tv Street Signs CNBC January 26, 2017 4:00am-5:01am EST
good morning, everybody. very glad you're with us. you're watching "street signs." i'm louisa bojesen. our headlines today -- a 23% premium sends actelion shares soaring as johnson & johnson puts a $30 billion cash deal on the table. investors not liking the taste of marmite after unilever warns of tough market conditions, posting a miss on sales. the ceo tells cnbc as the pound goes down, prices must go up. >> developing markets have not seen devaluations of 20%, 30%,
50%, the uk has joined their ranks. with brexit, we have seen a significant weakening of the pound. as a result many companies are announcing price increases. that's happening as we talk. ericsson swings to a loss in the fourth quarter as a slowing equipment demand forces the swedish firm to cut its dividend. the ceo will join us on "street signs." pints of profits at diageo as earnings rise in the first half of the year. the ceo tells how the drinks giant has been helped by the weaker sterling. >> we have about 1.4 billion benefit on the top line, and over 400 million on the bottom line. that's the fx benefit, even though the world is rocky, we are performing in a sustainable way. hi everybody. welcome to the show. we have so much going on this
morning. it's been so busy. we're still early days, right? still early in trade. markets have been awake for an hour now. we're looking at the vast majority of european equity markets trading in positive territory. though we've seen a couple smaller markets going a bit into the red. when it comes to the main sectors, where they're moving, healthcare higher by 1.7. johnson & johnson taking over actelion. we'll talk about that. banks higher by 1.5%. insurers also adding some gains. retail, basic resources off a tad. basic resources having a one of late. now, let me tell you more about this deal in case you are just joining us. shares in actelion have rocketed to the top of european trade today after the pharma company agreed to a takeover by johnson
& johnson. that's a $30 billion takeover. j & j is offering $280 deal per share. this represents a 23% premium to actelion's closing price yesterday and follows months of discussions to agree on a tie p up. let's talk about this, john is with us this morning. huge deal, $30 billion, all cash. $280 per share what do you make of it? >> i think it's a great deal for the pharmaceutical industry. it mirrors a few patterns going on, that m&a has been getting incredibly expensive. 15 times revenue is a big price for j & j to pay. in a sense now that's what it takes to get something excellent like actelion. the best part of this deal in my mind is the fact it's been
structured in a creative way. in a sense that the r & d part of actelion, the past success of actelion has been put out into a spin-out with an option for j & j to acquire up to 32% of that. started with 16%. i think this is a creative deal for j & j, because it gives them a window on that future value from actelion. >> so you have rnd assets to one side and the commercialized portfolio on the other side. >> exactly. the way they split it is a smart way. they picked up not just -- they not just left the discovery part, they left some clinical assets in the new co. all that early development, the clever early development that needs to be linked to discovery and have that synergy going on in r & d is retained. that annoys the new co to perform well in r & d and almost
takes off their mind the commercialization, which you could argue is better suited for a large pharma like j a& j. if it allows for more of a holding for j & j, does that mean shareholder value will increase? >> i believe so. when you pay 15 times revenue for a company, it's very simple to make the case and look at the strategic benefits. nobody talked about cost saving in this case. that's not what this deal is about. it's about growth. it's about j & j getting access to something, admittedly at an expensive price that it can look for its future growth in 10, 20 years time. what is the most important thing that actelion is doing? if somebody is watching and thinking maybe i should buy shares today, maybe sell, what do you think the real gemstone is for actelion? >> it's a mixture of the clinical assets and discovery.
the way they mastered the art of creating new drugs. this is not an easy task to create new clinical compounds. actelion through integration has managed that. there's a lot of small biotechs out there with 10 people, virtual biotechs struggling to integrate all of the necessary medical, technical, commercial skills. actelion has a capability there. it's the capability that's the value. yes, some assets will be valued more than others. it's the system and capability of actelion that's powerful here. >> at one point people were thinking there might not be a deal. we saw actelion walk away. there had been an offer shy of $260 per share, and it was speculated that 260 might be the magic number. we got 280. do you think we'll see more consolidation now with the likes
of sanofi given this deal? >> i think the pressure is on sanofi. i said a number of times that it's hard for sanofi. if you want to play in this game of buying a very attractive, larger mid caps, you have to have a strong balance sheet and a lot of cash. j & j had that. sanofi does not have as strong a balance sheet it will have a difficult job to play in this game. it would probably be better off looking at smaller acquisitions rather than going for a big one like this. this is an unusual one and a very good one for both parties. >> john, thank you very much. john round tree, managing partner at nova sector. i always say get your comments and questions through early, @louisabojesen or streetsignseurope@cnbc. do it early. oftentimes they come through, the e-mails and tweets after the show, then i can't use the questions. it's too late. diageo, they have posted better than expected sales for the first half of the year.
they saw tailwind from the stronger dollar and improvement in its u.s. business. we spoke to the ceo of the company and asked him for his outlook on m&a in this particular sector. >> diageo has a strong balance sheet. we're generating and throwing off a lot of cash. i fully expect us to extend our leadership over time. our core focus in keeping the organic growth machine going. m&a in our industry is impacted by business and brands that are family. you have to be patient. we are playing a long game. the history of diageo, we have grown through acquisition, consolidation, i expect that to continue at -- over the long haul. today diageo has a very good presence across categories, price points and geographies. delivering mid single digit froth, margin expansion and strong cash generation will get us to that best performing in
the consumer set. >> john forsythe is a global drinks analyst with me this morning. good to see you. let's talk about what we've heard from the ceo on diageo. talking about the history of diageo. spoke earlier on the channel, how they had been growing through consolidations, acquisitions. how are they doing now? do we need to see some of that for diageo? >> i think they're doing well. the main focus in terms of acquisition is india. they tended to use acquisitions to spread the reach more globally into emerging markets, where you actually need acquisition to master those particular markets. so i think it would be really interesting to see how india goes the next ten years. they made a huge bet on that. india has pros and kcons. the cons is that prohibition is
rearing its ugly head in some states, but the pros are millions are entering the drinking market every year. >> how big a slice of their portfolio do you think will be dedicated towards india? >> long-term looking for quite large. india has so much potential. so much growth opportunities. still a strong drinking market with a big population. at the moment it's small. in 10, 20 years, diageo is hoping they'll be bigger. >> in contrast to india, you have the u.s., their biggest market. organic sales up. a quote that americans are now drinking better. i'm not sure if that has to do with the environment in general, political environment, but 3%. can they maintain a 3% sales figure? >> at the moment the market is looking strong. they're right americans are drinking better. this has been going on for a while. however what they have not talked about is the fact that people are drinking more craft
rather than big global brands like smirnoff and johnny walker. they would have previously been drinking better brands. they're almost getting a bit left behind now by the introduction of craft brands, which tend to be smaller, more boutique, more quirky. that's a big challenge for diageo going forward. >> what do you make of the 5% hike in the dividend? >> we don't actually comment on shar shares, so i won't be able to come out on that one. >> fine, we'll put that to one side. the weaker pound having a huge impact. net sales by 1.4 billion pounds. operating profit by 460 million pounds because of the drop in sterling because of brexit or almost 20% drop since the brexit vote. >> yeah. i think there's a couple points. short-term brexit has favored diageo. it's mostly an export company. 90% of its business is exports. so a weak pound will favor it in
the short-term. however diageo argued against brexit. they argued against brexit because they really want to be part of the eu because the eu is negotiating trade deals. one of the areas it's negotiating trade deals is in india and the wider asia region. whether it's quite effective long-term for diageo as short-term is still a little bit open to question. >> okay. just taking note. i'll be tweeting a couple of your comments later. thank you very much. >> thank you very much. >> johnny forsythe global drinks analyst. coming up here on the program, out with the old, in with the f.a.n.g.s. talking tech after the break. we have loads more coming up. we'll be heading out to talk about baffin. by all means get your comments and questions through. f.a.n.g. is up next.
. hi everyone. welcome back. you're still watching "street signs." i'm louisa bojesen. ericsson cut its 2016 dividend by 73% after posting $181 million loss for the fourth quarter. the mobile telecommaker sales fell by 11% in the period. they make all the systems that support it. the ceo said the company was focused on prioritizing profitability over growth in the near-term. i will be speaking to mr. ekholm later on in the show. that interview is first on cnbc. if you have pressing questions on ericsson, send them through. i will see if i can use them. among the top tperformer on
the stoxx 600 is stmicro. they expect demands in the first quarter of 2017 to be stronger than usual. stmicro announced plans to invest $11 billions in 2017, part of its plans to boost its manufacturing capabilities. unilever, fourth quarter there. sales rising by 2.2%, missing expectations amid weakness in india and an economic slowdown seen in brazil. the consumer goods group which owns dove soap, marmite as well, they're warning of tough market conditions following a slow start to the year. nancy spoke to the ceo, paul pullman and asked him what he made of trump's america-first policy. >> in a world where we created enormous wealth and lifted enormous amount of people out of poverty, globalization has been a main driver of that.
most people will agree on that. to some extent technology as helped as well. at the same time we have not been able to compensate the people left behind in this transition, that is going along with this technological change. what his platform has been in the u.s. and very effective to a group of people who felt not included anymore that he was going to change that. a company like unilever, in all of the countries we operate of that size and magnitude, we make products for those companies. it's all americans who work there. we are local. in india we're a local company. in indonesia we're a local company, south africa and the same is in north america. we've been around for hundreds of years. when politics changes, we look at it, deal with it. >> what if president trump were to mention you specifically in a tweet, saying unilever need to make more products here in the
united states. >> we would love to make more products in the united states but we also need to make sure consumers buy them. >> how do you think the consumers responding to the highs in u.s. markets, dow 20,000, is that ultimately good for your business? >> you do see a stock market at a record high. consumer confidence moving up. there is a lift currently happening in the u.s. on the back of the elections. fair to say that under the former regime, the economy already started to pick up. we need to see how long that is going to last. we've been, as i said in business for hundreds of years. we've gone through good times and bad times. we take a long-term position in the u.s. as i mentioned, we bought dollar shave club, seventh generation. we have actively invested in the u.s., we see that as an attractive market and continue to see that as an attractive market.
the dow jones industrial average closing at an all-time high yesterday after breaking above that 20,000 threshold. it was boosted by bullish sentiment amid president trump's first week in office. equities were also pushed higher by better than expected earnings results. the nasdaq and s&p 500, both those closing at record highs as well. you saw, indeed, eight dow components hitting all-time highs. the biggest gainer was boeing, posting quarterly results that beat expectations, lifting shares by more than 4%. financials also outperforming. goldman sachs was the leader there. 1.5% to the upside and ibm on the sidelines. 1.5% higher almost. going, going, gone. bids for ebay going through the roof in after-hours trade with shares soaring by more than 8%. fourth quarter sales and profits meeting expectations with
investors cheering the online auction house's turnaround plans designed to take on the big players like amazon. a welcomed set of results after macy's posted some disappointing christmas numbers. qualcomm shares falling by 3% in extended trade in lower than expected revenues which rose by 3.9% during q1. the chipmaker said that it doesn't expect the dispute with apple to have an impact on the second quarter, reassuring investors it will remain a supplier to the tech giant. qualcomm is faces legal challenges from apple and the u.s. federal trade commission on accusations of anti competitive behave your. mark haughton is with us. we saw ebay up by 8% in after hours trade. qualcomm as well. you're looking at alphabet, microsoft, paypal.
give us some of your initial thoughts on these big ones. >> reporting for tech generally has been extremely good so far. we've seen good share price reaction, really where the reports have been strong or moderate. that's a great sign for the rest of the reporting season. we get the first of the big f.a.n.g. names tonight with alphabet. we had netflix already, which was strong. really for me, alphabet starts to signal that -- for the big internet names. >> and why is alphabet -- it's a core holding. but why do yyou continue to hol it? >> it's incredibly cheap. one of the interesting dynamics over the last 12, 18 months because investors have been operating in a risk-off environment they have tended to go for traditional names like microsoft or intel. google was flat last year as a performer. it's now incredibly cheap. more cheap than any of the top
ten by size technology companies in the world. >> any of the f.a.n.g.s that you think are too expensive at the moment? do we continue to ride this risk-on rally higher than where we are now? >> i think we continue to ride the rally. as i say, we are particularly keen on alphabet. we also hold amazon. there's some question about q4 volume. but it's a minor issue. for the long-term picture it makes no difference. it might be a wobble for their q4. but in general we want to continue to ride this wave and facebook still remains one of our favorite holdings. >> why? >> again, it's very cheap. in this winner takes all environment it's so clear now from what we've seen from the demise of twitter that the first player to gain the major share -- you know, a billion and a half users, network winner takes most if not all. >> microsoft, you say revenue
growth will continue to be flat year on year. and sales will drive intelligent cloud. you talk quite a bit about cloud in the comments. you love the storage theme. >> yes, for us, storage is really a great way to play what's going on in the cloud. because we don't have so much storage on the devices we hold in our hands, we forget things need to get stored and they get stored in the cloud and on hard discs. there's a tendency to believe hard discs will disappear. we've seen strong numbers in the past two days from seagate and western digital. they remain extremely cheap. we have microsoft and intel reporting this evening, two of the other traditional technology companies. there it will be interesting to see how their efforts in the cloud compensate for the very large businesses they have in the more traditional pc area. >> do you think cloud is going
to win over some of the more actionable companies? but cloud investing is a behind the scenes tech investment where the likes of amazon or netflix, it is much more in front of the scenes, it's a user friendly investment. >> yeah. i think that's true. people focus on these names and they become sometimes more expensive. netflix is pretty expensive. at the end of the day, the world spends about $4 trillion on i.t. of that about 1 billion is the area that could be addressable by cloud infrastructure. we have amazon doing a run rate of $12 billion a year. microsoft is 2 billion. that's $14 billions in a $1 trillion opportunity. it's enormous. it all sits in front of us. >> very good point. good stats.
a 23% premium sends actelion shares soaring as johnson & johnson puts a $30 billion cash deal on the table. investors not liking the taste of marmite after unilever warns of tough market conditions, posting a miss on sales. the ceo tells cnbc as the pound goes down, prices must go up. >> developing markets have not seen devaluations of 20%, 30%, 50%, the uk has joined their ranks. with brexit, we have seen a significant weakening of the pound. as a result many companies are announcing price increases. that's happening as we talk. ericsson swings to a loss in the fourth quarter as a slowing equipment demand forces the swedish firm to cut its dividend. the ceo will join us on "street signs." pints of profits at diageo as earnings rise in the first half of the year. the ceo tells how the drinks giant has been helped by the
weaker pound. >> we have about 1.4 billion benefit on the top line, and over 400 million on the bottom line. that's the fx benefit, even though the world is rocky, we are performing in a sustainable way. so we had the vote to leave the eu, but the data is still holding up. just looking at print for the uk preliminary fourth quarter gdp, plus 0.6% on the quarter. the forecast was plus a half percent, so slightly stronger, and year on year print is also slightly stronger. the uk economy still showing signs that it's holding up despite the fact that we are going to be leaving the eu and all of the uncertainty
surrounding that. looking at cable in trade. 126.64, higher by 0.3% or so. and we're right around a six-week high when looking at the trade of the pound. keeping in mind we did see a further rally overnight. right around 1.2663 overnight. theresa may meeting donald trump later on this week to have the initial meeting after the trump presidency took hold and it is thought she might be pushing ahead to clear the path for a quick trade deal. also keep in mind that david davies, the brexit secretary will introduce legislation to parliament today to begin the process of a brexit and that should be starting pretty soon. let's check in on what we're seeing with regards to the u.s. futures. implied open, five hours away from now, the implied open slightly higher with the dow jones looking to add 50 points
or so off the dow of breaching that psychologically important 20,000 level for the first time and closing above that level yesterday. european markets, we're slightly higher across the board on most of europe. let's talk about russia. let's switch gears and talk russia. russian retail sales slumped by more than expected in december posing a threat to moscow's optimistic 2017 economic forecast. we spoke to top russian bosses at the world economic forum in davos last week, and asked them for their outlook. >> today we see a huge inflow of investment already in russia, russian stock market, so i believe that in particular for russia in the short period it's interesting. it will bring a lot of opportunities for future growth. that is what russia needs today. >> i think it's a good opportunity for the foreign investors to buy russian assets
now and in current situation. i can't say -- i can't say that we feel a lot of interest, but some of the first signals from the biggest institutional investors we haven't. more or less optimistic about 2017. >> daniel salter is from renaissance capital. welcome back. >> good morning. >> we just heard the ceo talking about it's a good time for investors, and we also heard another talk about the big inflows of investment into russia. russian investment has been flying the last year or so. do you think it will continue to go on like this? >> we called this a rehabilitation trade, that russia a year to 18 months ago was not on investment screens. as the ruble stabilized, oil
prices recovered, fourth quarter growth in russia, that means russia is coming back on to investor radar, not to mention trump's victory and potential better relations between the u.s. and russia >> how much of it is a political trade and how much of it is down to the russian domestic issues? >> i think most of it is domestic. over the last year oil prices have doubled, going from 26 to 54. inflation has been crushed, coming down from 13 to 5.4%. >> big drop. >> big drop in inflation. interest rates have come down. there's a domestic story in russia which has legs. >> we always talk about whether or not we see enough reforms from within government. are we seeing reforms being pushed through? >> you have to look at the political cycle. we have presidential elections taking place next year in russia what we're seeing is what i call below the radar type reforms,
especially in the economic sphere in russia. we have the flotation of the ruble, inflation targeting being brought in. so the inflation target for the central bank is 4%. they are down to 5.4%, so getting to that target rate. so seeing things on the financial and economic side. the budget is set at $40 for oil. we're well above that now. so a lot of these below the radar reforms are happening in russia, but not the big restructuring of state enterprise type reforms. that's for after the elections. if i'm watching, i don't mind dipping my toes into russia, do i buy domestic players or do i buy players exposed internationally? >> we think the pendulum is swinging towards the domestic side towards the equity market. growth returned to the economy. there will be 1.7% growth this year in russia. you have seen real wages turn positive. expect that to feed through to consumer spending over the course of 2017. the ruble is quite well
supported, and about 200 basis points of rate cuts coming down this year. >> that much. >> yeah. so fairly decent rate cutting story. 150 to 200 basis points for this year. that should support the domestic side of the economy. >> what is the number one area that you think investors should be looking at in russia? we talk about oil with regards to russian investing. some people say look at some of the utilities, like telecom stocks, growth stories from within russia. do you have an opinion on that? >> we still like structural growth. there's the underlying economy which will grow slowly, partly because of demographics and slow reform process. we like companies in underpenetrated sectors, that stays in the internet sector, retail sector, and a story this year in the utilities sector. >> what do you think of the relationship between the u.s. and russia? is it going to get better? is it going to stay the same?
get worse? >> when i came in in december, we talked about the trump trade. russia has done well on the back of that. investors have to stay patient. i don't think trump will stand up tomorrow and unilaterally cancel sanctions on russia, it will be part of a bigger deal with investment, maybe disarmament. it will take time to be negotiated. i don't think it will happen in the next day or two. a year-long process we think. >> daniel, thank you very much for your time. very interesting. daniel salter global head of equity strategy. the latest market moves that we've been talking about, they came as president trump signed the string of executive orders, most notably one aimed at building a wall on the mexican border. trump slashed funding to sanctuary cities in the start of a strategy to tighten immigration controls. hallie jackson reports. >> reporter: his signature slogan, becoming one of his supporters favorite phrases.
>> build that wall. build that wall. build that wall. >> reporter: now donald trump's set to start. >> immediate construction of a border wall. >> reporter: today the president signing executive orders to direct money to start construction of his border wall with mexico. >> the wall, the wall. everyone loves the wall. >> reporter: making good not just on that campaign promise but on his pledge to crack down on sanctuary cities. places that don't prosecute immigrants for living there illegally. now blocking almost all federal funding to those areas. on beefing up immigration enforcement, today hiring 15,000 more agents. and after campaigning repeatedly with people whose loved ones were killed by undocumented immigrants, establishing a new office to advocate for those victims. out of all of it, his wall's the most notable and by far the most expensive. an independent government report says fencing alone could cost an estimated $8.3 million per mile.
democrats estimating the total cost to build and secure the wall at $14 billion. >> who's going to pay for the wall? >> mexico! >> reporter: not according to mexico. the president today acknowledging taxpayers will probably have to foot the bill first while waiting for a reimbursement, putting pressure on mexico to pay up by possibly threatening to penalize remittances, money sent back home from immigrants here. president trump not backing off that controversial plan or his controversial comments during the campaign about torture. >> as far as i'm concerned, we have to fight fire with fire. >> reporter: president trump today reiterating where he stands on illegal methods like waterboarding in an interview with abc news. >> i want to do everything within the bounds of what you're allowed to do legally. do i feel it works? absolutely, i feel it works. >> reporter: still the president's promising to listen to his top intelligence and defense officials who have both disavowed torture techniques.
>> i would love to hear from you on this, streetsignseurope@cnbc or @louisabojesen on twitter. a story about donald trump on monday gathering house and senate leaders, this is from the "new york times," and he basically told a story about a famous golfer by the name of bernard langer who he described as a friend. and he was standing in line, mr. langer, to vote and he was told by an official that he wasn't allowed to vote. donald trump then said lots of voters around him looked as though they shouldn't be allowed to vote. however it turns out, according to the golfer's daughter, that he doesn't know him. the golfer doesn't know trump. they're not friends. he wasn't waiting in line. he can't vote because he's not a citizen. the man is german. so it becomes difficult to try to decipher what a true story is, even when stories that are to be taken quite simple, you
can't trust them. let us know what you think on this. you can find you the on twitter and e-mail. @louisabojesen on twitter, and e-mail streetsignseurope@cnbc. mexico's president said he rejects and regrets the push by president trump to build a wall on the country's border. in a recorded message president enrique pena nieto reiterated that mexico would not pay for the construction of a wall. he did not say if he would be meeting with president trump next week. he has a lot of domestic pressure to pull out of the scheduled meeting. germany is stepping up efforts to woo foreign banks after brexit. the financial regulator, bafin, is to hold an international meeting with more than 20 banks to relocate to frankfurt. bafin insists the meeting is not a marketing exercise but says the summit is necessary to ensure financial stability as
britain prepares to part from the eu. annette is in frankfurt. so they say they're not trying to woo british companies. >> i think british companies or british banks are interested by themselves to relocate parts of their businesses. i've been hearing the likes of jpmorgan, goldman sachs reportedly, but also bank of america looking into moving stuff over to frankfurt because they already have big operations here in frankfurt. that is, of course, because they're afraid of staying in the city of london that they might end up without an eu passport to sell their financial services to the single market. that is one of the concerns to bafin currently. and another concern now predominantly is also linked to the new trump administration. donald trump is promising wall street to deregulate again, to levers last seen before the
financial crisis because he's not a fan of regulation. that's something which is not going down too well with the german watchdogs. because what they're looking for is a global compromise on regulation. take a listen. i sat down with the bafin financial regulator head exclusively yesterday in an interview and i asked him what they are doing about this pledge to deregulate in the states. >> the people sitting at the tables are -- right now are pretty much the same people coming from the fed and other regulatory authorities. other than that, i guess the answer is we don't know yet. it's just wait and tell. clearly the new administration will have different priorities than the old administrations. we will see what it means. we have heard some of the most recent announcements from the
new treasurer about the volcker rule. but we don't know what the details are. and in banking regulation, details matter. it's simply premature to make judgment about the exact cause of what deregulation is supposed to mean. it can be quite surgical changes on very specific issues. it could be a broad change in philosophy, but that remains to be seen. >> of course that's -- it's very critical what is going to be changed. but the overall pledge to rather deregulate the finance industry, to effort levels like before the financial crisis, if that was to happen, it would be a big blow to european banks, right? >> that's hypothetical.
if that were to happen, i wouldn't like it, of course. i'm a regulator. a broad face of deregulation would be a very bad thing indeed for everybody. not just from a public policy point of view, but from annan industry point of view as well. i can't imagine the industry itself would promote another phase of vast regulatory uncertainty. what everybody needs right now is regulatory certainty for an extended period of time. so, let's get out of those vast cycles of stronger regulation, deregulation, crisis, so forth. that's what we should do. but again, let's wait and see. in my view we don't know exactly what the new administration wants to do. if we know, we will have to deal with it one way or the other.
not everything, which the u.s. internally will put forward necessarily impacts the eu. >> why some people are afraid of a trade war, some are talking about a currency war, there seems to be a regulation war looming as donald trump is more pledging to deregulate. i guess he'll follow up on his pledge as he was also following up on other things. so i think it will be a hot topic going forward for the finance industry, how to reach a level playing field or not. back to you. >> annette, thank you. now, moving on here on "street signs," the socialists, they're locking horns. francois fillon coming under fire for misusing public funds. another dramatic day in the race after the break.
hi everybody. welcome back. you're still watching "street signs." just to mention we're seeing movement in the debt markets. the uk ten-year gilt yields extending gains. the uk finance minister, mr. hammond, saying the gdp figures that were slightly better than expected, they show fundabilitifundabilitmental strength but there may be troubles ahead. we saw selling across the board, safe haven sales as opposed to buying into some of the safe haven trades heading into the trump administration. across the channel, a televised debate head of a runoff vote this weekend. much of the two-hour debate
focused on foreign policy and france's role in europe. french prosecutors opened an investigation into the conservative candidate francois fillon over the misuse of public funds after a report stated that fillon's wife received a public salary as his assistant but didn't actually work. at&t adding 1.1 million smartphones to its subscriber base in the fourth quarter. the second largest u.s. wireless carrier matched estimates from analysts, but net income fell by $2.4 billion despite improvements in margins. the company went on to say it was confident that its deal to buy time warner would be approved. >> at&t reporting earnings in line with expectations. 60 cents per share. revenue of $41.8 billion came in lighter than expected. on the earnings call, at&t's ceo striking quite a positive note
talking about how the trump administration will benefit at&t. saying the company is confident it will be able to close its acquisition of time warner and bullish on how tax reform could help by cutting costs, enabling at&t to expand investments and driving revenue as gdp expands. >> i was impressed. i was meeting with a ceo. it was obvious. the president had a very specific agenda in terms of what he thought was critical, that was tax reform and regulatory reform. we spoke at length about each of those. i would tell you the man, the president is focused on these. so i left with a degree of optimism. >> net neutrality is exposed to be rolled back, but more streamlined regulation could jump start capital investment in the industry. he believes it makes sense for at&t to buy time warner as
mobile video and technology intersecti intersecti intersecting. shares in boeing jumping after strong fourth quarter results beating estimates. >> reporter: a big day for boeing as shares moved higher after posting better than expected earnings for the fourth quarter and giving a fairly optimistic outlook for this year. boeing beat the street on the top and the bottom line in the fourth quarter with earnings 12 cents higher than estimates. that's despite a slight dip in commercial deliveries, but the profitability of the 787 dreamliner is improving. the company says the transition to the new 737 sets it up for more commercial airplane deliveries this year. the wildcard is overseeing a company dealing with the trump administration. the president has blasted boeing for the cost of new air force one 747s. that's led to a couple of face-to-face meetings between the president and boeing's ceo,
who says he can work with donald trump. >> president trump is very much engaged with business. we've had the privilege of having a very open dialogue with him on business issues and all the actions being taken around things like tax reform, regulatory reform, focus on trade policy. those are all things that will allow us to grow economically and ultimately, allow us to grow and add manufacturing capacity in the u.s. >> reporter: a big concern for boeing, as it deals with the trump administration is the country's trade policy. and how that might change. what impact it could potentially have on boeing's dealings around the world. especially in china, which is responsible for about 25% of the backlog of boeing commercial airplanes scheduled to be delivered in the years to come. i want to show you what the u.s. futures are indicating, but also at the same time tell you not to go anywhere.
we have the ericsson ceo lined up. we'll talk to the ericsson ceo. this after they posted a loss in the quarter. do stay tuned for this first on cnbc interview with borj borje ekholm. u.s. futures indicateding a slight indicating a slightly higher open. in europe hanging on to slight gains as we head more towards noon. we'll see you in a second with that ceo interview with borje ekholm. don't go anywhere. with the xfinity tv app,
good morning. the big milestone. the dow pushing past 20,000 finally for the first time in history. border backlash. mexico puts up a fight after president trump inks orders to build a wall and crack down on immigrati immigration. and johnson & johnson agrees to purchase actelion for $30 billion. it's thursday, january 26, 2017. "worldwide exchange" begins right now. ♪ good morning. welcome to "worldwide exchange" on cnbc.