welcome to "street signs." i'm joumanna bercetche >> i'm willem marx these are your headlines from london commerzbank sees red despite being back in profit as investors focus on a dimmer revenue forecast and rising costs. unicredit beats expectations despite posting a fall in second quarter net profit as costs and nprs improve. intercontinental hotels trades lower despite raising

dividends as revenue per room improves in the first half the ceo says china is a crucial market >> we saw amazing numbers of domestic chinese visits which drove rev in q1. and the key witness in the mueller investigation, rick gates, admits to committing a crime with trump's former campaign manager as the investigation into links with russia deepens all right. the top story today, commerzbank shares are trading off the lows after raising its full-year cost outlook to 7.1 billion euros germany's second largest lender did swing back to profit posting net profit of 272 million euros. the bank confirmed it would resume dividend payments at 20

cents per share this year. at one point the shares were trading down about 2.5%. we pared some of those losses. down about 1.8%. we have an expert on the show. thomas, you're joining us. we'll chat more about this i want to get your initial impressions on some of the numbers we've seen particularly out of commerzbank the positive is that they've announced an intention to start a dividend payment again that's a good thing, but commerzbank very much saddled by a bunch of overhanging issues and continue to combat those issues >> that's correct. the european banking sector is in a tough situation you see stiffer competition. in the earnings release the ceo mentioned they have seen fierce competition. we've been surprised on the results of the retail bank

overall, this is the third year for commerzbank where they have declining revenues so it's difficult to compete with the other lenders then you have a difficult environment. flattening yield curve you don't have the tailwinds that the u.s. banks see. so flattening yield curve is never good for any bank. and what commerzbank on the other hand and all other banks in europe would need is more normalization of the yield curve. i would say at the shorter end of the curve they would need rising interest rates. but that's unlikely to happen in 2018 so overall i think seeing the stock trading in positive territory, i think in the long-term, if you compare it to the states, you have much better options in the states with the tailwinds we've seen from tax cuts, all these other things >> we'll get into the broader themes that's your view on commerzbank. annette has been following this

story as well. as thomas was saying, this is the third year in a row of declining revenues for commerzbank. they are facing a lot of issues, not least that of the low interest rate environment. what more can you tell us? >> clearly commerzbank is always saying that they are hugely burdened by the low interest rate environment still looking at the outlook, this is key here they are also warning us that corporate unit will actually generate lower revenues than 2017 this year previously they were more optimistic another worry is that they might drop out of the dax. as soon as the 5th of september, they will be looking at whether

commerzbank is still entitled to be in the dax because their free float is small there could be well some other company replacing commerzbank in the dax. that's also bad news for those shares looking at the profitability of the banks, clearly still a restructuring model. the latest out of the bank is that they're planning on more or less structuring themselves like imgb, which was successfully to cater germans to the mortgage field. but commerzbank is late to that game looking at what they plan on doing when it comes to digitalization, others are far ahead. it's the same old story when we look at commerzbank. yes, they're doing the right things, but they might be doing the right things a little too late in order to really see the

bank on a very solid footing, also for the future. another story which we have not mentioned is the earnings. at the end of the day there could be a reunion of commerzbank or deutsche bank which is not anything we are talking about imminently deutsche bank and commerzbank both have declining revenues the question is whether one of them can turn it around sooner than later >> it's not just about declining revenues it's about scale they've been going after retail customers in germany

spending money on customer acquisition. is that enough >> you can buy the stock today at 40% of book value there's a big risk attached to it these growth initiatives started to pick up in this quarter because in 2016 and 2017 we have not seen anything like it. it's a turnaround process now. i'm cautiously optimistic regarding commerzbank and deutsche bank regarding growth >> just want to flesh this out more you were saying a while back in our previous chats that on a valuation perspective or from an opportunity perspective, european barks are looking more attracti attractive

year-to-date european financials are down 10% this qua this surely is sending a positive vibe for the sector >> clearly the opportunity is price and in our opinion just price. i would feel much more comfortable to be positioned in the states again, they have right now a reversing and an increasing net interest margin. they have the tailwind from the tax cuts, deregulation, and overall we have not seen d.o.d. growth numbers in the past quarter. overall you can buy right now for 10 times earnings. the u.s. banks and on the european side, you're right, they're cheaper. i'm not saying the stock is going up or down but in the long-term you are much better positioned in the states >> thomas, thank you very much

speaking of discounted banks, unicredit reported a 13% fall in adjusted net profit due to higher charges and provisions, but it has still beaten second quarter earnings expectations. revenues fell thanks to lower trading income unicredit maintained i full-yfu and 2019 targets deutsche post's second quarter dropped. the ceo told cnbc earlier this morning that his company needs to focus on improving productivity >> we focussed very much on gaining market share in the last few years, expanding capacity. we have not focused enough to keep all these processes intact. we have not best in class

productivity everywhere. these are levers that we need to grow in line with the market that will lead to a slightly lower growth but much more fo s focused on productivity gains that will happen in the next month. in britain, hargreaves lands down reported strong earnings and record new business numbers. the supermarket announced a 40% increase to its dividend but the firm faces a major investigation into the online processes. standard life had reported net outflows of over 16 billion pounds and said that presents a challenge in a tough market. the british company hiked its interim dividend to 7.30 pounds per chair. and the co-ceo said the firm was well prepared for a hard brexit.

coming up on the show, china's short seller kyle bass tells cnbc the depreciation of the yuan is not a problem. that and the latest twist in the trade war after the break. hich y 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. (vo) ovewhelming air fresheners can send you running. so try febreze one. with no aerosols and no heavy perfumes. so you can spray and stay. febreze one.

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welcome back let's check in on markets. i want to talk about the u.s. session a bit. the three majors did end the day in positive territory. the s&p saw its third positive session in a row it is now at the highest level since the end of january only 0.8% from all-time highs for the s&p. so all of the selloff in february, all of that has been almost fully recovered at this point in time. i was just talking about the vix actually earlier the vix is almost back to the lows of the year as well so all of that scare, that volatility scare we saw back in february has been fully recovered. in the overnight session, asian equities rebounded significantly. good rebound in japanese equities that was driven by the

fastest rise in real wages in 21 years. so that has lifted sentiment overnight. today in europe you can see it's a strong open for the stoxx 600. we are one hour into trading let's get into the individual markets. a full sea of green right next to me. ftse 100 up a half percentage point. currency has been taking a dive after liam fox's comments over the weekend about a no-deal brexit hanging in around that 7700 level. xetra dax leading the charge, up 0.9% almost as much as ftse mib the italian index rebounding quite strongly the mood very much is risk on and positive sentiment for the equities heading into the end of the earnings season. still very much in the midst of earnings season. let's see where leadership is

coming from. basic resources, autos, oil and gas are leading the charge showing some of the biggest gains this morning as far as sectors are concerned. there's a strong correlation between basic resources, autos caught in the crosswinds of trade between the u.s. and china and chinese equities performance. on a day when chinese equities do well, no surprise autos are rebounding well. we have real estate underperforming, down 0.2% retail coming in around flat we have had a bunch of earnings as well that had been driving some of the performance. we'll get into those stories >> we should quickly correct sa something we said earlier.

zalando q2 sales are using its m of the stoxx 600 after issuing a profit warning the firm cut its full year sales and guidance after both numbers fell during the second quarter the company says it now plans to slash around 400 jobs to protect profitability. and strong demand in china helped boost ihg's room revenue growth in the second quarter the hotel group says it is on course to save 1$125 million a year by 2020 and plans to spend that money on further expansion. the ceo told cnbc earlier today he was not concerned about global trade disputes. >> i've been through these challenging times before our business did exceptional well during that time frame. principally our businesses are domestic business. the u.s. is our largest market china is our second. what drives performance there is domestic travel, the international inbound has small impact on our overall performance.

again, china, two weeks ago, incredible to see the infrastructure development, movement towards consumption-based economy and the levers that the chinese government can pull to drive performance in gdp is unlike most countries speaking of china, beijing has ramped up its pr offensive after the china daily newspaper branded trump's claims of having the upper hand on trade as nothing more than wishful thinking trump had claimed a recent fall in chinese stocks was a sign the u.s. was winning the trade war kyle bass has told saddam hussein's "squawk on the street" why he believes the trump administration is uniquely positioned to win the trade negotiations >> with our negotiations with china and north korea, i think the fact that we only export about 1$100 billion or 13$130

billion worth of good to china while we import almost 500 billion from china, we've got the leverage to really work through this tariff and trade war. and again, we've been fighting this trade war for a decade. no one has realized it thomas is still with us. you probably just heard me go over the markets the biggest rebounding sectors are basic resources, autos all of the sectors that have got hit by the trade discussions going on given the progress or seeming progress between the european commission and the u.s. after that meeting, do you think there's been a turnaround in sentiment towards stocks that have been adversely affected by the trade wars >> in general there's no doubt that chinese tariffs have an

impact on the german carmakers the situation is interesting now. there's a difference between the situation in the u.s. and europe and u.s. and china so higher tariffs or the threats or tensions between the u.s. and china, they impact particularly mercedes and bmw because those two are extremely exposed because they produce profitable suv cars in the united states. of course everybody is exposed also volkswagen with all 12 brands in the group. but let me just give you a little bit of an idea about the numbers. mercedes last year shipped 60 vehicles to china. if they couldn't pass on the 25% tariff hike on to their clients or customers, then that would hit earnings by about 500

million annually in context of last year's operating profit, that's about 3% we think the real number will be lower because both ceos of daimler and bmw say they can act flexible and in a nimble way to increase production locally in china. that's the perfect example of protectionism. mercedes produces about 60% of the cars they sell in china, they produce locally, and we expect that number to increase in the light of further tariffs. >> isn't it your understanding from that meeting between trump and juncker that they will work towards reduction of tariffs and there will be no further auto tariffs. shouldn't the assumption be no tariffs will be applied as far as autos are concerned >> it's different between u.s.

and europe probably one day we will look at zero tariffs but we cannot count on that. it's a different situation overall it's a different scenario for u.s./china. there can be a very good outcome. >> one irony is the plants in alabama and other parts of the u.s. were introduced by some of these automakers to try to avoid initial u.s. tariffs as part of the agreement that exists between the european union and the u.s. the idea that they have to ramp up production elsewhere in china. you are seeing contract impacts. do you think if they were to try to pass on any of these to customers they would see a massive decline in sales is that something people should be watching when it comes to stocks >> i don't think so. they might see some short-term pain regarding margins they might then rebound quickly,

medium and long-term and with not much concern we're talking about solid, healthy businesses i get your point, it's a cyclical business. it's a capital intensive business it will be capital intensive over the next years and in the foreseeable future because they dive into mobility and the ramp up of electric vehicles, but i'm confident they'll be fine. we also saw the numbers last week so volkswagen reported impressive results 8.9 billion euros in operating income almost 9 billion euros in the first six months so if you think about it, they're trading five times per earnings it doesn't get much cheaper than that they have incredible assets. they have porsche, audi. both have a high-margin business the truck business where we see

a potential catalyst for a spinoff. overall impact might be short-term but it's guiding the stock up and down >> thomas, thank you very much. majority shareholder of arsenal football club says he intends to buy the remaining shares in the club from the other russian shareholder. >> stan kroenke made this offer. 600 million pounds is the number that values arsenal at a total of 1.8 billion stan kroenke is the majority shareholder here at 67%. he's now offered to buy out the rest

he said we are moving forward with this offer to lead to 100% ownership of the club. we appreciate mr. usmanov's dedication to the arsenal football club. he says he wants to get them back into the champions league and winning premier league titles it will be interesting to see how this goes through, when it goes through, and whether or not it can go through before the end of the transfer window and if arsenal can add to their squad in the next two days >> is there a proven correlation between ownership and -- well, a change of ownership and a club like arsenal doing better in terms of performance is it all about the money? >> increasingly so at the top level of the game you have to imagine that might be the case we have seen the money that abu dhabi brought to manchester city not instant success there. it took them about four years to win the premier league after that money came in, now they're sustained at the top of the

table. 100 points last year winning the premier league whether or not this changes thing for arsenal is up for debate fans have not been too pleased with stan kroenke, calling him silent stan in the past. he sees this more as an investment usmanov wanted to buy out kroenke and they were at odds with one another if he then just got fed up and thinks he will take his money elsewhere. whether this is russian money also leaving the uk has been speculated roman abromovich has also been worried as well that he won't be able to do what he wants to do at chelsea >> you can't find many happy gunners fans at the moment thank you very much. ahead of the premier league season starting in a few days time, head online to espnsoccernet.cwecnbc.com where adam is looking at clubs

hoping to avoid relegation through that foreign investment. california firefighters are battling the biggest blazes in the state's history. the series of fires just north of sacramento now covers more than 280,000 acres crews are struggling to stop the flames from expanding into nearby communities strong gusts of wind continue to fan the flames and temperatures today could top 110 degrees. huge fires are also sweeping through the forrested hills of portugal the fires spread quickly over the weekend and left 25 people injured. more than 1,000 firefighters are battling the blaze dozens of soldiers have also arrived to help evacuate residents. coming up on the show, u.s. snap back sanctions on iran are now enforcin force details when we return

happy anniversary dinner, darlin'. can this much love be cleaned by a little bit of dawn ultra? oh yeah one bottle has the grease cleaning power of three bottles of this other liquid. a drop of dawn and grease is gone. welcome back to "street signs. i'm willem marx. >> i'm joumanna bercetche. these are your headlines

commerzbank sees red as investors focus on a dimmer revenue forecast and rising costs. unicredit beats expectations despite posting a fall in second quarter net profit as costs and nprs improve. intercontinental hotels trades lower despite raising dividends as revenue per room improves in the first half the ceo says china is a crucial market >> we saw amazing numbers of domestic chinese visits which drove rev in q1. and the key witness in the mueller investigation, rick gates, admits to committing a crime with trump's former campaign chairman paul manafort as the investigation into links with russia deepens. all right. just checking in on markets. the mood is positive today it's a sea of green behind me.

all of the top majors in europe are trading nicely up and positive this morning. ftse 100 up about 46 points. up 0.6%. we have xetra dax up 0.9%. more than 100 points higher on the day. ftse mib also having a good day. we're heading towards the end of the earnings season. it's been a surprisingly positive earnings season as far as we're concerned about 80% of companies of the stoxx 600 have reported with most of them exhibiting an average of about 5% eps growth that bucks the trend from the first quarter where growth was about flat so it has been a some what positive earnings season we're driven by the political noise in the background as ever. but we did see a rebound in chinese equities overnight that has transitioned into european sentiment this morning. switching on, let's look at foreign exchange yesterday we saw a bit of a rebound in the u.s. dollar this morning dollar is trading

on the back foot versus euro trading higher as far as euro is concerned. a quarter percentage point dollar/yen trading flat around 111.po aft 111.30 after that bank of japan meeting last week. since then we've seen a reversal in dollar/yen, but nothing major. want to draw your attention to dollar/renminbi. we've been talking a lot about the movement of this currency pair we're finally seeing strength in the renminbi to the tune of about a quarter percentage point. that shows some measures that were put in place by the pobc on friday about shorting are beginning to have an impact. currency is trading stronger equities are about 2% higher let's talk about the u.s. as well and see what the picture is like for u.s. futures.

dow is opening up about 80 points higher. nasdaq about 25 points higher and s&p is 7 points higher we are very close on the s&p of reefing in reaching an all-time high. >> well, u.s. sanctions on iran came back into effect just over four hours ago the decision blocked tehran from buying or acquiring u.s. dollars and means the country cannot trade in several pressures metals this will also impact iran's auto industry. the white house says iran must be willing to negotiate on its nuclear weapons program to get out from under the squeeze we have this report from tehran. >> reporter: the trump administration's unremitting pressure on iran is having tangible effects authorities here describe it as

psychological warfare and an all-out attack on iran's economy. the iranian currency is in freefall it lost about 80% of its value over the last year there's hyper inflation. the price of basic goods go up by the hour and people are stockpiling. all this is happening before sanctions and even snapback. addressing the nation, president rouhani said if america wants to negotiate they should remove sanctions imposed on iran. >> translator: the more united we are, the sooner we make the united states sorry. and we can shatter sanctions it is in our own hands >> reporter: there's also been continued protests in the country stemming from bread and butter issues. people are very concerned about the economic wellbeing of the country. the general consensus here is that they will continue as long as the economy is tanking.

eu officials say they will impose measures to protect european companies from sanctions. the so-called blocking statutes bans these firms from adhering to sanctions and does not recognize u.s. enforcement penalties. >> a couple months ago the european commission announced this comes in to effect the same day as sanctions this offers an impossible choice do you follow u.s. sanctions when you have business in the u.s. and are worried about that business or do you listen to the european commission and avoid complying with the sanctions it's a question of a rock and a hard place the u.s. will keep you out of all dollar transactions. the european commission, it's up to member states whether they prosecute. >> as you say, they are between a rock and a hard place. total is one company in the middle of this

earnings came out a few weeks ago, they have not decided what they'll be doing there you have to think from an economic perspective what business is more valuable for them yesterday we were speaking to an iran specialist on the show. he was saying for many of these companies it's a drop in the ocean. is it worth ruffling the feathers of the united states and jeopardizing their business in the united states for the sake of abiding by the new european commission rules. it's tricky for many of them we'll see that in some earnings over the next few months. venezuela's opposition has braced for a crackdown following an apparent assassination attempt on president maduro. authorities arrested six people and promised to detain more. we are joined by the principal analyst for the americas at ihs

market thank you very much for joining us we watched this video. you see the president look up, his wife flinches in response to whatever it is going on above them then you see sheer panic among the hundreds if not thousands of national guard gathered there. you see these soldiers dash for cover. what does that say to you about the loyalty of the national guard. it's been celebrated for its role in putting down earlier protests does this bode well for the government that reaction we're seeing on our screens? >> absolutely. what this means is that president maduro no longer counts with the unconditional support of all the factions of the armed forces and of the security forces. now, the embarrassing optics of the events we saw live on national tv with thousands of

soldiers fleeing, terrified, also underlines how vulnerable the government is towards perceived real threats they have proven to be efficient at repressing the population and preventing protests from escalating, but when facing potential or perceived real threats where we saw how vulnerable they really are and, indeed, very embarrassing moment for maduro and for the high military command in venezuela. >> groups being blamed for this. half dozen people arrested we had that awful situation last year with the helicopter dropping grenades over the supreme court. there seemed to be more and more indications of factions within the military and police willing to defy the central government does this lead to further civil strife we have these awful protests around food shortages, medical

shortages. is this a new chapter in that dissatisfaction with the government >> absolutely. it shows how democratic institutions are not strong enough to channel the ongoing severe economic, political, social and humanitarian crisis that venezuelans are going through. food shortages, medicine shortages. basic goods shortages, people migrating towards the border area disease spreading as the health system collapses in venezuela, as oil production continues to decline. we're seeing that institutions are not capable of channeling these crises of unprecedented scale, and the risk of political violence continues to increase what we've seen from the government is that they continue shutting down possibility of an

electoral solution, with the position we saw an electoral fraud in the election where maduro was elected for six more years, which the international community is not recognizing two years of failed negotiations, failed dialogue between that position and the government it seems certain groups are turning to political violence in an effort to try to force regime change they think an electoral constitutional, democratic and peaceful solution in venezuela is unfortunately no longer feasible >> just picking up on that comment, if the maduro government uses this as a pretext to crack down further against political opposition, what is going to determine whether or not they succeed? it looks as though the military seem to be somewhat rebelling against the system is maduro's survival based on whether or not the military stick by him or not in the

coming months? >> yes the answer is yes. simply yes maduro is holding on power and that depends on the military there are factions of the high military command fully aligned with the government. these are factions which basically run the economy. they control ports, airports, the import of food into the country. they control oil services. they control also illegal mining, fuel smuggling and drug trafficking. drug trafficking plays a key role in all the dynamics of what's happening in venezuela. venezuelan government has basically become or operates as a criminal group there's certain factions within the armed forces, within security apparatus and within police which are against these trends this is the sort of dynamics we're seeing along with some

radical opposition groups known as the resistance. we saw last year with the helicopter guy, oscar peres, also with the captain who is currently in prison and being tortured with other political prisoners in venezuela this is the sort of dynamic we've seen some pockets of resistance, but within a repressive system where these types of manifestations are very difficult more events of these nature are highly unlikely. >> yes thank you, sir of course we will be keeping an eye on how this evolves over the next couple of months. back in the united kingdom, scottish first minister has warned theresa may against an utterly unacceptable and deeply

damaging no-deal brexit. in a statement sturgeon blasted the uk government of talking up crashing out of the european union without an agreement sturgeon says such a tactic raises the risk that a no-deal scenario becomes a reality >> you can see that reflected where cable is trading. support for theresa may's handling of brexit has bumped to an all-time low. in a survey of 2,000 adults, 60% of voters said they were not confident may would get the right deal only 22% say they believe she could strike the best agreement. elsewhere positive news, total uk retail sales rose 1.6% in july. england's world cup run and warm weather helped boost food, drink and electric fan purchases but the lobbying group said despite strong food sales,

overall growth slowed as the heat laid bear underlying weakness in consumer spending. coming up on the show, putting the band back together we discuss how the music industry's old guard must adapt to survive why did i want a crest 3d white smile? dinner date...meeting his parents dinner date. so i used crest. crest 3d white removes... ...95% of surface stains in just 3 days... ...for a whiter smile... that will win them over. crest. healthy, beautiful smiles for life.

welcome back facebook helped push the s&p and nasdaq higher yesterday posting its best day since april after the company confirmed it is in talks to build links to banks. the social media giant is looking to give users access to account information and customer services through its messenger app. facebook told cnbc it has spoken to jpmorgan, wells fargo and others about the plan. technology has disrupted the media landscape. consumer spending habits in the music industry may have evolved but the structure has not. for more detail, joining us now is thomas englehurst at citi things i have not thought about before have there been big structural

changes in the music industry for financial reasons? and what are those changes >> the main change is how people consume music. now that you can get access to as much music as you want online at either a low price or for free, a lot of people have chosen to put money to work in other areas of the music chain and we've seen massive growth in live events. the conclusion of this report is actually that the music industry is in rude health. the industry is growing since 2017, and the total outlay in music is beyond the previous peak in 2006 but only a small proportion of this ends up in the hands of the artists. we estimate 12% of revenues end up with artists. that's where we could see the impact or disruption >> that's a crazy number, 12%

goes to the artists. you say a big part of that is on artists doing more concerts, festivals, how much of that growth is contingent on the streaming services not having or not being able to compete in that space that's key takeaway from the report we think there's scope for more vertical integration in the space. not only is this industry complex it just has not changed. record lal labels are still rec labels, c labels, concert promroerts still concert promoters. companies will have to think they move into other parts of the value change so vertical integration is a place we see expand sthusiexpan.

>> arjun kharpal joins us now. when does spotify follow a netflix model? when does it invest in new talent as a way as eating into the share of record labels >> that's a great point. what we are seeing is some artists are looking to bypass the traditional routes to market rather than go through some of these streaming platforms, they're launching records, albums, songs on their own websites that is a great area for the likes of spotify to tap into there's a clear demand from the artists to want to come to the market in a different kind of way. these distribution platforms, the likes of spotify and apple could provide good routes to that they'red ed advertising concertr the artist, that seems to be a push for them.

i wanted to ask you, tom, when do we start to see some of these newer internet streaming platforms eat away at some other parts of the chain of -- in the music industry when do they host their own concerts cut out the middleman? >> we are already seeing this. one of the most important points from the report is the fast the growing part of the music industry are those self-published artists one of the biggest is chance the rapper so they get a much bigger take of the revenue he generates. there are some interesting things going on. there's a section of the report talking about direct to the

consumer, and platforms like tune which are using blockchain technology to make sure artists not only get a fairer share of what they're generating but to do that in a much more transparent way. >> of course royalties are a huge part of where the growth is coming from. as you say, this is all part of the changing habits. a couple years ago we were talking about the demise of the music industry, but people have found new ways to make money, via concerts and royalties on streaming services how do you see that evolving over time with more and more streaming services and internet type subscription models >> one takeaway from the report is how murky that industry blob is in particular in the area of royalty collection you're right streaming services have led to significant growth in royalties. but what's interesting is firstly that's not hugely evenly

distributed. secondly there's a distinction between back catalog and front catalog. so for the big record labels, the amount of control they have over their catalog is a key, key source of strength for them. but it's a question about whether you can replicate that with artists going forward increasingly artists are taking the view they can actually hold -- bypass those intermediaries and retain a higher proportion of revenue it's more about how the market developments than looking backwards. >> tom, we leave it there. thank you very much. a former business partner of paul manafort testified he committed crimes with trump's former campaign chairman how has rick gates' testimony been received? what impact could it have on the mueller investigation?

>> that's interesting. because this trial about tax evasion and financial crimes has nothing at all to do with the trump campaign the outcome could, but this trial does not, but it could speak to the character ochf the man at the top of the trump campaign when and if those issues come up later the big news out of the trial so far is the government's star witness, rick gates a former business partner and a former deputy campaign chair for the trump campaign, he admitted to committing crimes with paul manafort saying he was directed to do wire transfers of money into offshore accounts, millions of dollars to avoid paying taxes, that he falsified tax forms, that he lied to accountants and book keepers and even kept some of the money for himself without his boss knowing about it that's what we could hear more about today in what is expected to be three more hours of testimony plus cross examination on top of that where paul

manafort's attorneys will try to tear apart rick gates saying he can't be telling the truth because he stole from his boss it is an interesting set of testimony as we consider this trial. we are now in week two of what's expected to take three weeks >> tracie potts, thank you very much that is it for our show today. "worldwide exchange" is coming up next.

it's 5:00 on cnbc. we begin with breaking news. a massive wildfire tearing through northern california ballooning overnight to become the biggest in the state's history. new u.s. sanctions against iran are going into effect we're live in tehran with the fallout. china blasting president trump again this morning over trade. we are headed live to beijing. investors are flipping out over zillow's latest quarter not in a good way. and can you name today's mers r mystery chart? this country's stock market has been crushing it this your despite the trade turmoil.