. welcome to "street signs." i'm joumanna bercetche >> i'm willem marx, these are your headlines. shares in shire trade higher after takeda agrees to buy the pharma group for 46 billion pounds in the largest ever foreign acquisition by a japanese company. and comcast puts together an all-cash offer for most of 21st century fox in a bid to beat out disney's $52 billion offer. shares in deutsche see red after first quarter earnings

miss forecasts and as frank apple tells cnbc that e-commerce poses a challenge. >> we have some challenges, but that was expected. we haven't had a price in crease for stamp prices in the third year, this year we always perceived the most challenging one. and the clock counts down on the iran deal. just hours to go until president trump announces whether he will withdrawal from the nuclear agreement which sends jitters through the oil market good morning before we get started, let's see how markets are doing. everyone is waiting on the announcement from the u.s. that will happen later this afternoon, vis-a-vis the iran deal and what mr. trump decides to do there. we saw a mixed session in asia hang seng was one of the outperforming indices.

so far the mood has continued into europe. actually stoxx 600 is gently below that zero flat line. a bit weaker, but generally a mixed picture heading into that important decision in the afternoon session. ftse 100 is playing catch up catching up with european counterparts today you can see the big underperformers is ftse mib down almost 1%. this is on news that potentially we could look at another round of elections in italy as soon as july after the fifth round of political talks failed yet again. so the market is not reacting to that well. let's switch on and look at some sectors. most of the theme today has been one of earnings and deals that have been crossing the wires you can look and see that the household goods sector is the one outperforming, up a half percentage point telekoms up 3%, bucking the most

recent trend travel and leisure up 2% we've seen a rebound in air france, one of the major underperforming stocks in yesterday's trading. to the down side oil and gas down 0.64% with some of the risk premium coming off in spot prices there. basic resources also underperforming a bit as well. we can see that some of that risk premium into today's iran decision out of the u.s. is coming out crude is about 1% weaker and wti is just below that all important $70 mark we were at 3.5-year highs yesterday. shire shares this morning trading higher after takeda agr agreed to buy the company. the pharma company will spend 1 $61 billion for shire.

takeda expects cost synergies of 1$1.4 billion, and insists the combined company will become an industry leader. we are joined by jonathan roundtree. will this make them an industry leader >> that's a tough one. they'll be bigger. we have two relatively underperforming stocks in the past year. i think investors have been concerned about that as to whether this conglomeration of therapy areas will thak make th leader >> why do you think the share prices have been underperforming so badly why are investors taking a bearish look on this >> the problem roots in m&a becoming very expensive in pharma as a whole. so companies struggling with patent expiries and innovation not working are looking to m&a as a solution. you end up with two companies

that have found their way and lost that juice that is going to get them to the next layer and resorting to m&a to solve the problem, where you take two different companies, one in rare diseases, one in oncology and gi not really fitting well together what is it about the companies specifically that is making it so attractive in takeda's eyes then they upped their bid, they're paying 5 pounds more >> huge premium. >> given the share reaction, that is what the market is telling them, they're overpaying for this what are they getting out of this apart from the fact they have this desire to become a global pharmaceutical company? >> i think they're getting scale. that's what shareholders seem to want if you look at shire, you can say they were going cheap because the share price was higher they had lost their way.

they had done an ill-advised acquisition which basically got them into trouble. from a takeda point of view, you could argue they're getting shire as a good deal, also you're getting innovation in there. that's the argument. the issue is is that balanced by the culture differences between the two companies. is there really an economy in the scale of these companies 1$1.4 billion after the third year does not justify a $20 billion premium. this is a gamble essentially on shire's innovation and they can turn it around >> you talk about a gamble there. we've seen almost 200 billi$200n worth of deals in the pharma space just this year is this driven under duress? is this all about costs and concerns into the future >> i think it's driven by the innovation problem that it's so hard to make new drugs these days with pharma you have this

unusual situation where after 20 years your drug value goes to almost nothing, so you have to keep innovating. that's driving m&a in the sector to try to keep innovating. you have to bet on innovation to make it successful this is not a cost synergy game. >> where is the end game of this will we see more and more consolidation with smaller companies partnering up? is there enough cash to finance all of these "b," what is the end game? and in order to keep up with innovation do they have to keep acquiring other companies? >> i don't think we'll see as many mega acquisitions i think pfizer is always one to watch. they started the whole mega acquisition game years back. the ceo said this one, you know, there's nothing available at the moment there's nothing at the right

price. we don't see a need for a transformative deal. i think he's on to something there. share prices have outperformed they've been disciplined about m&a, not overpaying and not realizing that you can basically put two companies together to make money, you have to bet on innovation >> do you think that firms like pfizer will see these other acquisitions, since they're staying away from the m&a game as a threat? >> i don't think so. i think pfizer has always been strong, disciplined buyer. and the shareholders like that yes, they made some huge acquisitions in the past, which were uncomfortable and put them through bad years. but they've come good from it. >> thank you very much for joining us >> thank you lsewhere, other potential deals, virgin money shares are surging after cybg made a takeover bid, they said the merger would create the uk's

leading challenger bank with around 6 million customers richard branson backed virgin money would earn 36.5% of the combined company. comcast is preparing an all-cash bid for most of 21st century fox in an attempt to beat out a pre-existing offer from disney. disney's bid for fox's assets stands at $52 billion, but reuters reported that comcast would submit a $60 billion bid but only do so if the u.s. government first approves at&t's proposed takeover of time warner comcast would also complete a full takeover of sky just to keep adding to this. >> it's complex. other comcast news is also formally notifying the european commission in its bid for sky.

that's a requirement for that ongoing battle with 21st century fox over the british tv group. comcast submitted a 22 billion pound bid for sky. shares there, you can see they're down on the day. and also, you know, not performing hugely well in the last week or so. very positive picture for sky. >> way above the offer price for comcast and fox's original offer. >> absolutely good point to make there. >> walmart, they're expected to announce a deal to buy a controlling stake in flipkart before the end of the week that's according to reuters. a deal would value the company at 18 to $20 billion. walmart will take a 60% stake in the firm, alphabet will buy a 15% holding. a reuters source says flipkart will announce the deal in a town hall from employees on friday. >> deal frenzy this morning. >> get involved in the

conversation if you information on deals, feel free to reach out to us on twitte twitter, @streetsignscnbc. coming up, nuclear countdown. president trump will later today announce his decision on whether he will walk away from the iran nuclear deal more when we come backmer is c 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. and for just $14.95 a month you get a credit, good for any audiobook. if you don't like it exchange it any time. no questions asked. you can also roll your credits to the next month if you don't use them. so take audible with you this summer... on the road...

on the trail... or to the beach. start a 30-day trial and your first audiobook is free. cancel anytime, and your books are yours to keep forever. no matter where you go this summer make it better with audible. text summer4 to 500500 to start listening today.

mr. elliot, what's your wiwifi?ssword? wifi's ordinary. basic. do i look basic? nope! which is why i have xfinity xfi. it's super fast and you can control every device in the house. [ child offscreen ] hey! let's basement. and thanks to these xfi pods, the signal reaches down here, too. so sophie, i have an xfi password, and it's "daditude". simple. easy. awesome. xfinity. the future of awesome.

president trump said he will announce later today whether the u.s. will remain part of the iran nuclear deal. he has previously threatened to withdrawal from the pact france, germany and britain publicly pressurized the u.s. to stick to the agreement trump has recertified the deal on multiple occasions since taking office but said he will make his latest decision public at 8:00 p.m. >> reporter: tonight, is the deal dead, president trump

tweeting late today i will be announcing my decision on the iran deal tomorrow the six-nation agreement required iran to reduce its stockpile of nuclear weapons, but the president says the pact is not enough to prevent iran from advancing nuclear programs. proponents say it's the only way to keep iran in check. key global allies have been shuttling through the white house to apply pressure including the leaders of france and germany and today, the british foreign secretary in d.c. >> we got to fix the floors in the deal but you can't do that without throwing the baby out with the bath water. >> reporter: foreign policy experts say iran will pull out of the agreement >> iran will have no obligation

to live under the restrictions, and we'll have created a crisis with our closest friends. >> reporter: it's one of the national security challenges the president is grappling with this week his pick to lead the cia gina haspel, a 30-year cia veteran is facing deep skepticism ahead of her confirmation hearing she ran a secret cia prison in thailand after 9/11 where a terror suspect was water boarded and later allowed the destruction of videotapes of enhanced interrogation sessions that a senate report later called torture she was looking for support today after threatening to withdraw last week, but pressed to stay by the president himself. >> look forward to wednesday. joining us to discuss this morning is the founder of abp invest i wonder if the u.s. decides not to renew the deal with iran, how big of a market reaction do you think we'll see? is there a lot of political risk

premium priced into various asset classes we were just talking about like oil >> i have the expectations that there won't be a deal. my view is he will not accept the deal as is but propose to restructure a new deal that's something that mr. macron, president macron mentioned. there could be a new deal, but not necessarily acceptance of this current deal. as a result the markets have been expecting that. i've been surprised to see sharp volatility on the back of that, however continuing volatility will remain. >> if you had to rank the list of potential things that could go wrong, whether geopolitical, political, other matters to do with monetary policy, what would you say is the number one risk facing markets today >> number one would be the trade

discussions taking place globally not only u.s. with china, but u.s. with europe, uk with europe so trade is number one second would be monetary policy surprises. stram central banks making policy mistakes >> you talk about trade concerns as a major factor there. we had a u.s. visit delegation to china last week, did not seem conclusive we have china's top economic official traveling to china this week should the u.s. be watching these meetings thinking why is there no conclusion or is trade an issue that takes some time to resolve? >> that's a good point and they're both right it will take time for this to resolve. it's highly political, especially between the u.s. and china. the u.s. is asking china to cut 2$200 billion of the trade surplus. it's more than half of the overall surplus they have with

the u.s. this is very much into the domestic electorate and the midterm elections coming for that reason, the 200 billion is the beginning of a negotiating tactic, though a harsh one. but i don't expect that's the central case scenario from the u.s. administration. >> let's talk about europe president macron has been in power a year angela merkel limped into their latest term as chancellor. do you think their relative strengths and weaknesses within the domestic situations make tun likely we'll see this reform effort succeed in europe >> i believe so. i believe angela merkel has had a fantastic three terms and is now preparing for the next cohort of leaders to take over for the next three years i believe chancellor merkel will focus more on who will be the next generation of leaders for germany rather than building

something new with macron. >> please stay with us we'll talk about europe briefly as well. in italy, president mattarella a proposed a neutral government or face new elections the far right lega and the five-star movement have already come out against the proposal. they called for fresh elections as early as july after another round of inkconclusive talks, mr mattarella said the new government should remain in charge until the end of the year. >> translator: it's up to parties to choose the proper seat in the parliament between these two sides. >> i wanted to ask you about italy. we hear some positive noises about the european periphery

some quite good indicators economically is italy the exception in your view because of this uncertainty? >> unfortunately it is i do not believe it's because of this uncertainty italy, before the whole euro situation could only help growth by deprecating currency. that was sort of even before the -- >> pre-euro. >> pre-euro. and even if there is political stability here, i don't think this will help the one risk which has been left out is because of madam le pen's failure to win last year because of the anti-europe rhetoric. i don't believe any of the parties will go with anti-euro this will not help the economic situation. >> not good from a structural reform perspective speaking of reforms, we have to talk about greece. we're hearing positive signs out of greece as well. how is the mood on the ground?

what are people saying about the potential exit is the economy strong enough to withstand this at a time when the european central bank is thinking about tightlly we are seeing some real turnarounds it's been a difficult ride, but the antidotal evidence from being there, visiting the country, but also some harder tourist data coming through, slightly improving consumer sentiment, gradual improvements in the employment have been helping but that needs to start moving faster. the country to look at is spain and portugal which have done fantastically well >> one of the drivers of spain's most recent strength is the fact that exports have picked up so notably, and we're not seeing that in the greek data you see a flood -- perhaps a little bit of investment but mainly tourism there i wonder about the longevity of

the situation. when portugal and ireland exited the program, they exited at a time when the ecb was pumping liquidity into the system. accommodative monetary policy. now things for greece are different. are we in a situation where it's not viable unless there's some form of public debt relief >> first i grow that it's been predominantly on the export side and spanish companies had to export outside because of the structural issues in greece, which have taken place or the lack of structural changes, exports have not been a driver we need some positive change on that i don't think there's so much of a quantitative tightening from the monetary policy within the ecb. that would be slightly positive. i do hope there may be some relief coming in terms of the discussion later on in the summer >> i was just in bulgaria recently where european finance

ministers were meeting to hash out a deal on potential debt relief one thing that was said to us we want to make sure the greeks fulfill the 88 commitments they have made. they have not done that yet. from your experience there and the people you know there, do you think privatization of the energy sector, will they happen in time? >> i'm not sure they will happen in time. there have been some marginal positive steps in terms of privatization, and when there was pressure to privatize back in the midst of the crisis, the assets were really cheap at least we're seeing more value through the assets and that makes more economic sense. i'm with you i think there won't be enough done in time it will be a matter of negotiating and some signs of good faith >> broadening this out a bit european recovery, european growth has been quite strong a few people have pointed to the fact that momentum slowed down

for a bit in the first quarter generally growth is there. how are you invested in this market >> growth has been slowing down because of the weather impact in the first quarter, also the currency was strong. we've seen the currency come off that also the domestic uncertainty and the political situation with germany. i'm not as negative on the growth i don't think we'll continue to see the momentum we've had over the last year or two years but growth will continue to be positive >> we had a guest on the show yesterday saying that the earnings per share growth in the u.s. for the first quarter was 20%. europe was only 3% so the growth is not really manifesting itself in the stock markets. do you see that as a potential value buying opportunity or do you see it as another reason to stay involved in the u.s. and not be exposed to a very slow growth environment as far as european stocks are concerned? >> i think it's more medium to

long-term story. the structural changes we have been seeing will b themselves over the next few years. volatility will be elevated and we may see the u.s. market behaving slightly better than the european market. >> much of that is contingent on what mr. draghi decides to do not only in the second half of the year, you have already given your views there, but what the currency does as well. do you have a view on the currency >> i believe the currency is a bit undervalued here i believe we have readjusted slightly higher in terms of market expectations. my views in terms of the japanese yen also. >> thank you for joining us this morning. hawaii's kilauea volcano is continuing to spew deadly lava that has forced the evacuation

of nearly 2,000 residents. officials are continuing to monitor the situation but have no timeline on when it will be safe for those residents to return we're just seeing some of those photos my mom washes the dishes... ...before she puts them in the dishwasher. so what does the dishwasher do? new cascade platinum lets your dishwasher be the dish washer. three cleaning agents dissolve, lift and rinse away food the first time.

new cascade platinum.

♪ with expedia you could book a flight, hotel, car and activity all in one place. ♪ the first survivor of ais out there.sease and the alzheimer's association is going to make it happen. but we won't get there without you. visit alz.org to join the fight.

welcome back to "street signs. i'm willem marx. >> i'm joumanna bercetche. the clock counts down on the iran deal. with hours to go until president trump announces whether he will withdrawal from the agreement, there are jitters in the oil market shares in shire trade higher after takeda agrees to buy the pharma group for 46 billion pounds in the largest ever foreign acquisition by a japanese company. and comcast puts together an all-cash offer for most of 21st century fox in a bid to beat out disney's $52 billion offer. shares in deutsche post dsl see red after first quarter earnings miss forecasts and as frank apple tells cnbc that e-commerce poses a challenge

>> we have some challenges, but with our postal operation,but that was expected. we haven't had a price in crease for stamp prices in the third year, this year we always perceived the most challenging one. checking in on markets ahead of that decision out of the u.s. later, vis-a-vis iran, today the mood is sour, particularly ftse mib. that has come down 1% since we last looked at it. down almost 2% on the day. 450 points about to break through that 24,000 level that's on the back of the news that they may be headed for yet another round of elections in italy. we have to see what information is coming out of there this is after the fifth round of talks between lega and five star ended with no positive outcome just a quick comment, ftse 100

up 2%. this is playing catch up with the other markets. i want to take your attention to foreign exchange. the theme there is one of dollar strength the dollar is at new highs for the year you can see that is really having an impact on euro/dollar, now at a couple-months lows. back to the lows not seen since the end of last year euro/dollar through 1.19 0.3% weaker on the day cable about to break through 1.35 as well key technical levels in cable at 1.3460 the other sector that is on

everyone's minds this morning heading into the u.s. decision on the iran deal is oil. and what we're seeing is the oil and energy complexes coming off a bit this morning, down 1%. down a full dollar or so you can see wti crude is actually below $70 we reached that level in yesterday's trading, which was another 3 1/2-year high. but the comments from rouhani yesterday saying they may still respect the deal even if the u.s. are not in it, and that it may not impact oil production. let's look at u.s. futures into today's sessions looks like we'll open lower. dow seen opening up about 36 points lower this comes after strong earnings season >> we were talking about whether markets moving, we did not see huge evidence of it eventually,

but some numbers out this morning relating to italy. we were talking about sergio mattarella calling fresh elections if he needs to we heard push back from the major political parties in europe five-year credit default swaps looking at the ten-year spread between italian and german bonds have hit the widest level in three weeks, at 127 basis points so a bit of reaction to that news >> you have equities, credits, incomes for italy. all of the instruments there are reacting it's interesting, i find it difficult to see how another round of elections will yield different results from a couple months >> that will be up to the voters deutsche post dhl missed analyst expectations

the german postal and logistics route blamed currency effects and the sale of its british outsourcing facility, williams lee. frank apple told cnbc earlier today that the company will face difficulties this year >> we had a good start, but we knew this year would be a challenging year for us. we have divisions which are doing extremely well our express division has done another record quarter freight is improving significantly. we have some challenges with our parcel operation, but that was expected we haven't had a price increase for stem price stamp prices fo year so this year is the most challenging one. adecco opened sharply lower after posting weaker than expected first quarter earnings. net income fell 26% missing expectations underlying revenue for march and april was also lower than the final quarter of last year

the slowdown was driven by units in north america, the uk, ireland and italy. and lafargeholcim shares are lower. the company is beginning a new strate strategy revenue was flat year-on-year. they contribute the first quarter result to a particularly harsh winter in europe and north america. we know all about that they said it's on track to meet full-year targets. uniper is trading lower. net profits fell 84% in the first quarter hit by an impairment charge on delays to its dattelin coal plant. the energy group has reaffirmed earnings forecast and dividend outlooks despite the setback and zalando has swung to an

after tax law of 15 million euros in the first quarter despite sales rising 22% to 1.2 billion euros. they confirmed the full-year outlook forecasting sales growth of 20% to 25%. the stock is up about 3% or so joining us no discuss everything equities, coming off a big earnings season, is charles carole from equity strategies. let's look back at the earnings season starting with the u.s looks like it was a strong earnings season. almost 80% of companies actually beat expectations. >> exactly, yes. so we've looked at about 380 companies, which have been reporting, we've seen that the number of beats have outperformed the number of misses by around 3/1 or 4/1. when we look at the absolute

size of the earnings surprises and aggregate them together, compare them with what analysts were expecting at the start of the quarter, then what you see is that earnings have come through around about 10% higher than expectations. >> a lot of that presumably is on the back of one-off measures. you have the tax cuts. the weaker dollar. but when you look at the data, which specific sectors were the surprises coming from? >> what we see is retail had a strong surprise, around 6% o16%f expectations driven by amazon mainly the tech sector providing a 14% surprise that's very important. because it's the largest earnings generator in the market then we have industrials and healthcare also driving that big surprise >> typically when these numbers have been so strong, does it indicate the run will continue, if you go back and back test the data, it's been a strong

earnings season but what people are saying is that perhaps this is the high water mark for the year and difficult to replicate this type of earnings season in comingquarters what does your data tell you >> yes, this earnings season has been a 10% earnings surprise you have to go back to 2010 when we were seeing a recovery from the recession. back then and this time around we have had one-off surprises, tax reform has been a very important driver but what is concerning is that we have not seen sales surprising by as much. the sales surprise has been 2% it would go back to the recovery, we were seeing 10% surprises on sales so we are concerned that this won't be continued just to reclarify that the surprise has been on net income not on sales because of those one-off measures >> yes, margin expansion

occurring there. with the data we have we can't see which individual items are driving that but we think tax reform is a significant driver >> one thing you've done is create a trend line looking at the u.s. when you've seen these beats, when company share prices are falling and the trend line indicates that's becoming increasingly common, why is that >> we think that there's a couple of things first, we think valuations are becoming more expensive. companies have higher hurdles to pass but if you look at that trend line, it's been going over for the last 20 years or so. and i think investors are becoming more sophisticated, looking beyond just what is happening to earnings, looking towards the balance sheet, looking towards what the companies are saying for the outlook. so you have concerns with tesla, which did beat, but people are concerned about its financial position, about whether revenues were boosted by emission

credits. you have caterpillar, which is looking and saying that it might be as good as it gets for this q1 most of the benefit from these tax reforms are coming through in the short-term. >> have you done work on risk adjusted returns not just the average beat or average return or dividend yield from a stock but dividing that by how much volatility there is in that underlying stock as well >> we have not looked for specific sides of that. >> the reason i bring that up, many people are pointing to the fact that they're expecting volatility to stay high. we're beginning to see volatility creep back into the market typically when volatility is high from your analysis, what sectors tend to outperform are there any sectors you would not touch in an environment of higher volatility? >> if you're seeing volatility rising, the classic thing is the low volatility stocks are going to be outperforming. that would recommend some form of investment into smart beta,

your concern there -- that would be aided by the equity market falls you saw. what would create also a headwind for smart beta is rising bond yields you have this difficult balancing act if you're an investor >> you're talking about utili utilities, reits >> utilities, the pharma sector would be appearing in there as well >> great >> charles, thank you very much for joining us that was charles cara head of quantitative strategy from absolute strategy. >> commerzbank ceo martin zulke has aimed to resume dividend payments for 2018. he said revenues were stable in the first quarter compared with the year earlier commerzbank is set to reveal its

first quarter results next year. and air france has recovered some altitude in early trade after falling to a one-year low on monday. unions have decided not to pursue new strike action giving investors some hopes of talks moving forward union strikes caused the airline big problems including the resignation of the ceo over disagreements about conditions and pay. we had a sharp drop in the air france share price yesterday, down 13%, 14% at one point at least the stock is rebounding >> following comments from the finance minister among others saying they would not support the airline if things did not go well another company with huge interference over the years is telecom italia the new chief executive has been confirmed, he said he would only

continue in the role if he won full support from the board which he has now done. warren buffett says he still sees potential in stocks and he doesn't think the equity market is in bubble territory in a cnbc exclusive interview, the billionaire said he would not hesitate to buy stocks over bonds even with the ten-year treasury yield around 3% >> now you have the situation, the federal reserve says they want inflation of 2% they say they'll try and devalue that bond by 2% a year in the dollar terms it's almost always equities have been a better buy. certainly if you're going to put away money over time when you're younger, you can buy stocks over a considerable period of time, you're not going to get the lows but you're not just going to buy the highs. if you are cross sectioned, well, like i say, it will turn $10,000 into $51 million and you never have the look at a

financial page again. warren buffett's vote in confidence in apple shows that they are heading into a new era. to find out why, go to cnbc.com. how much money did china make from the u.s. in april? we get the latest figures as trade tensions continue to simmer

♪ with expedia you could book a flight, hotel, car and activity all in one place. ♪

welcome back to the show rising fed interest rates may not be as big a risk for global emerging markets according to jay powell speaking in zurich, he vowed the central bank would communicate policy strategy as clearly as possible he says that, but of course the dollar has risen to new highs for the year, it's bounced about 4% in the last couple of weeks alone. still pretty much flat on a year-to-date basis i think the move in dollar over the last few weeks is freaking out a lot of currency pairs, not

just in developed markets but also in emerging markets we've seen that in the lira and the peso just looking at this board, euro/dollar is making new lows cable about to break through 1.35 the theme is very much of dollar strength and what the fed decides to do ext. >> we look at the euro, one big factor is trade data germany posted a bigger than expected trade surplus for march. data showed exports rose 1.7%, rebounding from a 3.1% drop back there february, while imports fell by nearly 1%. joining us to talk about this a bit by phone from munich is the director of the ifo center for economics at the ifo institute i wanted to ask you about deals and trade. we are expecting to hear from president trump later on today about the iranian nuclear agreement, whether he will continue to participate in it. i wanted to ask you about u.s.

negotiations with europe on trade. i know that's something you have been following closely do you think the extension of sanctions on steel and aluminum by a few weeks to the end of this month was a specific negotiating tactic or just a lack of ability to adhere to a deadline >> i think both probably it's in the interest of the united states as well as in the interest of the european union to strike a deal i think that's what the u.s. administration wants to do the 30 days we have is too little to make specific arrangements and to conclude financial trade agreements but 30 days could be enough to agree in principles engaged into more strategic talks that involve a negotiation on reducing tariffs on goods for

example, bilaterally across the atlantic >> what leverage does the european commission have in these negotiations >> we knows there a lot of signatories in the tariffs that the u.s. and europe apply. european tariffs on cars is 10%, relatively high. the u.s. has tariffs on light trucks, 25%. both sides have negotiation chips, both sides can offer each other something in those negotiations and that's actually a relatively good basis to come to conclusion it's also true that the new growth in the trade relationship between the u.s. and europe will not be in goods, it will be in services it's high time now that europe and the united states come together to, you know, to negotiate the basis for what could be a global rulebook in

this area. if they fail to do so, the rule making will move to asia, that is something that both brussels and washington would like to avoid. >> a lot of european officials have been relatively dismissive of the reason for these sanctions on steel and aluminum, especially when it pertains to the european union do you think the trump administration, when you look at the underlying numbers has a point, has a reason to be slightly unhappy about things? >> i think the documents that the united states trade representative has prepared to back up the decision of donald trump, those documents do not really rely on the national security argument. those documents read like if the steel and aluminum sector in the united states are under pressure, this reads more like what we call a tariff on safeguards grounds

so the numbers don't really permit those measures based on national security. the kee the key concern that the americans have is that europe is not cooperating enough in the area of defense, particularly germany. i think that's why we get this situation where the steel and aluminum problem that has much to do with overcapacity in china is mixed up with this national security concerns, that -- on the basis of the numbers and figures and data has not much to do together. >> just a question on the figures themselves according to figures from the u.s. department of commerce, the u.s. did have a trade deficit to the eu to the tune of 1$153 billion. but if you add in the net income or the income derived from u.s.

companies based in europe, if you add in services as well, actually we're looking at more of a flat number would you suggest and recommend that when these trade discussions are taking place, we're not just taking into consideration the good side of thing but also income generated for u.s. companies operating abroad as well >> absolutely. that should be done from a macro economic point of view what matters is not just trading goods, it's what we call the current account. that includes services and including net income it's important to see the united states may have a competitive disadvantage in goods, but advantage in services. in the eu it's the flip side of that if we believe trade to be an engine of growth, if we believe in trade to enable specialization, then we should at least have services and goods on a negotiation table

that should be the basic reflection should matter in the negotiations to come >> just a quick one. i wanted to ask you about the digital tax. this is a proposal that came up from the european commission, it has met a lot of push back we saw that at the euro group meeting last week. many people are saying that europe should not go at this alone. they should try to come up with a digital tax agreement with the u.s. in order to move forward on this the u.s. is saying that actually the proposal is somewhat retaliatory to the tariffs do you think that there is an opportunity for the u.s. and europe to come to an agreement via the digital tax, or is this a stick that they are dangling >> the timing doesn't work out because the tariffs about the digital tax are much older, but the unilateral move to push

forward with this 3% tax on d g digital revenue, that's something that one can see as discriminatory or protectionist because 50% of the revenue that the europeans target is revenue generated by u.s. firms. if the europeans and americans are to sit down at the negotiation table, they should bring goods and services to that table and in the services area what europe what is an important threat, which is the digital tax. maybe that is an area where compromise can be reached. >> thank you very much we have to leave it there. thank you very much for sharing your views that was the director of ifo center for international economics. >> that is it for our show we hand you over to our u.s. colleagues for now 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. theseare heading back home.y oil thanks to dawn, rescue workers only trust dawn, because it's tough on grease yet gentle. i am home, i am home, i am home

sure. mom,what's up son?alk? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. [ chuckles ] download the xfinity my account app and set a password you can easily remember. one more way comcast is working to fit into your life, not the other way around.

it is 5:00 a.m our parent company, comcast, may be ready to make an all-cash bid for 21st century fox. president trump will announce his decision on the iranian nuclear deal at 2:00 eastern time today. eric schneiderman is stepping down, this follows abuse allegations. activist investor value act targeting citi group, building a 1$1.2 billion stake in the bank and hawaii is on high alert as mount kilauea continues to erupt. it's tuesday, may 8, "worldwide exchange" begins