welcome to "street signs." i'm johanna versace. >> i'm willem marks. they're sending grocery giants to the bottom of the market >> we think it's a very positive move but it is in the context of a dynamic and changing market. we think if you don't change, you don't evolve and you don't move forward and in the current climate then that's very risky.

deutsch telecom shares dial up after t-mobile agrees to buy sprint in a deal worth 26 billion. life after sorrell wpp topped first quarter sales expectations with full year guidance sending shares sharply higher and president trump raises the prospect of a trade war with europe as he uses a rally in michigan to claim a meeting with north korea's kim jong-un could take place in the next month >> a meeting over the next three or four weeks. going to be a very important meeting. the denuclear meeting of the korean peninsular of north korea. denuke denuke. good morning one of the big stories in europe and globally is the idea that a

supermarket titan could be born. sainsbury and azda unveiled a 13.3 billion pound merger. azda parent walmart will become a 32% shareholder for that group. sainsbury says the merger will generate synergies of half a billion pounds it faces a breakup in 1% of the market cap if it falls through cnbc spoke to kevin oburn this morning. >> we think it is a dynamic move if you don't evolve and move forward in the current climate then that's very risky we think it's a very good move we think as we say it allows us particularly in a very competitive market online and with discounters to give much

brat e greater value to our customers. >> very big moves in sainsbury shares this morning. they opened up 20% higher. now up about 15% still, definitely good news by some of the buyers in that market i should point out that before today it was a heavily shorted stock in the index you think some of that short covering impact as well as people invigorated by the news from this story. then the picture isn't as invigorating the combined market share is as expect expected 30% market share is not good for all of the others. you can see pepco is down 1.5% morrison is down 8% and this is

the only him in that's positive in trading this morning, sainsburys we have the ceo of retail economics joining us give us a little bit more color and thoughts on the deal here. good morning to you, richard. >> good morning. >> the first question i want to ask is whether or not you think these two companies are complementary to begin with. if you look at sainsburys, typically they're targeting the more affluent older families also as a discounter do you see the two companies being complementary? >> it's very complementary asda has a great representation in the north and sainsbury in the south. although they are serving different core parts of the

market, there is an overlapping spread we do see this as complementary. i think the other thing that's really going to trans sent is the integration of argos into the stores this will give them a bigger market share, biggest at 30% for the industry, but it gives them coverage for the online food product as well. >> one of the other big questions is what the regulators decide to do we talked about there being a 1% breakup fee. do you think there are going to be any considerable constraints or challenges to overcome from a regulatory affect here >> sure. i think certainly there is an element of doubt over whether the deal will go ahead at all. there's going to be some serious consideration over the competition within a regional

perspective, almost a post code level. just to ascertain whether or not there's a worrying overlap between the geographical spread of the two different retailers, but i think the main thing here is the test goes to book end a tie up this paves the way for these types of negatives within the industry essentially this is about whether this is good or not for consumers. actually, if you look over the reasons this has come about, it's about the industry being fiercely competitive it's about standing up for tesco and having an increasing market share and a growing rapidly and also standing up against discounters. if they manage to do the tie up effectively, this is about driving down costs for consumers. the press release from sans burries estimated a price

reduction around 10% for a number of products they were selling. >> they would of course say that because they were trying to persuade people this was a good idea you talk about post code level is the opportunity for sainsburys selling off stores so they don't get in trouble with the regulators >> we're in the very early stages here. it is an opportunity for sainsburys and asda to look at their store state, look at the most profitable stores and some of the stores they may want to push forward to divest in part the deal and it may end up coming other the other side. there's in a much stronger position and balance sheet. >> i want to ask you about the walmart perspective on this deal this is an indication that the

company in the u.s. is paurg back its national ambitions slightly. >> it would a near way but it's important to have the 40% kpierd share of the business. they still have access to the sainsburys brand and also they're cashing out around 3 billion pounds that they can invest in other lucrative acquisitio acquisitions. >> sounds like you think walmart and the british retailer is the winner appreciate your time after four years in the making, speaking of big deals, t-mobile and sprint have announced a $26 billion all stock merger this would value the kind company at $146 billion. that includes debt

it will have 127 billion customers. it could compete with at&t and verizon. shares in deutsch telecom, they're trading higher after the deal's announcement. they say the deal will not increase its debt load too dramatically really interesting about this, this means there are three major operators in the u.s. market this he have traditionally been a long way behind many other parts of the world in developing networks but it does seem like they are investing in their own structure. >> there's a report that suggested that the u.s. is actually behind describe a and% chi -- south korea and china. this is about the costs associated with it it is expensive. they don't want to be at a

competitive disadvantage versus other geographic reej dwons. one of the main drivers is actually combining the power together. >> the fire power. >> so they have enough essentially infrastructure to roll out this 5g what's interesting is this isn't the first time that t mobile has attempted to perform a deal. they've tried in the past but it looks as though this time around because the environment has changed and the new technology involved, because of so much competition and because of the fact that the cell phone sector is aging a little bit, perhaps this time around there will be much less reg kwu la tori hurdles. just another thing that comes with the regulatory deals. as we were just discussing in the u.k., the environment has changed and regulators do need to take that r that into consideration.

as shareholders are taking this well, deutsch telecom will own 42% of the combined company. for them, again, this is a positive development because it shows that the combined company is very much going to become one of the leaders in terms of wireless and also 5g in the u.s. it makes them one of the biggest companies to overtake verizon if it goes ahead. john legere and marcel marcelo claure will be joining us. telecom italia says his position will be, quote, untenable if activist investor elliott wins of its biggest

phone group. taste ahead of a contentious meeting friday outside of milan. elliott wants an independent board to look at strategic missions. wpp as the company looks to regroup under its new leadership crohn's disease. you're more than just a bathroom disease. you're a life of unpredictable symptoms. crohn's, you've tried to own us. but now it's our turn to take control with stelara® stelara® works differently for adults with moderately to severely active crohn's disease. studies showed relief and remission, with dosing every 8 weeks. stelara® may lower the ability of your immune system to fight infections and may increase your risk of infections and cancer. some serious infections require hospitalization. before treatment, get tested for tuberculosis. before or during treatment, always tell your doctor if you think you have an infection or have flu-like symptoms or sores, have had cancer,

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of course the political story still very much in the back drop on the xetra dax, you want to watch out for the german data. >> some headlines reaching us now this morning we heard from the markets authority here in the u.k. they're saying the proposed sainsburys asda merger is going to be under review we heard from the sainsbury ceo as well. they think they will come to the right answer for customers talking about benefits, cost

reduction for consumers. it will be subject to review in other corporate news wpp the world's largest advertising giant reports revenue down 4%. and revenue fell 4% on currency headwinds, but the company reiterated its full year guidance and said it would focus on growth. the first sector results were published since martin sorrell stepped down i've got to ask you, this is the first set of results since sorrell stepped down how important is that going to be for the next quarterly results, do you think? >> yes, good morning i think this morning's message is really probably about steadying the ship and trying to demonstrate wpp isn't just all

about martin sorrell despite he was a huge influence and personality. in underlying terms the message coming through is very much one of business as usual and very reassuring remarks perhaps adding the departure of martin sorrell. what we've seen is a very, very strong underlying business with challenges but with certainly opportunities under a new and perhaps slightly more focused management team. >> so there are reports over the weekend that the data and market research business is looking to spin off for about 3.5 billion pounds would that be a welcome development in your view >> i think it's a difficult one to call. kantar has talked about historically as a business that wpp might dispose of over the past couple of years it may have become more of an

important part of the equation those are all very important that we believe the wpp has to offer to international clients i think the management message coming through in general is rather than sort of breaking up the business, it's probably trying to double down on the degree of cooperation within the business that said, that 3.5 billion price tag i think has been very helpful in underlying or indicating some of the underlying values in wpp and what has been a healthy price reaction. >> you mentioned the management message. given the uncertainty of the management structure, do you think this huge unwieldy conglomerate can compete >> i guess the question is how unwieldy is unwieldy the company has spent a lot of time becoming more integrated

over the last few years. i think it has demonstrated it's good at what it does it essentially offers us more stripped down service. i think wpp still has an awful lot to offer to its clients if it's smart about how it constructs its relationship. >> roddy, thank you very much for joining us this morning. elsewhere, in other top stories, north and south korea have vowed to work towards denuclearization of the peninsula. seoul officials say kim plans to invite experts and journalists from the u.s. and south korea to the north when the country shuts down its nuclear test site in may. now sherry is in seoul

mr. bolton announced quite a hard line test for sanctions release. what do you think? >> reporter: we have a lot of skeptics questioning kim jong-un's real intentions and what results can we get from a trump/kim summit certainly now we're at a point where we shift our approach and a lot of it is riding on the shoulders. we've got, yes, skeptics with what he wants to achieve and perhaps with china now getting involved in the process, sending the foreign minister later in the week, we are seeing a lot of busy diplomacy relevant countries. this is a familiar turn that

we've seen in the previous rounds of nuclear negotiations with north korea perhaps that's what's chs supporting ought skep tow civil out there we'll focus on what the trump administration has to say or do in terms of preparing for this summit we can expect the south korean president playing the mediator role certainly he's trying to -- he as in south korean president moon jae-in is trying to get to some of the other countries involved and ease the tension. perhaps ease some of the tension in the leadup to the trump/kim jong-un summit. markets are taking this well we had another strong session in asia overnight on the easing of tensions speaking of which, let's talk about china where growth in the

manufacturing sector eased in april. official numbers still beat estimates. the official pmi held from 51.4 to 51.5. although activity fell back slightly, the 21st straight week of expanding business alterations. >> joining us is david rubin from citi. thanks for coming in just pointing ought these numbers, there wasn't that much of a slowdown in yesterday's pmi numbers. generally we get the impression that chinese numbers moderate a bit. should we be worry about chie neas sharp activity. >> infrastructure investment, growth has fallen. the external environment has

become a bit more and net exports hasn't contributed to growth and the pull let bureau last week suggested that domestic demand ought to be supported. that's the first sign or first time since 2014 they have said something about the need to support domestic demand. there is evidence of some official concern about the slowdown it's not tragic. there are a couple of things that might make it more complicated. first is a raising of china tensions second is if the dollar strengthens. that would become a serious drag on chinese growth because if the dollar were to continue strengthening more aggressively, that would begin to suck capital out of china in other words, china's capital

account would become more fragile. >> now the other thing that we have to sbeek is china's huge if he cuss. he has tweeted about it many times. it was the crux of where these trade wars started from. actually, i was just looking in your piece, it's dropped a lot over the past couple of years, it's only 1.5% do you think there ease any probability that china can tip from surplus to deficit on the back of the tariffs president trump is going to continue >> he seemed to have a willingness to balance it. there's reason to have

skepticism over china's willingness to do this china pursued a very aggressive increase in credit growth. so the perfect sis tense has allowed a bit of an insulation >> it's allowed them to spend money elsewhere and loan cheaply. do you think the political battle gets impacted >> yes, i think that's a good point. i think china's ambitions in foreign economic policy, which can be summed up as the belton rhodin initiative would be more difficult to satisfy its own needs as well as needing

things to be different things would have been different if china had been able to make international progress in the redmond b. actually, in the last three years the evidence that we've got about the gains have not been made. >> thank you, david, head of the merging markets following at citi. coming up on the "squawk," mike pompeo hits out at iran

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- she outsmarts me every single time. - checkmate! you wanna play again? - anncr: prevagen. healthier brain. better life. welcome back to "street signs. i'm willem marks. >> and i'm johanna versace. sainsburys proposed merger with asda is likely to be reviewed the chief financial officer of sainsburys tells us he's confident of the synergies.

>> we think it's a very positive move but it is in the context of a dynamic and changing retail market and we think if you don't change and don't evolve and don't move forward in the current climate, then that's very risky. deutsch telecom shares dial up after t-mobile finally agrees to buy sprint for $26 billion. we hear from both of the ceos here on cnbc. life at sorrell. wpp tops first quarter sales expectations sending shares sharply higher president trump raises the prospect of a trade war with europe as he uses a rally in europe to say a meeting with kim jong-un could take place in the next three months. >> it will be a very important meeting. the denuclearization of the korean peninsula denuke denuke

asian markets are reacting well to that cry for denuke from president trump, but let's check in on u.s. markets as well friday was a bit of a lackluster day as far as u.s. equities. it was dow's first negative day down 0.5% on friday. they say the s&p was up .1%. today it looks as though things are going to open up higher. dow seen opening 90 points higher and s&p 10e points higher there is personal income expected to be higher in the u.s. as well as chicago pmi and u.s. pending home sales. let's not forget that we are in the midst of earnings season the numbers are quite good let's switch to european markets. the picture there is also one of more positivity.

we've got all of the indices trading in the green xetra dax up 1/4 of a percent. you want to watch out for german cpi data one of the major stories driving everything this morning is those of the deals that were announced over the weekend, be it sainsbury, asda creating the largest u.k. grocer and t-mobile and sprint so the picture here for europe is certainly more positive switching to the foreign exchange and this morning it's one of slightly dollar stronger. your dollar is down .1%, dollar jenn charging higher almost at 1.10 re3w0u7bded from the lows of 1 .05. cable has been struggling for the past week.

they have very weak data q1 gdp data and all of the ongoing political turmoil as the home secretary resigned late last night and the discussions are very much the focus this week as far as cable is concerned. that is the picture for foreign exchange you can see the ten year is at 3.6. let us not forget that today is month end. typically on month end you do see it emerge on fixed income. i want to bring in the head of interest rate strategy from commerce bank. good morning to you, sir

just referring back to the ten year u.s. yield, we're now snugly below the 3% level. many were saying when the ten year broke you would see a break through that hasn't transpired do you think they're going to be supported or will there be a break through higher >> we're seeing a lot of support at the 3% level with a lot of international investors looking to buy the u.s. treasury market. also supportive of the positioning, if you look at friday's cfdc data showing record net short speculative positions in five year and ten year futures this caps the up side for yields in the near term to be fair, fundamentally clearly there's up side pressure on yields. today considering the pce deflator which should jump up to 2% so basically we could get

headlines today that for the first time in years the fed is finally meeting its dual mandate and hence while clearly not hiking rates this week, they should clear the ground for the next hike coming in june. >> it's being very sensitive to what he dwee, we've seen the two year move a lot higher also the ten year has moved but not quite as much. we've seen a curve flattening taking place in the u. sms. thud we get worried about the curve flattening >> i think the risk of an y0u9 right inversion is rather remote to invert around 3% yield levels we would need higher inversion

spikes this is clearly a negative signal for the economy even though there are a number of special factors at play, the analysis that we have done really points to the fact that should we get an inversion, yeah, it's hard to argue a way that the risk of a recession over the next two years would be coming. >> cristoff, we heard from mr. trump about the u.s./china trade. what do you think? >> the u.s. refinancing announcement is coming up. there's a lot of concern that the biggest creditor, which is china, could withdraw. to be sure, china is not at a

place to sell the treasury where do they want to invest they need to stay in the treasury market. there is the risk that as we see the refinancing of china >> one of the things that comes up quite a lot is the wedge between u.s. treasuries and ten year buns. many are pointing to the big spread differential. we had the ecb meeting last week and mr. draghi is pointing to the slightly more weakening pmi backdrops and not the growth that you're seeing

will this hold somewhat or do you expect the 200 basis points wedge between the two to continue for a while >> a lot of good fundamental reasons for the spread to widen or stay wide or beat on the macro side or beat on the supply side having said this at 240 basis points just last week we have revised the widening u.s. treasury is on an unhedged basis. we should see some support and coming in. the treasury market versus bunz is seen more as mourgs. >> is there anything that you've heard, the timing for the first rate hike? >> i think the most interesting thing was what was not discussed at a monetary policy meeting,

which is monetary policy this suggests it's not on auto pilot as many believe. it could be delayed ifthis continued through in q2. hence, i thought a cross read of this were rather on the dullish side. >> we have appeared to have lost christoff. thank you for joining us down the line. elsewhere, brittain, france and germany have thrown their weight behind the iran nuclear deal the agreement remains the best way to control iran's nuclear program. they said the deal may need to get president trump's

permission pompeo has been on a three day trip to the middle east. he said iran destabilizes the region iran hit back and said they were baseless u.s. operation leaders will help lead to more regional conflict president trump himself held a campaign rally at the same place for the second year in a row. nbc's kelly o'donnell has the story. >> reporter: president trump gleefully traded one washington for another saturday night >> i'd much rather be in washington, michigan >> reporter: not only did he skip this for the second straight year. >> is this better than the phony

washington correspondent white house. >> reporter: he performs a fake president trump. >> i could be up there smiling like i love where they're hitting you shot after shot and then i'm supposed to -- >> reporter: while the trump administration encouraged its ono figures alls to attend, the president mocked the media before a trump friendly crowd. >> these are very dishonest people, many of them. >> reporter: touting his role into bringing north korea into negotiations. >> what do you think president trump had to do with it. i'll tell you what like how about everything. >> reporter: the rally audience chanted suggesting he deserves the peace prize. >> nobel. >> nobel. >> nobel i just want to get the job done. >> reporter: talking up his

handling of the ee con my. he talked about his own fair way endors endorser >> back in washington comedian michelle wolf hit the president's ideas. >> he has loads of ideas you've got to love them for that he wants to give teachers guns, and i support that, because then they can sell them for things they need, like supplies it is kind of crazy that the trump campaign was in contact with russia when the hillary campaign wasn't even in contact with michigan. >> you can check out the story on cnbc.com which gives you a full roundup of the evening. now in the u.k. the home

secretary has resigned rug came under severe pressure over her long term british -- in her resignation she admitted to inadvertently mislead a parti e parliamentary documents. the guardian newspaper had earlier revealed they were part of it. pails on the surface only 13 cars finished the race ahh... summer is coming. and it's time to get outside. pack in even more adventure with audible. with the largest selection of audiobooks. audible lets you follow plot twists off the beaten track. or discover magic when you hit the open road. with the free audible app, your stories go wherever you do.

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welcome back to "street signs. shares in the italian giant juventus is up heading into the last-minute amount of time on the losing side, it was ahead of gonzalo and saw it come ahead.

it's 4% higher with three gains left sticking with sport, louis hamilton has won the azerbaijan grand prix after one of the most chaotic grand prix >> you'd think we'd be talking about louis hamilton winning his first of the night team orders should have been coming to play here we are on board with them daniel riccardo. shock coming up, pricely the chief technical director packing up and going home. no point for them further this weekend. here we are this weekend, av the race mickey moon r mantle. for lewis hamilton winning the race, that happened behind him

he was nowhere near the pace now he's leading the race. here we are again. can't get enough of that shot. red bull crashing into each other. three laps to go, locking their wheels up. went over debris and hit the wall head on >> is there something about the circuit itself that makes them take on extra risks? >> there's carbon fiber flying off all over the place and even to the point where on some control. looking into that, the renos are actually another thing that they're trying to make it into

that into the midfield i sat down with the director and he said being part of that midfield is so important to their plans moving forward >> every single thing comes from the stop, bad strategy, the wrong engine at a certain time that can make a difference in the very marginal and there to fight and deliver but then on the long time. apiece the midfield this year and that is what he's got to do. then we're lapsing i am not that confident because of where they laugh. one cigarette we have between us and then is going to take a change i showed that.

>> fifth place finish for renault at the az zer bayon grand prix sixth place, sal va getting the best result in 50 grand prix two drivers without a point in the f1 championship. on to spain in two weeks time. >> very exciting it's almost as exciting as what's in u.s. equities. >> some would argue. in other news, richard branson's version hyper loop one and device could work on a hyper loop ricardo which they're hoping it will bedesigned to deliver goods at 620 miles per

hour and it has the ability to invest in more it sounds fascinating if they can go ahead and get it done. >> exactly they're trying to move people and cargo and trying to do this at the speed of flight but at the cost of trucking let's look into what sir richard branson told me yesterday. >> what keeps mea wake i think we have a couple of organizations, and they're all working on climate change issues and it was magnificent that 192 nations signed up at paris but to get to carbon neutrality you have to work hard to get there the hyper loop is carbon

neutral. it will take a lot of cars off the road so it's up to us entrepreneurs to come up with entrepreneurial ways of getting on top of these problems >> so what was really interesting about this, guys, was first richard branson, this isn't about moving people and cargo faster across the globe but it was also about taking care of the planet and fits into his climate change agenda. i asked the chair of dp world about this, what's happening globally, the geo politics, how worried. >> the current president in the speech submitted to reduce the custom duties and open china more

a few days is at piece i believe that paid work is out of the park. i think and i know but when you get to trump, people think he's a champion his view is deals. he wants to see fair trade he doesn't believe free trade is answer i open my markets, i expect others to open their markets if you close your market then i will retaliate. >> so with all of the excitement surrounding what they're trying to do when it comes to changing the way how we receive cargo they're thinking about the environmental impact going on there.

despite the fact there are many loops, they're telling me theirs is number one. >> thank you for brings us the latest on hyper loop elsewhere, blue hart landed on the new separate rocket. the country launched a ship and that was for the first time this year they're competing with spacex. they have not yet revealed the cost of the tickets. you can read more about blue origins on our website on cnbc.com. i'm not going to have it in my budget. i'm pretty confident. >> what, the hyper loop? >> touchdown. >> it will include debt and

america's third largest mobile phone company with 127 million customers. these talks have failed a couple of times in the past it could mean it could compete with at&t and verizon. the owner of t. money are trading off higher they don't have much of a deal when you can dramatically -- >> and john legere is the ceo of the u.s. and will be joining "squawk on the street" later today. make sure you watch that at 1500 cte. dow is up higher. >> "worldwide exchange" is coming up next but now it's our turn to take control with stelara® stelara® works differently for adults with moderately to severely active crohn's disease.

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good monday morning. 5:00 a.m top 5 at 5 merger monday. t-mobile is buying sprint in a $26 billion all stock deal walmart is creating the biggest grocery chain. on wall street futures pointing to a pop a