good morning welcome to "street signs." i'm willem marx. these are your headlines italian banks rally after a report that rome could be ready to reduce the deficit target, but mateo salvini claims there are those in europe who want italy on its knees. a remarkably positive outlook for the u.s. economy, jerome powell says these are extraordinary times. >> the u.s. economy is doing extremely well inflation is up to 2%.

i spent a long time indicating that i think inflation needs to get up to 2%, and here we are. i think things are going well this is something that can be continued for a number of years. tesco shares sink after the grocer misses half year profit expectations thanks to weaker sales in asia and mainland europe. and stock in reverse aston martin slips in its long-awaited debut a share price of 19 pounds values the british carmaker at more than 4 billion pounds welcome to the show. to bring you some eurozone pmi numbers, the final numbers for composite future output, 62.1 against the flash of 61.9. services pmi 54.7. that's against the flash of 54.7 the final composite pmi, the one we should be watching, 54.1, slightly lower than the flash

54.2 that's against the august number of 54.5. you can see the euro trading strongly against the dollar. that looks to be much more to do with the italian news. so let's take a quick check at the major european indices the ftse mib is trading positively up. in london, the ftse 100 up a third of a percent in spain the ibex 35 is up 0.4%. and in paris, the cac 40 is up nearly 0.3%. some italian stocks affected by this market volatility unicredit, intesa, atlantia, a company with a lot of attention trading higher let's look specifically at the banks in italy, since they're the subject of the deputy prime

minister's state inte intesa sanpaolo, unicredit, bper banca. all are up this morning. mateo salvini suggests that i tall yn talian equities have under pressure so they can be purchased at a lower price and there's a report that the government in rome could reduce its budget deficit over the next three years. the coalition government could give in to demands from the european commission and the country reduce its deficit spending to 2% of gdp by 2021. last week rome tripled the deficit spending target to 2.4%. this spooked investors and finance ministers over the last couple of days

i'm happy to say simon french joins us to try to make sense on what is going on in rome at the moment and what investors should take away in terms of the underlying fundamental strengths of the economy rather than this political noise. >> that's a good question. at the moment we're trading claim and counterclaim from the italian government and the european commission. heading back to the fundamentals, nonperforming loans in the italian economy have improved in the past few years. a bit of growth expansion across the eurozone which italy benefited from fundamentally you look at unfavorable demographics 130% gdp to debt ratio, and you look at the fact that the commission'sobjective shared b at least previous italian administrations is to try to get a deficit that'saveraged 3.1% of gdp down to balance

not only is that unprecedented in the context of the euro, it's going to be difficult for a government elected on a populist agenda to not just move to something that is unprecedented in the last 20 years, but entirely against the narrative that they were putting out to the italian election with the prospects of another election at almost any time. you can see an impasse ready to occur. >> one question i had for finance ministers, when you look at the growth assumptions he seems to be making for next year and the year after, using those as a basis to make this 2.4% deficit spending possible, a lot of people have said this is not the approach i would take. how do you balance growth assumptions by a government with growth assumptions that the european will release later in the year how do you figure out the reality? >> for investors, you look at

the fact that the italian economy has only grown 4% in 20 years. on aggregate basis, 8% in 20 years. that does not suggest the kind of ambitious growth estimates from the italian government have recent historical precedence you have to ask will we see the italian unemployment rate come much lower or have structural reforms to move that lower you can't see those in the pipeline can you see a big boost in animal spirits, sentiment, free up of spending hard to see. the concern is when you're looking at those two metrics, one from the commission, one from the italian government you have to go with the conservative growth estimate because that's both the structural trend in a low-growth xweconomy but also te history of the last 20 years >> so many individuals i talked to the last few days and have gone on the record talking about

this, they've been relatively negative about what they've seen so far from the italian government reality is you're tracking this closely. there's very little data released we have essentially got that one number, 2.4%, none of the rest is obliged under italian law to be released. when you listen to comments from those men from the commission, how much willingness do you think there will be over the next year or two for them to really put substantial pressure on rome? >> the kind of people you're talking about will want to see the underlying detail that justifies fiscal expansion look elsewhere in the world, fiscal expansion going on in the u.s., investors are buying into that we heard chair powell talking about the sweet spot it's not the fiscal expansion is a red flag for investors, but it's one that is a credible pathway to growth. if you have a target for 0.8%

gdp deficit and you jump it to 2.4%, you don't know what is effectively pork barrel spending and what is good spending. one bright light is if the italiangovernment can identify infrastructure programs that change the structural growth story in italy, you may well see the commission back up that and say that is a more plausible pathway to growth. if we see the convergence of those growth forecasts, without the details it's unlikely that will happen. you're pretty bearish. you're saying be conservative in terms of what you expect from the italian government, what you expect from growth targets, what you expect from the relationship with europe. >> you look for the grown ups in any government to come forward with proposals to change the dial if those are not brought forward you have to be conservative on growth estimates and you start to question what will happen in terms of the

standoff between the european commission and the italian government when it comes to determining the next european union budget of which once the uk leaves the european union the italians will be the third biggest contributor. that feels like where we're heading towards in terms of the key standoff with the quid pro quo that fiscal expansion will only take place or be permitted if you come to the table in terms of the contribution to the eu budget. >> simon, thank you very much. we'll keep you here, if you don't mind simon french there tesco missed first half profit estimates and has blamed poor performance on mainland europe and asia its acquisition of booker helped sales in the uk. the grocer said it was on track to deliver it's medium-term goals. and aston martin shares are in reverse just over 30 minutes after the company made it's debut on the london stock

exchange they listed at 19 pounds per share, a total valuation of 4.3 billion pounds the ceo described earlier this summer as what he saw as the business' strengs strengths. >> if you measure it on volume and profit metrics, even in 2017, we are perhaps more than two and a half times more profitable than any point in our history. between '16 and '17 we saw a bottom line profit swing of a quarter billion pounds a huge renaissance, basically that being done on back of the db11 >> evercore told cnbc earlier this morning that the strategy for growth stands a good chance for aston martin >> the plan is based on the launch of new product, special editions to lift products, and

if you bake that plan into the valuation priced today, aston martin is coming in at a 20% to 30% discount to ferrari. it's about the question can they deliver what they have not ever delivered in the coming four to five years to justify the current valuation. i think there is a good chance, it's a fantastic brand, but there's a lot of execution risk, a lot of market risk, the company is overrisked. are you trading in aston martin or investing in italy tweet us at @streetsignscnbc. coming up, boris johnson blasts theresa may's plans yet again as the prime minister prepares to take the stage for her party conference speech. more on that when we come back people tell me all the time i have the craziest job, the riskiest job.

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welcome back to "street signs. theresa may will claim the uk's best days lie ahead of it. according to pre-released extracts of a speech to be

delivered later today. may is expected to tell delegates that the uk's future is full of promise she's also expected to insist that brexit represents an opportunity and to urge conservatives to support their party which is decent, moderate and patriotic. yesterday boris johnson told a packed crowd at the conference that the prime minister should abandon her existing plans for brexit to avoid a deal which in his view would be wrong for the i uk if we get this right t could ab w a win-win for both sides of the channel. and if we get it wrong, my friends, if we bottle brexit now, believe me, the people of this country will find it hard to forgive if we get it wrong now and we proceed with this undemocratic solution, if you remain half in,

half out, we will protract this toxic, tedious business that is so off-putting to sensible middle of the road people who want to us stop talking about europe and get on with their domestic priorities. prime minister dismissed the comments in an interview afterwards with sky news >> boris also puts on a good show, but what matters to people is what we're delivering for them what the checkers plan is is a plan that delivers on the vote of the british people. it means we take back control of our money, our borders, our laws, we end free movement once and for all, we set out on new immigration policy today, we will no longer be sending those vast annual sums to the eu, we won't have the european courts jurisdiction in the united kingdom. >> simon french is one man who will be glued to his television screen later this morning watching her speech.

he is still with us here in the studio in londolondon if you're a currency trader today, it could be interesting in terms of the realities of what this prime minister is trying to deliver, what she will talk about from an economic perspective, is there much reason for her to be positive? >> there's a lot of money looking at uk assets, either through the sterling route or equities valued next year at 13 rather than 15 so a lot of money waiting for signs that that positivity will be reflected in the policymaking with respect to brexit and the broader domestic agenda, the pro business agenda we have had some conflicting speeches with ministers describes businesses in negative terms, not what you traditionally hear from conservative government. so theresa may's challenge

today, she set some fairly low bars over the last two years of conference where sterling has traded low off of disastrous performances, her challenge today is the activity reflected in the policy pathway on domestic investment and brexit >> terms of the underlying fundamentals here, we've seen a number of company heads talk about down-sizing, moving staff outside, the challenges of no-deal and what it means for the work force in terms of the economy itself, forgetting future policy, is there grounds for investors to say there is some good news coming out of the uk in terms of the economy? >> i think there is in terms of fundamentals if you look at demographics, i come back to a demographic picture that is favorable by g7 comparisons, if you look at the labor market, the flexibility of the labor market, what is set to be a more

responsive regulatory environment, yes, there may be divergence but there will be more control, there are some upsides which as an investor when you consider looking at the uk, if you look around the rest of the world you would say this is not an unfavorable climate to do business in the challenge, of course, is to wrap that up into a narrative where you're going to sort of de-risk some things, some more damaging things that have been spoken about and have been possibilities in invest minds, by that i'm talking about some statements from the opposition, some more extreme parts of the government's party putting those off the table and focusing on the strengths i spoke about in the uk economy. >> businesses have talked for two years now about the uncertainties around brexit. it strikes me that if there is so be a sort of political declaration involved in the withdrawal agreement, that doesn't necessarily address in

great detail the future relationship, then you are left with a significant amount of uncertainty still. do you foresee her today making that decision to publicly say we would like to try and move things along without making major compromises, but essentially saying we can put this off don't road once again >> no chance there's no upside for theresa may to be definitive on brexit and the tradeoff she may or may not need to make over the coming months to secure a deal. she has not got parliamentary majority to pursue a no-deal brexit where she says if the european union are not prepared to take my latest offer, they are not prepared to say we walk away, the problem she has if she does that, the parliament will not support that you have a real question mark of the sustainable of the uk government led by theresa may and its current form so i don't think she has intent to do that from an economic standpoint there's a budget on the 29th of october.

any big fiscal announcements we'll have to wait for >> ahead of that march 29th 2019 deadline, what do you foresee happening with the currency and what does that mean for import/export businesses inside the uk >> sure. i think we see sterling going lower still. it's heavily shorted i'm always nervous about companies that are heavily shorted. but the fundamentals of a bank of england unlikely to push out more than one interest rate hike over the next 12 months. the fundamentals of this uncertainty means pressure should be downwards on selling this is inflation in the supply chain for uk companies when you're an investor you have to look at how resilient uk companies are to what may be some significant fluctuations in their input costs. >> simon, thank you very much. that's simon french, chief economist joining us in the london studio. coming up later this

morning, we will bring you the entire theresa may speech live at 12:45 central european time, 11:45 in london. the iranian oil minister said u.s. president donald trump is responsible for higher oil prices he also says that opec lacks the ability to produce enough oil to make up fo iranian sanctions arg uncertainty for the market he says moscow is looking to cooperate further with tehran. geoff cutmore is in moscow for us this morning. what have you been hearing from your conversations so far? >> yeah, good to see you this is russian energy week. this is a week where the russian oil industry tries to showcase both its crude and its gas but it's also a forum for the world's energy leaders to meet i hosted a panel that had both

the russian energy minister, mr. novak, and the qatari energy minister, mr. al sadr on it. trump is pointing the finger at opec the iranian oil minister is pointing the finger at president trump. so i asked the qatari oil minister is opec to blame for the high prices we're seeing right now? let's hear what he said. >> opec is trying not to manipulate the price it's trying to bring the market to balance when opec took the measure to restrict the production, if you'd like, from its end and some allied countries to opec agreement, it was meant to shave the extra excessive stock which were record high, depressing the

oil price, that depression of oil price led to what? has it led to a better world economy? in fact, the downturn of the i'oi price. look what happened, the balance took place already between supply and demand. the world economy is at its best now. and this is what we believe in, that the balance of the market, the market where itself by itself provided that we don't have huge excessive stock leading to lower oil price, which would then down the road will create difficulty in producing enough oil and

possibly enough gas to cater the demand what happens even now after the recovery of oil price, the investment is not adequate enough to cater the demand worldwide. the investment in oil and gas has not been commensurate with the world demand down the road so we can see many countries down the road cannot make up for the actual drop or for 4% or 5% that's natural a lot of people think about injecting millions or billions of money into our industry, it means increasing the production. in fact a lot of it goes only to keep that level of production because it is the -- there's a natural drop, and unless we

invest we cannot cater for the natural drop we can see now a lot of countries dropped their production involuntary because of lack of investment. we need to inject more money, not only to keep up the plateau of production but also to increase it further to cater for the demand why the drop is happening, it was because of the long downturn in the oil price, which led actually to shrinkage in the investment it was for the first time in history that we lose two consecutive years, 25% followed by another 25% off investment. and the result now, is that there is a drop in many fields which could not be actually made up we need the oil price to be fair

for a longer period of time so the injection of investment goes back to cater for future demand. >> i think you can hear there the sense of frustration in the qatari oil minister's voice as he said opec really is just trying to balance the market not sure that president trump will agree or those who are paying higher prices for gasoline right now back to you. >> jeff, thank you very much geoff cutmore at the russian energy week. coming up, chicago fed president charles evans tells cnbc the federal reserve will need to hike beyond the neutral rate more on his comments after this break. t slams on his brakes out of nowhere. you do, too, but not in time. hey, no big deal. you've got a good record and liberty mutual won't hold a grudge by raising your rates over one mistake. you hear that, karen? liberty mutual doesn't hold grudges...

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welcome back to "street signs. i'm willem marx. here are some headlines for you this morning italian banks rally after a report that rome could be ready to reduce the deficit target, but mateo salvini claims there are those in europe who want italy on its knees. a remarkably positive outlook for the u.s. economy,

fed chai jerome powell says these are extraordinary times. and chicago fed chief charles evans says he agrees >> the u.s. economy is doing extremely well inflation is up to 2%. i spent a long time indicating that i think inflation needs to get up to 2%, and here we are. i think things are going well this is something that can be continued for a number of years. tesco shares sink after the grocer misses half-year profit expectations thanks to weaker sales in asia and mainland europe. and stock in reverse aston martin slips in its long-awaited debut a share price of 19 pounds values the british carmaker at more than 4 billion pounds to bring you some numbers we're getting. uk september services pmi are out at 53.9. that's against 54.3 last month

that is very slightly below the reuters expectation of 54.0. just 0.1% lower than the forecast for uk september services pmi seeming think they'll be overshadowed by a lot of conversations around brexit and theresa may's speech on the subject of theresa may's speech, let's check in on the pound. it's very slightly stronger against the u.s. dollar by a fifth of a percent the jury euro has come back str against the dollar it's stronger bay quay a quartea percent. the pound is also stronger against the yen. let's look at individual european markets the ftse 100 is up more than a third of a percent in italy, the ftse mib has fell back, but still up more than 0.50%. in paris, the cac 40 is trading

about 0.25% higher looking at u.s. futures. the s&p 500 looking to open slightly higher. the dow jones looking for a soft open, down 127 points. called down 127 points the nasdaq looking to open up 25 points up. jerome powell says there is a remarkably positive outlook for the u.s. economy powell told an audience that a unique combination of low unemployment and inflation in the u.s. indicated the current economic period indicated extraordinary times. powell also said the fed does not expect trade tensions to have a long-term impact on inflation. instead he said forecasts indicate there will be an extension expansion. >> the medians of the most recent projections and the most recent cbo forecast all have the unemployment rate remaining below 4% through the end of

2020, with inflation staying near 2% over the same period from the standpoint of the dual mandate, this is a remarkably positive outlook i was asked at the press conference last week whether these forecasts are too good to be true, which i have to admit was a reasonable question. the chicago fed president, charles evans, told cnbc this morning that he agreed with powell's positive view of the economy. he also repeated his belief that the fed will need to hike interest rates past the neutral rate >> the u.s. economy is doing extremely well fundamentals are strong. labor market is doing terrific unemployment is below 4%, which is really something. payroll employment is over 200,000 per month for many months which is a good showing inflation is up 2% i said i think inflation needs to get up to 2%, and here we

are. so i think things are going well this can be continued for a number of years. in fact i think by setting the policy rate just a bit above neutral that will keep things going for quite some time. there's a tremendous leaning towards maintaining your objective for as long as it makes sense. i think 2% makes sense i think that it does require extremely careful some what aggressive communications on the part of the central bank to indicate that we will defend our 2% objective in both directions. i often emphasize it's a symmetric objective, which means we'll be above 2% half of the time if we're doing our job right. that's consistent with our objective. that allows to us have as much head room to cut rates when we need it. >> what does all this u.s. economic strength mean for assets outside of the united states to make sense of that i'm joined by the co-head of fx and emerging markets research at

goldman sachs. what do these fed hikes, rate hikes mean for em assets >> if you think about some of these comments, they're saying u.s. growth has two effects on the rest of the world. stronger growth in the u.s. helps the rest of the world. it also comes with rate hikes that the fed is likely to go beyond neutral rate. those two effects are key to differentiating within emerging markets. there are some places where fundamentals are poor, the continued space of rate hikes will create more problems. turkey is the case in point. i think things will continue to remain challenging very, very bad inflation print this morning real rates look back down to spot level zero. they will need to do more in the face of higher inflation, higher oil prices, higher u.s. rates. argentina, again, similar situation. they've taken steps. the imf is involved. a combination of higher u.s.

rates means anybody who has fundamentals that are not so strong will be exposed the interesting thing is there are also other groups of emerging markets where fundamentals are stronger where the sort of stronger growth impulse that the u.s. imparts on the rest of the world should continue to be a benefit for risky assets and a tailwind for some of these equity markets and currencies >> when you look at the turkish lira, you're saying the way the fed is talking now, you will continue to see when you look at current say pairs a real challenge for the turks and argentineans >> i think that's correct. our three-month view on the lira is 6.30. the new deal that argentina reached with the imf could allow them to do less intervention than previously and see further weakness and test the higher end of the band.

but the environment where the fed is hiking and where u.s. rates are going up will challenge the weaker emerging markets. but it's not symmetric that's equally important to real lied think about the period of november to february when u.s. rates were going up, both at the back end and the front end, that's the period where emerging markets broadly did well because growth was strong at that point. then you had a period from february to august where u.s. rates didn't do much, the long-end rates were flat, em struggled significantly over that period because growth slumped. then the last three weeks where you had a big rally in some places like south africa, russia, even as rates have gone back up again, because there's some better sentiment positioning had moved and valuations had improved. so the question is which emerging markets are much weaker

versus less weak will differentiate in a world of higher rates >> leave aside the lira and the peso, where do you see the value of em currencies >> the last three weeks have been an interesting period if you look at the high yielders, you had this 7%, 8% moves in the rand, in the ruble, where we had thought there was value, but the moves have been swift. so the valuation cushion has compressed the asian high yielders, their valuation was not so strong to start with so their weakness in normal. i think the laggard where you can see this move, positive move continue is in latin america looking at brazil, mexico, colombia, these are some places which have not participated to the same extent in this move over the past three weeks, and where we have brazil's election coming up, you could see a move stronger in brazil, the real,

the peso and the colombian peso, that's where he would be looking for. >> let me drill down on brazil we have the first round of the presidential votes this weekend. there seems to have been a market reaction on the equity side and the currency side is there further upside than over the next couple of weeks potentially if one candidate performs well? >> i think so our three-month forecast is 3.80 so there's further upside for the real if the market can get comfortable that the economic team there is a team that addresses the longer-term fiscal challenges, brazil's cyclical picture is quite good. the current account deficit is pretty balanced, inflation is low and growth has been weak but looks like it is stabilizing or gradually moving up. if the market can get comfortable with a challenge,

you can have more upside in the real >> please stay with us if you have views about the brazilian elections or currency markets, get in touch on twitter, @streetsignscnbc. volkswagen has terminated the contract of audi ceo rupert stad dle stadler. stadler was arrested in june and has remained in custody since then he's been investigated for suspected fraud and false advertising related to emissions. vw said the now former audi ceo wished to focus on his defense the paris motor show has seen the future of electric vehicles come to the fore speaking to cnbc earlier today, luke luka dimaio outlined his firm's strategy when it comes to that

sector >> we will be in the market for an electric car by 2020. and next year, 2019, we will start our strategy there will be a lot of alternative in the market in the next year, not only diesel or new diesel or gasoline engines, but all of this new technology and we took the advantage of the paris motor show to propose another alternative which is to use compressed natural gas as an economical solution for our cars tesla shares ended the session in the u.s. lower as they warned about higher import tariffs into china they say they are operating on a 55% to 65% cost disadvantage compared to chinese made cars. the firm announced it will speed up development of its shanghai factory as a consequence there was also good news from elon musk as the automaker delivered over 83,500 vehicles in the third quarter, a 50% comp

from the second quarter. cnbc talked to a tesla shareholder today, ron baron, he said the battery business could be as big as the cars. >> i think we have 10 million cars, 15 million cars a year, the battery business is going to be as big as the car business. elon musk's dreams of hyperloop technology could become a reality elizabeth shultz reports from the unveiling. >> reporter: hyperloop's first full scale capsule measures five feet long and weighs five tons this is the first time we show what hyper will look like. >> reporter: hyperloop transport

is branded as a faster, cheaper, more efficient way to move people and cargo this will fit 48 to 50 passengers >> we have the unique opportunity to build a transportation system the way would in 2018. >> hyperloop was first envisioned by elon musk in 2013. it uses magnets to levitate pods and propel them through tubes at fast speeds. it took 26,000 hours of skilled engineering and assembly to build the capsule. >> we have the engineering capacity, the systems, the structure. we have the high, high level >> the interior of the capsule is not finished yet. currently it's a black tunnel waiting to be designed in the next step. from here it will move to a

research and development facility in tolouse, france. but hyperloop is just one of several companies in the race for super fast travel. virgin hyperloop one has successful but limited test runs of its pods. there are still questions about when and how hyperloop routes will be up and running think about the legal and regulatory hurdles >> it will take longer to have the final legal framework. the safety records and everything but it's definitely much sooner than anybody would expect. three years until worldwide adoption maybe 5 to 10 >> even in the world of high speed travel there's some way to go before you can reach your destination on board a hyperloop. >> if you want to hear more or learn more about some of the hype elizabeth was talking about when it comes to hyperloop, head to our website, cnbc.com. italian stocks rally after

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the official death toll of a tsunami in indonesia has risen once again more than 1,200 people died after the quake struck the region setting off a tsunami >> reporter: we arrived to devastation in every direction at this hotel that collapsed during the earthquake, rescuers are using sniffer dogs in their desperate search for dozens of people still trapped in the rubble as long as the dogs are barking, you'll keep looking? >> yes yes. >> reporter: but there is so much rubble to search here satellite images show how the earthquake and tsunami altered the landscape. buildings before and after the town's entire coastline swallowed by the sea the powerful quake and 18-foot

wall of water, striking with little to no warning some homes just floating away. today we felt aftershocks. there have been hundreds so far. and at the airport as we came in, scores of people were getting out, wounded and weary, boarding military planes to be evacuated from here. days after disaster struck, aid is still only trickling in to a place running urgently low on everything little is known about dozens of villages where 280,000 people are cut off. police are protecting aid convoys from looters people here are desperate. >> just to confirm according to the indonesian government's disaster management agency, that death toll has risen to 1,407. looking at italian stocks this morning.

ferrari, fiat chrysler are down into the red many of those major companies are performing relatively well not quite as well as they were earlier in the day's trade if we look at the banks in particular, you can see it, they are still all trading higher this morning bpr banca is up 1.4% intesa sanpaolo up 0.83% one reason for that is because the euro bounced back on the back of a newspaper report that the government in rome could reduce its deficit over the next three years. the coalition government could give in to demands from the european commission and the country reduce its spending to 2% of gdp by 2021. last week rome tripled the deficit spending target to 2.4%. this spooked investors and finance ministers over the last couple of days

a government source says they will insist on 2.4% for next year and then 2% by 2020 and lower than 2% by 2021. we still have our guest here from goldman sachs thanks for staying with us why can't markets move on from these various comments from italian politicians? why does this matter so much in the context of the eurozone, a few percentage points over a three-year time horizon? >> i think it's a couple of issues one is the size of italy's debt. banks in italy primarily own these bonds. that's an important reason why i think markets are focused on it. the main reason markets are focused on it, when you look at broader markets like the euro what matters so much is not the

italian budget deficit per se, but the extent to which that raises question marks about the integrity of the euro and the contagion to other peripheral companies. what i think is important is at least so far that contagion has been relatively limited in this particular episode this is still largely a btp issue spread of btps to bunds, other peripheral sovereign spreads have been very, you know, very well managed. very well contained. >> is it fair to say that italian politics shooting off their mouth are being unhelpful in terms of the country's borrowing costs? >> i think you could say that. i think, look, fiscal consolidation is hard. fiscal consolidation is hard work anywhere. but i think markets require a certain amount of at least good intention. and credible speech.

i think both of those are compromised in this incident >> theresa may will be talking to her conservative party later today in -- later this morning british time i want to ask about the direction you foresee for the pound as a currency. not just based on her speech, but the way she set it out with brexit what do you anticipate the next five and a half months until the next brexit deadline >> i think markets and people focused on sterling should to some extent, not completely, but to some extent ignore what is going on in the speeches that's aimed at a domestic audience, a party audience so it's not the most relevant thing. keep the eye on the negotiation of the eu. on that issue our best case is there will be a deal and when there is a deal, when

that is announced or clear enough to markets, there is likely to be a degree of relief and probably some degree of upside to sterling, 2%, 3% on a trade weighted basis that's still our best case i think it would be our best case no matter if some of the rhetoric that comes out of the conference speeches. >> would that involve a delay of a decision when it comes to the long-term future relationship between the uk and the eu? is that the way, to use the british term, fudge it >> it involves some degree of vagueness. so i think the key to securing that deal is probably not being too detailed about the specifics of the end stage that's right >> thank you so much for coming in appreciate your time just to point out that we'll be bringing you theresa may's entire conference speech, that's

live from 12:45 central european time, 11:45 here in london definitely worth tuning in for that if you're watching sterling and indeed british equities ahead of the u.s. market open, let's check in on the futures. the dow jones still looking to open significantly lower, down 121 points right now s&p 500 and nasdaq both looking to open very, very slightly higher the nasdaq called up over 25 points the s&p 500 2.5 points higher. i'm willem marx in london. "worldwide exchange" is coming up right now

it's 5:00 a.m. unleash the bulls. stocks on track to open at new record highs wall street kicking off the fourth quarter with a bang. tim cook sounding off on your data privacy to china. and jcpenney naming a new ceo. wall street seems to like it. another big chinese company going public here. and somebody called 007, aston martin set to make its big market debut on this wednesday october 3rd as "worldwide exchange" begins right