To talk about demand as you said in your report, demand, the pace has weakened in july and august. In september we saw the impact of the hurricanes. Was it off a oneoff effect . Is this something to worry about longer term . I think the focus should shift to the fact that in the Second Quarter of this year we had exceptionally Strong Demand growth year on year. That was partly due to the fact that the year before demand was relatively weak. What we need to say is over the year as a whole in 2017, despite the quarterly variations you mentioned, demand growth is robust it will be 1. 6 Million Barrels a day in 2017 versus 2016, which is strong. In the report weve reconfirmed our forecast for 2018 where we see demand going up again by 1. 4 Million Barrels a day. In 17 and 18 we have good demand growth, spread fairly evenly around the world. Just two days ago we heard saudi arabia was cutting its exports. Thats in part because of some refinery maintenance happening in china ahead of the Peoples Party congress is there any reason to be concerned about whats going on in china . Is it really just a temporary slowdown wedo slowdowns in china from time to time. Its because china is that year on year demand growth in 2017 is strong we expect it to be strong again in 2018, though perhaps not quite so strong in china another point perhaps we should mention about demand growth, in the report we published this morning, we have not had time to factor in the latest imf gdp numbers which have been revised slightly upward. In the next report the Economic Outlook might feed there to perhaps a better outlook for demand growth. Well have to wait and see what the numbers mean lets move to the all important supply you say that Global Oil Supply will be lifted by steady u. S. Production thats according to your iea report this morning. Were seeing fuel inventories in the u. S. Still rising steadily seeing opec pumping more according to the report. Is rebalancing still happening it is happening, yes. The main point is that its happening more slowly than most of the producers who signed up to the outbook caps, thats the way we are the rebalancing is happening slowly and gradually the excess of stocks over the fiveyear average in the oecd which is one key indicator that the producers have measured as success that surplus is coming down its more challenging for them than they might have thought, but the tendency in 2018 will be for a balanced market. 86 , thats the percentage that youre giving us this morning when it comes to compliance, when it comes to the opec deal. Is that good enough to keep everyone committed to that deal . Do you think it will be extended will it have to be extended . At this point in time were just seeing oil prices out of the danger zone, out of that sub 50 danger zone. 56. 67 for brent crude, wti just hanging on to the 50 level the iea doesnt have a view on whether oil prices are in a danger zone or not thats not our interest. Were saying that the opec compliance rate is about 86 for the year as a whole, not just for the month thats ended in september. By historical standards thats good within the total compliance rate for opec of 86 , you have saudi arabia in fact cutting by more than committed, and on the other side of the deal you also have russia cutting by more than it committed. So the two leading producers, who we call the heavy weights in our oil market report, they are very, very committed, visibly committed to maintaining this output deal. How long it will run through 2018, we dont know. Thats a matter for producers to decide the saudis and russians have made a clear statement theyre committed to the rebalancing process, and theyre prepared to do whatever they think it takes to make it succeed lets assume this deal will be extended into 2018. Do we still need that extension if donald trump will move forward with decertifying the iran deal . That could be bullish for the markets. Maybe we dont need the extension of the deal. Were an awful long way down the road from that theres a lot of process involved even if the president does decertify the deal, theres the debate in congress, and then theres the other signatures to the p5 plus 1 deal to take into account. We should not start judging what might or might not happen. Even if the deal does end for whatever reason, we dont know what type of sanctions, if any, might be imposed and what impact that would have on volumes of Oil Available from iran. So i think were rather speculating at this point. Well have to wait and see events unfold. Neil, thank you very much for your time. Thank you quick look at oil prices this morning, wti at the 50 level, off by twothirds of a percent brent crude down by a half percent at 56. 68 lets return to the equity markets and show you whats happening in europe one hour into the trading session to be honest, not a whole lot. Just hanging on to the flat line the stoxx 600 was up yesterday or slightly flat even, but the ibex was up 1. 3 it is a touch lower today. Were not getting fresh impetus from barcelona or madrid, just waiting for a few days to see what the response will be from either side. No clear direction for the markets. We have a couple interesting stock movers before that, wanted to show you what the markets are doing one by one the dax hit another record high because of lufthansa, but its fallen back just a touch 12,964 the smi is eking out a modest gain, hardly worth speaking of of around 2 points the ftse 100 off by 3 points this is the picture for the sectors. Travel and leisure up twothirds of a percent lufthansa doing better today banks down 0. 4 . Lets talk about lufthansa the ceo of the company says the airline will sign a deal to buy parts of air berlin today. The move is described as a milestone in the airlines corporate history. The coo said he was not aware of any other contracts to be signed by air berlin. Just eat is trading sharply higher to the tune of 5. 2 after the u. S. Competition and markets authority provisionally cleared a merger with hungry house a panel concluded that the acquisition of hungry house by just eat is unlikely to result in competition concerns. Also sky sky added 160,000 new customers this quarter, up 51 from the same period a year ago the tv and telecoms industry posted a 5 increase and reaffirmed its full guidance out of back of the earnings. The performance was boosted by the game of throne series, which has become the highest rated show in the uk maybe i should get around to watching it. Lets talk about the fed the feds december meeting is live, thats according to the latest minutes which suggest many participants support raising rates this year, despite the inflation picture is still troubling some fomc members. Steve liesman has the details. Reporter fed officials thought in the september meeting that another rate height was warranted this year but had a problem with inflation being too low. The key issue is failure to hit the 2 target. Some thought the resent softness of inflation was a decline in Telecom Prices under this line of thinking inflation would move up towards the target clearing the way for a hike there was also the worry that technology and globalization were behind the inflation miss that led a group of fed officials to be less certain about raising rates in december. The failure of wages to rise along with the declining Unemployment Rate is another concern. Again, most expect them to rise gradually, some are beginning to think maybe theres more to it, more slack in the economy, more slack in the labor market. If so, it would cause them to rethink future hikes the bottom line is the fed clearly indicated its on track to hike again in december. Thats probably at the moment the even money bet if Economic Data over the next several months including coming inflation reports show the low Inflation Fears are founded, it looks to be enough concern and doubt on the committee to delay that next rate hike. Steve liesman, cnbc Business News in washington for more we will be speaking to boston fed president eric rosengren, catch that interview tonight at 22 00 a fresh favorite for fed chair has emerged. Jerome powell got a boost after reports suggested he is the top pick for steven mnuchin. He reportedly has been recommended to President Trump powells odds of selection are the other frontrunner, kevin warsh and far ahead of fed chair janet yellen i guess its ul up all up to dod trump. Our colleagues will speak to steven mnuchin, first on cnbc at 13 13 35. Lets talk about the fed with Patrick Spencer from robert b. Baer. Great to have you on the show. There is a lot of concern about the lack of inflation. Fomc members are trying to look for it its nowhere to be found do you think its a temporary phenomenon or longer lasting i think yellen will run the economy hot despite inflation. So irrespective of that, theyre committed to cutting the feds Balance Sheet. They have talked about reducing that if you look at the financial markets, theyre predicting a 90 chance of a fed hike in december you know, the script is normalization, and i suspect even though the dot plot from the fed is considerably higher than consensus rates, higher rates are coming is she right to continue with the tightening cycle maybe thats what the market needs, the Financial Sector is hoping on . Shes really boxed herself into a corner if you will yes, dare i say never its different this time you do have technology, you have the Participation Rate which is bigger in the u. S. , which is most probably the actual Employment Group which is much larger there are structural reasons why inflation is low the economy is strong. The script is theyll raise rates, normalize the economy i think thats whats happening. I understand that inflation is one of the two key mandates of the fed inflation, price stability and unemployment we hit unemployment. Its at a decade low on the other hand, maybe we should let go of the notion that inflation is all important its pretty low in every part of the world, the boe, ecb, everyone is struggling with that maybe not so much the boe because of the plunge in the pound sterling but the boj. Should we let go of that we are historically still at low Interest Rates every irrespective of that rhetoric you have to normalize rates. I think higher rates are coming from the lower levels. I take your point. But there are structural differences. Does it matter to who the next fed chair will be whether its Jerome Powell still janet yellen from an Investment Banking point of view, i think powell is going to be quite favorable towards the banks. I think hes quite favorably disposed between the volcker rule, the volcker rule is where the brackets start to use their own capital to trade in the markets. I think he does want regulation. He wants less regulation so certainly i think and i think hes dovish. Certainly trump wants lower rates. Overall i think powell would be a good choice for the market and for the economy overall. Yes. Hes been considered more dovish than kevin warsh. Thats why we saw Market Reaction to the emergence of Jerome Powell, thats last week or the week before well see what happens we should know more in the next couple weeks lets talk about the start of the earnings season in the u. S. , kicking off with jp morgan and citi. The big banks kick off their report card season thats in two minutes. Zar one of our investors was in his late 50s right in the heart of the financial crisis, and saw his portfolio drop by double digits. It really scared him out of the markets. His advisor ran the numbers and showed that he wouldnt be able to retire until he was 68. The client realized, i need to get back into the markets i need to get back on track with my plan. The Financial Advisor was able to work with this client. Hes now on track to retire when hes 65. 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Yes, kobe steel acknowledged that it fabricated data involving clients specifications for aluminum and copper parts affecting 200 Companies Including toyota motor and boeing the ceo said he is putting the highest priority on checking the safety of products already shipped. The Company Plans to publish results of its safety checks in two weeks. Kawasaki added there is the possibility of more cases coming to light and saying trust in kobe steel has been reduced to zero he said as long as the scale of the scandal does not go further there would not be impact on Company Earnings sales of products put on hold account for 4 of overall sales. The scandal spread beyond japan with General Motors and ford motor launching investigation into the possible effects on their products General Motors said wednesday it is investigating aluminum and Copper Products supplied by kobe steel. Shares have been free falling, down more than 20 for the last two days, but it finished a half percentage point higher today. Thats all from the nikkei, back to you earnings season is kicking off this week with a number of big banks reporting stateside. Jpmorgan and citi group will report today followed by wells fargo and bank of america tomorrow wilfred frost breaks down what to watch banks share prices declined for the first two months of q3 this was in large part due to falling yields but also lower guidance particularly within Investment Banking and trading Analysts Expect a fall of 20 ye yearonyear or 10 quarteronquarter trading will be down about what analysts estimate, around 20 or Something Like that this quarter, jamie dimon said, going on to say last quarter for us a year ago was a particularly good quarter. Citi and bank of america guided down mid teens it is Goldman Sachs that will be in the spotlight following underperformance. Harvey schwartz said mitt quarter that it felt a lot like the first and Second Quarters. The disappointing Net Interest Margin is expected to approve as the june rate hike is priced in and deposit rates remain low the rising yields should allow an improvement in guidance even if its after the end of the quarter. Loan growth is expected to have slowed to 1. 5 as consumers wait more clarity on the trum trump agenda wilfred frost, cnbc Business News lets talk about this with Patrick Spencer. Patrick, the bar is pretty low thats been said by a number of banking ceos across wall street. I guess they can only beat numbers. Fixed income numbers are down across the board yes as we were talking in the break, you know how well the stocks have done. I sat here recommending the banks when they were unloved youve had a good run in the banks, up 50 since the election this year against the s p theyve underperformed just as wilfred was saying, theres concern about trading. Were an Investment Bank our trading has been sluggish in the last quarter loan growth has been weak as well you have to think about the hurricanes that hit the Loan Portfolio on the real estate side you have had a good run in the banks, but valuations, we are cautious going into the numbers. That lovely american expression, you know, you buy on the stakes, sell on the sizzle the numbers will be good, as weve eluded to. You might get weakness we would use that as a buying opportunity. These banks are still very attractive and happy to talk but the valuations well do that a couple interesting points i want to pick up on some things you mentioned. The weak trading environment, comps are incredibly tough this year around the Third Quarter, last year we had brexit, we had the run up to the elections, in the Fourth Quarter we had a hugely surprising election result so, can we just simply write off the Third Quarter and Fourth Quarter and look ahead to the First Quarter when comps will get better again i think on a relative basis, as i say, the valuations are still cheap. They on 12 1 2 times the median is 13 1 2 times so, a lot of the bad news is still being discounted in the stocks as we talked in the break, these stocks, if you look at the yield, the dividend yield plus the buybacks, you have a group yielding 7. 5 . Thats not bad. Thats at crisis levels these banks with double their dividends over the s p they can grow dividends by 20 the s p is only growing dividends by 10 its an economic mac crkrmacro o here on out. People hide in the consumer stocks because theyre bond proxies and stable these are paying higher dividends, and we think the economy will remain strong and theyre a good place to be why do we buy the financials . Is it the dividend story or this play on the steepening yield curve, which they have reacted to strongly just over the last month . I think the tax reform story is not being discounted. That would come as an additional surprise regulation is not in the stocks. You buy the stocks generally, theyre value stocks what th they tend to do best when the economy is doing well. So youre seeing a big correlation between banks and the tenyear yield there bank also trade against the tenyear yield, thats gone up from 2. 05 to 2. 30. The market is indicating the economy will be stronger if the economy is stronger, the banks will be better i hear your point, but at the same time loan growth has been depressed. Why isnt it stronger if the economy is firing on all cylinders. Loan growth should be better it shows theres some degree of uncertainty around what trump is going to do or not going to do ithere is, but its different this time. A lot of companies are not going to the banks, theyre going to the markets. You have record levels of fixed income debt from corporations. You have private Equity Companies that have got record amounts of money and also you have got still uncertainty about the economy. The tax reform the economic agenda that trump has put out there. He has not passed anything yet theres a lot of question marks. So the capital part of the Balance Sheet in corporations has not really come back dramatically it will, we believe, and then at that point the banks will do reasonably well. You talk about that high correlation, 95 correlation between the steep eening yield curve and the tenyear, but in the most recent note the impact will be less positive for every rate hike going forward. Why is that . Because we feel that in terms of in terms of the actual level, in terms of level Interest Rates, as they go higher, then less money is obviously going to be borrowed we feel there will be less impact so we just feel the as the rates steepen, it will become less impactful patrick, thank you very much for that Patrick Spencer vice chairman of equities from robert b. Baird limited. Wondering which stocks will beat the street this earnings season find out what investors think on cnbc. Com. The Catalan Government has eight days to drop their independence bid or the regions autonomy will be suspended well be live from madrid and barconafr isela teth short break. You wont see these folks at the post office. They have businesses to run. They have passions to pursue. How do they avoid trips to the post office . Stamps. Com mail letters, ship packages, all the services of the post office right on your computer. Get a 4 week trial, plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. Theseare heading back home. Y oil thanks to dawn, rescue workers only trust dawn, because its tough on grease yet gentle. I am home, i am home, i am home welcome back to street signs. Im carolin roth these are your headlines the rally fades in europe afte u. S. Stocks close at record highs as the fed signals its ready to raise rates again in december. A new fed favorite Jerome Powell gets a poll boost from Steve Mnuchin who reportedly recommends the candidate to President Trump for fed chair. We hear from the treasury secretary himself at 13 45 cet lufthansa shares lift off helping the dax briefly hit record highs as the airline is set to sign a contract to buy parts of troubled air berlin investors buy shares of just eat after the u. S. Competition authority clears the deal between them and hungry house. You heard it there in the headlines. Another day, another record high for all of the wall street indices, the dow, s p and nasdaq closing at record highs. Maybe some profit taking, fatigue, caution before the Bank Earnings before the bell, the dow jones seen off by 12 points. The s p off by p point3 points the ftse 100 is close to the flat line. The xetra dax saw a brief flirt with the record high now back down by 14 points at 12 p 956 points lufthansa shares are doing well. The ibex 35 is doing its usual thing, one day up, one day down. Today up 0. 2 . We have no clear direction for the European Equity markets at this point when it comes to the dollar, we saw the dollar close to a twoweek low yesterday on the back of the fomc minutes by ch were consid which were considered more dovish than expected dollar yen down by 0. 2 . Were seeing the euro just a smidge higher at 1. 1860. Helped by the small deescalation weve seen in catalonia. Speaking of that, today is Spains National day king felipe and Mariano Rajoy will meet in central madrid at a parade this one day after the catalonian government was given eight days to drop their independence bid if they refuse essentially article 155 would be invoked Joumanna Bercetche joins us. It seems like a game of chicken, pliolitical chess, whatever you want yes, alleyes were on rajoys speech yesterday he said he wants to understand whether them claiming they have a right of independence is the same as a declaration of independence hes seeking clarification on that point i sat down with one of his coalition partners, the leader of the citizens party, edberto rivera, and he said he went sure if puigdemont declared independence everything is clear, they declared independence yesterday. They signed the document saying they declared independence but decided to wait and negotiate with the government outside of the constitution, outside of the democracy. So its clear for you its not clear for Prime Minister why is rajoy asking for more clarification . Is he stalling postponing trigger article 155 article 155, they need to just have this kind of document and question the problem is not how to know if they are declaring or not i think Everybody Knows yesterday they declared it, but then suspended the effects of the independence for me, its just required by the constitution, and think are waiting for the answer of government of catalonia. The principle issue here is how the government will answer to the Prime Minister of spain so therefore mr. Rivera, its clear to him they had gone down the route of declaring independence what th independence what that means is they would probably have go down the route of triggering article 155, which means a dismantling of the Catalan Government they would have to vote on it in the senate if the government got a majority, its likely they will given the distribution currently, it means local elections would have to be held in the next 54 days. So i then asked mr. Rivera what he thought on whether on the outcome of those local elections and if that would yield anything different from the situation as it stands now. Lets take a listen. For me the most important question now is how to change the government of catalonia. The person out of law is not defending the rule of law, its against the rule of law. We need a person that decides to come back to the democratic come back to the constitution. The main issue is how to change the president. For me, this is the best way to do, voting by election so i am defending we have to do elections in catalonia to choose a new government puigdemont is going, probably we can change the government. So this is the democratic way to change the situation we have to use elections as a way. Mr. Rivera clearly saying that in order for them to proceed with discussions, it would entail a removal of mr. Puigdemont, because he did not respect the law by holding this referendum in the first place. Mr. Rivera thinks if they did hold a new round of local elections, perhaps the yooutcom would be different and the less pro independent voices and moderate voices would prevail. Back to you. Thank you very much lets get out to barcelona where willem is standing by. As we talked about before, its all about semantics now what about puigdemont say yesterday puigdemont has not really spoken other than one tv interview yesterday morning before the speech. Hes staying quiet his spokesperson came out and said any use of article 155 would force the Catalan Government to declare that independence that they suspended a couple days ago. We had a clahance to sit down wh one of the most important catalan participants in the government, and we asked whether he thought rajoy was serious about triggering article 155 rajoys speech yesterday highlighted that puigdemont needs to clarify whether or not he declared independence so rajoy can make a decision on whether or not to activate article 155. This now puts the ball back in puigdemonts side of the court i think this becomes very surreal to us politicians. Its obvious puigdemont did not declare independence he suspended it until theres been talks now would be a very effective time to start dialogue what worries me the most is the behavior of the socialists, they have not made it about talking they made it about a battle about who said what. The only opportunity for dialogue allowed, and i hope it doesnt come to this s a commission of territorial debate in congress, as if nothing was happening. I know that the spanish Prime Minister, rajoy, had the opportunity yesterday to trigger article 155 and he didnt. However did he have an opportunity to commence dialogue and chose to recite the law again. That was the main figurehead for the movement here in barcelona, he heads the catalan version, and he with the lady who runs barcelona as a city are the two figure heads for the alternative movement that rose prominently the last couple of years in spain they pushed repeatedly for dialogue they would like to see a referendum nationally across spain on constitutional reform he said in an interview to me that one of the problems facing spain in the constitutional crisis was the countrys constitution rajoy said democracy is based entirely on that constitution. The alternative reality is that democracy in the minds of people like Carles Puigdemont is based entirely on the will of the people they would like to see this referendum across spain that would lead to constitutional reform without that, they say they cannot see the situation being resolved essentially were in limbo until monday, if i understand everything correctly everything that were hearing from madrid, barcelona is muddled. But i assume we wont know until monday or later next week what the actual response will be from madrid how do you think this state of limbo will shape public sentiment in barcelona talking to people here the last couple of days, they say theres a game of back and forth, and they all see it as a game of chess. Thats not just politicians, thats ordinary people on the streets. Theyre frustrated that they didnt see this declaration of independence on tuesday completely unilateral. You have to look at the coalition that puigdemont heads, ten of them were disappointed. They saw the lack of a clear declaration on tuesday night as a lost opportunity that puts him in a difficult position, between members of his own coalition who want him to go it alone and announce full independence and the might of the Spanish State which we will see later today. He has to make a bigger decision by monday morning as to whether he will clarify his earlier comments, which were, according to many analysts here, notably obscure to give him more wiggle room if he doesnt declare independence by monday, things could be resolved. His coalition may collapse if he says the declaration is real, that document is legally binding, he will have three days to rectify that, roll back his position otherwise madrid and rajoy said they will invoke article 155 and use the full force of spanish law against the Catalan Government thank you very much for that report and that interview. Well speak to the spanish economy minister at 16 10 cet live from the imf meeting in washington now lets change gears a resurge jens nce of high winde fanned flames in california. An official cause for the fire has not been determined. At least 20,000 people remain under evacuation lets get the latest from jay bray in napa, california jay, no let up reporter no, not at all. Good morning to you. Were in front of one of the two dozen shelters that have been opened across the strike zone giving thousands of families a place to rush to ahead of the flames which continue to grow at this point the winds picking up again overnight and pushing the flames, the fire expanding to areas it had not been to this point. That includes neighborhoods, which were evacuated overnight again, these families looking for safe ground, someplace where they can get out, get away from the fires and wait until they pass to get back in, see what, if anything, may be left behind. We know that there are thousands of people in shelters right now across the area. That number along with the fire expected to grow over the next several days here. Its the start or the continuation of whats going to be a long and difficult fight. Jay, thank you very much for that update. Will electric vehicles become the new mainstream . Well hear from the ceo of Mitsubishi Electric after this short break. Back in two. Okay, i never thought id say this, but i found bladder leak underwear thats actually pretty. Surprised . Its called always discreet boutique. It looks and fits like my underwear. I know what youre thinking. How can something this pretty protect . Hidden inside is a super absorbent core that quickly turns liquid to gel. For incredible protection. So i feel protected. And pretty. New always discreet boutique. Chinas electric and hybrid vehicle sales rocketed almost 80 yearonyear the adoption of more environmentally friendly cars are demanding more of that type of vehicle in that part of the world. This is one of the companies that wants to be at the forefront of that. When we think of electric cars, we think of tesla or some other automakers, but there are a lot of other companies in the space getting involved one of those is Mitsubishi Electric makes parts, components of the batteries that go into electric cars the company is aiming for big growth one area that masaki sakuyama, the ceo of mitsubishi, has flagged up is electric cars. Will accelerate, so the current forecast will be changed in the next year, more acceleration but we are now preparing for that era of electric movement. We are now increasing our ca capability for the inverters when you look atthe cost of electric cars in the future, many have said actually theyre quite expensive still at the moment does the electric car become cheaper than traditional vehicles in the future i think it depends on the price of the battery battery mainly dominates the price of the or cost of the electric vehicle i understand that cost of battery is now dropping very rapidly. So, in the near future the price of electric vehicle will be comparable to the other cars do you think electric battery vehicles will be cheaper than combustion engines some day it will happen when i think of Japanese Companies i dont necessarily think of the most Innovative Companies in the world, but yesterday we saw the nikkei hit a 221ye 21year high, thats dy better earnings, better machinery orders whatnot should we reshape this view of japan inc . A few years ago japan was struggling but look at sony, they reinvented their business from 2013 to 2014 into what it is now. Nintendo also another company recognizing Technology Change and moving quickly often Japanese Companies move slowly, but that seems to be changing perhaps electric cars is an area that japan can get involved in they have a good history with robotics, machinery. Thats an area which will be quite crucial when you look at the electric cars and the factories of the future. Thats where i think Mitsubishi Electric is hoping to have its nose in. They also want to reinvent themselves through the help of ai, and there is not a company that doesnt want to do that yesterday we heard from alibaba, spending some 15 billion on r d centers overseas they will be working on cloud computing, ai, fintech do you have to have deep pockets to make an impactin that space not necessarily looking at ai, we should see this as a power of the future. Soon we wont be talking about ai, it will be what powers lots of companies, its underlying t will make them smarter, more intelligent. Thats where Companies Want to go some companies will be powering large things with ai, other companies will be powering smaller processes. Not necessarily. Arjun, thank you very much for that shares in New York Stock Exchange listed Cloud Company pure storage lost 4 of their value since the company floated back in 2015, however the stock has posted solid gains this year up by 25 over the last three months thats after it announced plans to expand into the field of artificial intelligence. Joining us now is scott deetson, the chairman of pure storage some would say your stock is speculative, what do you say to investors about where the company is going the business continues to grow profoundly quickly. Well do a billion dollars in revenue this year. Most havent quarter w most havent quarter was 225 . We are playing in a large market 35 billion is spent annually, were exposed to cloud and ai workloa workloads. 1 billion in revenue by yea end. First profit quarter is something youre aiming at in the Fourth Quarter is that all realistic . Absolutely. On what basis what are the key Growth Drivers . Ai is one thats exciting deep learning is a technique for getting more value out of data you could take customers like zunuity building cars with pure storage, and what you need is a lot of data and outcomes associated, good and bad, with that data, then the computers can actually find patterns that help make humans make better decisions. So were benefiting because our storage is uniquely able to support the highly parallel performance required for deep learning at the same time its also somewhat commoditized, a couple rivals are doing the same, thats why some push down the prices how worrying is that trend with the cloud workloads, a little over 25 of our business is supporting big cloud customers. We find legacy storage, the storage we compete against was designed more than 20 years ago. Its too slow, too complicated, too expensive and cant keep pace with the changing environment for getting value out of data. Is it all going into the cloud . Is there still physical storage 5 5, 10 years from now. We are arming many clouds with the storage they need to get value from their data. Not all the data will go into two, three clouds. Data has gravity theres not enough internet bandwidth in the world in 2020 we will have 20 times the data that we can fit into the public cloud what is the cure to that . Data needs to be processed where its generated so there will be a lot of data that stays out on the edge, and pure storage is one of the tools that customers can use to get value from that data and select a subset to move to the public cloud for deeper analysis. Hpe bought one of your rivals for 1 1. 1 billion s that the trajectory youre aiming at . Hey, we have to stay independent or to grow further we need to be bought up by a bigger guy . I would say from the outset we built the company for longterm independence thats the trajectory we continue to be on. When youre growing at 40 year over year, the return we can provide to investors and to our team is better as an independent company. What new strategy were you hoping to get from the new ceo who has replaced you, mr. Giancarlo, formerly of cisco what sort of operational changes do you want him to make . Ive been at the helm for eight years. The business has grown from 20 employees to 2,000 employees, and from zero to a billion dollars in revenue i felt the business needed more operating experience at a higher level of scale one great thing about giancarlo, he helped cisco grove from roughly a stage where we are to 45 billion scott, thank you very much for that appreciate your time before we wrap up the show, a quick look at u. S. Futures again. Last time we checked, they were somewhat negative. Yesterday we hit a record high for all the major indices, theyre still somewhat negative. The dow jones is seen off by 20 points the nasdaq seen off by five or six. The s p 500 could fall by four or five points we got the fomc minutes yesterday, they were considered by some as a little more dovish than expected. The fed still signaling its on track to hike rates in december. Quick look at European Equity markets. 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Giving the green light stocks soar to report highs as the fed signals a december rate hike is all but certain. You better get it passed, thats President Trumps warning over tax reform. And crisis in california the death toll continues to rise as fastmoving wildfires sweep through the heart of wine country. Were live on the scene. Its thursday, october 12, 2017, Worldwide Exchange begins right now