a very warm welcome to "street signs. i'm steve sedgwick shares take off. a stock blitz after they say they are considering buying a stake in the airline both stocks are higher but the bank itself can't hold water on the talks of a megamerger.

rome and madrid, markets shrugging off the first bit of uncertainty with ibex leading the way. and the third round of trade talks ends with no deal between beijing and washington as g-7 finance ministers convey their unanimous disappointment over the trump administration's tariffs. look at the world for a moment, everybody. think about what's going on. you've got european allies and canada and brazil and mexico up in arms at what mr. trump is doing about the threat of protectionism. that threat of protectionism also hurting relations between the two global super powers in the world, china and the united states as well you've got concerns about a much

higher rate scenario because of the very positive scenario we saw out of the u.s. jobs scenario we saw on friday plus two of europe's problem childs potentially having instability governments that want to backtrack on austerity reforms made in the '09 to 2012 period as well. given all of that, the fact that the markets are rallying so strongly i think speaks volumes about the lack of opportunities elsewhere about the value of seats. we know the corporate earning season has been very good atlea. we're creating more jobs than expected are slowly, gently moving to the up side. this is all very positive as well, but it just seems to me you either love it or hate it. that is what's happening with the market this morning. we're around about 75% of companies in positive territory.

ftse 100 -- you mentioned brexit, absolutely no problem at all. very easy trade. it's a tortuous event. ftse goes up it seems that binary and that simple , i ll remind you we were exactly 900 points lower than this 900 points the ftse has put on xetra dax, 12,784. cac carant 5,487. let's move on and take a look at the key sectors. every sector every sector in positive territory because this is the worst performers, this column, and they're still in the green utilities, how tilts leading us. air france shares soaring after

accorhotels says it's thinking about a possib stake in the airline. they added there was no guarantee that the talks would lead to an agreement reports in france suggested that the government is interested in selling its 14% stake in the airline. now klm's ceo had no comment when asked by cnbc but he did say the aiine was keen to maintain its positive approach. >> we need to keep the momentum. 2017 was a good year for air france they had an improvement from the year before. we have had very strategic investments and investing in air france klm we have made our moves and keeping the momentum positive. we have been more on the offensive in 2016, 2017 compared to the years before. i think it's important for us to keep this offensive approach.

>> shares of lufthansa trading lower even though the company says they plan to have record summers. we'll come to that despites positive outlook it still expects profit we don't have to come to it another time, it expects profits this year due to, funny enough, the rising price of oil and costs associated with its expanding euro i would add it's not on my radar, the fact that radar costs in the airline industry, still as well especially with the pilot's union being so proactive. bayer has launched an action to take over monsanto monsanto managed to lose some of its debt u.s. regulators approved the deal last week they claimed that bayer would

close the deal on june 7th elsewhere, cybg has under the offer for virgin money they would own around 38% of the combined entity. the owner and yorkshire bank has until 1800 pst to make an offer for the richard branson founded company. this one is interesting. societe generale is up it wants to approach a cross border european bank they say unibanca wants to push the idea of merging with the french base.

the chief european economist at jeffries, good morning to you, sir. how are you? >> very well indeed. >> i'm very happy to talk to you at length about all of the issues going on in spain and italy. i want to start with deals all i'm mentioning is deals. some of them i'm scratching my head about others of course like the monsanto/bayer deal, you get it. the industry didn't work and now they're looking at joining up. how do these deals impact how you feel about the broader markets? >> the bank of japan, socgen, the eurozone is running this surplus. investors are hungry for yield we see this translating into net capital outflows the eurozone is a big buyer of these markets. at the same time the eurozone was attractive and will attract

a lot of net buying from the investors given that the eurozone is still recovering >> bear ind they'rsaying everything they do is whether they have positioning. the other side of that dollar as well i can't understand what's going on on the european economyi loo. i have for the last 30 years the good, the bad, the ugly. i can't work out whether they're willing to tighten or needs to remain >> well, i think you've hit it really at the end of the day basically the ecb will taper and it's probably december or march at the very latest they'll stop buying bonds. when can they actually stop raising rates is the question. maybe at the end of the day draghi can get it back to zero before he leaves it will be very, very difficult for the ecb to normalize interest rates what we've seen is some evidence

obviously of world trade rolling over also what's happening on the trade front with donald trump and everyone else is obviously of concern going forward, yeah, the ecb will stop buying it and tighten policy could be difficult. >> disregarding this, i know him very well at unicredit it's interesting that we're talking about play books, creating a european giant. systemically we don't need anymore pan european giants. >> that's true at the same time we have very unusual banking in the euro. >> any big banks >> we have too many banks. you're absolutely right. systemically you're creating a banking, you know, sector which is still at risk one of the things about italy

the last four months, banks have carried them obviously in defense of last week, that wasn't such a great trade. you know, the banking sectors of france still has a massive banking shector as a share of gdp. there are more bank branss than there are pharmacists. the eu banking model doesn't work we need a banking unit it's a work in progress. >> i know i'm really an old scratch record pying the same song you tell me the italian banks are here and i say to myself, doom loop, doom loop, it's the same old scenario. it is. until the end of march, we saw net foreign buying in sizemore than we saw buying french bonds

but that trade obviously would have probably gone, you know, quite simply into reverse. it's very interesting to see how they come in over the next few weeks. the market will be involved in italian elections. july 26th ecb meeting is key ecb has to set the market on what they're going to do. >> that's fantastic. we'll come back to you after the commercial break thank you very much, david owen of jeffries. just to say more in the banking world still comes on this channel today. exclusive interview, jes staley. 2100 central time. you can tune in for the ceo of

bbva we'll put up the social media for you so you can contact us. plus, you can follow us on twitter streetsignscnbc. tweet me directly, steve underscore sedgwick. as a new government takes hold in spain, the socialist leader wants to leave out people from the party we'll hear from javi lopez who is mep for the socialist party coming up next

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let's take a look at spain now. the spanish stocks by and large moving to the up side this morning. you can see the ibex, 35 stocks in spain trading .7 of one-tenth higher bbta w bbva, we will be speaking to the ceo later on in this hour. by and large what have we got, a

bit of them moving up in the nextection spain's newminority government will anoint the ministers. the cabinet of the new prime minister pedro sanchez will be unveiled later this week and will only include members of the socialist party. over the weekend sanchez was sworn in as spain's leader after ousting the conservative he plans to remain in power for the remaining two years of the parliamentary return the catalan leader has called for the end of a dispute with spain. the new leader is going to look at the cause javi lopez is psoe mep and

executive with the catalan socialist party. thank you for joining us i know you're a busy person. let me be frank to you, i don't know how a man who has been ousted, i don't get how he's the unifying force for spanish politics there >> well, after a huge corrosion case and the funding of his party, pedro sanchez could build the majority in the parliament as you know, we are parliamentarian and include he was minority government and progressive and pro european that fully respect the european

commitments and end with a clear agenda against corruption. and put them in the history that we have. >> looking at the first big vote that comes up, and i don't know what that is, in order to build consensus you have to build a consensus. i know your point about democracy and corruption as well as we've seen over in italy as well, everyone wants a piece of the action if they're going to take part of the government forming as well. they're going to want a slice of government on this, aren't they? >> yeah. we don't have culture in our government this is probably something that has to change in the future, but we will have a minority government

the rajoy gaft also -- then we will be in the same situation. i need to fact with the fact that we have help with our parliament and the reasonable gons this will be the agenda. >> am' very interested at moments spain is growing at 3% analyzed quarter. very different to italy which is obviously struggling for just over 1%. but in terms of some of the fundamental drivers of growth over the longer term, spain obviously still needs further reforms. what can you say in terms of spain trying to improve the growth prospects

>> our idea and the deal of the new government, we will know this week. the stability is something really important this is one of the main points of the new prime minister pedro sanchez and to protect the recovery, it was clear at the same time, this is one of the main points, we need to fight against inequalities for example. today we know that we will have high commission over childhood poverty. we will have this on the agenda. wewill respect and protect our recovery but our recovery to everybody. this is one of the main ideas of the new government. >> and justifiably for me, you are of course also the eufos for the catalan government

they said the government should have talks as well, but in terms of the issue this is going to blie his permission, isn't it >> we have to start a new dialogue this is something the italian government has to be aware obviously guaranteeing our co-existence and fire work and thinking that the last year the new governance will be kit the with the idea. >> thank you very much for joining us javi lopez who is a psoe mep meanwhile, italy's new

government plans to work with the new labor that was put in place. udep prime minister said in a facebook post over the weekend, the legislation fails to give people enough job security this is after members of the new cabinet of the new government will be worn in. >> hao do you think it is? italy's new interior minister was greeted by a pro migrant protestors during a detention in 60 europe ought to stop that. >> translator: these are emergency centers. i want to increase the number. this isn't easy to do nor in the area of an hour. we want to cut costs

>> willem, you heard me talking about the facts and then my own editorial. i don't think this endnths of political turmoil, but are there hopes that this disparate connection i don't know, the prime minister, is it possible that they could appoint a prime minister and they could have cohesion >> i don't know they could counter act spending they have a 58 page contract for government you hear the comments down in sicily that it's about building new detention centers, trying to deport more than half a million migrants, something that's very close to his party's core beliefs. then meanwhile you hear them talking about 780 euros in terms of job seekers allowance,

something he wants to run as the new minister those kind of spending plans cost a huge amount of money. the question will be which of these two parties manages to prioritize their spending above the other. all of that will rely on a huge amount of borrowing, we've already talked about 130%. the bond yields and the investment climate seems to be relatively stable. people see the yields go up and it makes people like him concerned. they carry the majority of debt. they face the disproportionately higher costs in terms of the studies that have been done, it's north of $150 billion a year. buy want to being back to them

>> thank you very much very big issues. thank you about that vid willem talking about debt going back to the european tables she's ruled out debt relief. it already is a debt sharing union in many ways target, transfers. seriously? does any part of this equation work for you >> not as is the issue is if the eurozone is carrying and italy carries on, then we'll see some degree spreads tonge mobicontinuing toe they might talk about the omt, outright military transactions for the back stop. you need the sovereign in question so the way we're wording this,

stra strange situation. we look at the data and we look at what happens as the u.s. continues to raise interest rates. unstable equilibrium. >> how does this go forward? we want that relief and we want more money for italy and by the way as well you can forget about austerity. >> yeah, and also at some point there may be more money needed because that's the next step along the line if we get some talk about that at the end of the day there will be a back stop which leads to the next fiscal transfer in the system which is much more obvious. it really, really depends on the recovery >> great to see you. >> yes. >> thank you very much, indeed. >> my pleasure. >> joining us as the chief

financial economist over a jeffries we'll come back with a few more questions. did we mention trade yeah, trade tensions escalating as high level talks between the u.s. and china yet again end so far. it's a work in progress and wit. we're at the u.s./chinbusiness council. at's coming up 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.

warm welcome to "street signs. i'm steve sedgwick these are your headlines air france klm shares are taking offwhile the french group is considering buying a stake in the airline. investors liking the market and the banks are avoiding cold water and they're on at that point for a megamerger new governments in rome and madrid shrugging off the uncertainty with the ibex leading the way.

the third round of trade talks end with no deal they convey the unanimous disappointment over the trump administration's tariffs touch base on the european markets that we revisited at the top of the show. you can see there we do have green on the screen. it was actually very interesting set of markets moves on friday i'll just tell you very briefly. the week to date biggest for the stock 600. the ftse and the dax they were all very negative. the dax for instance down 1.700 pers week down 100 it was absolutely gangbusters. i will note the nasdaq had the best four weeks. what was going on there? i'll lead you to draw your own

conclusions. let's look at the foreign exchange markets as well we touched base 11706 euro dollar huge amount going on in both the eurozone and the u.s. economy as well that looks fairly steady the pound has there. u.s. futures are going to fall off. we are seeing higher meanwhile, in canada g-7 finance ministers strongly criticizing the u.s. over the imposition of steel and aluminum tariffs the six other member can you be tris issues a joint statement expressing their, quote, u nap any mouse concern and disappoint over the levies.

at the lead will will -- >> give you some context on that when you talk about g-7 plus one, when we talked about g-8, the other six ganging up on russia and the other on the u.s. interesting. g-6 now plus one u.s. treasury secretary steve mnuchin defended america's position. >> i don't think in any way the u.s. is abandoning its leadership in the global economy. quite the contrary, i think that we've had a massive effort in tax reform in the united state which has it an incredible impact on the economy. we couldn't be more optimistic i've continuously talked about our profit to hit 3% extended gdp. i think our leadership on the economy, which is one of president trump's major

objectives, that and national security, is n only good for the united states but is good for growth aroune world. and if anything, that additional growth is potentially leading to us with even more reasons to want to focus on the trade issues. >> in an interview on nbc's "meet the press" they talked about rushing out the tariffs. >> one of the things i have to admit i'm having a lot of trouble getting around is the idea that this entire thing is coming about because the president and the administration have decided that canada, canadian steel is a threat >> the idea that the canadian steel, the canadian aluminum that makes your fighter jets is somehow a threat the idea that we are somehow

they're helping and i'm acceptable. >> china has warned the u.s. economic will be void, void if washington introduces trade tariffs. the two sides concluded the latest round of trade talks in between. jake parker says it's clear talks between the two sides have made progress but a changing approach from the administration is making negotiations very difficult. >> the chie knows nchinese now understand i think there is a strong desire within the chinese government to have a productive and positive u.s./china commercial relationship they can find ways but it's already poll as well president trump announced that

june 15th, new tariffs may be ruled out or that restrictions will be on june 30th >> the chairman of the americans thank you very much indeed for finding the time to speak to us today. look, a lot of people are very critical of the american station. does the president have a point? are the termof trade with allies and pea tensional ffoe s or are they too skewed >> for the u.s./china relationship we do not have equal market access. we're talking about this weekend's negotiation. the real issue is lack of market excess and i know that u.s. companies are looking for a level playing field,

relationship based on fairness and reciprocal treatment so whether or not we have progress on ag, on energy, it would be good, but the essence of the argument really is in the market access overall. various entities in the state, consumers, treasury stake. they bought so much. u.s. he can nothing, u.s. industrials. there are u.s. businesses that have a vast amount of business in china they don't care about market access, they want the status quo. >> well, there are some companies that are doing okay as it is and so some of the larger companies and some who have been here longer. but really it's not the majority of companies that want the status quo even when we talk about the high tech ict cyber companies, they

really are obstacles for them to do business. for a cloud company to come into china, it has to have a 50% joint venture. for a chinese company to set up a cloud in the u.s., there are no restrictions and it's this type of market access that we want to equalize. >> i'm sure you know the mind set of the chinese far better than i do, but i do know that people in the region know china very well. talk about faith and impression you give and the chinese have turned around and said, look, you put these tariffs on the talks you've had so far, it's almost like a staring competition. do you think the chinese will possibly ever back down on this? >> well, not -- if you would call it backing down not so that it appears to be backing down.

you know, the two sides, i'm going to say something obvious but it really needs to be said, the u.s. a chinese economic systems are so different, and china's not going to change much it's been successful over 40 years. the u.s. is not going to change because it's been successful over a long time they need to find a way to work together which we think will happen on an equal -- it would allow -- in actual at this it would be in china's assessment it's a very good safe saving measure. i do know if you want to get other people to join your side, perhaps having very punitive tariffs against them since the first of june, perhaps not the best way of doing it as well has the president by picking

various fights at the same time and i'm not talking about that we heard from mr. trudeau.is thy getting them upset if you want them to join you in east montpelier. >> it's the worst tactic we can see. one of the worse companies, just likes the ones you have mentioned, they're based on market forces. this strategy -- excuse me, this tactic, we don't see that it makes a lot of sense because we do need to work with our allies to discuss the durchss in our economic structures. >> the inter2345gs nal trade data coming out on wednesday, i'll be looking out, of course, from tweets from the president ahead of that data there was a

bit of that coming out are the numbers? how toxic is it, willem? >> i think that the damage has not yet been done to our companies. the problem is that we don't know what's ahead so as the stock markets are affected by the talk back and forth, the major tariffs just recently applied to eu but in terms of china, they haven't really been applied yet and yet companies are waiting and investors are nervous. so what we want to see is agreement and yet we don't expect agreement over a weekend. we're talking about structural issues this is going to take a lot of time and negotiation and

compromise. >> compromise. therein lies the trade nice to see you, sir chairman of the american chamber of commee in china. meanwhile, we have been talking to you globally. i don't know what exact dibs are speaking at the eye ar tifts and global growth. >> we are worried, the trends we see in the global economy regarding protectionism, barriers to trade and to travel. these closures are always bad news not only for the economy but for the industry. >> all of these tariffs are things that we see obstacles of imagining. jeopardizes the worst positions in the world. >> we are big proponents

we see as they deregulate, it means better pricing for customers. it means a stronger growing economy and it means jobs throughout the entire world. r denuclearization must beps taken by jim mattis. mattis is already in the country and expects a, quote, bumpy road through talks. it has also been reported that three of north korea's top military leaders have been removed from their roles aheados nbc's chris pollone has more >> reporter: before president trump's historic sitdown with the leader of north korea, secretary of defense jim mattis said the administration's goal for the summit hasn't changed. >> so we still stand for the verifiable and irreversible denuclear bait sin

the dip ploe imagine are engaged in new york. advanced teams are engaged here in singapore i think the hopes of all of us lie with them. >> following a friday meeting, they planned to lower expectations of what might happen during the meetings i started a process, i told them today, take your time. you can go fast when you have go slowly >> north korea is working. >> they want to do that. >> some democrats are criticizing the president's strategy saying agreeing to meet with kim without pre-conditions, the north korean leader has already won. >> he got a major victory by having the president agreeing to the summit who knows, what will happen? there will be one, two, three.

>> they say sanctions will remain in place. chris pollone, nbc news. and among the logistical nightmares facing officials from the u.s., north korea and singapore, who is going to foot the bill i'm told by karen jones, the bulletin is a hell of a hotel. the paper cites two people familiar with the situation who say the u.s. is open to paying for it but is conscious of insulting north korea. singapore's defense minister says she's happy >> pick up my hotel bill >> meanwhile, june 12th will be a key day for asia at the singapore summit of course and another event could have an

even bigger impact on u.s./china relations. head to cnbc.com the e-mail address, you can get ahold of me personally at steve underscore sedgwick. change in spain or is it interesting. we're going to hear exclusively from the prime minister carlos torres vila. a new prime minister is sworn in we'll have that after the break. these birds once affected by oil

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just take a look at air france klm shares which have been absolutely abysmal over the past three months. down 24% including the fact that they've had a 7% move to the outside. 7% higher. addressing some of those big declines over the last three months this is after accor shares are moving down 4.45 accor is considering buying a

possible stake in the carrier. they have previously discussed a potential collaboration with the airline but added there was no guarantee early talks would lead to an agreement. the government is interested in sharing its shares of the airline. they said they're key to maintain the approach. >> we need to keep the momentum. 2017 has been a good year. we have had strategic investments. we have made our moves very important to keep the momentum positive. we have been on the -- more on the offensive in 2016, 2017 compared to the years before it's important for us to keep this offensive push. >> meanwhile, socgen says there

is no chance in tho innovate a cross border european bank they say the uni credit ceo has been pushing the idea of merging with a french bank in the next few months we're at the money 2020 conference good to see you. >> reporter: thanks a lot, steve. i have carlos torres vila here the ceo of bbta. i want to talk to you about the socgen tieup is there anything to do to the sector >> i think it's fascinating to see that we have cross border m&a back on stage which we

haven't had for a long time. for us, it's not a priority. we're very close on digital. that's where the growth opportunity is >> i want to ask you about politics it's been a bit of turmoil and change of prime minister what's your take on the political level and actually with the new prime minister. this brings up issues again of things like the catalonia succession >> well, we have had quite a sudden change in government in just a week. definitely that introduces some political questions as to what's going to happen. we have a strong economy at 3% rates. uptick in inflation. that should continue on catalonia, we'll see. might be an opportunity for

dialogue between the two governments within the rule of law which of course the socialists have supported throughout >> any of the instability of politics worry you about growth and your business? >> every time we hav certainty, questions pop up in investor's minds in that respect there might be some risk that things slow down. we have a two-year legislature with new government and for the elections. as i was saying, the momentum is really strong. i don't see anything happening. >> want be to move on to fin tech, what we're here to talk about. blockchain is a huge area bbva has been investing in. for you, what's the promise of this technology and where is your focus around investment is it hiring an expert or is it about partnering with other

companies in the blockchain space? >> we are doing all of that. we believe there's potential in blockchain we believe it's early. it can bring about efficient processes. really reduces the nr intermediaries it's faster, more transparent, more efficient that's what we're experiencing with clients we had this announcement that the first bilateral negotiations and in spain it was entirely here in the ledger kind of experiment that we're doing to test out the technology that has such great promise. >> i was speaking to ralph hays of ing he said there's no reason why it can't be widespread in five or six years.

are you as interested in the rollout as he is >> i am. it does have that promise as i sa we'll see how it develops. we're working hard to make it a reality. >> i want to get your take as well on where you see disruption coming from. is it from the startups as we've talked about or is it actually from big technology companies? the likes of apple, facebook, google, amazon who announced they're starting to dip their toes in financial services are they a bigger threat to you than startups are? >> i've always viewed startups as a positive disruptive element. i view this clollaborative way o works positive we have open apis and so on. i do see as you say big tech

certainly that has happened in asia with chinese players move into financial services. the risk is that the banks are one step behind the customers as plays when big tech expand their offerings into everything. >> we'll have to leave it there. thank you so much for joining me that was carlos torres talking about his view back to you in the studio. >> thank you very much, indeed that is it for today's show. i am steve sedgwick. "worldwide exchange" is coming up u.s. futures pointing to the up side at the start of trade we'll be back here in europe, same time, same place tomorrow

it is 5:00 a.m. at cnbc global headquarters. top five at 5. china issuing new warning. breaking deals there microsoft reportedly nearing a deal to buy github volcano in guatemala killing 25 people overnight some residents are being air lifted to safety airlines have fuel costs rising. and mgm reaching a tentative deal with 25,000 workers avoiding a strike. it is monday, june 4th, and "worldwide exchange" begin