. welcome to "street signs." i'm karen tso. european equities hold the flat line as the world awaits the response to a suspected chemical weapons attack in syria. man group shares rise after the largest listed hedge fund sees a healthy first quarter in funds under management strong first quarter profits

for dm rockets krshgts eo tells us he's optimistic >> 2018 we will show good growth this first quarter all our businesses are growing carrefour sees its stock fall to the lowest level in six years after offering a grim outlook for the year amid weaker sales, especially in its home market of france welcome to the program let's take you to some morning action in european markets we are in the green, but only just the heat map telling us a picture where some gainers and losers are evenly split. some challenges. investors are eyeing a weaker market on wall street. yesterday the dow, s&p and nasdaq breaking two-day winning streaks. you had oil improving, moving

out of correction territory. also appetite for small cap stocks with the russell 2000 gaining for the sixth session out of seven parts of the market picked up. gold as well some of this down to concerns of syria and rising tension there's as the yaallies look at retaliatory action the ftse just flat not much appetite on the xetra dax. the french market, you can see similar picture. it's just the italian market making territory, up 0.30% we are evenly split by the big names. utilities are the top defensive play chemicals going with it at the bottom, household goods and real estate a bit of a mixed bag in europe as investors take stock of what we're seeing on wall street. a decline in the cost of

gasoline drove the first fall in u.s. consumer prices in ten months the consumer price index dipped 0.1% after a 0.2% gain on february year-on-year, the figure rose 0.4% in march. the latest fed minutes showed unanimous belief that inflation in the states will firm in the coming months. at the march meeting, policymakers voted to raise the interest rate by a quarter percentage point the minutes indicate further rate hikes in coming months, leading goldman sachs to raise the hikodds of a june hike to 8% derrick halpenny joins us right now. markets are nervous. jumpy around syria

concerned around trade talk. a lot of investors put it back to the central bank's door saying it's a retreat from quantitative easing, the outlook for inflation and interest rates that's underlying some concerns for investors, which is why they're so jumpy and volatile on the intraday sessions in the states what did you make of the language we heard from the fed >> i think the overall tone, yes, there was definitely an air of a shift in focus more to a debate about how quickly the path of moving to neutral or even possibly to a slightly restrictive policy stance, how quickly that should take place so there was a greater indication of confidence that the 2% inflation goal is being achieved therefore the focus has to be on the path of rates going forward. but, you know, as you mentioned. i think why the markets have not

responded -- certainly the rates market has not moved significantly is these offsetting forces that could come into play and that path or that guidance that they have in place at the moment. so the markets right now are not willing to put more in the conviction of moving towards three rate hikes in 2018, which from the minutes is an increasing risk. >> the market action to price in june another rate hike, an 85% chance of that happening, suggests we have a 2018 playing out like it should have. we have one rate hike in the system another by mid year would lead to a third one by year's end that's the play book you woumrpd expect to achieve. >> given 45 brasis points is priced in by the end of this year i don't think the markets are at

the time frame for going into pricing that third, if it comes. the guidance at the moment is three, not four. the content of the minutes suggests that if we go forward as we are now without any great escalation in trade conflict or no war in syria, between russia and the united states, then the chances are that come june or certainly september that the dots could be raised from three in 2018 to four. >> what do you make of the uncertainty -- as we started the conversation, i pointed out investors are jumping at so many topics, as tweets from the president are moving sentiment, at the same time the real issue for investors is the slow retreat from the fed, the process that is taking extraordinary stimulus away. that's why investors are so jumpy, right >> as the ten-year yield starts to move further mort, then the

v valuation in the equity market become less compelling another reason why markets have not acted now, we're just about to go into the earnings season there's hope that will give confirmation to current levels if that materializes, equity markets can hold up. you're right over a gradual process, the higher rate scenario is a tightening of financial market conditions that's likely to bring much greater volatility. we have that in terms of equity market volatility in the period since the beginning of this year is significantly higher than the average of last year the conditions are there it is certainly one of the factors, as you said, it's the fed. >> the market was looking for jay powell to take the helm of the fed in confidence, with his communication. is that even possible at this stage when the president has stolen so much of the thunder away from jay powell, whether it's issues around trade, the

russian meddling, syria. is it possible for jay powell to provide the confidence investors are looking for? >> i think it's difficult to give guidance with conviction. everything could go pear-shaped if there was a significant escalation in any of these risks. >> let's say syria, if there was to be a response from the allies what would that do for the rate scenario >> there's so many different scenarios that could unfold in terms of a conflict in syria if there was a full-on war and conflict between russia and the united states playing out in syria, where you talk about troops facing each other in batt battle, planes being shot down, that would have a considerable impact in terms of equity market valuations and volatility across the markets more generally

>> particularly because stimulus is being moved from the united states >> there's been no reason as of yet for the fed to veer off course from the guidance that they have given. apart from, you may recall way at the beginning when we had the chinese financial market meltdown, we had a pullback from janet yellen that resulted in financial market conditions becoming much more favorable of course that's an option for the fed going forward as well. if we got an escalation in trade. if there was a severe conflict unfolding in the middle east that brought, say, crude oil north of 100 quickly, those types of extreme scenarios -- the fed would pull away instantly. you would see a change in guidance and perhaps the fed moving to the sidelines. which is a new realm we've not had this type of conversation for a number of years. derrick, thank you for joining us today for more on the federal

reserve and why committee members debate changing a key phrase, head to cnbc.com later today blackrock chairman and ceo larry fink will give his thought on the economy and q1 earnings in an exclusive interview at 12:30 cet. the united states and russia appear to edge closer to direct confrontation in syria after president trump warned moscow to get ready for u.s. missiles. in a twitter post, president trump said the missiles would be coming nice, new an smart. the ambassador to lebanon said any missiles would be shot down and launch sites targeted. russia's foreign ministry hit back at trump's comments saying smart missiles should be aimed at terrorists not the lawful government which has spent years fighting

international terrorism on its territory. oil prices are lower in morning trade, they have been on the rise of late hitting three-year highs earlier the surge came as markets focused on geopolitical risks following the tweet promising a missile strike on syria. richard malison joins us good morning nice to see you. let me ask you about the oil market we have not seen geopolitical premium in the price for a while. is this what it looks like >> i think a bit of what we've seen is geopolitical premium it's not really about syria in the end. syria is not an oil producer, but it's the wider ramifications and the upcoming deadline to decide on iran sanctions over the weekend when he was tweeting about who was responsible, he mentioned russia, putin and also iran.

>> there's a lot of different moving parts in the middle east for investors to try to gauge. what's the highest risk element, what you're highlights is iran in the overall picture, around nuclear disarmament is the key >> if we look to real risk to supply, that stands out more so than syria you have extreme scenarios where this is more than a one-off strike, but i don't think u.s. and russia will allow this to escalate further in terms of the military action between them there's already signs they're talking behind the scenes and will try to limit those risks. in iran you could see exports and production lost in a market that's already tightened a lot >> we just explored the worst case scenario if we have a conflict that plays out over e syria. the tweet fest indicates the

president is ready to go in with missiles could $100 a barrel be the immediate response if there were a conflict >> i don't expect we'll see this war of words translate into that scale of action. it's important we don't get too far ahead. yes, it looks likely there will be a targeted missile strike i think the russians will be given notice or warning,ests will be taken not to hit russian personnel or assets, the russian response will be more diplomatic rather than military >> it is interesting because it seems like you're saying the markets are not taking syria too seriously, but with trade talk it feels like investors have also been half-hearted on how this would play out, whether it's tension on both sides middle east tension should drive the price higher, trade talks should drive the price lower, does that keep us track dtrappea

range? >> there's a struggle in the market with so many headlines, pressures and fundamentals on the one hand, fundamentals look soft, china buying is not great. further out the market looks tight. the overhang is gone demand growth is underperforming. the market is struggling to process and take a conviction view with so many different conflicting pressures. >> oil markets have closely watched the potential around a long-term supply range between opec and russia that could extend for a decade or two some have questions on whether this would be put down on paper and signed by all parties. the crown prince has been wooing allies, talking to russia. if there is a conflict in syria

that draws lines between the west and russia, does that complicate the ability to get this long-term agreement done with opec and russia >> i think it potentially does that we are setting up with the u.s., the saudis, uae on one side. for the saudis, it's not just syria, but also yemen. they very much view that as an iranian movement, an iranian-backed action. on the other side you have iran, russia, the assad government so it could start to play within opec there's a good history of leaving politics at the door, still talking about oil policy question mark is with that extension and inclusion of russia, is it as easy to talk long-term? they have done well for the first 18 months of this deal i think they'll be able to continue through this year 10, 20 years, that's probably harder to achieve. >> best oil trade you would make

at this point? >> we certainly think the second half of this year there's more upside to prices from this level. >> so watch later on this year thank you very much for that we will talk more about the conflict in syria and the impact for markets at 10:45 cet ahead, mark zuckerberg returns to capitol hill trying to get lawmakers and investors to tap the like button in the wake of the cambridge analytica scandal. he also makes a surprising revelation ♪ with expedia you could book a flight, hotel, car and activity all in one place. ♪

prestige creams not living up to the hype? olay regenerist shatters the competition. big hype. big price. big deal. olay regenerist hydrates skin better than creams costing over $100, $200, and even $400. for skin that looks younger than it should. fact check this ad in good housekeeping. olay regenerist. ageless. now try olay hydrating eye. hydrates better than the #1 prestige eye cream. racing isn't the only and with godaddy, i'm making my ideas real. with godaddy you can get a website to sell online. and it will look good. i made my own way. now it's time to make yours. ♪ everything is working just like it should ♪

you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party.

dsm hiked its full-year outlook after posting strong growth in first quarter core earnings up 55%. the firm expects operating profits to grow around 25% this year earlier in the program we spoke with the ceo who says he is bullish on growth this year. >> the strategy as we outlined in 2015 is, in fact, working well after eight, nine quarters of consecutive growth, also again 2018 we will show good growth.

this first quarter all our businesses are growing all our businesses in nutrition and materials are above markets, but also the profit made a substantial step up. and despite a strong fx currency head wind. indeed, on top we have positive pricing environment for vitamins all in all that makes raising our outlook like you summarized preliminary figures, we come out earlier, because they are much higher than expected >> the stock rocked towards the top of the stoxx 600 today >> carrefour has a cautious outlook this year because of slowing sales growth in the first quarter. the chain struggles in its home market of france first quarter sales were 28 billion euros, just short of expectations, providing a mixed outlook for the retail space in

europe. taked asha is sounding out k for loans to buy shire takeda is looking for loans of several trillion yen in total from multiple banks. the company has until the 25th of this month to decide on whether to make a bid. and volkswagen supervisory board is meeting today to decide on a new ceo the meeting was originally planned for tomorrow according to a reuters source, the board is set to elect the head of vw brand as new ceo. facebook ceo mark zuckerberg deflected calls from congressional lawmakers to commit to new government regulations over the social media platform he also heard questions about the amount of control users have over data. the second round of grilling lasted over four hours

shares rose in the second day in a row following his testimony. arjun has more at the wall for us he's held up well under questioning. it's been long and enduring. what do we make now of where the story goes >> let's do a quick recap of what's happening with mark zuckerberg during day two of his testimony. legislators pressed him again to provide specific policy ideas. >> i think it's inevitable that there will need to be some regulation my position is that there should not be no regulation, but you have to be careful about what regulation you put in place. a lot of times regulation by definition puts in rules that a company that is larger and has resources like ours can easily comply with, but that might be more difficult for a smaller startup to comply with these are all things that need

to be thought through carefully. >> he also responded on how information on the social network is controlled. >> people often ask what is the difference between surveillance and what we do the difference is clear. on facebook you have control over your information. the content that you share, you put there. you can take it down at any time the information that we collect, you can choose to have us not collect. you can delete any of it you can leave facebook if you want i know of no surveillance organization that gives people the option to delete the data they have or to know what they're collecting >> in a heated exchange with a california congresswoman, mark zuckerberg revealed a personal connection to the cambridge analytica scandal. >> was your data included in the data sold to the malicious third

parties? >> yes >>it was are you willing to change your business model in the interest of protecting individual privacy? >> congresswoman, we have made and are continuing to make changes to reduce the amount of -- >> are you willing to change your business model in the interest of protecting individual privacy >> congresswoman, i'm not sure what that means. >> i'll follow up with you on it when did facebook learn that cambridge analytica's research project was for targeted psychographic political campaign work >> congresswoman, it might be useful to clarify what happened here >> no, i don't have time for a long answer. when did facebook learn that and when you learned it, did you contact their ceo immediately? if not, why not? >> congresswoman, yes, when we learned in 2015 that a cambridge

university researcher associated with the institution that built an app -- >> we know what happened with them >> yes, i'm answering your question >> cool as a cucumber. i think one of the first responses was stunning about regulation, and effectively using some of the distrust and clash around facebook to say you only will be left with facebook if you regulate. no one else will be able to come into the mix because they will be regulated out of the system very clever response >> he was very clever in all his responses around regulation. when saying i'm not completely opposed to regulation, but it has to be the right regulation and he has avoided specifics that was a positive from the market they never got a sense that actually there is regulation in the near-term coming down the line that was one of the biggest fears around the facebook stock story as well. >> what crops up to me is this alarming approach. you have a well-versed ceo, also

the fact that lawmakers don't know how to ask the right questions because there's so much complexity behind the scenes >> are you selling data? he said no, that's not our business model that was part of the problem particularly on tuesday. not so much yesterday where he got a taking to. >> thank you very much for the recap on facebook. coming up, the bank of england releases its latest credit rorept. we'll have full analysis stay with us

welcome to "street signs." i'm karen tso. these are your headlines european equities hold the flat line as the world awaits the response to a suspected chemical weapons attack in syria. america, the uk and france say they're ready to act despite warnings from russia man group shares rise after the largest listed hedge fund sees a healthy jump in quarterly numbers. dsm rockets to the stop of the

stoxx 600 after a positive outlook. the ceo tells us he' optimistic >> 2018 we will show good growth this first quarter all our businesses are growing carrefour sees its stock fall to the lowest level in six years after offering a grim outlook for the year amid weaker sales, especially in its home market of france >> we have some information crossing on the boe credit conditions uk lenders see a rebound in demand for mortgage lending in the next three months. uk lenders reported the largest drop in availability of lending to consumers in q1 uk lenders expect broadly unchanged availability of unsecured lending to consumers over the next three months

jonathan stumps joins me, equity strategist from citi we've been seeing mixed messages around the economic conditions with brexit. what does that mean for stocks at this point? >> mixed is the optimal word there. mixed and modest uk growth story before the brexit referendum was strong strongest growth in g7 since then, we had more headwinds coming in. so we had softer consumer, softer investment. so uk gdp growth has come down from 2, 2 plus to high 1s. that's where we are now. we see challenges for the consumer, despite some positive news on real wages as we go through a period of falling inflation. overall the uk macro back drop remains sluggish

>> if uk lenders are expecting a rebound in mortgage demand, that suggests the consumer is somewhat confident of employment prospects, their ability to spend and buy some household items, also scaling up to a large financial commitment that's a positive sign, isn't it, on financial conditions. >> it's a positive data point. we have a mex tur oixture of dat that come out. our retail team runs a household available cash flow model. it looks at various components or how much additional spending uk consumers have. they're looking for that to be sort of up 0.4% like for like this year. 0.9% next year these are relatively small numbers. there is positive news flow from falling inflation. we also have a low savings rate,

so the balance between additional spending versus additional savings means we don't think there's a strong uk consumer story >> the uk market has become a strange market, erratic since the brexit vote. we saw the ftse 100 scaling up to 7,800, drops then through 7,000 points i think one area where investors are shy about was the domestic play what do you make of the conditions playing out domestically and whether it's a buy if you look at the stocks? tesco has been a stand out on the back of numbers. >> uk has been a defensive market global equities have been weaker year-to-date the uk a couple weeks ago was the 67th best out of 67 markets we track globally. a defensive market in the uk has been a drag on global indices as well that's because some of the big defensive heavyweights such as the tobacco sector have been a

drag we see that d rating driving a value opportunity for investors. one valuation metric, free cash flow yield, uk has a free cash flow yield of 5% in terms of domestic specifically, the big domestics are the banks. within banks we see more growth, net interest margin conditions for the international banks. so within domestics we can find opportunity. we can fine opportunity in financials, less so on the banking side, more on insurers and asset managers >> you listed a couple, aviva, bellway, then delivery services, justeat, this looks like an active strategy for the stock pickers, not an index tracker. >> uk is an interesting market heavy towards commodities, especially on the oil side should be a support. >> which you also like that's one of your picks

>> we put oil up to overweight the last few weeks so we're pushing oil again on the value case, but also more support coming through on earnings and cash flow so, the uk is a slightly older market by composition, but the value case is broad across the index. you have the big three media companies trading on single digit pes. you have the tobacco sector which almost got to a double digit free cash flow yield recently when we look at baskets and ways of exploiting that, we're trying to find companies that don't have significant headwinds from softer mixed domestic back drop. they have strong business models, they can grow, and enjoy capital returns. when we build those exposures with analysts, those are the stocks we get to >> just to flesh more, the attractive consumer category, you put bellway, itv, you

mentioned media stocks in that basket why is the consumer suddenly more interested in the uk. it feels like the worst of brexit is yet to happen. we don't know if there's going to be a cliff edge uncertainty around any deal process. ireland, northern ireland, the border is far from sorted. could there be more problems if jobs are still in danger at some point? surely the consumer looks squeezed >> you make a valid point, that's something investors reflect back to us consistently, that's uncertainty uncertainty in this case in terms of the uk economic and political output some of your earlier guests this morning were talking about what's happening related to sort of trade, tariffs, tweets as we put it so i think it's hard at the moment to have conviction. whether that's in the outlook for the uk i think at times that's more important to lean on a

combination of valuation and robust business models >> does that mean by and hold is dead, you need to be more dynamic even if you like some of these names? >> buy and hold is not dead, but we're in what we think is the last phase, and we're looking for signals which would signal and -- we run a bear market checklist. we have 2.5 factors out of 18 flashing a warning light that's a low score we're looking for the warning lights, the bell to ring the end of the cycle, we don't see it. >> let's hope you're right thank you for your analysis. uk brexit secretary david davis says there will not be a mass migration of financial services from the city of london following brexit predicting the capital will remain a global banking hub. speaking at the "wall street journal's" ceo council, he said

virtually nothing would change for businesses during the transition period and he expects details of the financial brexit bill later this year >> hayes posted a 10% like for like growth in the third quarter. it cited good performance in australia and new zealand but a subdued uk market. earlier we spoke with paul venables about the impact on his business >> until we know where we are on brexit, we won't have any relief on this pent-up demand what is clear is that most good corporates are being phenomenally tight on cost control. the depressing part is little or no long-term investment going ahead across our client base we said last time it's a good market they replace levers. they're continuing to use temps, but that 10% of the market which is driven by growth, large investment projects is not happening. quite frankly now we have had since about july 2016, a month or so after the brexit poll, our

business has been flat you might be up 1% one quarter, down 1% the next i see no reason why that will change man group has seen funs under management rise by 3% in the first quarter of 2018. the world's largest listed hedge fund was buoyed by net inflows of 4$4.8 billion it saw total funds under management increase. chris odey is betting against uk government debt he is targeting weaker prices for 30-year-old gilts. european commission investigators are looking into ziggo sport as part of a probe into a possible cartel in sports broadcasting rights. the investigation also includes fox networks group whose london offices were raided earlier this week european officials said they carried out inspections of a

number of companies involved in sports media rights. an international consortium looking to create global football tournaments for fifa includes japan's softbank. proposals include creating a new national team competition and expanded club world cup. the consortium has investors from china, saudi arabia, the u.s. and uae any joint venture with fifa would guarantee football's governing body at least $25 billion in revenues. . coming up, u.s./russia tensions rise over syria as president trump threatens to fire what he calls nice and new smart missiles the impact aer tfthe break

♪ most people come to la with big dreams. ♪ we came with big appetites. with expedia, you could book a flight, hotel, car, and activity all in one place. ♪ dinner date...meeting his parents dinner date. why did i want a crest 3d white smile? so i used crest. crest 3d white removes... ...95% of surface stains in just 3 days... ...for a whiter smile... that will win them over. crest. healthy, beautiful smiles for life.

even when nothing else is. keep her receipts tidy, brand vo: snap and sort your expenses with quickbooks and find, on average, $4,340 in tax savings. quickbooks. backing you.

it was weaker session on wall street yesterday. the major averages pulling back snapping a two-day winning streak the dow, s&p and nasdaq on the back foot. most of the action in the small caps the prices this morning, you can

see implied open suggests s s a slight bounce. big issues around potential syria conflict, trade talk still playing out between the u.s. and china. the markets somewhat cautious still. european markets barely moving from the core level. the ftse, dax and cac in a tight range. if anything, worsening in the last 30 minutes or so of the trading session. tilting a bit into the negative side the italian market strong, up 0.3% let's look at foreign exchange markets. the dollar has been on the back foot in the last 24 hours, hitting the lowest level in about two weeks. on pace for the fourth negative session in a row this morning it's trying to make territory against the japanese yen. 106.88 a bit of recovery to the pound, to the swiss

you can see mixed there, fairly flat to the euro 1.2365. oil markets have been interesting. oil finally moving out of correction territory yesterday wti continuing to climb to hit its highest level since december 2014 the handles would tell you the story, 66.72 for wti and brent with a 72 handle a bit of tension geopolitical tension that's putting premium back into the oil price. not something that we have spoken about for a while one analyst earlier was suggesting maybe around $80 towards the second half of this year. the united states and russia appear to edge closer to direct confrontation in syria after president trump warned moscow to get ready for u.s. missiles. russia's ambassador to lebanon said any u.s. rockets would be

shot down and the launch sites targeted the syrian government backed by moscow denied involvement in the suspected chemical weapons attack ha hallie jackson has more on the story. >> reporter: tonight, all signs point to what seems all but inevitable, a strike on syria soon. >> thank you all very much. >> reporter: on twitter, the president previewing an attack and putting russia on notice after a russian official promised moscow would shoot down any missiles aimed at syria. president trump writing get ready russia because they, the missiles, will be coming nice and new and smart. you shouldn't be partners with a gas killing animal who kills his people and enjoys it defense secretary james mattis not ready to say for sure the assad regime is behind this weekend's deadly chemical weapons attack outside damascus. >> we're still assessing the intelligence ourselves and our allies. >> reporter: but to the white

house and others around the world, it's clear the syrian dictators to blame for yet another horrific poison gas attack targeting people in their homes including children rescuers working frantically to help them. >> the use of chemical weapons cannot go unchallenged. >> reporter: the u.k. and france now agreeing on the need to act, as white house officials point to close coordination with those allies and others the president's tweets today, a break from the military strategy of surprise he's often talked about. >> my administration will not telegraph exactly military plans and what they are. militarily, i don't like to say where i'm going and what i'm doing. >> reporter: and in a tweet on syria from 2013, he asked why can't we just be quiet and if we attack at all, catch them by surprise? >> why this time is the president not taking his advice and being quiet? >> the president has not laid out a timetable and he has a

number of other options as well, and we're considering all of those options. >> there is no advantage to revealing that a strike is coming and there is no advantage in taunting russia because the worst outcome in this upcoming scenario would be direct military conflict between the united states and russia. >> russia's foreign ministry hit back at the comments saying smart missiles should be aimed at terrorists, not towards the lawful government which spent years fighting international terrorism on its territory president putin's spokesman called on all sides to refrain from taking steps which could destabilize the situation in the region investors are taking stock of some of the rhetoric and the tweets from president trump. what do you make of this situation as it stands what's the risk? >> when it comes to trump, the rhetoric will not match the actions. we're getting a time delay as different military options are debated, but the most likely

direction will be more of a limited u.s. strike or military option against the assad government not really aimed at russia i know trump has blamed putin and wants to hold him responsible. i don't think we see an attack on russian military assets in syria. that would create a much broader conflict, much more dangerous if he tries to do that. >> even if trump tries a targeted limited approach in syria, will russian missiles try to stop that attack from the allies >> other options would be to use electronic warfare techniques. those would be much more pragmatic approach it wouldn't directly challenge trump. it depends on which military base does trump strike if it's purely government forces, we can find a win-win approach or a limited approach where we don't enter into a direct confrontation between

russia and the u.s can we find a mechanism to de-conflict. >> there's a familiarity around trump and his tweets with missiles we saw this with north korea, but putin is not kim jong-un, he has a much powerful country that is weaponized and in key conflict areas how productive is it for the president to be goading president putin like this? >> it's not productive at all. it gets the u.s. and russia closer and closer towards more confrontation. the relationship has been deteriorating for a while. the most recent wave of u.s. sanctions on russia were much more meaningful. the context of what's happening here in the relationship and this u.s. strike or what is likely to be a u.s. strike on an assad military base or bases, that's much more problematic as we see it today.

one thing to keep in mind, structurally trump wants out of syria. his inclination is to withdraw u.s. troops from syria putin maybe lets trump move ahead with the rhetoric but maintain his position in syria >> i wanted to get to the motivation on trump's calls and what he's pushing for. if you recall back to the campaign trail, at loggerheads with clinton, hillary clinton was calling for more air strikes against islamic states, the enforcement of no-fly zones, a more hard lined approach she was calling for. there was push back from donald trump. why do you think he's changed his tune to an extent on syria is it because chemical weapons were a line in the sand that the u.s. must take a stand on? >> i think at a structural level, trump is not going for more engagement in syria this is purely a punitive

measure related to the use of chemical weapons at its core he doesn't want more engagement in syria. certainly he's not establishing a no-fly zone or authorizing broader and greater u.s. involvement. this is about not looking weak, not looking like former president obama, basically saying when i draw a line in the sand, it holds i'm different. i have that authority. that's what we'll get over here. that's why we will get u.s. military action. some of the u.s. alleys would participate in this. this is primarily or heavily reliant on u.s. military force >> we have the allies making strong comments, looking fairly supportive of the u.s. despite the fact that trump has been so disruptive in nato what do you make of the response from the likes of uk and france to be ready to support america in any conflict? >> i think that on this issue

there is broad agreement, and it's perceived to be an opportunity to mend relations. the transatlantic partnership has issues at the moment, especially with trump in power i think this is a meeting point where they will all agree on further intervention in the middle east. the foundation over here, the most problematic aspect of what i see here is an international law being ignored. the u.n. security counsel is less and less relevant the foundation of the international system, that's been undermined in the process something that over the long-term could be much more destabilizing. over the short-term it brings europe and the u.s. together >> one of our earlier guests mentioned the issue for the middle east being around iran. that's the headline act when it comes to geopolitical risk in the market from many investors and whether trump seeks to end the six-party agreement that's in place currently what do you make othis

>> the nuclear agreement with iran is already in the air it's difficult not to see trump where he does not push away from the nuclear agreement. very difficult for geopolitical stability in the middle east iran has been restraining its actions because it cares about the funds, about investments from the west. absent a nuclear deal, i think we face much, much more confrontation in the region. much more tension. that's why the context of the u.s. deteriorating u.s./russia relationship, deteriorating u.s./iran relationship, that makes the confrontation much more problematic >> very interesting. thank you for drawing the lines of interest for many investors, who look at it as a complex area of the world thank you for joining us this

morning. china has said it won't hesitate to fight back if the u.s. escalates trade tensions. in a press briefing, the country's commerce ministry said it would be misleading to say xi's pledge earlier this week to cut import tariffs was a concession to washington speaking to cnbc yesterday, trump's top economic adviser said the measures announced by xi were positive but warned that tariffs could still come before negotiations happen. >> we are going to have negotiations at some point there may be tariffs before, maybe not. we shouldn't panic so far there have been no tariffs implemented. i hope everybody realizes that that's important you won't see any of that probably for a couple of months. in other political news, the scope of the warrant executed on michael cohen, president trump's lawyer, is wider than thought. the search warrant is said to have been execute the on him this week says investigators did

lawfully seek to obtain communications involving the access hollywood tape. the footage came out during the election and featured trump talking about abusive behavior towards women. the show "access hollywood" is part of comcast. u.s. house speaker paul ryan will not seek re-election in the upcoming congressional elections. stepping down at the start of 2019 it comes as blow to republicans who are already concerned about their prospects in november's midterm election despite clashing with the president, ryan was seen as instrumental in getting trump's tax reform passed. that's all we have time for today. thank you very much for joining us i'm karen tso. "worldwide exchange" is up next. - i love my grandma. - anncr: as you grow older, your brain naturally begins to change which may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers.

- anncr: prevagen is now the number-one-selling brain health supplement in drug stores nationwide. - she outsmarts me every single time. - checkmate! you wanna play again? - anncr: prevagen. healthier brain. better life. olay regenerist shatters the competition. hydrating skin better than prestige creams costing over $100, $200, and even $400. for skin that looks younger than it should. fact check this ad in good housekeeping. olay regenerist. ageless.

you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party.

good morning it's 5:00 a.m. on the east coast. here's the top five things happening now. is the market volatility finally slowing down the first calm morning in a while. futures basically flat two, oil holding near a three-year high. tensions rising in the midwest. three, if you thought a trade war with china was out of the question, think again. china out with a new warning for america. four, ge's ceo weighing in on the trade spat between the u.s. and china exclusively to cnbc hear those comments ahead. and five, shares of bed bath & beyond getting taken to th