squloo when fwerm ma any makes a massive oil and gas deal with russia where you're supposed to be guarding with russia and germany goes out and pays billions and billions of dollars a year with russia so we're protecting germany we're protecting france and all of these countries and then numerous of the countries go out and make a pipeline deal with

russia where they're paying billions of dollars into the coffers of russia. energy is a whole different story. i think energy is a much different story and you have a country like poland that won't accept the yes you take a look at some of the countries. they won't accept it germany is captive to russia. >> steve joins me to discuss steve, it's only been half an hour and already the fires have been started it's going in a different direction though president trump is single handedly pointing out germany. >> i think he's an extraordinary intervention by the president. i think it's one where the nato secretary general was completely and utterly blindsided by the assault from the president this

morning. i was watching the communication skills of the president also and i think it shows you how he's ripped up the rule book. fs undiplomatic, blunt and to the point. it's taken the sales out of any hope of cohesion on the surface let alone behind the scenes from the german and u.s let me just shirk it back and tell you what it's really about though it's not necessarily just about nato spending. we know that the 2% level of gdp is okay with the u.k. states just barely getting there. the german states spend 1% of the gdp. the germans have an enormous trade surplus. $249 billion global trade surpl surplus. in 2017 it's 245 billion

it's around 49 billion euros they want the germans to spend money. now, three, this assault on the german energy relationship with russia, it is unambiguous, it has very high ties with europe and germany. gerhart schroeder is there as well europe broke all amounts of records in the amount of gas it takes from the russians. it took around 40%, 40% of the gas in europe came from gas prom as well. record after record. he mentioned this new pipeline this is where it gets really interesting. the rubber stamp is going through the baltic will double the amount of gas that gets into europe and germany

it's somewhere around 65 billion btm. a large amount of extra gas could be coming through. guess what the likes of lithuania and poland are doing for starts, it encoaches on their backyards as well. they've been building terminals. this is about reliance on russia but it's also about the competition of exports of l&g going into europe and opening up those markets as well. let me just recap. i've gone on a bit this is overtly about german defense spending it's about the german surplus and russian gas competing with u.s.lng. i thought the president absolutely blindsided them and laid down the gauntlet to

germany. >> he clearly came to germany with an agenda if anything, that 2% target is the guise behind the real incentive which is the trade surplus and which is also pointing out the fact that even though europe are proud of themselves for having applied the sanctions on russia, at the end of the day through the back door as you say the pipeline is very much dependent on russian oil imports to keep their economy ticking. >> thereinlies my point. you know this. journalists, you're a banker as well you know that actually at the height of the crisis in 2014 when diplomatic relations between the u.s. and russia, between the e.u. and russia were absolutely heightened in de

facto situations as well what was going on in the gas supplies exactly the same thing as now. despite the fact that they were at loggerheads in 2014, the huge amount of gas has been flowing at record levels into europe this is the rail policy of the world. the relationship between china and saudi and russia as well we draw a link there as well it's one very interesting case >> the only thing as well in parallel to that is it's easy to say, i'm coming to nato. i'm going to push. you get the likes of germany and other european companies saying, yes, we plan to get to the 2% spending that would have been an easy win. now the stakes are higher. >> how do we increase our defense spending in europe

would we buy home grown goods, fighters or buying more f-35s. would we be buying more u.s. hardware this is the president's point. he's the ultimate salesman he wants the u.s. defense goods to find their way in i know hadley will have a lot more insight on this as well. >> absolutely. we're talking about nato, but of course paris as well the u.s. has ramped up the trade war with china announcing it plans to launch 10% tariffs and $200 billion worth of goods. the tariffs will be imposed after a two-month review process. in a statement u.s. trade representative robert lighthiezer cited the trade.

while the first round set more on car products, handbags, skis. chemicals, cole, steel, aluminum will also face tariffs eunice yoon filed this report. >> reporter: china says it will respond to u.s. action but it hasn't clarified what that response is going to be. the commerce ministry said it would immediately file a complaint to the wto but so far no word on how the chinese will retaliate. the u.s. is threatening a 10% tariff on the u.s. goods talks have been unsuccessful china says it's shocked by the move and it is a big number. in fact, china only imports $130 billion worth of goods in the

u.s. people are now wondering how china will make up for the short falls if it does hit back. china has drawn up a plan to defend its companies as well it says that it will assess impacts, use income raised by counter tariffs as relief for chinese firms, encourage chinese firms to diversify its imports and step up use of foreign products the four-point plan is set to safeguard the companies. eunice yoon. >> they have hit the equity trading sentiments overnight you saw asian markets in the red. let's take a look at the minors this morning key names all trading in the

red. bankorp is trading lower no big surprise here because the stakes keep getting higher as far as the trade war is concerned. not just trade war with me to discuss is erin brown the head of asset aloe gags. good morning. >> good morning. >> so many things going on let's start talking about the trade tariffs and $200 billion worth of tariffs up nm nuntil now most analysts believe the 36 billion that has been applied as a portion of gdp is small it hasn't had that much on gdp or inflation >> $200 billion is a totally different ball game. how would that force you to think about how you positioned your portfolio >> you're right. the way that we estimate the impact of gdp from the first $50 billion in tariffs has been announced thus far is likely to

be implemented, 36 of which or 34 of which have already been implemented is about .1% impact to u.s.gdp and the same to chinese gdp. fairly small if we were to see the full slug of it implemented, that impact would be materially larger at about .3 to .5% to gdp that's the first order effect. clearly this really is a step up in terms of the impact that we would see both to gdp as well as to earnings. from an earnings perspective, it would probably take off about 3 to 5% as the s&p 500 earnings so that's giving back half of the impact that you saw from the tax policies being passed late last year. >> to be clear, that 3 to 5% impact is from $200 billion?

>> exactly that's the first order effect. as we start to see ripple effects through the supply chain which could be expected, then it could be materially larger than that >> reading your notes just before you came on, you are talking about emerging markets and it could be contrarian where is your optimism coming from >> i think there are three things that really led to the impact of the markets selling off as deeply as they have this year the first is a stronger dollar the second is the fact that you have seen export data roll over in emerging markets and third probably most importantly from a sentiment perspective of a trade tariff we think for long-term investors it's still fairly significant value in being long emerging markets. we think people are not well positioned in emerging markets

we think that there's a structural argument to being longer in emerging markets it's still fairly robust and still above trend. we've turned the inflection point from downgrading growth from a global gdp perspective as well as from an emerging markets perspective. it bottomed out in 2016. we're now seeing growth come back also when you look at valuations emerging markets still look cheap relative to the rest of the world on both a relative basis and an absolute basis. we still think that the earnings power is there to be long emerging markets for long-term investors. >> the risk is higher volatility it's up 6% one day, down 2 1/2 percent the next day so even if you wanted to get in, you'd be safe with other people rushing for the door at this

time trying to get it. is now perhaps not the time to be a hero? >> so, again, i think it depends on your time frame what's interesting about the flow is that the amount of yoet flow are the same during the taper tantrum. i think you're right to say that higher volatility is going to mean lower sharp ratios if you're investing in emerging market equities. i think it pays to pick the spots and be cognizant of the fact that you are going to be -- it's hard to bottom pick the market you are getting in at a time where volatility is high that's typically where you're best rewarded as an investor but you have to have a longer term time frame in order for that to play out. >> erin, thank you very much for joining this show this morning now before i move on, let's take a quick look at how markets

are doing at this morning. markets are deeply in the red. we'll talk more about that later. for more on the nato summit, paris, make sure you tune in at 17:30 cet when we talk to william hague. it is a sea of red out there you have stocks europe 600 down 1% in trading, this after that heavy weakness in asian markets as well. we had chinese industries down 2% nikkei down more than 1% let's take a look at individual entities there's the picture as you can see, fully red all of the major indices trading deeply below that 100 mark xetra dax after president trump's comments down 150 points sectors that again won't come as much of a surprise here, but every single sector is trading in the red they're leading to the down side

more than 3% this is on the back of fears $200 billion worth of tariffs from the u.s. coming up on the show, stocks up on the stakes in the battle for sky more on this ayuned

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welcome back to "street sign"s sky shares are in the red. the increased all cash offer of 14 pounds per share represents an increase. fox has a backing for the deal its initial offer made in december of 2016 has been under scrutiny by british regulators with me to talk more about this is tim mulligan. great to have you back on this again, tim is this it do you think we can draw a line on this episode? >> i wish it could be that definitive

i suspect there will be another counter bid because this is such a key part of what's happening in the media and technology space right now. >> before we talk about the broader narrative of what's happening in the media space, more on this deal specifically we just were looking at sky stock is trading up at 14.80 clearly trading through that offer price. that implies that the investment community thinks comcast will come in for a counter offer. is there any level where it stops making economic sense for the counter offer? >> so on one hand you could argue we've reached that stage already. so the financing package that comcast has already put together to make the initial bid is beyond the comfort zone. they're already in that stage as well for disney, remember, disney is the primary mover behind why

21st century fox is making the bid because 21st century fox has agreed to sell its 9.5% stake in sky to disney. >> disney/fox just got approved? >> absolutely. disney -- this is make or break for disney this is why they're throwing everything at it this is why they're continuing to increase it they will go as far as they have to to make this happen so it's already gone beyond the comfort zone of both parties but the outcome is survival versus uncertainty and probably decline. both have to go for this. >> let's talk about the loser. whoever doesn't end up winning sky or out bidding the other person what happens from there onwards? does it open up the door to potential takeovers of other media companies, other paid tv net sfwhorks how do you see this playing out? >> comcast will be stronger because we know comcast has a track record of successful diversification and they have

the revenue streams. they have recurring revenue streams from their broadcast subscriptions and from their paid tv subscriptions and they have a diverse media offering from nbc universal as well they're also primarily u.s. focused which is another key distinguisher here disney is a global business. disney is looking to move into a space which it doesn't have many assets it's looking to become distributor. it's looking to become a full snap media operator to compete with amazon, to compete with netflix. so from comcast's point of view, they can survive this. it's not ideal it's going to reflect negatively on their ambitions to wall street, but they can survive this for disney, if they don't make this happen, there will be existential actions asked about where do they go next? i suspect you're right i suspect they will leave themselves open to a potential

takeover by another acquisition ner, another company that's looking to capitalize on this huge disruption because, remember, the at&t/time warner merger has now been approved so already there are two big consolidated players in the north american market. still remain the primary market. the only other market of size that can compete is china and that's effectively locked down and closed to outside investments. these are big plays that are going to see the next decade of media distribution and growth. >> where do the tech companies come into this we hear the likes of amazon, just a couple of games but they're managing into that space. you have netflix that has disrupted the whole system in the place. is the future one where the tech companies have the pow jer and

will continue forcing the disruption and they will be deemed regulated as a media company rather than the technology companies. >> you just called out the elephant in the room, regulation so everything that's happening now is in a scenario where only one-half of the parties at the negotiating table are subject to regulation so there's regulation for mergers and to monopolies stick behavior, regulation to the kind of cop tent they can be beholden to it's not what amazon and netflix are beholden to. we're in a strange scenario where the biggest market cap companies in the world are free of regulation at the moment. this will inevitably change. as soon as it changes, a lot of

the rational will also change and it will force a consolidation and normalization of these kind of practices so what's happening now these combinations are trying to get everything in alignment before that moment happens >> tim, thank you very much for spelling it out for us that's tim mulligan, senior analyst from media research. president trump has just arrived at the nato summit in brussels we'll head there for the latest.

welcome back to "street sign"s president donald trump lands the opening blow at the nato summit turning his sights on germany for its, quote, very inappropriate relationship with russia. >> energy is a whole different story. i think energy is a much different story than normal trade and you have a country like poland that won't accept the gas. you take a look at some of the countries, they won't accept it, because they don't want to be captive to russia.

germany as far as i'm concerned is captive to russia. >> chinese equity markets sank shares in burberry slumped >> rupert mourdock tries to out fox the opposition raising 21 century's bid to 14 pounds a share and sharing the agreement from an independent committee. today is all about tariffs, trump, trades, you name it and what we've seen is a negative reaction in the asian markets overnight and also european markets this morning we're an hour and a half into the trading session. all of the majors are down 1% already. we have the german index, xetra

dax down 100 points. down 1.3%. all eyes on the political front but also on the trade side as well let's take a look at how foreign exchange markets are fairing euro is weaker to 1.5% and cable is the focus given the political backdrop it's hanging around the sag line this morning let's talk about u.s. futures even though u.s. equity markets did have a positive news, the news came out after the close and what that did is sent down futures about 200 points earlier this morning it looks like shell' put her in the car and do triple digit losses.

go to our main story, donald trump has lashed out at nato members for not spending enough on defense arriving at the summit in brussels the u.s. president vowed to, quote, make it fair for u.s. taxpayers had lee is in brussels had lee, we always knew it was going to be an exciting nato summit in the firms hour a lot of shots were fired. >> reporter: absolutely, you said it was acrimonious from th start. the president did, in facts, come out swinging, slamming germany again and again. let's listen in to what he had to say. >> it's very sad when germany makes a massive oil and gas deal with russia where you're supposed to be guarding against it and we're protecting germany. we're protecting france.

then numerous of the countries go out and make a pipeline deal with russia where they're paying billions of dollars into the coiffeurs of russia. energy is a whole different story. i think energy is a much different story than normal trade and you have a country like poland that won't accept the gas. you take a look at some of the countries, they won't accept it. they don't want to be captive to russia germany as far as i'm concerned is captive to russia president donald trump taking serious attacks from her meals the president will come out swinging because he said again and again the nato allies, they're not playing fair with the united states. they need to pony up when it comes to the 2% of defense spending so they need to make that 2% of gdp this is a good question, which is how basically battle hardened

andbattle ready are the german troops there have been a lot of reports in the press about whether or not the army has any place to defend itself if something were to happen with the russians coming over the boarder. the question is can the nato allies defend themselves let's listen in to what the president had to say. >> we're supposed to protect you against russia but they're paying billions of dollars to russia and i think that's very inappropriate. the former chancellor of germany is the head of the pipeline supplying the gas. ultimately germany will have 70% of the country controlled by russia with natural gas. you tell me, is that appropri e appropriate? i've been complaining about this from the time i got in should never have been allowed to have that happen. >> now just a few minutes from

now we will have reaction to that of course, the question moving forward is we're already at the start of two days here just the beginning of the 48 hours of talks, how much can the president expect and how difficult will it be since he's put the allies on the defense? >> all eyes will be on the upcoming meeting joining me is the former u.s. ambassador to the u.k. germany is captive to russia is this something you would have expected to hear in your lifetime coming from the

president of the united states >> i wouldn't have expected to hear it a little over a year ago. i wouldn't look for that the truth is germany is not captive to russia. angela merkel doesn't have a cozy relationship with president putin. she has been very firm on the issues of the day, whether that's crimea or russian action in georgia a few years ago or russian action in europe and in the united states. that's what you have to judge them by is whether there is a freedom to take the issue to russia which are different than throughout the de. i think germany is an alibi and a robust one. >> if you think of everything the pred sense and the target.

very soon they drew criticism as the european allies on the trading side on the linking of the german economy to russian economy versus a gas export, he's turning a lot of the same topics into the mix do you think that's going to back fire? >> the president and his administration will work out what their objective is. there will be statements the u.k. has been arguing for that because we've already been one of the countries but the truth is what is the issue it's a president trying to do his strength in nature, to see nato as an asset of nature or is he trying undermine and score

points but ultimately he won't rip form rates. that includes taking some of the pressure off ourselves and putting the pressure on russia and our other potential add very sarris. >> expect the tradeoff as my colleague was saying we don't know what's going to happen but, again, again, what type of checkup is this with the president meeting with theresa may on friday. you're absolutely right. i think the back drop to the visits to the u.k. will be what happens in nato? we have a repeat at nato that won't be the upper back drop and i hope that doesn't happen

whatever it is, there's quite a bit about the u.s./u.k. relationship that the president needs to understand. it is two way. there's a trade and investment relationship that there's a security relationship which matters and meps america and helps murns. with the big european allies and trading partners. >> before we talk more about that, did the u.q. -- i want to ask you again your thoughts on donald trump's comments yesterday when he said it sent a very solid opening american, you're not going to happen it. i in just strength, united states, round well, is that it does have our lives. it goes have progress and friends.

people are worried of course they are that's one of america's strengths. i think america wants to continue to see a great country, it should see the alliances not just as a bourbon. when you're believing, you can take it that way i think that's the bigger picture. >> what else do you read about the fact that president trump is ending the trip with a visit to president trump. that means in the negotiating chamber as well as on the scene. the issue is what sort of connections have they been in and if he comes to the meeting

on monday having had a very acrimonious outcomes, i mope that doesn't happen to me. >> would that be the beginning of these >> i don't think that's why if itself would be. if the president is devoting friendship and kind which is a threat and the sort of bad act offers in the world. i think that would be a fundamentally different world order. let's talk about the next leg of the president's euro trip we'll see him head to the black forest college also attend. on friday morning the president will travel to meet the prime minister theresa may

in the afternoon it's on to winds windsor. the president is going to hold a summit with russian president vladimir putin in helsinki the prime minister underscored the importance of the u.s./u.k. business relationship when southbound spoke to her last month. >> we have a good trading relationship every day a million people wake up here in the united kingdom and go to work for an american company we've got the good relationship and we want to build on it president trump and i have the opportunity to briefly talk about how we continue to want to be able to development a trade

deal wliek gave the european union. >> nigel primer, how would you define those how is the space of relations? i want to make that. >> dewayne: force. he asked about brittain and he said brittain is in turmoil. >> we'll come back to what you said in a minute there is a strong relationship between the u.k. and u.s it's historically strong in trade, economic implications, strong in intelligence, people to people contact of strangers so it's got all of the attributes of a working relationship president trump has introduced policies which are not the policies that the british government or many other governments of the world

on the middle east, trade, climate change assuming we leave, brittain will sneed america which is not what we have at the moment because i've got a new world trading system i think there is a concern in brittain about a divide opening up with the united states which most people in bring the fan there's a concern here but i hope that the president by being here, list jek to people, exposing himself to a range of things, as you said, over the next couple of days, that will give him a more rounded view moving ahead with the pre-trade

agreement. let's not expect that to be done overnight. >> it sounds like they're like europe. >> they have a reputation for toughness. these things aren't negotiated overnight now that the u.k. has moved to a different approach. that will need to be worked out. it will be for the trade experts to work out in the month and years ahead. this is the moment with very high quality indeed. >> do you think the mayor is

helping at london. he defended over the roof. we'll have hundreds of thoigss of people demonstrating. we've heard from the u.s. embassy to keep a low profile and there's quite a bit of tension between the two countries. i fall back on what they said earlier this morning people have a right to discuss their issues there is, as i say, concern in the u.k. there will be press in the u. kate but i think that the important thing is to, again, work out what you're objective is in.

it can easily be compared and undermined he'll have to work out what he wants. don't throw the baby out with the bath water. >> babies flying above london. thank you very much for joining us this morning. the former u.k. ambassador to the u.s. we'll bring you the gentleman speaking now >> we estimate that european allies and canada will add $266 billion to the u.s. defents budget between now we are moving in the right direction and nato, strong nato support for europe but it's also

there. despite different issues, this summit is able to agree and deliver on strengthening of the nato answer, corner stone of southern massachusetts >> sorry it was a meeting and president by snar score chd the topic. a message on defense spending, but we all agree all allies agree that's essentially why all allies agree that ben is spending less than 2% have to spend more because we have turned the corner, all allies are starting to increase and we have the

biggest burden, increase to defense spending across the u. force. so i expect open and frank discussions about defense spending during our summit but i also expect they'll do, that's allies spend more. also that rick has done the planning [ inaudible >> i exeffect open and frank arguments. some of them are not night tow

was the full disagree. i suspect they will be agree the naets don't have to be strong to protect all our life and that we were the liver on sprieng sense. you have canadian troops, european troops that want to do more together and that we are going to deliver, for instance, on stepping against aur tifk the owe fil-- >> [ inaudible ].

>> first of all, the pipeline, that's not for them to decide. it's up to nato. nato has energy security we understand there's a relationship between entergy and curiosity manners. to make sure that our energy system are resilient and i think also investments in the new bolt is decreasing the tension but on the north stream issue there are groups it's not for nato to sell it out. its ee ensure. >> [ inaudible ] >> i have met the president several times and we are used to

having open and frank cat a lag. i'll follow her. >> thank you i think -- because there are 29 nations i will not follow follow by buffer day, they'll support norway.

>> the message is we will continue to provide support for the after goon security options. we strongly believe that the best way to stabilize our family stance is to that action just because the. i'm there for a week continuing through watch live sport, funding for the after goon national security forces on the message to the taliban, they will met on the support they have to sit down and the massachuset massachusetts, they will not win at the battlefield

we saw it some weeks ago >> we have increased some in the baltic countries already we have four groups, one in each of the baltic branches and one in poland. >> we'll keep an eye on what the secretary general of nato has to say. just to recap some of the things he was saying, of course he's emphasizing that a strong nato is important, not just for our rop but also to the time they're not spending

20 was a bigger year before buy head out, let's see how european markets are fairing. the picture is pretty negative they're all trading lower than 1% already that is on the back of geopolitical concerns. on threats there will be $200 billion of tariffs that should the u.s. foreign exchange, we could see that year is now eating dinner with maydock we will get the reaction to u.s. president donald trump's tough talk to germany at the nato summit ayuned

21st century fox upping the bid for sky. president trump blasting our allies as he meets nato members in brussels. pfizer rolling back planned drug price hikes after being called out by the president and a true call where until you hear where one