welcome to "street signs." i'm joumanna bercetche >> i'm willem marx we're both in london hadley gamble is in manila these are your headlines >> desperation and despair iran's president blasts new sanctions from the white house and says they're doomed to fail. europe follows asia lower in markets after a u.s. judge reportedly finds three chinese banks in contempt for failing to comply with a probe into north korea sanctions violations french business consultancy

capgemini buys digital services firm altran in a deal worth 3.6 billion euros sending shares in both companies higher. and ecb vice president denies low rates have hurt profitability of the region's banks and says foreign merger activity is indispensable. the iranian president has hit out at the latest round of u.s. sanctions and says they will fail. he told state television that the measures show washington's desperation and that tehran is practicing strategic programs. president trump described the u.s. penalties as proportionate in terms of a response to iran's shooting down of an unmanned drone over the strait of hormuz.

he urged iran tone gauge in talktal to engage in talks. >> my only message is he has the potential to have a great country very quickly he should do that rather than going along this destructive path destructive for everybody. we can't let him have a nuclear weapon he says he doesn't want nuclear weapons. a great thing to say a lot of things have been said over the years and it turns out to be not so he said openly and plainly he does not want to have nuclear weapons. if that's the case, we can do something quickly. >> hadley gamble joins us with more so far it seems neither side in this confrontation have sought to calm the situation very much. >> not as of yet the war of words between washington and tehran shows no

sign of abating, at least not yet. we understand there will be further u.s. sanctions coming down the pike later this week. i want to mention something we discussed over the weekend with brian hook i asked him in my exclusive interview about those u.s. sanctions, but i also had the chance to ask him about the burden sharing when it comes to securing the strait of hormuz or the persian gulf this could have major implications not just for tanker traffic but for america's foreign policy in the long-term. let's listen in to what he had to say >> the president has held the door open to real negotiations to completely and verifiably eliminate iran's nuclear weapons program, it's pursuit of bli ballistic missile systems, it's support for international terrorism, and its other maligned behavior word wide. all that iran needs to do is to walk through that open door.

>> that was actually america's national security adviser, john bolton he was speaking from israel, discussing the fact that the united states will continue, he says, to keep the door open to conversations with tehran. we heard from the president, rouhani, earlier today, and he said the new sanctions are doomed to failure, they're ridiculous, they show the desperation and despair of washington but the war of words continuing here and on the sidelines of this mideast peace con frons that t conference that the president's son-in-law has invested so much time in. >> let's give some background to the viewers. president trump's son-in-law, senior adviser, jarrett kush edr will unveil a package.

palestine's president dismissed the plan and said a political solution to the long-running conflict should be a far greater priority let's get out to hadley. the key is in the wording here what i was just saying is that ultimately the focus has been on an economic solution rather than a political solution, not really addressing some of the fundamental concerns that have been gripping the region as you may well know over the last 30, 40 years or so so what hope is there for any tangible path to peace to come out of this conference that's happening? >> that's an excellent question. at the end of the day stthere's growing understanding that there can be no peace plan without an economic plan as well. we talked so many years about the potential for a marshall plan for the middle east in terms of these economies the world bank said last year the palestinian economy at large grew by zero percent

so they know they have a problem. the palestinians desperately need the billions of dollars in investment we know this particular plan would put forth $50 billion over the course of ten years. 13$13.5 billion if grants. 26 billion in low-interest loans, 11 billion in private capital investments. in terms of where that money is coming from, there is a plethora of u.s. businessmen on the side. the gulf arab countries would be expected to contribute the lion's share of this big-time investors could bring in a piece of that pie it's also interesting throughout the next couple of days, the son of law of the president will be on site. steve mnuchin, the secretary of the treasury of the u.s. will be here making remarks and holding a panel with finance ministers they understand they have to get the economics right in terms for the potential two-state but they

say this is not the peace plan t has to be a peaceful/political solution, not just the economics. but when you come to the conference like this one and you don't see the leaders of israel or palestine on the sidelines, you wonder how far they will kick the can down the road >> mike pompeo is in the region as well looking to secure allies when it comes to the conflict with iran. hadley, thank you very much for breaking it down for us. i want to bring in darya dolzikova from rusi. our other top story today is that about the u.s. imposing additional sanctions on the iranian regime particularly this time targeted at the supreme leader khomeini

i want toask whether or not yo see any deeper consequences on the back of the u.s. going for the second round of sanctions towards iran >> yes it's hard to say what the practical impact of these additional sanctions will actually be. they are largely declaratory in the sense that the irgc was already under sanctions from the united states. the iranian regime was cut off from the international financial system so the naming of specific individuals, it's interesting to see, but it will be interesting to see what the actual practical impact of this will be it's hard to say at the moment >> and are you surprised that the u.s. went down the route of applying extra sanctions it's difficult to determine what the impact will be, but the communication from the president at least before the sanctions were announced was that of looking for some form of a

diplomatic solution. then again he surprised the market by announcing these extra round of sanctions do you think diplomacy is dead at this point? >> it's hard to say. it might have an impact on the ability to conduct negotiations. when you call out specific members of the leadership, it might kind of threaten opportunities for goodwill for negotiations sanctions like anything else are another tool in the toolbox. whether it was surprising or not is a little hard to say. it has been clear, it seems like from some statements from president trump, that he is looking to, you know, instead of perhaps goingdown the military route, to do something more in terms of an economic or diplomatic approach. so this does fit in with that. >> is this not just ultimately a failure of european government is, and businesses to provi

provide/deliver the long economic businesses to iran that should have resulted from the jcpoa? >> i don't know how much the united states decision to impose additional karng sh aal sanctio or not related to the failure or the challenges that the european -- or the eu parties to the jcpoa have had in providing that economic relief to iran this seems to be a unilateral u.s. decision to impose these sanctions. >> last week it was said brussels was more focused on the compliance to the jcpoa. is all of this a smoke screen to distract from the failure on iran's part to potentially live up to its part of the deal as well

>> it's hard to say. i'm really not sure. it's kind of hard to speculate where iran's head is at for this at the end of the day, the mechanism to provide some financial relief or to kind of deliver on what iran sees -- or what iran expects from the financial end, the mechanism is there. how well it's working or not is another conversation that's an important route to take forward perhaps to try to lower tensions a bit >> clearly it's difficult to know what's in the head of the iranian leadership how seriously should invests and businesses take commitments from senior iranian officials when it comes to their apparent and off-stated intentions to break some of their commitments that bind them under the jcpoa. >> at the end of the day the international financial community and international

businesses, it's up to them to make the decision of what their risk appetite is to go into the country. u.s. sanctions are in place. there's secondary sanctions as a result it is an individual business decision at this point >> darya, we'll leave it there thank you very much for joining us this morning. another story, a major chinese bank is reportedly at risk of losing access to the u.s. financial system after an american court held three chinese financials in contempt for refusing to comply with probes into north korean sanctions violations this is according to a "washington post" report the three banks have not been identified, but china merchants bank has denied involvement in any investigation and said it complies with both u.n. resolutions and chinese law. that's the picture for system of the chinese banks we're looking at merchant s bank is down almost

5% others are down about 3% the shanghai composite down about 0.9% a risk-on vibe overnight in asia after a weaker close for u.s. equities >> interesting to see how sanctions are playing into the picture for some of these big corporates do get in touch on twitter if you have views on the u.s./iran tensions or that story in the "washington post." @streetsignscnbc coming up on the program, a friendly takeover sends shares in capgemini and altran technologies surging more on that potential deal after the break.

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been a relatively positive month but the mood has soured in the last 48 hours as the market is gripped by geopolitical concerns between what is happening between the u.s. and iran with the u.s. deciding to go ahead and impose extra sanctions on iran and the upcoming g20 summit where president trump is expected to meet with president xi and other key leaders the market is looking for progress when it comes to the trade war. overnight both of those themes play nothining into equities. we have the stoxx 600 trading at about 0.2% softer on the session today. again, gripped by geopolitical concerns and also some idiosyncratic stories here let's get into some of them. switching to european markets, starting off with the ftse 100, the uk index trading below 7,400. boris johnson, the prime contender to be the next prime

minister in the uk finally gave an interview to the bbc where he emphasized that october 31st will be the uk brexit date, whether there's a deal or no deal no-deal fears priced back in to this index yet again today xetra dax down about a quarter of a percentage point. cac 40 down 0.2% the italian index down 0.4 the european indices are trading moderately weaker. the bigger stories are those of sectors. let's talk about where the weakness is coming from. at the bottom the banking sector down about 1%. one name we're focused on here yet again, commerzbank here there are reports in reuters that unicredit has gone cold when it comes to its potential bid to take over commerzbank. both of those barns are trading negative on the become of that news we have german bunds at an

all-time low not pstiositive for the banking sector retail down. autos yet another day in the red for this all-important sector. not just because it's export oriented, but we have had a bunch of profit warnings yesterday we had daimler warning. today more bad news when it comes to the renault and nissan merger renault is trading down about 1% on that report as well that nissan are indeed turning cold when it comes to the future alliance between the two just a quick recap of the positive sectors basic resources up 0.9%. tech up 0.5% the french consulting firm capgemini has agreed to buy altran technologies in a 3$3.6 billion euro deal. that could create a group with revenues around 17 billion euros annually capgemini says the deal will

allow them to capitalize on altran's engineering and r & d the deal will require regulatory approval. shares in some of the top tech listings plunged on monday. video chat company zoom debuted with a 72% pop back in april it closed down 11% that wiped 2$2.8 billion off its market cap 2019's best performing ipo, beyond meat, dropped 8.5%. those two weren't alone. slack, cloud strike, lyft and uber all recorded significant share price declines the ceo of box talked about the sharp declines early this morning. he said he sees huge potential for the tech ipos. >> what i do know, the market

for whether it's cloud products or consumer technology companies that are going and disrupting legacy industries or legacy markets continue to be enormous. when you look at slack or zoom, the market potential for these organizations could be ten or 100 times larger in terms of the potential revenue and the growth in the businesses. bitcoin is hovering near a 15 month high. it surged after the announcement about facebook's new cryptocurrency libra last week the price of bitcoin jumped nearly 200% after hitting significant lows at the beginning of the year. the first and largest cryptocurrency began that decline after its value topped out at more than $19,000 in december 2017. you can see that really there has been a significant jump since the beginning of the year. up almost 200% let's bring in our expert on the

topic. garrett halman joins us. let's go back to the year-to-date performance of bitcoin. is there any economic reason that it has rebounded so much? >> yes bitcoin's price is driven by supply and demand. we have next year what is called the havinean coming up, where the reward for mining bitcoin will be cut in half. demand has been rising in part because of the interest in facebook's stable coin and how they may onboard digital currency users, and china, fears of china's trade concern have been driving up demand in china. so you mentioned facebook, but what they announced is not a cryptocurrency per se. how does that alter the

landscape for the more traditional currencies here like bitcoin and ethereum >> there's some debate about whether libra is a cryptocurrency some would argue it is others argue it is not it's not as decentralized as a cryptocurrency like bitcoin. it is run by a corporation, a set of corporations, with a limited number of computers operating it there's been a fear that some cryptocurrencies could be negatively impacted, but not bitcoin. it's scarcer, it offers something different than what bitcoin is putting forward >> your head of research at blockchain so this is in your wheelhou wheelhouse a stable coin is underpinned by existing financial infrastructure what is to stop a trader trying to attack a stable coin and try and unhook it from the peg that it's automatically attached to >> right

so we've seen that happen. tether has been around for years. sometimes it drops to 89 cents, but arbitragers will come in and convert tether for real u.s. dollars and peg it back in line. that should be what people can do with libra as well. that's one way that the price of stable coins have remained relatively stable. >> i know you don't have a huge amount to go on, it's a 12-page white paper, but this is a product aimed at the un-banked as facebook implies, is there a long-term problem that it won't offer an interest rate return? they're not trying to offer banking services but if you're someone in the part of the world where you can't access a bank, might you take this? >> there's a lot of unanswered questions. we've seen stable coins earn interest rates through various

providers. you could earn 6% right now on some stable coins by making them available for lending purposes to traders and others using them just because facebook is not directly paying out interest to libra users doesn't meanviders r interest >> it's a means to transfer funds across the world for people who don't have access >> but if there are transaction fees associated with that, is that an attractive product >> we don't know how high the fees will be sending money to subsaharan africa is extremely expensive. maybe if facebook can offer something at 1% or less that could be attractive to users >> as long as you have access to the facebook removing significant hurdles >> last week mark carney made some comments about libra that

came as a surprise to the market that he was singling out one particular firm, facebook, saying they are watching developments in that space and keeping an open mind, not necessarily an open door to the advancement of libra were you surprised to hear those comments out of the bank of england governor >> yes and no. the bank of england for years have been talking about opening up vaults as the headline read to allow more firms to bank directly with the central bank it was surprising to hear that so shortly after the libra announcement to mark carney and the bank of england's credit they have been at the forefront of innovation and attracting companies to london who are looking to innovate around financial services this is a seat change. the banks may not like it that tech companies can have a relationship with the bank of england. it's a big deal. >> you have to think there will be a lot of regulatory jumps, speed bumps for this company to get through if they want to become wide spread and mainstream we'll leave it there

thank you very much for joining us today on "street signs. coming up on the show, u.s. and chinese officials hold trade talks over the phone as a crunch meeting between president trump and xi jinping looms more after the break (client's voice) remember that degree you got in taxation?

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welcome back to "street signs. i'm willem marx. >> i'm joumanna bercetche. these are your headlines >> desperation and despair iran's president blasts new sanctions from the white house and says they're doomed to fail. european markets follow asia lower after a u.s. judge reportedly finds three chinese banks in contempt for failing to comply with a probe into north korea sanctions violations french business consultancy capgemini buys digital services firm altran in a deal worth 3.6 billion euros sending shares in both companies higher. and fedex soothes the u.s. government over chinese export restrictions describing the

measures as an impossible burden, this ahead of fourth quarter earnings due after the bell today it was a risk-off tone in asian equities overnight lots of concerns as we head into the g20 summit towards the end of this week and the geopolitical narrative hanging heavily over how the market is trading. not a pretty picture for european markets ftse 100 don't 0.3% as boris johnson reaffirms that the uk will be exiting the eu on october 31st whether there's a deal or no-deal. so no-deal brexit priced into that market. xetra dax the out-performer, they pared some losses in the last half hour, trading around

the flat line. cac 40 down marginally moderately cautious tone in europe today switching to foreign exchange, the theme over the last couple of weeks has been one of dollar weakness the dollar index trading at a three-month low. that's one reason why euro and sterling have been rebounding over the last couple of sessions euro close to 11.14, many of yo would be surprised to hear the currency is trading higher than before the president draghi speech last week the your ro currency tra euro c. cable up firmer as well. 1.2760 the story there is one of sterling weakness and a flight into yen today the yen trading about 0.3 firmer

even though so members of the committee were open to the idea of additional easing the picture for u.s. pfutures, moderately lower s&p down a couple points dow down a couple points all eyes on a speech given by the chair powell, that is coming up later today it will be interesting to see whether or not he sounds as dovish as the impression the market got from the fomc meeting last week. that will be key to watch later on top u.s. and chinese officials held a phone call to discuss trade ahead of a meeting between presidents trump and xi. china's commerce ministry said robert lighthizer and liu he spoke about trade and agreed to keep in contact. >> vice premiere liu he has had

a conversation with steven mnuchin and robert lighthizer. the two sides exchanged opinions on trade and the agency also pointed out that the call was at the invitation of the u.s. emphasizing that the u.s. initiated reflects one of china's key complaints that the u.s. approach is unilateral and disrespectful of beijing i spoke to a former trade official and asked whether the chinese government understood why the u.s. and china's other trading partners are so frustrated with beijing. this is what he said >> because they do not have trust on the chinese government. the chinese government is serious, for instance, about making a serious law, regulations about the protect n protections and china's established so many courts

specifically for the treatment of violation of aprs we are serious about that. protection of that is not only good for the foreign investors, but also good for chinese inventors, so it is a mutually beneficial thing so the foreign side should fully understand that the protection or some other requirement from the foreign side are also in the fundamental interest of china. >> the minister hopes the u.s. and china will be able to movement needle on trade talks at the g20 he said he's cautiously optimistic because believes the economic incentives are there for a trade truce. eunice yoon, beijing. from trade to fed speak. robert kaplan said it is too early to decide whether the fed

should cut rates it said it could substantially he reduce in the future but that he is monitoring u.s./china trade tensions and slowing growth to see if they will cause a material deterioration of domestic let's bring in patrick spencer great to have you on the show. interesting that mr. kaplan seeds to be throwing cold water over some of the markets hopes of an imminent fed cut at the july meeting is it your expectation that the fed may well go ahead and get this cut out of the way at the next meeting >> if you look at the futures, there's 100% certainty that they'll cut. i think they're just playing for time through the g20 talks if a deal gets done, which we think is unlikely, you might have to put those interest rates on hold. because the domestic economy in

the u.s. is doing perfectly well, thank you. you have nearly full employment. you have low inflation you have retail spending, which is quite high. consumer confidence continues to rise the back drop is reasonable. if you have a deal, maybe it's on hold for the moment but unlikely we get a deal >> simple question how do you play a rate cutting cycle? where do you put your money? >> so far the stocks that have done well this year are the staples. defensive stocks what is underperforming is things like industrial stocks, material stocks. things that do well on a dollar weakness and emerging market stocks if you do get a rate cut, i think you turbo charge those specific areas that will be followed shortly thereafter by the technology stocks and the consumer services

stocks >> you talk about the confidence you have in the u.s. consumer staying resilient. is that reason enough to stick with some sector and consumer discretionary ideas? >> first, look at the market the market is close to all-time highs. the u.s. consumer is 70% of the u.s. economy consumer confidence is quite high so, you know, the numbers recently -- there was another takeover yesterday in the restaurant space people are looking where there's distribution issues. you know, where can you buy business that are not actually attacked by our friend amazon. so, the retail for specific reasons is better than expected. also the underlying consumer is still in a strong place he you just had all these refis t refinancing that put money back into the consumer's pockets.

>> one thing we've not seen a huge amount of yet in the united states is the impact of tariffs on products affecting that consumer resilience. when you look at this g20 meeting between president xi and trump, what is the best case scenario from an equities perspective to km out come out t meeting and then the worst >> the best would be a deal. but that would maybe put rates on hold. >> a deal that lifts all tariffs across the board >> yes i think the market would like that the worst is that they continue to talk. then there's going to be further difficulties and slowdowns nobody knows how far this will escalate trying to get your hands around that, the economic and earnings impact in the u.s. is really the $60,000 question >> do you think there's more to be lost from uncertainty as opposed to yet more tariffs

being imposed in a way >> yes i see the question you're asking the markets hate uncertainty they deal on certainty the fact is that markets are trading at near all-time highs they are looking through the present issue. they're saying, look, we're going to muddle through. there's no recession we will see earnings improvement in the third -- in the fourth quarter of next year so they do want the certainty. but the market is looking through the uncertainty saying it's not -- even if it comes around and it's delayed, there's not much impact on the u.s. and global economy >> patrick spencer, stay with us ecb vice president luis deguindos said a weakening economic growth could hurt the outlook for the european banking sector deguindos insisted that the ecb's easing monetary policy has not harmed bank profits but the impact of low rates needs to be carefully monitored.

patrick hannahan disagrees he said some banks may partially feel the effects of negative ecb rates. he's getting his information from lots of research. some banks will suffer from low interest rates depends on the business model and the portfolio. there's still a lot of banks with large portfolios and small business loans who -- system of them stress loans, nonperforming loans. the economy needs to perform well for those loans to come right, to come good and to pay off. that's where the offsetting factor comes your first look as a banker is low interest rates, not good for me but strong economy good for me it's the balance between those two. some banks are suffering, but on average, it's a wash, i would say. >> another fund in trouble h20 asset management is ur

sently tsent urgently trying to stem client o funds. morningstar suspended the rating of the fund which sent natixis shares sharply lower last week outflows reached 600 million euros in the second quarter but analysts estimate clients pulled 1.4 billion euros between tuesday and thursday last week. on monday h20 sold some of its bonds putting the aggravate value to less than 500 million euros. there's been a bunch of downgrades on natixis. barkley barclays calls the incident a

black swan event interesting comments out of barclays, calling this a black swan event it's the third event in the fund management industry coming from such high profile names. we had the fund from natixis, the gam fund, the woodward fund. these funds were heavily invested in illiquid assets. is this just poor governance on the part of these funds? >> the issue is -- i was looking this morning at how many private equity funds have actually been evolved in the last 15 years it's grown 150 percent in the last 15 years. you have 3,500 private equity funds now. in the capital formation cycle the big money is not made when a company goes ipo'd, it's in the

private equity space you are making 10 to 15 times in the private equity space maybe you make more in the unicorns over a period of time so the big money is made in the private equity space i can understand why people are now obviously going into that area, which is illiquid but the profits are so much more higher. because there's so much more money now and so many funds chasing a decreasing amount of m&a opportunities, it gets very competitive. prices are rising. it's a risky strategy if you buy the wrong companies. i think that's what's been happening recently the legislators and the regulators will have to look at this it's an attractive place to invest it's just what are you buying? it needs to say on the tin what you're buying. i think the regulators have to scrutinize the activity. it's a great question. >> it does raise scrutiny about

the difference between open-ended funds and closed funds. open-ended funds has the ability to withdraw cash when they want to if the underlying trust investor cannot get out of those securities quick enough tenough raises a lot of issues so we could be looking at a change at how these funds are regulated. >> very much so. you saw overnight that vanguard is thinking about introducing a private equity fund for the retail area. everybody recognizes the importance of the vertical and the importance of that group but it's just how you regulate it and what you put it in. that's where we need to move forward. it's a good question >> from the perspective of the retail investor, over the long, long, long term going forward, we've seen the rise of far more automated investment opportunities for people that clearly puts pressure on fund managers, because they're

having to justify fees is that the chain of events that leads to something like this >> i think the big question is -- that's another good question -- it's basically passive over active. baird gives advice to active fund managers. the argument is should you pay those fees our work shows that basically if you go into a passive fund, you are saying you can't -- there's no upside. you can't beat the index now do you want to do that as an individual now, there are a lot of great fund managers out there that are beating the index. the work we've done recently shows that in a bear market active managers will always outperform passive investments, that's because they can move to cash they can move to reits if you look at the nasdaq, 45% of the nasdaq is in five stocks. you imagine when the etfs, that

liquidity issue hits the buffers, if you don't have an active manager you'll be in trouble. there's benefits to active over passive. it's a blend i think people have got to understand that. retail investors are quite smart. just being passive is a dangerous strategy >> we'll leave it there. appreciate your time patrick spencer from baird. boris johnson says he is seriously prepared to take britain out of the european union without a deal in his first televised interview since the launch of his campaign, he said he would need help from the eu to avoid a hard border in ireland and the trade tariffs that would arise in such an event the favorite to replace theresa may as uk prime minister also defended his position to remain silent on a reported row with his partner over the weekend that caused police to be called to his property.

spacex has completed its first heavy rocket night launch. the craft took off from florida and will fly for around six hours deploying 24 satellites to be used by multiple global governments. the rocket's center booster crashed into the atlantic ocean, but two center side boosters returned safely to earth coming up, the olympics are returning to italy with milan and cortina set to host the 2026 winter games all the details after the break. you need to buy a car and you want to get an excellent price you'd think with all these options it would be easy. but with terms like msrp, invoice, list price, things get confusing pretty fast. you just want to get a real price and that's where true car comes in. only with true car can you see what other people paid for the car you want and you can connect with certified dealers

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the international olympic committee has chosen milan and cortina d'ampezzo to host the 2020 olympics. ice hockey and skating will take place in milan and other competitions in cortina. the italian bid won with 47 votes against stockholm's 34

italy hosted the winter olympics twice before cortina hosted it 70 years earlier in 1956. it was in turin in 2006. >> the big question is where the luging event will happen >> all eyes on luge. >> that was the highlight of my 2018 fedex is suing the u.s. government over chinese export restrictions it says they are an impossible burden they say the measures targeting huawei and other chinese manufacturers means it has to effectively police the millions of packages it ships daily, an impossible task for a private company. the company is also expected to report lackluster fiscal fourth quarter earnings after the bell today with almost a 20% fall in earnings per share let's bring in ken hoexter from bank of america merrill lynch.

the setup for fedex wasn't positive to begin with the stock is down 30% over the last 12 months or so indeed over the last five earnings reports the market has b been disappointed. you are expecting anything different today? >> we're not expecting something disappointing just given the setup they had at our conference a month ago they highlighted the economy was starting off soft. they lowered their industrial production outlook and really set up a bearish stage then since then they have increased their announcement of sunday delivery to seven-day delivery on the ground they also announced that they're booting amazon off the network on the express side. you have a couple things setting up where not only is fourth quarter going to have what looks to be some charges, but we think the 2020 outlook will be reined in as well >> fedex is one of the names

that is in the middle of the trade war, but just a few weeks ago they announced they will not be renewing their contract with amazon for air delivery. do you think this is a wise move considering the fact that amazon controls about 50% of the u.s. e-commerce market? >> amazon is only 1.3% of their revenues this is maybe just a large portion of that. it's a small portion of fedex's revenues, we felt it was a statement saying we're going after price, we're not going to be taking this business at a lore value especially as they move to next day volumes, which meant they would seek a more affordable price so initially it looked like a move more focused on pricing since then you have had articles in the papers highlight that fedex is actually now chasing some additional business using price to fill up that extra network. so that is certainly something

we look for the company to answer on the earnings call. >> what you're saying is that decision on amazon was to defend potential margins under attack from competition i wonder, as e-commerce continues to grow and grow in the u.s., how does a firm like fedex go about protecting margins across the board when it look at its affiliation with the u.s. postal service at cheaper, more affordable options that will keep consumers and customers happy? how does it do that at the same time and protect margins >> using the post office is one way of that lower lightweight product where you can ship it into the post office for the last mile delivery but you focus more on price to protect margins as a functional duopoly with u.p.s. you create value i think if you start doing what you're suggesting which is using price

to win more business, then you start increasing margins that's been the problem with the stock. the stock has been down and under pressure because they both have been chasing volumes using price. i think that ultimately becomes a bigger issue >> ken, thank you very much. appreciate your time ken hoexter from bank of america merrill lynch. >> a quick look at u.s. futures. the european equities are trading with risk-off sentiment. doesn't look like u.s. futures will be different. watch out for a speech from the fed chair powell, that's coming up later today that's it for our show i'm joumanna bercetche >> i'm willem marx "worldwide exchange" is up next. fun fact: 1 in 4 of us millennials have debt we might die with. and most of that debt is actually from credit cards. it's just not right. but with sofi, you can get your credit cards right - by consolidating your credit card debt into one monthly payment.

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it is 5:00 a.m. at cnbc global headquarters. the white house slapping new sanctions on iran following tanker attacks and the downing of a u.s. drone. iran firing back with fiery rhetoric of their own. a record within reach. the dow just 224 points away from a new intraday all-time high will today be the day? speaking of rallies, bitcoin topping 11,300 this morning. up more than 200% year-to-date tom lee is here to weigh in. fedex taking