welcome to "street signs." i'm willem marx. these are your headlines italian stocks rally and bond yields fall as investors welcome the establishment of a coalition government. european exporters rally as the block fights back against u.s. trade tariffs the eu says they will enact retaliatory measures and mariano rajoy says he will not resign after socialist chief peter sanchez was put in

power. and deutsche bank says the bank's financial strength is beyond a doubt after the s&p cut its rating for deutsche's stock. if you look at our share price yesterday we are vulnerable for speculation. this is tough. sometimes this gets bumpy. by we have already quite a lot behind us, we know what we have in front of us we have a plan some numbers out of italy. final gdp figures for the first quarter, it is as expected, 0.3. italy expecting a gdp of 1.4 for the year those new final q1 numbers at 0.3% this morning. also going to bring you more data on the eurozone

manufacturing pmi data coming out at some point in the next few moments. eurozone final manufacturing data for may output is 54.8, that is against preliminary number of 55.5, that's down from 56.2 from april. in italy the five star movement and lega party agreed on a new cabinet lineup president mattarella a retarelld the new list the break through came after both parties agreed to reject savona as finance minister, he has been replaced. as woe look at some of the reaction to this, another example of them clawing back the ftse mib up 0.2% on the

morning. if you look at the stocks roaring back, in particular the banks, banco bph up almost 7%. unicredit trading positively, up more than 4% another thing to look out for is the italian bond market. both the ten-year and the two-year, the yield dropped significantly compared to tuesday. the two-year is currently down more than 43 basis points. pretty positive news in terms of that government debt in italy. that at one point got down to close to pre-tuesday levels after that wobble. we're joined by silvia deangelo. on the assumption this new cabinet under conte gets sworn in, approved by parliament next week, do you think we can see changes to taxation, that new spending being rolled out

quickly or is that going to take time >> if we look at the coalition agreement, it includes several measures most of all they imply higher fiscal spending or a reduction in revenues. however we have mixed signals from the designated finance minister they're in favor of change towards a flat tax system, but it's more skeptical about the universal income so i would expect these measures to be implemented gradually. also i would expect some debate with european institutions all these measures might end up being toned down quite a bit >> one argument from five star

and more specifically from lega is the measures in terms of reduced tax take and increased welfare spending will stimulate growth is that what your model shows? is that something you anticipate happening? >> are two issues. the impact of fiscal measure is always uncertain second, it's unlikely to be immediate. so, we get first hit to public finances, but the beneficial impact will not be immediate, and also it's going to be uncertain. >> another question, in terms of the near-term horizon, do you think there's anything that could happen that would rattle markets to the extent we saw on tuesday? >> i think that financial markets have been complacent they're probably underpricing the political risk in italy. what we saw earlier this week

was probably not reaction. going forward italy will remain under special monitoring for financial markets. i doubt we'll see another episode of stress like we saw earlier this week, but we can't rule it out. >> one other thing, mr. savona will not be economic minister, he'll be in charge of european affairs, he'll presumably be throwing bombs, as it were given that, given the fact that you'll have a far more pro european politician, a former monte assistant and aide as foreign minister, do you think the relationship with europe will change dramatically? is that something we should be focused on in terms of the relaxation of fiscal and spending rules these are lots of big ifs.

is that something investors will watch closely? >> i'm sure investors will watch this relationship with europe more closely one of the main points of convergence involving the government is confrontation with the institutions i think the relation with europe will evolve. we'll see. i should add at times of crisis europe found the strength to push through so this might be an opportunity for europe to deal with the populous more seriously and propose new solutions. >> big structural reform issues in italy jean-claude juncker said they want the new government to work harder and they want to see less corruption is that realistic? is that fair as an assessment of the italian economy?

do you think anything can be done about those two issues iss >> growth has been zero over the last ten years on average, and that started declining well before the global financial crisis clearly there are structural issues in italy. structural issues that governments over time the last decades have basically ignored it's now time to seriously tackle those problems. i'm not sure whether that's the case for this government which includes a fairly mixed force. so the five star movement and the lega are quite different parties with different goals, with different electoral bases >> very different set of ministers as well. >> there is the risk of there

being conflict between different components of the government that could be unheard of but we might also see a positive scenario where these forces put forward a plan including structural reforms, some fiscal measures some limited fiscal slippage it's a narrow path, but a possibility. >> do stay with us thanks for some of that commentary there another story very crucial to europe in terms of politics, spain is also mired in political upheaval we'll speak to an mep and economic adviser at 10:30 a.m. cet. shares in deutsche bank, they're trading higher after falling to a record low in yesterday's session following a report that the fed last year designated the bank's u.s. operations as troubled

you can see they're up more than 3% after a 7% fall yesterday in a message to staff this morning, deutsche bank's ceo said the bank's financial strength is beyond doubt my colleague, annette, joins us this morning this is not particularly new in terms of deutsche bank facing difficulties, but the language is unprecedented >> yes the language is unprecedented. i think the markets were shocked that deutsche bank is called a problematic bank in the united states, but obviously everybody is always very afraid of looming penalties from one of those big u.s. authorities deutsche bank has been under scrutiny in the united states for so many years by the fed already in 2013 the fed criticized the bank for a lack

of proficient infrastructure and internal controls. nothing more to be added to be honest that's the same claims the fed has now or a year ago, mainly internal controls and infrastructure that the bank needs to work on in the memo they said, well, this has been up there for many, many years and they're cleaning it up. but it still needs time. the bank is not there, where they want to be. we also today spoke with the chief communications officer from deutsche bank we asked how he judges the situation. >> we are, if you look at our share price yesterday, vulnerable for speculations. it's -- we are vulnerable when bad news comes out, that the market reacts heavily.

we are shifting, redefining the core these are things we're doing, it's tough, sometimes bumpy, but we have quite a lot behind us. we know what we have in front of us, we have a plan >> to be clear, talking about the share price of deutsche bank, even if it's up 3% today it's still close to record lows. it nowhere traded near that level, not during the financial crisis so it is a harsh market reaction, even year to date, beginning of the year the shares were at some 15.80 euro, now they're below 10 euro, which is a psychological mark today at 7:00 cet, they also came downgraded the credit rating from s&p 500. the credit rating is now triple

b plus, which is two notches away from noninvestment grade. that's not a problem for the bank, but the rating agency saying if the bank is not delivering on all their targets, there's room to further downgrade that investment rating for now they're citing that they are clearly seeing execution risks as the management team still has to show that they really can deliver they're looking clearly at the cost targets, the profitability targets of the bank, whether management can really raise all those -- whether they can achieve those targets. in addition to that, s&p's also saying that they are thinking that the bank will clearly underperform peers for the foreseeable future because of the deep restructuring cuts. the bank is nowhere out of the heat zone. but still they are trying to make progress when it comes to

that risk structuring. back to you. >> thank you very much another programming note, our u.s. colleagues will be speaking to jes staley today, that is monday, 9:00 p.m. cet. coming up, trade tensions intensify as europe hits back at u.s. tariffs analysis on that after this break. 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, or develop any new skin growths, or if anyone in your house needs or recently had a vaccine. alert your doctor of new or worsening problems, including headaches, seizures, confusion, and vision problems. these may be signs of a rare, potentially fatal brain condition. some serious allergic reactions can occur. do not take stelara® if you are allergic to any of its ingredients. we're fed up with your unpredictability. remission can start with stelara®. talk to your doctor today. janssen wants to help you explore cost support options for stelara®. happy anniversary dinner, darlin'. can this much love be cleaned by a little bit of dawn ultra? oh yeah one bottle has the grease cleaning power of three bottles of this other liquid. a drop of dawn and grease is gone.

i'm willem marx. let's look at how the european markets are faring this morning. you can see a major recovery under way, once again for equities across the continent after that dramatic day on tuesday. the stoxx 600 currently trading up let's look at some major indices behind those numbers all four, ftse 100, xetra dax, cac 40, ftse mib all in positive territory. the ftse mib is up 2.73%

in parriis, cac 40 is up 1.19% some of the threats for equity markets in europe, u.s. tariff ares on steel and aluminum have come into effect ramping up the prospect of a global trade war the u.s. added a 25% tariff. the wider impact of this potential trade war has implications for european automakers jpmorgan expects the tariffs to have a moderate negative hit for fiat chrysler, but less relevant for volkswagen, bmw and daimler. so a bit of an impact there for the auto sector.

all of those major european automakers now in positive territory. nbc news' kristen welker has more on this >> reporter: tonight, triggering a trade war. the u.s. announcing harsh taxes on steel and aluminum imports, now the retaliation from some of america's closest allies already under way. mexico vowing to slap fees on american pork, fruit and steel europe threatening tariffs on everything from whisky and motorcycles to denim and cigarettes canada's prime minister promising a dollar-for-dollar response and calling the u.s. move an affront. >> in particular an affront to the thousands of canadians who have fought and died alongside their american brothers in arms. >> reporter: and now, u.s. consumers and businesses bracing for impact. >> it could lead to higher prices on everything from beer to automobiles and that could mean job cuts at some companies. >> reporter: brent bible is a

soybean and corn farmer in indiana whose products are sold in all of the targeted countries. bible supports the president but not this latest move. >> the farmer is being drafted as a soldier in the trade war. we're not really being given any weapon to use on the front line and we're very vulnerable to price fluctuation. >> reporter: stocks dropped on the news which comes after the trump administration failed to reach trade deals with those key allies the white house wants less imported steel and aluminum and more of those products made at home, arguing american-made materials are critical to national security. are you sparking a trade war with these new tariffs >> no, i think the president is protecting american aluminum and steel. >> that response from last night. we're joined still by silvia deangelo you look at those european stocks that have exposure to

this decision, they don't seem to be plunged into turmoil they're all in positive territory. that is a short-term reaction for now. in terms of the long-term economic implications for europe what do you see those as being >> first of all, it's worth pointing out that the macro economic impact from these measures is likely to be limited. starting from the u.s. perspective, steel and aluminum imports account for less than 0.2% of gdp. these imports are spread out across several countries, canada is one of the main providers of aluminum to the u.s. clearly germany is also vulnerable to tariffs. even nor germany, it's more a share of export affected

something like 1.6% of german exports of goods is steel. within the exports only 4 pr% gs to the u.s does it end up not being an economic story and more a political story? >> absolutely. the symbolic meaning of these tariffs is powerful as the u.s. is challenging its historical closest allies, canada, european union, mexico. this move could trigger retaliatory measures, potentially a trade war. generally, more generally, could lead to a new global order, which is hardly an order, which is more fragmented, and which is

clearly more vulnerable to conflicts. >> so the ostensible reason for these tariffs was to do with overabundance of steel in particular on the global market and the impact that that was having on u.s. producers a lot of that oversupply comes from china is there a reason to think this decision will impact china if the europeans are going to say we'll put up our own safe guard measures to avoid excess capacity being dumped on our shows. we heard that for three months, it might take time, the commission will examine that, is there a change in terms of chinese production behavior that you foresee? >> as you suggest it's completely possible that china diverts its exports of steel, overproduction towards other markets including europe

so eventually europe could be hit through that channel the u.s. measures are punishing its closest allies rather than china. >> you say there will not be a significant economic impact because of these measures because there's a small amount of gdp for either side do you think investors have understood the implications of this decision already in terms of pricing and understanding the future and what this holds for them >> financial markets tend to focus on one thing at a time in the last few days the main story has been italy i expect the next main focus will be really international trade, so of course the possibility of an escalation of

tensions, not just between the u.s. and allies, but between the u.s. and china i think the financial market also quickly go back to this topic and we'll price in risk. if you had the chance to offer policy advice to european officials, european leaders when it comes to this, what will be the best solution in your mind to protect their economies is there anything they can do? >> it's quite hard the european commission announced a list of retaliatory measures they're quite symbolic as they're targeting all the sym l symbolic american products like whiskey, bourbon, harley davidson europe is in a hard position europe is one of the main champions of free trade.

europe is one of the most open, large economies. 30% -- exports account for 30% of gdp in the eurozone so for europe it's hard to change a strategy. what europe can do is just try to defend the existing trade order, try to strengthen the wto, and the other institution protecting trade >> one final quick question, spain. we have got this vote of no confidence coming up for mariano rajoy. is there a threat to the growth rate there yes or no? >> my quick answer is no spain is no stranger to these political wobbles, in the last few years we've seen political election in late 2015 leading to a new round of elections six months later we saw the catalonia crisis at the end of last year, still spain managed to grow around 3%

annually >> i will leave it there thank you very much for joining us >> thank you it's worth pointing out on cnbc.com, find out why jim cramer thinks europeans are in over their heads when it comes to trade because they have never seen anything like trump. we'll continue this discussion with tony fratto at 10:45 central european time. spain's social list leader, pedro sanchez could be on the brink of ousting mariano rajoy as prime minister. more on that no-confidence vote coming up after this break

welcome to "street signs." i'm willem marx. these are your headlines italian stocks rally and bond yields fall as investors welcome the establishment of a coalition government set to be sworn in later today european exporters rally as the block fights back against u.s. trade tariffs the eu says they will enact retaliatory measures spanish prime minister mariano rajoy says he will not resign ahead of a no-confidence

vote after opposition parties vote to put pedro sanchez in power. and deutsche bank says the bank's financial strength is beyond a doubt after the s&p cut its rating for deutsche's stock. >> we are, if you look at our share price yesterday, vulnerable for speculation this is tough. sometimes this gets bumpy. but we have already quite a lot behind us, and we know what we have in front of us an we have a plan >> we've just seen some new numbers from the uk in terms of manufacturing pmi, 54.4 for the month versus april's 53.9. that's still in terms of new business the weakest sentiment in months of 54.7. you can see sterling slightly negative against the u.s. dollar, weakened by less than

0.1% we'll continue to watch that currency over the course of the day, but no immediate massive reaction to those new pmi numbers. may manufacturing pmi at 55.4. that's up against 53.9 for april. some other uk news, involving northern island. reuters out with a report in the last few minutes talking about the fact that the uk is considering attempting to break the deadlock over brexit negotiations ahead of the late june european leaders summit there is a negotiation potential option here, which is a proposal to give northern ireland joint uk and european union status so it can trade freely with both the uk and european union. that will be a very interesting development if it turns out to be confirmed so far the department has declined to comment. it's not clear whether the eu would be happy with that proposal, but one party not thrilled would be the dup,

democratic unionist party, they are supporting party for the conservative government. without that support it could be difficult for theresa may to continue with her majority in parliament let's look at some other currencies out there we've seen cable down. across the board, euro weaker slightly against the u.s. dollar the dollar strengthening against the yen and the swiss frank. strong bit of movement for the u.s. dollar. in terms of european markets, they are all looking good. ftse 100 up 0.68%. the xetra dax up 0.90% in france, cac 40 up 1.20% in italy, the ftse mib still into positive territory, 2.7%. the banking sector there is up almost 5% on the day so far. u.s. futures, the s&p 500, dow jones, and nasdaq all being

called up as of this hour. the dow jones up 87 points nasdaq looking to open up 27 points s&p 500 with an implied open up more than 10 points. the u.s. is expected to add 190,000 jobs in may with the jobless rate holding steady at 3.9% in april, jobs growth underwhelmed coming in at 168,000. we'll look at spanish stocks it's worth pointing out pedro sanchez is set to become spain's new prime minister after his socialist party secured enough votes to oust mariano rajoy. sanchez got 180 votes more than the majority needed to take over as prime minister. immediately after the no-confidence, "squawk box" spoke to an mp and international

spokesperson for mariano rajoy's party, he said today's vote would cause a political upheaval >> it looks like we'll have the perfect storm in parliament. what we've seen today is unprecedented in spanish constitutional history i think that will put a big doubt on what will happen in the future for the new government because we only have 84 seats in the parliament of 350. >> doesn't seem to have much of an impact on the spanish stock market the stock market there is looking to trade up 1.5% you can see some of those spanish bank stocks also doing well there

san t santander up 2%. s sabadell up more than 2% we are joined by an economic adviser for the party now essentially being left out in the cold, ciudadanos let me ask you what does this mean for your party? you are the largest party but you will not have any authority if this vote goes forward? >> it's a coalition supporting the new government, in including parties that were previously aligned with basque nationalists we don't think that is a coalition that can govern spain with a tiny share of votes for the socialist party.

the only thing that unites the coalition and also the popular party is the fear of ciudadanos and their aim to try to weaken ciudadanos over the next few years. we'll see if they will govern spain, which looks doubtful. >> thanks for joining us do you see this as a cynical ploy by sanchez to sideline ciudadanos in spain? >> no, i think mr. sanchez is being strategic like other parties. this vote was caused by the vote you have a bad ruling against dep, corruption ruling, and that forced parties to move i agree that sanchez will have a hard time governing the country with 84 mps. >> i have to ask about spain's economy. it looks like growth is holding steady do you have concerns about a

socialist-led government in terms of that? they said they will not do major changes to the budget pushed forward already? >> the budget has been worked on since july of last year, the budgetary ceiling and the objectives for the year. the budget will stay that's good news for the spanish economy. but the only thing that will hold this coalition together will be removing some of the constraints that have been imposed in the past by europe and i imagine economic policy will be less sensible and there are risks to stability and the unity of spain it's a really -- it's going to be hard, even if they were going to try, the socialists, to be responsible. it will be hard when they are only 84 seats out of the 186

majority that has come together today to destroy the -- to remove the rajoy premiership >> breaking news from rajoy, he's saying to pedro sanchez, let me be the first to congratulate him, the implication is that he has resigned it looks like pedro sanchez will be the new prime minister of spain. i have to ask you, this started really -- the corruption is a massive driver of this no-confidence vote ultimately it was about the basques decision, and that was not helped by what happened in catalonia late last year and last month is there going to be a solution long-term with sanchez having said he will reopen discussions with the catalan separatists >> i think you have a change in tone with the catalonia issue but you will not solve the problem short-term the problem at the end of the

day is one of massive polarization that has been caused by the independence movement the population in catalonia is split in two if you have a government tries to defy the constitutional order, i don't think sanchez will have any kind of willingness to negotiate anything with them i don't think the issue will resolve. change of tone, but i don't think you will solve the issue >> your party is opposed to catalan separatism would you welcome a change in tone in those conversations? >> we would welcome a change in the way that catalan separatists are talking about spain, talking about spanish citizens, and a realization that there is no problem between catalonia and spain. 47% of the population is trying to restrict the rights of the more than 50% of the population who wants to be part of spain and wants the democratic rights to be perceived.

so what has been worse of the narrative is this ma nority convinco minority convinced that they speak for catalonia. this gives power to the rural regions, and they managed to get a majority in parliament, but that doesn't mean they're the majority they have never been more than 47%. that's the change in tone needed >> what can happen to increase political stability in spain we have more than two parties, there's no longer the bipolar democracy that there may have been in the past what happens in order to have stable government? whether that's by coalition or majority rule. >> at this moment, probably another election i absolutely agree with you. we're going through a period of political change by the way, this is not just the case of spain. i think because of the economic crisis that accentuated political trends there for a long time this had different

manifestations in different countries. for example, knit lyin italy yoe two populist parties talking about forming a government i think it's difficult to know when this period of political change will end. it's still in flux i think you need another election to see what the political forces will stay at the end of the day >> one final question, your party doing well in the polls, you would presumably want an election as soon as possible >> yes we have -- our position has been clearly been that we think the spanish people need to be given a say and not a government back-room deal that was impossible to imagine for most voters when they voted in the last elections not that back room deal to form a government with this wide range of populists 25 parenti iparties forms this government that says a lot. we think the way to resolve this

is to have a new election, a fresh mandate. >> thank you very much >> thank you >> that no-confidence vote asked dou scheduled to take place in about 18 minutes time. europe phits back at u.s. tariffs. more analysis after this break a. - 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. jimmy's gotten used to his whole yup, he's gone noseblind. odors. he thinks it smells fine, but his mom smells this... luckily for all your hard-to-wash fabrics... ...there's febreze fabric refresher. febreze doesn't just mask, it eliminates odors you've... ...gone noseblind to. and try febreze unstopables for fabric. with up to twice the fresh scent power, you'll want to try it... ...again and again and maybe just one more time.

indulge in irresistible freshness. febreze unstopables. breathe happy.

u.s. tariffs on steel and aluminum imports have come into effect ramping up the prospect of a global trade war. the u.s. imposed a 25% levee on steel imports and 10% on aluminum speaking to cnbc, wilbur ross defended the move saying insufficient progress had been made to reduce america's trade deficit during negotiates. he also brushed off concerns that the tariffs would harm relations with america's allies.

>> these are blips in the radar screen i don't think they change the fundamentals of the relationship everybody has spats every now and again. every family does. every country does, with others. there's nothing weird about that i think everybody will get over this in due course. >> they'll get over it, they will the reaction from the north american neighbors was quick mexico announced equivalent measures on american products like pork, apples and cheese canada said they will impoef ser tariffs on whiskey and orange juice. speaking in ottawa, canada's prime minister tricriticized the decision from the u.s. government >> these tariffs are totally unacceptable for 150 year s years canada hasn

united states allies. the united states remains our partner, ally and friends. this is not about the american people we have to believe that at some point common sense will prevail. but we see no sign of that in this action today by the u.s. administration >> on this side of the atlantic in europe, french president emanuel macron lasted the imposition of those tariffs as illegal, adding he would appeal the decision, that's through the european commission, which said it was preparing a set of retaliatory measures that could target harley davidson and more targets on american bourbon and whiskey. jean-claude juncker said the move was unacceptable. >> this is a bad thing for the world. the european union cannot react to that without reaction so we'll immediately introduce a

settlement dispute on the wto in the next coming hours counter balancing measures, what they can do we are able to do exactly the same it's totally unacceptable that a country is imposing unilateral measures when it comes to trade. >> salzgitter called on the e rushgs commission u commission to protect the european market. a small number of exports from germany go to the u.s. volkswagen expressed regret and concern on the levees. the carmaker said there's reason to fear this will mark the beginning of a series of tig tit-for-tat trademeasures. vw also coming on the resumption

of talks annette is in frankfurt covering this this seems like all of these companies expressing regret, but share prices have not been badly impacted >> that's true i think a lot of that has already been factored in to the share price. when you look at the carmakers, they have been under water quite a bit. anticipation that such a move could come the big risk is that donald trump will impose a 25% import tax on european cars which would hurt the german carmakers. there are estimates up to additional costs of 4.5 billion euros, that would -- they're saying that every single car, which then would be imported to the united states is a lossmaking investment from the side of the german carmaker.

we're nowhere close to that scenario, but it could happen. that risk is, of course, a major concern to the german carmakers. if we talk about steel, aluminum, we don't have a lot of aluminum producers in energy it's too energy intense, that business, but the steelmakers, they don't -- they're not overly concerned about that tariff. what should concern them and what i'm hearing from the industry is there could be a wave of additional steel flooding into the european markets, then depressing prices. and i guess there is some relief from the european union being quite adamant about counter measures here. they want to show and they have to show that europe is united. that's one of the claims which is coming out of various angles, also in berlin, that our message

now should be europe is united against whatever the united states is going to do. peter altmaier, the economy minister from germany also stepped out with a comment >> translator: the decision by the u.s. government today is wrong. it's damaging for europe, but also for america itself. those who impose this are those interested in protectionism and one-sided measures this is a shame because the eu was prepared to negotiate further. >> while the world seems like it's in shock that donald trump followed through with the tariffs, the question is what comes next that will also probably dominate news flow and also dominate market reaction going forward. with that, back to you >> thank you very much joined by tony fratto. you had a bit of a role in the past when it comes to focusing on the messaging around economic policy that the messaging from the

trump administration been consistent on all this >> yeah, they've been consistent this is a view that they've had for a long time. not just for the trump administration, but for president trump himself going back to his longstanding views, well before he became president. he's someone that believes that we should be protecting these markets, searching for the best way to try to impose tariffs he actually likes tariffs and quotas, and he was looking for a way to do that the vehicle he used is the 232 measures, making the case that it's a national security threat to most observers, including many in the defense establishment, they see that as a stretch. but it's to get to what he really wanted, which was tariffs to protect these markets i really am worried, a lot of the business community here is

worried that they don't see an easy exit from this in the near-term. that we won't be exiting until we see some retaliation by certain industries in the united states >> it struck me over the last couple of months with the extended exemptions that that was the ability for him to exit with saving face in terms of leverage, that was another tool for them to force the europeans and/or other parties back to the negotiating table, trying to get more favorable terms. we heard again and again from the european commission that won't work they won't negotiate with a gun to their head is the term aheard a lot in brussels. do you think this approach failed >> well, i think he's very happy to create this leverage. we see that lots of his negotiations, we're seeing that in the nafta negotiations, the intention to create leverage that you can trade off for concessions. the problem for the people on the other side of those

negotiations is that if you take out that stick any time you want, then that's not something we can negotiate on. we can negotiate on long-term structural changes between our two economies or sector by sector, but we can't negotiate with someone who is going to pull out this kind of protectionist stick every time where people misread the administration, he's willing to create this leverage as a negotiating tactic, he's also comfortable keeping the measures in place he does think there's an economic benefit to keeping the protectionist tariffs in place chief trade policy assistant, peter navarro is in "usa today" with an op-ed that very clearly outlines how they see the benefits of protecting these markets. they're comfortable staying with

protectionist measures in place. that's very different for an american administration. >> one quick question, yes or no does china come out weaker from this >> no, i think china is happy with this outcome. >> tony, thank you very much that is it for today's show. a quick look at u.s. futures all three major indices looking to open up ahead of the trade in new york that is it for today's show. i'm willem marx in london. "worldwide exchange" is coming up next.

. it's 5:00 a.m. at cnbc global headquarters. breaking news out of spain that country's parliament about to hold a no-confidence vote in its prime minister he's expected to be ousted at any moment. italy about to swear in a new government putting to rest weeks of uncertainty hanging over global markets. s&p downgrading deutsche bank's credit rating as shares bounce off all-time lows. mandatory evacuations ordered in hawaii as a volcanic eruption enters its fourth week. and casino