hello. welcome to "street signs." i'm carolin roth >> here are your headlines >> european stocks follow the u.s. lower after the dow posts one of its worst days this year. banks and basic resources lead the declines >> brexit blues for the uk house builders barratt and berkeley trade at the bottom of the european market, as both sound a cautious tone on brexit and see weakness in the key london market hurricane irma strengthens to a category 5 as it takes aim

at the caribbean islands on a path to florida, causing flight cancellations and mandatory evacuations. russia's vladimir putin joins the international chorus condemning north korea's missile testing, but warns the crisis can only be resolved through diplomatic means sr . good morning it's wednesday, it's not just any wednesday. it's a wednesday where we have sri. welcome back to london >> lovely to be here >> a day before the ecb. >> yes i couldn't have picked a better time for the markets everybody is back from their holidays perhaps everybody will come out of this complacency and a pick up in action >> come on, you're only here because you want to benefit from the weaker pound >> i've been rumbled, but i will try to keep the shopping in

moderation >> good to have you here looking forward to have you on the show today and a little more this week and last week. let's look at the markets. >> why not >> the stoxx 600 is off 0.2% if today is another day of losses, you're looking at three days of losses banks have been under the weather a bit. that's because we get the ecb meeting tomorrow, there's been prospect of a later than expected tapering. that would hurt the prospects for the banks. let's look at the indices one by one. a bit of a mixed picture ftse 100 off 0.3%. home builders are off. we'll get to that in a second. the xetra dax is off by 10 points german factory orders contracted in july but much weaker than feared ftse mib is eking out a gain of a quarter of a percent as far as the sectors are concerned. autos the only sector in the green up 1.7%. insurance down

this might be the irma effect. travel and leisure off by a half of a percent shares in berkeley are trading lower after the property developer warned that the london market could be hit by brexit uncertainty and a rise in property taxes berkeley reaffirmed guidance after posting pre-tax profit in line with expectations barratt shares have also been dragged to the bottom of the stoxx 600 after posting a strong set of full-year numbers the french government is selling a stake in gas utility engie. the finance minister said the proceeds will be invested in innovation >> you really frenched this up i think it's engie >> i like to put a bit of flair into my reads. >> i think you're right. >> you should try some of the asian names next time you're

over >> i want to refrain that from that let me stick to the german names. deutsche bank ceo joseph cryan says frankfurt will draw business from london as brexit takes hold because it has the necessary regulatory bodies, law firms and an airport he said the time of easing money should end despite the strong euro annette spoke to a board member and asked if there is systemic risk for european banks. >> i'm not that worried about a simic crisis at all. there are regions, sectors, certain banks in certain countries that are more exposed than others. it's not a system-wide or country-wide issue all the colleagues are working very much on making sure that the crisis doesn't come up

again. so, that also doesn't keep me up at night but it needs close observation. let's get back out to annette who is covering the banking conference in frankfurt. she has another important guest with her >> thank you very much, i have a special guest. next to me is ralph hammers, ceo of ing thank you very much for joining us let's talk about brexit as well. john cryan, the ceo of deutsche bank was saying frankfurt is well positioned for this do you think -- or what is your assessment for the european banking industry when it comes to brexit. >> i'm not going into which cities are best situated or best placed to benefit from it. i think it's bad for all countries, bad for the finance industry brexit is bad for the economy, bad from a political perspective. it is bad for the progress in

the financial industry from a european perspective what do i mean we've seen progress in the world as driven by pulling talent. we see it in silicon valley but also in the financial industry if you break up that talent in europe away from london, you get scattered talent pools that in itself will decrease progress i think it's a bad thing >> european banks are not as strong as the competitors in the united states. do you think that will worsen the situation going forward? >> i don't think you can talk in terms of whether they're stronger or weaker i think there's strong european banks, strong american banks, but if it comes to investment banking, it's clear that the american banks basically are leading the world, and also leading the world in terms of progress and innovation. i don't think that brexit will

help european banks to catch up with that. on the contrary. it will be detrimental >> you personally, i think, went to silicon valley to chat with founders down there on the ground, as well as to enhance your business model. in a way you're also ahead of the curve, ing's role being a technology leader. what would be your advice for others >> if you look at all the challenges that banks are facing and why banks are being disrupted, we're being disrupted because of negative rates. we're being disrupted because of the enormous regulations and regulatory framework that we have to adhere to, more and more is coming. those are all challenges the challenges that disrupts banks is the digitalization. with that the expectations that clients have from a bank on how to interact with banks

i regularly visit silicon valley because we want to be looking at, you know, which companies are setting these client expectations the technology companies are setting these client expectations >> in other words, if you look at technology and european banks, where would you think they are on average? are they somewhere between -- are they 5 between 1 and 10 or is there a lot of room to improve? >> there's a lot of room to improve. but to be honest i do think in terms of using digitalization, with that a much better client experience, delivering a much better client experience for your clients, i actually think european banks are not that bad. actually ing, we feel, were ahead of the pack. there's more european banks that know how to include digitalization in the way you often interact with your clients. across the world i don't think

european banks are too bad i think we know where to go, but there's still a lot to be done in order to be able to compete with some newcomers in the banking space. the nonbanks that's clear you were touching upon it briefly, the low interest rates, what's next in store for the ecb. what are your expectations tomorrow is another big day for the ecb, but probably we have to wait until october what's your view >> if it were up to me, i actually think that thecurrent situation is hurting europe as well negotiate sieve rates is destroying value for households because of savings, because of pension situations, and clearly, you know, we have given sufficient time for politicians to act on structural reform. we see the economy coming up we see consumer confidence at

the highest level since 2001 we see house prices going up all the signs are there that there was a lot of room in the economy now to move and to start tapering even further. i do realize that with a signal of tapering that that will maybe influence the strength of the euro further but yes, that's a negative effect but the negative effects of the current situation are also bad so, in my view, you know, clearly i don't have all the information that the ecb has, i think it's time to move. i'm not sure that he will do that they have more information, clearly they have a better view on specific things, but for me, in the coming months, we'll have to start moving. >> john cryan was saying he thinks we are seeing asset bubbles because of the ultra loose monetary policy. is that the case in your view as well >> it's difficult say whether they're already asset bubbles. they're big enough to threaten nick recovery.

we do see house prices are going up quickly and with that you start running the risk of bubbles being created. >> thank you very much for your insight. have a good day here on the ground >> carolin, with that back to you. it will be an interesting day. we have a lot of guests in frankfurt and a lot of talk about technology and the disruptive effects on the banking industry of course also the big elephant in the room is the ecb with that, back to you >> thank you very much for that. let's bring you an update on brexit a leaked government document publish the by the guardian newspaper it's a the uk will immediately end the free movement of labor after brexit and begin implementing measures aimed at cutting down the number of lower skilled eu migrants the proposal asserts that immigration should not just benefit migrants but make existing residents better off. defense secretary michael fallon

told uk media that brexit was not closing the door but numbers were expected to come down david davis expects the row over the eu bill to rumble on throughout negotiations. the brexit secretary warns discussions would not be easy. he urged his european counterparts to be more open minded in their approach to talks. >> we remain committed to making as much progress as possible on those issues which are solely related to withdrawal. our discussions this week demonstrated yet again and exposed yet again that the uk's approach is substantially more flexible and pragmatic than that of the eu as it avoids unness disruption for british business and consumers. i urged the eu to be more flexible on this point. davis' opposite number said the brexit secretary was dreaming if he thought he could secure a strong deal with

europe >> it's a fantasy to think that you can have a deep and comprehensive trade deal without shared institution the sooner we face up to that, the better the truth is too many promises have been made about brexit which can't be kept. the secretary of state just said nobody was pretending it would be easy. mr. speaker, they were friending pretending it would be easy. >> the word choice of both sides, we're dreaming, fantasy, more imagination sounds lyrical i wouldn't think these are the words you use to describe a tough process. that shows how protracted these talks will be. >> one thing for sure, it won't twob year be two years it may not even be a five-year process, remember greenland? >> yes >> had an economy that was just down to fish and fish, i think

it was and it took them two, three years. uk is a far more complex economy. it will take a far longer time >> e-mail the show, let us know your thoughts. streetsignseurope@cnbc.com you can also find us on twitter, streetsignseurope@cnbc and tweet us @carolincnbc or cnbcsri. coming up, find out what south korea's president and russia agree on when it comes to north korea. we're live from seouafr l tethe break. hange, 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 short-term memory. prevagen. the name to remember.

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south korea's president said he and vladimir putin share an understanding that resolving tensions with north korea is a top priority for regional security speaking at the eastern economic

forum, moon said his russian counterpart expressed his full support for south korea to handle issues related to north korea. south korea said it's inevitable that oil supplies to pyongyang will be cut and asked russia to cooperate. chery is in seoul now. let's bring her into the conversation you and i talked about this before cutting off pyongyang's lifel e lifeline, which is the supply of oil, is it guaranteed to bring them to the negotiating table? is there still a diplomatic track here >> exactly that's considered one of the critical pressure points on the north korean regime along with a potential ban on north korean labor overseas so i think that's exactly become sort of a hot topic as the u.n. security council is trying to put together this sanctions package the security council is

set to vote on resolutions next monday local times as you pointed out, yes, both leaders of south korea and russia, they both agreed that they don't like the idea of north korea being a nuclear state. but we have not seen what we have seen before yes, vladimir putin doesn't like a nuclear state of north korea, but of course he says sanctions and pressure are not going to be able to solve this north korea issue. so i think, yes, they are still at this parallel when it comes to how to address this issue of north korea. in the meantime, south korean president moon is scrambling to change what he can do here he thinks it's inevitable to stop oil supplies to the north

korean regime. it's a remarkable turnaround for the south korean leader who has always been talking about the need to engage with north korea through dialogue certainly an interesting development happening for sunshine policy of the south korean administration. sri? >> thank you very much for that update chery kang from seoul. international investors cut their capital flows to emerging market debt and equities in august hitting a low not seen since january. em debt saw 16.5 billion of inflows in the month let's talk more about these flows with the co-head of emerging market debt relative at schroeders james, pleasure to see you and have you on the show what does this slowdown in in flows mean is it profit taking or people acting with more caution because at some point the fed will ramp

up the tightening and reduce the balance sheet? >> at this point it feels more like a pause than a reversal of flows. the fundamentals are still strong the key for us is the dollar remains weak that tends to push flows into emerging markets that phenomenon is still going on we consider this a pause rather than reversal. >> is it still sensible to bulk up on emerging market debt even after this short pause do you think valuations have not gotten ahead of themselves >> that's a tough question if you look at it from a historical spread, they look tight, but to the rest of the debt market they look generous if you look at local currency debt, real interest rates are still very, very high relative to developed markets >> in terms of preferred exposure and local currency debt, does india and indonesia

remain the choice for you despite the fact we've seen record inflows so far year to date is that the high water mark? can we see another leg up in terms of flows >> that depends on the global mac crow environmekr macro vish environment, but if the dollar remains weak we can't have more inflows. if you get 7% yields, currency volatility less than most developed markets, so investors have flocked to that fundamentals are good, growth is strong, the central bank cut rates, they may cut rates more it's a good story still. >> and if i can ask you about china, which is liberalizing its bond market. bond transactions, they've picked up there is considerable interest in the short-term debt instrument that offers a 4.5% yield and currency exposure, would you be a buyer of that

>> i think china is going to be a natural recipient of inflows as they liberalize their capital markets. what global em debt investors are looking for is china to become part of the local currency index when you see that, i think you'll see a lot of inflows into china. >> how do you feel about venezuela? some people say that's not investable at all. brazil has been a topsy-turvy story. let's start with brazil. is now the right time to invest? now that the pension reform seems to be going through? >> i think there's a lot of corruption fatigue in brazil there doesn't seem to be appetite to get temer out of office and you have high interest rates i think brazil is a favorite story in latin america >> how do you position in the

middle east and saudi especially because the bond issue from saudi from a year or so ago was very well received oversubscribed by the market as expectations that we may see more issuance. how do you see that corner of the market >> it was well received but a novelty factor because saudi arabia had never been in the bond market with oil prices in the 40s and 50s, we will see a lot of saudi arabian issuance, so it will become less unique. i think it will trade relative to treasuries with a generally tight spread >> what is the biggest risk to em debt? is it the fed or is it politics? looking at the headlines coming out of the trump administration, the rescinding of daca, or repealing nafta, that doesn't bode well for some, is it the fed or is it trump >> both. >> you didn't really answer my

question >> so like every global market, those things are the things that people are focused on. the fed is important because the fed getting too far ahead of other developed markets and central banks in terms of a tightening cycle could turn around the dollar. that's really risk number one. secondarily politics, of course everywhere is a risk but generally speaking that's more idiosyncratic to specific markets like mexico with nafta negotiations generally speaking it's going to be the fed that will call the tune >> if i could circle back to asia and talk about belten road and the export capital and that entire themeatic that is getting a look at, is that going to help infrastructure bonds that's a story investors tend not to focus on. china reducing supply by

rationalizing state-owned enterprises, and then pushing capital into this major infrastructure project is boosting commodity prices. that has a follow-on effect to emerging markets in general. it is an important theme >> james, thank you very much for your time. i think this is a story for not just you but me especially, too. >> let me guess t has something do with chocolate? >> something to eat. a swiss chocolatemaker created a fourth type of chocolate after white, milk and dark, it's time for ruby chocolate. the swiss company launched the product in china and described the taste as a combination between berry freshness and chocolate smoothness i'm not fickle

>> any kind of chocolate mars products, other products on the market we have plenty more "street signs" coming up after this short break. stay with us

welcome to "street signs." i'm sri jegarajah.

>> i'm carolin roth. these are your headlines >> european stocks follow the u.s. lower after the dow posts one of its worst days this year. banks and basic resources lead the declines >> brexit blues for the uk house builders barratt and berkeley trade at the bottom of the european market, as both sound a cautious tone on brexit and see weakness in the key london market hurricane irma strengthens to a category 5 as it takes aim at the caribbean islands on a path to florida, causing flight cancellations and mandatory evacuations. russia's vladimir putin joins the international chorus condemning north korea's missile tests, but warns the crisi can only be resolved through diplomatic means okay well come back let's look at the u.s. futures and see what they are implying for the day ahead on wall street it looks as though it's going to be a fairly flat day with a

slight upside bias for the major indices. we are coming off a weaker close the day before and the markets to some extent are playing catch up after the long weekend. but a lot of markets here are in a holding pattern. i would say until we get clarity from the ecb that policy meeting tomorrow, of course the euro is a bit of a headache for the policymakers at the strange bank we' central bank. it looks at this sage mario draghi won't have a sintra moment and try to talk down the euro as opposed to talking it up let's look at the major pairs. still a safety bid to be had in the yen. dollar/yen trading at 1.0866

euro/dollar at 1.20. that's been a fairly good pivot point. the swiss franc getting a safety bid as well. the dollar weaker against the swiss franc at 0.9534. >> we are still seeing safe haven flows three days after the initial test, the latest test which was the h-bomb over the weekend. we usually see the safe haven flows fizzling out throughout the course of the week equities have recovered well in europe, not so much in the u.s., they had a -- the markets were closed monday. i wonder whether this time the effect of the latest missile test lingers on longer >> you're right. i think it's slightly different this time around because the escalations have taken on a far more ominous tone and there's rhetoric from trump and pyongyang. i think september is going to be a month of volatility led by the

geopolitics by virtue of the fact that pyongyang is exc accelerating its nuclear progra and there are two key events, national events taking place this month either of which could be a pretext for the dprk to conduct further missile tests or launches that's the problem that markets have to contend with yet another brick in the wall of worry. >> you're right. let's focus in on hurricane irma which suspected to hit the virgin islands and puerto rico it is now a category 5 with sustained winds of 185 miles per hour shares in cruise line companies dropped in tuesday's session as the storm approached the caribbean. dan shan miman has the latest. >> reporter: all of dmroor is und florida is under a state of emergency. hurricane irma is spinning away and could reach florida as early

as saturday. >> the storm is massive. >> reporter: everyone in the storm's path are on alert. >> we're getting our house ready and debating whether we should stay or go. >> reporter: gas lines are long. many store shelves are empty in miami, homeowners are filling sandbags we have to prepare our neighborhoods are prone to flooding we're trying to make sure we are prepared enough. >> reporter: public officials say everyone needs to anticipate the worst. >> the flood models, and actually the damage models are really based on the intensity of the storm. this is a very, very powerful and intense storm. >> reporter: a dire warning ahead of what could be a craftic storm. nbc news there is another storm brewing in the atlantic. the nhc, that's the national hurricane center says tropical storm jose is about 1,255 miles

east of the lesser antilles with a maximum sustained winds of 60 miles per hour that is expected to become a hurricane by tonight insurance stocks in the u.s. had their worst day since the brexit vote last year, this as barclays reports estimates from hurricane irma could equal or top that of katrina. the bank said it could result in up to 1$130 billion of damage i florida. insurance stocks in europe are among the biggest decliners in early trade today. let's look at the energy complex post-hurricane harvey. and with other hurricanes waiting in the wings especially in the atlantic. brent crude is gaining traction around 53.50 wti 48.77. let's bring in an oil analyst from energy aspects good to see you

let's start with the u.s harvey was bearish crude, bullish gasoline irma is waiting in the wings will we have a repeat of that cycle? >> it's been a fluid situation in the gulf coast. it has been bearish wti, but we've been saying it's constructive brent, what happens is the rest of the refining system globally sort of ramps up their utilization rates to send gasoline and other products to the u.s. brent has been bid by european refineries, and on the asian side so in that sense, net-net, i think there is an argument to be made that there is a demand loss as well within the gulf because of less gasoline, demand but overall, yes, this throws opec given a few weeks, once the dust settles, we will continue to see balances get constructive. >> when do you think the spread between wti and brent will get

smaller once again it's at the widest there about two years. we know some asian buyers, they're ready to pick up some wti because it's cheap at the moment do they wrait a bit longer because irma is around the corner, potentially jose which might or might not impact refining or oil production in the gulf of mexico and around the caribbean, do they wait longer or is now the time to buy? >> they would want to buy now, but the issue is the pipelines that have been affected. crude that's in cushing, if that needs to come to the gulf coast or crude in the permian basin, there is a lot of bottlenecks. those are the things that traders are trying to guard against. export facilities as well. if the u.s. gulf coast refining comes back, they can clear away the glutton and the spread

narrows. >> where is opec in this you have all these variables, response of u.s. shale, opec compliance, when you put it together, does opec need to extend cuts beyond march 2018? >> looks like they would have to it would help balances if they do they are monitoring the situation. last time the market expected much more from them. it's also a case for them to balance expectations in the market if they come up now and tell the market, yes, we will extend the deal, the way it works is the market starts to factor in more from them >> is the strategy of opec supply restraint working are we seeing meaningful inventory normalization? >> absolutely. they started focusing on the

visible inventories. saudi arabia was proactive and cutting exports directly to the u.s. we have seen draw downs in the u.s., even the rest of the world, look at refine product stocks because demand is strong. that's been drawing down as well it is going in the right path. we are seeing the brent curve going backwards, but it's a slow process. the market is trying to guard this >> help us out here. what does positioning by the speculative community look like? twice this year they've been building up long positions, helping for rebalancing. didn't come nearly august. they built up positions again. what does it look like now >> they've been burned quite a lot of times false starts has been the theme for oil investors this year. even at this stage, it's shots

on landing that's creating the price moments for now. but a great sign for investors, because they get the low yield, if that sustains they would start putting in more -- allocating more money into the oil sector >> thank you very much for that. we've got some corporate news for you in the form of daimler delivery numbers it says that the mercedes-benz brand, august deliveries, were up by 9% also says that mercedes-benz posted record monthly sales every month for the past 4 1/2 years. i guess much of that demand is still coming out of china. and it says mercedes-benz august deliveries were up 8.4% in europe up 24.5% in china. but down 10.7% in the u.s. we've seen a lot of reports and hard data about the slowing down of the u.s. auto market which

has been a concern daimler this morning up 2.77%. much of that is down to a goldman sachs upgrade. there's been all this speculation over the last couple of days that daimler will be broken up into three separate divisions. that may be spurring on some gains here evercore says a shift in daimler structure could unlock 31 billion euros in shareholder value. president trump is scrapping a program that protects people brought illegally into the u.s. as children. announcing the decision, attorney general jeff sessions called daca an unconstitutional overreach by obama and said it would be wound down. trump wants congress to pass new legislation dealing with the issue. in a tweet he said we have lawmakers -- or he said lawmakers have six months to legalize the program or he will revisit the issue. former president obama called the move cruel. in a facebook post obama said to

target these young people is wrong because they have done nothing wrong. the decision sparked criticism across the business community. goldman sachs ceo lloyd blankfein called for congress to find a solution. mark zuckerberg echoed that call saying this is a sad day for our country. president trump is heading to north dakota to drum up support for his tax reform plans. in a surprise move the democratic senator will fly with him. the president struggled to get the democrats to back his tax agenda, which includes slashing corporate rates and simplifying the tax code obviously yesterday the news in the u.s. around the world, they were filled with the daca rescinding that was quite a slok to mahocky now it's up to congress to fix the issue whether they can fix t that's a different animal because they have not been able to bring new immigration legislation to the table in

decades. then tends up on mr. trump's desk again i want to talk about the economic impact of rescinding the daca program according to estimates, it would result in a also of 4$470 billin from national gdp, that's u.s. gdp over the next decade ending daca would remove 685,000 workers from the nation's economy. i know donald trump says make america great again with rescinding that program, does he make america great again economically >> i'm with you on this one. i saw that figure as well. i think this is something of a false narrative from the trump administration and once again the counter argument to the position that the trump administration takes on the dreamers is that they are a drain on resources again, false 65% have bought a car. 16% have bought a house. 9 out of 10 of these folks pay their taxes. they're not a drain on the

country despite all the protesttations of the trump administration the other thing i find remarkable is how business including the chamber of commerce, warren buffett, wells fargo are aligned on this issue and believe the end of daca is a bad idea yes, it is an obama-era policy, but even some republicans believe that there are parts of daca which should be preserved and see merit in preserving a partial daca plan. again, i think that this is fairly ill-thought out policy. he's playing to his base >> equally we need to give him credit for making clear that this, too, is a difficult and tricky decision for him. he said repeatedly we love the dreamers don't want to send these kids home they have nothing to do with the decisions that their parents made so i think you can see that he's struggling on this decision.

that's why maybe he sent sessions to make the announcement that's why he's happy to hand it over to congress let's hope congress finds a fix. >> yes let's hope it's going to be continue to be tough policymaking environment, paralysis, tax reform. deregulation i can keep going on. >> yeah. but we need do this story. growth is strong and it's time to push eurozone economic reforms. eurozone growth is said to be near 2%. moscovici expects to unveil a new internet tax proposal soon coming up, is the end of qe in europe on the horizon or has ecb president mario draghi been caught in a euro trap? we'll look ahead to thursday's ecb meeting.

shares in hewlet hewlett p-d jumped we will speak to hp enterprise chi ceo meg whitman at 15:00 cet boeing delivered a warning over the united rockwell deal. they said we need to protect our interests. united tech shares extended losses following boeing's statement. speaking exclusively to

cnbc, united technologies ceo greg hayes defended the deal >> is the right deal the reason, 30,000 new aircraft will be delivered in the next 15 years. the aerospace business is growing dramatically we see passengers up 5% every year growth is coming in the aerospace business with that growth comes pressure from customers to take costs out, continue to innovate. having scale in the aerospace business is essential if you're going to deliver the value to the customers that they expect the german savings bank association warned small banks are being choked by regulation that's been designed for big banks. annette ta spospoke to george fahrenson in frankfurt >> the regulatory burden we have the regulatory systems and rules, they were developed for the big international engaged

invest ba investment banks and even in europe, too big to fail we are coming to a situation where he can have to discussion too small to succeed and survive. so europe has to act soon just to get the right solution for our very stable and resilient diverse banking industry in europe especially if you look at those powers, those institutes who are helping and financing a small and medium enterprise that we need for a good and stable economic rowth >> the ecb makes its latest policy decision in frankfurt on thursday all eyes are on president mario draghi and his thoughts on the level of euro. i don't he will specifically address that the haven't rise in the currency

has given the central bank further food for thought ahead of a possible tightening of policy he called on the central bank to move on rates sooner versus later. >> economic situation is doing well, not only in germany n france and spain and portugal, even in italy. so i think it's really now the right time to start with the first step carefully and gradually. >> we are joined for a bit of a preview of tomorrow. to be honest, draghi has not spoken much about tapering since that sintra speech since then he's been hum what c mum. what can we expect tomorrow? >> in june they said in autumn they would start think being alternatives i guess september is technically the beginning the autumn time so we could hear some details about

the future of quantitative easing and whether or not they'll start tapering the issue is the strength of the euro currency. we have appreciated a lot this year versus mostly the u.s. dollar inevitably that will have an impact on eurozone inflation and at tomorrow's meeting they are set to release their latest economic projections the 2019 hipc forecast is what the market is focused on it's expected to drop on the back of the euro appreciation effects it was 1.6%, expected to go down to 1.4 with that back drop it's difficult for him to come in and justify tightening financial conditions and would join some of that liquidity injected in on a monthly basis. the issue is the question of tapering is not when it happens, it's not if it happens, but when

it does happen and at some point in 2018 they will run out of bonds to buy mostly in the german bund curve. because of that the market is expecting them to make some form of a tapering announcement, if not tomorrow certainly in october. >> talk to us about positioning in the euro. on the long side it's not really that stretched, is it? it is conceivable if mr. draghi doesn't really voice concern about the level of the single currency, then euro bulls may take that as a green light to bid it higher. >> it's a valid question speaking to some people, market participants, i think most people are hoping for a pullback tomorrow so if he is a little bit more dovish than market expectations. a lot of investors are look to buy that dip and push on euro to new highs. but it all boils down whether or not they can cap the appreciation in fx, signal they may start tapering, and then

keep monetary conditions under control at the same time it's a difficult act they have a dilemma on their hands. >> definitely. thank you very much for that don't miss our coverage of the ecb rate decision from tomorrow at 13:30 cet before we wrap up the show, let's look at u.s. futures this is how they're looking after that big drop on the dow yesterday. the dow jones seen up by 33 points that's it for today's show i'm carolin rothment. >> i'm sri jegarajah >> "worldwide exchange" is coming up next

global market alert. u.s. stocks look like they could stage a comeback after the dow suffers its worst day since mid-august. the most powerful atlantic hurricane in recorded history makes landfall and caught stealing. the yankees/red sox rivalry just went high-tech we have details of that. it's wednesday, september 6, 2017, "worldwide exchange" begins right now ♪ good morning a warm welcome t