welcome to "street signs." i'm willem marx. novartis shares pop after beating expectations in the second quarter despite struggles at its santos generic unit >> net prices in the u.s. has not increased in novartis' portfolio. given the structure of the markets and the rebates we have to pay, net prices have been

flat to declining. ericsson jumps towards the top of the stoxx 600 after a surprise profit in the second quarter boosted by positive momentum in north america. i'll speak to the ceo in about 20 minutes time. shares in the assassins creed videomaker hit a high thanks to a strong first quarter sales. and jay powell says countries that embrace protectionism fair worse >> for now the best way forward is to keep gradually raising the federal funds rate on the one hand raising interest rates too slowly may lead to high inflation or financial market excesses. if we raise rates too rapidly, the economy could weaken and the economy could run below our projecti projection

good morning as you can see, it's been a positive start to the day's trading here in europe with the stoxx 600 up almost a half percent at this stage. a lot of those numbers coming in in terms of earnings seeming to help that upwards momentum looking at individual markets and how they're driving that number, italy in the red the ftse mib down more than a tenth of a percent the xetra dax up more than 0.75%. the cac 40 up more than a half percent. technology up more than 2% autos up 1.5%. healthcare up almost 1%. banks, after we got a run of earnings in the u.s., they are down

novartis beat analysts expectations with its top and bottom line numbers. sales rose 5% and core operating profit grew 7% as strong demand for the arthritis and heart drugs offset weakness at its generic unit the drugmaker reaffirmed its full-year guidance speaking to cnbc earlier, the ceo addressed the pricing in the u.s. >> net pricing in the u.s. has not increased in novartis' portfolio. given the structure of the market and the rebates we have to pay, net prices have been flat to declining in our overall portfolio. the growth you see is driven by volume and our ability to drive break through innovation i'm excited by the new launches we have coming up. that will enable us to continue to grow through this period. we have a great oncology

portfolio, and a series of launches coming up that will enable us to drive growth. >> it's important for us to know and shareholders to know that you didn't know anything about the michael cohen contract until when, the first of february this year >> look what we've disclosed as well in all the senate documentation is i learned of it after i became ceo of the company. we tried to manage this as best we can it was a mistake i think we put the matter behind us there's no ongoing inquiries anywhere on this matter. and i'm focused on what we can do as a company to drive growth. >> what happens with santos now? i note you're buying gene therapy company avexis, but does this whole surge of spending from your company and others

into gene therapy, does it risk having the same problems that generics have had previously you pay up for too many early stage drugs and treatments and it goes sour >> when you look at gene therapy and many of the related therapies like cell therapy, our recent launch of a drug called kimrya, these are medicines which have break through efficacy you are seeing situations in children and pediatric cancers where you have 90% of the children responding, those responses are consistent over time with avexis, in young children most of whom would die in the first year of life we've seen children with 100% response and the children doing well now out three, four years of age so these are truly transformative therapies i'm excited that it's been approved now in pediatrics and adults in the united states. we have positive opinion now in europe as well showing this is a

reality cell therapy with gene therapy we announced this morning that we're in position to file avx 101 from avexis in q3 so this is becoming reality now. i believe one of the future pillars of a company like ours is these transformative therapies. i think that's the future of medicine if you can drink true cures or potential cures to patients, parents will appreciate that, patients appreciate that, the physicians community appreciates that these are complex therapies, but if we can conquer these technologies we can build another pillar of growth for novartis >> ten seconds left. sandoz is on the block >> sandoz in the u.s. we're continuing to optimize, it's a leading generics business around the world, so we're committed to ensuring its success in the

medium to long-term. >> the ceo speaking to steve sedgwick earlier this morning. asml reported better than expected second quarter earnings sales jumped 30% net income at the company was 584 million euros. french video game firm ubisoft reiterated its full-year guidance in-game purchases and a growth in its catalog boosted first quarter results. sales for the three months ending june 30th hit 400 million euros, net bookings almost doubled. the company estimates full-year sales will be around 2 billion euros. and akzonobel missed q2 estimates as net profits fell 10%. bhp billiton reported a

record output of iron ore and raised its target for the current year bhp expected to in -- incur a charge related to 19 deaths. and tele2 net profits surged the firm saw higher sales numbers in sweden and a growing number of users in sweden and the baltics. earnings for the year are expected to come at 7.1 billion crowns and easyjet blamed industrial action in france and severe weather for a rise in

full-year cost receipt excluding fuel the firm upped its full-year profit guidance to between 550 and 590 million pounds you can get in touch with us on twitter, @streetsignscnbc. coming up, we speak to the bosses of two big swedish companies. that's coming up next on the that's coming up next on the showic ocean. population on the planet. isolad ♪ hawaii is the first state in the u.s. to have 100% renewable energy goal. we're a very small electric utility. but, if we don't make this move we're going to have changes in our environment, and have a negative impact to hawaii's economy. ♪

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. electrolux reported second quarter core profit of 1.65 crowns to beat forecasts, however they see increasing headwinds from a rise in raw material costs and negative currency effects the company added it will pursue price increases and try to tackle costs we are joined now by jonas samuelson. how much are you struggling with raw material costs, adverse currency conditions? you mentioned this last quarter

as well. >> we're seeing across the group significant headwinds in terms of stooeel, plastics, chemicals and in combination with currency headwinds mainly in our american business and in europe these are ongoing headwinds we are facing and addressing throughout the year. >> there's not much you can do about them short of getting donald trump to lift tariffs on steel for instance but the market for your products in north america is softening. do you think consumers will stick with you in markets like north america given that you will be passing on these price increases to them to protect your margins >> i think the overall consumer demand back drop is supportive across the world and for sure in north america. so i think the consumers are resilient. but of course the higher costs we're facing in our industry is being passed on to higher consumer prices. there is some demand related to

that which we guided for we see the overall back drop on consumer demand as favorable >> you have six major business areas. in your annual report for last year you said half of those were no in the target growth phase. as you look for profit growth, where are you now in terms of those six business areas >> yeah. that's still very much the case. particularly our european business has grown profitably, our professional business and our asian business those three divisions are in our profitable growth mode we also saw a nice growth in latin america despite the significant headwinds we're facing there so we're extremely pleased with the products we have in the market now we see market share gains across the world. as we're facing these headwinds we discussed, we're doing that in a position of strength. >> looking at your share price, down almost 30% on the year. why do you think investors are

not buying into the strategy for profitability growth >> well, i don't necessarily think they're not buying into it i think the share price is very much a reflection of the headwinds we're facing and people are waiting to see to what extent we can offset that >> you got stung in france recently after a court decision cost you 25 million euros in provisions you had to set aside twice that amount to deal with allegations of price fixing by the french competition authority. both of these eating into profitabilities. should investors be aware of anything else in the cupboard that has not yet come to public light in terms of various territories in which you operate? there's dozens of them around the world. >> no. there's nothing that we have not disclosed publicly of any magnitude. >> what's the element of the last three months that's made you as ceo most happy with your company's performance? >> the success of the new and

innovative products we have launched we are gaining market share against tough cost back drops. that's pleasing. we're continuing to be driving cost efficiency. we have a long track record in that >> jonas samuelson, thank you very much for joining us shares in dutch paint company akzonobel are higher despite missing expectations in the second quarter net profits fell 10% speaking to cnbc earlier today, the ceo said he was encouraged by the firm's performance. >> comparing quarter over quarter in a year, since last year a lot of things have happened in raw material we had to absorb 300 million euros of raw material increases last year and about the same thing over and above that this year we are encouraged by how we are turning the tide and actually

making good on the headwinds versus what we see from some competitors in the industry. >> is it fair to say ever since the ici acquisition your company has been in a constant state of flux it seems you're forever in transformation why isn't this company betting down >> isn't that what every larger company in materials is doing? it's a lot of transformation, a lot of things have to be adjusted, markets are changing if you go with what my predecessor has done, that is try to make the company much more competitive in the structures i'm trying to take where he left it and get it to the famous by 15 by 20, making us not only one of the largest players in paints and coatings globally but also the strongest performing so it's all driven by performing stronger less than that there would be some other reason behind it. that's what globalizing industry

and markets, that means you have to adjust your structures. >> you said raw material is set to continue through the year at what point do you pass that on to consumers? >> that's already happenedto a large extent it's always difficult to all the value channels you have to pass on to price increases. if you analyze our numbers, so we have two bigger parts that we report on, detective paints, i would say wall paints, houses, there we had a 5% raw material increase that we have been able to offset with pricing if you look at our return on sales, detective paints is back in the race. it's been doing better than last year 12.6% return on sales is strong. if you go to the performance coatings business, 3% price increases, which is unprecedented versus the rest of the industry, the paint industry how we go about capturing the

value. 3% is less than 5% because of a lot of six-month contracts, annual contracts, that's why you see a bit of a mix >> that was the akzonobel ceo. returning to sweden, ericsson swung to a surprise second quarter profit thanks to growing sales in north america the swedish mobile equipmentmaker announced savings of 10 billion crowns as it comes towards the end of its annual cost cutting program ericsson said the stronger than expected numbers gave it confidence to achieve long-term financial targets. we are joined by the ceo of ericsson, borje ekholm you're selling us on the idea that you can reach an operating margin of 10% by 2020, 12% after that that's only if you exclude significant restructuring costs. can you not actually get to those numbers without stripping out those restructuring costs?

>> yeah. you know, we set out on a strategy of what we call a more focused strategy last year that was designed to basically get our profit margin beyond 10% by 2020. we feel we are on track to execute on that. and then we will not see significant restructuring costs. they are really associated with the current change in the business it is encouraging to see the strategy is gaining traction and momentum your share prices jumped aggressively over the past few months what do you see as the reason for that? is it about the sales not so terrible as they have been in the past is it about profitabilities? why do you think investors are buying into your story

>> it is always in the eyes of the investor how they should respond to it. what we are focused on what we are satisfied to see is the strategy we have we are executing on and we are yielding results. we see investments in r & d to develop a competitive portfolio generates results. we have good momentum with customers. we also see the effects of the cost out so i would say net-net we are at least happy with what we see in the sense of delivering on that strategy i would expect investors see that also and give us credit for that. >> don't go anywhere i need to report to viewers, bloomberg is reporting that google will be fined $5 billion by the european commission over its use of the android platform for mobiles. this goes back many, many years,

and it is about the use of android to dominate in the search environment taking you back to our environment with borje ekholm at ericsson what about the investments you're having to make in 5g and associated technology. for how long will that huge outlay be a drag on profits? when should that start paying off from the shareholders perspecti perspective? >> you know, it's back to the target we set out for 2020 that's actually including investments in 5g as well. so we have really been in the target not including benefits from 5g sales by 2020. we have not built that into the targets. so the costs are really to a large extent accounted for of course there will be extra costs on future development in 5g there will be some costs related to large-scale field trials.

but for us it's really to have the discipline to manage our financial target in 2020 that's what we're committed to >> you're still testing this technology just this week i understand you had another break through in collaboration with intel you placare out of the lab gettg into the real world as far as testing, but how long until this technology is fully operational and licensed for consumers >> we will see commercial launch by the end of this year. we will see much more devices coming onstre stream in 2019 ane expect a billion subscribers by 2023 it's not that far out when we will see a significant part of the traffic in the network coming from 5g you know, 5g is critical in

order to give -- if you look at data traffic, it's doubling every 18 to 24 months. so operators need to deal with that without having costs exploding or quality deteriorating. that can only be sold with technology here we see 5g playing an important role in both lowering the cost for dollars per gigabit and also keeping a high user experience >> you have yet to predict how much 5g will make to the bottom line and your profits in the future is it fair to say you're putting a lot of your eggs in this one basket >> we are investing a lot in 4 g technologies as well as 5g technologies it includes anything from the radio side to also the coronet

work we're investing heavily in the next generation. at the same time i also want to stress that our existing hardware portfolio in the radio side is already enabled to carry 5g traffic with a very simple software upgrade the reality is an operate their puts in our 4g gear does dmot ha not have to rip out that hardware but it upgrade. we think that's important for competitiveness and why we have good momentum with customers today. >> talking about competitiveness, you have done relatively well in north america. the u.s. government led one of your rivals, zte on a bit of a dance the last few months. the firm from china now seems to have access to u.s. companies once more. has that uncertainty had an impact on your own strategy?

>> i think we have to focus on what we can impact so, you know, we focus on having a very competitive product portfolio and solutions to customer problems and to be cost competitive. that's our key reasons and it's on that basis that we win contracts. for us, the uncertainty is an external event whatever happens we will respond and deal with that our focus and dedication is on our own products and our own cost position. >> borje ekholm, thank you very much for your time today. coming up, the uk government survives a series of key brexit votes, but sterling hits a few bumps. analysis and market reaction coming up. overwhelming air fresheners can send you running...

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second quarter despite struggles at its sandoz generic unit the ceo says he will not increase generic pricing this year >> net prices in the u.s. has not increased in novartis' portfolio. given the structure of the markets and the rebates we have to pay, net prices have been flat to declining in our overall portfolios. ericsson jumps towards the top of the stoxx 600 after a surprise profit in the second quarter boosted by positive momentum in north americ as its turnaround plan kicks in. danske bank says it will forgo profits in its estonian branch due to suspicious activity and google faces a $5 billion fine for abusing its market dominance with the

android market platform. that is higher than the previous penalty directed at the european giant. the fine suspected to be announced at 1:00 p.m. central european time. uk inflation numbers are out this morning they are below expectations. we will take a quick look at sterling you can see cable falling now and weaker against the u.s. dollar on the back of that news. something that we're watching closely here as brexit, the process continues. the british government survived a series of votes on its brexit strategy in parliament mps voted against a proposal that would have forced the government to start discussions over a customs union with europe if the outline for a free trade deal were not to be agreed by january. this meant that theresa may can now pursue an independent trade

policy after britain's exit from the european union the government did lose one vote on its planned regulation of medicines after brexit that political loss saw the currency hit a four-month low against the euro the currency also had its worst day since may 1st, however the pound ended back up bouncing after the government survived more significant brexit related votes. the prime minister is set for another busy day when she faces off against jeremy corbyn for the final session of what is known as prime minister's questions before the parliamentary summer recess. later theresa may is scheduled to appear in front of the liaison select committee boris johnson, a potential political rival forever theresa may, is set to make his resignation statement later

today as well. we are joined by peter sheffrick this morning it does seem like theresa may is struggling day-to-day at this point. does that mean anything for i vei -- investors? >> you mentioned the gyrations of the pound up and down that's a reflection of it at the end of the day the key question for investors is -- obviously one part is what kind of brexit deal ultimately will be put through parliament but the bigger question is is there somebody around to push a brexit deal in the first place obviously if you come to a point where the government potentially has been toppled, and that increases uncertainty not only about the timing but also who will follow, and i think that's one of the key questionss will for. >> how likely is it that theresa may survives until march of next

year what does that mean for markets? >> i think it's almost impossible to put odds on it, though there are odds out there that you could look at the broader question ultimately is if we approach the october deadline, i don't want to talk necessarily about the march deadline, but if you approach the october deadline, which is supposed to be the point in time when an agreement with the eu shall be struck, do we have at that point a majority in parliament to vote for whatever has been agreed, yes or no if that's not the case, irrespective of whether she stays in power or not or whether somebody else gets in, if we do not have a majority in parliament for whatever has been agreed at that point in time, the odds of a no-deal scenario, of a no-deal that can be agreed with the british parliament, increases substantially irrespective of who is in government >> counter argument to this is

that parliament in the uk goes off on summer holidays known as the recess in a few days time. theresa may has won what was seen as a crucial vote of the customs union last night her position after this recess begins could be safe is there no reason that investors could stop worrying about this until september >> i don't think so. quite possible, in fact it's very likely, she will survive until the recess kicks in next week however one thing you have to remember is that all of the mps, they go back to constituencies, particularly the conservative mps tend to be less leave-prone on balance than constituencies they will go back and then they talk to the people on the ground and the people on the ground will almost certainly voice dissatisfaction with what's going on in particular when you look at the latest surveys in regards to the checkers deal, people are not happy with that.

once they come back, we'll really have to see the odds of that deal being pushed forward, that even decreases after the recess >> you may not be seeing the numbers now, but it looks like sterling has plunged a bit against the dollar on the back of this latest inflation data in the last few moments and based on that, based on the fact that mark carney spoke publicly about the consequences of no-deal brexit, what does this mean for bank of england policymaking and assets like gilts? >> yeah. so i think we have to differentiate between the short-term and when we talk about short-term we are talking august bank meeting and then the medium term. in the short-term i would be surprised if the bank holds off with a rate hike it did so in may i think it's unlikely everything we have said so far, all the data that has come out, the data may be weaker now than the consensus estimate, on plans all

the data supports their expectations going into this meeting. so hence if they do not hike rates as we forecast, i would be extremely surprised. over the more medium term, that's a completely different story, because the path that the bank has mapped out for two to three hikes over as many years is crucially contingent not only on economic circumstances but on a smooth implementation of brexit if that doesn't happen the path is in jeopardy. >> peter, thank you very much. according to former white house chief strategist steve bannon now is the moment for boris johnson to challenge theresa may for the top job. speaking to the daily telegraph newspaper in the uk, bannon questioned whether the prime minister was the right person to lead the uk at this moment in history. the comments follow an interview in the sun newspaper in which president trump suggesteded that boris johnson would be a great

prime minister steve bannon will be one of many high profile speakers to take to the stage at the delivering alpha conference in new york later today the event is hosted in partnership with institutional investors. this year's lineup also includes larry kudlow, marry callaha callahan erdoes and kenneth griffin. attendees can hear from james chanos and david rubenstein. steve bannon having a one-on-one interview with michelle caruso-cabrera let's look at the futures for the three major markets there. the s&p 500 looking to open very slightly lower the dow jones looking to open higher the nasdaq after a strong day yesterday also looking to open slightly lower we look at the currency markets, we've been talking about cable the last few minutes you can see the pound is 0.7%

weaker against the u.s. dollar the euro is also weaker against the u.s. dollar by 0.40 the ftse 100 is up 0.59% the xetra dax is up 0.69%. the cac 40 is up 0.40% the ftse mib is the single major market in europe down 0.10%. sticking in europe, strengthening the demand for swiss watches in asia and america boosted swatch's first half net profit by 67% the swiss company said it expected further growth in the second half of the year predicting more opportunity to expand market share. we are joined by the chief executive of swatch, nick hayek. i have to ask you, where do you see this opportunity for

increased market share which territories? >> yes, hello, everybody this time you're late, cnbc. you need a switch watch in studio to talk earlry ry in the morning. i'm always happy to be with you. you see the opportunities are everywhere in the world. even in the united kingdom we see that the business is going well not just in asia, america, but across the boards through all segments that's very good good news. we're bringing upon a good 2018. >> are young people increasingly interested in buying a wristwatch >> yes the young people are much more interested than some older people, especially when you talk about the americans. americans are used to taking watches or many of them just as a time keeping machine but they have no other reason

for it, but the young people and the millennials, that's it exactly, they want something that is special that adds value. they want real brands. they don't want another commodity. commodities are all over you can just interchange them, throw them away. the value is decreasing. no, it's a counter trend what they want is real value, independent of the price of the product. they wanted real brands with history, with innovation, with swatch group we are well positioned. we spend a lot of time looking at currencies. this morning the dollar is stronger against the swiss franc. how much of a challenge have you faced from currency headwinds over the last few months >> it got better you must know we have 150 factories in switzerland we do practically from swatch up to the top, we do everything in switzerland. so of course exchange rates for us is tremendously important

of course it's a much better situation now than it was a year ago. now the swiss franc looks better there are some areas in the world that are still in an exchange rate that is not so much acceptable for us, but we live with it that's fine now. >> in terms of your various portfolios, are some performing better than others are the more expensive watches selling more successfully than the cheaper ones >> no, you know, this is the funny thing. you can look at swatch, then very successful situation, that depends also on the regions, also america for example, u.s. swatch is very strong. then on the other side you have omega which is strong across the board. you cannot focus on the high-end

only or the low-end. it's across the board. people are looking for quality that gives reassurance and if you buy a watch for your child, you want a high quality product that's reliable, transparent and you know the one who is doing this product. so people are looking independent of the segment and the price for good quality and guarantee and who is guaranteeing the product this becomes more and more important. one final question, your profits have jumped 67% for the first whatevhalf of this year. why is that? what is driving that huge increase in profitabilities? >> like always, since we do everything ourselves, the moment you sell more, you will increase your profits if you do movements alone, we are not the only ones, some are clients of ours, if you do everything yourself, you will have much more profit, much

quicker when you sell more product. of course if you sell less product, you have costs of production but you control your production, innovation and you're much quicker in the market when the market goes up again you will see in the second half it will go up again. in the first half we had olympic games with omega and commonwealth games with longenes, this added over 100 million in marketing expenses. so the profitability would have been higher if you take this out. that's our strategy. let's do everything ourselves. that's an opportunity and not a risk >> mr. hayek, thank you very much for being with us this morning. just to bring you an update, the european commission for competition is going to be talking at 1:00 p.m. central european time, that's going to be about that potential fine for

google around its dominance and potential abuse of the android operating system for mobiles abuse of the search space in particular bloomberg already reporting that fine could be as much as 5 billion u.s. dollars the european commission fine is expected to center on alleged business practices for google air round the android operating system coming up, fed chair jay powell backs more rate hikes as he defends the benefits of free trade. more on that and his comments after this break plaque psoriasis can be relentless.

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welcome back to "street signs. i'm willem marx. danske bank lowered its net profit outlook for the year after reporting first half earnings that fell below expectations the bank reported net profit of 9.1 billion danish krona

sticking with banks, second quarter net profits at swedbank beat expectations. they were boosted by higher income from its trading unit costs were in line with expectations speaking with cnbc earlier, the ceo expressed her satisfaction at house prices in denmark in particular are now stable. >> the mortgage market grew by 6.8% in the second quarter we grew by 6.3 i'm pleased by this, we're the bank for the many in sweden. we are there for everybody and now we see stabilization of prices we also see a number of transactions generally have come down a bit

which is good. we're in line with the average the past four years, which is a good place to be >> that was the ceo talking about house prices in sweden, not denmark. morgan stanley will release second quarter earnings before the bell stateside they are the last u.s. bank to report numbers after goldman sachs saw a better-than-expected 40% jump in profit speaking of goldman sachs, the bigger news for that bank was confirmation that david solomon will take the reins in october as blankfein steps down or steps up to senior chairman after 12 years as ceo solomon is also expected to get a pay rise go to cnbc.com to find out how much he will be taking home. u.s. markets closed higher yesterday lifted by an optimistic outlook led by jay powell in testimony before the senate banking committee he painted a

bullish picture for the u.s. economy and forecast the job market would remain strong, inflation would hold around the 2% target over the next several years. powell also said that for now the fed remains committed to its gradual path of rate hikes steve liesman in the u.s. has more >> jay powell telling congress that the best way to keep the u.s. economy growing is to continue raising interest rates. in his semi-annual testimony before the senate, powell said the job market is strong, unemployment will fall further in the months ahead, and inflation has more or less hit the 2% target. >> i think gradually raising rates is the way for us to extend this expansion. nothing hurts working families and people at the margin of the labor markets more than a recession. >> powell said wages were not rising fast enough yet to cause an inflation concern that was something of a dovish comment. he added there is room for wages

to grow without sparking inflation. powell said it was too soon for the tax cuts from last year to be helping wages now the ultimate affects of the fiscal policy will be hard to gauge. overall he said the tax cuts have had a positive impact on the economy. powell tried to steer clear of direct comments on the trade controversy because he likes to stay away from politics, he offered a generic warning. >> in general, countries that have remained open to trade that have erected tariffs have grown faster and have had higher incomes and higher productivity and countries that are going into a more protectionist direction have done worse. >> powell also said there have been some report of businesses canceling or delaying capital spending plans because of the tariffs and he held out hope that better trade agreements can ultimately come from the current process sticking with the subject of the federal reserve, we're joined by the chief u.s.

economist at t.s. lombard. joining us very early from new york i have to ask you, it seems difficult to avoid politics in all this for the new fed chairman you have donald trump politicizing everything from trade to employment numbers. >> yeah, it is hard. but, you know, i think he did a great job. he said the right thing, that the issues the senate brought up involving trade, wage disparities, these are not in t the -- or something that the monetary policy can fix, it's not in the fed's chart tore go after. and they are looking for him to basically give them an answer or a sound bite they can hang on to and push the administration on to give them either a pat on the

back or the opposite so he like yellen, bernanke, greenspan before him, they tee off with the 3 wood instead of the driver and hit it down the fair way >> it's not the fed's job to fix some of these things but it's their job to react to some of these things do you agree that it is more powell's job to look at trade as a hypothetical risk? >> trade is a real economic risk, but he can't adjust policy today to the here ridea of whata or may not do. everyone has a view. but until you begin to see it

actually impact economic numbers, policy has to stay with what's right in front of it, which s as he said, an expanding economy. growing employment, and wages that are beginning to catch up, but not there yet. >> there's a debate going on inside the fomc about market signals, the shape of the yield curve, correlation versus causation questions. janet yellen brought up in her last press conference that based on yesterday's testimony, where do you think powell stands on that? >> i think he stands on outsourcing the issue of what is a neutral rate to the market a child spread in the 20, 30, 40 basis point range for twos and tens is normal for this stage of the cycle. you can go back to the '90s and '80s and before that what stands

out is not the flatness of the curve but how long the fed needed to keep the yield curve so steeply positive to reliquefy the banking system now we're at a point where this will trend here for a while. then the fed will go a step too far, the curve will revert, recession will come six, eight months later, but he's happy to watch the curve. when he sees the curve getting too flat, that will be the signal to him. >> we have to leave it there thank you very much for your time. that's it for today's show i'm willem marx. "worldwide exchange" is coming up next. - i love my grandma. - 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.

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it is 5:00 a.m. at cnbc global headquarters. here are the five big things you need to know. trump and putin be darned, why it could be another record day for your high-tech dollars european regulators set to fine google $5 billion over its android operating system more on this developing story in moments. the ceo of one of america's biggest technology companies is out after sixweeks on the job. jay powell heads back to capitol hill and united airlines may have given investors the all clear to buy airlin