hello. it's friday. welcome to "street signs." i'm carolin roth rbs shares push higher as the bank's second quarter profit squarely beats analysts expe expectati expectations the rbs cfo tells cnbc that the results prove the bank's turnaround plan is working >> we're encouraged by the results today. second best results since the cris crisis over 900 million pounds of bottom line profits.

challenging market conditions could continue for swiss reason a grand jury and jobs in focus. u.s. special counsel robert mueller reportedly convenes a grand jury to look into russian campaign leak links as investoo await the latest non-farm payroll number >> good morning, everybody it's jobs friday, we expect a print of 180,000 as usual on these fridays, we're in a wait and see mode ahead of that that very much happened in the asian trading session. the stoxx 600 is off a tad we have in other choice but to focus on earnings. rbs is one of the best performers in the stoxx 600. we'll get to that.

also swiss re is the other side of the ledger underperforming, we'll get more details on that in a few minutes when it comes to the european equity markets, here's a picture of the ftse 100. holding on to flat line. xetra dax off by 0.1%. not a lot of movement. we are seeing basic resources, utilities, real estate outperforming. insurance ne insurance, media and financial services outperforming >> shares in rbs quar lsquarely expectations but the bank cautioned it's likely to post a full-year loss as it prepares to settle with the u.s. department of justice gemma spoke to the cfo and joins me now when i look at the analyst notes, i'm seeing lots of praise >> was a broad-base beat we saw in the first quarter they

also beat, but that was predominantly on the income side here there was strength on income but also costs did well income revenues were up in the natwest markets, particularly important given that rbs is a bank focused on fic, and other competitors use fic in regards to low volatility. i also talked about the uk economy. the message out of the bank yesterday was gloomy what we did see from the royal bank of skocotland was that the net income margins were squished, but they perpetuated growth on the mortgage side. i asked how that outlook for the uk economy was in general. >> if you look at our payment trends in the first half, they appear to be benign. we are cautious. we look at consumer trends it feels like the growth in consumer credit, poor savings

rate, decline in real wages all point to future issues regarding consumer commentary yesterday >> has that altered your assumptions built into your molds going forward? >> if you look at what we've been -- where we've been positioning our loan portfolios recently, we've been prioritizing secure mortgage lending for sometime over unsecured. we've been cautious on where we want to lend to in commercial. for example, commercial real estate is somewhere we have been cautious on. >> that was ewen stephenson talking to me. capital was stronger, beat expectations cet coming in at around 14.8 >> that's a really strong number >> it is

the jump from 14.1 last time and looking at the capital resolution plan. analysts impressed by how well they're dock ging getting rid of poor assets. >> i do wonder to what extent that will be impaired once we get the crucial settlement with the doj. i know you asked him about that, he couldn't say much, maybe there's not a lot of movement or maybe he's not allowed to say anything if there is movement. any sense of when we could expect that settlement and how big it would be and how much the provisions are >> unfortunately not i agree, it's unclear whether they know much more than we do they are keen to remove this from around their neck referred to it several times and the warning that 2017 could be a tenth year in the red given that if they do eventually settle, which they're desperate to do,

that will push them into a loss most likely. >> gemma stick around for the next conversation. moody's upgraded its outlookfo uk banks to stable from negative citing improved capital positions, strong loan quality and robust liquidity despite expecting the operating environment to deteriorate due to brexit uncertainty, the ratings agency says banks have become more resilient to weather the tough conditions joining us now to discuss this report is the senior vice president of moody's investor services andrea, thank you for joining us to talk about the report talk about the main reasons for the upgrade. the uk banks have been in the doldrums for so long what's this change >> this changed the resilience of the broader uk banking sector it has improved. we think that banks are better placed to face deteriorating operating conditions over the next 12 to 18 months the improvement coming from

three different areas. the first is the credit quality. banks have sort of lowered the number of bad performing loans compared to previous years the capitalization has continued to improve we expect to continue to improve moderately over the outlook period and then the third area is that the banks have sound founding liquidity profiles, which obviously help them to withstand unexpected market shocks >> wouldn't much of that change and deteriorate automatically when it comes to brexit, when we do see the harsh realities of brexit as you say default rates are pretty low, 2.2% of gross loans, wouldn't that rise once brexit hits us? >> yes, let me clarify our outlook is for a period for the next 12 to 18 months so that will be before brexit

happens at the earliest. second point is that the -- in the uk we have a very low level of interest rates. the bank of england capped the base rate at 25 basis points, which is an all-time historic low, which clearly means the borrower's ability to repay debt has been stronger. our expectation as far as operating conditions are concerned is that they will deteriorate, driven by lower economic growth, during this period of time and multi cap unemployment >> listening to governor mark carney's press conference yesterday, it sounds like bank of england has become decidedly more pessimistic, even since may in the wake of the general election you have forecast the same sort of downturn since then >> yes the bank of england yesterday reduced effectively the forecast

for economic growth in the uk from the previous estimates slightly lower than previously our current forecast for real gdp growth is slightly lore than that we are expecting the real gdp growth for 2017 to be around 1.5%, and for the year after around 1%. so certainly a deceleration of economic growth. >> how concerned are you about the fact that the uk consumer at this point seems to some extent overleveraged? i've been hearing a lot of comments about that, especially when it comes to mortgage debt but also consumer debt as a whole when it comes to auto debt or student loans, that's also a problem in the u.s at what point would the banks suffer from that >> you're right. the level of indebtedness of the uk household sector is quite high the income to debt ratio which

is a measure of this is around 135%, which is quite high if you think that the height of the financial crisis it was around 150% since the financial crisis, the banks have strengthened materially their solvency, their liquidity position, they made progress on the underwriting standards and have much better risk management capabilities, so they are better placed to withstand issues rising from that >> we've seen a lot of cons consolidation in spain and italy. is the uk banking industry the right size >> it's not for us to make the assessments. at moody's we express our view of the credit worthiness of institutions certainly the uk banking system is quite concentrated. you have the largest five players that account for about

80% of the banking assets in the system however there is increasing competition in the market provided by challenger banks so smaller players are challenging the profitabilities for the larger players >> litigation has been such a huge issue, especially for rbs, which probably won't be able to turn a profit because of litigation is there a sense that you think this ten-year litigation cycle could be coming to an end? we're looking at the end of the ppi claims, the libor and doj claims >> let me clarify that at moody's we think that it's not the end of litigation, though as we indicate in our banking system outlook for the uk we expect the costs to come down. regarding rbs specifically, the drivers behind the profit that they made in the first half is

obviously partly due to lore litigation and costs >> andrea, thank you very much for that >> thank you on the subject of the banking sector, cnbc will be speaking with jamie dimon early next week. you can watch that interview on tuesday at 17:30 cet we were just talking about it with our guest, brexit uncertainty is stalling growth, that's according to mark carney. speaking at his press conference, carney said the devil is in the data >> uncertainty about the eventual relationships are weighing on the decisions of some businesses. but it is still down from the 1,000 businesses in our decisionmaker panel which is run by our agents, but 40% of those businesses are affected in some way, either through the supply chain or -- and markets by

uncertainties around brexit. we see it in the macro economic numbers. investment has been weaker than we otherwise would have expected in a strong world high degrees of profitability, ample availability and low market capital. >> sterling fell to a nine-month low tsh low. it was 6-2 to keep the banks on hold sterling/dollar now at 1.3150. up by 0.1% on the day. far away from the highs from earlier this week. the investigation into russian meddling into the u.s. election that taken a step forward. robert mueller has convened a grand jury the move would allow him to compel witness testimony and gather more evidence hallie jackson has more on the

story. >> reporter: tonight the special council investigating russian election interveerns ference m assembling a grand jury in washington, d.c. as first reported by the wall street journlt. it's a signal robert mueller's investigation, which has dogged the administration and infuriated the president, will stretch on for months if not longer nbc news has not independently confirmed the report, but the grand jury would be empowered to hear testimony and get records from people or businesses. >> the fact that special counsel robert mueller felt compelled to empanel a special grand jury in washington suggests he wants a group of grand jurors focusing only on the trump russia investigation and nothing else >> reporter: one of the president's outside attorneys tells nbc news we have no reason to believe president trump is under investigation. a former senior intelligence official with knowledge of the

discussions has told nbc news mueller is looking at whether the president may have obstructed justice president trump's new white house lawyer, brought in specifically to deal with the russia investigations, says he wasn't aware mueller had started using a new grand jury calling those matters typically secret adding the white house favors anything that accelerates the conclusion of mueller's work fairly and is committed to fully cooperating. mueller has recently added even more former top prosecutors to his team as he assembled high powered experts on everything from foreign bribery to public corruption >> the team mueller has assembled is a strong team of seasoned veteran prosecutors this the varsity >> reporter: the president has repeatedly lashed out at mueller's investigation. >> the entire thing has been a witch hunt. >> reporter: now on capitol hill lawmakers on both sides of the aisle are today introducing bills to help protect mueller and his investigation. >> some people can say flexing your muscle but it's really just doing exactly what the founding fathers wants us to do, to have three strong co-equal branches >> that was hallie jackson reporting. we will be discussing the latest turmoil around the trump administration in the next half

hour with london school of economics professor peter trubowicz. stay tuned for that. e-mail the show. as always, the address the streetsignseurope@cnbc.com you can also find us on twitter, streetsignseurope@cnbc and tweet me at @carolincnbc i know it's friday, but keep your mfp guesses coming in my guess is anything north of 190. coming up, toyota announced a tie-up with mazda. we'll have details on the deal coming up next on "street signs. is this a phone?

or a little internet machine? [ phone ringing ] hi mom. it makes you wonder... shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. [ laughing ] so all you pay for is data. see how much you can save. choose by the gig or unlimited. call or go to xfinitymobile.com introducing xfinity mobile. a new kind of network designed to save you money. welcome back allianz since pimco has become a performance engine again as the asset management business logged

inflows of 52 billion euros in the second quarter helping the german insurer post an operating profit it also saw the solvency rating rise to 219% all segments of the business are doing well according to the cfo. >> we are in good shape in all segments 2 billion net income out of 2.9 billion profits, 30 billion revenues all great numbers, solvency means that we can -- 1 billion we put aside for dividend pay, we can have another 2 billion of free cash, free surplus generated in the second quarter. the drivers, great influence at pimco, an active fund, a world record of inflows in a quarter >> staying with the sector,

swiss re missed analysts forecasts. the world's second larger re insurer warned market conditions remained difficult property and casualty rates continued to slow down in july the cfo said there is no need to change the guidance forev the fl year >> we gave guidance estimate for the full year at the beginning of the year at 100% for pmc and re for the first six months we're tracking better than that. i think on the basis of trying to make a full-year estimate, subject to a lot of unknowns even now the estimate we provided is probably just about right. >> pearson slashed its interim dividend by 72% as it embarks on a wide squal cale restructuring

they expected to generate cost savings from next year and a lack of a special dividend is purti inhurting hars lan lansdowne. they want to retain an additional 50 million pounds to keep the capital level above the regulatory threshold shares off by 5% that's one of the biggest drags on the ftse 100. in car news, toyota announced a u.s. tie-up with mazda this as the world's second largest carmaker reported a 10% drop in first quarter operating profit and trimmed its guidance for northweste american sales. nancy is in singapore to join us on this story. give us detail on that big announcement we're seeing a lot of information on the wires 1$1.6 billion is the value of te plant in the u.s

>> that's right. that plant expected to be running by 2021. it could have a capacity of 300,000 vehicles a joint project here between mazda and toyota it will produce a combination of toyota corollas, but also a new mazda crossover. you will notice behind me, when reports of the story first came out from the nikkei, we got a pop in mazda shares, ending the day higher by 2.8% this is key for mazda, the u.s. is their top market when you look at profit contribution but they do not have a factory in the united states, unlike toyota, which has a big manufacturing presence in the country. that is perceived as good news shares still moving higher all in all we know this will create quite a few jobs. in the thousands for the u.s some are saying this is good for the trump administration that has been pushing for foreign automake toer mae automakers to pick up production

in the u.s the yen/dollar headwinds at times can really cause a headache for these manufacturing. so localizing production is never a bad thing. speaking of the enimpayen impace got earnings better than forecast from toyota that was due to the impact from fx they upgraded the outlook, but over at evercore isi, they say the street analysts were ahead of that forecast so somewhat good news compared to the previous quarter on guidance, but other analysts saying they already had this baked in it's interesting to see how toyota shares open the price behind me reflects the pre-earnings release >> what's the political angle here i wonder to what extent any trump tweeting is behind this move, this announcement by toyota we know there was back and forth between toyota and president trump back in january. since then, they've struck a more conciliatory tone how much can donald trump really take credit for this

>> extremely conciliatory in the way toyota says they want to put $10 billion into the country, it's hard to say it's all down to the trump administration. we know toyota has been investing in the u.s. for quite some time. when you look at the share logistics and the supply chain issues, it makes good sense for business to have production where you sell the cars. and the u.s. is a crucial market for toyota it expects it will continue to be that way. when you are overall looking at what is happening in the u.s. sales market, you know there's a slowdown on the cards after the peak volumes we saw in the aftermath of the recession this tie up says a lot about that they want to brace for this slowdown, it's key when you talk about the costs involved and electrifycation and autonomous vehicles these two companies are saying we want to share in the r&d expenses which will only increase from here

i'm sure you may hear a victory chant coming from the white house on this one, given the fact the new plant will create new jobs, it's hard to say this was done simply for political reasons. >> thank you very much for that. uber says it is working to fix over 1,000 defective cars it leased to drivers in singapore, this after a "wall street journal" report that uber staffers there bought the vehicles even though they knew they were under a recall order honda warned the vezel sport utility vehicles could overheat and watch fire uber said it did take action following the report of an uber car igniting but says it could have done more snap shares moved higher in after hours trade on reports that google was considering buying the company back in 2016. goggle's approach was a known secret among the snap upper ranks. one company insider said an

offerer had been on the table before and after the social media group's ipo. let's see if that will be received at any point in time. before we go, quick look at the european equity markets. a mixed picture. ftse 100 eking out a modest gain maybe that's the rbi impact. we'll b bshacbeack with plentye "street signs. chances are, the last time you got a home loan,

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welcome back to "street signs. i'm carolin roth these are your headlines rbs shares push higher as the bank's second quarter profit squarely beats analysts expectations the rbs cfo tells cnbc that the results prove the bank's turnaround plan is working >> we're encouraged by the results today. second best results since the crisis best six months results since the second half of 2014. over 900 million pounds of bottom line profits. swiss re is in the red after the reinsurer missed expectations with first half earnings, warning challenging market conditions would continue a grand jury and jobs in focus. u.s. special counsel robert mueller reportedly convenes a grand jury to investigate russian campaign links as

investors also await the latest non-farm payroll number what you heard in the headlines is the focus when it comes to u.s. trade. it's all about the jobs report and any further comments coming out of washington, whether we get more news on that special counsel investigation, that remains to be seen the s&p 500 up by 3.5 points the dow jones set to add 21 points the nasdaq opening higher to the tune of 6 points it wasn't an inspiring session for the dow yesterday. it barely moved. yet it still eked out another record close the eighth gain in a row and we saw the s&p actually down by 0.2%. when it comes to european trade, looking somewhat mixed ftse 100 is pulling out a gain of 2, 3 points that may be the rbs factor here. the xetra dax is off by a couple

points cac 40 losing just a bit of ground no major moves we really here are waiting for the non-farm payrolls report same applies to the fx markets euro/dollar pair up by 0.1%. the dollar getting hurt by those robert mueller news first reported by the "wall street journal. and seeing the pound recovering just a tad against the u.s. dollar after yesterday's big fall 1.3148 as we said before, it is jobs friday today the market is looking for 180,000 additions to the work force in july after a much higher than expected 220,000 non-farm payrolls in month of june the unemployment rate is expected to have edged down to 4.3% earlier on cnbc, scott shalley from tjm investments, famous for his colorful cow jackets, had this to say. >> 250 >> 250

>> that would help, or 140 this is the problem. three years ago we were averaging 250. two years ago we were averaging 225. last year 187. so i guess if you want to look at it in the positive note, we are still growing, but growing slower that's not good. so we need to start seeing net pick up. again, we can't have a 4.3% unemployment rate and a sub 2% gdp. something is broken. i think janet yellen can't figure out what is broken yet. none of the major companies can. >> let's talk to our next guest, chief economist from g plus economics. you have a pretty beautiful jacket on, too but not quite as exciting as the cow. let's talk about the non-farm payrolls report. i guess what we have not mentioned so far is the lack of wage pressure to the upside. we're expecting wages to pick up by 0.3%. but that might not be enough >> absolutely. so inflation remains an

important ingredient in how the market feels about the future of the fed policy outlook, the data and policy reaction function with respected to the comments about the recent inflation softness while that is important, what is clearly driving the fed normalization cycle is the sense of fed normalization, that's the picture we have from the labor market but not enough to endanger inflation stability. this is a particularly good combination for risk markets which have been running on a hybrid engine of strong growth and cheap debt >> why is this phillips curve broken in why is unemployment so low, yet inflation is not picking up quickly enough? what's the structural difficulty here is it the lack of productivity are we too impatient at some point inflation and wage pressure, it will come what do you think? >> there's three things to say here the fed's concern here is not with managing short-term

inflation volatility the fed's concern is with reaching the economy's potential capacity constraint what we have seen from economic surveys, the dynamics of the labor market is that the economy is at its productivity capacity constraints as determined by population growth and productivity growth. the fed's job ins cyclical to t extent that the fed's job demands management when you look at the last gdp figures in the u.s., consumption was a fifth of grow. that's huge when services are so low. trying to push the economy further by keeping that emergency level of stimulus could make this boom cycle look like a financial bust. >> could this also be a structural shift that we have not quite picked up on yet we know ai is coming artificial intelligence will be

stealing jobs, but we see that in retail. jobs are being lost but replaced by -- not necessarily, but being replaced by some jobs in warehousing at amazon, for example. we know in the manufacturing sector a lot of these jobs will never be replaced. is that one of the inherent problems >> that's a fantastic point. because the o points really, remaining here, emotionally the markets seem to be married to 1987 multiples of the phillips curve, the relation between employment and wages we spend all our time wondering i would it's not working when you look at the fed's policy, balance sheet, rate levels, it's looking back to 2007 the point here is indeed in the gig economy, in the new fin tech driven driven environment we have a relationship between full

time and part-time jobs which is changing more people are moving out of employment also we are at a time of enormous structural productivity, technological change you have to look at the financial industry to understand people are thing prioritizing job security for chasing the next paycheck. and i think that's an important thing, particularly when we look at the matches -- though we spend tile lookime looking at t inflation measure, we look at medicare and so on so these are very important. these have become a important part if you're in the u.s. and you have two job offers, one with the better benefit package, you take that one. we have seen this movie before that is basically the movie, the trailer in place in japan since

the crash. >> what should the fed do? ignore the loss of economics and the phillips curve and ignore the very low inflation prints in terms of the pce deflator which came in at 1.4% for june should it still hike for the third time this year >> it's worth remembering the last major economic shock came from an overextended financial cycle in a controlled inflation environment. that means if the fed were to prioritize economic stability, as i believe they should and the bank of england seems to be, they would look at financial conditions overall it's clear at the moment, whenever you look across credit markets, equity markets, bond markets are too expensive. that means the whole range of products is overpriced to the fed's balance sheet. >> you know what we have not talked about yet, donald trump and his administration to what extent do you think jobs are not being added or wages raised quickly enough because

there's so much uncertainty around some of the policies, tax reform especially? >> i don't know is the simple answer i think we in the markets spend too much time talking about trumponomics or trumpflation, and now we're at the other end of that curve. economic uncertainty has played a role but we have gone a very long way from ten years ago the fed's stimulus has managed to normalize the credit cycle, normalizing the investment cycle. though current growth looks weak this is clearly the new normal the economy is clearly at the frontier, trying to push growth beyond current levels. risks blowing up the low savings debt, productivity inplanses that caused the last crisis. if we're to look at growth now from two years ahead what is it we want to see we don't want to be pushing the current levers of growth further for fear of turning this boom into a bust. >> stekick around for just a

moment uk home builders are falling sharply after a report that the government is looking to end the help to buy scheme early the report suggests that the department for local government asked the london school of economics to evaluate the scheme which could result in it being canceled. the uk consumer was key focus at the bank of england press conference governor mark carney said we are currently at the toughest point of a real income squeeze >> we're going through a sluggish period in the economy we're not growing as fatst as we did post-2013. part of that is because real incomes are being squeezed because prices are going up in the shops and wages have not been growing the second thing to say is that we think we're in the teeth of this right now so, over the course of the next couple quarters, it will continue to feel like this, but then as we move into the new year, we see inflation start to

come down, and household income starts to go up. so that we move out of this real income squeeze i'm not saying roaring out, but we move out of this real income squeeze. >> that was mark carney concerned about the real income squeeze. that is certainly going to be a big problem as we go further into the uncertainties of brexi brexit >> are we any wiser after yesterday's meeting? it was a little dovishness but also some hawkishness. >> the bank was cautious in the way it balanced it's action. the action was to suspend one of its three ingredients, the national term program for lenders to accommodate some of the uncertainty that resulted from brexit. the bank is facing a very unfavorable inflation outlook. it's prioritizing ability

stability, preparing to look through persistent strength even know some of the sterling weakness pass through may not have gone through. that's very important for an economy that runs a very large current account deficit, runs a very large fiscal deficit, that has overindebted consumer sector, so we depend on the finance from the rest of the world, it is clear for sterling that yield, the traction has not been a great hit that means there's the risk that the financial conditions could tighten if the pound were to fall much further through the rising inflation to squeeze real incomes but also the tightness in market liquidity. the bank has been very good at balancing. >> you grade the communication highly others are more confused thank you very much for that

in other news, come parcomp shares are under pressure after advertising costs rose the italian group forecasts that margins will improve in the second half of the year. speaking to cnbc earlier this morning, the campari cfo says they are looking to control costs. >> we are focusing on our core spirits business over time there may be things on the market having said that we are out of distilled wines, selling more mainstream brands at a very good price, we have quite a bit of real estate in grand mariner, and the big one is still out there. we'll see how it goes. >> japan's saporo acquired anchor brewery, one of the

oldest craft beer makers in the u.s. the takeover is the latest example of big international brewers buying into american craft beer air berlin is reportedly set to partner with u.s. carrier jetblue. an announcement on the tie-up could come as early as today air berlin declined to comment on the news, shares are flying high in german trade staying on airlines, trading updates point to a pick up in the number of passengers for some major players as they battle aggressive competition. easyjet reported an increase in the july load factor to 96.8%. this is up 1% from the same month a year ago rival norwegian air also posted a rise in its number of passengers it was up over 15% in july from the same month a year earlier. coming up on the show, trump in turmoil the embattled u.s. president

faces more scrutiny as an investigation into russian meddling in last year's election gathers pace plenty more discussion after this short break

. the investigation into russian meddling into the u.s. election is taking another step forward. special counsel robert mueller has reportedly convened a grand jury that will wife hgive him the po convene witness testimony. the white house has released transcripts of trump's calls with the heads of mexico and australia. peter alexander has the details.

>> reporter: tonight the president's private calls unfiltered one week after taking office admitting to mexican president enrique pena nieto he's publicly cornered i have to have mexico pay for the wall i have to. i've been talking about it for a two-year period. who is going to pay for the wall >> mexico. >> who >> mexico! >> reporter: in transcripts of the calls obtained by "the washington post," the president pressures pena nieto to stop publicly saying mexico won't foot the bill. you cannot say that to the press. still, mr. trump concedes the money will likely come from elsewhere. it will come out in the wash, and that's okay. on the epidemic of illegal drugs smuggled into the u.s., i won new hampshire because new hampshire is a drug infested den. in new hampshire today, residents displeased >> i think using drug-infested den is harsh. >> i would never say new hampshire's drug infested. i would say new hampshire has its share of the problems like the rest of the country. >> reporter: another contentious

call the next day with australia's prime minister the two leaders clashing over an obama era agreement that the u.s. admit detainees held in australia. kill me. because i'm the greatest person who does not want to let people into the country before ending the call, mr. trump exasperated, i've had it this is the most unpleasant call all day. putin was a pleasant call. this was ridiculous. >> reporter: the white house denied to confirm the authenticity of the transcripts. but the president has repeatedly railed against leaks >> we're going to find the leakers. they're going to pay a big price for leaking. >> reporter: tonight lawmakers condemning the leakers. >> these people should be fired. they should be out of government they're disloyal to our government and i hope that that's what's going to happen. >> reporter: tonight president trump back on the road in west virginia where support remains strong. >> problems this country's facing were not built in a day they're not going to be fixed in a day. it's going to take time. china is expected to release

strong trade data next week this comes as the u.s. looks to launch an inquiry into beijing's trade practices. the timing is uncertain. an expected speech by prurp today has been postponed probl probably happening next week peter trubowicz joins me now for further analysis why do you think this would have been delayed >> i can think of a couple reasons. there are internal divisions in the administration over how to deal with china. some want to get tough on the economic side of things. and to push back against international property, infringements or theft depending on the term you want to use and china's trade surplus. there are others who see china as a vehicle or lever to be used on security issues in the region, and in particular with

respect to north korea so one possibility is that these divisions have just kind of prevented the administration from moving forward. an alternative, not completely inconsistent argument would be that there's been a bit of movement from beijing on the sanction question, on the -- before the u.n. right now. and that the last thing the administration wants to do is pour water on this >> i was going to ask, do you think there's short-term remedies that china could offer before the u.s. implements some of the trade sanctions some of the trade tariffs? do you think this could be involved without starting this inquiry or without just going to the wto? >> i think there's already stories coming out in chinese media that this should go to the wto and the u.s. should not be imposing section 301 from the 197 4 trade law in the united states, which the u.s. has not

used for quite some time and didn't since the 1990s or since the wto i think the problem for china is that if it makes concessions before it sees what's coming from the united states, xi jinping looks weak and so forth. so i wouldn't expect that. you might see movement on another issue like the north korean issue where there's an implicit bargain or trade that's in the works >> why do you think trump decided to ready that investigation this week? why do you think it all came now? for months during his tenure as president he's been very conciliatory towards china he was hoping for help on reigning in nblgzorth korea's aggression, has he said china is not helping, let's start this trade war? >> i think their patience is growing thin with china. another way to view this, this is a way to ratchet up the

pressure on china to say, look, we can go down this path this is not particularly good for you, maybe not good for us because you have weapons you can -- economic weapons you can deploy as well soybean producers in the united states are worried about the potential implications of this and the possibility of a trade war. one should also say, you know, in a way during the presidential campaign trump hammered on chinese trade practices, they were the poster child for everything that was wrong with the u.s. trade position. in some sense this is the default position, trump's default position it didn't come up -- he didn't think it up during the campaign. he's been on the issue for many years. >> maybe he needs an easier win because he has not been winning much lately. the healthcare reform didn't go in now i guess he's incited trade war with russia as well and other things don't seem to be going well who knows about tax reform

could it just simply be a strategy of wanting to win >> he clearly wants to win he has very few legislative accomplishments and no significant one to speak of. tax reform will be a heavy lift for the administration and the republicans in congress. so i thing, yes, that's clearly part of it, having something to point to and with the announcement of mueller's grand jury, he has plenty on his plate. >> peter, thank you very much for that keep an eye on the non-farm payrolls report. that's it for today's show have a great weekend all. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered...

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lucky number 7 the dow backing its seventh straight record close. can it go for 8? we have your friday market setup. jobs, jobs, jobs we're counting down to the july employment report that comes out later this morning. and hefty profits, shares of weight watchers are soaring on earnings we're digging inside those numbers and more it's friday, august 4, 2017. "worldwide exchange" begins right now. ♪ >> good morning. welcome to "worldwide exchange."