welcome to "street signs". european equities reversed early gains with autos, the worst performing sector, after chinese auto sales sync, confounding fears in a slow down in the second largest auto market. reckitt benckiser opens higher the consumer goods company says its health and home units are

improving. opposition builds over president trump's national emergency declaration as democrats signal they will challenge the president's move to fund his border wall. and uk intelligence chiefs reportedly decide they can manage any risks from far away in a break from the u.s. and other allies while european markets have been open for just over one hour, and we are seeing some oscillation this morning with these stocks 600 currently flat lining. this of course comes on the back of last week which was very strong for european markets. the stock 600 managed to gain about 3% a very strong finish on friday with the stock 600 up about

1.4% really a steadying on the back of the strong week last week a lot of the narrative remains the same u.s. china trade remains in focus. we are also coming off of a disappointing week for data last week europe and stateside. we'll be looking for more this week that economic narrative continues to be the same and of course then house central banks will respond this week we have the fed in focus with the minutes due on wednesday in addition to all of that, we've also got focus on the auto sector, and of course on brexit. let's get into the european markets and see how the different regions are faring in early trade. a diverging picture emerging the ftse 100 is currently down about 30 basis points. last week this was a strong performer.

the dax is looking at a lower start, 21 basis points, a strong index, up 3.6% the kak and ftse are looking at a slightly stronger trade. autos in particular in focus today. we have been swinging back and forth between gains and losses one of the worst performing sectors down about 72 basis points at the top of the leader board, basic resources up about 65. chemicals banks and telecomes right there. no real trend emerging in terms of those cyclicals versus defensives i want to take you to the auto sector in particular we had data out overnight, and stocks reacting fairly negatively and that data was china auto sales they dropped for the 7th consecutive month in january as demand in the world's largest car market continued to slow sales fell 15.8% year on year to

2.37 million vehicles. that is according to china's auto maker association forecast, and as i just flagged we are seeing a negative reaction in the european auto space, would also highlight that yesterday, the customer department in the u.s. wrapped up their investigation into the possibility of imposing tariffs, increased tariffs on the european auto sector something else for auto investors to be watching out for. vilam? >> u.s. china trade negotiators are set to meet in washington. chinese president xi jinping sounded optimistic saying both sides made progress during the talks. u.s. trade negotiator warned that quote very difficult issues remain unresolved and our colleague filed this report from the chinese capital beijing. >> trade negotiations continue in washington this week. sources tell me after the president's day holiday, lower level officials are going to meet first to work out technical

details before china's vice premier heads to dc with continued discussions with robert lighthizer and steven mnuchin on thursday and or friday the focus will be tohand out a memorandum of understanding that president trump and xi could use for a framework. the pressure is on to get as much done as possible when the focus will shift to president trump's summit president trump tweeted big progress being made on so many different fronts president xi was a bit more measured but positive telling state media that the two sides achieved important step by step process. negotiators are making incremental progress on issues such as market access. china has offered to allow foreign companies to weigh in on product standards before they are set. however, the two sides are stil

far apart on some of the structural issues. cnbc business news, beijing. to weigh in on this conversation, i want to bring in wei yo, lead scientist when we're approaching this march 1st deadline, there are three prominent options that could take place we could see tariffs increase, two, the deadline could be delayed or three, we could have a deal agreed. which of these three outcomes do you see taking place as we head to this key deadline >> our view is the most likely situation is that the deadline would be delayed, will be extended and the talks will continue the reason that we're not seeing a deal right away is indeed, there are many difficult issues that need to be agreed on or compromised from other side but

the goodwill that has been demonstrated from both sides seems that the chance of avoiding tariffs going up is pretty good now. >> if we do get some sort of deal agreed eventually, how long do you think the truce can actually lack given the outstanding, more structural fundamental issues around things like technology. >> it depends on a few things. the u.s. and china will have to separate the long-term issue we cannot expect a deal to address every problem between china and the u.s. things like long-term competition, the technology space, and geopolitical influence will not be addressed in a deal. a deal can only cover so much, and it depends on where the u.s. economy is going, the domestic

political pressure on donald trump. we do think if we have a deal, the tariffs should not go up. >> you mentioned a deal can only cover so much. what exactly will the chinese be willing to do norin order to ge some kind of agreement >> china's side has agreed to buy more u.s. goods. that's fine. and china agrees to treat foreign companies better, agreed to protect intellect ch there's no disagreement here, and it should be in the deal. >> if we assume that china will make those kind of concessions that you have mentioned there and there is some kind of broad agreement at least in the short-term, what does that mean for the chinese economy? >> well, for the chinese

economy, if the tariffs doesn't go up, that will remove a big source of downside pressure or downside risk to the chinese economy which is pretty important to the chinese policy makers because china is managing a slow down. china is managing a slow down because the chinese leadership realize they need to direct the economy or kind of reduce the economy's reliance on debt, so they are going through pretty important structural long-term reform here and need every help they can get and removing external pressure is important for them. >> in terms of the magnitude the rebound the recovery might see in the chinese economy, if we get resolution requires an understanding of how much of the slow down we have seen so far is attributable to the external factors and overnight, for example, we had the weak auto sales data this compounds some other weak

dethat -- data we are hearing positive commentary from companies, particularly in the luxury space. we had l'oreal come out saying things continue to be strong what do you make of the data we have seen so far, and how much of the slow down is actually attributable to u.s./china trade tensions. >> sure. so the chinese economy is slowing, no doubt about that and some sectors affected more than the others. some consumption sectors remain resilient. that's the function of rebalancing, which is still a positive long-term trend that's going on the big source of the slow down is actually not trade, not in our view the trade didn't help. it certainly is one source but the bigger part is actually coming from the structural reform the chinese government is trying to conduct in terms of capacity reduction, in terms of

deleveraging seems to be bottoming out at least at the beginning maybe but the shadow banking deleveraging, that's still walking through the systems, still putting downward pressure on the economy so reform itself is actually the bigger source of slow down that leads to our point which is en if we get a deal, the chinese economy may not bounce back quickly. may still see slow down. the key point is we can kind of feel a bit reassured that the chinese government should be able to manage the slow down better. >> lastly on the piece of data we got on friday, the slowing inflation ppi data, do you think this is going to prompt further easing from the ppoc >> inflation is always lagging the cycle. this is telling us things that we know, the economy is slowing and it needs help, and the pboc

have more room to offer more easing, which is indeed our case we think the pboc should cut interest rates, the question is which interest rates >> excellent thank you very much for joining us this morning. wei yao lead economist at society general. as the impact of global trade tensions spreads throughout the supply chain. japanese -- and the u.s. commerce department submitted a report on auto tariffs to president trump. the precise recommendations have not been revealed but auto industry officials believe it could lead to new tariffs on car and auto part imports. president trump now has 90 days to take action on the commerce department recommendations. elsewhere, the uk has decided it will be able to mitigate risks in the country's 5 g net works.

that's according to an ft report that cites officials linked to britain's national cyber security center, the decision would also quote carry great weight with other eu leaders u.s. officials have repeatedly said the chinese government uses the network equipment maker as a proxy for spying operations and has warned allies against a reliance on huawei technology. the australian prime minister has said a state actor was most likely behind a cyber attack on its country's political institutions the hack compromised parliamentary i.t. systems morrison said there was no evidence of election interference and did not specifically name the suspected culprit. a general election is scheduled in australia before may. and remember as always, you can follow us on twitter @street signs cnbc

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well, some kormt news for -- corporate news for you reck it ben kizer -- faced a series of setbacks over the last few years, including a cyber attack and a safety scandal in south korea. >> and norwegian airways is trading slightly lower after the chairman sold subscription after airline giant iag ruled out a bid for the company. british regional airline has cancelled all remaining flights after it went into administration over the weekend. the company said in a statement that rising fuel prices and brexit related uncertainty had damaged its business the airline employees and 17

planes fly to 25 european cities it's advised affected passengers to talk about alternative arrangements or refunds. deutsch bank's largest shareholder hna has cut its stake in the german lender by around a fifth to 6.3% t. -- it marks the latest in a series of cutting its debt pile. shares have dropped 40% in the last 12 months hna is the largest shareholder with the royal family and black rock, two other significant holders of the bank'sstock elsewhere in the banking space, tiger global has dissolved its stake in barclays, according to the financial times. tiger global has been a strong supporter of the ceo but began

reducing its stake in the lender last year. activist recently submitted an application to join the bank's board, pushing for a turn around plan that would see barclays shrink its investment bank operations and swiss re has completed a buy back the swiss reinsurer launched the program last year when it revealed it bought roughly 11 million shares the company will release full year earnings on thursday. nuclear power has a bright future that's according to u.s. deputy energy secretary dan bruett. he told cnbc that nuclear energy should be part hally gamble joins us with more. what precisely did he say? >> reporter: good morning, guys, so essentially what one of the main topics of the munich security conference, 55 years,

this started back in the cold war era and one of the main topics was nuclear proliferation. what i want to talk about is the fact that he has said the first time a u.s. official has come out and said that saudi arabia will not be able to take u.s. technology if they do not sign the 123 agreement, which would essentially mean they're not able to enrich uranium the uae has done this. there is a model essentially they have said they don't want to leave the door open. >> we won't allow them to bypass 123. we hope they will pursue some form of an agreement of a 123 agreement, that will take care of the nonproliferation concerns that not only we have but the rest of the world has. we have a worldwide pact with companies that have nuclear power, responsible country, i should say that have this duel use mission in mind. nuclear power has a bright future as well it's very very important, not only to our economic situation

in the united states but around the world. as country's want to pursue more environmentally friendly, more emissions free technologies, nuclear has to be a part of that we would encourage countries to pursue nuclear technology but to do so under the regime and under the construct that we have put together around nonproliferation as you know, this technology has a duel use and in the wrong hands, it becomes a very very dangerous world. we continue to urge the saudis, secretary perry has done a great job in his bilateral relationship with minister alfala we hope those talks will continue and we will continue to leave the door open as long as the saudis want to leave the door open. >> reporter: that's the first time a u.s. official has addressed the situation, saying this is not going to happen. they will not share the technology with saudi arabia unless they decide to agree to 123. i think it's interesting as well because as you know, as part of the saudi vision 2030, they planned to build two nuclear

reactors, and one of the things on the mind of many, not just in munich, but also in the region is where they're going to get that technology, from russia, china, pakistan. we know from our conversations with the energy minister in saudi arabia that their number one choice was of course the united states and it seemed as if a couple of years ago, this might happen for them. the problems with the murder of jamal khashoggi and the fact that in so many ways, people in washington, on capitol hill are looking to go after saudi arabia and hold the person they believe responsible, the crown prince mohammed bin salman accountable for the things that have gone on in the past year that has put a wrench in their plans. let's listen to what one member of the saudi family has said. >> @nuclear market is open it is not just the united states that is providing nuclear technology we have france we have russia we have china. we have our friends in pakistan. and in other places as well.

so if they want to remove themselves from that market, well, that's up to them. >> reporter: so no surprise, saudi arabia would essentially he's suggesting, look elsewhere, france, china, russia, i mean, pakistan as well we have just seen them in that country signing some big deals with the pakistanis and they have a strategic and historical relationship with them that can't be much of a surprise remember this all plays into the conversation we have been having over the last year or two about the potential for a nuclear arms race in the region we know his israel is a nuclear power. iran may or paint become a nuclear power in the next ten years or so. the saudis have said themselves. mohammed bin salmon, we would get a bond as well a lot of concerns, i think, not just about the continuing situation between russia and the united states but certainly about the potential for an arms race of that kind. i had the chance to catch up

with ian bremer. take a listen. >> there's an arms race in the middle east. the saudis are spending the most on their defense the uaes are ramping up. it's going to be more challenging with the recession this year. the defense contractors should be happy in this environment that's true all over the world, you know, in an environment where there are so many big challenges, it's a little sad to see just how many countries are working to ramp up their defense spend and certainly the middle east, that's the case, but in part, we all know the united states is going to careless about the middle east over the medium, long-term, not just because our countries are tired of wars, but also because we're now the largest oil producer in the world, so if that's the case, and you don't know who else is going to care about you, but there are a bunch of countries in the region that do have plans for the future of the middle east, and they all hate each other, you're going to see an arms race, and that's kind of where we're heading. >> reporter: saying there, you know, that it comes as no surprise that we're having the tit for tat in the united states

and the region, for saudi arabia particularly what they expect from their partners, the strategic partnership and alliance with the kingdom but at the same time the kingdom having told us and saying that if iran gets a bomb, we need to get a bomb too it's something certainly that here in munich, at least, everyone seemed to be focussed on. >> we have heard over the last couple of weeks of these stories, the syrian force, the kurds and u.s. coalition closing in on isis held territories. president trump has called on europe to take over 800 of those isis fighters back speaking to an audience in dc, the u.s. is about to achieve a 100% victory that call to repatriate fighters and their families has prompted opposition what have the attendees said to you about this debate? >> i think it really played into

the broader narrative here, which was that essentially europe over the last couple of years as you know, such a struggle to decide where they stand with the united states because they couldn't really get a read from the trump administration, trump himself, as to really where they do stand. i saw such a different this year, european leaders really sticking it to the united states in the sense they were pushing their own agenda it seems as if they have taken a step back and realize they don't have to count on the united states in many of the ways that they have in the past. it was a very cool reception at least from the germans i found on this demand from the president that they reabsorb and reintegrate all of these isis fighters and of course something i had the chance to catch up with george osbourne the former chancellor, i asked him about that he said there are legal procedures by which the folks need to be reintegrated. it's an element of compassion, given the places they have been and where they have been coming

from at the same point, i think you're going to see some level of push back when i asked about the challenges he sees on the horizon for 2019, this is the first thing he said which is the reintegration of people coming back from places like syria, what the security concerns are, how they're going to keep track of them, given what's happening with brexit. this is definitely a concern certainly when it comes to the nuclear file, we have saw so much concern between the middle east, the united states, what's happening between the u.s. and russia a lot of things on the agenda at the 55th munich conference but certainly energy and the potential for an arms race very high on the agenda. >> thank you for the interesting conversation that was halle gamble live in munich. thousands of people out on the streets calling for catalonia's independence as pedro sanchez calls an early election we'll have more details coming up after the break

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and these are your headlines. >> u.s. equities reverse gains chinese car sales syink for a 7t month, and fears rise of a slow down in the world's second largest auto market. a healthy beat, reckitt benckiser opens higher the health and home units are improving. and opposition builds over president trump's national emergency declaration as democrats say they will challenge the move in court. and uk intelligence chiefs reportedly decide they can manage any risks from huawei in the rollout of 5 g, in a break with the u.s. and other allies the european markets appear to be pausing for breath after

last week's strong week. we saw the stock 600 gain about 3% then. a strong close on friday but this morning, a bit of divergence across the region overall, we are looking at a flat start to trade this week for europe now, in terms of the different regions, the ftse 100 is down about 27 basis points, underperforming the block. the dax is down about 24 basis points, the strongest performer of the morning is ftse mib, last week, a strong week for italian equities that index was up nearly 5% over the weekend, so interesting to see the that the gains continue for italian stocks i want to take you to fx, we did see the euro and sterling come into focus we saw the euro dip after signals from the ecb that they may be looking to restart the purchase of corporate bonds so we saw a bit of a dip in the euro there

more dovish signals from the ecb. now we are seeing a climb back, 10 basis points higher around the 113 mark, and the pound currently strengthening versus the dollar around 1.29 european bonds, take a look at where yields sit at the moment, the german blend around the 101 mark, the guild around the 104 mark the spanish bond and the tie aye -- italian ten year bond, and we have the call for snap elections and one of the big questions that investors in europe will be asking is whether the sort of 150 basis point spread between italian and spanish ten-year bonds is actually valid is that divergence juflstified. that is the picture for ten-year yields at the moment willem. >> we are joined by the chief

investment strategist at blue bay asset management i want to pick you up on spanish election it was pretty much forecast this was going to happen after that vote on wednesday. when you look at the lack of reaction of the bond market to the news, is there an outcome in the election, come late april, where we will actually see investors get nervous? >> it's a good question. i mean, the market did respond very much with a shrug to the announcement of a snap e elector, and i think -- election, and i think that's because the underlying fundamentals were strong growth is what 2 1/2 to 3%, the budget deficit is around 3% or lower of gdp i think the market is focussed on those fundamentals and they're kind of discounting like the political risks, which in spain in contrast to italy are very much focussed around catalonia and the unity of the spanish state rather than

reflecting a sort of widespread anti-eu populism so i actually don't think that we're going to see a meaningful selloff in spanish assets. >> i want to stay in europe. over the weekend there was quite an interesting scene at the munich security conference angela merkel got a long round of applause when she made some comments about the section 232 investigation into european car exports to the u.s let's take a quick watch of that video. >> >> translator: we are proud of our cause and say we should be, and those cars are being built in the u.s., in south carolina there is one of the biggest factories, no, the biggest factory for bmw, not in ba v -- now, all of a sudden they're being viewed as a security threat to the united states. that shocks us >> and what you don't see there is the applause that that was

met with a single person in the room not applauding that statement, that was ivanka trump, the president's daughter and senior adviser in the white house. we have this report submitted by the commons department to the white house over the weekend we don't know what it says yet, and mr. trump will have 90 days to react to it that could mean tariffs. what does this look like over the course of this year when you look at the eu, u.s. trade relationship we have had so much focus over the u.s. china relationship, is this not a bigger concern in the sense that these are the two largest trading partners, the trade between these two is absolutely enormous and the eu can inflict more pain on the u.s. than china could. >> i think you're absolutely right, and i think it's the most ignored risk at the moment in the market, the focus being very much on the u.s., china, where the music has been getting better and people really have been ignoring this issue of the section 232, the national security on potential auto

tariffs, and i do think that when you look at the focus of that and some of the potential analysis, i think it is really focussed on europe i think there will be a carve out for mexico, canada, and china if there's a trade deal between the u.s. and china this potentially is very very bad news for europe. it's very bad news for autos and we have seen some in auto stocks and as you say, i think if we do get either tariffs or quotas imposed, both which i think are quite possible, then i think the eu will retaliate to that. we could see a meaningful escalation >> from the u.s. perspective, i remember last year when tariffs on steel and aluminum were announced. we saw the response from the european commission was to target specific districts in the united states, things like harley-davidson spring to mind as a product, and that was very

politically motivated to try and send a message if they have a much more powerful arsenal than the chinese, is that not going to be a big concern for the president, and i'm just wondering as a market participant, is this something you try and game out >> well, certainly as an investor, one of the reasons why we have either taken on the strategy outright under weights or part of the european cyclical sectors, in particular autos is in part because we do think there's meaningful trade risk associated with that i think what's happening at the moment is that the eu and u.s. are engaged in negotiations. the u.s. wants the eu to give ground on agriculture, which is a difficult topic or area for europe, and this is going to give this report and this threat of tariffs on autos is going to provide president trump with leverage in those negotiations but it's, again, it clearly is a

risky game, i think, for both sides where you know that there's also been some slow down in the u.s. economy, at least in part because of uncertainty around trade policy. >> i want to hone in on the european equity market you just mentioned the cyclical part of the market i'm curious about what's driven the gains we have senior to date the stock 600 has made some pretty decent gains but the data has been incredibly weak germany just escaping a recession by the skin of its teeth and the political risk that willem is as high as through 2018 where is this disconnect coming from >> i think there is a bit of a disconnect as you were highlighting just earlier. look at the bond market. look at where bonds are trading. they're not telling you that all is rosy within the european garden, we have actually alluded to, had this relatively strong rally in european stocks you think that's in part just a

correction, if you would like, for the selloff we saw at the end of last year, and i think broadly speaking, fixed income and credit is pricing very low growth equities are a little bit topee. >> thank you that was david riley, chief investment strategist at blue bay asset management to bring you updated news on the situation around michael calvey, the founder of that firm, more than 20 years ago in russia of course and was arrested just a few days ago he's being held in custody for the 13th and president putin has been commenting on his case. the kremlin says putin has met with calvey many times, says his detention is not within the president's remit, when the kremlin was asked, they said they are following the situation closely, hope it will not affect relations between the u.s. and russia, as a u.s. citizenment relatively separately, the

battle over u.s. president trump's border wall has intensified. several states say they will challenge the declaration. trump redirected money to build the wall after congress as we all know allocated only $1.4 billion for border fencing. nbc's white house correspondent kelly o'donnell has some details. >> reporter: a florida weekend get away for the president is no holiday for adversaries. heading to court to challenge the president's border wall national emergency today, california attorney general javier bacerra said legal action is imminent. >> we are prepared we knew something like this might happen and with our sister state partners, we are ready to go. >> reporter: california's legal coalition filing suit against the national emergency is expected to include new mexico, hawaii, oregon, connecticut, minnesota, and possibly other states democrats on capitol hill plan

to take action too but any legislative block would likely provoke the president's first ever veto. >> yes, he will veto. >> he's going to protect his national emergency declaration guaranteed. >> reporter: a veto threat may not deter the opposition. >> i think there are enough people in the senate are concerned that what he's doing is robbing from the military and dod to build this wall. >> reporter: even some republicans are wary about mr. trump using this executive power to get more border wall money that congress refused to authorize. >> this would be another expansion of that power. that's why you see an awful lot of us concerned about this. >> reporter: defenders blame politics and claim the president ran out of options >> the congress is locked down and will not give him what we have given past presidents so unfortunately he's got to do it on his own, and i support his decision to go that route. >> that was kelly o'donnell, the white house correspondent for nbc news reporting there

and i want to bring you some fresh headlines from the uk's national cyber security center remember early we did report that the ft had reported that the uk said they could manage the risks associated with huawei, and they have come out and said we have a unique oversight of huawei engineering and cyber security they said they have concerns around huawei's engineering and security capabilities and have set out improvements they expect huawei to make the annual huawei cyber security oversight report will be published in the near future really confirming the earlier reports there that they do feel they have a unique understanding of how huawei works. meanwhile, british lawmakers are calling for facebook and other tech companies to be subject to a special ethics code under the proposed regulations companies would face heavy fines if they failed to crack down on m misinformation and harmful

content on their platform. facebook has responded saying it's open to meaningful regulation it added it was not the same company it was a year ago when the extent of data misuse on its platform came to light. elsewhere, yellow vest protesters have taken to the streets of france for the 14th weekend. demonstrations turned violent, at projectile, throwing protesters in paris, leon and several people were hurt after a driver tried get through a crowd. meanwhile, nigeria's opposition leader has blamed president buhari for a last minute postponement to the presidential election saying the administration instigated the delay and accused the president of clamping down on democracy. buhari said he's deeply disappointed by the developments they postponed by a week, citing the logistical issues of five hours until polls were expected

to open. if you want to get in touch with us about the topics do so on twitter. tweet us directly. @cnbc juliana, and i'm @willem marx. flying out to barcelona ahead of the new season. stay tuned to find out why one team has been forced into the pit lane thisyeah.ice. yeah, this is nice. mmmm how did you make the dip so rich and creamy? oh, it's a philadelphia- -family recipe. can i see it? no. new philadelphia dips. so good, you'll take all the credit. we know that when you're spending time with the grandkids every minute counts. and you don't have time for a cracked windshield. that's why we show you exactly when we'll be there. saving you time, so you can keep saving the world. >> kids: ♪ safelite repair, safelite replace ♪

welcome back to the program, the french government has denied reports it has offered the uk concessions on the irish backstop as part of an effort to seal prime minister's brexit deal the london times reported that france and other eu members could provide assurances on the backstop to end the deal the withdrawal agreement was not renegotiable meanwhile, theresa may will hold further talks with european commission president this week the uk prime minister will hope to make progress on alternative

arrangements to the irish backstop days after her plan faced another defeat in the commons. may will speak to every member state leader over the coming days. >> and tens of thousands of people took to the streets of barcelona on saturday and demanded independence for catalonia. a dozen high profile separatist figures remain on trial in madrid that's after 2017 independence referendum meanwhile, opinion polls forecast no single party would win a majority in the snap election members o. party are expected -- of the party expected to gain seats. we're now joined by antonio, thank you so much for being with us we saw this show of force from the pro-separatist movement in catalonia over the course of this weekend tens of thousands of people on the streets. is that going to be the central

focus for the e elector in your view -- election in your view. >> that's going to be one of the main topics on the campaign, particularly because you have the trial that you mentioned that is occupying all the media headlines every day in spain, and the trial is going to continue right, so as long as you have this issue on the media occupying all the headlines, i believe that's going to be one of the main topics in the campaign. >> one thing i found quite striking last week in the run up to that crucial budget vote was that not much of the discussion focussed on the actual specific spendi spending plans that mr. sanchez was proposing. a lot of it was on his betrayal, whatever you want to call it, from his opponents when it came to being conciliatory toward the catalans does any of this matter? is that not going to be part of the campaign at all? >> i think it's not going to be part of the campaign right now what you have in spain is a polarized environment, the politics are extremely polarized

and the budget was not discussed at all it was all about the catalan issue. they will focus on whether sanchez did get this report or not. so the economy is going -- >> shortly after the general election will be the european parliamentary election how is that going to play into what we see unraveling in spain? is that going to affect the way we see these parties campaign? >> no, actually, to call the election before the european election, he can benefit from a victory in the national poll i think that was a key strategic consideration. some people were pushing him to call the election the same day as the european election he will have lost power at all levels of government it's part of the strategy to try to get a good result in the national election in order to then get a good result in the election. >> you have the month long period leading up to the

european parliamentary elections, you would expect coalitions to try and form they're not going to want to talk to each other, are they >> absolutely. i think you face two issues. one is the european parliament election parties don't want the coalition negotiations to basically feed into the potential campaign of the parliament election, and the second issue is that regardless of timing of the european parliament election, it's so polarized that forming a government is going to be extremely difficult. >> and are the numbers for sanchez actually going to get better after this election >> it's tough to know what we know from the opinion polls that have been published over the weekend, he seems to be benefitting from an incumbency effect sanchez might win but might not be able to govern. >> sanchez saidover the course o. weekend, people should be concerned in spain about

citizens party moving to the right because they want to try and strangle vox, i wonder when you look at that accusation, do you think it holds any water >> i think the main issue first, they will have the numbers, which right now is going to be a close call i think i will say the other way around there's going to be some concern when people see vox rising in the polls, providing kind of the moderating stance, you will always have that centrist party trying to moderate the stance of a right wing government. >> thank you so much for joining us this morning talking about the spanish elections. . well, today marks the first day of farm la one test --

formula one testing ahead of the new season all ten teams have made the trip to the circuit in barcelona, but one team's involvement has already stalled because their car isn't ready yet. adam reid, our sporters reporter joins -- sports reporter joins us around the desk with more what can we expect >> the season in general, mercedes going for a 6th consecutive title. testing is well underway this morning. this is the first day of four days of testing. the team that you mentioned has stalled hasn't even got out on to the track williams, their car just isn't ready yet, but all the other teams are there. the other nine teams are testing this morning they have been out on the circuit already. mercedes who i just mentioned, they are going to be testing both of their drivers today. there's already been some, well, slightly embarrassing, you would say maybe for the alpha romeo

team, he went to ferrari, won the world title there. but he's back there now, but there's been a red flag already. he spun off into the gravel. there's going to be those sorts of teething problems at this stage of the season because it is testing, very limited amount of time they are allowed to do testing. >> you and i have talked about the dominance of certain teams at the top of the english soccer league, the tennis players at the top of the world rankings. is there a problem of formula one that there's three teams compete something. >> absolutely. this is a problem, the media trying to investigate and find ways to make it more competitive. it goes against what some of the teams, particularly the ones, as you can imagine at the top of the list would like to see happen, talks of salary caps, talks of limiting the amount of funds that the teams can have, fing ferrari being the ones that get special payments from formula

one, so they would obviously be against those sort of things very interesting season. very interesting move. we're seeing the new reno car there. daniel ricardo, moved from red bull, outside of that, he believes he can get to the top of the podium based on the fact that he's now joined a team that he thinks is on the up. >> adam, thank you very much a lot to look forward to that's it for today's show i'm julianna tatelbaum. >> and i'm willem marx stay with cnbc here on this channel. look around. with artificial intelligence, we are not crawling or walking. we are flying. microsoft ai helps an architect bring history back to life. this is now. ai helps farmers grow more

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