welcome to street signs. there's a new prime minister in italy who they will present to the president later today. trade war averted. u.s. futures point higher as negotiators from washington and beijing put aside tariff threats and agree to address trade imbalances >> we're putting the trade we're on hold. so right now, we have agreed to put the tariffs on hold while we

try to execute the framework >> ryanair records recovered prices >> we're ledged at $39 a barrel. the question is who survives oil. clearly $80 a barrel oil is going to bring casualties this winter >> and elon musk reveals a new vehicle. the production issues could take the shine off, though. good morning, everybody. happy monday before we start the show, let's check in on how markets are doing. we did see a bit on of a rebound in the asian session as some of the tensions vis-a-vis the u.s.

and china trade talks. the u.s. is saying that the trade disputes for now have been put on hold and also the chinese foreign ministry have returned by saying we don't want trade tensions with the u.s. that has boosted sentiment in asian trading. we have both the swiss index and the dax closed for the session that's one of the reasons we don't have the dax up. as you can see, the only underperforming index this morning, the ftse mib down 1%. but there again, some of that movement is being affected by the fact that the index has gone ex dividend. but, of course, we'll get into some of the stories at driving italy performs in a short while. let's take a look at the sectors. every single sector is in the green this morning again, though, that is a little bit distorted by the fact that the german markets rpt trading you can see travel and here yle is up .8%.

the outlook isn't as positive as the last your's profits would suggest, but there again, you see travel and leisure is the basket that is performing. underperforming somewhat, banks up .1% but today is all about italy let's take a look at ftse mib and some of the major blue chips in ftse mib. telecon-italia, it's inching back into green. media set underperforming. overall, the index is having a weak session today, down 1%. that index has been quite volatile as i mentioned a little earlier, the index has gone ex dividend, so that is weighing somewhat as some of those names are now ex dividend but let's talk about the maven story is that is that italy's anti-establishment five-star movement are reportedly set to

propose private law professor gissepi cande as their prime minister lega mi giancaro giorgetti would become the economy prime minister over the weekend, lega members overwhelmingly backed a coalition deal with the anti-establishment five-star movement in a statement, lega said around 90% on of its supporters participating in an informal ballot favored the plan. last friday, 94% of members of the five-star movement backed the deal, as well. and our colleague willem is in rome we finally have a viable

candidate for prime minister what more can you tell us? >> right so i just confirmed that the voting process over the weekend, five-star ran an online poll on friday to try and get approval on certain measures and decisions they've made they had 44,000 people across the entire country 94% approval rating, as you mentioned. meanwhile, lega set up a series of stations around italy and they ended up with a 97 approval rating what they're looking to get today around 5:30 and 6:00 respectively when they meet is not only approval for prime minister candidateand we don't know for sure who that's going to be and probably won't until after that meeting, but they're looking for a much more informal approval of the policies we've seen them promulgate over the last ten days or so. they hashed out common ground.

those include huge changes to the italian flat back system some economist including a team at the university in milan estimate that could cost more than $125 billion euros a year cost savings meanwhile would be only half a billion. you can see a pretty massive, gaping hole there in terms of finances that looks like it's been included at 780 euros a month for poor families here in italy, but it will be tied to job seeking assets as well as means so that is essentially a typical unemployment benefit in terms of sanctions on moscow, that's something they're hoping to withdraw and migration is a big issue during the election here for all the major parties they're looking to immediately deport over half a million

migrants across italy and looking to include the deportation camps for those migrants will people will be held for 18 months >> just in terms of timing, can you tell us a sense of how quickly this government formation process is going to go if all goes to plan, as you say, later this afternoon and then also when this new government or new prime minister will have its first meeting with the rest of europe we heard from the french finance minister over the weekend, mr. lemeia who is firing a few shots at the government saying you have to have a few budget rules. >> yes the lega colleagues will meet. a week ago, we had similarly timed meetings on monday that came to nothing as we realized both sides were still not on the same page. we would imagine that we would have a prime ministerial candidate named either by the president or by those two

political leaders and at that point that man or woman will be given an individual mandate to go about selecting cabinet members, presumably people put forward by both 5-star and lega. did they get through that and, remember, this coalition has a slim majority in the senate, just ten seats, that government would in theory be able to start its work the question is whether at that point a viable prime minister candidate will survive that approval vote and will be able to represent italy at the next level. >> let's check in on bond yield. yields are fall out of bed this morning. we've seen a big sell-off in ten-year btps that are now about 7 basis points mier on the day really, i want to pull your attention to the front end, up

10.5 basis points. this is a really big move and that brings it back up to almost 20 basis points. i think some of that was on back of their plans to think about issuing short data bills with me to discuss that is william. big move in fixed income today it's surprising because, to a certain extent, some of the aspects of the program have been dialed down a bit. they're saying that they're not going to put the fiscal spending limits too much, aim to go somehow respect the master treaty yet we're seeing this reaction in fixed income. what is spooking investors here, do you think >> it's the significant fiscal expansion from a country that needs to be moving in the opposite direction, in most people's eyes. and the budget deficit is well below the 3% limit that's because the economy has been growing for several years and indeed, i think they're fortunate, this incoming government, that the background is very favorable.

the european economy is growing strongly, interest rates are low, italy has a current account surplus. it had a deficit back in the days when this was a much bigger problem. but a lot of betts are being placed on the fact that this government is going to stumble into a mess. that when it's under pressure, it's going to spend more i think the reversal of the pension reforms, which are the only plank that really they share, that's the only thing these two parties really agree on, that's a big mistake the pension system is overly generous and people are living longer and every country is grappling with that. >> how long do you think it will take the economy to feel the effects of reversing the labor reforms and other fiscal measures, as well? the way the market is reacting today is as though we're going to get instantaneous implementation they have a very small majority, so it will be difficult for them to put a lot of these measures into place >> well, we'll see

we'll see. predicting any country's politics is difficult. predicting italian politics is tim particularly difficult we'll see what happens most people expect a new election in a year so could they get a bigger majority in the next couple of years? i think the key point is the immediate impacts could be simply positive. you give a tax cut to people even if you watered down the universal income, you give people more confidence, they spend more money inflation is not a problem i think the immediate impact could be positive on the economy on ordinary people >> so do you buy italian equities, then, here >> we love a lot of -- there's some great businesses out there. there's a lot of high quality globally competitive companies around, for example, the ferrari ducatti, little industrial hubs. there's a company, ima, that makes 70% of the world's tea bagging machines

you may think that's a rather declining industry, but they also make the packaging for philip morris's new cigarettes and that's a big growth area the problem our stock pickers have had is they're too expensive. so this is a -- a strok story. the ftse mib down this week, down today, down last week >> still up 10% on the year. >> it's up -- i don't know about about 10, but it's up quite a lot this year. there's some great stories there. the question is will this government mess up >> can you hedge that somehow? would you use the currency for that would you sell bond yields >> hedging is the bond is very tricky basically, you just -- our guys basically look at quality companies, so they only hold one bank if they were cheaper, they might buy them so i don't think you can sensibly play to hedge out that

situation. >> steven, what do you think this means for the ecb did you think it's going to have any bearings on whether or not mr. draghi decides to finally put an end to thises asset purchase program or if he sees the likes of ten-year yields continue to go sell off on a regular basis they might balk somehow? >> it's a problem if the bond yields get so high that they have to activate one of these programs i don't think it's going to be very easy for mario draghi to activate these programs, anyway. but if the italian government is marching precisely in the wrong direction, he's going to find it very difficult and, of course, he's going to be out of office at the end of next year so we're going to be looking to his replacement who is very likely to have a much less sympathetic view this is the kind of time when it's easier to do fiscal consolidation because the overall economy is doing better. that's the kind of time when the numbers look better and they're worth marching in the wrong direction. >> we're going to have to leave it there

thank you very much for joining the show this morning. that is steven bell from bmo global management. head to cnbc.com for a full profile. elsewhere, nicholas maduro has been re-elected as president of venezuela in an election that has been dismissed by rivals as a coronation of a dictator officials say maduro claimed 5.8 million votes with his nearest challenger henry falcone claiming 1.8 million speaking after the vote, falcone claims the vote lacked legitimacy turnout was 46.1%, down from 80% at the last presidential vote in 2013 speaking during the vote on sunday, maduro took aim at washington, stressing venezuela's independence sf sflt. >> translator: the usa can't think they are the rulers of the world.

venezuela is governed by a constitution, by national laws, and is governed by solid public institutions, solid public powers like the electoral authority. so venezuelans are governed by our own conscious. >> meanwhile, iran's foreign minister says the european union's support for its nuclear deal is not enough eu leaders have prejudiced to honor the deal but speaking in iran, mohammed zarif said the party is not sufficient french finance minister bruno le mair referred back to rules from 1996 which could allow the eu to intervene. speaking on sunday, he said the

eu would be the allow the u.s. to become the economic policemen of the world and we've discussed plenty of things this morning. if you have any views on italy or some of the price action we've seen there, the address is streetsignseurope@cnbc.com we're on twitter or tweet me directly coming up on the show, turbulence ahead for airlines as the oil price begins to bite we'll hear from ryanair chief executive michael o'leary right after this break the first survivor of alzheimer's disease is out there. 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. ♪ tired of wrestling with seemingly impossible cleaning tasks? using wipes in the kitchen, and sprays in the bathroom can be ineffective. try mr. clean magic eraser with durafoam. simply add water, and use in your kitchen for burnt on food,

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welcome back to street signs. we have to wait and see what comes in the future according to italy's developments as we were just speak, our guest, programs it could have

some implications for ecb policy later in the year if fixed income does continue to get unhinged you can see euro dollar is trading about 4% weaker on the day. elsewhere, ryanair has cut its outlook for the full year 2019 as staff and fuel costs add to a continued soft pricing environment. the airline posted a record profit in its latest full year results, rising 10% to 1.45 billion euros. earlier on "squawk box," ceo michael leary said the higher price will create casualties in the airline sector >> we're well hedged on oil into this year. we're hedged at $59 a barrel current spot is close to 80. if the oil continues at these elevated levels, we're clearly facing higher oil prices n not in fy 19, but in fy 20 the question is what casualties that will bring. clearly $80 a barrel oil is going to bring casualties this winter >> when you don't know whether

the price is now at its peak and about to roll over or come back on or whether tlkdz be more up side for the oil price how do you get your head around the hedging policy you need. >> what we try to do is roll forward, be 90% hedged 12 months out. so at least we have certainty on costs. and we are essentially price takers on oil. at the moment, we are now 90% for the full fiscal year we have very little hedging in place, less than 20% for the following your and we are now facing forward rates in the mid 70s some of those airlines that couldn't make money last winter i don't think will make money this year. >> you think norwegian is going bust >> yeah. if you couldn't make money at $40 a barrel last year, they're unhedged, i think it's

inevitable, it either goes bust or gets taken out or reformed. >> is it just nor weejend or are there other players? >> there's other players >> such as >> i don't want to name them all on television. air italian is in administration, you have t.a.p. struggling there will be a number of players who are going to suffer. we have it built into our numbers, but it may well be if there's a restructuring over this winter, then the capacity growth environment may stall, which may be good for the outlook on fares at the moment, we're pessimistic on fares because capacity growth continues to be above average. >> let's take a look at the ryanair stock this morning it will open about 3% weaker, but has rebounded now. we're up almost 3% sort of whippy action in that stock this morning of course, they did post very

strong profits for the year, but the guidance was negative so the two are mitigating somehow but the strong results seem to be weighing. elsewhere, ieg is reportedly planning to offer 1.52 billion euros for norwegian air shuttle. the spanish media has reported that after two unsuccessful attempts, iag has drawn up a proposal to pay a premium of almost a third of its rival share price. on friday, aeg said it was not expecting to announce a deal soon and the company has not commented. markets in norway are closed today. a trade war between the u.s. and china is, quote, on hold that is according to u.s. treasury secretary steven mnuchi fl speaking after negotiations in washington, mrunin said the two countries agreed to discuss that while they're discuss ago trade deal >> right now, we have greed to

put the trade war on hold. the president has been very clear since the first meeting with president xi in mar-a-lago that we are going to reduce the trade deficit. we have an agreement with china they will substantially agree to it it's not a giant purchase order with us. >> now both beijing and washington have continued to look for ways to lower china's trade surplus with the u.s the no specific dollar figure was cited by either country. it was suggested this weekend china would raise energy and agriculture imports from the u.s., but they will not be forced into this action to avoid a trade war. >> translator: this round of talks have been pragmatic, fruitful and efficient we reached many agreements we agreed on mainly two areas.

one is trade the other is structural issues we've resolved some of our misunderstandings from the past. these meetings will not just help the lateral economic and trade relations and overall ties, it's good for people in both countries >> and speaking of trade, japanese exports increased in april mark ago trade surplus for the second consecutive month due to strong demand overseas for automobiles and semi conductors. makiko suda joins me from the nikkei can you tell us where some of that strength is coming from >> yes hi government agent released today show that trade surplus marked a 30% rise on the year for the month of april and this was despite an increase in energy imports, includingoi and coal now, exports grew 7.8% continue to go rise for the 17th consecutive month. and what stood out was the growth inauto sales, climbing over 15% from the year before. demand was especially strong in

europe where it surged 24% and in the u.s. the increase stood at 10% in terms of region, exports towards china rose over 10% hit ago record high for the month of april. semi conductor exports more than doubled and demand for metal processing machinery grew nearly 50%. negative effects due to the trading friction between the u.s. and china were limited. steal exports to the u.s. both in terms of volume and value were up 13%, even with tariffs being raised for most steel and aluminum products. that's all from the nikkei back to you. >> makiko, thank you for bringing us the latest there let's check in on gold prices this morning, i think we have reached new lows for gold prices for 2018 and down, well, 3.5% in the last three months alone and down .37% in trading today around 1280 of course there's no coincidence there that it's coincide, a much stronger dollar with the x/y

hitting highs of 2018. mg coup on the show, new data protection rules take effect this week, but what exactly do they mean for european businesses? we've dive into the details right after this break - 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.

welcome to street signs. a break through in italy sends bonds yieldses higher and the stocks lower as the parties agree on a new prime minister who they will present to the president later today. trade war averted, the u.s. futures point higher as negotiators from washington and beijing put aside tariff threats and agree to address trade imbalances >> we're putting the trade we're on hold. so right now, we have agreed to put the tariffs on hold while we trying to execute the framework. ryanair cuts its outlook and warns on the impact of prices but right now, they're having

record profits >> we're hedged at $59 a barrel. current spot is close to 80. the question is who survives this winter. or what casualties that brings >> elon musk takes to twitter to unveil a new version of the model 3 with a dual motor and an all-wheel drive. but critics say the $70,000 price tag and production issues could take the shine off let's check in on how u.s. futures are looking this morning. we have slightly weaker session on the day on friday with the dow ending the day and the year slightly negative, down .02% but today, the move is a lot more optimistic. dow is seen opening up about 220 points higher. in terms of data, there's not a lot to wauch for today in the

u.s., but we will be getting plenty of fed speak. we want to watch out for atlanta fed and philadelphia president harker both speaking later in the session. but, of course, today is all about the fact that some of those trade tensions have moved to the back drop now let's switch to european markets. today, the focus has been very much on ftse mib down almost 1%, more than 200 points in trading as the market comes to terms with the new proposals by lega and 5-star as we mentioned, a lot of the other markets are closed today germany, switzerland, norway all closed ftse 00 interesting. we're at 78.30 on the index. that is a new record high for the ftse 100 index up 50 points, up .7% it is no coincidence there that it's also coincide, a much weaker pound so let's take a look at foreign exchange and see what the picture is like. cable we have at 1.3414. it is now at five-month lows as

it coincides with new highs in ftse 100 no big surprise because there's a very open and export oriented index. and the theme across all of those currencies you can see is one of dollar strength today euro/dollar is back through 111, now .5% stronger elsewhere in technology, shares in google parent alphabet fell on friday as cbs show "60 minutes" prepared to show a show on anti-trust. >> i admire some of the innovation by google over the last decade. well, i want their illegal behavior to stop >> and that's what you feel has gone on. >> not only do we feel it, we mean that we can prove it. >> and european companies could face fines if they don't comply with new data privacy rules set to take effect later this week the so-called general data

protection regulation, or gdpr, ames to give individuals more control over their personal data online and i'm happy to see elizabe elizabeth schulte joins me now to discuss can you explain what this regulation means and what it means for the consumers. i've been getting various e-mails asking me whether or not i want to stay on their newsletter list. but beyond that, what additional rights am i going to get >> gdpr, general data protection regulation is a sweeping rules going into place across europe the idea is to give you more rights on your personal data this is a law that is trying to harmonize data privacy across the entire eu. some countries have strict law necessary place, others don't. this is trying to create a framework so that it's consistent besides the right to know what companies have on you, you also

have a right to be forgotten what that means is your data can be erased. you can say to a company, i want you to forget about me and they have to comply with that if they aren't able to comply, there are some pretty serious fines. we're talking 20 million euros or up to 4% of global annual turnover so those are make or break numbers. >> are we expecting consumers to be more hands on in terms of how they think about data privacy in the future >> so surveys have shown that cob assumers do mra plan to take advantage of these new rules they are going to request what information a company has about them i think over half of consumers in one survey say they plan to reach out to companies and say what do you know about me and maybe i want that information deleted. we've seen this is a focus a lot of people don't know what personal data companies pull about them, so there's

transparency there now >> and in terms of businesses being ready, we saw it with the previous regulation at the beginning of this year, many companies were not ready to introduce this regulation, even one or two days before it came into play. and actually what we ended up seeing was many of the key points ended up getting postponed a lot bit. >> up to half of companies are looking like they may not be able to meet that deadline based on how they're reporting we heard some of the issues are that u.s. companies have to comply, too. if they have customers here in europe, you have to fall under these rules. so we spoke with a u.s. company and they told us that speaking the same language with the i.t. and the legal teams was one of the biggest problems here is what that company said to us in an interview. >> it was quite new for them, really, the idea that they had to comply with a piece of european legislation what we discovered very rapidly is that we talk two different languages. >> so two different languages

between the i.t. and legal teams. that's a challenge across the ocean. it's a challenge within europe here, as well. >> not very reassuring and presumably entails a lot of cost on the business side one final question for one cheryl sandberg said the eu is leading the way when it comes to data privacy regulations do you think that the template being applied by europe will eventually be ruled out, internationally, perhaps, in the u.s., as well? absolutely one of the reasons this law has been watched so closely is that it's seen as a framework for other laws out there if it turns out this is successful in getting countries to be more transparent about their data, ear companies, other countries are following suit and we are seeing a focus on data privacy laws around the world. >> elizabeth, thank you for bringing us the latest on gdpr for a run yoen on everything you need to know about gdpr, head had to our website, cnbc.com trade shift is tapping what it calls tradeshift launches

the cloud company is launching tradeshift pay joining us on the show is the ceo of tradeshift, christian lang can you tell me more about this technology you're combining not only block change, obviously, a new form of payment, but keeping existing types of payments in play, as well >> yeah. the problem is, if you have a global footprint, you have to run payments a lot of different ways and especially in developing markets, smaller countries, it's very hard to access, for instance, finance. and blockchain based finance riding to the block chain, you make it available for financing even for global banks. so you make the economy much more accessible, but you give much more global footprints to companies. >> blockchain and crypto currencies is a very large

technology how easy will it be to sign up for these? >> that's the beautiful thing about the platform if you have all this on a very easy to use interchange, you don't need to understand blockchain >> so one of the problems that you identified is that there are significant amounts of late payments that go on in trade invoicing, to the tune of $7 trillion that is a huge number. why are there so many delays where is the hurdle? >> i think historically, when payments were paper based, you had to send an invoice you had to move it through the company, get an approval you would have to write a check, 50% of u.s. payments are still check-based. hard to believe. it takes time. three to four to five days you see a lot of companies moving out maybe to 90 days. the problem is that hurts the economy. it hurts small businesses. they have to lend at extended rates. so what we do is we enable

companies to preserve the cash flow while giving access to earlier finance to the smaller companies. we insert all the major banks like santander, american express, into that flow and finance -- >> so you're providing stopgap financing. >> exact ly, yes, on the fly realtime >> how did you get the banks to sign up given that banks have been very skeptical? what was your pitch to the banks here what are they getting out of this >> i think you have to work with the banks as a friend. we view banks as the best in the world of finance when you bring it together, it works. in the past, bank, they used to be with the trade wars, there's a reason there's a bank -- branch at every single -- in the world. today all of that trade is digital. it's on platforms like trade shift. if you're a smart bank, you create a virtual branch. >> presumably, they get a commission per transaction or interest -- >> yeah, control of cost

relationships and it's all digital and, you know, you have to facilitate the that much faster and quicker and we help companies get app access to finance. >> one question that comes up is that of cyber security how do you protect or reassure anyone who is participating in their platform that their transaction is safe? >> so that's both public and private blockchain we are the biggest enterprise consortium of blockchain companies. one of the platforms and benefits of using tradeshift is we guarantee transactions, we take care of security. you don't have to know about all of these things. i think that's a huge benefit about having a private platform like tradeshift as the intermediary >> thank you for that. that was christian lang, the ceo of tradeshift. if you have any views on anything we've discussed, twoet

tweet us about gdpr. coming up, are london bridge prices falling down? we get a bearish outlook owe sector when we return.

welcome back to street signs. u.s. president donald trump has demanded that the justice department investigate whether his presidential campaign was infiltrated by the fbi in a series of tweets, trump suggested the fbi may have planted or recruited an informant in his campaign rnd the direction of barack obama. after spending the whole weekend inside the white house, the president emerged on twit were a major declaration. i here by demand that the department of justice look into whether or not the fbi, doj, infiltrated or surveilled the trump campaign for political

purposes the president's demand follows reporting in the "new york times" and washington post that an fbi informant made contact with three members of the trump campaign in the summer of 2016, after the bureau began to examine possible russian election interference. reached by phone today, the president's lawyer, rudy giuliani says said mr. trump wants answers. >> all he's asking for is for them to investigate it he's not telling them what to conclude so it's perfectly appropriate. >> giuliani says the president has the authoritier to demand a new probe as head of the executive branch the president's legal team wants to speak directly with the confident informant. we'd like to interview everybody. but you can't compel that. >> any informant's identity must be kept confidential >> the day we can't protect

human sources is the day the american people start becoming less safe. >> the special counsel notified the team that its investigation regarding the president could be concluded by september 1st late today, rod rosenstein responded, if anyone did infill trail or surveil participant necessary a presidential campaign for inappropriate purposes, we need to know about it and take appropriate actions. >> for the latest twist and turns, head over to our website, cnbc.com in corporate news, general electric is closing in on a deal with railway equipment an agreement valuing the combined businesses at $20 billion could be announced as soon as this week. if it goes through, the deal would be the biggest under new ge ceo john flannery as he aims

to restructure the company and boost its full length stock price. tesla founder elon musk has teased new specifications for the model 3. the car would have dual motor capabilities and a top speed of 155 miles per hour the starting price would be $78,000. tesla has struggled to ramp up production of the model 3 and has had to push back the timetable to reach its 5,000 weekly production rate goal. meanwhile, another ott musk projects with, the boring company, has been getting a different kind of attention. phillip reports from chicago >> eeen lon musk's side project, the boring company, has some big ambitions for drilling tunnels under the city of los angeles. musk wants to about build a proof of concept tunnel almost 3 miles long pedestrians shuttles would zip along inside the tunnel at up to 150 miles per hour the cost $1 a ride. and musk believes it would ease congestion in l.a. >> the highways are at the outer

limit of their capacity and you're really just on it, barely moving the needle in capacity. but for tunnels, you could have hundreds of lanes. and there's no real limit. >> the boring company is partnering with the agency in charge of l.a. county's public transit system to explore building tunnels, but also there is push back on the idea at least two neighborhood groups in the area are suing to prevent any digging. it is still unclear how much it will cost to drill these tunnels or who will pick up the bill, but that is not stopping elon musk from drumming up public interest in zipping around at very high speeds under the city of legislation phil lebeau, cnbc business news, chicago. from the boring company to boring football matches, the billionaire russian owner of the chelsea football club abramovich is facing delays in his visa

his investor visa reportedly expired three weeks ago and is taking longer than usual to be renewed. relations between the u.s. and russia have hit a low after britain accused moscow of poisoning sergei skripal in march. russia has denied any involvement. and goodbody will be celebrating on two key players and a bearish outlook overall. it takes the market is currently defying dooms dayers but that is only a matter of time as brexit and foreign investors come into play it's a pretty bearish outlook. we're expecting less foreigners with, less chinese money coming into the capital now >> very much we know the impact of russian sanctions hit first time around

on particularly high end residential london there was a clear move in prices but our analysis, which we focus on now for a new look and relatively bearish call, it cass driven by two facets we look at the overseas reliance in terms of what's coming through from capital investments. then we look at the leasing side leasing drives our primary concerns if we look at overall lease terms, leases are getting much shorter. for buying real estate is less significant than it was -- >> because you have that rollover risk. >> i want to ask you about the income there was a very interesting story talking about cva, so company voluntary arrangements whereby a lot of these retail companies are allowed to renegotiate much lower rent fees than they would have had now worry seeing more and more

retailers jump on that bandwagon, anyway. that can't be a positive development for landlords, can it >> that is a further pressure point. cvas predominantly affect retail companies. it has permeated through in terms of fears and if you look at what's happened in terms of the reaction of pricing, shopping center values continue to fall in the uk, the transaction receipts of far blue water being a case in point has been weak. if you look from the office side and particularly focussing on very much the central london view, that has continued to take it on quite well and the reason it's continued is inflows particularly for far eastern investors. they're not buying real estate so much for the income stream, but the fact that the income is weaker, a higher risk is not a major concern. they're looking at the pricing standpoint and we've done a lot of work to determine how they price assets, what they did for assets

a lot of these investors are 25%, 30% more than would stack up what that's meant is a lot of your traditional uk property funds who they're domestic, they know the market best compared to overseas investors, they're selling out of west end -- >> and that artificially high bid from foreign investors is going to go away because of what >> that's the key thing is trying to identify that catalyst if you look at the regulatory change, particularly from mainland china into hong kong which particularly flows to europe or to the uk in this case, that is trying to slope. they're trying to track that particular indicator and how that capital will evolve is the key thing. the view out there is the london market is sustained is no locker the case any more. >> and how are government

policies playing into your outlook? because we heard the budget, of course, there's a big plan to build more affordable housing. perhaps that's more on the residential side than the commercial side. i just wonder how the supply outlook is from the housing perspective, as well >> it affects most western european capitals these days have similar competitiveness issues when it comes to office space. but for us, the pinnacle issue is dem nating. we look at evolving our declines and take a three-year review if you also think what's happening around that time period is q4, it's pretty much peak brexit. that's the end of the transition agreement. we tried to build a rationale case for growth in that interim period, we find it quite challenging. it is a modest decline so we're looking for about 18% over three years nowhere near the declines in the

market has seen between 2008, 2009, which is over 40%. modest in our view >> still 18% over three years. and in terms of yield, what are you penciling in >> about 50 basis points so you take the prime tra west end asset now, you're looking at about 3.5% yield it's quite a modest move when you take a longer term view of the market >> what would cause you to change your outlook? where is the positive catalyst going to come from >> from an occupier perspective, you have to think around how the brexit negotiations evolve and would the key catalyst be whatever focused on if there was a soft brexit environment, that would help those transition view >> certainly >> so that would be a positive >> that would be a positive and i would see upgrades in our view >> thank you very much for joining us, collin, real estate analyst from goodbody. let's take a look at u.s. futures before we hand off for the session. it looks as though it's going to be a much more positive day as

far as trading is concerned with the dow seen opening up about 230 points s&p opening up about 14 points higher, as well. and i should mention that on friday the dow did close slightly down for the year, year-to-date almost negative -- well, minus .02% not a lot of data today to watch out for. we've got a couple of fed speakers coming up we have atlanta fed bostic and president parker, as well. before we head out, let's take one last look at ftse 100. we have been talking a lot about the uk today the ftse 100 has made new highs for the year, up 60 points as cable makes new lows for the year, as well. and that is it for today's show. "worldwide exchange" is coming up next. [fbi agent] you're a brave man, mr. stevens. your testimony will save lives. mr. stevens? this is your new name. this is your new house. and a perfectly inconspicuous suv. you must become invisible.

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it is 5:00 a.m. at your cnbc headquarters treasury secretary steven mnuchin saying the trade wars are on hold. ge may try to get smaller by merging its rail unit with another train company. lava continues to spill from hawaii's mt. kailua volcano. and a big win for fox as deadpool 2 takes a big spot at the box office "worldwide exchange" begin