welcome to "street signs." i'm joumanna bercetche >> i'm willem marx here are some headlines for you. unilever in the red after sales miss expectations in the first half the ceo warns consumer growth is falling short in certain sectors. >> one of our hot spots, to be blunt, one or two markets we're struggling in hair care and our black take business has underperformed we think those are good markets for the future. new medicines deliver a

first half net profit jump for roche as they lift their sales outlook for the year the ceo tells cnbc the trend will continue into 2020. >> given the strong momentum we have with the new medicines, we also expect growth beyond the current year and to be able to continue to overcompensate the effect of the entry of the bio similars. astrazeneca shares hit a record high as they beat second quarter estimates. the ceo hales strong growth in cancer drug sales. >> it was a growth rate of 19% this was driven by oncology franchise growth of 58%. we got to $4 billion for the first half, china grew by 35%. so very great driver of growth for us and ab inbev beat second quarter forecasts as beer sales grow at their fastest pace in five years, while diageo's ceo

tells cnbc a taste for gin is boosting performance >> a lot of that growth is coming in the early evening occasion from -- i'll call it boring wine an boring beer an beautifully served tangaray and tonics have a beautiful space to play. >> just some of the latest news out of germany the ifo business climate index has come out seeing morale falling in july, 95.7, that's much lower than the consensus forecast of 97.1 current conditions index is at 99.4 for july. that's against a consensus of 104. the expectations index at 92.2 in july versus the forecast of 94 bear in mind we saw the weakest manufacturing pmis out of germany yesterday in seven

years. it looks like ifo revising some june numbers looking at euro/dollar, it's trading weaker bay ten eer by aa percent against the greenback. i wonder with the numbers with hard and soft data out of germany, will that weigh on the equities market this morning >> i like to match what i'm wearing to what i hope will happen in the markets. i was hoping for a day in the green today and we have that ecb meeting coming up later. a lot of expectations on president draghi will he or will he not signal extra easing to come the market is trading more optimistic as we head into the all-important meeting. let's talk about price action in other markets. wall street had another record close for the s&p 500 and the nasdaq the dow slipped a bit yesterday on disappointing earnings from

boeing and caterpillar a lot of focus on big tech we had the department of justice announce that they will be investigating further the practices of social media companies and online retail companies. today watch out for earnings from alphabet and amazon strong numbers out of facebook we'll talk more about that on the show the picture overnight was more positive we had some positive developments when it comes to the potential for china/u.s. discussions next week. that's the macro narrative stoxx 600 is trading up more positive today, up 0.4% firmer we're in the heart of earnings season i want to talk about some of the individual markets and what we're seeing a breakdown by individual countries let's start off by looking at what's happening in the uk big development mipolitically. we have a new prime minister and a new cabinet formed of pro brexiteer members of the tory party. that will be an interesting one

to see how that develops over the summer ftse 100 today is above 7,5006789 slig7,500. slight positive performance there. it's been boosted by strong earnings of astrazeneca at the top of the ftse, up 6% itv up about 2%. anglo american up 1% positive earnings giving a bit of a lift to the ftse 100. xetra dax trading firmer strong performance in the french index. ftse mib up about 0.2% we've had a lot of positive earnings the market is diges digesting, but the big question is what president mario draghi will say in a couple hours time, and whether they will go for that rate cut today. the market is pricing in three basis points or come september when they release their new economic forecast.

the ecb may be reluctant to act before the fed next week that's the macro picture but it's coming on the heels of weak ifo and manufacturing data let's talk about sector. media and chemicals struggling autos continue to be in focus, down a quarter percentage point after a bunch of earnings came out missing relative to expectations with the exception of psa yesterday, as julianna broke if down for us we have healthcare at the top. very strong results out of astrazeneca. roche is another company we're looking at food and beverages, a number of names reporting in that space. unilever is one. willem conducted an interview earlier with mr. jobe. we'll talk about that. willem, tell us more about the unilever results >> they missed their second

quarter sales growth expectations that was on the back of wet weather in europe an north america. they reported first half net profit of 3.2 billion euros and confirmed its full-year guidance this morning we asked about the company's performance in the emerging markets >> we just posted results that again falls within our guided range for top and bottom line, a nice balance and the growth, as you say, has been driven by our emerging markets business it all comes down to fundamental economic growth in those places. so asia continues to grow well the fundamentals are strong. we have -- in most of those countries we have a 11-year heritage very strong market positions we're seeing in those countries as a local company, innovating, bringing solutions that are relevant locally and it is definitely the inherent strength of unilever in our position >> do you think that's the

perspective of the consumer in a country like china helps you when we heard they are concerned about a potential slowdown in consumption there? >> yeah. obviously if you look across the full economic sector, there are cyclical sectors there are volatile sectors then there are steady consumption driven sectors fortunately our businesses are in less of those the success or otherwise of our businesses in places like china is much more driven by how well we're meeting consumers needs and our ability to be relevant locally than on big macro effects. >> you said in this earnings release you want to address performance hot spots where growth is falling short. have you found it's easier to sell off brands that are not meeting expectations or trying to rework them or remarket products >> we're doing both. it depends on the view you take on the long-term prospects of the category that brand is in.

one of our hot spots is one or two markets around the world we're struggling in hair care and our black tea business is underperforming. we think those are good markets for the future we took a view on spreads and margins that that would be a difficult category to reignite growth so last year we exited that business so we take a long-term view when we are making those kinds of decisions. >> sticking to the food and beverage space, efficiency savings helped danone beat second quarter sales estimates baby food sales turned to positive territory after three quarters of delines. ab inbev topped earnings estimates in the second quarter. revenue grew by almost 6%. th the world's largest brewer said brazil reported double digit volume growth. and diageo has beaten estimates after posting full-year operating profit of 4

billion pounds, a near 10% jump. rising demand in china and india was said to be driving growth. the ceo told cnbc he expects emerging market consumers will continue to acquire a taste for finer spirits. >> our core spirits brands have a lot of room for growth if you look at, for example, the exciting growth we're seeing in begin, not just in europe, but now in places like brazil and mexico and south africa and australia, a lot of that growth is coming in the early evening occasion from -- i'd call it boring wine and boring beer. and beautifully served tangaray and tonics have a beautiful space to play. the food and beverage sector as a whole up 27% in europe this year >> let's flesh out the discussion a bit more with

christopher peele. great to have you with us. we were discussing a remarkable characteristics out of the earnings we've been talking about in the food and beverage space is the remarkable resilience from china. there's good demand there. it is still showing up in the numbers even with everything that's going on with domestic slowdown, trade war, et cetera what do you point that down to >> it's how one defines a slowdown the reality of it is the chinese economy is bigger today than it was three years ago, five years ago and ten years ago. the rate of growth may be slowing, but the actual size of that economy and the demand for goods, consumer goods, manufacturing goods is increasing it doesn't surprise me that companies are continuing to sell well into china because there are -- there's more wealth stockpiled there to consume western goods and domestic goods. >> still growing at 6%

>> these are all european firms selling goods into china do you think that matters? we've seen this huge amount of tension between the u.s. and china. do you think it's easier now for european companies doing business in china than american firms? >> certainly supply chains move quickly. we've seen that over the last six months with the trade war between the u.s. and china, other asian countries have taken up some of -- >> i'm almost thinking more about consumer behavior. we've heard these reports that there are chinese consumers boycotting u.s. brands i wonder if the tension persists, and it may not, whether that's something that will begin to reflect itself in earnings >> i think potentially down the road, but it's very short-term. what we're seeing is china is a huge market and it's evolving as wealth creation in the development of the middle class is growing it has a long, long way to go.

if you're a manufacturing company, especially in europe, which does a lot of trade with china, i think it's -- it's still a fertile environment to pursue an export market. >> i want to take you back to individual sector performance year to date again, tech is up 28%. food and beverage up 27% construction materials up 25% year to date there seems to be a disparity between how these stock market sectors are performing versus the macro narrative. we spent six months talking about how weak europe is the slowdown in the manufacturing sector the pressure on the ecb to do more to ease yet the cyclical sectors seem to be performing quite well in europe >> i think that's right. the fact is we're a long way from 2002008 we had long interest rates for a prolonged period of time even though the banking system is not fully recovered, there's

spending power you can certainly see it in southern europe in particular, whether that be italy, spain, portugal the economies at a localized level are much stronger partly because there's a lot of tax incentives for foreigners to go and base themselves there on a longer term basis. you are seeing that trickle down into the economy >> whether you're talking about europe or the u.s., and we had record highs on two of the major indices in the u.s. yesterday, do you think the valuations you're seeing looking at the earnings season we're going through at the moment are reasonable >> i think they're reasonable. and i could argue that u.s. equities still are on the cheap side if one believes the fed is going to continue to -- will cut rates next week and then another time by the end of the year, and then potentially next year in the run up to the election >> on a discounting basis.

the global growth at 3.5% and u.s. growth, one says it is at 2%, 2.25%, that's the long-term average over the last 15 years in the u.s i don't believe that the talk of a recession is valid it's a long way off still. >> we will have more to talk about on that topic in the next few minutes. do stay with us. let's go back to some earnings astrazeneca shares hit a record high after the british firm raise the its outlook for 2019 stronger demand for cancer drugs boost second quarter sales that beat estimates the ceo said the firm was prepared for a into diehno-dealt >> no-deal brexit is not good for anybody, but we're ready in our case, you know, provided we prepare ourselves which we have done, we can manage brexit. we are not manufacturing and

xhe commercializing heavy products like cars and heavy equipment. our products can be flown across borders. in our case we will be ready we do hope an agreement can be reached because disorderly brexit would not be good for anybody. roche has raised itself f l full-year outlook after reporting an 8% rise in first half group sales they highlighted solid performance in key multiple sclerosis and sense a drucancers the ceo told cnbc there was strong momentum for innovative drugs. >> sales up by 9%. core earnings up by 13%. and entirely driven by the demand for our new medicines >> in terms of the demand for new medicines, this is crucial given your legacy portfolio is facing erosion from bio

similars if we can start with the u.s. on this point earlier this month amgen launched bio similars to two of your key drugs in light of this news can you give us color in terms of how much you're expecting those bio similars to erode your sales in the u.s. in the second part of this year? >> bio similars have already entered the market outside of the united states. as you have seen, we were able to overcompensate for that effect driven by this strong demand for the new medicines indeed, as expected, we see the bio similars in the second half in the united states we see and expect more of an impact towards the end of the year but given the strong momentum we have with the new medicines, we also expect growth beyond the current year and to be able to continue to overcompensate the effect of the entry of the bio similars >> not such great news for investors in clariant.

the swiss firm sabic ended talks to form a chemicals joint venture. the results come a day after the ceo unexpectedly quit. coming up on the show, anglo american eyes a dividend boost but the ceo warns of trade war concerns details are coming up next

welcome back lvmh has beaten second quarter sales expectations first half revenue rose 15% to 25 billion euros they noted strong demand in asia and its market in france also returned to growth during the period the company said it was confident for the rest of the year schneider electric raised its full-year outlook after beating first half core earnings and revenue estimates. the french firm says they will continue to expand revenue growth in the second half of the year

the stock is up almost 4% today in trading. anglo american said they will increase their dividend and buy back up to $1 billion worth of shares. the ceo told cnbc an escalation in global trade tensions could impact the firm. >> we do see some concerns don't forget in our view trade wars do create some uncertainty. even with the results we've presented today, debeers has been soft in the diamond market, that's usually an early indic e indicator of some stress in the system the good thing about our portfolio, it's diversified in terms of the products we produce and the markets we sell into from that point of view we have a number of businesses doing extremely well yes, we see some headwinds, in terms of what we've done with costs and margins, we're still well placed. >> top u.s. trade officials will travel to shanghai next week in the first round of face-to-face

negotiations since president trump and xi agreed to a truce at the g20 in june the white house says intellectual property, force the technology transfer and enforcement will all be discussed. trump threatened additional tariffs on 3$300 billion worth o chinese goods. steve mnuchin told cnbc there was symbolism behind the choice of shanghai since that was where the u.s. and china agreed to reestablish formal relations back in 1972 >> reason why we're going to shanghai is that the host country, china, has invited us there. there's a significant to them of the shanghai communique and the symbolism obviously of that important agreement. hopefully i'll take that as good news that we'll be making progress next week i would say there's a lot of issues >> let's continue the conversation with christopher peele. to pick up on what you were saying before, you said no recession in sight for the u.s

a lot off ethe head wiwinds see be subsiding a softening of a rhetoric between the u.s. and china you have the fed about to embark on a rate cut. where do you see the speed bumps coming from in the second half of the year? >> i'm optimistic for the second half of the year in that i think the fed pivoting to an easing mode, ecb, i would expect them to do something today. the pboc has accommodating policy that's all positive to try and uplift the global slowdown that certainly started 18 months ago. in terms of recession, global growth at 3.5%, growth in the u.s. around 2%, given that china and the u.s., the two biggest economies, as long as those two are growing and trading with each other or elsewhere, that's a positive for global trade. i think the trade agreements

being refreshed or renegotiated are positive in the long term for the global economy we had tppg, revised nafta, which is still going through the lower house. i'm of the view that u.s. and china both need a trade deal and that will happen sometime over the next 6 to 9 months, which is positive for the global economy. >> u.s. equities don't think there's going to be a trade deal, but some of the chinese indices over the last three months have not performed well do you think they stand to benefit in the second half of the year >> chinese equities year to date are up significantly, but over a 12-month basis, yes, they do trail the u.s. i think chinese equities -- >> they've fallen back the last two, three months. is there a chance you think the next six months that that trend continues that we saw in the first quarter?

>> from a standing start now looking 12 to 24 months out, i think there will be a rotation away from the u.s. as you get into the election year there will be more volatility in the u.s. exchanges i think you will get global allocators or investors looking to pare down that u.s. exposure because these companies are at virtually all-time highs >> it's interesting that you say that in the context of china being emerging markets almost emerging markets, this year we've seen emerging markets economies benefit because of financial conditions about to loosen, the fed is about to start easing, that's taken some pressure off the currency. how do you see that panning out for the second half of the year? >> i'm of the view that the main driver for currency movement is interest rate differentials. the fact that the u.s. or the

fed is -- has been largely pressured by the white house to change their tone or their policy, i think that's negative for the u.s. dollar. so -- which i think longer term is positive for commodities, it's positive for emerging markets. that will fall through into investor portfolios in the second half of the year. the bump could be that the fed doesn't cut rates, or doesn't -- or isn't as dovish as the market expects over the next six months that will detract from tbeing negative on the dollar >> your big call is short the dollar for the second half of the year thank you for taking the time to talk with us. coming up on the show, primed and ready mario draghi is expected to give his strongest signal yet that more ecb stimulus is on the way. we're live in frankfurt. that's coming up next.

welcome back to "street signs.

i'm willem marx. >> i'm joumanna bercetche. these are your headlines unilever in the red after sales miss expectations in the first half the ceo warns consumer growth is falling short in certain categories >> one of our hot spots, to be blunt, one or two markets we're struggling in hair care and our black take business has underperformed we think those are good markets for the future. an inbev beats second quarter forecasts as beer sales grow at their fastest pace in five years diageo's ceo tells cnbc a taste for gin is boosting performance. >> a lot of that growth is coming in the early evening occasion from -- i'll call it boring wine an boring beer an beautifully served tangaray and tonics have a lot of space to play. nokia shares set for their best day in 17 months after beating forecasts in the second quarter on super charged 5g

sales. german business confidence hits its lowest level since april of 2013 as the ifo warns of turbulent times ahead for europe's biggest economy it's a big day for european macro today. the ecb could lay foundations for a new stimulus in september by tweaking its language in today's decision ecb watchers say a cut in the deposit rate and another round of asset purchases could be on the card but after the summer break. however a draghi surprise could be in store with markets pricing in a 30% chance of a 10 basis point cut. commerzbank predicts a bigger cut to keep the central bank ahead of the curve

so lots of moving parts today. certainly draghi is going at lengths to emphasize all of the different tools he has in the toolkit, whether it's language, interest rate, lots of tolls there. let's get out to annette in frankfurt. putting it altogether, expectations are very, very high after that sintra speech what will they do today and will the president use this as an opportunity to really lay the foundation for that big package come september >> most likely we'll get a lot of signaling today mario draghi was clear that rates could also go lower at sintra, and clearly they have to remain credible. what will happen today and what package we might get, i'm joined by the chief economist with s&p global ratings here in frankfurt. thank you very much for joining us what are your expectations for

today? >> yes the ecb is back to the future. we expect the ecb to switch back officially in the easing mode at today's meeting. and there's a package of measures with probably cutting the deposit rates by 10 business points in september and potentially resuming its asset purchase by 15 billion a month from october >> do you think we get tiering if they cut the deposit rate further? >> to me a tiered deposit rate system is still an open question on one side the fact that such a system exists in japan, switzerland, denmark is in evidence for the ecb to introduce such things. excess reserves by banks are larger than in the past, and it would allow the ecb to go deeper in negative interest rates on the other side excess reserves are not evenly spread

across eurozone countries. tiered system would support german and french banks first. and i doubt that such a system would increase the lending to the economy. i think that the tiered role is a much fairer and effective instrument for that. >> looking at inflation, it is nowhere near where the ecb wants it to be how likely can those measures proposed or discussed now actually really boost inflation? do we have to live in a world in which has lower inflation? >> the ecb cannot be complacent. we have not only market based inflati inflation, nonindustry goods are barely increasing. the prices for communication services are going down. we're probably stuck in a world of low flagflation.

>> i hear from inside the bank they're starting to rethink the monetary policy framework and they think it's a good idea when the president changes. what do you think? is that a good timing now? >> yes it seems the ecb is thinking about bringing symmetry in its inflation target in that case i would expect the market would expect more from the ecb. there is 20 basis points difference i think the ecb should not be too heasty on such a process especially when you compare what's happening with the u.s. federal reserve. the u.s. fed is also thinking about its definition of price stability. it's a long process with a lot

of consultations, so the ecb should do that also carefully because there is the real danger that inflation expectation does not react to a change in the price stability target >> that would be very bad for the credibility of the bank going forward. let's switch topics a bit and let's look at the economic situation in germany how much do you think are they worried in that tower behind us about deceleration of the german manufacturing activity >> not only the german, but the italian deceleration the eurozone economy is stuck at two speeds we have absolutely no recovery in the manufacturing sector. germany and italy are continuing to hover close to recession

territory. personally i think it's fair to say that we have done what is asked by growth. for now we say 1.1% growth for the eurozone if you look at the incoming data, probably lower than that not very much, but somewhat. and the third quarter -- the eurozone economy would barely grow there is a danger that the growth will disappoint further >> thank you very much have a good day. with that i'm sending it back to you. more to come later from here especially the bigger focus will be the press conference today, which starts at 2:30 back to you. >> can't wait. be sure to tune in decision time, it will be me and willem and annette in frankfurt breaking down that decision. we have another central bank meeting coming up. that's the turkish central bank happening in a couple hours

time i hate to say this, they may steel some of the limelight away from the ecb they may cut quite aggressively there. back here in the uk, boris johnson has announced major changes to the british cabinet on his first full day as prime minister johnson mostly appointed pro brexit lawmakers to the top roles. is sajid javid is the new finance minister boris johnson spoke yesterday. >> though today i'm building a great team of men and women, i will take responsibility for the change i want to see never mind the backstop, the buck stops here.

i will tell you something else about my job, it is to be prime minister of the whole united kingdom. that means uniting our country, answering at last the plea of the forgotten people and the left behind towns, by physically and literally renewing the ties that bind us together. >> so do or die brexit on october 31st this is reaction in the uk index. ftse 100 is up about a tenth of a percentage point today has beena big focus has b earnings astrazeneca up 6%. the bigger focus will be on the ecb meeting and whether mr. draghi can pull out a magic trick. let's talk about foreign exchange even though we were talking about dollar weakness earlier on in the show, today the dollar is trading stronger we're seeing euro is trading

softer versus the dollar we're trading at 1.1130. we had that weaker german ifo numbers coming up. cable is trading below 1.25. not a lot of movement in the last 24 hours as boris johnson got confirmed as prime minister and has announced a cabinet reshuffle. you could say a lot of risk premium is priced in something to monitor over the coming weeks let's talk about the u.s. markets. yesterday we had yet again record highs for the s&p and nasdaq today the indices are seen slightly mixed s&p one-point higher the dow 22 points higher we're still in the heart of earnings season. lots more to come today including alphabet and amazon. republicans and democrats claimed victory after robert mueller testified before congress for six hours on wednesday. mueller answered questions about his investigation into russian meddling in the 2016 u.s. election and reiterated his

report on the subject did not exonerate president trump as the u.s. leader has repeatedly insisted >> you know who knew it was phony -- >> reporter: pausing on his way to a fund-raiser, president trump seized on robert mueller's appearance before congress >> mule deller did a poor job >> the president has repeatedly claimed your report found there was no obstruction and that it completely and totally exonerated him but that is not what your report said, is it >> correct. >> reporter: and refuted a repeated claim by the president. >> it's not a witch hunt. >> reporter: the highly anticipated testimony fell short of expectations for some mueller often offering one-word answers and dodging questions nearly 200 times >> did he lie into you guys,

too? >> can't get into it >> reporter: democrats call it a watershed day but shied away from launching impeachment decisions now. >> whatever decision that will be made has to bedone with our strongest possible hand. >> reporter: americans are split. >> very much seems like democrats are trying to embarrass the president. >> it seems obvious he should be impeached at this point. >> reporter: the testimony exposing deep political divides in d.c. and beyond nbc news, washington coming up on the show, facebook beats expectations as regulatory pressures ramp up mr. on their latest earnings coming up next the music event of summer...

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nokia has beaten forecasts in the second quarter with a 7% rise in revenue and a surprise profit thanks to rising demand for 5g the telecom equipmentmaker confirmed their full-year guidance tesla posted a larger than expected loss in the second quarter, that sent shares

sharply lower in after-hours trade, but elon musk said he expects to see the firm return a profit in the fourth quarter of this year. the electric carmaker also announced that the chief technology officer will step down from his position and will become a senior adviser. facebook reported better-than-expected earnings in the second quarter despite intense regulatory scrutiny. they posted $2 billion in profit even after taking in charges for investigations and privacy concerns what i thought was absolutely remarkable out of these results -- not just because the profits beat, but their users in the u.s. and canada have gone up from 186 million in quarter one to 187 million people don't care about all of these privacy concerns and cambridge analytica. they keep attracting more users. >> people don't seem to care and advertisers don't seem to care

we saw 16$16.9 billion of growt in the second quarter, so continuing to see strong results. facebook also beating on the bottom line and average revenue per user, a crucial metric we look at when we look at how much revenue facebook can bring in from ads, came above expectations the fundamentals in this report were very good there was a bit of warning on the earnings call from executives about the outlook going forward. that's where it looks like privacy costs may play out they say they expect additional expenses from the regulation they're addressing, and we might see the revenue slowdown in the coming quarters because of that. >> that $5 billion settlement, how much of an impact will that have for facebook? at the end of the bay, they're locking in $15 billion plus of revenue per quarter. $5 billion is not that much. >> at this point it's all accounted for. it looks like after the news officially came out yesterday, shares rose, shares are trading higher in extended hours, too.

so investors are not bothered by the $5 billion fine. that's a bit of why we heard some dissent from the democrats at the ftc yesterday saying this is a drop in the bucket for facebook it's not doing anything to address the underlying behavior and they will regain back that amount in the first couple days of trading >> good news for the u.s. treasury, an extra $5 billion i the bank >> everything helps. today is the busiest day of earnings season today with 52 s&p 500 firms due to report. on the nasdaq, amazon will release its second quarter results. investors would like to focus on how the firm manages costs from the one-day shipping strategy is announced for u.s. customers joining us around the december desk is jonathan ringer. i don't want to get too much into the weeds of the one-day

shipping strategy, if you're not a giant firm like amazon or alibaba, how do you survive? >> it's tough. the market is going through extraordinary change well known names are struggling to survive the things that mattered in the past, strong local position, good product, less service, they're still important. but the rules of the game have changed. now retailers need to excel at technology, at data analytics and at innovation. people like amazon and alibaba are changing the game and setting a new hurdle on those dimensions >> how much has the tech structure contributed to that, in the sense that anyone with an online presence has not been taxed the way bricks and mortar businesses have been taxed you have rental expenses, et

cetera now it's part of the mainstream nature to look at where these companies are getting taxed. there's not been a firm commitment on a global scale to tackle this. do you think that there is a valid point in that the taxation system has allowed those big e-commerce retailers to expense at the benefit of the bricks and mortar companies >> for sure it's a real issue. it's a complex issue it needs to be examined closely. you have to ensure there's a level playing field for the retailers trying to compete. the thing they're doing very differently that is really causing the other retailers to struggle is the sheer quantum of investment they're making behind innovation, digital and technology and things i mentioned before >> if you spend billions on data analytics and technology, how do you carve out a share of the

market in the future >> the same things still matter, great proposition, great product. if you look at the ten largest retailers, not just in the uk but globally, but estimate over the next five years they'll spend somewhere in the region of 1$100 billion less than amazon n technology and data and so on. so there's a huge barrier to them competing if we look forward, we think there will be some model that can survive and thrive there will be big players. there will be players that have extraordinary product. also we think there will be some that will struggle our estimates are 25% of the pool will fall into that category of legacy laggards who are struggling to keep up with the pace of change you talk about all that spending that amazon is doing but they had a string of record

profit, which is unusual because for so long people only cared about growth can it continue to be profitable when they keep making these investments? >> they have a different model they don't have the same cost base as traditional, physical retailers. people will be interested in the results that come out today. the top line level, people will be excited to see where growth is coming from people will be very excited to see what's happened with prime, last week's prime day or prime days and in particular what that means for new subscriptions to prime, which is really the glue that binds the amazon ecosystem together >> for those newer businesses that decide the way forward is to spend a load of money on their digital presence, on the analytics, on the technology, what are the pit falls for them? >> there's a couple. one is do they have the absolute

scale to match the investment that other competitors are doing? there's a question about how much they do themselves versus how much they work with partners for many industries and retailers, there's an ecosystem of people playing different roles. it's important for those players that are smaller to make sure they're tapping into the latest trends they won't be able to do that all themselves in the way they have done in the past. >> all of this disruption is happening at a time where economies are still growing. we have not actually entered into recession there's been talk about it from a macro perspective, how do you envision things playing out if, indeed, the economies globally were to start heading a lot more southward and ultimately end up in a rese recessionary situation would these things get exacerbated if the economy tips into recession

>> they will get worse and will be exacerbated it's a time where you see the changes in the new winners and new losers the underlying trend flows through the cycle around innovation, but some of these businesses are struggling today. in an environment with less consumer confidence they'll struggle more. >> just one final macro question how do you think the china/u.s. trade war is playing into the relative competitiveness of the online industries and in asia and china we spoke about earlier on versus u.s. is that somehow going to shape the landscape in years to come, do you think >> it is hard to predict exactly what impact it will have the boundaries, the retail boundaries are shifting all the time many of the big retailers have supply chains that significantly cross borders. not just in food, regionally but also in other categories

globally any of those dynamics we see about trade have a knock-on impact to retailers in the long run. >> all right we'll leave is there thank you very much for chatting with us. jonathan ringer joining us very heavy tech earnings day and earnings season. quick look at u.s. futures we had record closes for the s&p and the nasdaq yesterday today the picture is a bit mixed as we head into the super thursday dow is seen up 25 points all eyes really on that ecb meeting coming up in a few hours time you can join us. we'll host it. that's it for our show today i'm joumanna bercetche >> i'm willem marx "worldwide exchange" is coming up in just a few moments time. prevagen is the number one pharmacist recommended memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.

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it is 5:00 a.m. at cnbc global headquarters. here's your five at 5:00 it's the busiest day of earnings season so far with more than 50 companies reporting results. before all of that starts, there are three names that we are watching this morning. first of all, facebook warning of slowing user growth and ad sale uncertainties that stock seeing whip saw action in the premarket. then tesla, a major margin miss has investors wondering if the company will ever be profitable despite assurances fro