Foundations for the merger losing its find. Pandora blames a challenging u. S. Retail environment for its Second Quarter profit miss shares off by 9 and trade data from china disappoints but the country maintains a healthy surplus with the u. S. Good morning, everyone, it is tuesday and taking a look at the map this morning, the stoxx 600 isnt going anywhere were just holding ton the flat line the stoxx just out of the gates up by 0. 2 now, an hour into the trading session we are flat as a pancake. Again, thats a pretty quiet day when it comes to Economic Data the only piece of data we got out is german trade numbers, german exports with its fastest fall in two years we got the china to focus on and that did lead to the basic metals stocks lower. Lets show you the European Market its one by one ftse 100 up by a few points and the xetra dax coming by the sectors, one of the worst sectors with the downside of 0. 4 and travel and leisure also down 0. 7 lets give you more info on that trade data from china while it came in below expectations for the month of july, exports rose 7 , and imports down 11 that left the country with a trade surplus with nearly 7 billion for the month. Lets dig into those numbers with miranda carr. Miranda was his an aberration or a slowdown when can comes to fundamental factors . I think with the economy and western markets, we had a very surprisingly strong june numbers and surprisingly weak july numbers those two factors even out. And the last two months were see improving economies in the western economies both in the u. S. And eu demands picking up almost in double digits. So thats pretty positive. And also domestics when you think of excavators, machine tools, consumers to commodities, theyre not great but coming along pretty well. But what chinas throwing out is the huge anomalies in the markets. You got two factors messing up the figures and messing up basically the demand picture but i do need to pick up on two points the fact exports to the eu has been the u. S. biggest trading partner with the drop in double digits do you think this is a sign of slowdown in the u. S. And eu . Well, the u. S. Numbers were particularly strong in june, but the Previous Year down 10 a lot of it is unfavorable comparisons. But you look, go back to end of last year, exports to the u. S. Were only rising by 2 whereas now theyre rising 14 so thats a big shift. Thats a trend thats not just sort of monkey work so the pickup from the u. S. And europe people markets seems from a very weak base i mean, were not talking about a fantastic year last year, european exports 2 last year. So youre talking from a very weak base things are looking better again, dont get too excited but i dont see this as a major thing. One thing thats probably going to add more fuel to the fire, the chinese u. S. Trade spot that is the trade with the u. S. For the first five months, thats the increase, 5. 9 . By dont know what the trade is going to be coming from u. S. Towards china. To what extent does that slow down the trade between the two countries . You get strange arguments on both side. Steel exports have been falling. So, a keep point of the Trump Campaign was steel thats now falling and trying to say, weve addressed your concerns, thats fine you know, the currency is going up, appreciated by 3 . Thats automatll tactical movements . Its very tricky with the two things that negotiators are coming at you with is, these are no longer issues we still have obviously exports. You know, the textiles will replace goods coming into the u. S. Market that they could then take action on but then china argues, well, wed like to import more of europe, but we want highend, advanced machinery, advanced energy in particular, which the u. S. Doesnt want to export. I think the negotiations are going to be quite tricky because chinas answered a lot of the problems that the u. S. Has had thats exactly my question, when do you see that trade action being taken how severe, how aggressive, do you think the retaliation will be on the part of china . Can they afford to be that aggressive because they dont want to slow down trade with their biggest trade partner . Well, some of the measures that china takes is more internally focused you can see the big if you remember is to try to open up chinas Financial Services markets. Some of the internet markets, but basically if it doesnt get action on trade it did limit the markets with the likes of facebook, google or any of the any of the Financial Services companies, they want to get into china and china can just keep that keep those barriers up if theyre not if theyve got trade sanctions imposed by the u. S. Its been roughly two years, exactly two years, in fact, august 2015, that was the month where we worried so much about the unpredictability of chinas currency and the action of the pec. Weve seen a stable economy, by and large, weve seen a pretty Stable Currency which has been rising a little bit. But you said in a recent note that this masks some of the underlying problems. Were now in a slightly weird point in the marketplace kind of a weird place, ahead of the congress the pboc, we did a recent survey recently in the bond investors, no one expects the leverage to continue it might be up to the Mighty Congress but basically in the next few months were not going to see any shift in the policy things are going to be kept stable and its only the external risks that china has to worry about. Everything has been going back to the safe, going back to the banks, keeping the market steady everything is being held very, very stable, up until the congress up until that congress which i guess happens in november right . Yeah. Whats the obvious trade for china at this point . Is there one or isnt there one because everything is to be kept stable . I think the market just in general, the markets, in terms of Monetary Policy were seeing a slight shift yields are gradually moderating we think theyre going to peek at 2. 7, 2. 8. That stocks moderating, coming back to it again, things are loosening up again we do see risks in the private sector local government financing platforms. Theres more risk there. Basically moderating after the june squeeze yield moderating markets are stable. And its really only as i say external risks miranda, thank you so much for that insight in other earnings news this morning, pandora shares we heard on the headlines falling after the Second Quarter profit. No expectations. Dane ish protested a profit revenue grew at 12 year on year helping pandora to reaffirm their fullyear guidance and Deutsche Post driven by strength in its express Delivery Business it rose 12 . Helping the german mailing Logistics Company to reaffirm its targets and says no Material Impact from the cyber attack in ukraine in the end of june and its seen higher volumes, shares up nicely 1. 16 on the German Market and unip raises profits. Now seeing earnings before interest in tax of 1. 2 billion pounds up from previous forecasts. And shares of junglinerich raises outlook as the german forklift manufacturer poses a Second Quarter even and the fund manager alex, always a pleasure to talk to you about some of your stock picks on the shelf why do you like it each . Obviously, you didnt know what the numbers were going to bring today. Yeah, no, weve been invested in them for a long period of time basically the second largest forklift truck business in europe Third Largest globally and the reason we like the stock, it boasts the theme of Online Retail, bringing more transaction online only about 10 of all retail globally is done online at the moment and when that happens you need to warehouse it. And things need to be brought out, packed and transported. Its not just a forklift truck, but logistics system as well we see this business as a play on growth and Online Retail which is a key and future trend that will only develop and very important. And that story certainly makes sense, alex. But at the same time, given that this is a German Company that probably exports quite a bit isnt going to be hit by the 1. 18 Exchange Rate for the dollar thats certainly important for the business 8 of the companys revenue actually has come from europe. The exposure is quite well mitigated to that effect lets talk about some of the countries you like one of them being asal in the Semi Conductor space. The only issue with stock it has business with 30 in the last year is it now time to take profit . Youre right, the stock has had a really good performance when you compare it to businesses like advance materials or land research, the company has actually seen relative underperformance. Certainly, the second point id state to valuation, if you look at this business, relative to its tenyear average, one year out, trading at 24 times earning. Over the last ten years, it averaged 27 times. But i think the important thing, its not just the multiple but the actual earning that goes low. This is a business that set out a very clear target in 2016 in capital markets. They said by 2020 we could do at least nine euros of bps. The next iteration of machines that theyre rolling out at the moment that management has said theyre at an inflexion point now, theyve got 5 billion plus euro i think that mindset is very, very achievable, you could be looking at 10, 11, 12, Something Like that. Which i think allows asml to grow very comfortably. My question to you is to what extent asml is at risk from the likes of apple and samsung which are now trying to streamline the production of ships inhouse they want to build this vertical integration. They want to simply not use the likes of asml. And i think there was a big story of one of its partners is it asml with apple and smith not meeting them intel is actually 108 investor in asml so the interests to the businesses are very close aligned. I think whats fascinating if you ache asmls biggest customer, intel, todays take, samsung, every one of those businesses, totally in line, and its supporting the technology that as said ml ml you appreciate the importance of the law, things have to fit. And if you believe in all of these trends, better memory, better devices, you cant fill it out without asml, simple as that iand now the cost of gene secrets falling and demand would rise, obviously this is a player that would do very well. Given that costs are falling, wouldnt more competitors come into the space and try to eat some of the cake thats certainly an argument thats been leveled for this company. If you look at the market share, somewhere still along 70 or 80 . Generally, we intend to only invest in businesses with high market share you need to get the regulators on board so it proves it this business, illumina theyre still investing 50 on research and development. Theres a close link to the Academic Community and the big businesses that are actually buying the machines and actually dislodging that business is proving i think a lot harder than the skeptics of the stock mentioned. And they wanted to buy that business a couple years ago, illumina didnt play along at that point, they said this is nice to have, not a musthave. A couple years later one of the big players came out and said this is a musthave company and we need to go in and buy it . I think thats a plausible scenario, indeed for the future trends that we look at, whether its molecular diagnostics, and all of that sequencing very few people are in the market, so theres certainly a scarcity value attached. Alex, thank you for your time fund manager at heptagon capital. Still coming up on the show we check in on some of the larger Hotel Players ahead, after the break do stick around. Ihd share ihg shares are trr with a drop in the Second Quarter. And weighing on the numbers, the revenue also declined from the First Quarter. And Marriott International has a lower outlook for its enorth american market. The Worlds Largest hotel chain reported income up 68 but shares fell on the plymouth forecast seema mody has more. Marriott, the Worlds Largest hotel chain reporting better earnings, much higher than what the team was expecting revenue also a beat at 5. 8 billion but i also want to draw your attention to net income Second Quarter net income totals 414 million a 68 increase over the prior year period. Management says a lot of this has to do with Strong Performance in asiapacific and europe the company pointing out some strong markets like shanghai, barcelona and london asia has been the big focus for marriott today the big news that the company is signing up with this joint venture with alibaba the stock is up higher, already 45 year to date, making the best performing hotel stocks this year. Back to you. Ey says, quote, unprecedented market disruption is pushing companies to divest over half of the firms surveyed by ey said global and political insecurity drove sales diversity leader at ey joins us to discuss the support of the rest of the industry and divestments for 2017 what are those unprecedented market sources exactly carolin, great question weve got mac book volume difficult. Geopolitical uncertainty in so many markets we have great disruption right now because of technological change its everywhere and its disrupting so many Business Models and we have shareholder activists all over the place driving activity i just want to pick up on that point weve seen a lot of Shareholder Activism in the u. S. But only recently its reached europe with some of the big ones like nestles being targeted. Do you think that increasing will be driving divestments . At this point, we know nestle was going to sell off some of its confectionary business anyway do you think this is an organic decision or one driven by Shareholder Activism i think there are two pieces. I think theres the Portfolio Management to your point, carolin. Thats looking at things that are noncore. And things that are underperforming perhaps in somebody elses hands. Thats one piece of it and but then you also have the Shareholder Activism piece all of the conversations with clients in asia pacific and europe, thats going to grow in asiapacific at what point do Companies Invest a whole too much . Weve seen that from factor like oil price and profits plummeting at what point do we see the profitdrivers being cut off to the extent that we simply cant invest in these companies anymore . Yeah, i think right now, disruption is going to continue to drive these divestments, carolin, theres no question about that what were seeing companies are using the proceeds right now from investments to come back and invest in Digital Technology whether automation robotics, software, internet and because of that disruption and what technology is doing to everybodys business model, we believe that will continue one of the pieces of information in your report, i found it really interesting, it was fascinating, you say that in europe theres more pressure to sell at a certain speed. Rather than at the right price why is there so much pressure on speed in europe and are we seeing fire sale prices in europe you know, thats a great question, actually because its a bit of a dichotomy between americas and europe. In europe, youre seeing a couple things, number one, youve got the postjune 2016 hangover from brexit there was a bit of stagnation in the market for a period of time. And i think youre seeing that market get caught up i think because of that stagnation, that drove a lot of companies to perhaps make decisions that were hasty to drive further activity do glconglomerates still work i knee theyre completely out of fashion. They want to drive the noncore that begs the question are they value or is it about valuation i think some parts can offer value. Its how they unicommunicate tht core to their stakeholders down to the street. Thats what it comes down. Thank you so much in other news, citigroup will pay 130 million to settle a libelrigging lawsuit in the u. S. British lender barclays reached a similar agreement in 2015 for 120 million and on a programming note make sure you tune to cnbc today at 17 30 cst with an interview with jamie dimon we have more street signs in a few minutes. Dont go away. Your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Honey, remember to slaughter the tomatoes with the nun. screaming remember to water the tomatoes when youre done. [announcer] sometimes, hearing isnt easy. Lick a carp. Lookin sharp. [announcer] but now, theres a simple way to enhance it because now theres eargo plus. The virtually invisible hearing aid with amazing sound quality. Designed with patented flexi fibers, so theyre suspended completely inside the ear canal. And so small, that theyre virtually invisible. Just pop them in and tap each ear to find the right setting for you. A single nighttime charge will last you an entire day. Sauerkraut the slum lord. Watch out for the skateboard. [announcer] dont wait, call or go online now for a free sample pair to experience the incredible comfort and invisibility of eargo plus for yourself. Hello and welcome back to street signs. Im carolin roth and these are your headlines outflows at stand lifes fund pull shares near the bottom of the