good morning welcome to "street signs." i'm joumanna bercetche these are your headlines german software giant s.a.p. shares plunge as second quarter margins disappoint dragging down germany's dax. investors cheer at beats from novartis as the swiss drugmaker reports double digit growth and first half operating income the ceo says he is optimistic on the rest of the year >> seen strong sales momentum across all the growth drivers.

we're increasing our sales guidance in innovative medicines and santos and our bottom line guidance for the full year. easyjet shares take off after backing the full-year outlook and lands a new chief operating officer. and shares in asos sink after issuing their third profit warning in the last eight months all right. very warm welcome to you all we are right in the middle of european earnings season things are beginning to ramp up. annette and julianna will have the latest on s.a.p. and novartis first two stocks here in the uk. asos is one we've been following closely. they have issued the third

profit warning in eight months citing operational issues in europe and the u.s at one point asos -- you can see the stock is down 12.7%, at one point they were down 20% another stock we're looking at is easyjet first half results did meet expectations the budget airliner reiterated their full-year guidance easyjet is up there at 3.6%. one of the few green spots on the heat map today s.a.p. says one-off costs contributed to a 21% fall in second quarter operating profit, but the german business software group still managed to meet expectations s.a.p. says trade tensions impacted second quarter license sales but claims the pipeline remains strong the company backed its outlook and bill mcdermott expressed a commitment to expand margins by 5 percentage points through

2023 this is the picture for s.a.p. it is down 6.4%. close to the bhottom of the stox 600. annette joins us with more back in april the activist investor elliott management disclosed they had built a $1 billion stake in s.a.p. and back then they said they fully supported the company's plans to improve its performance. they're probably disappointed with what has been released today. >> yes, that might be the case but also you have to put the share price reaction in perspective. clearly the shares trade took close to they're all-time high which they reached earlier this month. that was at 122 euros a share. so the share price reaction today is quite wild given the valuation of s.a.p let me run you through the

results. clearly there's positive things in those results, which is clearly not going or reflected in the market reaction we have the cloud business going strong that's positive also for the next quarter clearly the cloud is where they see themselves like being positioned in the future license revenues are down by 5%. that's also because of the trade dispute. that's what the ceo is telling reuters, especially asia is weak when it comes to license sales that was their bread and butter business years ago when we didn't have the cloud. ever since the move towards the cloud business the revenues are higher than license revenues still this is the weakness s.a.p. has a clear cost problem in the last quarter with costs higher for the redundancy program but also the cash compensation because of the high

share price was higher than people had expected. going forward the second half might be actually better than the first half according to the ceo and they're sticking to their guidance back to you. >> excellent thank you for breaking that down s.a.p. stock down about 6.5% today after their earnings let's move on to another top mover today. novartis raised its full-year sales and profit targets on the back of a 20% increase in second quarter core operating profit. the swiss pharmaceutical firm says it now expects 2019 core operating income to grow at the low double digit to mid teens percentage range julianna joins us with more. strong numbers out of novartis today. the bigger question is what the pipeline is looking like further down the road. >> a strong set of numbers

the market was prepared for the strong momentum they saw in q1 to continue in q2. the fact they delivered this upgrade won't come as a huge surprise to investors, but certainly is reassuring for the market you talk about the pipeline. novartis has about 25 potential blockbusters in its pipeline and one exciting drug for this company is in the gene therapy realm. this is a drug that they just received u.s. fda approval for back in may. this is gene therapy, a revolutionary type of drug it's unchartered territory for everyone involved. this particular drug costs more than $2 million a treatment huge price tag but huge possibilities when it comes to creating opportunities, creating solutions for devastating diseases i had a chance to catch up with the ceo of novartis and ask him about the pricing of this drug and the prospects for gene

therapy moving forward >> we were very pleased the way we could price this is in a way based on the value it provides to the healthcare system when you look at the benchmarks and analysis that external parties have done, it's priced in a similar way to other drugs. it makes a lot of sense for the healthcare system. the challenges come at one point in time rather than spread out over the long-term so we've been able to offer it to healthcare plans in the u.s. and the opportunity to pay over time and also to get paid back if our medicine doesn't work. it's early days. we'll see how many plans ultimately utilize that. here's a nice benchmark, our cell therapy is being reimbursed right now in 18 countries around the world. we have over 1,000 cancer patients treated with this so actually healthcare systems are finding value for these

one-time medicines and are providing reimbursement for them >> do you have an early indication as to how receptive providers are to this five-year plan >> it's early days we have 40% of commercial lives have a letter of intent and the fact they would like to contract with us. i would expect in q3 to give more color as to which approaches different plans are using. what is exciting for us is even in the absence of contracts and policies, in almost every case thus far where a patient has been on label we have been able to get them on to this drug, so this shows there is an awareness that this is a revolutionary therapy and we need to get patients on it >> the reason i wanted to highlight for you the comments on this gene therapy drug, this is a really revolutionary field, expect to see more of this from pharma companies, they are out with one of the first gene

therapy treatments of its kind as you heard there, it is still early days in terms of the reception to this hefty price tag. it's a new area for everyone involved i also had a chance to ask about u.s. drug pricing, given all of the focus from politicians, from president trump on coming down on drug pricing. right now everybody here is in wait and see mode. he said he, too is waiting to see. it's unpredictable where things go from here to sum up, in terms of the share price reaction, this is a strong set of results the question is at 18 times earnings, how much of this good news is baked into the price >> excellent certainly one of the themes is drug pricing let's broaden out the discussion i want to bring in the head of life sirens research thanks for coming on the show for us i want to start off by picking up on system of the highlights of these novartis numbers. today is a heavy day of trading

in europe, but novartis' numbers stand out. they're forecasting high single digit sales growth for the rest of the year. this seems to be encouraging coming from one of the largest healthcare operators in the world? >> i think absolutely. one big theme in healthcare at the moment is where is the growth coming from novartis shows that investors are willing to pay for growth on the top line and bottom line, that comes from a diversified portfolio and a more exciting pipeline. >> novartis would you agree seems to be the exception rather than the rule? the second quarter has been a tricky quarter for healthcare as a sector >> i would point to novartis and astra both benefiting from a diversified portfolio, but performing on the top line these companies invested in bringing innovative therapies to the market that's coming through in the results. >> that's something that novartis clearly were very vocal

about and it's something that julianna was questioning them about, their gene therapy drug that is set to come to the market, which would be groundbreaking clearly a focus of theirs has been on innovation another theme raised is that of pricing and pricing pressure this is a theme we've been talking about since the midterms there's bipartisan support in the u.s. to contain some of the price points out of these pharmaceutical companies do you think that that risk is pretty much baked in to the outlook for pharma majors at this point is the risk premium already priced in to the outlook >> i think drug price hag been a headwind for a long time that's likely to persist is it baked in when there's headline noise around drug pricing the sector underperforms more broadly if you look at the specifics, we had a walk back on the rebate rule, which was largely neutral from a pharma perspective, maybe hit other sub sectors like the

insurers more. but i think the risk here is that the next set of proposals are more draconian for far phar. >> you say there are some companies in particular that are more exposed to that than others >> if you look at diversification of portfolio, novartis and astra are relatively insulated, they play in oncology and areas not as competitive. areas where there's a lot of generic exposure or competitive pressures like diabetes, these are the types of therapies that are more exposed to drug pricing risks. >> one other positive catalyst are the positive clinical data trials how are those trends evolving? >> yes compared to 2018, there's been a

lack of big clinical catalysts to get excitement. we had oncology. that was a big push. we had gene therapy, now that's on the market and a commercial execution story. gene therapy is still a hot area i think actually more than clinical trends, it will be m&a trends that drive the sector going forward. li >> last year was a huge year for some mega deals in the pharma space, this year has been a bit quieter. >> that's a fair point the first quarter we started off with three big deals the second quarter has been a bit quieter. we had pfizer more eventually, and then allergan. i think it's interesting to look at the drivers behind the m&a so the markets and invests respond positively to innovation led

growth transactions that are driven more by financial merits, so if it's propping up the top line when products are going off patent as in the case of avi/allergan, that is less exciting >> it's all about innovation, isn't it thank you so much for taking the time to chat with us coming up, earnings extravaganza electrolux reports quarterly net profits in line with forecasts but trade uncertainties continued to weigh on the swedish company. we will speak with jonas samuelson after the break. we're the slowskys.

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check it out! now you can schedule a callback or reschedule an appointment, even on nights and weekends. today's xfinity service. simple. easy. awesome. i'd rather not. . welcome back electrolux second quarter net profit met expectations as price increases helped the home appliancemaker temper higher costs from raw materials, trade tariffs and currency headwinds the swedish firm added that it expects these pressures to have a smaller impact on full-year results. the company also backed its 2019 outlook for its north american and european markets

let's bring in jonas samuelson, the ceo of electrolux. i want to ask about your take on the quarter. in line with estimates but i see sales declined from a year ago, mostly on the back of lower volumes. >> good morning. that's right we had a negative effect mainly driven by private label sales in north america. our branded and premium problems are developing well. we're happy about the development. we have been able to realize pricing to offset the headwinds, and we're continuing to drive positive mix, meaning that we're selling more of our innovative and more highly featured products contributing to profitability. >> sir, you're one of the companies that's been very much caught in the crosswinds of the trade war and extra tariffs being applied on steel and aluminum what i thought was interesting is a comment in the earnings release and similar to the last quarter you said you managed to

introduce price hikes and those price hikes have fully offset tariffs. is that still expected to be the case in the future can you pass through those tariff hikes one for one to the consumer >> we had to and we have it's not something we like because of course the higher prices do have an impact on demand we have seen somewhat softer demand in north america as a result of these price hikes. so that's an unfavorable development, but we have no choice but to pass on the higher costs. >> there is another choice, that is by going for efficiency gains. you said you're looking to modernize some plants in north america, south america can you give us more color on the developments there >> absolutely. that's unrelated to the tariff we are in a competitive industry, we need to continuously work to improve efficiency we have a strong and long track record of doing that

what we're doing now is a combination of product feature innovation, better product experiences, through a modernization of our product architectures and automation manufacturing. that's our largest investment program ever we talked about an additional 8 billion over the coming years leading to a 3 billion swedish krona annual cost efficiency improvement. we're ramping up our large refrigeration facility in south carolina right now with really cutting products and super modern facilities. we're excited about that we expect that to continue to contribute to our earnings improvement. >> sir, we talked about the negative impact from the tariffs and rising raw material costs. how are costs looking in the second half of the year here >> as indicated, we have eased our headwind for guidance a little bit in terms of those

headwinds. they're still going to be unfavorable year over year in the second half, but less than we had previously seen >> all right thank you very much for taking the time to speak with us. jonas samuelson, the ceo of electrolux there >> the imf believes the u.s. dollar is overvalued by 6% to 12%, and it sees the yuan, euro and euro in line with fundamentals g7 finance ministers voiced their concerns over facebook's planned libra cryptocurrency officials meeting in france warned the social media firm it must meet tough regulatory standards, while bruno lemaire said the sovereignty of nations cannot be jeopardized. steve joins us with more yesterday we were talking about digital tax, today we are

talking about cryptocurrency on both fronts lemaire is taking a hard line approach >> you're right, joumanna, but only on one issue can they get a form of agreement on the g7. on the digital tax argument, clear lit u.s. is taking the stance this is targeting, perhaps unfairly, u.s. big tech companies by the nature of it, by the nature of the fact they are the companies with those ref news over 750 million euros and 25 million euros worth of revenues in france i think the french are being provocative to try to get this issue out on the table just seeing a lot of provocation at intergovernmental level the oecd is trying to come up with its own proposals, they're not due for completion by the end of next year a long, long time in between and as mr. lemaire said yesterday, i'm not prepared to wait an eternity for that. on the libra issue, this one

seems easier it's an existential threat down the line to all of these nations, whether g7, g20 or beyond they see this digital currency threat again, the question has been asked why make such a big fuss of libra when they allowed bitcoin, a relatively free run i think that's simple. it's a question of scale libra would, if it had all facebook users, have roughly the same number of users as the population of india and china combined it's got about 2.38 billion monthly active users at the moment, bitcoin has 38 million users. you can see the difference in scale, why a libra adoption by users would be on a different scale to anything we've seen from bitcoin and elsewhere in cryptocurrencies beforehand. lots of other issues the imf story about the dollar as well. real concern that will be bubbling under the surface especially as the president gears up towards the election

towards the end of next year, targeting what he says is an unfair high valuation of the dollar the imf can agree, but how to get the dollar down is a question when the u.s. will be doing this action unilaterally because other big nations i'm sure would like some form of devaluation of their currencies to get a growth stimulated there are other issues some issues are being talked about, some aren't i asked giovanni tria why people are not talking about european growth and stability levels, european fiscal levels surely this is a challenge to growth i'm not sure mr. tria agreed this is a topic for discussion at the g7. let's listen to his answer >> we have a policy that we want to reach fiscal stabilization and growth, two targets should be reached together.

>> the key topic here is about the challenge to economic growth this is one of the key challenges, having the wrong fiscal policy in europe. >> i think we have to change the fiscal rules in europe, but this is an issue that we have to discuss in europe. >> again, mr. tria saying fiscal rules need to change what does that mean? what does that mean about the ability to raise debt and the ability for growth the ability to have larger deficits raises some large questions. none of which i think are being talked about too extensively here because i don't think they have an answer to it back to you. >> it's never easy never easy to get consensus at g7 all right. thank you for that coverage. we'll have more from the g7 meeting later today when our u.s. colleagues will be speaking to the treasury secretary, steven mnuchin i want to take you to the heat map in europe you can see we have a lot of red

on the screen. about 80% of these stocks are trading in negative territory. stoxx 600 is trading 0.6% weaker getting right into the heart of european earnings season here. a lot of underwhelming results today. not least from german software company s.a.p. another stock we'll talk about next, netflix shares slump after its stream of new global subscribers dwindles we'll talk more about netflix after the prak ♪ more, more, more ♪ how do you like it, ♪ how do you like it ♪ ♪ more, more, more ♪ how do you like it, how do you like it ♪ all you can eat is back. how do you like that? applebee's. now that's eatin' good in the neighborhood.

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welcome to "street signs." i'm joumanna bercetche these are your headlines german software giant s.a.p. shares plunge as second quarter margins disappoint dragging down europe's tech index an germany's dax. investors cheer at beats from novartis as the swiss drugmaker reports double digit growth and first half operating income the ceo says he is optimistic on the rest of the year >> seen strong sales momentum across all the growth drivers. we're increasing our sales

guidance in innovative medicines and santos and our bottom line guidance for the full year. easyjet shares take off after backing the full-year outlook and lands a new chief operating officer from rival ryanair. and netflix shares plunge in extended trade after posting a miss on second quarter subscriber growth for the first time since 2011. all right. we are getting some data out of the uk retail sales numbers, to break them down, 3.8% year-on-year versus may 2.2%. the poll was 2.6%, huge beat on retail sales, 3.8% year-on-year for the month of june. month on month the number was plus 1% versus may the reuters poll was 0.3%.

again, a bumper beat here and much higher than the may print the may number was 0.6%. month on month, adjusted x fuel came in at 3.6% year-on-year, much higher than the poll forecast of 2.7% the pound is trading firmer. i want to bring some other headlines that we're getting the obr also releasing some budget forecasting results over the next couple of years and we are seeing big headlines come out here saying that uk government borrowing would be around 30 billion sterling a year based on imf no-deal brexit forecasts. they say no-deal brexit would increase public debt by 12% by

2023/2024. the imf stress test is by no means a worst case scenario. they have released their analysis on the impact of a no-deal brexit on the economy. the bigger picture is we have the retail sales number and that's driving sterling higher euro is trading firmer, up about 0.10%. we're seeing greenback weakness versus the yen european markets are in the red this morning asian equities as well it's red across the board. the biggest mover to the down side is xetra dax, we talked about it numerous times on the show s.a.p. is down about 6% right at the bottom of the stoxx 600. the tech sector under pressure this morning as are other trade sensitive sectors as well. ftse 100 also down 0.6%.

switching to u.s. futures, we had a weaker session for wall street yesterday and today it doesn't look like the picture will be that much different. we get philly fed later and more earnings one bank to watch out for is morgan stanley one big mover overnight post the close, after close, was netflix. netflix tanked almost 12% in extended trade after the streaming giant reported a huge miss on international subscriber growth and a rare fall in u.s. paid members elizabeth joins us with more this wasn't just a small miss. they posted 2.7 million for the quarter versus a 5 million guidance >> that 5 million number was the number netflix itself had said they expected for the quarter. a lot of people questioning on wall street how did they get this so wrong. the u.s. domestic market lost about 126,000 subscribers in the second quarter that is the first time domestic

subscriber growth has been negative since 2011. that was well below the company's forecast that international subscriber growth was also much lower than expected 2.8 million new subscribers internationally versus 4.7 million the company hoped to add. a couple different factors here. one is the general price hikes netflix had during the second quarter. they think that might have had an impact. the second quarter does tend to be weak for netflix. maybe people are not watching as much tv. and then the competition aspect. we talk about streaming wars, that's something that netflix said was not afactor in the second quarter, it's confident in its lineup still going forward. it points to a lot of those original content shows as something that will boost subscribers next quarter it says it can add up to 7 million subscribers next quarter. netflix saying don't worry about

this yet >> let's bring in an alternative view tony gunnerson joins us. to elizabeth's point, she highlighted a couple reasons for weakness in the last quarter, isn't a lot of it due to the price hikes? have they not shot themselves in the foot by driving up prices so much it's simple economics. >> well, they have done this before there's impact on that i think the pricing is not the big picture here clearly "stranger things" was released a couple days after q2 ended. had they planned a bit differently, you know, numbers would have been different. and the numbers would have been quite different. price increases, there's a theory that we talk about a lot that consumers are unwilling to pay for things on the internet i don't think that's the case. most netflix subscribers are also amazon subscribers.

they have hbo or now-tv in the uk they are paying sums every month similar to cable and satellite tv subscribers yeah, there's a little bit going on with news servi services comu it's too early to talk about this >> do you don't think they'll make changes to their pricing structure on the back of this? >> one thing that was talked about last night was india, releasing the mobile only tier, 3.99 per month which is much cheaper. it competes with pay tv which costs 5 bucks a month in india so we think they'll roll that out across southeast asia and perhaps africa to drive quicker penetration of netflix in those kinds of markets

elsewhere u.s., uk, canada, you know, germany, netflix has grown to amazing scale they can probably afford to increase prices more that might lead to some subscribers showing up, but they'll make more money. >> what struck me is the focus on content you mentioned "stranger things." how much is this impacting the business model of not just netflix but other streaming companies when you're relying on a hit so heavily to drive your bottom line going forward? >> so q2 was the quarter when hbo's chernobyl was released we talked about this a lot during the summer. it's one of the biggest hits this year. that was from a competitive service. whether that had an impact on netflix numbers, i don't think so 126,000 in the u.s., that's a

drop in the ocean compared to 60 million subscriber base. content drives this. you know, the beauty with the subscription model is you can -- it's cheap you stay with it, and you dip if and out of different services. >> they will also face more competition in the space you say they had a dominant business model for a long time now you have hbo, you have nbc universal, you have disney plus, hulu, apple and amazon how long can they keep this market dominance for with so many other names coming into the game and stealing content away from them? >> yeah. the entire story has been netflix, netflix, netflix.

that is not changing any time soon we think in our forecasting we think netflix is going to stay in the number one position until 2025, perhaps even later they have achieved such massive scale already. it's going to take disney a couple of years to reach the tens of millions of subscribers domestically to reach 150 million subscribers will take a long time. apple has a huge captive market because of its hardware penetration, but they are sort of -- apple is going for an amazon model, doing a bit of everything not just video yeah netflix's position is not exactly challenged just yet. in the 2020s that will look different. >> netflix is seeming to insist they're not going to offer ads on their platform. how much of this advertising

strategy is playing out? because we know a lot of competitors willoffer ads in commercials, is this something netflix can stick with if they want to be competitive >> they even went further, they said any reports suggesting that we will release sort of an ad-funded model is totally false. they explicitly stated that. it's a consistent message. bear in mind they have a free trial period of a month. that acts as sort of a -- the free or ad-funded kind of thing for consumers. you can try this service for free for a month, binge the series and never pay you can only do it once per email address. >> you sound like you have done it. >> >>i haven't, no. other operators are banking on an ad funded model

hulu has done it others are thinking about it there is space for that. consumers are having netflix, amazon, they're having a third and fourth service at the same time i think consumer wallets will get a bit tight after four or five services. that's where youtube is still one of the biggest or the biggest video service in the world. that's ad funded >> tony, we have to leave it there. thank you very much. sounds like 2020 is the year to watch for netflix and competition. tony gunnerson and elizabeth schulze as well, thank you. let's go over some other corporate earnings today china was a big driver for ri richemo richemont. sales in asia offset sluggish

performance in europe with growth on the main line particularly strong. sales were up 3% year over year excluding online distributors at constant exchange rates. and givaudan reported a 2.3% rise in first half net profit. the fragrance maker said they plan to maintain the current dividend strategy. and a larger than expected fall in quarterly sales at remy cointreau. the spiritsmaker said sales should rebound in the second quarter as high revenue cognac units continue to perform. it is the 148th open championship adam is at royal port rush in northern ireland with more on the golf >> yes, where rory mcilroy will be teeing off in less than a half hour as thousands of fans stream through the gates here in

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welcome back the obr says the uk's weak business surveys in june raised the risk of a full blown recession. the obr warned of dangers from a no-deal brexit saying public debt would rise to 12% of gdp by the end of 2023/2024 spends pledges by boris johnson and jeremy hunt would prove expensive if pursued. today easyjet's first half results met expectations and the budget airliner reiterated their full-year guidance revenue for the second quarter grew 11% boosted by higher reservation numbers. the company also announced deployment of a new chief operating officer, peter bellew who comes from rival ryanair. asos shares are plunging after the uk firm issued its third profit warning in eight months citing operational issues

in europe and the u.s. the online retailer warned transmission problems will weigh on the firm for the rest of the year and they expect full-year pretax profit to be between 30 million and 35 million pounds. bank of america shares closed slightly higher after the lender beat profit estimates in the second quarter boosted by its retail business. consumer loans and deposits rose over the period helping to offset losses in the bank's trading division the lender lowered its full-year net interest margin guidance to 2.3% the company blamed a decline in long-term interest rates for the full year. morgan stanley is the last of the big learneds to repolend quarterly numbers before the bell today john, your broad takeaway from earnings, it seems like almost all of these banks lowered net

interest margins is that purely a function of the flattening of the yield curve or a reflection of less loan activity taking place? >> i think it is the flattening yield curve. the long end has come down and the short end has come down as well in expectation of the fed cutting rates soon the banks have pretty much all cut their guidance for net interest income. bank of america yesterday saying they're cutting from plus 3% for the full-year to plus 1% probably if you get two rate cuts, and also jpmorgan pulling back a bit wells fargo bringing down guidance towards the lower end of that minus 2% to minus 5% range. a bit of pressure coming through. what is interesting as well, if you look at the consumer activity and the consumer facing businesses, there are not that many warning signs to me, just reading through the results, it looks like did the u.s. consumer and lending activity, it's still robust in the u.s. >> bank of america were clear about that

they have a good perspective on the u.s. economy and the u.s. consumer the u.s. consumer continues to do well. you would expect that given the employment numbers unemployment down to 3.8%. unemployment continues to drop strong earnings growth wage rise is over 3% consumer credit remains healthy. from a consumer perspective, bank of america seeing loan growth of 4% on core businesses. on the other side you do see businesses struggling more that's where the lack of optimism is coming through that is causing a bit more confusion because of the trade wars >> does make you question on whether or not the fed is right to pursue this cut that's another discussion. what about the trading businesses lots of weakness there across the board. it varies from bank to bank. generally the picture there is one of significant challenges to the industry >> that's right. to a certain extent it was quite

a strong q2 last year. on the other hand there's no doubt it was a risk-off quarter for trading. in particular the geopolitical concerns and trade wars coming through causing nervousness. the people were okay with the u.s./chinese trade war for a while. then you had tweets about mexico as well. then there was a pull back in trading. so while there was a spike in volatility, it was what they call bad vol it wasn't activity which people could trade on apparently they recovered a bit with more optimism coming back from central banks generally talking about potential cuts from the fed and the ecb you had bit more of talks between the u.s. and china and equity markets positive as well. that's created a better back drop but a few headwinds to come in terms of the u.s. debt ceiling, brexit coming up, and then we've got u.s./china trade war. perhaps not going quite as well

as hoped >> to say it mildly. john, thank you very much for taking the time to chat with us. the 148th open golf championship has teed off at royal port rush in northern ireland. the open has not been played at the course since 1951. rory mcilroy is one of the favorites to lift the claret judge. adam joins us now. i want to ask about tiger, he has not played a tournament since the u.s. open. how are things looking for tiger woods today? >> there's always going to be lots of people following tiger woods around wherever he goes. you can expect no different today as well. just going to point you towards the defending champion who just happens to be on the putting green, francisco molinari won in dramatic style last year at

carnoust carnoustie he will be going out shortly as will rory mcilroy in about 20 minutes time ahead of that, i'm pleased to say that i'm joined by another guest this morning, i'm joined by the chief executive of the i rshr it has taken a while to get here, is it worth it >> oh, yes.golfers in the world and it is just ten until ten in the morning and the place is four. >> in a short time rory mcilroy will be teeing off at a home event. tell me a little bit about what that means for northern ireland and the job that everyone has done at the r & a to bring the open golf championship here? >> with rory coming here, we had

darren going off at 6:35 this morning. >> going very well >> playing very well and rory what we have been able to do here is galvanize irish support behind the best golfers on one of their finest golf courses this event is being broadcast to about 600 million households what better exhibition for northern ireland to be shown all the way around the world it's put this country, this golf course absolutely on the global map. it's a pleasure to do that with the open championship. >> now, royal port rush is not used to seeing this amount of people in one place. it's having a huge impact, can't help but have a huge impact considering there's over 235,000 people coming through the gates this week. >> so, 237,750 is the official number for the attendance. it's the second highest ever in

the open the highest outside of st. andrews. and, you know, the open is now such a global sport. it's way beyond what it used to be as a british championship this is a global sporting event. and all these people are absolutely enjoying it we are grateful for them for turning up and supporting their champions. >> how important is it for golf to continue to evolve in this congested sporting atmosphere that we live in at the moment? the fact you can bring golf to northern ireland, new territories, new audiences >> i think this is my fourth year in chargeof the open. i think you're seeing a new era for the open we are trying to make it more modern, more relevant to people, to engage with a different audience we have an objective to get 25% of our audience under the age of 25 we're doing a lot to to do that. you're seeing golf modernize

it's becoming a sport. it's no longer a game. it's a sport i think it's becoming a global business and i find that as a golf fan truly exciting. >> just finally, royal port rush is here now. it's been 68 years since it was last year. where does it fit in to the open rotation now and what does the future hold for the open here or back on the mainland of the united kingdom >> we have ten courses on the pool that we use i think after this week, i think port rush has cemented its position in those ten courses. this championship will bring 80 million pounds worth of economic value to this region that is a huge boost to tourism and to the economy here. i think it's been a great partnership. >> thank you very much we are surrounded by people here and that is almost only for one

reason when the next 15 or so minutes, because rory mcilroy will be teeing off to get his open campaign under way here at royal port rush. >> exciting. certainly a lot of pressure on rory mcilroy there my husband was telling me earlier that he won the championship at age 16 with a 61 that's the extent of my golf knowledge. adam, enjoy the rest of the day. quick look at u.s. futures before we head out it looks like the three indices are set to open up in the red in line with some of yesterday's moves. dow seen opening up 60 points weaker watch out for more earnings later, but also be sure to tune in later today when our u.s. colleagues will speak to the treasury secretary, steven mnuchin, that's at3: c 100et

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it's 5:00 a.m. nothing chill here shares of netflix sinking after something that's happened that never happened before in the streaming age. does the company that invented binging have what it takes to turn things around red arrows in japan. two economic data points disappointing. here the earnings rush rolls on numbers out of morgan stanley, united health and union pacific all on tap trade talks, they're stalled. reports this morning that the u.s. and china remain at a deep impasse