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tv   Street Signs  CNBC  November 17, 2016 4:00am-5:01am EST

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everybody. welcome to "street signs." i'm louisa bojesen. >> i'm carolin roth. these are your headlines. this morning we're focusing on banking stocks in europe losing some of their trump traction peers going into the red, keeping european markets in check in early trade. seeing red. ahold misses forecasts amid a tough trading state side with the retailer saying the deflationary environment will continue through the fourth quarter. payout plays. investec and zurich top the stoxx 600 as both firms announce
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divided hikes, with the swiss insurer targeting an eventual payout of 75% of its net profit. donald trump prepares to meet his first foreign leader, japanese prime minister shinzo abe, as the bank of japan goes on the defensive, buying jgbs in a bid to offset rising treasury yields. good morning again. welcome. glad to have you with us for this next hour. we have lots going on. a packed show for you. just giving you an indication of where europe is trading, we were called higher by the spread bettors before we opened an hour ago, hanging on to those gains, just over a tenth of a percent. over night, the bank of japan conducting the bond buying, stopping jgb yields from highing higher this had an effect stateside and some rejigging of
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yields in europe. when it comes to some bigger movers out there, also just looking at some of the stock specifics, investec has been trading higher after reporting a solid set of first half earnings, similar for zurich. ahold trading lower after weakness in the firm's u.s. business hurting operating incom. then royal mail on the right-hand side of the screen. also down after announcing further cost cuts to combat a drop in first half profits. so a mixed bag of announcements so far. when we look at the sectors out there, how some of that is reflected, you are looking at banks being a main sector to be trading lower, down by a half percent. telecoms, basic resources hanging on to some gains. people questioning how long this banking or financial sector rally can continue. >> we are seeing unwinding of the trump rally that's been in
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place for a week or so. i was talking to an investor yesterday, it's difficult for us, even if we don't have conviction in the trump trade, we have to be on it. the institutional investors, they want to see the massive gains that some of the financial investors in the u.s. wracked up in the space of one week. they're torn between a lack of conviction but the pressure from investors. >> you were at the ubs conference, i know a lot of heavy weighted people in the industry were there. i spoke to somebody from the emerging markets yesterday, from brazil, who was talking about how the danger is that everybody piles into the same trade. everybody goes long u.s., it's great until it isn't. he was saying it's important to diversify. >> timing is absolutely key. let's see what some other huge investors are saying out there. carl icahn has praised president-elect trump as a consensus builder saying he will help to heal the divide between
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american business and government. speaking at the global investment outlook summit, he also said that he believes the post-trump market rally may be overdone. he confirmed that upon leaving trump's victory party early on november 9th he bet about $1 billion on u.s. stocks. >> only a billion? >> only a billion. but has done well on that. what did bill gross say? >> taking a slightly different line. he is saying there's no trump bull market adding that the president-elect's victory signals the american economy is heading the wrong way. speaking to cnbc, he warned that structural headwinds remain in the way of u.s. growth. >> proposals in terms of fiscal spending are focused on not only tax cuts, but corporate infrastructure. you know, tax incentive corporate infrastructure plans which are to the necessarily the
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best way to go from my standpoint in terms of injecting money into the system and putting people to work. that's debatable. we'll have to see. i don't think we're looking at 3%, 4% gdp growth because of structural headwinds that i talked about with you for several years. >> we're now joined by justin oliver, and we're seeing some reversal of the trump trade going on in the markets overnight what do you do? do you want to build on to your position in financials, healthcare, basic resources? is it time to take profits? >> you have to look at where the tailwinds are at the moment. the tailwinds behind financials, healthcare, infrastructure will be there. i think they're overdone in the short term. some regulation change, is that we'll be seeing will be supportive for u.s. financials in particular, maybe not so much
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in terms of europe. but i think from an investment point of view, you have to invest with the tailwinds, not against them. the tailwinds are in those sectors. >> so the trend is clearly your friend. you do want to be diversified what if this trump rally comes to a screeching halt and volatility picks up again. where do you want to be invested to buffer those effects? cash? gold? >> depends what's causing the volatility in the first place. as we know, bonds over the past few years have been very good as a hedge against slow growth, dis-inflation, deflation. if the trump rally comes to a grinding halt, bonds are the place to be. if we're seeing volatility as a result of inflation coming through, then cash is going to be your friend. >> the vast majority of people
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now are still advising invest in equities. i don't remember anybody saying come out of equities, heading into the election there were people saying we have a larger portion of cash now. hedging ourselves a bit. but when looking at the equity positioning now, there are also people questioning financials and how long that support really can continue before we start to see a turn there. are we started to look a bit overdone in financials in. >> we are in the short-term, again, it comes down to the fact that you will have that tailwind there. now, people are talking about, you know, the dodd-frank act just being put to one side. clearly that is not going to happen. at worst you'll see a moratorium on new legislation in terms of the financial industry. but that's the environment in which we got at the moment. again, if you look in terms of u.s. financials in particular, the correlation between that and
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the yield curve is pronounced. again, you would expect that the environment we've got, that yield curve will be steepening. >> how about basic resources? talking about valuations, talking about some bigger metals and miners, like glencore. so many thought glencore was going bust a couple years back. now it's recovered massively compared to where it was a few months back. same with valley and their evaluation. will we see money pumped into these bigger basic resources stocks? >> slightly different. we were expecting the dollar to remain on the firm side, that hasn't been good for commodity prices. if you talk about commodities, you have to factor in what's going on in terms of china. you know, it's always been -- >> china is doing fine, no? >> possibly. if you believe the data. clearly, again, there's a lot of
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expectation out there that there's -- that housing situation in china is very, very overblown. i think you will start to see a bit of a slowdown. not expecting the hard landing that maybe some are. but china has historically been the marginal consumer of a lot of these commodities. we think the economy is slower than the 6.5% that the government statistics are showing us. >> for many investors, the missing piece of the puzzle is earnings growth. the u.s. we've seen a comeback of that after five quarters of earnings recession. in europe tepid earnings growth. can a trump trade spur more earnings growth and a margin pick up? >> that's more difficult. depends where his policies go. the rhetoric at the moment has been very anti-trade. anti-trade is not good for equities typically outside the u.s. you think about europe, germany, it's all about exports, particularly in terms of cars.
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you expect in that sort of environment earnings growth will be more difficult to achieve for european companies. offset against that, probably going to get dollar strength, euro will be weakened that will help the exporting position. we have more conviction in the u.s., u.s. earnings profile than elsewhere. >> justin, we have to leave it here, thank you very much for your time. justin says go with the trend, go with the trump trade. >> trend is your friend until the end in the bend. e-mail the show, get involved. streetsignseurope@cn we have plenty coming up. the french elections, talking about that. follow us on twitter with comments @streetsigns address cnbc. @louisabojesen. >> and @carolincnbc. can the former economy minister make his mark on the
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italian election or will france make a hard shift to the right? we'll discuss coming up.
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. welcome back to "street signs." sodexo offset weakness in france with solid sales in north america and the uk. the company suffered from strikes, security fears, floods in the home market. sales were in line with expect takes coming in at 22 billion euros. the ceo told cnbc he believes the recovery is underway in the company oop's home market. >> france had an effect on the growth because france has been effective by the terrorist attacks, by the strikes.
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by the flooding in spring in paris. hopefully the situation will get better this year and will recover in terms of tourism which is not the case so far. it's an election year as well it will probably wait on the overall activity. hopefully we'll have establishization in france. ahold-delhaize reported a 25% increase in net income for the first period. but the operating number fell short of expectations amid weakness in the u.s. firm's grocery business. ahold-delhaize warned deflation is likely to continue in the u.s. food market through the fourth quarter. premiere oil cut its expenditure forecast for this year but they expect to beat the budget by 10% thanks to the selloff in sterling and cost cuts. tony durant said he is continuing to deliver
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operationally despite a challenging commodity markets. julius baer reporting a 9% increase in assets for the first ten months of this year. switzerland's third biggest bank said net new money rose by 4%. and zurich insurance doing well today. let's look at the stock. up by 2.5%. zurich has upped its dividend target. they are aiming for a payout ratio of 7 5% of its net profit. the swiss insurance firm announced it is aiming to realize $1.5 billion of net savings by 2019. analysts called this optimistic and ambitious, but hopefully realistic, too. shares in investec have been valleying aft rallying after the firm raised its dividend prospect. and specialty chemicals and sustainable technologies firm
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johnson matthey is upping its dividend. the ceo said currency moves boosted the latest set of earnings. >> brexit in the short-term from a currency point of view works for us. like many exporters and foreign -- lots of trade overseas, it's translational benefit. still long-term questions about what brexit means into the long-term, we'll wait and see. european car sales fell by 0.3% in october. volkswagen, renault were the leading underperformers. sales now up by 6.9% year to date. most of these auto makers just trading slightly in the green. the auto sector was another
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section of stocks to enjoy a trump traction. phil lebeau has more. >> reporter: in a city of stars, no expenses spared rolling out dream cars. take the $323,000 mercedes cabreloet. mercedes expects strong sales of a rich vehicle only the very rich can affordment. >> we are only building 300 worldwide and bringing 75 to the u.s. we will have a situation that we already see where we have more demand than we actually have cars available. but i think that's the right strategy. >> reporter: l.a. remains the center of america's luxury vehicle market. but it's become the largest market in the country for pickup trucks, which is why gm chose l.a. to roll out the new chevy colorado zr2. >> we know that there's a lot of people who want to go off road. they want a capable vehicle. i can tell you this is seriously
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capable. >> reporter: amid the new models, automakers face questions about doing business in the trump administration. will fuel economy standards drop and will cars built in mexico but sold in the u.s. face a 35% tax? it's a move that could cripple auto sales. >> what the automotive business is is an international business of parts, manufacturing, logistics, trade. it's an ecosystem. it's an ecosystem that works quite well in america. we make a lot of cars here. we make a lot of cars across the globe. i think the ecosystem works. >> the consumer is not looking at uncertainty when it comes to automakers. they're focused on what is being offered today. what's out there on their showroom floors. >> reporter: one thing is certain, demand for luxury vehicles is not slowing down, especially high-end suvs. when you walk the floor and talk with auto executives at the show, it is clear they plan to feed america's appetite for bigger vehicles, which is why
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we'll see more suvs debut at upcoming auto shows. phil lebeau, cnbc business news, los angeles. the bank of japan has unexpectedly announced its maiden fixed rate buying operation under its newly revamped monetary policy framework in a bid to offset rising treasury yields, the bank said they will guide the yield to 0%, with the aim of combating low inflation and sparking growth. >> look how much it is yielding. just fractionally in positive territory what a yield. the bundesbank warned that german banks may not be prepared for higher rates. germany's central bank says the country's lenders are robust but may be underestimating risks. banks hurt by the low-rate environment have been rallying on the prospect of higher rates, but how could a rate rise pose a threat? >> the low interest rates are
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good for the banks in the sense that the funding costs have declined. this is also part of the balance that we have to look at. but what is happening right now is, of course, that the loans that the bank issue to the real economy and to households borrowing, these loans have low interest rates what we see in germany is these loans have an ever-increasing maturity. we now have a much higher share of mortgage loans, for instance which have a ten-year or longer maturity. these loans have a very low interest rate. of course the question is what happens to the banks if funding costs start increasing. that might be an issue for the bank. this is an interest rate risk bidding up on banks balance sheets. >> how concerned are you about the recent increase in yields after trump was elected as the president, we see bond markets catching up with the idea that he is starting to spend,
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inflation will increase is that something you're worried about? >> the election is a week ago. i'm careful to really talk about forecasts. markets have to reprice this. i wouldn't talk about the effects of the election on the macro environment. it's way too early. what we can say is future invest in interest rates will have some of the implications that i talked about. for instance, that the funding costs for banks will increase and that might be an issue for the banking system. in particular, many institutions, many banks are hit by the same risk at the same time. what individual institution can deal with may not be the same for the system as a whole. now, barack obama has arrived in berlin german magazine, the u.s. president appealed for stronger
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cooperation in the future between the united states and europe. obama will be dining with the german chancellor who he described as his closest international partner. they'll be dining later tonight. italian prime minister matteo renzi said if he loses the december 4th referendum on constitutional reform he won't take part in any attempts to form a temporary or technocratic government. having already promised to resign if he loses the referendum and later retracted that renzi said he was sure the electoral system would change whatever the outcome. as it stands, renzi's yes camp is behind in 32 polls published by 11 different pollsters. but should we still believe those polls? after brexit? after trump? >> should we be believing the polls in france? we have a french election coming up. emanuel macrone has thrown his name into the hat. the former economy minister who quit under president hollande to run as an independent joins a
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congested list of names vying for the country's top job. alan jupre remains the favorite. maureen le pen is expected to also run. let's talk about more from france. emily mansfield is here. good morning. >> good morning. >> just assuming that not everybody is up to speed on french elections. this is the first time they're holding what is the equivalent of a primary in the u.s. for the center right quequivalent to th republican party, right? this is the first time they're holding open primaries on the center right and center left. so there's more uncertainty than usual. we don't know yet who the main candidates will be for those two big mainstream parties. we have the republican primary later this month, and then the next in january. >> and what are people going to be voting on? what are the main topics that
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are getting to people? >> the big issues at the moment in france, they've had three major high profile terrorist attacks in the last 18 months. so terrorism and how to improve security is top, and addressing immigration and what marine le pen discusses, the idea of secularism is important. there is also the economy, but that's taking a backseat compared to the identity politics at the fore. >> is there a consensus in france that le pen can pull uf what trum r trup did in the u.s? it was said they are not organized the same way as the republicans are in the u.s. so you can't draw the same similarities. what do you think? >> i think we have to be careful not to have a knee jerk reaction after seeing trump win and
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assume le pen will also win in france. it's a different system. the polls have their own horrible moment of realization after the 2002 election when they didn't predict that martin le pen would reach the second round. recent elections have been quite close. given the high turnout in france, it's more like 80% compared to 60% in the states, the likelihood of a sudden surge of voters not expected is not quite so strong. more importantly france has a two-round election. which means in the second round, the winning candidate has to get over 50% of the votes. he will pen is polling around 30% right now. that's a shift given in france the center left and center right unite to keep the far right out. that said, we shouldn't underestimate that risk. >> what are the strategies we've seen on the part of political parties in france is actually parties joining together, rival parties joining together and
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trying to block votes for another party. do you see that happening next year in a big way? they're so frustrated with their rise? >> yes, i do think that will happen again. less dramatically as in 2002, when it was sort of 82% of the winning candidate as a consequence of that. that said, even just last year in december, when they had the regional elections, the same thing happened. the center left candidate withdrew. the center left supporters were urged to vote for the center right candidate to make sure marine le pen is kept out. >> i happened to speak to a frenchman yesterday afternoon -- sounds strange -- but making the point that marine le pen doesn't have the backing of a republican party, it is seen as a fringe party even in france and with these issues. the other point is the point of
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how much up others have come in, he has done very, very well in the polls, and has taken on 25% of the voting opposition, neck and neck with sarkozy, and you have these new allegations that sarkozy was too close to gadhafi, and there was money that shouldn't have been flowing between the two. >> to your first point there, she's worked hard on what she calls de-demonization of her party, which was considered a political pariah under her father. she stepped away from the racist or anti-semitic language he would use and softened the rough edges of her party. that said, a lot of people still consider it beyond the pale. >> and could francois stand a
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chance? >> he's now in the running certainly for that center right republican primary. we think whoever does win that primary will go on through to win the presidency. >> emily, thank you very much. emily mansfield joining us from the economist intelligence unit. we have to take a quick break. check out world markets live, our blog, which runs throughout the european trading day.
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. welcome back to the show. yes, you're still watching "street signs." i'm carolin roth. >> i'm louisa bojesen. your headlines this morning -- bank stocks in europe losing some of their trump traction l keeping european markets in red. seeing red. ahold misses forecasts amid a tough trading state side with the retailer saying the
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deflationary environment will continue through q4. payout plays. investec and zurich top the stoxx 600 as both firms announce divided hikes, with the swiss insurer targeting an eventual payout of 75% of its net profit. donald trump prepares to meet his first foreign leader, japanese prime minister shinzo abe, as the bank of japan goes on the defensive, buying jgbs in a bid to offset rising treasury yields. hi everybody. welcome back to "street signs." data just hitting our wires, uk october retail sales plus 1.9% over the last three months verses what we saw in september of 1.9% as well. october 5.9% in the three-month time period versus september of 5.4%. that's the biggest since june of 2002. in other words, the october
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retail sales seeing a healthy surge. it seems the cooler weather has been boosting sales of clothing in particular. uk october retail sales ex fuel 2% month on month versus 7% year on year. that's stronger than what was anticipated. the poll looking for 0.4% month on month and 5% year on year. stronger than anticipated. talking about the cooler weather, saying october clothing sales were boosted. >> september was so warm, remember that? no one wanted to buy winter clothes in september. i don't know about you, certainly i didn't see anyone. let's look at the u.s. fight cho futures. the s&p 500 up by a half point the dow jones set to add 16 points. the nasdaq higher to the tune of seven points. a couple hours away from the u.s. open. yesterday the dow snapped a
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seven-day winning streak. some trump trades have been unwound. we saw telecoms leading the charge. financials and energy lagged behind. the nasdaq also outperformed for the second straight session. in europe, a similar picture to what we saw on wall street. once again, people taking money out of risky assets, specifically some of the sectors that have done well in the last week after the trump victory. the dax off by a quarter of a percent. the ftse 100 is outperforming by a quarter of 1%. banks are underperforming in europe. the different currency marketsr stormed to a 14-year high. now down 0.3% currently. still a touch higher against the japanese yen. only fractionally. changing hands at the 109.12
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level. the euro/dollar up to 1.0723. in terms of the monday markets, yields stabilizing somewhat after the big rout in bond prices that we've seen over the last week on expectations of higher inflation under a trump presidency. let's look at the ten-year u.s., now just back below the 2.2% level. we saw that yield at the highest level in more than a year. also want to tell you what's going on in japan. the yield for the ten-year is back in positive territory. only fractionally so. this is after the boj unexpectedly launched its yield curve control with some purchases of bonds. >> carolyn, i want to mention breaking news that is hitting our wire. it has to do with hillco capital announcing they will be buying staples uk retail business. looking at this news here. hillco agreeing to acquire staples uk business for nominal
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proceeds. and the use of the staples brand is to be phased out over the coming months. they say in the release that agreeing to sell the retail business to hilco aligns with the strategy of focusing on north american and mid market business, and that it is a meaningful step in the process according to the ceo and president of staples. be aware that will be happening. only three weeks ago the former boss of barclays, anthony jenkins, criticized britain's big four banks for their inefficient i.t. systems. banking is adapting to make banking more efficient and secure. good morning, jose. you just had, you hosted the cash manager's forum in london
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as well, jpmorgan did. talk about what this is and what some bigger discussion topics were. >> let me put the question into context. if you look at what the corporates have done over the last eight years since the financial crisis and the double-dip recession in europe, they have shored up their finances substantially. that meant they were aggressive in cutting costs. the capital expenditures went down, balance sheets improved. if you look at the results and if you look at the metrics, you can say there's been a fairly improvement in all of those metrics. if you look at the economic environment, we continue to be in a low growth environment. that means corporates continue to be under tremendous pressure to be more efficient. cash management and optimizing cash management at a time when there's been a substantial improvement in technology, that might be the last tool to
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optimize with those corporates. >> aren't companies already doing this? you could argue it's nothing new that technology helps us and that we should be implementing it and businesses should be moving to become more efficient like this? >> they're trying. but if you look at global corporations, they're dealing with millions of payments and receivables on a daily basis, paying in different currencies around the world. dealing with cash, that cannot be moving croacross borders eas. so they have complications to move something that is very simple as cash. if we manage to centralize a lot of those activities, providing the corporates the ability to know where the cash is, and allow them the flexibility to use their excess cash where they need it, at a time putting in fx
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component where they can seamlessly pay their bills, capital injections, dividend repatriation, even the m&a transactions, it will make a real impact to the bottom line. >> don't you think under a trump presidency cash will become so much easier because of the repatriation of cash, all of a sudden these companies are sitting on cash piles and they can spend it, spend it on dividend share, buybacks and maybe capex. >> we'll see what happens. it's premature to go bullish, we'll see what happens. clearly the technology is working in favor of the companies to make them more efficient to move cash around the world. what is not helping is legal restrictions at the local level. if the u.s. manages to do that it will be beneficial for u.s. corporations. >> one of the other big threats
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to treasury departments are cyberthreats. are you saying that treasury departments are woefully underprepared? >> let me put it the other way around, which is they're becoming the obvious target for cyberattacks. if all of this cash now is moving to vicyberspace, cybercre will look at ways to go after where the cash is. i think it is the responsibility of the financial community, the banks, as well as our clients to work together to make sure we have the control systems in place but also the right corporate cultures to make sure we're dealing with that problem. >> thank you very much for your time. over to the political news of the day. speculation continues to run high that jpmorgan's ceo jamie dimon is still in the running for a treasury position. conflicting reports have
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indicated he's not interested in the role while others say he is pitching hard. we asked for a view on the rumors. >> the ultimate is the move will be from the person, the president-elect, to the team he will pick and then to the politics, and the choices they will make. at the moment we're still in the first phase. it's about the person and it is starting to be about the team. >> now, speaking to cnbc, the institute of international finance president, timothy adams, also gave his view on the possible appointment of jamie diamond. >> i would love to see him as treasury secretary. i would be surprised if that comes to fruition, i love jpm, it's a great institution. there's a great number of people in the suite of jpmorgan, a lot of people could step into that role, but dimon is a big guy. workers have removed the trump side from an apartment
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complex on the upper west side. over 600 residents petitioned to have the sign removed during the presidential campaign. sam zell, chairman of equity residential, said he first spoke to trump about removing the name a year ago. >> we've been in the process of dealing with this for over a year. our goal was we have no interest in having any political position on anything. once mr. trump made the decision that he was going to enter the political scene, we looked at it and said, you know, we don't -- we want to be neutral. we don't want to have an opinion. that was part of an agreement we had with him. the agreement expired. we're basically renaming the buildings according to the street. >> hillary clinton has urged americans to never give up. speaking at a charity event in new york, she opened up about her struggle dealing with the defeat. >> i will admit coming here
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tonight was not the easiest thing for me. there have been a few times this past week when all i wanted to do was just curl up with a good book or our dogs and never leave the house again. over the past week, a lot of people have asked themselves whether america is the country we thought it was. the divisions laid bare by this election run deep. please listen to me when i say this, america is worth it. our children are worth it. believe in our country, fight for our values, and never ever give up. >> can i just say she looks tired and exhausted. i can't blame her. >> she's been on the road for a gazillion years it seems like now. i would be pretty tired, too. >> then after that defeat. all right. let's move on. talk about trump. japane japanese prime minister shinzo
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abe will meet donald trump today in new york. in september he met with rival hillary clinton on the sidelines of the united nations general assembly. the japanese prime minister will seek assurances on japan/u.s. ties. president-elect trump continues to build his white house team behind closed doors at the trump tower, names are being added to and scratched from the public short list. let's get out to tracie potts joining us from washington. depending on which report you read, the transition is going well or not so well. what are you hearing? >> reporter: a little bit of both, depending on who you talk to. the key is that nothing is final until president-elect trump says so in terms of who these cabinet picks are going to be. we are getting new names like south carolina's governor, nikki haley, she was publicly opposed to donald trump during the
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primary, during the campaign, and is now reportedly being considered as secretary of state. then there's ted cruz, the senator from texas, who was commonly referred to, frequently referred to as lying ted during the campaign. well now, it looks like donald trump may be considering him as attorney general. there are a couple other names going out there. lieutenant general mike flynn, an adviser to trump, possibly as national security adviser, that's one that would not have to be approved from congress. we're getting word from capitol hill some of his choices might be controversial for democrats and republicans. for example, rudy giuliani or john bolton, the former united nations ambassador for the u.s. both possibly on the short list for secretary of state. it looks like there may be enough democrats and republicans to block either one of them. >> thank you very much. tracie potts joining us there live via nbc news.
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i find it fascinating that jared kushner and his role in this, in terms of being a private adviser. he's not allowed to be legallya. >> for now he's just the first son-in-law. >> a lot of people are saying chris christie was removed because he threw kushner's father in jail. >> the question is who gets security clearance to read the important documents. trump's vow to boost infrastructure has boosted stocks. >> railyards move daily on the equivalent of 26 miles of track here. it's a huge facility and privately funded by csx. it highlights the freight railroads already maintain their
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own networks on track to spend $26 billion this year alone. if donald trump comes up with plans to drum up a trillion dollars in infrastructure spending, rails will still benefit as ports get an update. the biggest boom would be moving building supplies themselves, increasing volumes at a time when rails struggled amid a weak straight environment. >> we serve the industrial economy to a large degree. when they win, we win. there's opportunities here based on what ultimately the policies are going to be for more spending. that would be helpful for us as well. >> reporter: many questions are far from being answered, particularly around trade. if the incoming trump administration takes a more protecti protectionist stance against strayed, that could have ripple effects in the supply chain. for the u.s. railroads,
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one-third of traffic is trade related. with chemicals, grain and autos among the biggest groups. analysts say some railroads would be more affected, particularly those that have benefited from booming trade with mexico. a growth story in an otherwise tough freight environment. >> we're certainly going to see a shifting trade pattern, that could impact railroads that go across border verse the eastern rails, does that investment go back into that rust belt states where you could see more and more traffic originate from those areas. >> reporter: more traffic could come. the president-elect has vowed to reinvigorate coal, which for the rails has plunged by half from a peak of 140,000 weekly car loads in 2008. while coal deregulations could boost revenues and stocks, not even the railroads themselves expect to return to the commodities glory days. i'm morgan brennan in bedford park, illinois. tweeting his way to victory,
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trump's use of social channels to get elected. we'll hear more about that after this short break.
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. >> hi everybodifyeverybody. welcome back. cisco shares took a hit after disappointing guidance for the second quarter. josh lipton has more on the numbers from san francisco. >> reporter: cisco is undergoing big changes, and investors got more data into how that transition is really going. the tech giant announced that it will eliminate 5500 jobs or about 7% of its work force. executives say that was a tough decision but one needed to drive
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strong financial performance in the future. that news came as cisco reported q4 results which were better than expected. eps of 63 cents on revenue of 12.64 billion versus expectations of 60 cents on 12.6 billion. gross margins clocked in at 64.6%. rbc's mitch steves says that number shows that cisco's ceo, chuck robbins, is doing a good job of transitioning the company from hardware to software, services and security. though he also noted that guidance for q1 gross margins did imply a decline. like a lot of tech giants here, cisco is transitioning to the era of cloud commuting. businesses are not as interested in buying pricey hardware, instead purchases relatively cheaper hardware filled with code from different vendors. the big cloud providers don't buy high-priced gear for data centers. cisco is aware of these trends, which is why robbins is focused
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on cloud collaboration tools, software defining networking and the internet of things. and investors have been willing to place a bet on that strategy with the stock up 15% over the past three months. josh lipton, cnbc business news, san francisco. after reports of turbulence in the trump transition team, the president-elect took to social media tweeting the failing "new york times" story is so totally wrong on transition. it is going to smoothly. i wish i had his voice to do that or alec baldwin's voice, for that matter. i don't have either. josh marsch just joined us around the desk. a part of me thought that donald trump is going to be different when it comes to his tweeting activity from being on the campaign trail to being president. that's not going to happen it appears it helped on the campaign trail. does it help him now? >> we'll see what happens when he gets into the white house. i think we live in this very
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polarized fragmented media landscape where for a lot of people they don't know what to believe anymore. i think twitter gives this amazing opportunity, or gave trump this amazing opportunity to engage directly with his followers, people look to that and believe him and see that as a great channel. it's actually the reason that so many companies today are also investing heavily into twitter and these channels. because consumers and individuals today don't know what to believe. i think they value that direct one-on-one connection. >> where did it go wrong for hillary clinton and her campaign from a social media perspective? she was quite active to, but not as bombastic. worth pointing out she used part of your technology, too. i hope it wasn't your technology -- >> no, it definitely wasn't. trump's use of twitter is highly personal to him. it was about him tweeting about
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his opinions, having this unfiltered direct voice out that certainly drove a lot of media and headlines for him. hillary, you know, you can take lots of comments on what she did as a candidate, i won't judge that. she certainly wasn't getting the same attention in terms of the content she was putting out there. what she did do in an amazing way, innovative way, is use it to connect one-on-one with her volunteers, people who wanted to find out where they could vote, how they could help and made a difference in the ground game. they connected with thousands in that way. >> what does your software do? >> our software helps companies or organizations engage one-on-one with large numbers of customers thirough social media or twitter. so google, sprint, hertz rental car have hundreds of customer service agents that use our software. >> are you thinking differently
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about how to use the software platform given that trump had such a big impact? i heard somebody say it was his strategy, he knew that if he put out one-liners at 3:00 in the morning that he would get attention. personally i don't think it was a strategy, i think that's just who he is. >> i think the one lesson here is it's not about -- the software can help you, especially in our case, what we can help you do is have hundreds of people engaging one-on-one. if you're looking at your more media strategy, which i think trump's use of social media was less about that one-on-one engagement, it was more about how he can get his voice out. the lesson there, which is applicable to everyone, be authentic, be genuine. the reason people are on these platforms is because they want that. they don't want to go and see the same pr speak coming out everywhere else. if you use it in a genuine way, people pay attention. >> given this election, you
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could argue, was more more social mediaish led, you can only assume that will continue as technology develops. do you think that twitter, other platforms valuation goes up because of that? >> what this election shows is how powerful these channels are for getting your voice out and engaging with people. i think that's going to drive a lot more change in the boardrooms when companies are going how will we invest our money and our advertising spend? where will we ask customers to engage us from a customer service point of view? this will show more people who may have been more hesitant and conservative, which a lot of people still are, just the power of social media. that will increase the revenue, usage and valuation over time because of that. >> trump might be a boom to twitter. >> potentially. >> twitter may not know this, but trump may be saving the company. >> i think they do they had
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adverts all over new york with trump and hillary looking at each other during the campaign. >> josh, thank you very much for that. we are mixed to slightly lower in european trade this morning, in part because some banking stocks are underperforming. what happened on wall street, the ftse 100, up by a quarter of a percent. u.s. futures? >> what's the call, called flat, pretty flat. the dow jones and nasdaq just called op called to open higher. >> that's it for the show. i'm louisa bojesen. >> i'm carolin roth. "worldwide exchange" is up next.
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good morning. the end of a winning streak. the dow suffers its first down day in seven. why carl icahn thinks the post-election rally may be overdone. janet yellen heads to capitol hill. the fed chair expected to be grilled on monetary policy and potential trump administration plans. and the president-elect looks like he'll fill his cabinet. reports and rumors are flying around this morning. it's thursday, november 17, 2016, "worldwide exchange" begins right now. ♪


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