welcome to "street signs." i'm karen tso. here are your headlines. shares sink as british taxpayers take a 2 billion pound loss, dragging uk lends lower. bark lay's ceo says they were never considering a bid for standard c but says m&a in the sector is coming. >> you do have a very divided market across the continent of europe in trying to develop banks that have the scale that the u.s. banks have in this

market makes some sense. >> europe's chipmakers feel the apple effect after shares of the smartphone-maker hit a record high as investors cheer updates from its annual developers conference. and coffee hangover for sta. sharesl after ceo howard schultz steps down after nearly four decades at the firm, as rumors swirl he is headed for politics good morning, everyone thank you for joining me we are looking at some more data crossing, another health check on the eurozone and the latest numbers to cross for the final composite pmi, 54.1 for the month of ay. the flash number was exactly the same, but these numbers do mark a slight reversal from the previous month of april when the

level was 55.1 when it comes to the services side, that component is at 53.8, just a fraction off the flash on it comes to the final composite future output pmi, so slightly forward-looking indicator for the eurozone this is at 63.7, also, just a fraction off the flash number. so just a little bit of a disappointing readn some of those metrics. the new business element, 53.5 this is a tad above, so that is actually one level of good news just crossing through the numbers. we are pretty stable as you can see, reaction on the currency on the euro this morning. let me take you to european markets and how we are faring in the morning session. the ftse's been a little soggy this morning, some of that down to the banks and around rbs, 7,736 on the index, sliding a fraction, but firm across on the core markets the dax close to 0.4, about a third on the french market, less on the tele market, but it's

been slightly higher on the back of a slightly calmer view on politics versus what we saw last week sectors broken down across the european markets for you -- technology is strong this is the apple effect that i alluded to in the headlines. we'll delve into that in the show, but a lot of supplies bouncing after an update from the developers conference. technolo up by 0.8%, autos almost 0.7%, gas also a bit of a bounce travel and leisure the underperformer, down about 0.7% as a result. meantime, the uk government is driving down its stake in rbs. they have sold 7.7% of the bank for about 2.5 llion pounds, taking its overall holding to 62%. this represents around a 2 billion pound loss to taxpayers, giving the value of rbs shares when the government made its initial capital injection at the height of the 2008 financial crisis chancellor phillip hammond said the sale was an important step in moving past the crisis, but the opposition labor party

criticized the move wi john mcdonald saying "there is no economic justification" for the sale well, covering the story, jeff has stayed around to talk a little longer. you'll be doing this a while because the state sale reduction is going on a number of years and this is another leg in the sell-off of that asset. >> it feels like this story's run forever. let's go back to the beginning here way back to 2007, ill-fate takeover of abm amro, of course, then the 12 billion pound rights issue that followed that to justify fred goodwin putting that deal together and then, of course, it all went pear-shaped after lehmans collapsed. and then what happens, fred goodwin leaves, tail between his legs the uk government steps in, takes over the bank at 502 pence per share. which is why when you look at today's sale at 271 pence per share, inevitably, the opposition steps up and says this government is making a bad

decision but i guess a rock in a hard place. does this bank go back to being a private sector/publicly listed business, or does it remain ow thek government and let's face it, for ten years, it didn't make a profit ow, karen, in the banking you story, how much is it going to make going forward >> this is a point around timing, whether you sell the asset now. and you've got to think, the ftse's been trading around record levels, some of the highest levels we've seen on the index, which tells you there's an appetite for uk shares right now. brexit still could deliver a significant dose of uncertainty for the uk, for banks particularly mark cary has alluded to that around his decision-making, effectively, on monetary policy here in the uk so you've got to wondeher this is a final opportunity to get rid of some of the exposure that the uk government has and whether it is sort of the right timing now to begin the unwind >> yeah. as much as the labor party will bemoan the fact that more should have been raised and the government should get back to what it ultimately paid to take

this bank over, it is worth bearing in mind that chancellor hammond has a bit of a trailing wind in public finances at the moment, and he is at this point, apparently, been successful in pushing down the public sector net borrowing requirement. this sale today will raiseanothn quid that he can throw at the public debt and give the impression that this is a conservative government, that whilst it appears at times to be floundering on brexit, is at least getting the public finances back in better shape. and if we are going down the road of another crisis or recession some point when this cycle comes to an end, at least he can turn around and say, well, we've done our best here to try and fix the roof while the sun has shined. >> let's talk about the sort of fixing process at rbs itself because we've been talking about banks all week, and thity

of the names after the crisis cropped up -- talk of consolidation -- whether the european backdrop needs more consolidation of assets. you think about rbs, closing branches this year, 162 across england and wales. you've also had an annual profit that's been posted, 752 million, the first in a decade after a turnaround, and of course, its own legacy issues, the misselling crisis, the misselling omortgage-backed securities in the states how advanced do you think the bank is in terms of the recovery road >> well, i mean, just to fill out that picture, rbs operated in 38 countries pre the financial crisis, and it has ultimately had to downsize very radically. and steven hester was the man who stepped into the hot seat after fred goodwin left and managed the bank early on while it was in government ownership i mean, he got a lot of political brit backs, but

frankly, he took over an unenviable situation i think the bank has come a long way. february marked a significant profit breakthrough for rbs. it does look a lot leaner, a lot more streamlined, but no doubt, you know, as we were discussing on "squawk box" yesterday, m&a in the banking sector is still very much the word of the moment, and it does feel as though more consolidation needs to take place, not only in continental europe, but here in the uk, too. >> that's right. >> so maybe that's where we're going ultimately. >> and how clean the asset is that you might be buying with still a lot of legacy issues jeff, thank you for that i think you're done for the day. >> are you bactomorrow you bright early. >> see you at 6:00. barclays ceo says there is case for consolidation in european banks in an exclusive interview with wilfred frost, jeff staley said it could help regional lenders

build scale like u.s. peers but wrote down any potential deal with standard charter. >> there is no deal going on with standard charter. we spent a lot of time restructuring this bank. we're done we had a terfic first quarter, so we're off to execute the strategy of barclays. >> he also spoke with jes staley about the recent challenges, including the fine he personally received for attempting to identify a whistle-blower. >> the last year and a half has had its challenges we reduced the head count of barclays by 56,000 people. we sold 22 businesses around the world. we closed our retail banking business across africa and across continental europe, et cetera at the same were charged and sued by the justice department over mortgage-backed securities sold in 2006 to 2007. on top of that, we were charged criminally by the british government around a capital raise in 2008. so, we have these lawsuits with

the department of justice, with the british government, we have the restructuring, the reorganization of the bank, we have this case of the anonymous letter, and to a certain extent, all of that is behind us, and no can look forward to running the bank and executing on our strategy. had a gre firrter again, the group results, ex-litigation issues, was a double-digit return for our shareholders, something we haven't done for four years. so, those issues are behind. now it's time to move forward. >> indeed, and a long list of issues that successfully have been put behind you, as you say, jes. but specifically on the investigations into you personally it was very drawn out. it did take a long time. the conclusion, eventually, of course, has allowed you to keep your job, but did you fear in the midst of it that it d worse, the outcome, and that you might lose the role that you're in at the moment >> you know, i've got a lot of respect for the uk regulators. it was very robust investigation by them. barclays is very complicated, challenging bank but no, i feel that was my obligation to commit my focus

and attention to the barclays shareholders, the barclays customer and clients, and so, no now we move forward. >> jes staley there. allen higgins has joined us, cio at quds allen. good morning nice to see you. >> good morning. >> there's been a lot of news in the banking sector, not just consolidation with uk banks with barclays and charter, but there's a big wave of consolidation coming to the banks in europe finally. do you think that's happened >> i don't know. it looks more like rumors are planning i think there's an envy when you look to the likes of jpmorgan, you know, huge market cap of $370 billion and in europe, maybe envy to the likes of bnp, which is larger, but very hard if you look at the barclays situation, they just recently pulled out of africa whereas standard charter's expertise is emerging and frontier markets, so that seemed a bit strange. so, i think difficult to execute.

>> if you consider how sprawling some of these businesses are, and they have actually been shrinking, but there's still a lot of legacy issues, how hard is it to combine across jurisdiction i mean, one of the great ones, uni credit and socgen, a combination of assets and different regulators in different countries and the winddown process that is still very different across europe surely, this would be a complex process, much harder than building a bigger bank in the united states. >> yeah, very complex. i understand there are some synergies in eastern europe, but very complex and you have to wonder why to a certain extent, i think, looking at the investment bank dominance in the u.s. being very large, you can imagine, put ourselves as a large corporate looking to do a big underwriting in debt or equity, then the larger the bank you're dealing with, the more confidence you may have, and certainly, the likes of jpmorgan and morgan stanley, goldmans, of course, the u.s. banks with a big u.s. market have really

dominated there. so, i think that's a big factor, but yet, unicredit, it's a big leap of faith. it would be g leap of faith in the europe for societe generale. >> i can see the rationale by having somebody very large as a bank for business in europe, particularly if you want to create eurean champions to combat the might of some of the american and chinese players, but think about the resolution process, because we don't talk directly about rbs or some of the other banks that have been wound up, but if you think about the process that's been involved, it's been stop-start in spain most recently, you had the ecb selling bank of popular credors wiped out in the process. and in italy, you had banks across bonato that were hard to consolidate and it effectively meant the government had to step in and ring-fence parts of the bank they sold the bad side had to stay with taxpayers. if you start putting banks across more jurisdictions, how is the wind-up process going to hamper the winddown, if the back

to you suddenly becomes in strife or difficulties encounter? what is the wind-up process, and which taxpayer is going to stand ready to bail out the bank >> fair point. one difference if you look at all those banks you mentioned, all very small, all wound up, and the thesis which we agree is investing in national champion, debt in particular, national champion bank, debt in particular, is an attractive risk-reward proposition. very risky again for the smaller banks, but you raise an interesting point -- what happens if a national champion bank gets in trouble again, and especially if it's cross-border, who bails them out i guess the thinking right now is can we be as big as one extreme, jpmorgan in the states, as bnp here in europe and therefore ultra safe and there is an argument that the more diversified are, the safer the bank is. >> let's talk a little bit about contagion risk because we saw an element of that last week around italy. you know, the european bank sector, bank index has not been doing that well this year.

it was falling, then it got another leg lower around the italian crisis. >> yeah. >> i wonder how that is playing out for you because you're long as a sector via etfs -- >>s anone active fund, yes. so, look, financials taken a hit, so our biggest position is in debt, so our biggest conviction is in financial debt, but you're right, we have a small position in financial equity fund, more towards the have an u.s., it has to be said. in terms of direct, just a statement of fact, what we own is jpmorgan's obviously done well but in terms of contagion, you can understand it. i think the italian banks own 270 billion of btps. so as soon as you price in a slightly higher probability of default, which would be ridiculous, or leaving the euro, then you can see italian banks, this sovereign link with the domestic government bond market, that sort of sovereign link, the

domestic bond market and the banks is so important, so you can see that pricing in, but it's an opportunity. so, wee seeing that debt bounce back very strongly now. but if you look at the likes of unicredit, i think they're subordinated cds, so their junior credit is about 270 basis points, so the next 270 basis points for a company that's relatively recently had a big 13 billion rights issue, that seems a lot of compensation. the way we look at it, that's a transfer from equity-holders to bond-holders so, that's why our main money is al debt. that's the best risk-reward scenario out there. >> so you would buy debt of italian banks right now after what we saw last week? >> well, we own it so, karen, if we own it, by definition, clients coming to coutts in certain pockets would. so, just stepping back a bit so, we do buy some direct corporate bonds and do own, statement of fact, unicredit corporate bonds, but we're also a big customer of the fund management industry and we own

so-called coco funds, the most subordinated funds, and we have two or three managers looking over those holders the biggest holdings at coutts are the funds, the smaller holdings are the direct bonds. that's in specialist mt funds. >> must have been an interesting week last week alan, thank you. >> just have to be stoical, karen. ideally, you have to add t positions, but ideally, sit through it bu because after a 13 billion rights issue, the prospect of solvency of unicredit is very likely. >> keep looking at fundamentals. alan higgins with us, cio at coutts. on a different note, apple has unveiled a raft of changes at its annual developers conference among the updates for the tim cook-led company are upgrades to iphones run faster, improvements to its voice assistance, siri, and a crackdown on tools that can track web users. apple also said it would work to make it easier to transfer iphone and ipad apps on to mac

computers. here's a quick look at the apple effect and how it's playing out with stocks across europe. some of the chip makers into the money this morning austria microsystems bouncing the most, up 4.3%. d semiconductor also rallying having concerns across the sector about whether apple would take more production facilities in house and away from the suppliers. so it's been a rocky path trading these stocks of late we'll hear from apple's co-founder, steve wozniak, at 10:45 cet, for his thoughts on the iphone x. wpp shares are trading lower after berenberg said the situhe british advertiser will "get worse before it gets better. the german lender cut wpp to a sell from hold, saying all was not well from an operational perspective. the broker forecast a stepdown in margins, citing incremental fee pressure at a time of management change. sir martin sorrell recently quit as ceo for alleged misconduct. coming up, bringing you home

the bacon. find out how mexico is planning to retaliate against the united states in the latest escalation of the trade war

dutch fintech company adyen sees a market valuation of 6.5 to 7 billion euros the payments platform will announce on euronext in amsterdam with about 12% of the shares being offered trading are expected to start on june 13th. argen is at the 2020 conference in amsterdam plenty to talk about there, including what fintech's up to in 2018. >> reporter: yes, definitely, karen. and it looks like fintech really is on fire now you've seen some big moves, the likes of a.j.en listing. e i have with me, sebastian. we were talking off mera and you described this company as a teenager what do you mean >> i have kids, obviously, and

they're a little bit younger, but becoming a teenager, they don't listen to daddy anymore, does a little of what he wants himself, but it's fun. >> reporter: but it's a fast-growingnager. your profits tripled last year in 2017. what triggered that performance? >> the real differentiation is just being here at this conference, there are a lot of payments, but we're sending digits back and forth, right the core question is what value are we creating for customers? i think we've been dead focused on trying to create, like solving everyday tasks, demanding tasks associated with payments, returns, shipping, i don't know w my package is, what am i supposed to buy, just a lot of these tasks and what we're trying to do is remove those and create, being your assistant in this well. >> reporter: we're five months through the year now how has the performance been so far this year versus last year >> it's been quite astonishing we've seen massive success, and i think especially it's fun to see with asource in uk the

traction we've within getting there and with uk users, so that's exciting. >> reporter: big for you was acquiring your european banking license. you started as online payments and now are you starting to move into new consumer products with that license >> yes the answer is yes. i think that we, you know, we are going to do a lot of things. this is just one example of that but the opportunities are great because banks havey been obsessing about themselves and not really about the customers, and if you obsess about the customers, there's so much value you can create. >> reporter: are you essentially launching a new current account? >> could be. you'll see, you'll see. >> reporter: what about the competitive landscape? you've got all of these other sort of neo banks or challenger banks to market. seems like there can't be space for all these guys. >> yeah, could be, but i think we're also coming from a very different space because we're really connected to the merchants as well. we're not only on the kind of issuing side as we say in the industry, but also on the acquiring side we know the merchants. we know the problems customers

face when they shop online, and we're really targeting focusing on those users and how to solve their problems. >> reporter: around $250 million in funding last yearyou're lued at about $2.5 billion when jumping into new areas, will you need fresh capital to fund that, and does that come through vc funding again and strategic partnerships like you have with visa, and they've got a st, or will that be via an ip snonk. >> i think we've always focused on being a profitable company and that's given us the means to do exciting things. >> reporter: will you need fresh capital to pursue that >> i think at the current rate and the growth we have, i don't see necessity in that. >> reporter: what about plans to expand into new geographies? you've got clients, of course, using the client platf the uk, abercrombie & fitch in the u.s. are there new regions you're looking to expand into >> absolutely. banking has been an extremely local play, where you have local players, very broad products offers in the future, just as retail has become global, retail

banking will become global, and there will be a few players that have really understood how to create customer value, and they will be global they will work in all countries. we are the only bank we are aware of currently that can offer their services in uk, u.s., and a lot of european countries. and obviously, adding more countries in europe is a given >> reporter: when we spoke a couple of years ago, you mentioned you wouldn't enter into the chinese market. is that still the case >> that is still the case. i have an amazing amount of respect for all these companies. they're amazing, yes. >> sebastian, ceo of klarna, thank you for your views on the future of your company and the payments industry as well. karen, back to you in the studio. >> argen, thank you. quickly what do you make of the conference there do you feel there's a strong move towards digital transformation taking place, more so than say what we've seen in recent months >> reporter: yeah, there really is and i think when you look at the incumbents here -- we spoke to isg and bb&a, mastercard --

they're really putting an emphasis not just in investing in start-ups, but also trying to build a lot of this stuff inhouse and partner with the key players in the space i was also speaking to sebastian off camera and there seems to be a real shift in mentality in the european fintech scene here, a lot more confidence as well with these ipos and acquisitions as well. >> thank you i'm glad you said that because 2018 feels different to me, too. stay tuned we'll be right back. we're going to talk about the ecb finding itself in the crosshairs of italy's new 'lbeig bk tent wel rhtacafr this to his whole room smelling like sweaty odors. yup, he's gone noseblind. he thinks it smells fine, but his mom smells this... luckily for all your hard-to-wash fabrics... ...there's febreze fabric refresher. febreze doesn't just mask, it eliminates odors you've... ...gone noseblind to. and try febreze unstopables for fabric. with up to twice the fresh scent power, you'll want to try it... ...again and again and maybe just one more time. indulge in irresble freshness. febreze unstopables. breathe happy.

welcome to "street signs" if you're just joining us i'm karen tso. here are your headlines. shares in rbs sink in trade as shareholders take a loss in the sale of the bank, dragging other uk lenders lower. europe's chip makers feel the apple effect after shares of the iphone maker hit a high as investors cheer updates from its annual developers conference. european composite pmi figures hit an 18-month low in may with the outlook looking similarly dim for the coming months. and a coffee hangover for starbucks investors. shares fall after ceo howard

schultz steps down after nearly four decades at the firm, as rumors swirl he is headed for politics all eyes this morning now turning to uk services pmi as we get a check on the uk economy. after a weak patch at the start of the year, some of the data has been improving the may services read at 54. the reuters poll was looking for a level at about 53. this is all an improvement versus that forecast but also up from the april number, which read at 52 so, this is the highest level since february the numbers, therefore, strong enough to move the pound this morning. you can see we've just jumped in the last couple minutes, roughly up about 0.33%, 1.3353 the level on the handle. so still strong, but a lot of brexit worries still in the background that's what many are watching.

here's a look at how we are poised on currencies across th curb this morning. euro trades firmer to the dollar, 1.1707 we've had a bit of a dollar fade in the last week or so, where we've come off some of the highs on the dollar index. the u.s. dollar still holding to the yen today. we've got some weakness in the dollar versus the swiss off about 0.1%. european markets a mixed bunch when you take the uk into consideration. it's 0.2 lower on the index, 7,726, but the lift in the sterling a bit of a headwind that's coming through, but also a bit of weakness in the banks today and the government stake sale in rbs coming through in the banking sector the dax solid, 0.4, still holding on to those levels we've got the french market solid but now a significant bounce in the italian market it was a little bit softer than that about a half hour ago and the index, it's now scaled up to almost 0.8%. so, decent, but keep in mind, it lost a fair amount of territory from the height that it saw earlier this year on the italian

crisis it really came back and it's still off about 10%, so still a gap to close on that market. let's show you u.s. futures and how the american market is poised it looks solid, setting up for a positive session in trade this morning. we saw decent numbers yesterday across the markets dow, s&p and nasdaq allposting their third positive session out of four and some records on the nasdaq along with the russell 2000 small cap stocks, so more appetite for stocks stateside today. let's push on. spain's new government will have no immediate impact on the country's sovereign rating, according to s&p but the rating agency has warned it could cutits outlook if tensions over catalan independence worsened. spain has an a-minus rating with a positive outlook. rome has taken aim at the ecb after the central bank reduced purchases of italian debt speaking to "financial times," the top economic adviser accused of ecb of favoring german bonds

while five-star lawmakers also questioned the reduction however, the central bank has gone to lengths to explain this was done for cyclical reasons, rather than response to the new government the ecb changed its bond buy levels to favor german debt amid a raft of april redemptions. italy's antiestablishment coalition quartered controversy with a draft proposal that suggested they could ask for debt forgiveness earlier, we spoke to former ecb director general for market operations francesco papadita. he said the ecb is not playing games with italy. >> i would be very, very surprised if they would be playing games, as you say. i think they're just following their capital key. and of course, there may be small changes now because of past purchases and things like that, but i would exclude on the basis of my prior knowledge that they would be doing something like that. >> italy's new government will face the thirst of this week's

parliamentary confident votes. a confirmation between the parties is widely expected to back the government in the senate later today let's go to willem for more in rome markets are closed, watching any nuance around this story in us what we should be watching "todatoday. >> reporter: seems like the italian market as you mentioned doing relatively well so far today, karen in about an hour and a half's time, guiseppe conte, the new italian prime minister, will be hoping for a vote of approval to start off the senate. he'll be talking to senators here his party supporting him, of course they have a slim majority in the upper house here in rome they're looking at a 14 majorities in terms of seats out of 320 that vote will take place early evening. tomorrow he'll be waiting for debate in the lower house, the chamber of deputies, then talking to mps there, and then again, facing a vote of confidence for himself a h 18 cabet picks at around 5:40 local time the two men supporting him, of course, luigi di maio and matteo

salvini, they have been in direct confrontation with brussels in particular matteo salvini went down to sicily and talked about the idea that he was sending convicts to italy. he was expected to go to luxembourg to talk about the overhaul of the dublin rules about migrants landing on italian shores he's not going so he can be around for the vote over the next two days. he's sending a delegation. he wants to see a major overhaul spearheaded by the italians to european migration rules then luigi di maio, of course, he is now the labor and economic development minister he's been talking about pension reforms, those pension reforms we saw under mario monte, talking about how he wants to roll those back and get the funding to do so from europe he says he wants to take that money from europe to u his language now, of course, giuseppe conte says he will be traveling to the g7 in canada, where that relationship with europe will be

on full display when he has a bilateral meeting with german chancellor angela merkel in canada on iday, karen, a conversation that we will likely hear a lot of detail about afterwards, hopefully. >> let me ask you about the impact from the europeans, because there was a lot of messaging from brussels and across europe last week at the height of the crisis that the italians have to play by the rules, or watch out. and now we're seeing the ecb not buying some of the debt, and they've cited different reasons, not political reasons, but must be purely a slap in the face for some of the italians, saying that in the background, the ecb market playing politics. >> reporter: it's interesting, not just the ecb here in the last week, karen, you and i were talking about the comments from the german commissioner in brussels about how market reaction to the instability here in italy would drive italians to change their decisions at the polls in the future he was very heavily smacked down by matteo salvini, the new interior minister here and head

of lega for those comments but we heard last night inn interesting interview with our colleagues that the designate prime minister for a hot second last week also said that the reason these two parties came back to the ble at all after sergio dimaio vetoed the finance minister was because of what we saw last week. so, we have a strange relationship where italian politics seems to drive market sentiment. market sentiment, then in turn, drives the politics as well. >> for the bond vigilantes, thank you for bringing us the latest there. mexico will reportedly slap a 20% tariff on u.s. pork imports. this is in a retaliatory move after washington imposed steel and aluminum levies on its neighbors as well as the eu. officials told reuters they did not expect pork prices to rise in mexico as there are, quote, many alternatives to u.s. suppliers. the koch brothers' political network has unveiled a

multiyear, multimillion dollar campaign opposing the tariffs implemented by president trump the influential billionaire donors typically support republican and conservative causes but have spoken out against the tariffs. the kochs political groups are launching a campaign that will include media buys, activists, education, grassroots mobilization, lobbying, and policy analysis. in corporate news, howard schultz is stepping down as executive chairman of starbucks, ending 36 years at the company he helped grow into the world's largest coffee chain schultz handed the role of ceo to kevin johnson in april last year in order to focus on social impact initiativ and expanding the company's high-end stores. schultz will also step down from the company's board. his resignation has sparked speculation that he may run for public office after years of rumors about his presidential ambitions. in a memo to employees, schultz said he was mulling a range of

r his future from philanthropy to public service but gave no other details. here's a look at shares in starbucks. they fell as much as 1.4% in extended trade after the news hit but closed the after-hours session off that low. andrew ross sorkin will be speaking exclusively with schultz later today. that's coming up at 1400 cet schultz has also played an active role in politics in recent years head to cnbc.com for more on his potential political aspirations. you can also e-mail the show, streetsignseurope@cnbc.com and i'm on twitter this morning. my handle is @cnbckaren. get in touch. coming up on the show, apple shares hit a record high after unveiling key changes at its developers conference. analysis when we return. these birds once affected by oil

are heading back home. thanks to dawn, rescue workers only trust dawn, because it's tough on grease yet gentle. i am home, i am home, i am home the first survivor of ais out there.sease and the alzheimer's association is going to make it happen. but we won't get there without you. visit alz.org to join the fight. - anncr: as you grow older, -your brain naturally begins to change which may cause trouble with recall. - learning from him is great... when i can keep up!

- anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers. - anncr: prevagen is now the number-one-selling brain health supplement in drug stores nationwide. - she outsmarts me every single time. - checkmate! you wanna play again? - anncr: prevagen. healthier brain. better life.

welcome back to "street signs. washington state attorney ferguson is going after tech titans google and facebook he's launched lawsuits against the two firms for failing to

keep public information on who has been buying election ads since 2013 ferguson says the companies broke the campaign finance law in the state and should face fines. he's also requesting an injunction that would force them to disclose this information going forward. twitter shares rose in extended-hours trading after it was announced the microblog platform would join the s&p 500. the company will replace monsanto, which will leave the index due to the acquisition by germany's buyer. it's unusual for twitter to join the s&p 500. companies on the index are supposed to repo four straight quarters of positive profit, but twitter has only had two consecutive profitable quarters. microsoft shares hit a record high after the company announced it will buy coding platform github for $7.5 billion in an all-stock deal the acquisition is a bet on the uber cloud business as they target the open-source software

and taking on amazon in the space. it is the biggest purchase since it snapped up linkedin ceo satya nadella talked about the rationale for thlatest deal. >> developers are going to be required everywhere -- it's kind of like what maybe ie early '90s was tuip knowledge workers with tools and services, or what it was even in the 2000s to build sas services for sales profsionals. developer sas is going to be at the center of the digital economy, and that's the real strategic rationale for it it's a secular growth market, and microsoft has heritage here. >> apple shares hit a record high in monday's trading, driving the nasdaq higher as the iphone-maker unveiled a raft of changes at its developers conference among the updates for the tim cook-led company are upgrades to let older iphones run faster, improvements to its voice assistant, siri, and a crackdown on tools that can track web

users. apple also said it would work to make it easier to transfer iphone and ipad apps on to mac computers. ceo tim cook lauded the app store as a hub for developers. >> this week, we're going to achieve another huge milestone the money that developers have rned through the app store will top $100 billion. the app store is clearly the best place for you to be rewarded for your hard work and creativity >> argen is at the money 2020 conference in amsterdam. and argen, you've spoken to one of the ck. wonder what he thinks of the company that it's become theseds >> reporter:eah, i mean, his view is very much this is still a story about the iphone this is the key product in the apple lineup, of course, because this is a phone that sold in the billions now, and as many phones in the market, and it's key for apple because it continues to play on the services as well to continue to grow that revenue.

now, i caught up witeve wozniak, co-founder of apple, and asked him about the iphone x. this is the anniversary edition of the apple iphone, which has come under criticism for a high price tag and also perhaps not selling as much as expected. steve wozniak said that the high price is natural for an apple product, but he did have one issue with one of the features of the iphone. let's listen in to what he had to say >> the greatest thing about the iphone x for me is a little more screen space for a size that fits in my pocket. and as far as the face i.d. it really hasn't worked as well me as uch i.d., and i really like the ones where you touch on the back so, it hasn't been like, oh, my gosh, it's the greatest thing ever in the world! the worst thing about it, though, is the combination power key/home button has about eight different functions depending when you push it, how many times you push it and how long you push it and it's kind of

confusing. and even the jet stream got complicated as to when you hold and when you have to remember to touch and a second time and holding it it got more confusing, and that wasn't the nature of apple products we thought out a one-butn mouse was better for beginners because anybody could use it than a three-buttouse where you have to remember all these different things the idea is it should be intuitive. >> reporter: was the price too high >> well, i didn't really -- apple products are worth the price, in my mind. the iphone works so well with the watch and with the ear buds that it's just worth it. and for that particular iphone, the pricing really falls in with where prices of smartphone products are for their abilities. yes, there are some companies that try to short-change ts and not have much profit, and there are some that try to make good trade-offs. if we leave this out, we can make it a little less expensive, but still do the main job, and i admire those companies, too. >> reporter: that was apple co-founder steve wozniak there, giving his views on the iphone

x. and i think the reason that the iphone is still key, and it goes back to the worldwide developer conference which kicked off yesterday -- apple unveiled some new measures that actually are designed to keep the software up features, such as augmented ew reality, to some of the products, and that's quite key for apple as it continues to sell these iphones, but also moneti on th crucial, crucial, crucial software and services business that the market cares about so much, karen. >> argen, thank you very much for that i'm going to talk more broadly about some of these features joining me on the set is neil capling, co-he of a global group. neil, i thought it was fascinating to see some of the areas apple targeted at the developers conference, clearly around some of the software, but the need for speed it's trying to make the device much faster in terms of launching apps what is it, about 40% faster than the previous operating system >> because i think if we go back a year, one of the biggest criticisms of ios 11 was the speed. there were performance issues,

degradation as well. and this fixes some of those issues but if you look at the speed now of an iphone, it's 130 times faster than the original iphone, super performance improvements over the last decade, for sure but really from wdc yesterday, the biggest takeaway clearly is the app development community and it's the $100 billion that's been paid out to developers means that it's now self-serving in terms of the ecosystem for people to develop apps on that particular platform. >> which is a little bit sort of challenging to the open source model, right so, typically, there was a lot of pushback from the community, felt like they couldn't get access to apple, but apple's kind of opened the platform to an extent. you have to pay for the privilege, but you still get access. >> yes, and of course, the price point for that privilege is very low. it's $99 now, earlier in your message from your reports were saying about the microsoft deal yesterday, for example, $7.5 billion to basically buy into an open-source platform apple has an open-source platform now that has meant that the developers on mobile for the

industry have grown from 2 million to 20 million over the last ten years. >> for me, there are a lot of different things buried in the update yesterday, how apple is going after different areas, from you know,mented reality rtificial intelligence but for you, the first message you said to me is it's about gaming that's where you see some opportunities. >> because i think what's often lost is we've got hundreds of thousands of apps in the app stores, but 82% of revenues is in gaming. it's all about the gaming vertical so, although the $100 billion going out is gaming-based, gaming is now the biggest vertical within media, a $130 billion industry alone, growing at double digits every year for a ten-year basis and apple has become one of the biggest gaming companies in the world but makes no games so it's g a lot of money in the business primarily from gaming. >> are there more direct plays because with pokemon for instance, we saw a couple players behind the scenes benefited. what do you look for in this

cycle if apple's delivered the platform >> you're looking for high-quality gaming companies that engage with millions of players. the best ways of playing is through the big gaming companies. there's one that's little known but has done very well called cd project. that's topping the gaming space, posting actually in poland also, activision also in the u.s. and capcom in japan are our four top picks in the gaming vertical. >> can we get into security, because in the headlines earlier this year, just a few weeks ago, mark zuckerberg versus tim cook on the type of models they have, free model through advertising support that zuckerberg was defending, as you saw, the cambridge analytica scandal break, tim cook effectively saying the security was much, much better. we have seen now this latest initiative to stop apple users being tracked if they go to websites is this stealing some of the advertising dollars or thethund advertising models >> potentially, it makes obviously much more challenges for the likes of facebto really track users going off the platform on to other websites,

et cetera. and apple's kind of making a case here that they're saying that they are protecting users' privacy data, which could become a challenge for the facebook model itself and actually, it might mean that the ad dollars go on to those platforms that are aware that engagement takes place so, for example, amazon. there is more product search that begins on amazon than begins in a search engine, which is quite phenomenal. >> i want to get into the change we're seeing at technology conferences, and i just alluded to that before with argen. but i was at vivatech last week, been at member of world congress, web summit as we closed out 2017. it feels like the conversation has moved now where every single item that we know is being transformed digitally somehow, and you saw that through apple yesterday, where they're talking about you don't even need a tape measure anymore. you can measure the distance or the length of certain objects. so, it feels as though we've sort of stepped into a new wave of change around technology. >> lots of things talked about artificial intelligence, machine learning, hyperscale data

centers, these kind of technologies the key thing to think about is that in the tech industry, there's been a massive investment in capex over the last four to five years. it's built out the infrastructure so, much of this is being enabled actually by the cloud services the cloud infrastructure that means that for us as a user, we just see these seamless experiences on the internet, on cloud, on our devices, and that infrastructure's enabling massive advances in technology improvements. >> are we seeing a subtle shift now whe any of the big players are really going to benefit? i mean, apple's conquered so many different parts of the spear. ir, also big data where it's now given you the ability to go through all of your photos and bring together themes, so effectively, the customer's big data can be tapped i wonder whether these big companies have moved so aggressively now that there's not much left for some of the start-up entrepreneurs >> i think there's always still a vc and start-up culture that exists within the tech industry, and they're always looking for new-improved ways of doing

things clearly, the big companies are very powerful in this space, but actually, it's also a way of playing into those ecosystems. these companies have got big platforms. you look at a billion people spending three to four hours a day on one platform. but it also means the way those platforms work, it's enabling developers to work with those platforms. you've gotten the infrastructure, you had the platforms, you can tap into the user base, but you've got, certainly, opportunities for small start-ups still to thrive. >> just ten seconds. apple a record high on the stock, justified with the update at the developers conference >> i think it's reasonable i mean, the valuation's fairly reasonable i think that there are opportunities that exist in playing the cycle through, ways of playing onto that platform where you have better opportunities for alpha capture. >> neil, thank you verymuch fo running us through some of the key updates. neil campland. for more on the updates and upgrades to apple products, head to cnbc.com. one of the big moves in markets

this morning is around sterling, 1.3379, but you can see how much it's lost since the beginning of the year we have the biggest daily rise in seven weeks on the back firm, expected uk services pmi moving the needle on the trade. but also, a u.s. dollar fade has been noted by a number of market watchers so, as you see, some of that sentiment really come out of the trade. that's having an impact on sterling/dollar on the back of good news. u.s. futures suggesting u.s. markets are in for another bounce today you can see green moving on to the screens early on that's it for today's show i'm karen tso. "worldwide exchange" coming your way next

it is 5:00 a.mat cnbc global headquarters and here are your top five at 5:00. the eagles will not land at the white house. president trump canceling that football team's visit. starbucks' howard schultz stepping down. will he now run for president? apple's ceo, tim cook, opening up, talking everything from tech to regulation to privacy to b the first trillion-dollar company. twitter investors chirping after that stock getting a huge win. and the world's biggest bond fund out with a warning for you and your money it is tuesday, june 5th, and "worldwide exchange" begins right now. ♪