tv Street Signs CNBC February 1, 2019 4:00am-5:00am EST
zbliefrmt welcome to "street signs. these are your headlines deutsche bank shares sink after the german lender reports a greater than expected fourth quarter loss amid a government-brokered tie-up with commerzbank. >> as we demonstrated in 2018 when we faced a number of challenges both in the markets that were idiosyncratic to us.
the lender misses on the bottom line during the fourth quarter. bbva's profits soar. >> electrolux shares soar as both the u.s. and china say they're optimistic about striking a trade deal. we'll speak with ceo jonas samuelson. and amazon delivers its third consecutive record profit in the holiday quarter shares drop in after hours trade as the e-commerce giant flags slowing growth and increased spending in 2019 welcome to "street signs." let's get right to our top corporate story of the day deutsche bank has post the its first full year net profit since
2014 now, this comes despite a worse than expected fourth quarter net loss of 409 million youros there was weakness at its key trading business after a slump in revenues at the bank's bond trading unit the ceo says he is targeting cost savings and growth saying deutsche bank is on the right track despite recent money laundering allegations and failed stress tests. n now, we spoke with the deutsche bank ceo and asked him to comment on reports of a merger with deutsche bank >> we won't comment on mergers we're executing on the plan that we've defined, and as christian said i think a number of times, we are wholly focused on our own business and executing on the plans that we define >> but how confident are you that you have your faith in your own hands? >> we control our own fate as we
demonstrated in 2018 when we face aid number of challenges both in the markets that were idiosyncratic to us. >> one more question, what's the massive potential shareholders why should someone put -- yeah -- its money in your shares >> we are seeing the benefit of the work we've done, frankly, over several years in particular, in terms of shaping the business in 2018, which we think gives us a foundation for growth. those growth expectations are not reflected in our stock, to my own judgment. we have a lot of things, as i say, in our hands to execute on to improve if you like self-help in our story, and i think that's something that investors should look at and we'll be talking with them about today. >> now, it's interesting to note that yesterday when the reports emerge yet again that commerzbank and deutsche bank that both shares plummet odd that news, and i think investors are weighing the question of whether merging two struggling
banks creates an entity that's better than the two individual banks. >> it's not just that. it's merging two struggling banks, and also who are tapping centrally into the same market they're both domestic retail banks. both of them are struggling from a valuation perspective. again, putting it all together, deutsche bank's shares are still 50% lower. that is a strong story in itself, and whatever they're trying to come up with, investors had originally given the benefit of the doubt, bout it's not really playing out as far as the price action is concerned in the stock >> well, let's get out anetta who joins us in frankfurt. so much focus, as we were just discussing, on these external factors whether or not they will merge with another european bank, the legacy legal and compliance issues continuing to face them. how is the underlying investment banking business doing, and how did it look in today's report? >> if you look at the results of
the investment bank, it's shrinking and sh rinking that's not a positive message for deutsche bank. even though many people would prefer deutsche bank to concentrate on the most daily retail business, the money its made in the investment bank and traditionally deutsche bank was always driven by investment banking. having said that, so the outlook is crucial the first quarter is crucial also when it comes to the looming future for the bank. whether we'll see a merger, whether we see divest tours, it's not a given that we're going to see a combination of commerzbank and deutsche bank. a lot depends on how the business is fairing in the first quarter. i caught up with james from very early today in the plorng and asked him how the re new situation looks like and also how the first quarter started. take a listen. >> i think the first's overall
performance is in line with the market's expectations, but, yes, i'm certain of our business areas. it's below the market's expectations i think the market going out of the fourth quarterunder estimated the impact of a very difficult rate and credit environment globally, and, of course, our businesses are exposed to those markets we think, actually, in that environment they performed reasonably well. i don't mean so much in the revenue performance, but in risk terms and how we manage through that environment we're quite pleased with the performance of the business. >> still, everybody is looking at revenue and it's when we're talking about deutsche and also the future of the bank that's not a turn-around quarter. we've seen that in the fourth quarter. how will the first quarter be? >> you're absolutely right we've been working to stabilize and grow revenues after having executed on the restructurings and reshaping of the business that we did in 2018. the fourth quarter, with the environment that we faced, consistent turn out to be the quarter for that turn-around, but it's something that we continue to work for and look for in 2019.
>> let's look at how the year started because the markets clearly rebounded. is that also something which is reflected in your numbers? >> well, the market back drop is clearly much more encouraging than in december and throughout the fourth quarter, to be honest i think the market or the expectations for are being scaled back in the fourth quarter, but corporate earnings, the overall environment, the underlying economy is performing perhaps better that greater confidence i think is coming through into the markets. also, the actions of the central banks, so monetary policy stance has changed somewhat >> let's look at 2019 and also
euro return on tangible equity target some analysts are calling that very unlikely to reach the 4%. how optimistic are you >> we are working towards a plan that we've artillery clated to achieve better than 4% rote, and we'll lay out for the analyst elements of the path to achieve that we think that the lion's share of that movement is in our control. we're enormously pleased with the progress on the reshaping, the milestones that we hit in 2018 across all three of our businesses as well, frankly, as hitting our financial targets for 2018 that sets us up to execute on our plans for 2019, and we're confident that we've put in place those conditions >> just now the press conference has started. be christian is speaking, and the big elephant in the room is the future of the bank will there be a merger or not? the journalists are not
necessarily too much concerned about the numbers. the numbers were okay. quite, well, a bit lower than expected, but the question is can the management stay on can they turn around the bank on the stand-alone basis, or which kind of scenario is most likely? of course, nobody can force deutsche bank into a merger with commerzbank. even not the german government clearly deutsche bank is owned by its shareholders, but the market can drive the situation in such a direction that it could be perhaps too painful to stay -- yeah, to keep the structure as it is right now, to keep deutsche bank independent of another bank. so some people are saying if the shares fall below seven, this is a crucial landmark we have been there nothing happened the big guess is when is it going to be too painful for deutsche bank to keep itsing
current structure and also when is it going to be too costly looking at the bond side of things to finance this huge balance sheet of the bank going forward, under the, as i said, current structure. i guess the jury will be out at the latest at the end of march when deutsche bank will present -- or end of april, i should say, when deutsche bank will inform us about the development in the first quarter. back to you. >> viewers could probably notice that's mr. seving delivering at his annual press conference after these results. we just got a couple of lines from that press conference where he has said that we aim to grow profitability substantially through the current year and beyond since 2019, the aim is not only to save costs and also to save in growth as well.
we spent a lot of time dissecting the profitability targets of deutsche bank, the huge restructuring efforts that the bank is undergoing investors obviously are there's another issue as well. only back in november they were greeted by official forces money laundering investigations. those stories are also impacting not just investor sentiment towards the bank, but client sentiment in terms of whether or not they want to continue trading and placing money with deutsche bank. >> clearly, it doesn't really help overseas, internationally to have those pictured with, like, a whole fleet of police cars in front of your headquarters and also the
allegations that you have been active in money laundering still, more or less in august of last year. also, clearly, the focus back then was on the role of the current management wruz ur because christian, the ceo, is inside the bank and was also heading up a unit where the alleged money laundering had taken place. clearly, it didn't help, and they are saying they want to get over those scandals. whether another thing pops up or not, we don't know deutsche bank apparently was active in a lot of those fraud lent exercises as we know, during the last years. we also don't know whether the money or the potential fine will be high or not this is like highly speculative right now. currently if you look at the numbers, the provisionsfor
legal outstanding legal issues have been raised substantially perhaps that's an early indication back to you. >> all right thank you for breaking it down for us certainly, investors are not reacting so well to the news today. the shares are down about 1.4%, having previously been called out. let's have a bigger talk about what's been happening in terms of price action for equity markets over the last 24 hours just very quickly, i want to talk about some of the price action in the u.s. we know the dow ended close to that 25,000 mark actually, for the month stocks have had the best january since 1987 all of the gloom and doom of december seems to have been fully or somewhat priced out in january at the beginning of the year the earnings season seems to be off to a good foot as well we had some stronger earnings out of companies like general electric, facebook as well we spoke about it in after hours trading. yesterday it was trading up 10% for the session to help lift the tech sector. overnight more optimism in chinese stocks as well
despite some of the weak manufacturing data we got there coming at the lowest level since material 2016 there in chooirn optimism about the trade talks, it seems like the discussions between the vice premier and the washington counterpart and president trump have been doing well that is the picture, the setup for the european session today. >> i want to talk about the individual forces, starting off with the u.k we have ftse 100 just shy of 7,000 now. up .44% or so. again, this is in line with some of the positive price action we've got in commodities, miners, oil, and gas yesterday it gave the ftse index an overall quite a big boost, and we're seeing that transpire in today's session. dax up a quarter of a percentage
point. similar amount for cac as well, and ftse also up similar amount. the macrodata haven't been so strong we do have bright spots in terms of earnings. as we were just talking about, one of the sectors we've been very focused on today is banking, and it hasn't just been deutsche bank's story today. there's also been further news about -- every district of columbia doons every. >> it's been a big day for yourp even bank earnings across the board. let's start with danske bank the lender called the year challenging, as it was hit by a major money laundering scandal danske also posted a net profit of 15 billion danish crowns. denmark's biggest bank says it expects net profit of between 14 billion crowns and 16 billion crowns for 2019. elsewhere network at spain's bank fell 54% in 2018.
the bank reported profits of just over 28 million euros compared to 717 million the year before it blamed the vufrp on an i.t. outage at tsb last summer. that left some two million customers locked out of their accounts full year net profit at spanish bank bbva surged 51.3% year-on-year, coming in at 5.32 billion euros. the lender saw its earnings booszed by the sale of thits its chilean unit, and it 45i8ed solid growth in the mexican market the second largest bank in spain earn warned of a difficult environment in 2019, but it sees double digit profitability throughout the year. caixabank, finally, missed expectations despite rising almost 11% the spanish lender saw a net interest income rise moderately in 2018 helping it decleare a dividend, a share to be paid out in april lots of banking this
morning. also coming up next, as we discuss, washington and beijing hailed progress in trade talks as president trump had a meeting with president xi. more when we return. my mom washes the dishes... ...before she puts them in the dishwasher. so what does the dishwasher do? cascade platinum does the work for you, prewashing and removing stuck-on foods, the first time. wow, that's clean! cascade platinum.
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zplierjts shares in j.c. decaux rose after it posted a 5.5% rise full year adjusted revenue rose almost 4%. electrolux has posted fourth quarter operating profit that beat expectations. this thanks to higher prices that helped offset a rise in raw material costs related to tariffs on chinese goods the swedish home appliance maker also expects reduced costs for 2019 coming up, we will discuss these results with the ceo jonas samuelson. that's at 10:35 cet. tune in for that let's talk about some of the macrodata. china's manufacturing sector contracted by more than expected in january, and by its largest ajt in three years
the pmi index dropped to 48.3 compared to 49.7 in december it's a similar trend that appeared yesterday and compounds fears that growth in the world's second largest economy is faltering. president trump says he will meet xi jing ping soon speaking along side the vice premier, trump said he was optimistic that washington and beijing could agree to "the biggest deal ever made." with that i want to bring in neville hill, our chief europ n europeanist from credit suisse to dissect some of the numbers i said this is a great day to talk about european numbers and asian data, which has come in very weak as well. what is the link between the two? are they two very closely correlated >> absolutely. i think it's asia that's driving the weakness in europe, and i
think in europe there have been a few factors that have depressed growth, you know, within the euro zone itself. often, special factors like the shutdown, and actually there are low levels at the end of last year that affected the chemical sector the big story here, i think, is that we're seeing a slowdown in demand in china that is having reverberations across the asian region if you look at the pmi's in korea, in taiwan, in japan, for example, those are all very, very weak this morning, and i think what we're seeing is europe follow all the european manufacturing sector follow that weakness down. technically in contractionary territory. how much do you think, if you had to divide it, it apportion it, is driven by weak external demand versus some of the stories that are associated with the euro zone right now? in germany it's been an auto
story. >> to be fair, it's mostly the weakness in external demand. jerl anne is the most exposed economy to china once again, it's another sign that the weakness is external rather than domestic there probably is a bit of idiosyncratic weakness it's still holding up very well, so consumer and business spending for now at least still seem to be pretty resill zwrent eent you've got this sort of d disidents. >> we'll see how long that divergence can continue. i want to look at italy. more weak data out of italy as well pmi falling to 47.8. that was the lowest since may 2013 they have, of course, reached an groemt with the e.u. in terms of their budget right now, but as they look to 2020 budget discussions, how -- if they are in a recession, how does that complicate their power in terms of negotiating with the e.u. and
in terms of the stability of the coalition? >> i think it makes it pretty chal epging this year. i think a lot of the weakness we're seeing in the italian economy is a response to the big-timing in financial conditions, the economy soar thanks to the coalition's debate with the e.u. over the budget. of course, the problem is that the weakness -- the recession and weakness is going to blow out the budget deficit that means if we have discussioned at the end of this year between the italian government skpechlt u., they'll be very hardin ed do it does make the coalition stability pretty wobbly. we still think they'll hang together, but it's a very close call >> just to pick up on juliana's italy point. one of the big assumption whz we were having those big assumptions it was the italian government growth forecast, and they were extremely out of whack compared to other analysts they had something like 1.5% or 1.6% growth. only a couple of weeks ago the bank of italy revised down their own forecast for growth to .5% we know technically now italy is in recession
the numbers so far for january have been extremely weak as well and this mean that we will inevitably get into another excessive deficit procedure discussion with italy at some point given that growth is faltering so much? >> i think the issue here is that if the italian deficit is going up because growth is weak, and it won't just be the timing of financial conditions. it is this weaker external back drop as well, whereby you know, the european commission will be more sympathetic about that. effectively, it doesn't want to force italy or anyone else into, you know, pro cyclical fiscal tightening basically where you get a slowdown, and you are forced the type of fiscal policy more and exacerbate that slowdown that's a mistake europe made in 201 1-2012, and i think they've learned from that mistake. >> now, sticking with italy, but also shifting to france, i think it's interesting that this year we've seen italy really bashing france on multiple fronts with
demeo supporting the yellow vest movement, and we're seeing it now come through the corporate world as well talking around a potential merger that could happen between italy and france. what's really at stake here when you think about italy putting pressure and calling out france for what they're doing what's at stake between what's going on between italy and france >> i think a lot of it is nationalism and the sort of growth in nationalism that we've seen across the e.u. in the last few years. whether that's manifest in brexit or support for more right wing parties i think the fact that you have the northern league effectively and the five star pushing this as a means of trying to blame italy's problems on someone else and sort of a liberal leadership in france makes them a particularly good target i think that means given macroisn't going anywhere and for the time being the italian coalition aren't going anywhere, this is a source of tensions that's going to continue to fester >> i'm curious to see your reviews on how the ecb will react to all of this
neville, stay with us. we'll continue the conversation after the break. neville hill, chief european economist from credit suisse we're going to be speaking to the electrolux ceo this is after the swedish firm posted better than expected profits. that is coming up right after the break. ♪ hawaii is the first state in the u.s. to have a hundred percent renewable energy goal. if we don't make this move we're going to have changes in our environment, and have a negative impact to hawaii's economy. ♪ verizon provided us a solution that lets us collect near real time data on our power grid. ♪ if we can create our own energy, we can take care of this beautiful place that i grew up in. ♪
welcome back to "street signs. these are your headlines >> deutsche bank shares sink after the german lebder reports a greater than expected fourth quarter loss amid reports a government brokered tie-up with commerzbank may happen by midyear. >> we control our own fate, and as we demonstrated, frankly, in 2018 when we faced a number of challenges, both in the markets that were idiosyncratic to us and emerge stronger. >> caiche bank weighs in as the
lender misses on the bottom line the bva profits soar after it sells its chilen units >> electrolux shares forecast lower costs for 2019 as both the u.s. and china say they're optimistic about striking a trade deal we'll speak with ceo jonas samuelson at 10:35 cet amazon delivers its third consecutive record profit in the holiday quarter, but shares drop in after hours trade as the e-commerce giant flags slowing growth and spending in 2019. >> it's a bift a pmi extravaganza we've had the euro numbers and we're also just getting the u.k. manufacturing pmi numbers as well let me just bring them to you.
at the january prince came in at 52.8 that is versus the reuters hole of 3.5 big miss weak are than expectations and a drop from where we were back in december at 54.2 manufacturing pmi stocks of purchases 56.3 versus 5 4.2. that is the highest since records began in 1992. that's interesting because it shows that there's some price inflation pressures there when it comes to the stocks of purchases on the manufacturing pmi side then the output number has come in at 51.4 that is also the weakest number since july 2016. you are seeing the reaction in the pound. it's dropped, what is that, 20 pips or so, but 2% weaker on the session on the weak numbers. just to put it into context, we had weak numbers out of euro zone just about half an hour ago as well pointing to further
slowdown in tooit for the month of january specifically led by german manufacturing sector and also in italy as well. as far as the macroback drop for the first month of the year, certainly things have nose-dived just a little bit. juliana is going to give us a breakdown of how markets are doing. >> thanks very much. well, as you can see besides me, it is a positive day for european markets right now all four major indexes are marching higher. the ftse 100 up 50 basis points. sterling reacting negatively to the pmi data out of the u.k. showing a weaker than expected drop in the manufacturing index. now, we are seeing a big day for corporate earnings a lot of the moves are driven by the idiosyncratic stories. they're largely shrugging off the data in china. a positive picture across the board. in terms of the sectors, autos are the best performing sector of the day, and that is driven by, in large part, an upgrade
from morgan stanley. they raised their industry view to attractive from in line let's get into fx markets and see how the rest of the currency space is trading this morning. the pound slipping slightly about 15 basis points lower versus the dollar. it is euro is trading up about 12 basis points versus it is dollar >> let's talk about one of the top stocks today that is electrolux, which has post the fourth quarter operating profit that has beat expectations this thanks to higher prices that helped offset a hike in raw material costs the swedish homerun appliance maker also expects reduced costs for 2019 there is a lot to unpack here. i'm happy to say that jonas samuelson, the ceo of electrolux, joins us on the line before we start talking about the earnings per se, i want to talk about the big announcement you made yesterday, which is that you are spinning off your professional business and will be solely focused on household
appliances and consumer appliances going forward can you give us a sense for, one, why this made sense for the company, and also, whether or not you are confident you're going to get full shareholder approval for the spin-off. >> right so the announcement of the intent to separate professional is in order to create long-term shareholder value. we see that we have a very successful professional business that's been growing profitably for a number of years. there's an opportunity to further accelerate that growth there is access to further accelerate growth. we're really excited about this opportunity. of course, this is now a study that will kick off and we expect the board to give direction on the further development of this at around midyear, but we think that this is a very good idea to pursue, and then it will create a lot of value >> sir, coming back to the qb
results you just reported today, investors obviously reacting quite well to the news, and part of that presumably is the fact that you were able to push through price increases in q4 to offset some of the higher input cost pressure you were experiencing can you give us a little bit more color around the magnitude of those price increases you were able to push through and what you are expecting for q1 of this year? >> yes we've indicated here that the combination of pricing and product added about 2.7 points to our margin in the quarter, and that almost offset the really unprecedented headwinds we faced both in terms of raw material, tariffs, and currencies we're quite pleased with that. we're continuing to drive further price increases and make improvement into 2019 to completely offerset these head winds. >> you have also announced that you are restarting vefrinvestme in tennessee in 2020 you had put knees plans on hold in march last year, and you have also announced you are closing down another facility in memp s memphis. can you talk about your expansion and what's going on
visa vi, your approach to north america here >> right what we're doing is, of course, in the face of a challenging market, we're looking at ways to inshurp that we're competitive going forward. the best way to do that for us now is to consolidate our cooking manufacturing to one side and using a new modernized product architecture that is able to manufacture both freestanding cooking prurkts and built-in cooking products off of one product line form. these actions are driven by the tough market and competitive environment that we're seeing, but we're very confident that we'll be able to provide a very competitive product and good profitability going forward out of that side >> what's interesting about this discussion is we can't really talk about producing the type of equipment that you make in north america without talking about the tariffs as well. sure surely, there has been an impact, as you mentioned, on the rising costs or the input costs
from the steel and aluminum tariffs. are you expecting those to fade in the future, or is it just something that you have fully bei accounted for now when you think about pricing in the future? >> i think we have accounted for those headwinds, or we're taking action through price and mixed both in north america and the rest of the world. having said that, of course, we have to take a lot of actions and make sure that we continue to grow profitably going forward, and in the face of tough headwinds, and that's really what's driving our decision yesterday to consolidate. >> thank you very much for running us through the detail. jonas samuelson, ceo of electrolux this morning trading up over 9%. if you want to participate in the conversation today, a big day for single stocks. a lot of corporate stories, a lot of debate to be had. you can follow us on twitter
@street signs @cnbc coming up on the show, a cautious outlook versus a record holiday quarter. we break down amazon's numbers and discuss why investors took a bearish view for the sports lovers, a big year kicked off for international rugby. more on that when we come back as well. ♪ and if you feel, like i feel baby then come on, ♪ ♪ oh come on ♪ let's get it on applebee's. now that's eatin' good in the neighborhood.
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welcome back to the show, everybody. it is february 1st, and i thought we would check in to see how some of the major indexes have performed for the month of january. remember, december was the worst month for u.s. equities since the great depression, but things have soared back the start of the year has been pretty positive. you see s&p 500 already up 7.9% for the month of january if you annualize that, something has to go wrong at some point, right? s&p 500, 2700 just through that. that is the level best month since 1987 for u.s. equities there. no doubt underpinned by
dovishness that's come out of the fed as confirmed this kweek e week in the fed meeting and the expectation that the fed really will be on hold for the foreseeable future that has helped give equities a bit of a lift as well as optimism around trade talks as well as the discussions in washington take place right now. i also want to turn our attention to nasdaq as well because it's been a very interesting month for the tech sector you can see it's almost up 10% for the month of january this after a very heavy, heavy december where a lot of the fang stocks it has been a good start to the yooer. probably didn't seem like it was going to be the case at the beginning of the year andian the 2nd and 3rd where apple gave that warning about the macroslowdown and slowing smartphone sales since then we have seen a real decent bounce in the tech sectors. the year is starting off pretty well for equity plarkts across the globe. >> thank you for setting the stage for us as we start off february i want to bring you to a couple of the stories in focus yesterday. general electric shares there rallied sharply trading above
$10 for the first time since november after the conglomerate beat fourth quarter sales and cash flow estimates, the company offset losses in its powering capital units with rising sales in aviation, health care, and oil and gas. ge also announced it had reached a settlement with the u.s. justice department over its subprime mortgage practices before the financial crisis. now, the other major stock everyone focused on yesterday in the u.s., amazon shares there declined in after hours trading amid concerns over weak guidance and increase investment in 2019 there's also concern around tighter regulations in india with cfo brian olofski warning investors that the situation there is "fluid right now. however, the on-line retailer posted record sales and profit in the first quarter boosted by holiday spending the firm's cloud businesses, aws, saw revenue surge 45%, and it now accounts for 10% of the overall business elizabeth, our tech
correspondent joins us around the desk with more elizabeth, help us understand why did investors take a bearish view on the back of these results yesterday? >> yeah. these moves downward seem to be about that weaker than expected guidance for the next quarter. if you look at this fourth quarter for amazon, it was very strong we saw revenues of 72.4 billion dollars. 20% growth year-over-year there. big growth in that aws business. as you mentioned, up 45% also, want to highlight the other segment of amazon, which covers its ad business growing 95%. now, it was a slight deceleration, but still big growth that we're seeing in that segment. on-line stores also grew at an impressive 13% rate. when it comes to its guidance going forward, amazon mostly highlighting some costs related to investments in its warehouses and in head count and overall infrastructure amazon essentially saying it's going to be putting more money going forward and that seems to be what's worrying investors about its bottom line here >> let's talk about the
composition of where amazon gets its revenues from, right it used to be purely an e-commerce giant now 50% of the revenue comes from the e-commerce side of things they're making a huge push into cloud, into advertising, as you mentioned, and other segments as well also, there's talk of them also getting involved in the health care sector market, too. is this a company that is just going to keep evolving and really branching into segments that essentially have much higher business margins than what they got in e-commerce? >> that's a great point. where we're seeing the revenue come in mainly is from the high margin businesses. cloud and advertising. those are easier to make money in than some of the traditional retailing would be that's one thing that amazon is trying to highlight. amazon is not just a tech company anymore. it has so many segments of its business, and that's what's important to look when we're breaking down these numbers. overall those fundamentals seem to be strong, but that's also why it needs to make a lot of new investments where. >> let's bring in the chief investment officer from jay
stern and just to handle the conversation a little bit for more, as elizabeth was saying, they saw extremely strong growth in the ws business 45%. can they keep up that level of growth >> i think -- well, i think amazon had a very strong result, and i think if i look at what i was not entirely surprised if i look at my own kids' wish list, i'm on amazon, then i can see that they only got part of what they wanted. i was not surprised about the strong results sf you think a business of that scale that can grow its overall revenues by 20% that can grow something like aws in cloud where it's just beginning the outsourcing by the 40% that it did and it can double the advertising revenues, which are almost entirely profit if you think of it, it was 3 billion. that's 12 billion annualized at
pure profits as the scale grows, that's going to become more difficult we take a very long-term view. we've been invested for over ten years. if you think of the prospects that they have in terms of the growth in each of those areas, i think they're very strong th we think the prospects will continue >> that sounds like a good trade. >> to respondent's exhibit's point about how amazon has branched into different sectors no you, from a valuation perspective, when you are looking at this as an analyst or investor, is it possible to expertly value each of those businesses given it falls into so many different categories it's businesses that require a very different approach in terms of valuing the underlying businesses does the market value amazon correctly? >> we think about what business
kz do in five, ten, and 25 years. jeff bezos has said when they congratulate him about a quarter, he is wrg on a quarter that's three to five years from now and not just what got reported yes, can you look at the individual business, and you can value them you can take views on the amount of money that they're making you can make views on the amount of money that they're spending in order to generate the revenues that they do, and you can then think of what the prospects are. we effectively do some of the parts valuation for amazon we add up those numbers, and we get to a share price that is very significant higher than the current one. >> when we talk about amazon, the first thing that comes to mind is their sheer presence did they have a huge presence in e-commerce 50% of all e-commerce sales in the u.s. are done on amazon. the sheer vastness of the company in some ways makes it very positive, but then also, it could be perceived to be a weakness as well particularly if you are a regulator looking and saying
perhaps they have their finger in too many pies and they have too much of a critical mass and to trust issues. that sort of thing remember, elizabeth, when we were speaking back in december, we talked a lot about regulation and the threat of extra regulation on some of the companies in 2019. why is it investors are willing to brush off some of the concerns given that nothing has really changed >> we hear about analysts talking about the threat of regulation, but they're not pricing that into targets for the stock. part of that could be that they don't -- just don't believe it's going to happen. at least maybe this year i will say these regulations that we're seeing from india look to be weighing on the outlook of amazon. that was a dark spot in this report if that hams in other countries, india is already a huge growth market if that spreads to other countries, it could be bad news. >> all right elizabeth, we're going to leave it there christopher, thank you very much
for joining us around the desk christopher, the chief investment officer from jay stern and cohen, and we're discussing amazon earnings a bit of a disappointing price action in after hours yesterday our amazon, but the picture has been very constructive i also want to turn your attention to the ftse, which seems to have just broken through 7,000 key psychological level. up .5% on the day. in the last couple of days, actually, the ftse has rebounded pretty well in line with the bounce we've seen in miners, kmoodty space, as well as oil and gas. remember, we had very strong earnings out of shell yesterday, and that helped give somewhat of a boost to equities even though the political back drop arguably isn't getting any clearer day to day. that is the equities ftse breaking out from some of the political developments elsewhere, though, for the sports lovers out there, 2019 promises to be a big year for the rugby union with the first world cup in asia to be held later this year.
until then, all eyes are on the six nations which kicks off today and is sporting a whole new look adam joins us with more. >> thank you very much if you are not a huge rugby fan, this is the year to start. the six nations, it kicks off today with france against wales. it's the best that the northern hemisphere has to offer. it calls itself rugby's greatest championship i'm joined by the six captains, and i blend in fairly well, i think. it gives a good prom meter, this year's competition, because it's a precursor to the world cup the first world cup to be played in asia. it's played in japan that's later on this year. before all that, a huge amount of rugby to be played, and the new look, well, that's because it's got a whole new sponsor guinness are the new sponsors of the tournament the first time it's not been a bank sponsoring the event. rbs had it for a hunl amount of time between 2004 and 2017 a bit of a dispute over how much the organizers and rbs thought
the competition was worth led to nat west coming through, and guinness, it seems, have got it for a very good deal six years and for a lot less than the 130 million or so estimated that the cost -- that the organizers valued it at. speaking of guinness, looking at the rugby itself, this weekend one of the stand-out games, if not the stand-out game, is ireland led by rory, and england led by owen ferrell because, of course, tillon hartley, their captain is out injured for this one. now, it's going to be taking place in dublin. ireland, well, they are going into the match as favorites, bearing in mind that they are above england in the world rankings wales are also above england in the world rankings a rare thing to happen because england only finished fifth in last season's competition, would you believe. their aussie coach, eddie jones, though, he is never one to be shy about maybe playing a few mind games
they started already he said he is only foekcused on playing ireland, and don't you dare mention the world cup just yet. >> obviously, the world cup is there, and everyone thinks about the world cup, but the every the world cup is nine months ago nine months away we can't do things now that are going to make us a better team in the world cup all we can do is concentrate on beating ireland. that's what we're trying to do >> he said, right, let's get ready for a few grenades, and so he is extremely hard to read you don't know if you threw it in as a comment to distract you or whether he threw it in as something that he is genuinely thinking about >> joe schmidt saying that eddie jones has already been having a few words in his ear this week england have really round that up by saying that -- that they believe that ireland are going to bore them into
submission ireland reacted and said we're want going to bore anyone. we beat the all blacks last year all the praise that ireland has been getting can make a team weak >> what do you mean bore them into submission? like be so boring that they go into submission, or -- i don't really associate boring with rugby. it sound like a mind game to me. >> the rules of rugby end up being quite intricate, and we obviously want to see huge amounts of running and passing and try scoring and even great kicking games as well. both of these teams possess. ireland are a very determined tooep team they've got a huge pack. grand england do as well, of course, with some returning players. at the same time what they're going to do is make sure that england can't get to the try line england haven't scored a try in dublin since 2011. they've only -- they're going to have to do a lot to just get past this irish team >> you say guinness is the new
sponsor of this tournament the first non-bank sponsor what should we make of this? >> guinness has been having an association with rugby for quite some time. let's be honest. fans do like to drink a little bit, as well enjoy themselves responsibly at games. it's been the official drinks partner in the past. it's sponsored the pro 14. the league outside the english premiership, which is a big deal as well. guinness has had an association, and i think they've jumped on the band baig wwagon because ita huge year for rugby. >> it's almost time for us as well end of the week. thank you for watching that's it for today's show i'm joanna >> i'm juliana worldwide exchange is coming up next for aspaceship. hang on. radar that senses things the human eye can't. busted.
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it's 5:00 a.m. at cnbc global headquarters. here's your five at 5:00 wall street kicking off a new month after the s&p 500 handed in its best january, get this, since 1987 amazon raising the red flag. what the company said about the future that's putting pressure on the stock deal or no deal? president trump expected to meet with chooeina's president. crude oil did something it's never done before. we'll tellyou what that is we are just a few hours away from today's big jobs report we'll break down the key number to