welcome to "street signs." these are your headlines the euroushes higher after ecb chief says the central bank will discuss winding down its bond-buying plan next week amid a better growth and inflation picture. ecb policymaker and bund yes chief weidmann says it's possible the bond purchase program will close towards the 's intentht steps towards normalization.

and 8.9 billion euro deal shredded international paper pulls its offer for smurfit kappa, sending the firm higher as they support the ceo's plan to stay independent. and italian prime minigiused markets with promises to roll out budget-busting policies that could ruin rome's debt credit. >> translator: we want to reduce the public debt and do it with the growth of our wealth, not with austerity measures that in the past few years have just contributed to its growth. good morning, everybody. back from a couple of weeks off and happy to be here but first, let's check in on how markets have been doing, because in asia, there's been a bit of a spring in the step as far as markets have concerns, mostly lifted by the tech sector, and that was again after nasdaq closed at yet another record high for the second day in a row in the u.s. session.

you can see that in europe the gains are somewhat modest this morning. stoxx europe 600 slightly but let's get into individual indices and see the picture on an individual basis. you can see that the mean underperformer this morning is ftse mib, the italian index no doubt spooked by some of the comments from new prime minister giuseppe conte and his future budget-busting measures, as they're now known as, on what they're planning to do on the fiscal side no doubt will set them at logger heads with their european counterparts. but the picture for the rest of the european indices is moderately positive. ftse 100 leading, up 20 points or so or about 0.33% let's see where the leadership is coming from basic resources at the top up 1.3% in today's trading. oil and gas has rebounded in line with the move we've seen in spots and underperforming, household goods down 0.4%.

let's go to our main story the euro has hit a ten-day high against the dollar after ecb's chief economist said the cenal bank will discuss an end to bon. ed thaflion is rising back towards its target and expectations of a qe exit had wanes among weak economic data and political uncertainty in italy bundesbank president jans weidmann has weighed in. he says it's plausible that the ecb's qe program will be wound downy the end of the year and added that this would be the first step towards normalization but cautioned that the ecb would guide the process to try to avoid market turmoil and i'm happy to say that joining me is someone who knows a lot about central banks, the chief economist from goldman sachs. thanks for joining the show. >> good to be here. >> i want to ask you about the comments we just got, setting

the scene for next week's meeting, creating a little bit of suspense. aounce thend, or the beginning their asset purchase plan, you think next week? >> i'm not sure in terms of how specific they're going to be where we're not necessarily expecting really big announcements, but i do think it's plausiblehat they will taper qe kind of later in the year our baseline would still be that ogram probably comes to an end by the end of the year i think the bigger question, though, is at what point they expect the first move in the deposit rate oun towards the end of 2019, and that's still a little bit on the later side, relative to some of the signals we've gotten, but it seems to ask that the inflation numbers, even after the somewhat higher numbers recently, still very much support the idea that you can wait. >> essentially moving away from asset purchases to very much

forward guidance and keeping front-end rates pinned question -- why do you think they're dismissing all of the political -- well, the political uncertainty, but also the volatility we'n inlian markets over the last couple of weeks? i mean, it seems that the timing on their part seems a little bit hurried, given that we only just a few days ago got a government formed in italy. >> again, i think they're going to keep their options open and of course, if things were to tighten more significantly in terms of financial conditions because of, you know, italian turmoil, that moves not just bpps, but also european financial conditions more broadly, which we really haven't seen to a significant degree yet, then the option would be to delay any of these exit steps. i mean, that's true both for the end of qe and also for the first hike in the deposit rate you know, they're not locking themselves in, and i wouldn't expect them to lock themselves in at the meeting either.

>> conspiracy theorists would say that perhaps they are applying pressure exactly at the time when italy don't need it, so as to send a warning shot to the government but speaking of italy, investors turn to safe havens after italy's new prime minister, giuseppe conte, used his speak following a successful confidence vote, to outline the coalition's ambitious fiscal plans. he promised radical change, including increased welfare spending, that's raised concerns about policies that could further overburdentaly's debt loads. his comments sent yields and italian bonds higher you can see the ten-year btp is 15 basis points higher on trading today and two-year, which has been very volatile of late, is trading up 36 basis points, back up around 1.35. but conte did try to reassure italy's european partners, saying that his government had not planned to take the country out of the euro zone >> translator: leaving the eurozone was never up for discussion it's not up for discussion

this is not an issue that's part of the government's contract this is not an objective we're trying to follow the issue is something else and one that has also emerged as an intervention it's legitimate, is it not, for the government, for a country to renegotiate its economic policies >> conte also lashed out at the eu for not providing italy with enough help in dealing with the migrant crisis >> translar: first test of the new way in which we want to dialogue with our european partners to discipline immigration it's evident to all that the handling of the flow of migrants so far has been a failure. europe allowed, and we have to say it strongly, selsh clo of many member states, allowing for the unloading of migrants on the frontier states, firstly in our country. when the burdens and the difficulties should have been shared >> he "unbalanced, unrealistic, and damaging.

renzi pointed that much of the government's agenda seems contradictory and unpaid for he also said that unlike the five-star and legia parties, they would demize opponents onocl networks because "we are very different from you." and switching to the u.s., next week's fed meeting could prove pivotal as the u.s. central bank continues its path towards normalization. the fed is widely tipped to raise overnight borrowing costs next week, which would bring it close to its inflation target, and this means that for the first time in almost decades, the cost of borrowing dollars will no longer be essentially free, and jan hatzius, chief economist with goldman sachs, is still with us. i want to ask you but next week's payroll numbers, because i find it interesting that the economy is creating 225,000 jobs a month at a time when we're close to max employment. it suggests to me perhaps we're nowhere near max employment. >> well, i think we are -- my view is we're probably a little bit beyond full employment

i mean, there's always a range of uncertainty around these estimates. this is not precise. but when i take all of the different signals together, it seems to me that we're a little bit beyond the stainable level of the unemployment rate or the employment rate. and we are still creating a lot more job long-term trend, for sure, which we would put at about 100,000 so, when you're at, you know, 200,000, the trend's a little less than that where exactly it is isn't really material, but you're well above the 100,000, so that means the unemployment rate is likely tooo overheating territory. we're looking for 3.25% for the unemployment rate by the end of 2019 and i think at that point, we would be beyond full employment in the sense of the long-term sustainable level. i mean, there's a difference in how low could i possibly push the unemployment rate, and the

long-term sustainable level, which is not as strong as that, because at very, very low unemployment rates, i think it's very likely that you will get more upward pressure on inflation, and that would ultimately not make it sustainable. >> so, you're saying we should 25y end of 2019. rates hit about is that when the fed will finally hit the neutral rate in the sense that probably, let's say another three more hikes coming this year, perhaps a few more next year, then they'll have to stop because they've got to that rate >> we have them going a little bit beyond neutral, and they, themselves, actually have their policy going a little bit beyond neutral. in their forecast, they get to about 3.25% to 3.5% for the funds rate at the end of 2020. now, that's their own estimate and according to their own estimate, that is somewhat in restrictive territory. our own forecast is that they get to about that level, but about a year earlier and both of these forecasts are

meaningfully above market pricing. so, that's, you know, a strong view that we think we are going to see more rate hikes, a rate hike every three months for the next seven quarters, basically, and you know, that's 100 basis points above market -- >> jan what do you think that does to the u.s. yield curve there's been a lot of talk about the flattening of the so-called yield curve. you've written a piece saying one mustn't confuse causation with correlation in the sense that a flattening of the yield curve tends to be associated with recessions but doesn't necessarily portend a recession. don't you think if the feds embark on a hawkish path as you suggest and you highlight, that that yield curve flattening may actually lead to an inversion, in which case, it would be a self-fulfilling profess? people will get concerned about recession and business sense for the future. >> i wouldn't view it as a particularly hawkish path. it's more hawkish than markets are pricing, but if you look at

history, i mean, a 25 basis point move every three months isn't particularly hawkish in the '04 to '06 cycle, for example, they did twice that the point about the yield curve, i think, is that, first of all, we're not forecasting an inverted yield curve, t of i ink it is important to distinguish between the correlation of an inverted yield curve and subsequent recession and the causality. i don't think there's causality a recession. i think the way the causality works is that when the yield curve is -- the yield curve typically inverts when the fed has to make policy restrictive because the economy is overheating. and in that kind of environment, yes, recession risk is higher. but if you thoughtbout the alternative, economy's overheating and the fed doesn't make monetary policy restrictive, then the economy overheats further, and a yea ter, you're in the sam

position, except more extreme. and then in order to catch up, you have to make policy even more restrictive and that actually increases the risk of recession. so, this is a somewhat subtle distinction, but it's actually extremely important, in my view, to not think that the fed delivering on the sort of po that's required in an overheating case is what causes recessions >> because we're not orhng yet. but do you think that the yield curve will invert at some point? >> it'our forecast, but we have flat by the end of 2019, sloped only 25 basis points between the funds rate and ten-year yields, a lot flatteane now. so you know, that certainly kes it quite feasible that you could get an inversion, but it's not focast. jan, i want to ask something else we spend time talking about the rate hikes, but the other element is quantitative tightening and the fed's balance sheet. looking to raise the heomc at interest on ex reserves by

only 20 basis points at the next meeting. do you think, perhaps, they'regd about some of the tightening in money markets here and that's going to affect the way they construct these rate hikes in the future >> yeah, i think that is what they have concluded from the drifting up of the effective funds rate inside that 25 basis point band we've been moving towards the top end of the range, and they would like to be closer to the middle of the range, so they're trying use their tools the interest rate on excess reserves is a tool to lessen that and move the funds rate back into the middle of the band, so it's a technical issue, though. this is not a monetary policy issue. this is an implementation issue. it doesn't carry any significance for what the overall monetary policy plans are. >> or the balance sheet reduction. >> i don't think it means anything for the balance sheet

reduction. >> one more question, trade wars, trade narratives, trade diussions that are going on. clearly, there are a lot of questions for investors right now as to whether or not the tariffs will go into effect. but assuming they do, how much of an impact is that really going to have on the u.s. economy, and also, do you think it's going to be a considerable factor as far as the fed are concerned when thinking about tightening in the next 6 to 12 months >> i think it's small if you look at the direct effects i mean, obviously, there's quite a lot of uncertainty around the extent of the tariffs on chinese imports on, you know, potential auto tariffs, so there's obviously a range. but when we run these tariff effects through our models, we get numbers, you know, order of magnitude, 0.1% on core pce inflation, and if there is full retaliation, maybe 0.1% or so on growth so, it's unfavorable

it means more inflation, less growth, but it's small the way it gets significantly bigger is if you get large sentiment effects. so, if financial markets, equity and credit markets, are very sensitive to the risk of breakdown of cooperation and a broader trade war, as they were two months ago -- so, two months ago, it seemed like a more significant potential negative more recently, markets have kind of moved on a bit. >> kind of immunized >> and they don't view this as a very large macro issue and if that environment stays in place, i don't think it's going to have a major impact on either the economy or on monetary policy. >> so, the fed are unlikely to bog. jan, i'll have to leave it there. thank you for joining us show, jan hatzuis with goldman sachs if you want to g involved in the conversation, e-mail streetsignseurope@cnbc.com we're also on twitt twitter @streetsignscnbc and you can tweet me directly @cnbcjou

smurfit kappa's ceo says they have great prospects after international paper drops its bid for the irish packaging firm more after this break. stay tuned - 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 back to "street signs. some corporate news. international paper has withdrawn its 8.9 billion euro bid for smurfit kappa, the company citing ack of engagement" by the board of directors and management for the collapse of the deal since the initial february offering, the irish firm has rejected two offers from international paper. speaking to cnbc in the last hour, ceo tony smurfit defended the company's prospects. >> we've been very consistent from the sta that we have great prospects of the company and our first quarter proved that, and we continue to say that we have great prospects you know, we introduced a plan before this proposal from ip that laid out a future that is very exciting for the company

and its employees, and that's what we intend to stick anwhen we got the approach, we obviously looked at it very carefully. the board looked at it, but it didn't represent a value for us. so, obviously, we're not prepared to engage with a company that didn't put a value on the table. air en do you think, though -- i mean, i'm oking at the valuation of your company and before today's move, i think you're trading at about 12.9 times forward. that's with the bid in the situation as well, tony. do you think, though, for a company with such a large revenue as you do, i think 8.6 billion euros in 2017 -- do you think you make enough profit and the market is not wise to that but understands that the profitability needs to be better for you to move to the next level in terms of valuation? >> yeah, i think there's no question that we need to make more money i mean, we invest a lot of money in our business. we've got great prospects, we've got great tools, we've got great people, but we have to get a better return, and that's what we're working on very strongly,

and that's part of the objective of the plan is to move us to a different level, and that's why we're pretty excited about what we see elsewhere, the uk government has given the green light to 21st century fox's business for sky. britain's decision came with the caveat that fox must sell off sky news to preserve its independence concerns had risen that a successful takeover of sky would give fox's rupert murdoch too much influence fox now faces a $22 billion battle with comcasto acquire sky. this after comcast, which is the parent company of this network, > elsewhere, bhp hasn april. reportedly received first-round bids for its u.s. shale assets, valuing them at between $7 billion to $9 billion. according to bloomberg, bp and chevron are among the bidders, while shell has also submitted an offer with partner blackstone bhp reportedly expects to launch a second round of bidding as early as july. representatives from the

companies have denied to comment onhe report. rep sol will ramp up production in 2020 and hike its dividend to one euro per share over the next two years. announcing its latest strategy, the spanish oil companide 15on e spending, adding it would deliver adtional share buybacks if the crude prices stayed above $50 elsewhere, the stage has been set for the highly anticipated summit between u.s. president donald trump and north korean leader kim jong-un. according to the white house, the capella hotel on singapo's s meeting.island will host the trump earlier told reporters that plans were, quote, moving along very well, adding a lot of work was going on behind the scenes japan's prime minister says he wants the g7 to send a message that it supports president trump's policy on north korea. and makiko is with us down the

line wh re from the nikkei >> reporter: yes, as the summit between the u.s. and north korea nears, japan's prime minister abe is working to keep the pressure up on the north towards its complete denuclearization. abe will be meeting u.s. president trump on thursday and hopes to coordinate their position ahead of the historic meing toldapore next week. presid that hes not want to use the term maximum pressure anymore, which has heightened thejapanes that pressure may soften against north korea. abe has said he will stress the importance of a complete, verifiable, and irreversible denuclearization as well as resolution of decades-old cases of japanese citizens being abducted by north korea. president trump has also indicated that talks with pyongyang may be held multiple times, which also has tokyo worried that that could led north korea put off taking any concrete steps towards

dismantling its weapons. japan relied on the u.s. for its security, and amid the sovereign turn of events, jap japan's ruling liberal democratic party called to double the country's defense washington has also been pushing japan to shoulder more of the cost of its defense, and the party has urged the government to raise the defense budget to around 2% of its g japan's defense budget has risen for six straight years, reaching nearly $48 billion in the original budget for the current fiscal year. that's all from the nikkei back to you. >> makiko, thanks for that i should also say that we've got a few comments out from prime minister abe ahead of the g7 meeting. of course, all eyes on that. but he's saying no countries benefit from trade protectionism. the g7 must play a role in achieving stable global growth by promoting a free and fair economy, and therefore, weighing in on some of the latest tariff announcements by the u.s. there. of course, that will be a big

topic of discussion at this week's g7. but coming up on the show, a potential compromise china has reportedly offered to export in excess of $70 billion ofcan goods if the u.s. pulls tariffs. we'll discuss it after this break. why did i want a crest 3d white smile? dinner date...meeting his parents dinner date. so i used crest. crest 3d white removes... ...95% of surface stains in just 3 days... ...for a whiter smile... that will win them over. crest. healthy, beau for life.

welcome back to "street signs. i'm joumanna bercetche and these are your headlines the euro pushes higher after ecb chief economist peter pratt says the central bank will discuss winding down its bond-buying plan next week amid a better growth and inflation picture ecb policymaker and bundesbank chief jan weidmann strikes a more hawkish tone, saying it's plausible the asset purchase program will close by year end in the first step towards normalization. and 8.9 billion euro deal shredded international paper pulls its offer for smurfit kappa, sending the irish firm's shares higher as they support the plan to stay

independent. and neian prime minister giuseppe conte spooks the bond markets with his promise to roll out budget-busting policies that could worsen rome's debt burdene the public debt, and we want to do it th the growth of our wealthth aterity measures that in the past few years have just contributed to its growth welcome to "street signs." let'check in on how markets are doing before we push on further with the show. you can see that dow is seen opening up about 100 points higher in today's trading, s&p about 6 points higher, and nasdaq, which continues to make record closes, second day in a row yesterday, is also seen opening up about 18 points higher as the tech sector continues to outperform in u.s. markets. switching to european markets, the pictur somewhat mixed. we've got ftse m, the italian index underperforming after some of mr. conte's comments on the budget side.

now ftse mib is down about 200 points or 1% in tradg, and that is, of course, in direct contrast to what is happening in other european markets ftse 100 is up about.33%, xetra dax about 0.4% as well let's look at foreign exchange and see what the picture is like in currencies this morning and there you can see it's a mixed bag as far as the dollar is concerned the dollar is trading stronger against yen, back through 110 again, about 0.25% stronger, but weaker versus euro and cable as well you can see euro/dollar is about 0.3% higher. there is a build-up of anticipation ahead of next week's ecb meeting after pratt and weidmann's comments suggesting that potentially we could get some hindz towards the end of the assets purchase program. china has reportedly offered to import in excess of $70 billion of american goods, if the u.s. holds tariffs now, according to multiple media

reports, china proposed the deal to buy more u.s. energy, agriculture, and manufacturing products during trade talks in beijing last weekend it is not clear whether washington will accept the offer, but president trump i believed to have met trade advisers yesterday to discuss the potential deal and meanwhile, zte has reportedly signed a preliminary agreement to lift a ban from operating within the u.s according to reuters, the chinese telco equipment-maker reached a deal in principle under which it will pay a fine of $1 billion, plus $400 million to cover future violatns zte has not commented on the report while a spokesman for the u.s. commerce department said that no definitive agreement has been signed by both parties and also sticking with trade, mexico has announced retaliatory tariffs on american products, targeting its from republican strongholds ahead of u.s. midterm elections in november the measures include tariffs on

pork products, cheeses, and bourbon. mexico's economy ministry will also match duties that the u.s. placed on mexican steel by imposing a 25% import tariff on u.s. steel products. mexico's response ramps up trade teioetween thewo countries as they aim to renegotiate the north american free trade agreement, or nafta u.s. trade representative robert lighthizer says nafta negotiations are making progress, though, but that the three countries are not close to a deal in a statement to cnbc,he said differences remain on intellectual property, data localization, agricultural market access, and energy. and the mexican peso and canadian dollar slumped on concerns about the agree and meanwhile, in the eu, the eu has reached out to mexico and canada in a bid to form a united front against washington's tariffs the eu added it was preparing a set of retaliatory measures worth up to 2.8 billion euros on

u.s. products, including harley-davidson motorcycles and bourbon. bourbon seems to be the primary means of attack for all of them. british prime minister therese theresa may called the tariffs unjustified and disappointing. ellen clark kent is with britain's conservative party can i just ask your take on the tariffs that were announced last friday by the u.s. administrationearly, verdisappo most counterparties. >> absolutely, and deeply concerning that we're seeing in the more protectionist policy coming from the administration when it comes to trade, and that is having a global impact, as we've already seen of course, this was initially to deal with overcapacity, but it's acted alone, instead of coizinito wo with other partners to challenge their overcapacity we see, particularly in the steel. >> what do you make of the eu's response to respond with tit for t tat, in that they are responding with extra tariffs on u.s.

imports, if the issue is dealing with overcapacity, then surely the eu can take the moral high ground and grough the multilateral system, through the wto and seek a solution that is more a-encompassing than going into this tate for at the battle. >> well, i would agree with you, and i wish that we were, but unfortunately, this protectionism is growing, and it's the natural sort of default posion for the eu as well. so, of course, they feel they're pushed into a corner it's an excuse for them to also look at more protectionist measures moving forward. and the concern is that this will then become a carousel of movements and people taking protectionist decisions and acting independently. >> now, theresa may has been criticized somewhat for the somewhat lackluster response you know, we heard from labor leader jeremy corbyn who said that theresa may's appeasing donald trump in the hope of getting a race to the bottom of the trade deal with the u.s. after we leave the european union. to some extent, he's right in that the uk can't really sound

too aggressive on the u.s. or side too much with the eu, given that the uk are in a position where we will need to negotiate a trade deal with the u.s., irrespective. >> well, on the contrary, prime minister may was on the phone to trump only yesterday absolutely expressing our deep, deep disappointment and concern about where this is going and the trade war that this could lead to so, prime minister may was leading the charge, but we are still members of the european union, and we will fight for an exemption from these tariffs with the european union as a rock >> going forward just talking about the uk's trading arrangements, it could lead the u.s., number one on the list, in terms of future counterparties to sign a trading agreement with who else have the uk started speaking to already behind the scenes on a future trading relationship >> well, of course, america knows the importance of our biggest export market, but the new department for international trade set up 21 working groups

with other countries, of course. amongst those will be importantly japan or canada, continuing our relationship that korea, but also looking towith other countries, such as australia and new zealand in order to make sure that we are acting globally and taking part. 90% of economic growth that is expected to come from outside of the european union. >> now, the uk paper on -- well, the brex deal is supposed to be publish -- was supposed to be published in the next couple weeks, but there are now some reports saying that that white paper could potentially publish after the june summit that's coming up in a couple of weeks' time i'm just wondering if, perhaps -- well, one, give us a little bit of guidance on when that white paper is going to be published, and two, whether or not we're running out of time? >> well, there's an awful lot happening in the house of commons and in the house of lords right now. and unfortunately, business is probably going to be delayed on a certain extent anyway. but of course, the negotiations are at an absolutely critical point in brussels, and until we can understand where we are, perhaps it is best that we

postpot white paper a little bit, so we can make sure when we announce it, we are confident about the direction we are taking. >> and can we talk about the eu withdrawal bill? of course, that is coming back to the house of commons next week with multiple amendments from the house of lords. are you expecting the amended version of this bill to be passed i mean, how is the government looking as far as that vote is concerned going into next week cause there's some reports that it may be difficult for mrs. may to actually push this one through. >> the passage of this bill has not been as smooth as the government and the prime minister reflect it to be, but i think she's showing real determination now in challenging the house of lords' amendments and making sure th we see progress we have to be very clear, the uk's negotiating its future trading relaip with the european union, and we need to have our withdrawal in order to proceed in those negotiations. so, we really need to get clarity on the direction of that we're taking, and i believe that the prime minister's leading the way in doing so. i hope that the vernment, and

i hope the house responds in the right way. >> when will we get full clarity on customs union, customs union partnership, max facilitation? clearly, lots of businesses are sitting on the sidelines now saying, look, we're running out of time. we've got the june summit coming up unless we see the brexit white paper before then, we're essentially running out of time ake g ss decisions, and we don't have any clarity on what type of customs arrangement, if any, the uk is going to have with the eu. so, when can we expect more color on that side of the talks as well? >> i share their disappointment and their frustration in not getting more clarity on what our future relationship and trading relationship and what the customs union will look like of crse, we're leaving the customs union and the eu is making this extremely difficult at this point in time. i hope we'll get clarity after the summit in june we are at a very, very critical stage in the negotiations. i think the max fac, as they call it maximum facilitation, is the only option on the table that will allow the uk to have an independent trade policy,

which, of course, will be good for our economic perity in the future. >> we'll have to leave it the. thank you very much for joining us, emma mcclarken, mep and international trade spokesperson for britain's conservative party. elsewhere, president trump's trade strategy has taken its toll on ceo sentiment, as kayla tausche reports. >> for the first time since donald trump was elected president, a quarterly reading of confidence among ceos has fallen the survey conducted by the business roundtable showed that expectations for the next six mont for hiring, capital investment, sales, and u.s. gdp all declined one major reason is trade. 95% of respondents cited white house trade policy aa moderate or serious risk. business roundtable ceo josh bolton and chair, jpmorgan's jamie dimon, told reporters they'd advise the white house against tariffs and protectionist policies to no avail. 132 ceos rponded tthe survey during the middle two weeks of may when the white house was

negotiating trade deals on nafta fricascreased intwo fronts w the weeks since. the u.s. may pursue separate deals with canada and mexico to replace the cut trilateral deal and a white house team in beijing reportedly rebuffed an offer from china to buy $70 billion in u.s. energy and crops. here's white house press secretary sarah sanders. >> our focus is on making sure we get good deals. i'm not here to make an announcement on what those look like, but he's going to push forward to make sure he gets the best deal for american workers. >> a campaign promise turning into a "c" suite headache. kayla tausche, cnbc business news, washington. a fly in the ointment that could end the recovery that's what jpmorgan's jamie dimon thinks about trump's trade policies head to cnbcor more on what ceos think about current trade tensions and growth prospects in the u.s and i'd also like to draw your attention to, of course, we were talking about weidmann

comments and trade comments earlier, suggesting that as soon as next week we could hear an announcement on ecb winding down its asset purchase program, and what we've seen is a reaction in front-end money markets. now they're fully pricing in a rate hike by july 2019 after these comments and june of 2019 is pricing in a 70% chance of a hike versus 50% earlier this week so, markets bringing forward the timing of rate hike expectations ahead ofhat all-important ecb meeting next week. now, howard schultz has ripped into democrats for veering too far to the left. the outgoing starbucks chairman told cnbc democrats are proposing too many expensive policies but refuse to be drawn on whether or not he would launch a 2020 bid himself. >> i can't be nailed down today on a specific of what i might or might not run for, you know. i want to think about this through the lens of what it

means to be a great american citizen. i don't know what that means at this point but my concern for the country and my concern for our standing in the world, the lack of dignity, the lack of respect, the vitriolic behavior coming fr this administration, i think we can do much better. and i think the political class as a whole, not only this administration, has been reckless, specifically with regard to $21 trillion in debt, and not being as fiscally conservative as we need to be. and we are going to pay for thi, and it's unfair. >> now, howard schultz is just one of several business leaders who may get involved in 2020 bids head to cnbc.com to see who could challenge trump and how they stack up financially. now, get involved in the conversation we've discussed a lot of trade in this second segment of the show, so if you have any views there, the address is streetsignseurope@cnbc.com and you can follow us on twitter @streetsignscnbc or tweet me directly @cnbcjou. coming up on the show, we

argetting there. an emotional elon musk addresses shareholders as he says the carmaker will likelyit its model 3 goal stay tuned these birds once affected by oil

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> welcomshow former chief executive of cambridge analytica, alexander nix, has been accused of taking over $8 million from the firm just before it collapsed investors speaking to "financial times" say the money was taken soon after the company's role in facebook's data leak revealed in media reports. nix is being urged by investors to return the money. he has not commented on the report. and facebook has announced that it has data-sharing partnerships with at least fourg huawei, which has been raised by u.s. intelligence services as a national security concern. the four chinese companies are among 60 firms worldwide which haveecaccess tme user data after signing contracts with facebook. on tuesday, the social media firm said it would end its partnership with the four chinese firms. and an emotional elon musk

has addressed shareholders at tesla's annual meeting, admitting that the last few months have been excruciating. he made the comments as tesla revealed plans to build its first factory outside the u.s. with china top of the list as well as another development potentially planned for europe tesla's head of worldwide sales also teased a potential partnership in china as well with tesla's cash burn a key concern of investors prior to the meeting, ceo elon musk moved to calm concerns, stating that the company, quote, does not expect to raise any additional debt or equity motions to remove three directors fr the board and to take theirn role from musk were also rejected by shareholders musk also explained the firm is currently producing 3,500 model 3s a week with a target of 5,000 in sight by the end of june. >> all parts of the model 3 production system have demonstrated a 500-car-per-day capable or a 3,500-car-per-week

capability and we just did a big set of upgrades and we're spooling out the production lines again and i think it's quite likely that we will ach 5,000-car-a-week by the end of this month [ applause ] it's like, whoo. this is, i'll tell you, the most excruciating, hellish several months i've maybe ever had, and a lot of other people at tesla but i think we're getting there. >> musk recently came under fire for his behavior during a call with analysts, at one point teing a participant not to buy the stock. >> we have no interest in satisfying the desires of day traders. like, we couldn't care less. please sell our stock, don't buy

it if people are concerned, they should definitely not buy our stock. i am not here to convince you to scary.uyt if vity is there you go >> and shares in tesla jumped 1% in after-hours trading off the back of the shareholder meeting. joining me down the line is an analyst from arc invest. company that has been mired in controversy the last couple of months, be it on the pr side, othe pruction sideon the management side, and also downgraded by moody's just a month ago or so but you hold a very constructive outlook and a big buy call on tesla. can you talk me through your anticonsensus view at this point? >> sure. and i thinerday was perfect example of why we hold it across three of our portfolios, one of the top positions. everyone is so focused on the short term, but on long-term goals, they're actually ahead of schedule and i think one of the biggest things that came out of

yesterday was elon musk said that for battery cells, they could be at below $100 per kilo watt hour by the end of this year if you look at analyst reports just three yearsgo, thatt bay ce been unheard of. and they actually mentioneth in their first-quarter earnings. they've said that the cobalt in their battery cells is ahead of their competitors' next-generation cells. so, what this does is it puts tesla roughly two years ahead of the competition when it comes to battery costs and technology and really, to put that in perspective, the cost of cobalt is $90,000 per metrito and in competitor cell, just the cobalt alone, the raw material costs would be $35 so, this cost decline and this new chemistry is putting tesla at a structural cost advantage compared to them so, i think people are going to be really excited when they start to process what came out of yesterday's call.

>> and what do you think that means in terms of future cash burn because one of the biggest issues that were cited by investors and also moody's in the first quarter of this year is that the company seems to be spending a lot of cash, burning through cash to the tune of about $1 billion, and also it continues to borrow in debt markets as well. so, yes, they may be investing a lot in this new type of technology, but what does that mean for their company finances at the end of the day? >> right, i think that's a short-term concern and yesterday, you know, we saw the 3,500 capability perk. some new confidence that they'll be able to hit 5,000 model 3 per week by the end of this month. and i think what's really incredible is that market share. you know, they showed that chart. the model 3 is now the market leader with 30% market share in that midsized, premium category. and that's not just electric

vehicles, that's electric vehicles and gas-powered vehicles so, i think people are going to really look back at this and theye going to say, wow, this ng the bell for electric vehicles this is just the start here as far as that cash burn question goes, i think once they ramp up to 5,000 model 3 per week, you know, that puts them at 20,000 units per month. and at an average sales price of $50,000 per car, this would make the model 3 the top-grossing sedan in the united states, and really just going to ng that realize once they see ose numbers. because right now they're just concerned with them being able to get there. >> i'm just curious of why you're so confident on these production targets because yes, they have announced that they're planning to produce 5,000 model 3 cars a week by the end of the second quarter, but they're still only producing about 2,500. and also, originally, that target was set to be achieved by the end of 2017. we're still not there, so what

makes you so confident that they're actually going to get there this time? >> you know, i think part of it is elon musk's confidence, but also, i think really the bigger part of it is whether or not they hit 5,000 at the end of this month or they hit it even a that's not really going to be a -- we're long-term holders of the tesla stock, and this is really a short-term barrier. we don't think that they're never going to be able to hit this goal. and , whether they hit it at the end of this month or they hit it at the end of next month is not necessarily as big a concern for us the opportunity ahead of tesla is just so large the autonomous opportunity right now, we're just talking about electric vehicle car production, but once they turn on autonomous capability, they rom selling th hardware, you know, one-time sale hardware margins to a recurring revenue model at software margins, and, and this opportunity -- >> sam, one last quick question for you.

we've only got a minute. giveyou're such a big believ in tesla, what do you make of elonk and his reaction to some of the analyst questions on that infamous call just couple of weeks ago do you think that perhaps he should consider getting communications officer and outsourcing those types of cls in the future? >> i think what we saw was a lot of raw emotion he is trying to -- it is a mission-driven company he's trying to transition the world away from gas-powered vehicles to electric vehicles. and i think that he is really into the mission and the long-term vision of tesla and that these short-term questions to him are not really as material for where tesla's going. and so, i think that that's what we saw was that raw emotion coming through and his belief in the long-term vision am, thank you very much for that that was sam korus, analyst from ark invest before we head out, i want

to draw your attention to some things that are crossing the wires from german, french, uk, foreign finance ministers have written a letter to the u.s., a joint letter, saying that they remainmied to upholding the iran nuclear deal. the european ministers and top diplomats also request that u.s. allows business with iran in energy, auto, civil aviation, infrastructure and banking sectors to hold. and they say that they request that u.s. exempts sanctions from eu companies that had contracts with iran after implementation of the nuclear pact. so, therefore, sticking with the deal and that is it for today's show. i'm joumanna bercetche "worldwide exchange" is coming up next.

it is 11:00 a.m. on the beaches of france, and here are your top five at 5:00 a.m. on the east coast another black eye for facebook after admitting it's been sharing data with a chinese company that's been labeled a national security threat, among others tesla shareholders striking down a proposal to remove elon musk as chairman of the board hundreds more homes in hawaii destroyed. lava continuing to flow from mt. kilauea. china's zte reportedly inking a deal with america that would put it back in business. anr airways chief executive apologizing for the sexist remarks that he made yesterday. it is wednesday, june 6th, and "worldwide exchange" begins right now.