Transcripts For CNBC Street Signs 20170411

G7 Foreign Ministers meeting in italy look to put on a united front on syria, as turkey suggests the Syrian Government still has chemical weapons capacity. Hi everybody. Good morning. Welcome. Good morning. How are you . Very good. A lot happening in the markets today. Ton. A lot of breaking news. Well talk about dialog in a second. We want to show you what European Equity markets are doing in general. We saw a flattish open, flat to slightly lower open. Markets lower somewhere in the region of a half percent. The ftse 100 bucking the trend a little bit. That also seen in the sectors out there. You have household goods, chemicals, real estate trading higher. Banks and Technology Leading the way down. Lets also have a look at some of the best and worst performing single stocks out there. Dialog semiconductor off by a whopping 30 after Bankhaus Lampe cut its rating for the stock saying that apple will be developing its own chips. Well come to that story in a bit. Some of the tech names and chip names in particular are bearing the brunt of the losses this morning. Its incredible. When a change like that happens, if you do see a supplier pulling out or see changes, apple is a big company to do business with. Its about getting it right and timing is crucial. Shares in european chipmakers are plummeting after Bankhaus Lampe said there was strong evidence that apple was developing its own Power Management ship and ditching dialogs quote in part. Lampe believes apple was setting up Development Centers in california and that dialog would face significant uncertainty. The german bank added that dialogs chip designers continue to be highly valuable. Apple has over the last couple of days clashed with another supplier, imagination technologies. And they have said in a statement theyre going to reduce reliance on that particular supplier of graphic processing units over the next 12 to 24 months . Why . They want to develop their own chip. Increasingly, apple wants to do everything inhouse, like samsung is doing. Some of those suppliers have been heavily reliant on apple will be feeling the pain. Its very smart of apple. Then they have full control over everything. I question dialogs internal value because this contract goes away doesnt mean theres no value to be found in the company. A lot of people would say theres still value to be found there, its a matter of rejigging themselves, finding other companies to be working with. Can you replace your biggest customer . Rejigging it a bit, i dont think that cuts it for someone like dialog, is their Business Model completely failed now . Do they have to be taken over by the likes of an apple or samsung . Which may be one way of finding some value. Lvmh shares touching a high after shares rose 15 in the First Quarter. The biggest luxury group said it saw solid growth across main markets led by strength in the fashion and Leather Goods division. Lvmh warning about the uncertain Business Environment saying Current Trends cannot be extrapolated to the full year. Givaudan has posted First Quarter earnings beating estimates out there higher by 3 in trade. The companys like for like sales rose 3 in the First Quarter helped bay Strong Performance in north america. These are the sales figures that were looking at. They say vanilla is supposed to be one of the most vanilla and cucumber are supposed to be some of the most popular fragrances. I visited givaudan factories a couple years ago thats my dream the smell is quite strong. Do you know where vanilla comes from . Madagascar . You disagree . No, no. Lets get to this story. The chairman of Banco Popular said the lender would be looking to raise further capital as it cleans up billions of euros in toxic options. Emilio saracho said there are 36 billion in nonperforming real estate assets. Banco popular off by 34 . Lets talk about the fed. Federal reserve chair janet yellen says the fed wants to stay ahead of the curve to make sure the economy is supported but does not overeat. Speaking at the university of michigan last night, she added the bank is taking the foot off the gas to give the economy some breathing space now that healthy levels of growth have been reached. She explained current Monetary Policy should be about sustaining what has already been achieved. Before we ever put foot, press down on the gas pedal trying to give the economy all the oomph we possibly could, now allowing the economy to coast and remain on an even keel to give it some gas, but not so much that were pressing down hard on the accelerator, thats a better stance of Monetary Policy. The fed chair warned about the threat to the Central Banks independence from two bills making their way through the u. S. Congress. Lets get out to valentin molinaux. Her comments yesterday did not move the dollar much, but were seeing fiveweek lows in terms of dollar longs. When do you think those have to be built up again . Do we have to wait closer to the june fomc meting . That may be the case. What seems to be happening in relation to the dollar and fed, its driven by two factors. One is the timing of the next rate hike by the fed, which could become more of a driver for the currency as we move closer to the june meeting. At the same time its about the Forward Guidance by the fed which has been at least historically the more important driver of the dollar. Forward guidance for the time being, from what we heard from janet yellen is neutral. Unless the fed steps up to the plate, like they did ahead of the march meeting and starts dropping very strong hints that rates will be going up, the dollar may remain that range, close to the multimonth lows. That said, i dont think the dollar is a sell or the downside correction will continue from here. If anything wlashg we ahat we a at is the performance of the dollar trade weighted index around the president ial election, and that compared to the historic performance looking back to the 80s. How the dollar trade weighted debt before and after the president ial elections what seemed to be the case after the Trump Victory is the dollar was trading as a massive premium compared to performance. With the correction behind us we seem to be well on course to converge to the average tlar trade weight, which was the case, which we have seen after the president ial elections. I think we priced out the term premium by now. From here, its all about the u. S. Data and the fed. That should remain constructive for the dollar. Back to fundamentals really. Want to talk about euro dollar. We put up a chart there of euro dollar. Its back below the 106 level. The d the doubts around the French Election are still underway. Whats the best way to trade the euro dollar going into it . I think still thats being discussed on previous occasions, its the case that investors may not have fully grasped the risks going into the election. If anything, the fact that the polls are suggesting that Marine Le Pen is polling at 26 , may be an underestimate of performance. The biggest risk for euro dollar is performance of the first round, which means euro dollar may be on course to revisit the lows of the range towards close to 104, potentially lower. All that said, conscious of the political risks on the other side of the atlantic, the uncertainty about trumps fiscal stimulus, we still prefer euro yen as a short going to the election rather than short euro dollar. In geopolitics, north korea and syria on one side, fed rate hike expectations on the other side. Which one offsets witch . It which . What may be different this time around, what gives us confidence that the fed will continue to hike rates from here is resilience of the u. S. Data. The u. S. Economy entered a phase of janet yellen was calling it healthy recovery from that point of view, you think that the u. S. Recovery and the risk assets, the u. S. Risk assets may be much more resilient to global shocks, geopolitical shocks. That could give the fed confidence they could hike despite lingering political risks. Reading through some thoughts. You talk about u. S. Protectionism is to weigh on the risk sentiment with the aussie bearing the brunt. From the current point of view, the next rate hike is a distant prospect. I dont think the markets will be focusing on that. If anything, geopolitical risks, but also u. S. Protectionism keeps coming. The u. S. Treasury report, fx report which could come as soon as this week or next week, its midapril, because of the easter holiday, it could become the focal point of market concerns about u. S. Protectionism. It is the case that the new u. S. Treasury secretary may opt to tweak the parameters which will allow the treasury to assess the currency policy. From that point of view, countries that i would consider safe from any currency manipulator branding like china may come under closer scrutiny. We like to be short the australian dollar, the new Zealand Dollar given trade exposure to china. On the whole, the u. S. Of protectionism may play out as a dollar positive against asia currencies. We would like to sell aussie, at the same time other Commodity Currencies we see rebalancing in the oil market which is an interesting side story, but its the same bearish aussie dollar view. Thank you very much. It happens every single time you fly, someone is being called forward to the desk and asked, do you want to give up this flight . Well give you a voucher. Usually people are throwing themselves at the desk, ill take the money. Ill take the extra night somewhere nice. Its usually students or people who have nothing to lose, but businessmen will rarely do that. No kids. Exactly. Do you do that . Do you usually say, hey, ill take the check . I was on my way to capetown, so i was downgraded from Business Class not Business Class, i didnt have much of a choice. Thats a long flight. I cant say i slept, but, yeah. It was okay. Have you done that. I got some money. I took the money. Yes. I never done it. I did it back in the day when i was a student. Now i need to get home. United airlines has come under fire after a number of videos posted on social media showed a man being forcibly removed from a plane. The clip shows an elderly passenger being violently dragged down the aisle after refusing to give up his seat on an overbooked flight. United sent out a public apology, but in an email he wrote that the customer was disruptive and belligerent and employees followed the established procedures. I question the word elderly. Hes or whatever . Well find out. But its pretty incredible. And standard at the same time. Happens every single day. Never seen that. No. But the procedure is standard. Email the show. Get in touch. Let us know your travel stories. The address is streetsignseurope cnbc. Com. We are also all on twitter. You can find us louisabojesen. And carolincnbc. Coming up on street signs, well pass you over to willem marx for a preview of what to expect from the g7 meeting. Coming up, g7 foreign minute strers meeting f ministers are meeting for a second day. [ engine revs ] [ screams ] [ shouting ] brace yourself this is crazy [ tires screeching ] whoo boom baby rated pg13. [ screams ] good morning. Welcome back. Youre still watching street signs. Within the last half hour, a spokesperson for Angela Merkel revealed that she spoke to the president of the u. S. Last night to discuss north korea and syria. Merkel told trump that the political process over syria must be placed over u. N. Auspices and the goal should be a stable syria without assad at the helm. The u. S. Is working to rally International Support for its revised stand on syria ahead of the secretary of states first diplomatic trip to moscow. Rex tillerson is in italy at the g7 meeting where political leaders are working to produce a cohesive message on syria. Willem joins us now. Theyre up against quite a bit, the g7 leaders, if theyre looking to produce a cohesive message. Will they manage to . I hear theyre talking about more sanctions to be placed on russia. Thats right. Boris johnson, the British Foreign secretary, one of those pushing the sanctions last night at a working dinner, working to try to persuade g7 counterparts that sanctions would be a good idea. Theyve been joined by some counterparts from mideastern countries including qatar, uae, turkey. We saw the turkish Prime Minister moving in behind me an hour ago. He already had a conversation with Rex Tillerson about that message. Its a message that Boris Johnson says needs to be unified. I think its very important in these circumstances for the world to present a united front. For there to be no ambiguity about the message. The message were sending to the russians is very clear. Do they want to stick with a toxic regime, do they want to be eternally associated with a guy who gases his own people, or do they want to work with the americans, and the rest of the g7 and, indeed, likeminded countries for a new future for syria. Thats the British Foreign secretary talking about pushing the russians away from the syrian president , bashar al assad, its something his counterpart in germany said he wanted to push russia out of al assads corner. The question is how are they going to do that . You mentioned sanctions as one option. Clearly military force is another one that the u. S. Administration has used last week with the 59 tomahawk missiles in response to that use of sarin. What that message will convey to sergey lavrov, that Rex Tillerson will be meeting with later today, is not clear. Well have guidance in the next hour at a press conference. Willem marx, thank you very much. Lets talk a bit more about what possibly could be on the agenda with regards to syria. We have the director of middle east and north africa at youur group what is the masmartest thg for the g7 leaders to come up with . A conservative statement not to pressure russia too much. The objective here is to have a conversation over its support of assad, over its alliance with the syrian regime, but to a certain extent also iran. Its difficult to convince putin to both withdraw from syria, curtail iranian influence and cut his ties will sanctioning him and producing that out of the g7 and not the g8 which russia is no longer a part of. Its more about russia than syria. I think so. The point is to give tillerson leverage. If you push the issue too much and the statement is too hawkish, it undermines the conversations in moscow. Not to be too cynical about this, but this g7 meeting wont make a change when it comes to the sixyear long syrian war or what russias stance is. Is this just a lot of talk . Still people are being killed. I dont think its easy to change the balance of power in syria you have all the forces there, american troops, russian troops, iranians and many other proxies. Its very difficult to get to a resolution quickly. Thats precisely why it would be very dangerous to have that conversation out of some form of u. S. russia diplomatic engagement. The russians have a lot of troops in syria. Its tough to see how the g7 has a real plan. It seems to me that listening to several officials from what the Trump Administration have said, they dont really have a plan. Theres so many conflicting messages on what happens to assad what doesnt happen to ass assad. What ultimately do you think is the message coming from the u. S. , or do they not have one . I think most likely this was a oneoff attack, were seeing pressure from different groups. Even International Parties to try to shift that more into a regime change formula. I dont think trump is there. The pressure definitely is. Maybe it can be quite confusing for people not from the region to figure out whether it was a good thing for the u. S. To do this attack or not. What is your stance on that . I think you have two issues. One is procedural. This was taken outside the u. N. Context, it actually undermines u. N. Norms. North koreans have used that almost immediately. Regimes that use chemical weapons should be held accountable. I think its very important to provide context on that. To have the conversation in the u. N. , and the u. S. Take action if the evidence is there on the table. I think that would be more productive. Do you still believe that the russian president , mr. Putin, is glad the u. S. President was elected . After this early bromance, having never met, do you think that has changed . I think the first days was a honeymoon period. I dont think there is any talk between them. The relationship is at presence very, very tense. Can i ask briefly, if we were to see a regime change, if assad were to go, is there somebody else who would be ready to step in to assads shoes . At this point, no. Its not very clear. I think even the u. S. Has been clear about that. Regime change policy today could be effective over a number of weeks if the u. S. And International Community chose to, they could bomb all regime targets and assad would be out of power. The issue becomes who takes over in this power vacuum. I think up to this day were actually scared of the alternative. Until there is one ready, were more likely to play a conservative game. Thank you very much. We need to take a short break. Check out our blog. Up after the break, well talk gold and hedge funds. Stay with us or find us on twitter, louisabojesen or carolincnbc. See you in two. Hello. Welcome. Youre still watching street signs. Im carolin roth. Good morning. Im louisa bojesen. Your headlines apple supplier dialog plunges after an Investment Bank says apple may develop their own Power Management unit. Shares in lvmh rally to a record high as the french conglomerate posts a forecast beating a 15 rise in First Quarter sales, setting a trend for the rest of its luxury peers. Toshiba finally posts earnings after delaying results two time the, but does to without the auditors approval. G7 Foreign Ministers meeting in italy look to put on a united front on syria, as turkey suggests the Syrian Government still has chemical weapons capacity. Hi everybody. Welcome back. Inflation data for the uk for the month of march. Were looking at a bit of cooling in areas. Holding steady in general in march and set to gather steam in april is the main message. Producer output prices, 0. 4 month on month, plus 3. 6 year on year. By in large, outperforming the poll of 3. 3 that had been anticipated. Core Producer Prices, plus 2. 5 on the year, which was bang in line with what had been expected. Input prices, 0. 4 month on month. Thats higher than the targeted 17 that people had been looking for. Basically seeing Producer Price inflation falling by less than expected to 3. 6 for the month of march and holding relatively steady. The largest upward pressure on cpi from food, alcohol, tobacco offset by airfares on the easter effect and fuel. February house prices, 5. on the year versus 5. 3 in january. So also seeing quite a significant rise there. For london, february 3. 7 , the lowest increase in london since april of 2012. Still that slowing in london happening. We had been expecting cooling. That came in stronger. A bit stronger at 2. 3. Were seeing a bit of a pop in pound sterling. Lets bring up the board once again. Were seeing the pound against the u. S. Dollar at 1. 2418. Just up slightly. Since the data has been out, thats a bit of a pop. Euro dollar back below the 1. 06 level. 1. 0599. The dollar is range bound given that on the one hand we have still got the geopolitical risk going on with north korea and syria and that is putting pressure on treasury yields. European equity markets, we are mixed. Ftse 100 outperforming to the tune of 0. 3 . The xetra dax is off by 0. 2 . Slight declines for the cac 40. We are seeing some techs and banking stocks really dragging us down. Weve had the big downgrade impacting dialog. Well talk about that later on in the show. Luxury doing better on the become of better than expected numbers from lvmh in the First Quarter. U. S. Futures look like this. S p is seen off by 2. Dow jones seen off by 13. Nasdaq is expected to fall by 3 points at the start of the trading session. Fairly choppy session for wall street yesterday. Stocks ending little changed. Lets talk about commodities. Oil has slipped back from fiveweek highs as an increase in u. S. Shale production is offsetting news of the closure seen in libyas largest oil field. Gold prices have been inching higher. Prices reacted little to a dovish janet yellen who said the fed would be raising rates gradually only if the u. S. Economy continued to perform strongly. Karen hodgin is with us. Good morning. Gold having risen 5 over the course of this past month. How much further do you think gold has to go on geopolitical tensions and currency fluctuations . Our forecast for 2017 is an average of 1300. So we still think theres more upside to go. We move positive at the start of the year. We changed the way we appreciate our gold valuations. We moved to a more score card metric. We devised a way of maybe the five major drivers for the direction of gold. Actually the score card at the start of the year was a 41 in positive gold price move. Thats born out true. Some of those dynamics are not as strong now, but it feels theres a win in the card for gold. We still anticipate a price increase at least through to the end of the year. Out of the five key drivers for the price of gold, which one is the one that is super important to follow . Thats the hardest question to answer. There is not actually one straight answer. Its dynamic. At any one point, you would identify three major aspects, but also you have the factors of short term trading ideas, the long short positioning and Central Banks. Theres not one killer answer. It just happens to be what is the key answer at that particular time. At the moment looking at Geopolitical Uncertainty and Economic Uncertainty are the major drivers. You are an equities guy. As an investor, what should you do with gold . Should you invest in the metal or the underlying equities . Thats dependent on your risk profile. If you are more akin to chasing the dollar, i would expect you to be looking at the equities. If youre more cautious, and you are a believer in gold as the asset glass itseclass itself, be to gold metal itself. On the equity side, many producers have had a severe cost problem. Do you think that has been under control of late . Do you think theres picks out there worth chasing . 2016 saw a recovery in costs. A lot of that was down to currency, currency benefits. Well see a lot of that reversal in 2017. We had to already start to see that in q1 with the South African rand appreciating, the South African produces are looking good value again from a currency perspective. Also positive on russia. We think the asset base is high quality. We think that sentiment in egypt as well is a high quality name. You have to look at each company, the country they are operating in, look at the underlying jurisdictions. Whats your top pick . Poly metal and sentiment. Should gold have reacted more to a more dovish janet yellen . It was already in the price, if i may. We saw the news flow last week, and a comment we sent out to our clients was that the fact that if there was a commentary, that there was an effective deleveraging of the balance sheet, its highly unlikely were going to see the additional rate rises throughout 2017. Its akin to driving a car with the foot brake and hand brake on. It was already seen in the price, we believe. Excellent. Kieran, thank you very much for that. Conservative neil gorsuch has been officially sworn in as the justice of the do you want to take this. Ill get a cup of water. As the justice of the Supreme Court in a major coup for donald trump. The coloradobased judges appointment fulfills one of the u. S. President s top Campaign Promises and swings the court towards a conservative majority. Edward lawrence has more. History at the white house rose garden. Neil gorsuch taking his place as the newest justice on the Supreme Court. I will never forget that to whom much is given much will be expected. And i promise you that i will do all my powers permit to be a faithful servant of the constitution and laws of this great nation. Reporter gorsuch took the oath from anthony kanennedy, a justice he clerked for. To the scalia family, i wont ever forget the seat i inherit today is of that of a very, very great man. Reporter earlier at the court he took his constitutional oath from chief justice john roberts. At 49 years old, gorsuch is destined to become one of Donald Trumps legacies, swaying decisions for generations. Our country is counting on you to be wise. Impartial and fair. Reporter the Supreme Court has some big cases looming from religious freedom to gay rights and gun control. More immediately the challenge to the president s travel ban on people from six predominantly muslim countries. Regardless of the law, democrats say the confirmation process was too political. I believe it will make the Supreme Court a more partisan place. Reporter Senate Republicans changed the rules to confirm gorsuch making only a simple majority of 51 votes needed instead of the traditional 60. Neil gorsuch will make 251,800 a year as a justice, a 15 raise from his Appeals Court salary. Edward lawrence, nbc news, washington. The skrshceo of wells fargo the bank needs to build trust after the High Pressure sales scandal resulted in the creation of more than 2 million fake accounts. The bank said it was clawing back 75 million of compensation paid. Reporter wells fargo announcing the largest claw backs in Financial Services history following a board report into the sales practice scandal that deemed it necessary to claim back additional 28 million of pay from former ceo john stumpf after he had already agreed to forgo 41 million when he resigned in october of 2016 and an additional 47 million from carry tolstedt, she had already forgone 19 million last september. To tolstedt was also terminated retroactively for cause. The root cause of the sales practices issue, as determined by the investigation, was the excessive sales pressure in Community Bank, the excessive sales goals, and the failure to escalate the problem appropriately through the structure of the Community Bank. Carrie as the leader of the Community Bank is responsible for that. Tolstedt refused to be interviewed but a statement from her lawyer says we strongly disagree with the report and the attempt to lay blame with ms. Tolstedt, current Ceo Tim Sloan is given a pass. The report says tis direct involvement with the sales practice issue was limited until he became president and coo in november of 2015. Despite that i asked him if there was more he could have done earlier. When i looked back, i should have and could have done things differently once the issues made its way to the corporate leadership level. In hindsight i wish we would have moved more quickly. We would have made decisions, for example, that we made last fall, which was to end the incentive Compensation Plan in the Community Bank. Away from the individuals, the report says a sales oriented culture and decentralized Corporate Structure helped cause the issues. Here are some examples. Monthly motivator reports where it was reported that some employees lived and died by the results. Retail score cards which were instituted by tolstedt and generated significant sales pressure. How did that bad behavior manifest itself . The report details one instance where a district manager warned an employee that wells fargo provided a challenging and intense sales environment and that he should be prepared to do whatever it took to meet the numbers unless it was down right unethical. The report uncovered more about the tactics employees used to hide practices within the wells fargo system, substituting their own email address for a customers to prevent wells fargo from getting less than perfect Customer Survey score. The Company Reports earnings this thursday ahead of the annual Shareholder Meeting in florida on april 24th where all 15 Board Members face reelection. Wilfred frost, cnbc business news. The Washington Post and New York Times earned Pulitzer Prizes for their coverage of Donald Trumps campaign. Elsewhere the International Consortium of investigative journalists took home an award for their work on covering the panama papers, which detailed the widespread use of off shore tax havens by bignamed politicians and business leaders. Donald trump might be thinking that the New York Times is failing, but theyre still winning prizes. Still winning prizes. Absolutely. The United States, mexico and canada, theyve submitted a joint bid to host the 2026 world cup. Nine years away from now. Yeah. Such a long time. According to the u. S. Soccer president , the plan would be for mexico and canada to host ten games each with the remaining 60 to be played in the u. S. The last time the world cup was in north america was usa in 94 which had the highest attendance in the tournaments history. I do remember that one. Ive been tweeting with a couple of you, you say thats because theres more seats, the stadiums are larger. Im not sure. Maybe. Other people saying it was a boring tournament the last one. I thought it was amazing. I thought it was really good. I watched all of it. Welcome back to the show. Shares in european chipmakers are plummeting after Bankhaus Lampe said apple was making their own power chip and ditching dialogs. They believe apple was setting up Development Centers in munich and california and dialog would face significant uncertainty. Were joined by the author of this report. Thank you for joining us. I dont know if congratulations are in order but you single handedly dragged the stock down by more than 30 in morning trade. Its off morning lows but still down 20 . How detrimental is this for the stock, for dialog . Whats the meaning for sales and earnings . First off, im certainly not enjoying the selloff on the stock price this morning. I just thought it was my duty to publish what i found out in my research. I think this could be quite alarming for the company in the midterm. Im describing in the note that from 2019 onward could have a Significant Impact on earnings. Theres still a lot of uncertainty around the exact numbers because at the end of the day it will depend on how much apple used internal forces, and how much they are using from dialog going forward. At least there are Uncertain Times ahead. What if apple falls away as one of the most important customers or at least in part. What other companies or essentially customers can dialogue rely on in the future . There are many other smartphone manufacturers out there. Probably one reason why in the past dialogue has never been so successful really in developing a Customer Base is the majority of the engineering was tied up with apple. And if apple is now going to use internal source, then this frees up some engineering sources at dialog for other customers. I think they could become more successful. Given this uncertainty, dialogs Business Model, is it still strong . Do they have value . Absolutely. I have been following this company for about 20 years now. And they are quite used to a certain type of customer. They used to have ericsson in 99, they used to have siemens in 2004, and they survived those customers. There is value in the Business Model even in tough times when customers fall away. Im not saying apple will fall away completely. At the moment im just expecting a second source, which, for dialogue, is probably bad enough. But certainly a significant strength in the Business Model and certainly is value in the design that dialog is having. Karsten, thank you very much. Toshiba faced with massive losses related to its Nuclear Power business released its twice postponed Earnings Report today but without the auditors stamp of approval. Toshiba booked a net loss of 4 4. 8 million from april throug december last year. And its total debt reached 2 billion as of the same period. It is extremely unusual for a firm to release its report without the auditors approval but toshiba delayed the Earnings Report twice, and no Japanese Company delayed an Earnings Report three times. There have been allegations of inappropriate internal controls at the company which has accumulated massive losses due to delays in two Nuclear Power Plant Construction projects in the u. S. There are also other risks for toshiba since its net worth has fallen into the red as of the fiscal year ending march. Unless it improves the situation by the end of the current fiscal year, the stock will be delisted. Toshibas president will hold a press conference later this evening. All this uncertainty made the firms lenders and investors uneasy, and toshiba stocks are down 3 today. Thats all from the nikkei. Back to you. Thank you very much for that. Equity hedge funds have made their best start to a year since 2013. This thanks to a Strong Performance in european and u. S. Equity markets and some of the strongest gains in emerging markets with india and china returning 5. 5 . Lets talk more about the sector with jason gurlach. How much of this is dependent on what the trump trade does . I think theres certainly some benefit to the trump trade, without question. What weve seen with donald trump is a decoupling of markets that were tracking together in lock step. That made it harder for active strategies to succeed. Its a shortterm good thing for the industry. The longer term picture is people were shoveling dirt too quickly on the Hedge Fund Industry last year. Youll see what hedge funds do this year and beyond. We saw massive withdrawals, a third of the industry last year, and a Fee Structure which maybe is not up to date with what investors are looking for. Were seeing money flowing back into strategies that have worked the last couple of years, such as macro strategies. Do you think macro will outperform . As a macro manager, i hope so. Yes. Its a good place to be. You have a president in the United States who with a given tweet can move markets 5 or 10 . If you dont have a good suite of macro strategies in your portfolio, youre missing out. Why should i be looking closer at wage and inflation data . I think you want to look at anything that will continue ta dec that decoupling of markets, and pockets of volatility. As that data comes out, its the kind of thing that will move markets where you need them to go. That will be pushing the long short equity funds . Thats one of many factors. Does size still matter when it comes tottracting inflows . The last couple years it was the big ones. The small ones didnt stand a chance. Can small Hedge Fund Managers make a comeback . Theres opportunity but its much harder. Hedge funds have become about brand and size. Size has become the equivalent of safety. As a smaller manager myself, its a challenge. Whats your aum . Currently just under 400 milt on. Okay. Your changing strategies or not at all . No, were a macro were always evolving. If youre a macro manager f youre not evolving, youre dying. Weve been blessed to be in business 3 ye8 years. We wanted to showcase for the world theres good mid size to smaller managers in california that you should look at. We often hear theres too much money chasing too few deals. Is that going to change . Do you anticipate more deals this year . I think so. I think generally speaking theres a positivity about the opportunity set that i have not heard in several years. So, you never know. Were always one crisis away from god knows what. But its certainly feeling like the industry will be on an uptick. The Fee Structure, is that dead . I hope not. Certainly managers command it, and some command more. I think excellence will always get you the fees you want. You can set your own rules with excellence. The doom and gloom about the industry i think is overstated. The average fee set is still quite high. The average manager fee is over 1. 5, the Incentive Fee is 16 or so. That will continue to motivate smart, talented people into the industry. Jason thank you very much for that. Thank you. Before we let you go, quick look at u. S. Futures. How were shaping up for trade 4 1 2 hours away from now. The implied open on the righthand side of the screen, called just a bit lower. Thats it for todays show. Im louisa bojesen. Im carolin roth. Worldwide exchange is up next. Well see you tomorrow. [ engine revs ] [ screams ] [ shouting ] brace yourself this is crazy [ tires screeching ] whoo boom baby rated pg13. [ screams ] good morning. Markets now, stocks pointing to a lower open on wall street as oil backs off a fiveweek high. Food fight. The big battle brewing over whole foods after activist investors upstake its investment in the company. And sky high outrage, both companies and investors demanding answers from united today after a video shows a man being dragged off a plane. Its tuesday, april 11, 2017, Worldwide Exchange begins right now