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tv   Street Signs  CNBC  August 23, 2018 4:00am-5:00am EDT

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. welcome to "street signs." i'm joumanna bercetche these are your headlines the fed warns a trade war poses the biggest risk to the economy. tensions escalate between the u.s. and china as more tariffs take effect amid talks in washington the fight over funding president trump takes to fox news to defend his actions after michael cohen's plea bargain sends shockwaves through washington >> you have to understand what he did -- and they weren't taken out of campaign finance.
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that's a big thing that's a much bigger thing did they come out of the campaign they didn't come out of the campaign they came from me. saudi aramco is forced to confirm its ipo is on track after reports suggest that the record public offering has been scrapped. ryanair shares take off after the irish pilot's union says it reached a deal with the budget carrier over a longstanding labor dispute ♪ all right. good morning just to kick things off, we have some eurozone pmi data coming out for the composite manufacturing and services we have the flash estimate for the composite pmi number for august coming in at 54.5 and that compares to an estimate of 54.4 as far as the flash
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manufacturing is concerned we also have the services number come in at 54.4 versus consensus of 54.4. both services and manufacturing numbers are coming pretty much in line. the composite again is a tad weaker than expectations coming in at 54.4. the poll was 54.5. last month 54.3. in line with expectations. perhaps a slightly stronger momentum than last moment. we will be watching these numbers closely. q2 was a bit of a weakish quarter for eurozone economies, particularly for france. we saw that turn around with these manufacturing and services numbers that have come out let's switch and talk about markets in general and how they're behaving muted reaction across the board for most of the majors ftse mib underperforming to the tune of about 60 points. a third of a percentage point
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weaker in today's trading. overnight in asia we did have somewhat of a cautiously optimistic session with the backdrop of ongoing discussions in washington between china and the u.s. the mood is pretty muted, if i would say, slightly more positive you want to watch out for the ecb minutes that also come out later this morning some more clues on monetary policy switching to sectors, leadership is coming from the tech sector, up 0.7%, in line with the moves we see in u.s. equities trading healthcare is having a good session, up a half percentage point. construction material up autos down, underperforming this morning to the tune of about half a percentage point. that's on speculation that u.s. president may be re-evaluating and imposing tariffs on the auto sector also banks underperforming as well let's switch and talk about commodities. obviously the main story has
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been that of the reuters story, vis-a-vis aramco looking to pull their potential ipo. oil is trading weaker. not that it impacted the price of oil, but crude trading weaker and wti also weaker. gold continues to perform. down a percentage point. saudi aramco's chairman told cnbc the group's ipo is on track following reports that the listing could be scrapped. he said the kingdom remains committed to the listing at a time of its own choosing when conditions are optimum he added the state-owned company was making positive progress towards what will ultimately be a landmark offering. earlier reports suggested the state-owned company had axed the protected ipo on domestic and international markets with
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reuters saying financial advisers working on the listing had been disbanded speaking with cnbc in march, he was confident that the listing was proceeding as planned. >> the timing and exact venue will be announced when we're ready. >> you said you were ready >> we're ready with the preparation. the company is 100% ready. the board of directors of saudi aramco, which i chair, have reviewed in every meeting over the last two years the progress, including a couple weeks ago we reviewed the 2017 financials, which have been prepared in accordance with international accounting standards it's investor friendly the company is ready the government has also changed its appropriate tax laws, regulatory environment to accommodate a public listing and the government is ready from
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a regulatory standpoint. what remains is the selection of potential secondary venue and the timing we need to make sure markets are ready for us to do that. we're ready to do it in the second half. if we have to slip, we will slip i don't see 2018 as a necessary year to list unless it's opti m optimum. big story. i want to talk about this more with our guest thanks for joining us. it's not a major surprise. there was skepticism around the deal particularly the high valuation they were looking to command, $2 trillion are you surprised? >> not really. it's important to note that the ipo is not necessarily completely off but will be delayed quite a bit. i think there's been doubts from
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the start. the aluation the crown prince said 2 trillion in the beginning the market then said well, 1 trillion to 1.5 is more likely i think there's also a lot of questions regarding what they would do in the ipo, which assets they would include. i think the venue is also a major issue. so i think the listing venue was a major issue. would they go -- they would do a listing, would they go for an international listing. hong kong, new york, london, issues with all of them as well. >> obviously that was a big theme for the market they were sort of doing a beauty parade about six months, 12 months ago about the potential listings again the listing topic did come up in the topic if you list on
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the london stock exchange or the new york stock exchange you have capital but also subject to more regulation that could have been one thorn how much of this do you think is a function of aramco being preoccupied with the state they're looking to acquire in the sabic company? >> i think that plays a major role part of the ipo wasn't about capital raising for aramco, it was part of a wider idea to open up the saudi economy to foreign investment and make it less dependent on oil it's important to note that both aramco and sabic are owned by the saudi state. sabic is owned by the sovereign wealth fund, the pif they were hoping for a payout of 75 billion to 100 billion.
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pif will still get a payout in the tens of billions so the need of a bit of cash for the pif will have been resolved by this deal so the immediate pressure for a bit of capital in order to create more jobs, open up the economy a bit further will have been met by this deal. >> let's not forget the price of oil is significantly higher than where it was in 2016 so for me, i actually am not surprised they have not ruled it out completely obviously they'll preserve optionality in case oil prices dip again. do you think saudi aramco will just wait and see? >> i think they're in a comfortable position at the moment they can go on as they have been i believe something will happen at some stage. but as the minister of energy was saying, they will do it when the time is right, as things go
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along. there is also an option for them to engage in a private deal, so get an investor in for a small stake, so 1%, 2%, 3% in order do a first step and then look at an ipo later. there's been rumors about chinese investors coming in. china has a need for oil but doesn't have reservine ins itse that would be a great alliance, and then still open the way for an ipo at a later stage. maybe it would also help investors be more at ease about an ipo if there's already another foreign investor in there. >> of course it helps unplug some capital they were looking to raise to begin with all right. we have to leave it there. thank you very much for joining us in other news, the irish pilots union has reached an
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agreement with ryanair members will vote on the proposed solutions it is unclear which resolutions the two parties have come to, but you can see ryanair stock is up almost 6% in trading. that's down about 17% the last three months germany's continental has cut its 2018 revenue guidance citing weak car sales in europe and china and higher costs for electric vehicle technologies. it's the second profit warning from continental and comes after announcing a broad restructuring last month shares in pirelli are higher after the company said they don't see changes coming in the tire market that could impact the forecast for the coming year. kkr is reportedly in talks to buy fiat automotive component maker magneti marelli forks 6
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bi -- for 6 billion euros. fca's efforts to spin off magneti have been complicated by leadership changes at the group following the death of sergio marchionne last month. we'll speak to juergen stackmann at 11:00 central european time. right after this show. if you want to get involved in the conversation, if you have views on saudi aramco, tweet us. tweet us at streetsignseurope@cnbc coming up, find out what the fed believes could be the biggest risk to the u.s. economy. stay with us we'll be right back.
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u.s. equities have marked the longest ever bull market run. the s&p 500 bottomed out in 2009 and since then stocks have grown by more than 300%. can anything kill the rally?
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there's been a lot of talk that the markets are climbing a wall of worry and a few red flags could put an end to the longest bull market in history we have tightening labor conditions peaking credit cycle the real estate market topping out. all of that could cause the bull remember to slow down or even cause a correction of some kind. but the real concern is what will cause a bear market that's drop of 20% or more most strategists are not going to insist clients sell on a 10% correction, but a bear market you will get calls from people to sell. the two big killers of bull markets that bring in bear markets are recessions and the federal reserve suddenly raising interest rates none of that is happening. the market is not signaling signs of recession the fed has been slow and deliberate in raising interest rates. we have a stable inflation situation. a neutral fed. no credit stress
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strong investment in the form of buyba buybacks, mergers, acquisition and strong corporate earnings growth what could happen is we might reverse these lopsided trades that develop we all know the u.s. is the place to invest. everybody is long u.s. stock market they've been long the dollar they've been shorting emerging markets. they've been shorting commodities. a lot of people have been shorting treasuries. some of this is reversing because the dollar has weakened. there's been hopes the china trade deal might be reached. china has gotten stronger. metal stocks have finally improved so we may see movement in the markets, but nothing on the political front is affecting stocks, at least not yet on that topic, the u.s. and mexico are close to resolving bilateral nafta issues with mexico's chief negotiator saying an agreement could be reached in
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days canada's foreign minister says she was very encouraged by the latest signs despite ottawa not being included in the latest round of discussions wilbur ross also signaled a deal was i innocent >> we're trying to get to a deal we're making progress. we don't have a deal just yet. but i think a deal is very likely within reach in the very, very near future >> but the trade war between the u.s. and china has escalated after tariffs on a further $16 billion worth of goods came into effect overnight the war of words also continued with wilbur ross saying we have many more bullets than they do while a spokesperson for china's commerce ministry says beijing opposes the latest measures. with tensions rising, eunice
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ro yoon spoke to those on the front line and filed this report. >> reporter: i'm at chinese factory that makes lights and candle holders the owner says he doesn't have high expectations for the ongoing discuss cushion discussn washington over trade. tart r the tariff has slammed his factory. his largest u.s. retailer sent him a letter asking him to split the 10% cost of the tariffs. labor and raw material costs he says are up 15% from last year so he's looking to reorient his business away from the u.s. market he's finding new customers in europe, australia and the middle east, dropping low margin profits and shrinking volumes to the u.s. >> translator: we can't afford orders that don't make money we won't kill ourselves to stay in the u.s. market. >> reporter: like many manufacturers here he's
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concerned that the u.s. will impose mar tariff more tariffs. he is now looking ahead and worried about the 2$200 billion threat, saying that lighting could be on that list. eunice yoon, cnbc business news. ongoing trade disagreements pose the biggest risk to the u.s. economy according to the latest minutes from the federal reserve. fed policymakers also expressed confidence in strong economic growth in the near-term and acknowledged inflation is coming within their 2% target the fomc is widely expected to hike interest rates to 2% in its september meeting. frazier, let's talk about the reaction to the fed minutes yesterday. we are seeing the dollar rebound quite aggressively even though i would say it's not really that surprising going into the minutes the
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market had been anticipating a september hike to begin with why are we seeing such a hawkish reaction >> some of it is justified by the very good shape that the economy is in. we have come off of some stellar earnings season in the u.s it's not really what i think they would be looking for because as they correctly point out in minutes, key risks around emerging markets and trade tensions are not helped by a further strengthening of the dollar that's something that they will probably be looking to guard against going forward. >> the other marked characteristic from yesterday's move is we saw the two-year yield move up again, ten-year didn't do much it had more flattening in the u.s. cufrve. as an investor are you preparing for the possibility that the curve inverts? >> i think we are as good as there already. 20 bips. i think that tells you a lot
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about the fact that there are some meaningful longer-term headwinds. but nobody really doubting the intention of the fed to continue with a slow and steady normalization process, both through hiking of rates and through the quantitative tightening so that means significant capital risk in longer-term credit you could lose a year's carry in a day. i think it's worth bearing in mind that when you're looking to invest for longer here, what i would say is that -- >> but sorry, just to pick up on that point, doesn't the steepness of the credit curve offer good opportunity versus the traditional u.s. treasury curve? >> that's right. if you look at where we are today versus the beginning of the year, there's less threat to credit as an asset class from either side. libor has come up so much. you're seeing less money spill
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into equities as a dividend play alternative. because of this lack of rolldown from treasuries, what was already a poor value proposition looks worse. actually credit stands on its own two feet well. >> which sectors are you looking at specifically in credit? >> i think one concern we have is because of this strengthening dollar, because of the amount of share that u.s. fixed income is taking of overall share, it is floating all boats there's a lack of appreciation of the underlying fundamentals one key issue is a lack of respect of how much disruption there is at different sector levels if you look at the u.s. credit markets, the low end of the high yield market is full of areas of potential disruption telecom, healthcare, autos places where you don't know what the business model will look like in ten years time that's an area to be careful with on the flip side i think there should be substantial premium to areas that are not exposed to
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such disruptions, so u.s. home builders is a sensible place to put your money and you look at toll the other day that confirms the back drop. >> how do you think about the high yield space and this environment and the high yield space in the u.s. is exposed to shale and energy sector. we had reports of aramco pulling their deal, not that it affects that space directly, but how is the energy complex playing out >> that's a good question. it's not as big as it was two, three years ago during the energy crisis. it's still substantial i would say the credit cycle for that part of the market is not particularly long. they nearly died three years ago. their behavior is defensive. it's more about bolstering balance sheets and putting off equity friendly behaviors. so we think it will continue to look more utility like in the
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coming quarters. so putting that together, when you look at the u.s. versus the rest of the world, we had an analyst on the earlier show saying something to the effect of this concept of decoupling doesn't exist in this environment. the em market is slowing down, eventually the u.s. will have to catch up that's where all the liquidity is stemming from with the fed tightening you can't have one part of the world slowing down does that play into your view? >> i agree if you look at valuations we're priced for this decoupling i think the u.s. is largely priced to perfection here. if you look at the difference on the rate market in two kroo-yea between germany and the u.s. it's never been this wide. the sensible thing to do is respect the fact that banks are good at matching up supply and demand there's been flow into u.s. fixed income and more of the
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aggressive loan supply has gone there to match that. the opportunities here have to be on the european and emerging market side. >> we have to leave it there thank you very much for joining us stay tuned cnbc will be finding out if the mountain air can clear the heads of the world's top central bankers. we are live from jackson hole where steve liesman will speak to fed policymakers as well as others angela merkel prioritized finding a suitable german candidate to lead the european commission the business daily cites a government official as saying the commission rather than the ecb is the top priority. merkel was previously seen backing bundesbank chief
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some possible candidates were peter altmaier, manfre manfred weber and ursula vo ursula von der leyen. coming up, trump lashes out at his former lawyer the telast drama from the white house when we return could lead to way cleaner teeth. she said, get the one inspired by dentists, with a round brush head. go pro with oral-b. oral-b's gentle rounded brush head removes more plaque along the gum line. for cleaner teeth and healthier gums. and unlike sonicare, oral-b is the first electric toothbrush brand accepted by the ada for its effectiveness and safety. what an amazing clean! i'll only use an oral-b!
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welcome to "street signs." i'm joumanna bercetche these are your headlines the fed warns a trade war poses the biggest risk to the economy. tensions escalate between the u.s. and china as more tariffs take effect amid talks in washington the fight over funding president trump takes to fox news to defend his actions after michael cohen's plea bargain sends shockwaves through washington >> you have to understand what he did -- and they weren't taken out of campaign finance.
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that's a big thing that's a much bigger thing did they come out of the campaign they didn't come out of the campaign they came from me. saudi aramco is forced to confirm its ipo is on track after reports suggest that the record public offering has been scrapped. ryanair shares take off after the irish pilot's union says it reached a deal with the budget carrier over a longstanding labor dispute let's look at how european unions are trading composite pmi numbers came out, pretty much in line with expectations, but showing a bit of an uptick from the july numbers. the august numbers pretty much in line with expectations. not having that much impact on the major indices here the picture is mixed with the xetra dax and minuftse mib
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underperforming. the cac 40 slightly higher let's move on and talk about foreign exchange you can see that euro/dollar is taking another leg lower about 0.4% weaker on the session. that's dollar strength after the fed minutes. cable also weaker. 0.4% on today's session. dollar/yen, the strength is manifesting there. even versus the safe currency, dollar/swiss a bit stronger. switching to u.s. futures. the mood is subdued. dow opening up about 15 points weaker s&p about 1 point weaker after its longest bull run in history. that is tis the longest withouta bear market correction have have been several 19% corrections, but not 20% in the u.s. we'll get the pmi
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numbers and manufacturing numbers. president trump attempted to downplay claims made by michael cohen implicating him in campaign finance violations. speaking to fox news, trump denied the hush money payments made to two women ahead of the 2016 election were illegal however trump now finds himself under pressure as he appeared to contradict his original story of what he knew an when he knew it. hallie jackson has more. >> reporter: after a double blow from two confidants-turned-criminals, president trump tonight defending what he knew and when about the payments his former lawyer made, meant to keep two women quiet about alleged affairs. >> did you know about the payments >> later on i knew later on they weren't taken out of campaign finance, that's a big thing, that's a much bigger thing. did they come out of the campaign they didn't come out of the campaign, they came from me. >> reporter: the president in april. >> did you know about the $130,000 payment to stormy daniels?
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>> no. >> solicitation is a crime of directing someone else to commit a crime. that's true even if the person doesn't follow through with the act. so here, if they can find additional evidence to support what michael cohen says, i think you could very well have a criminal violation against president trump. >> reporter: michael cohen says he broke the law at the direction of his then-boss but the press secretary said the president's not in trouble. >> he did nothing wrong, there are no charges against him -- >> reporter: the press secretary pushing back. >> he did nothing wrong, there are no charges against him he did nothing wrong, there are no charges against him. >> reporter: as for cohen, his attorney says he's ready to share whatever he knows with whoever wants to know it >> is he hoping for a pardon from president trump >> not only is he not hoping for it, he would not accept a pardon he considers a pardon from somebody who has acted so corruptly as president to be something he would never accept. >> reporter: but the white house is not ruling out a pardon for paul manafort, now convicted of tax and bank fraud the president seeming sympathetic, praised his former
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campaign chair unlike cohen he tweeted, manafort refused to break, make up stories to get a deal, such respect for a brave man. the developments exposing a series of contradictions in a scandal that surfaced in january when the "wall street journal" reported on the payment to porn star stormy daniels just 11 days before the election. a month later, cohen acknowledged he used his own money, saying neither the trump campaign nor the trump organization was involved. that wasn't true cohen admitted in his plea deal to submitting phoney invoices to the president's company. >> those invoices were a sham. >> reporter: while sources familiar with the strategy say the aim now is to discredit cohen that pits the president against federal prosecutors who say they have reams of evidence that would make this more than a he said, he said head online to find out about a $50,000 payment michael cohen made to a mysterious tech company in connection with trump's election campaign. speaking of elections, the
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australian prime minister is facing calls for a second leadership ballot following the resignation of several senior ministers. he said he would hold another vote if his rivals secured enough support the aussie dollar is actually very close to the multi-year lows down 0.8% overnight in trading investors are becoming increasingly interested in sustainability, that's according to morningstar which says the european sustainable fund market saw net inflows of 32.1 billion euros in the first half of 2018. i'm happy to say that the director of strategies and sustainability research from morningstar joins us
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you have actually launched a portfolio carbon risk score to help investors evaluate how much carbon risk exposure they're getting exposed by investing in various portfolios can you tell me more about how you construct those metrics? >> these are metrics that help investors evaluate carbon risk embedded in portfolios we've seen investors are increasingly aware that climate change poses risk to the portfolio. and increasingly they're willing to -- or they want to measure that >> do you have a universe of companies you look at and just rank them by their carbon-friendly elements >> we work with a partner for that, and they produce the carbon risk score.
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so we use those company's risk scores in our portfolios, they are asset-weighted across the portfolio this is something that informs investors about how much carbon risk they have in the portfolio. that risk goes beyond capital footprinting because we're looking at the risk that every company faces in the transition to a carbon economy. i said that we are also wanting to go further than that. so we've created the low carbon designation that is awardedto firms with low-carbon risk >> it's like a stamp of approval >> absolutely. >> what have your findings shown by region? where are the worst offenders? >> as you were expect in emerging markets, companies tend to have higher carbon risk than in developed markets like europe
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or the u.s even within developed markets there are variations in canada there are more companies with higher risks in terms of carbon. >> in terms of the return that you get on friendly-type investments, is it lower than a traditional investment and are investors happy to forgo some of that additional return to be invested in something more sustainable or climate friendly? >> investors invest with us for many reasons, but many strategies show investing like this does not make a sacrifice it does not subtract from performance. it also depends on what the investor is looking for. if they want to include sectors that may not be aligned with the
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value, then, you know, they need to take that into -- or consider that carefully, because over the short-term especially that could impact performance but over the long-term plenty of studies show that it doesn't detract from performance. how big has been the launch of these esg funds reading your notes, it looks like momentum is slowing down a bit. fewer sustainable funds were launched during the first six months of this year than during the last six months of 2017. >> yes we -- there are small numbers still. they there ahave variations and variability across quarters and years. when you look at the last six months of 2017, then there is an increase in the first half of 2018 there were close to 80 new products that were launched in offering different types of
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strategies from broad esg to thematic strategies. we've seen a fair number of product focusing on climate and low carbon this is not surprising given that environmental issues are among the most important issues for esg investors. >> thank you very much for joining our show >> sure. schools, businesses and government offices have closed in hawaii as the pacific island prepares for hurricane lane. classified as a category 4 storm, lane is forecast to hit the big island overnight with winds of 145 miles per hour. residents have been advised to prepare supplies for 14 days with the governor urging people to prepare for significant impact if you have thoughts on climate change or hurricanes or esg
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investments, you can tweet us at streetsignseurope@cnbc coming up, will investments in bricks and mortar stores pay off for alibaba? we'll have that after the break. can be relentless. tremfya® is for adults with moderate to severe plaque psoriasis. i'm ready. with tremfya®, you can get clearer. and stay clearer. in fact, most patients who saw 90% clearer skin at 28 weeks stayed clearer through 48 weeks.
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welcome back alibaba will report first quarter results later today with investors keen to see growth in core commerce revenue. arjun is going to tell us what else to watch out for. >> i want to flag up a few key things that investors will be watching for the first is the core commerce business this includes online shopping sites that alibaba runs. investors here are expecting a jump of around 63% year-on-year in revenue force this unit of alibaba. another unit of growth is cloud computing. this grew about 100% in revenues in the fiscal year to march
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2018 this is an emerging area only accounts for 7 % of revenues many analysts see this a big part of future growth. another metric we will look at today is the investment and margins. the margins for alibaba dipped last quarter that's because they're investing heavily in new businesses. there's a southeast asian online e-commerce business. alibaba boosted its stake there. it also acquired a food delivery platform so we expect margin pressure over the next few quarters as alibaba continues to invest. i want to take you over to the way the shares performed over the past few months. it hit a record high in june that's really because people were very excited about the growth the u.s./china trade war then kicked off and alibaba has been caught up in that selling. it will be interesting to see how the shares react after
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alibaba reports those earnings before the bell today in the u.s. back to you. >> i want to pick up on a bunch of those points. joining us on the line to discuss this is neil campling. arjun is still with us also. arjun mentioned many of the points we should be watching out for. but the first thing that catches my attention is alibaba is much more of a domestic-focused company than some of its peers given that the chinese economy is slowing down a bit, are you expecting that to show up in earnings today >> good morning. i think it certainly has an impact to the stock performance recently we had a lot of macro data in china showed signs of slowing. there is a tradeoff here in regards to the fact that you have an e-commerce giant who is growing much faster than the
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economy, but with concerns over the long-term impacts of potential trade wars, we could see some of that a bit that could translate into where we will see strong top line growth again in this quarter, but the trade offwith thooff wie margins is a concern among investors. we've also seen other tech giants in china, particularly tence tencent, and then some peers in the space that we have seen in the likes of that showed some tepid q3 guidance might concern i venvestors as well >> i want to pick up on a point arjun was talking about. that's about margins specifically they have been investing in logistics, that's dragged down the margins from 53% to 44%. those are still high margins if you compare it to the likes of
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amazon where the margins are barely anything. >> it's a very good point. alibaba is in the middle of a heavy investment cycle they are spending across cloud, retail, international expansion. so margin pressure has been weighing on the valuation. but in terms of those margins, if you look for long-term the ability to scale those margins, they're operating for the long-term, but the need of those investments across a plethora of services looks at the fact that you see margin compression and there's consolidation factors of acquisitions which also drags down the margins in the core commerce market that will be a focus within the results. >> i wanted to ask you about the cloud business
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this is something we don't usually associate with alibaba it accounts for a tiny amount of revenues at the moment what is your expectation of this business over the next few years? do you expect it to continue to grow and be a large part of the business much like amazon made it for their business? >> yes i do not think if you look at the business in the cloud, alibaba is about 45% market share in china in cloud. their cloud is four times larger than the number two player, tencent. the alibaba cloud strategy we think is similar to what aws does for amazon. certainly it could become a business worth many billions of dollars over time. much like now aws has become not only a significant growth driver for amazon but also a significant part of the evaluation of the company. there's nothing to suggest that
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the alibaba cloud will be anything different from that i suspect it will be a huge growth driver for the company going forward. it will become a meaningful part of the business in terms of revenue and profitability and to cross-pollinate other services and facilitation of the alipay payment platform >> i would like to broaden this out and ask you more about the general sector the tech sector in china as a whole. we know it's caught in the crosswinds of the trade war between china and the u.s., and also because of the restrictive environment for the tech space in china with restrictive licensing. the government cracking down on some things as far as social media is concerned instant messaging. one company that got hit hard is tencent. what is your thinking of the
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broader tech sector in general in china and the opportunity >> within china generally speaking in the tech sector, if you're export heavy focused business there are significant concerns in fact the future tariff that may come next will have a meaningful impact on the semiconductor industry if they come to pass that will be a concern for domestic focused companies and companies that have strong digital presence, and are in very strong platforms, it is significant. we have to also bear in mind there was a big government reshuffle in china in the end of the first quarter. if you have any political positioning in any country that
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creates a pause in activity and bottlenecks. it was clear to us from where we saw tencent deliver results and also from their conference call that the changes to the two regulations that cover the video gaming space, the e-gaming, mobile gaming space was linked to these delays. and it does not change the demand dynamics, it's merely a bottom on regulation and that government change. >> thank you for your views on alibaba. arjun, thank you for joining us as well. tiger woods, dustin johnson and brooks co s koepka will loo
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take home a bonus. adam joins us with more. >> the fedex cup playoffs begin today. it's done on a ranking system. the field gets cut from 125, to 100, then down to 70, then the final 30 for the tour championship with a $10 million bonus on offer for the man who finishes top of those standings. first is the northern trust event which begins today a lot of extherera attention ont because for the first time since 2013 tiger woods is involved he's returned to form after showing good form at the pga championship where he finished in tie for second behind brooks
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koepka and finished sixth a couple months ago as well. so tiger woods, and the fedexcup has gone well for him in the past this is money just from bonuses. twice he has won the $10 millio bonus. they had to change the way the money was allocated after that after tiger won so early on and was so dominant the first couple of years, it looked like he would be on for a $1 billion retirement fund. now it is more even distribution tiger woods is back. he is fit and healthy. it will be a big test for him over the next four weeks four consecutive tournaments will be a big ask. he's excited to see where he will end up. >> everyone knows i've struggled. i've had some back pain. i've gone through four surgeries. i'm trying to work my way back it's been tough.
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people understand that >> how would characterize the difference >> not just last week, but i think that people i guess are appreciative of it i don't want to make that sound wrong or anything, but they know i'm at the tail end of my career i don't know how many more years i have left. but i'm certainly not like i was when i was 22. >> big expectations for tiger woods there. thanks for planning it out for us, adam. coming up next for our european viewers, we'll hear from the volkswagen board member as the carmaker looks to put the emission scandal behind it for y's. viewers, that's it for todas show thanks for - anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers.
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it is 5:00 a.m here are your top five china retaliating. a new round of u.s. tariffs kicks in. saudi arabia slamming a report saying that it is cancelling the world's biggest ipo. hawaii on high alert a category 4 hurricane bearing down. apple booting a facebook security app over privacy issues and we continue counting down to our week-long series beat the street. today another fund manager is up 28% just this


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