welcome to "street signs." i'm willem marx. these are your headlines the consolidation continues. bankia agrees to buy smaller rival bmn in a deal that creates a bank with a combined 230 billion euros in assets. we speak to bankia's cfo first on cnbc. a russian court arrests some assets of russian conglomerate sistema, sending the stock lower as the legal dispute with oil giant rosneft rages on. schaeffler shares sink to the bottom of the stoxx 600

after the auto parts supplier warns of profits and free cash flow. mario draghi defends his easing monetary policy as he warns about the risk of unwinding these policies too soon the ecba president will speak in a few moments time from sintra we'll bring you that speech live here's the latest on the heat map across europe a lot of red on the board. the latest in bank consolidation is that bankia is buying banco mare nostrum bankia plans to raise capital to fund the deal. a lot of red there except for bankia

banco popular at zero. > . schaeffler cuts its profit warning. they see the 2017 adjusted eby t ebi at 11% to 12%. stada takeover bid fails the vote was close with support for the move falling just short of the 67.5% required. the chief executive says the shareholder's decision provides a mandate for the company to press ahead independently. let's look at sistema shares they're slumping after a russian court arrested some of its assets in an ongoing legal battle with rosneft. the country is suing sistema for over $2 billion and says the arrest of shares was a security

measure. we spoke to sistema's ceo about the spat with rosneft. >> we think the claim is pretty much baseless. i can only state what i see in the papers, what i see in the papers is something that from my point of view does not have a legal basis, and this is something that we're going to prove. >> a dovish mario draghi is defending the ecb's ultra loose monetary policy stance at a town hall meeting speaking to an audience of university students, the central bank president cautioned against the destabilizing effects of inequality and urged governments to pursue better wealth distribution policies. he also warned a premature end to monetary easing could prompt another recession. here to talk to us about that is kamar shamen we saw this overnight dip on the euro on the back of draghi's comments do you expect the currency to remain at this level for the

foreseeable future or a bit of upside coming? >> i think we're looking for a bit of downside. our research has been that we're looking for a risk-af move markets appear to be under pressure u.s. data is turning over. european data is turning over. against that back drop and draghi pushing against some of the hawkish xh isish comments >> part of the challenge for mad mad, he eluded to there yesterday, is the economic realities across the eurozone. we have huge income inequality in some countries and huge differences in the realities for different members of the eurozone is that something he will ever be able to address as a bank governor? >> it's a constant source of concern for many bankers about the redistribution of wealth the emphases falls on governments to do their part as far as the fiscal push to redistribute wealth. it is going to be a common theme. we'll hear from draghi whether he can do this by monetary

policy, he doubts that himself he's trying to emphasize the need for a more coordinated fiscal response from the europeans. >> we'll mare from mr. draghi in a moment what do you make from his argument that he expounded on yesterday about the low interest rates on savings and pensions, that those savings themselves rely on growth, that relies on keeping interest rates low is that a compelling argument given the current environment? >> i think the ecb is concerned about one thing that we did see in 2011, they reacted in some ways prematurely to the improvement in the european economy. they are keen to avoid the mistakes he's playing it ultraly cautious ultimately the ecb will need to keep rates accommodative despite the criticism mounting from the germans. >> last month we heard from the ecb that they're backing off slightly from further rate cuts. the language was they expect rates to remain at the present

levels for an extended period of time and not see a further cut soon was that tiny tweet to language, do you think we heard from draghi in the past 24 hours that will pour cold water on the idea >> i don't think so the mantra here and the sentiment is that we're here to stay for a while the downside rates to interest rate cuts have diminished. given the momentum in the european economy remains robust. we had a pick up of inflation in the near-term. they can be cautious but also slightly optimistic about the growth outlook >> do you think governments are listening to mario draghi when he says i can't do this on my own? this is something you guys need to take control of i need to prop up growth that's my job to give you a window of opportunity. is that something they're listening to >> it's interesting following the macron victory, that there's more talk about a german franco access in terms of a coordinated response we have the german elections at

the end of the year, perhaps after that there will be a more coordinated effort pu there's there's been more of a populist wave part of the reason for that is the fiscal contraction in the past few years the easing of the fiscal levers to inject more stimulus into the economy may be on the horizon. that would need coordination macron and merkel are moving in that direction you mentioned emanuel macron overnight his finance minister responded to a report in french television outlet that essentially there was going to be a possibility they would overshoot deficit targets mandated by europe do you think that's something -- we're hearing mario draghi doing something. i will come back to you in a bit. let's listen in to mario draghi who just started speaking in central portugal >> was lackluster across advanced economies now the global recovery is firming and broadening a key issue facing policymakers

is ebb sunsuring this growth be sustai sustainable. the economic growth is crucial for that in turn for the eventual normalization of monetary policy investment and productivity growth together can unleash a vicious circle so that strong growth becomes durable and self-sustaining, and ultimately is no longer dependant on a sizable monetary policy stimulus the discussions we will have over the next two days in particular understanding the path of low productivity growth and persistently low investment are therefore highly relevant for the economy and monetary policy yet as we anticipate the problems of tomorrow, we must also work on the issues of

today. for central banks this means addressing an unusual situation. we see growth above trend and well distributed across the euro area but inflation dynamics remain more muted than one would expect on the basis of output estimates and historical patterns an accurate diagnosis of this apparent contradiction is crucial to delivering the appropriate policy response. and the diagnosis by in large is this -- monetary policy is working to build up reflationary pressures. but this process has been slowed by a combination of external price shoc shares of generic drugmaker s, most likely in the labor market and a changing relationship between inflation the past period of low inflation is perpetuating these dynamics these effects, however, are on

hold temporary and should not cause inflation to deviate from its strength over the immediate term, so long as monetary policy continues to maintain the solid anchors of inflation expectations hence we can be confidence our policy is working and its full effects on inflation will gradually materialize. but for that our policy needs to be persistent and we need to be prudent in how we adjust its parameters to improve economic conditions understanding the inflation dynamics requires us to divide up the inflation process into two legs the effected of m of monetary pn demand and the effect of demand on inflation all the evidence suggests the first leg is working well. though the euro area recovery started later than those in

other advanced economies, we have now enjoyed 16 straight quarters of growth with dispersion of gdp and employment growth rates among countries falling to record low levels if one looks at the percentage of all sectors in all euro countries that currently have positive growth, the figure is 84% in the first quarter of 2017 well above its historical average of 74% around 6.4 million jobs have been created in euro area since the recovery began the role of monetary policy in this growth story is clear -- since mid 2014 our monetary policy stance has been determined by the combination of three instruments -- first low policy rates second, asset purchases in financial markets and targeted

long-term refinancing operations for banks, reinforced by, third, forward guidance on both this has created strong downward pressure on financing costs with rates falling steeply across asset classes, maturities and countries as well as across different categories of borrowers. converging financing conditions have, in turn, fed into rising domestic demand. according to our bank lending survey, our latest easing phase has coincided with a strong rebound in demand for consumer credit to purchase durable goods. while demand for loans for fixed investment has gradually firmed. at the same time followialling costs have facilitated deleveraging which isone reaso

why for virtually the first time since 1999 spending has been rising while indebtedness has been falling this is a sign that the recovery may be becoming more sustainable. just to put our measures into context, since january 2015, that is following the announcement of the expanded asset purchase program, gdp has grown by 3.6% in the euro area that is a higher growth rate than in the same period following qe 1 and qe2 in the united states. and a percentage point lower than the period after qe3. employment in the euro area has also risen by more than 4 million since we announced expanded asset purchase program, comparable with qe2 and qe3 in the united states and considerably higher than qe1

for the monetary transmission process to work, however, stronger growth and employment ought to translate into higher capacity utilization, scarcity in production factors, and in time upward pressure on wages and prices this is what we see. the unemployment gap, the difference between actual unemployment and the nonaccelerated inflation rate of unemployment is narrowing and is forecast by the commission to close within the next two years. surveys of business capacity utilization are now above their long-term average levels inflation is recovering. between 2016 and 2019 we estimate that our monetary policy will have lifted inflation by 1.7% cumulatively yet the second leg of the

inflation process, the transmission from rising demand to rising inflation has been more subdued than in the past. how can this be explained? the link between output and inflation is determined by three main factors external shock surprises, the size of the output gap, and its impact on inflation. and the extent to which current inflation feeds into price and wage setting in different ways, each of these factors has been relevant for the delayed reaction of inflation to the recovery. starting with external factors, one explanation for this low improvement in inflation dynamics is we are suffering the aftereffects of global price shocks in asset and commodity markets which have led output and inflation to move in different directions inflation has been subject to such shocks over recent years, most notably the oil and

commodity price collapse in 2014 and 2015 this not only depressed the cost of imported energy, but also lowered global producer prices more generally ecb analysis suggests that the global component in the under-performance of euro area inflation in recent years was considerable in 2015 and 2016, around two-thirds of the deviation of euro area headline inflation from a bodial-based mean can be accounted for by global shocks lenked to oil prices even though the downward pressure on inflation from past oil price falls is now waning. oil and commodity prices are still having a dragging effect if only because they continue to lack a clear upward trend. in fact, lower oil and food prices than those assumed in the

march 2017 projections are an important factor behind the downward revision of our latest inflation forecast oil related base effects are also the main driver of the considerable volatility in headline inflation that we have seen an will be seeing in the euro area. falling import prices partly explains the subdued performance of core inflation, too this is because imported consumer products account for around 15% of industrial goods in the euro area likewise, changes in commodity prices feed through to some service items and into industrial goods produced with high energy intensity. as a result, in the first quarter of 2017 oil sensitive items were still holding back core inflation

this illustrated the core inflation doesn't always give us a clear rating of underlying inflation dynamics global factor there's foreappear to be wei factors therefore appa to be weighing on inflation, but low oil prices are mainly supply factors, which the central bank can typically look through even if supply factors affect the path of inflation for some time, with inflation expectations secure, they should not ultimately affect the inflation trend. a second explanation for the discrepancy between real developments and inflation is uncertainty surrounding the size of the output gap and its impact on inflation this might be happening for a

variety of reasons one possible reason is that we're experiencing positive supply developments. we do observe that as the recovery strengthens, the supply labor is rising, too labor force participation has been growing over the past several years buoyed by increasing participation rates of older workers we also see some evidence that labor supply has become more elastic due to immigration, particularly in strongly growing economies such as germany. since 2007, the euro area participation rate has risen by around 1.5% whereas in the united states it has fallen by 3 percentage points in the same period structural reforms in labor markets have been a factor in this labor supply boost.

similarly,performs in product markets may have had an effect by increasing productivity an raising growth potential. another reason why there is some uncertainty over slack is the correct notion of unemployment that is there may be residuals lacking in t sla slack in the labor market that has not been captured by unemployment measures. unemployment in the euro area has risen during the crisis but so, too, has the number of workers underemployed, meaning they would like to work more hours or who have temporary jobs and want permanent ones. this has implications for inflation dynamics, since these people might prioritize more hours or job security over higher wages in employment

negotiations if one uses a broader measure of labor market slack, includinged unemployeded, underemployed and those marginally attached to the labor force, the measure currently covers 18% of the euro area labor force phillips curve models that employ this measure appear to be more successful in predicting inflation. a third reason why slack might be larger is the effect of a so-called global slack this is the notion that globalization has made labor supply characteristics more uniform across the globe and labor markets more contestable conditions in foreign labor markets could therefore have a damping effect on domestic inflation even as domestic slack is shrinking the evidence, however, is not

clear cut. for example, new ecb analysis finds only limited support for the thesis that global slack is weighing on euro area inflation today over and above theimpact it has on global prices. along the question of the level of slack is the impact of slack on inflation this is the well-known debate on the phillips curve there are indeed reasons to believe that wage and price behavior in the euro area might have changed during the crisis in ways that slowed the responsiveness of inflation. for example, structural reforms that have increased firm level wage bargaining may have made wages more flexible downwards, but not necessarily upwards. likewise, we see today that firms are absorbing input costs through lower margins due to uncertainty over future demand

which would also tend to temper price pressures. indeed, ecb estimates show that if we take into account the unusually large and persistent shocks of the past years, the phillips curve for core inflation may be somewhat flatter recently however insofar as the slope of the phillips curve appears not linearly on the cyclical position it may steepen again when the economy reaches and surpasses full potential while these various reasons might delay the transmission of our monetary policy to prices, they will not prevent it as the business cycle matures, the higher demand resulting in positive supply development also accelerate price pressures while firms pricing powers increase and the broader measures of slack will converge towards the headline measures.

as shown in the united states, the gap between the headline unemployment rate and broader measures typically opens in ssn recessions and shrinks during expansions currently it is going back to levels prior to 2001 and 2007 recessions. just as falling oil and commodity price shocks, we can be reasonably confident the forces we see weighing on inflation are temporary, so long as they do not feed more lastingly into the inflation dynamics this brick brings us to the thid possible explanation for why growth may be diverging from inflation. the hypotheses that a persistent period of inflation is feeding into price and wage setting in a more persistent way. what is clear is that our

monetary policy measures have been successful in avoiding a deflationary spiral, and securing the anchoring of inflation expectations in the past, as interest rates approached zero, some did question our ability to add sufficient accommodation to combat a prolonged period of too low inflation. we answered those doubts by demonstrating that we would take any measures necessary within our mandate to deliver our mandate and those measures were effective in further easing financial conditions deflation risk premium, which had been growing in 2014 and 2015 have become more or less priced out of the market based inflation expectations that being said, a prolonged period of low inflation is always likely to be exacerbated by backward lookingness in wage and price formation that occurs

due to institutional factors such as wage indexization. and this has plainly happened in the euro area. ecb analysis finds that compared with long-term averages, low past inflation dragged down wage growth by around 0.25 percentage points each year between 2014 and 2016 the evidence as to whether backward lookingness has increased is mixed there were signs that indexization had fallen in the early part of the crisis, and our empirical estimates suggest that the weight of past inflation and current inflation has decreased. yet there is also evidence that indexization has returned in some large euro area countries in italy, for example, backward looking indexization of wages now covers around one-third of

private sector employees still, even if indexation rose it would only create inertia in price formation it would not obstruct the transmission process. as economic slack shrinks, upward pressure on prices will materialize and gradually enter the indexation ratchet once again we see temporary forces at work that should not affect medium-term price stability. this assessment is broadly what we see market-based inflation expectations today interpreting with some caution they're now consistent with the picture that our policy is every fekti effective and will take time to materialize what do these various explanations imply for our monetary policy stance the first point is that we face a very different situation today from the one we encountered

three years ago. then we also faced global shocks and significant labor market slack. the recovery was still in its infancy. global growth was slowing, depressing both import prices and net exports. fiscal policy was less supportive than it is now. and headline inflation was much lower than today and inflation expectations were more fragile creating a higher risk of low inflation becoming entrenched in this context, we faced another risk, too. a permanent damage to the economy through the so-called histor effects the risk was if output remained too low for too long, we would see a permanent destruction

of -- when we said we wanted our policy to have effects without undue delay, we meant we wanted the output gap to close upwards and before such effects should develop. this is why we had to act forcefully now we can be confident that our policy is working and those risks have abated. the threat of deflation is gone, and reflationary forces are at place. since one driver of inflation today is positive supply developments, this should feedback positively into potential output rather than produce histo rises. in these conditions we could be more assured about the return of inflation to our objective than we were a few years ago. this more favorable balance of risk has been already reflected in our monetary policy stance

via the adjustments we made to our forward guidance another considerable change from three years ago is the clarification of the political outlook in the euro area for years euro area has lived under a cloud of uncertainty about where the necessary reforms would be implemented at both the domestic and the union levels this waacted as a brake on confidence and investment which is tantamount to an implicit tightening of economic conditions those things have changed. political wing wins are becomig tailwinds. there's a new found confidence in the reform process and a new found support for european cohesion which could help unleash pent up demand and investment nevertheless we are still in a situation of continuing slack.

and where a long period of subpar inflation translates into slower return of inflation into the objective. inflation dynamics are not yet durable and self-sustaining. so our monetary policy needs to be persistent. this is why the governing council repeatedly emphasized that a very substantial debris of monetary accommodation is still needed for underlying inflation pressures to build up, and to support headline inflation in the medium term and this is reflected in our forward guidance on net asset purchases and interest rates as well as our decision to reinvest the principle payments received under the app, the asset purchase program for as long as necessary. with reflationary dynamics slowly taking hold, we now need to ensure that overall financing conditions continue to support that reflationary process until

they are more durability and se durable and suf sustaining a constant policy stance will become more accommodative and the central bank with adjust the parameters of policy instruments not in order to policy the tighten stance but to keep it broadly unchanged. there is an important caveat that we need to consider financing conditions are not only determined by the calibration of central bank instruments, but also by other market prices. some of which are significantly affected by global developments. in the past, especially in times of global uncertainty, volatility in finlt mancial mar prices has at times called an unwarranted tightening of financial conditions which necessitated a monetary policy

response so, in the current context where global uncertainties remain elevated, there are strong grounds for prunes in the ad prn monetary policy. any adjustments to our stance have to be made gradually and only when the improving dynamics that justify them appear sufficiently secure. let me conclude, our assessment of the outlook for inflation of monetary policy can be summed up in three messages. the first is confidence that monetary policy is effective, and that transmission process will work. all the signs now point to a strengthening and broadening recovery in the euro area. deflationary forces have been replaced by reflationary ones. while there are still factors weighing on the path of

inflation, at present they are mainly temporary factors that typically the central bank can look through however a considerable degree of monetary accommodation is still needed for dynamics to become durable and self-sustaining. so we need persistence in our monetary policy. and finally we need prudence as the economy picks up, we will need to be gradual when adjusting our policy parameters so as to ensure that our stimulus accompanies the recovery amid lingering uncertainties. thank you. >> that was mario draghi speaking there for a little while. some pretty interesting but not surprising headlines

what struck but that we saw a pop in the euro was that a surprise? >> i think heading into the speech t looks as if the euro was under some pressure following yesterday's comments which seemed to be more on the dovish side from draghi. i think he's emphasizing that growth remains robust and is expected to remain robust. he is re-emphasizing that any pace of accommodation would be gradual, they're prepared to wait inflation remains the key here they have to look through the transitory factors, but it's consistent with our own views that this is a long haul the path of withdrawal from accommodative monetary policy will continue for the for se foreseeable future it was more balanced and less dovish than his comments yesterday that were reported do you think that's just the aid

ye audienceties ha he's talking to >> i think the fact that unemployment is coming down, albeit in a slow pace, the goal here is to support growth and make sure inflation and reflationary tailwinds are persistent >> he talked about 6.4 million jobs in the euro area created. clearly for his audience that's important what does that mean in terms of the broader eurozone? does it matter about job growth? >> i think it does in the context of what it means for average earnings one concern from central bankers is that we have not seen significant second round impacts of this reflationary growth environment. higher employment should mean higher growth and higher -- >> we've seen the eurozone up a half percent what are you looking for? >> still looking for down side in the euro. we're coming into the summer session, still constructive on the view that there may be some

tax reform proposals going through from the trump administration ultimately with u.s. economic growth a little bit wobbly at the moment, but expectations having been down side, the path of least resistance is for the euro to head back to 1.10. >> he talked about that virtuous circle s that something we will hear from him again and again, that the idea of growth needs to be sustainable >> he wants to reinforce market expectations until they see signs that higher growth paths are creating a higher monetary path >> interesting, he talked about the belief that inflation in the medium term will remain on trend despite some of these little wobbles we've seen those wobbles matter, don't they >> absolutely. we revised down our forecast for 2017 and 2018, but they do matter for the central bank the medium

term objective is always price stability. >> i thought it was interesting trying to push back on some of his critics, he made comparisons to qe1, qe2, qe3 in the u.s. trying to show in the eurozone there has been successful performance when it comes to gdp growth as well as employment numbers. >> absolutely. the size of the qe and the ecb has been significantly larger, but also the european economy has benefited from the three-stage qe process, in the u.s. it was starting to grow into the start of this particular decade. that's obviously helped the european economy >> just to recap, the euro price right now has come up more than a half percent, up 0.55 out of the course of this session is this a prize r surprisurpris what mario draghi said >> i think the market is relieved at the moment the market was looking heavy

entering into the session. the more balanced nature of those commence e those comments suggest that the markets are relieved >> bond prices here the bunt is ve up there's been an impact there on terms of the european markets. the equities down across the board. in ftse, the cac down almost % substantial losses in germany as well i want to thank you very much. >> thank you >> chatting me through mario draghi's latest speech in central portugal we're joined by annette in central portugal what was your response to that you listened in. >> i think when you look through the speech, his comments on inflation are quite interesting.

it's the first time that we are actually getting more details about his thinking of inflation not moving in tandem with the economic recovery. and that he's spelling out where that could come from it's quite interesting the motion that the real unemployment rate, where we should be looking at is rather 8% eurozone, not the benign below 10% for the aggregate or the average of the eurozone. and this higher number including some other statistical measures is reflecting the true state of the eurozone economy a lot more than the official number that also would explain that inflation is still stubbornly low when it comes to the inflation target of the ecb. all in all, even though mario draghi was quite dovish in the speech, i think he is also, for

his terms, sort of cautiously optimistic talking about that this time they can be more optimistic and that inflation is trending towards a more sustainable path take a listen of what he had to say as a conclusion to his speech >> all the signs now point to a strengthening and broadening recovery in the euro area. deflationary forces have been replaced by reflationary ones. while there are still factors weighing on the path of inflation, at present they are merely temporary factors that typically the central bank can look through however a considerable degree of monetary accommodation is still needed for inflation dynamics to become durable and self-sustaining. so for us to be assured about the return to inflation to our objective, we need persistent in our monetary policy.

and finally we need prudence as the economy picks up, we need to be gradual when adjusting our policy parameters so as to ensure our stimulus accompanies the recovery amid linking uncertainties. >> mario draghi speaking moments ago. our thanks to annette there in sintra join us 11:30 a.m. cef for the bank of england's financial report and mark carney s'speech. t often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock.

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stock through a shared swap. bankia will raise capital to fund the deal. gemma acton is here joining me trying to break don't deal what's the significance for spain? >> this looks like another step in a long-term consolidation plan for spain they started this a long time ago. bankia is the result of seven banks merging. you remember more broadly speaking since 2000 a8 and the financial crisis, there were 55 banks, with this merger it's down to 14 arjun kharpal yesterday had the chance to catch up with the ceo of bppa, he said how much pressure is coming from the state. the state asked you to take on banco popular, which santander acquired would you have done it >> i think in this day and age,

this is how things work. we had an opportunity to look at this particular bank, popolare, we are more focused on leveraging technology to customers, transforming what banking is for in that context it did not fit well. that's why we looked at it but decided to pass. >> he mentioned innovation and technology, that's their focus going forward. many reasons why there's consolidation going on, we expect to see that more generally across europe. you have the need to cost cut because of the huge expenses coming up with technology, innovation and regulation. on the other side it's making sure you can reintroduce good assets back into the system which happened with in intesa san paolo

thank you very much for that speaking yesterday, chinese premiere li said they will implement profiscal strategy and provide a prudent monetary framework. >> translator: china will be proactive about opening up and being more inclusive we will further relax market access for the zf seservice secr and manufacturing sector and relax barriers to foreign investment >> geoff cutmore is with us. what is the significance of these comments >> well, i think it's steady as she goes the big issue is whether china has a soft landing or a hard landing. i think premiere li just making the point that as far as he is concerned and as far as the chinese government is concerned, it is steady as she goes on the growth front

they have been pleasantly surprised by that 6.9% print for the first quarter and they think they will see reasonably similar growth levels through the rest of this year i think it's just to point out to the international financial community that this government is confident that they will maintain status quo on the growth agenda. what's also interesting as we've been here, we've been catching up with international ceos spending time at this world economic forum the fourth industrial revolution is the headline here so a lot of tech companies are here discussing their business i had a chance to catch up with marc benioff of salesforce.com we had a conversation about technology and tech valuations, and what they're doing in the space, he feels even though we have seen very strong growth in share prices for the f.a.n.g.

stocks, we could see plenty more inflation on the share prices to come if anything, we have not gone quite far enough let's have a listen to some conversation i had with mr. benioff. >> last year we saw a lot of opportunity. this year a tremendous opportunity of narrowing the reason why as the public market accelerated this year, especially in technology, entrepreneurs were looking to sell their business last year and are now looking to go public there's less opportunity for us to buy companies >> what do you think of valuation there's the tech space? we watched the f.a.n.g.s drive the public listed markets higher it feels like we're getting into nosebleed territory. >> i think some of those fans are underv fangs are undervalued. we worked with aws, amazon, you

look at that business going past $20 billion, this year i think it's on trajectory to go to 1 0 1 $00 billion. if you look at that, amazon is a tremendous upside for the future wref >> the business outlook supportive of that you think there's plenty of space in the technology sector for these companies to maintain these tremendous margins >> one thing that's exciting is ai is the new platform we talked about ai, job retraining but every company including ours is building next generation ai systems. one thing i've been excited about this year was the introduction of sales force einstein, which is now we have ai right inside other own platform our relationship with ibm, i'm excited that we're able to put einstein and watson together

deliver next generation artificial intelligence. this is a huge growth lever for the industry >> you mentioned ibm deal. you have this relationship with dell now as well it does seem to be a new strategic direction for you. to do the partnerships rather than go through m&a. >> we have some great partnerships we mentioned three of them am month iazon is amazing relatp helping them grow services then you see this incredible relationship coming up with ibm, going to market together then dell. we've brought so much incredible new deltech nolgy into the dade. we have the disk drives, michael dell -- i don't think any tech entrepreneur or leader created as much value for customers and for shareholders in the last

year as michael dell has completely blown away. >> mark, you have always publicly stated that technology companies have been a forcetor good you tried to live by that yourself at sales force. when you look at travis at uber and some of the embarrassing headlines around that company of late do you look at that and see that as a watershed moment for the startup segment? how meaningful is what's happened there as an example of what should happen in other tech businesses >> you have to be more aware of your what your culture is and the employee's behave color is than ever before one of the most important values that has gotten amplified inside our own industry in the last several years is quality and, you know that we, you know, have fought for lbgtq equality in great states like indiana,

and in georgia, in north carolina, we are also looking for gender equality and pay equality looking for, as i said, education equality because equality is more dominant in the industry than ever before, that you saw that when his employees started to write a very strong narrative about how that was not valued inside that leadership team, it really became a situation that the board and then the shareholders had to act on it became a crisis of equality that will not be the last crisis of equality in the tech industry it's the beginning of several that will be right there for everyone to take their own behaviors and their own capabilities to another level. that's kind of depress that you say that i think we would hope this would be a one off you seem to be suggesting

there's something systemic in the tech segment >> at davos i said it would take another 107 years for us to hav gender pay equality that weir st we're still paying women less than we pay men. that kind of idea that companies repress women, pay women less and don't give them advancements, opportunities, and opportunities to come up to the same level of men that seems backwards to me. when ms. fowler started to talk about what was going on at uber, that amplified that many people in our industry and other industries want to see more equality >> marc benioff from salesforce.com and some interesting points about equality and the need for equal pay. i think what will resonate with many is his remark about the valuation of f.a.n.g. stocks here even as many who watch the markets and watch the nasdaq

worry that we are already at nosebleed levels willem, back to you. >> thank you very much some interesting and candid comments from bamarc benioff there. join us at 11:30 a.m. for the bank of england's financial stability report, followed by mark carney's speech that's it for today's show i'm willem marx. "worldwide exchange" is coming up right now

good morning the draghi pop big moves in the euro as the ecb president talks up the economy 22 million unshired. the congressional budget office releasing i score of the senate's healthcare bill we're live in washington with the latest. and marc benioff sits down exclusively with cnbc. it's tuesday, june 27, 2017, "worldwide exchange" begins right now. ♪ good mornings.