. hello. welcome to "street signs." i'm nancy hungerford >> i'm willem marx these are your headlines citron shares hit the highest level as the opel business returns to profit in the first half of the year. ubs posts a better than expected rise in second quarter net profits sending shares higher the ceo tells cnbc the bank is on course for a strong year. >> like in the last few years, we have been able to navigate

challenging market conditions and deliver have returns to our shareholders i believe we will continue to have a solid performance also for the rest of the year a big beat for alphabet. shares jump to a record high in after hours trade after the google parent company's second quarter earnings smash expectations. and ams jumps more than 10% as the apple supplier forecasts record revenues for the second half of the year pulling other chipmakers higher. hello. welcome to "street signs." we have some eurozone pmi figures to bring you this is the flash number for the month of july coming in on the composite level just shy of forecasts. that composite coming at 54.3. that compared to a forecast of

54.8 a touch shy of the 54.9 level in june on services, that appears to be the drag services at 54.4 compared to a poll of 55 on the manufacturing component, we had a beat. 55.1 compared to a poll of 54.6. the headline is that business growth was slowing as trade fears bite interesting to see how much of that is due to the current trade tensions out there >> it looks like peugeot is on the road to recovery psa reported first half results that beat expectations the carmaker saw strong performance in the new opel unit and net income rose 18%. can you give us more detail on the share price reaction >> well, it is a good one. i investors like what they see in this report the stock jumping now almost by

10%. this is the highest we've seen this stock since about august of 2008 that gives you an idea of how enthusiastic investors are the note from evercore was opel rises from the ashes this is a huge part of the story. overall let's dig into some of the numbers to give you a better idea of what does have investors enthused looking at the net income, that was up 18% 1.48 billion euros the revenue a big jump of 40% to 38.6 billion this is the number i'm interested in. operating profit of 47.8%. not bad for an industry trying to get operating profits up across the board when you consider vw band is struggling to get it to 6%. net income, revenue both beating. a lot of this is down to opel returning to profit here as you know, we've been talking

a lot about sergio marconi, the newly exiting ceo at fiat chrysler i couldn't help but remember what he had to say about the ceo of psa i got to speak to him after this opel-vauxhall deal was announced. marconi said if anyone could pull this off, it was taveras, because he had a reputation for overpromising. >> michelin reported a jump in first half profit that was broadly in line with expectat n expectations lower borrowing costs and u.s. tax reforms helped the french tiremaker boost net income by 6% to 917 million euros a weaker u.s. dollar pushed revenues down. the results come as michelin pursues a series of acquisitions to fuel growth and value

creation the firm sealed several recent deals including a joint venture with sumatomo. let's check on shares of ubs which are rising after the second quarter earnings beat expectations net profit als also topped expectations at the swiss bank's wealth management business, adjusted net profit grew 7%, despite 1.2 swiss francs in outflows that the lender blamed on seasonal higher tax flows joumanna is in zurich and joins us now you've been speaking to the ceo directly investors seem to like what they see in these results what's the message from ubs? >> absolutely. this is the beginning of the european earnings season typically you would look towards ubs for guidance on how other investment banks will look in

the next few weeks the message coming out of this is they're off to a strong start, particularly on the investment banking side of things i want to draw your attention to some numbers here, particularly against those of the u.s. counterparts to give you an idea on average u.s. banks were up about 14% in their equities business 9% in the fixed business today ubs was up 17% in equities business and 33% up in the fixed business strong numbers there a lot of that was underpinned by a pick up in fx trading and equity trading one of the segments that mr. amatti amati pointed to was china and capturing extra market share let's not forget that they have a big wealth management division as well. that is where the bulk of their earnings and revenues do come from

there even though the overall number was strong, they still exhibited a 7% growth year on year, there were a few things that were worthy of pointing out. one of them is that they simply have not been passing on the full extent of the dollar rate hikes. the beat is at 35%, they're aiming to get that towards 50% i asked, okay, the numbers are good now, on a forward looking basis, if you have to keep passing on these dollar rate hikes, surely it will eat into your margins >> i think we've been passing it along. it's the speed of how you pass on the rate hikes. the competitive landscape is much more fierce than before we do expect not in the fact that our beta will move towards the 50% or higher for the rest of the year. >> then crucially loan activity has been muted as well

what do you point that back to >> i think it's risk appetite. at the end of the day i'm happy with the developments of our landing and our loans portfolio, but if you really look at the year-on-year and the dynamics, you can see this lack of risk appetite by wealth management clients coming in through leverage, through loans requests >> do you think that's a function of the macro climate, just uncertainty about the global growth environment, protectionism, that sort of thing? >> yes particularly if you look at the u.s., it's interesting we've been surveying clients they are still quite constructive in respect to the macro economic outlook if you look at their equity portfolio, they are quite sticky they don't move around their positions. that's also explained why transaction volumes is down. and also very important compared to the last -- second part of 2017, their cash balances went

up 5% to the mid 20s you can see on one end they are constructive about the macro economic environment, when it goes down to transactions, portfolio movements, cash balances, they act in a completely different way >> is that a high level historically, mid 20s? >> it is particularly for the u.s >> one other question on u.s. specifically we're seeing a flattening in the u.s. yield curve right now to stand at 25 basis points if that inverts, how much of an issue do you think that's going to be? >> this is not going to be in general good for banks most importantly from a historical standpoint of view, it would be one leading indicator of recessions or economic troubles ahead. almost to market adjustments to

both on the equity side and more on asset -- more asset classes >> the strength in the wealth management division has been driven by margin expansion and not from loan activity, which i thought was quite interesting, especially in light of further interest rates to come that's one element to think about. the second was his comments about client activity levels and the fact they're deploying more cash than historical levels on the sidelines. they had about 25% of their cash sitting on the sidelines that's a function of the environment. he's saying from what they can tell, people are getting concerned about the outlook here, be it on back of the global growth outlook, on the back of protectionism, whatever it is. it tells you there's cautiousness creeping in here. all these things on a forward looking basis do send a caution

as far as the results are concerned. overall if you package all of the results coming out, everything is quite positive investment banking strong. capital generation, they continue to get capital, so all in all ticked all of the boxes today. >> joumanna bercetche, thank you very much. for more i'm pleased to say we're joined by ben mendow from jpmorgan asset strategy. thank you for your time today. great to have you with us. it seem there's are two fors ths out there. one is over the sense of optimism, then we have the likes of this pmi data on the services side weaker than expected the survey is saying they are seeing nervousness about the trade tensions out there and what that means for growth going forward. the back drop is looking good,

but what is out there next seems to have investors concerned. are you worried? >> not worried about anything imminent as far as the risk posture and multi assetful is is a functio several things, where we are in the cycle and where we are in the u.s. cycle we see an economy that drifted into the late stage of the cycle sometime in 2017 when we use our scoring apparatus on previous cycles, these tend to last it could go on for several years here our read, as you were mentioning, the high frequency read of the economy is good. that's not just a u.s. phenomenon that's a global phenomenon we see above trend growth. when you put a low recession risk view together with a positive outlook, those two things are sufficient to create a pro risk tilt in our portfolios you need to consider how you

hedge against the risks out there. when we look at the question of how do you implement that pro risk view, is it overweigies underweight? how do you implement it? right now we're expressing it as an overweight in equities. we're taking a bit more insurance out in the form of a neutral view on duration we think the holding treasuries, holding bonds is your insurance policy in those growth shocks you might expect in the later part of a sicycle. so, you know, i think you're holding equities but also holding more insurance against that view. >> you mentioned we fell into the late cycle almost unexpectedly unmarked towards the end of last year

and six months ago all the conversations were about inflation. has that gone away as a fear >> i think the fear of inflation has always been overwrought. inflation itself is always a part of the economy. inflation outcomes tend to move slowly that's exactly what we're seeing so we're a little concerned in 2017 where you had downside surprises on inflation a lot of talk about deflation and markets reacted in a significant manner pricing that out. now we have swung to the opposite direction and people are talking about inflation. this is against the backdrop of deflation which is creeping up gradually. consistent with that cycle view,

and consistent with an economy in the u.s. that is tight, you would expect markets to at times overreact to that. >> going back to the idea of looking at credit as an insurance policy, overall you're moderately overweight equities, is that right? how does this play into the geographical stance? would you look at europe considering the strong run u.s. equities have had? >> no, for your question about europe we do look at it as a global -- there's a bit of a tension between what is your late cycle playbook and what is your trade war playbook or how you play risk. your late cycle playbook, you probably want a balanced approach we like the u.s. as a defensive high quality balance on one end of the spectrum. we like emerging markets as part of your late cycle playbook. if you go back in history, emerging markets tend to do well so u.s. and em is your late cycle playbook

>> not so well when the dollar rises. then your trade war playbook, em is offside so you like the u.s. in that in that scenario, probably deepening your preference for the u.s. it's worth mentioning in both playbooks, europe doesn't do well we see a narrow path for europe. >> the last few weeks aheard people talking about the word recession in relation to trade tensions what are you seeing as the likelihood of that being triggered by the escalating disputes between the various global trading powers? >> we have a sanguine nemedium term outlook trade policy tends to move slowly when we go back in modern history, it's not unusual to find parallels to the current situation. in the '80s it wasn't china with the bilateral surplus with the u.s., it was japan that led to trade barriers being

erected. but ultimately to negotiated outcomes you had the plaza accord in 1986, market access being given for certain u.s. products in japan. our medium-term outlook is positive despite the near-term tensions i think you have to look at the economy and how it's doing there's a lot of momentum in the u.s. economy now i think it would take a big shock to put the u.s. into recession at the moment. and in terms of are you actually seeing evidence that trade wars are bleeding into things that affect the economy, i would argue the evidence is limited. so some of the surveys in the forward looking -- the softest of the soft data, you can see evidence of that if you project on to it but we're not seeing it in a meaningful way yet >> still, some say if you want to take a cautionary approach, avoid the auto sector because this is vulnerable to the trade tensions

but then look at what's happening to psa today we're talking about an individual corporate story, is this evidence there are still opportunities within sectors if you're willing to take the chance >> i think there are opportunities and heavy regional slant. in the trade war, europe is collateral damage. there's no systematic bilateral negotiating framework with the u.s. in the same way that there are for nafta economies where autos are huge, in the same way where there are for china. when nafta eventually resolves, when china hopefully eventually resolves, europe might be left holding the bag for these tariffs on steel, aluminum and autos. >> we'll look closer at that later in the program ben, thank you for joining us. coming up on the show,

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welcome back let's give you a view of the european markets we're seeing decent uptick, about 0.4% for the broader stoxx 600. a lot of earnings in focus today. that's been lifting key stocks to the upside. let's give you a closer look at the breakdown with the key bourses in europe. the ftse 100 higher by 0.3%. the german market and the french cac 40 higher by 0.5%. the italian ftse mib higher by 0.75%. when it comes to sectors in action, attention around financials on the back of ubs earnings, banks higher by 1.4% the auto sector getting pushed higher by those psa earnings overall the sector higher by 1.5% basic resources getting a lift of 2.4%. let's get a closer look at ams

shares they're moving sharply higher. they have hit the top of the stoxx 600. that's been pulling fellow european chipmakers higher as well the iphone supplier issued upbeat guidance for the third quarter. the company, which makes 40% of its revenue from apple, says it expects a record level of revenues in the second half of the year that spells good news for the sector in the session. >> ran stdstad shares are highe after beating expectations adjusted income rose 23% year-on-year the ceo said the u.s. business picked up slightly third quarter gross margin is expected to be slightly lower thanks to seasonal factors shares in norsk are rising after second quarter earnings of 2.7 norwegian crowns

they said u.s. tariffs and sanctions continue to contribute to market uncertainty. the partial closure of its refinery in brazil has also played a role in that uncertainty. we have joined by the cfo of norsk hydro, eivind kallevil thanks for being with us you acknowledged you're uncertain about the full reopening of the refinery in brazil but you've given a 15-month time span for when that might happen. can you give detail about why this is taking so long >> we have constructive dialogue with the different governmental bodies and authorities in brazil it is very hard to predict when we will get to a final decision point where we are able to

restart. >> can you give us more detail than that? >> no. the discussions are between the authorities and ourselves, and that's where we need to keep the details. >> you said you can't meet cost cutting targets because of what's happening in brazil what can investors expect in terms of potential writedown and the value of that plan >> so far we did an impairment at the end of the second quarter. we still have good coverage on the stuff on the balance sheet obviously the more prolonged the situation is, the closer we will get to an impairment situation but as of q2 we are in good position >> i understand you're not worried about the near-term effect of the current threat coming from the u.s. on tariffs, additional tariffs potentially on the eu as well.

at what point would you worry? would it be a stage at which the u.s. does move ahead on additional tariffs for eu car imports? >> my primaryconcern with the -- let's call it escalating trade war at the beginning of the trade war is not necessarily short-term, but it's what it will do to global trade over time in the medium to long-term perspective. as a company we are very much backing free and open trade on fair and competitive terms we are still of that opinion we think trade barriers in many ways distorts trade flows and puts hindrances on global trade. >> what would these tariffs on european autos mean for your business you presumably run models. can you give a sense of what it would do >> so far the tariffs in the u.s. don't have an impact in isolation. there are some tariff impacts on

the operations in the u.s., where we have goods shifting between mexico and the u.s. and the u.s. and canada and back but from a company perspective those are relatively minor when it comes to the export of primary metals, the increase in midwest premium more than offset the tariff increase. >> on this issue of your linkages to rusal, there's been a suggestion that the u.s. treasury department is considering some sanctions relief for rusal would that be a relief for you >> would be a relief for the total market there's no question that the uncertainty about the rusal situation has impact on the whole confidence of the industry we saw a certain increase in aluminum parts when the sanctions were being -- or the planned sanctions were introduced to get rid of that uncertainty

would be for the benefit for the producers as well as consumers of aluminum. >> that's all we have time for thank you very much for joining us today that's eivind kallevil still to come, eu officials head to washington for last ditch talks aimed at avoiding further trade disputes with the u.s. more for you after this short break.

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welcome back to "street signs. i'm willem marx. i'm nancy hungerford these are your headlines citron shares hit the highest level as the opel business returns to profit in the first half of the year. ubs posts a better than expected rise in second quarter net profits sending shares higher the ceo tells cnbc the bank is on course for a strong year. >> like in the last few years, we have been able to navigate challenging market conditions and deliver good returns to our shareholders

i believe we will continue to have a solid performance also for the rest of the year a big beat for alphabet. shares jump to a record high in after hours trade after the google parent company's second quarter earnings top expectations and ams jumps more than 10% as the apple supplier forecasts record revenues for the second half of the year pulling other chipmakers higher. hello. welcome back to "street signs. let's check on how u.s. markets are set to open. a mixed session yesterday with the nasdaq rising along with the stoxx 600 rising today the dow pointing higher by 74 points. the s&p 500 called slightly higher the nasdaq called for a higher open as well another look at how european markets are playing out in the seg. green arrows across the board. the ftse 100 higher by 0.6%.

the dak leadix leading the way r by 1.14% the cac 40 and the ftse mib also higher the dollar weakness was in focus yesterday. today the dollar is slightly lower against the japanese currency the euro slightly lower against the dollar at 1.1678 the number was led lower by services sterling at 1.300. the yuan rate at 6.8129. let's check bond yields. it was news around the boj looking to make tweaks to its monetary program global bond yields moved higher. today the ten-year jdb giving up

some eu commissioner president jean-claude juncker is traveling to washington, d.c. this week in a bid to reduce trade tensions with the u.s. white house. white house advisers expect to offer details about a specific trade deal eu officials say they won't happen donald trump has blasted the eu as a foe and has threatened to extend tariffs on eu steel and aluminum imports to include the car industry juncker criticized the moves as brussels prepares a list of american goods it could slap with retaliatory tariffs these meetings are the latest episode in the spat about trade. >> i would like to reiterate this appeal, that exemption should be unconditional and permanent. we believe the u.s. measures should be judged on national security and interest, and this should not happen between allies

we're calling for their withdrawal we'll continue our negotiations with the u.s., but we refuse to negotiate under threat >> it's totally unacceptable that a country is imposing unilateral measures when it comes to trade >> i want to sell cars in there like they sell cars in here. it's all going to work out it's all going to work out remember this, remember this, it's all going to work out because we're the piggie bank that they like to take fra from we said if we don't negotiate fair, then we have tremendous retribution, we have tremendous powers, including cars cars is the big one. you know what we're talking about. they will come and try to negotiate a deal >> cars are the big one

apparently worth noting there we're joined by tony fratto of hamilton place strategies in washington, d.c. here in the studio is the chief economist at omfif i want to start with you first europe's success in many ways really reliant on trade. as you look back over the last few decades how big could a change in this framework -- this meeting is the start of conversation how big of a problem could a change in that global trading framework be for the european trading bloc >> the eu is based on trade and it has relied on this rules base the multilateral system. it's the polar opposite of drumdru donald trump approach to trade, the art of the deal. a lot of it is at stake because the aluminum tariffs that we have saw are a small part of trade between the eu and the u.s. cars would be a big blow to that

which is at stake to the latest threats we've seen from donald trump. >> tony, yes, cars are at center of this fight between the eu and u.s. but looking at it, the eu does have a steeper tariff when it comes to u.s. cars going to the european bloc. it seems there's an easy solution here. can't the two parties agree to reduce those tariffs, even to zero >> that would be great that was the proposal to bring tariffs on all vehicles down to zero, that was part of the negotiations put on the table for further discussion to try to get those down to zero the difficult part is you hear president trump talking about the differential on autos of 10% in europe and 2.5% in the united states, but he leaves out the 25% u.s. tariff on light trucks in the united states so, you know, these should be parts of negotiations.

that would be a pretty good agreement if you could take both of those tariffs down to something close to zero. it's hard to imagine the trump administration making that offer on pickup trucks we like our trucks in the united states, that's an area of high protectionism in the united states that is the offer that ought to be on the table. >> european car manufacturers like the fact that you like them i have to ask you, the u.s. used the national security pretext for steel and aluminum potentially doing the same for car imports. european officials i spoke to have laughed that off as a reasonable pretext for imposing these tariffs. they have gotten that swift recourse to overturn that as a decision i wonder, do you think -- do people in d.c. you speak to acknowledge this is an abuse of the system >> i think most people outside the white house actually do see it as an abuse of the system

there's the business community in the united states and a lot of trade community in the united states recognizes that using national security to impose trade restrictions, trade sanctions is a pandora's box, once you do that any country can do that. so they're thinking of the long-term, a dangerous path to go, and they would prefer the united states not go in this direction. certainly not with autos they felt it was a stretch on steel and aluminum, but certainly could not be the case with autos we produce so many autos here in the united states. so it's kind of a ridiculous way to go. they're worried about it. >> we have heard eu officials talk about concerns around the fact that national security grounds are being touted here. to me it seems like one of the many complaints we've seen recently coming from brussels about u.s. policy. i do wonder, if you consider where relations are at the moment, not just due to trade but on things such as going all the way back to the climate

deal, going to iran, do you think the relationship is too strained for the parties to come together and achieve something on trade >> definitely. relations are at a low pot you have trump, he's got an american first policy. and the eu is the biggest experiment we've seen of pooling of sovereignty ever. it's different starting points but the relationship is tense. we've seen it in the area of defense with trump's comments about nate co, the lo, the finee it doesn't set the scene for a fruitful meeting on top of that you have the eu itself being divided on this >> juncker is going to washington, he doesn't exactly have a unified front behind him. the french saying we will not negotiate with a gun to our head the germans saying, hey, let's

try to figure this out this is us most severely affected by these tariffs if they're imposed. is it possible to go there with any offer supported by the eu 28 behind him >> i think the most likely scenario is we will see a language that is mutually acceptable and junker expresses something acceptable to the national governments back in europe he has to represent all those different views, france, germany, netherlands, all at different points >> tony, your thoughts on the big front that the u.s. administration is currently fighting on trade. that's with china. it's interesting today because we are seeing the yuan weaken once again against the u.s. dollar talking about beijing officials now talking up this idea of fiscal stimulus. it seems there's something going on in china which is more discrete than the approach we're seeing out of the white house. you know president trump is

talking about the full 5$500 billion in imports being exposed to tariffs here we have chinese officials almost taking measures to me that seems like they're ready to soften the blow. who has the right approach >> the right approach would be for both to sit down at table and hammer out an agreement and try to get commitments on rules of trade i think it's a fight with the chinese over the near-term because those two measures, the chinese can be more aggressive with their currency and on the fiscal fronts and rules and standards and how they allow things to move through the ports. on all three the chinese have taken action to soften the blow, as you said. they also have an advantage from a political standpoint where the u.s. administration has to be concerned about the midterm

elections and how this trade war is impacting congressional races going into november. there is no par rel allel in cha the president in china is president for life now, so it's not a fair fight, at least over the near-term. over a longer term you could see some advantages the united states has, but china can wait them out >> tony, thank you very much for joining us there from washington, d.c. thank you as well. well, the market calculus is more fragile than it was a year ago. that's the warning from third point ceo daniel loeb in an investor letter. he outlined the four key risks that he thinks could drive stocks lower they include the escalating trade war, slowing economic growth rate and rising inflation. loeb forecasts equity rates will

go higher but at a rising pace let's get you a check on greater china markets closing firmly in the green on the back of that rapidly weakening yuan the offshore rate of a 13-month low fell as authorities sent easing ignals. beijing vowing to pursue a vigorous fiscal policy the shanghai composite closing up 1.6%. strength also seen in hong kong where big cap property and banking stocks led the hang seng up. in europe, italian prosecutors have opened an investigation into banca carige. they have shared all minutes and letters to the ecb they are dealing with the resignation of its management

and they say they are cooperating with authorities let's check now in shares of creval which is falling after credit agricole is set to buy 5% of the bank. both companies declined to comment on the news. at least 49 people have been killed and more than 150 injured in greece as a forest fire swept through a small resort town to the east of athens hundreds of people were rescued by passing boats as families fled to the sea to escape the blaze. this is the worst fire in greece in more than ten years >> unbelievable photos there we wish the best for all the recovery teams out there. satellite images from washington-based think thank 38 north appear to show that north korea has started to dismantle elements of a key missile site

38 north said the dismantling represented a significant confidence building measure from pyongyang. feel free to get in touch with us on twitter the show handle is @streetsignscnbc. you can also tweet us directly coming up, it's as easy as abc for alphabet after it blows past profit estimates. more on those numbers when we come back.

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welcome back to "street signs. let's check on the european stock performance. the stoxx 600 pushing higher now, getting closer to 0.8% increase, a five-week high for the stoxx 600. it was a decent lead from wall street after strong earnings and a good bounce in the asian session. the competition commissioner in brussels is set to hold a news conference at around 12:30 p.m. central european time that will be focused on four

different anti-differetrust cas. be sure to follow that story closely. could lead to significant news >> of course after the scrutiny around google and alphabet, but that's not getting investors down shares have jumped over 3.5% after the parent company of google stormed past second quarter profit forecasts google's advertising business accounted for 86% of total revenue. however including last week's $5 billion fine by the eu, eps fell to $4.54 i'm pleased to say we're joined by daniel ives head of technology research at gbh insights and he joins us from new york there seems to be not much to like about this forecast

how hot is too hot for investors to get into this stock >> look, in our opinion, it's still the early innings of that advertising story and the mobile side playing out youtube is the crown jewel if you look out over the coming years, this is a 20%, 30% overall advertising grower there have beeen questions of what they're seeing in the field. >> revenues and gross growing at a decent clip. not spending too much money on their operations it's been a fraction of those revenue numbers ultimately what do you expect from margins going forward and they continue to spend more and more money investing in new products?

>> cloud is front and center if you look at amazon, microsoft with azure, you're seeing capex significantly increase they're focused on the cloud that's the right strategic move. investors are willing to give them four to six quarters maybe longer to build this out longer term that's the biggest growth initiative for them as they chase after amazon and microsoft. i think this is really something you're starting to see the seeds of growth here i think investors are willing to give them sort of margin leverage over the coming years for near-term pain, long-term gain >> should investors not be concerned at all by the dominance of amazon and microsoft? we look at microsoft's recent results in cloud, they're doing extremely well >> yeah. look, amazon and microsoft are in a class of their own. it's a two-horse race in cloud

i think for google here, it's around can they gain share can it be 5%, 10% of share over the coming years multiple clouds operating in an ent prierprise environment. i do not expect microsoft and amazon to give up significant share, but can google get this you are going from 35% of workloads to 55%, 65% going to the cloud the next four or five years. that's ra maa massive opportuni that google is going after >> when you look at numbers, you have this line item cost of an eu fine. it's the second time it appeared in the last 12 months. it's not ideal for shoulders to see that as a cost of doing business i wonder, when you look at the gdpr in particular as a threat to their business model in europe, what do you see as being the impact from that >> it's a great question

they're there were fears that fwshgs d gdpr would be a maker jish fiss google and it's been negligiblne if you look at the fine, it's noise and a head wind, but investors have looked through that and feel the worst is behind from a regulatory perspective in terms of the fines. the overhang is removed and gdpr, the bark was worse than the bite in terms of google's business i think you saw that last night. >> talking about gdpr not being such a problem as people anticipated, you mentioned there's feathers in the cap of bulls. which numbers will they point to those critical of the share price, which one will they be highlighting in. >> they'll focus on regulatory

that's a longer term risk. in terms of margins, margins as we talked about, that's going to be the issue in terms of the valuation. the bears will argue that they're not going to be successful on cloud. you have amazon and microsoft too many miles ahead of google they're spending in a situation where they can't gain share. those are the areas that the bears will point to as well as is the advertising growth sustainable? if you look at mobile search and youtube, we think that's in the second and third inning of plague out here. >> shifting focus and getting your thoughts on amazon. president trump taking to twitter again criticizing amazon should investors be worried about this >> if you look at the fundamentals of amazon in the consumer and the aws, i think we'll see this with earnings, i don't think things could be stronger we expect a 4%, 5% beat.

in terms of the risk, the trump tweets, the regulatory, the antitrust lingering worries out there, that will continue to be there. this is something that investors are getting more used to and immune to versus four, five months ago where the stock could be down 5%, 7% i do not view antitrust issues being here, but i think this will be a linkeringlinkering -- worry. >> dan, thanks let's quickly check in on the u.s. markets it looks like a positive open for all three indices. that's it for the show i'm willem marx. >> i'm nancy hungerford. see you tomorrow

it is 5:00 a.m. at cnbc global headquarters. google delivers a blowout quarter. the big numbers behind the big on win. that beat propelling the tech sector to new highs. what trade war what china's market seems to do that says maybe we're not that worried after all. gold alert something happened to the yellow metal that could be red flag. and goldfish, the big recall you need to know about it's tuesday, july 24th.