welcome to "street signs." these are your headlines european stocks lack direction as washington eases trade restrictions on china's huawei allowing a smartphone maker to keep buying u.s. goods to maintain current network and software for the next three months yourp even chipmakers follow their asian counterparts higher even as huawei's founter warns there will be conflict the u.s brazil gives the green light to restore output at its key

aluminum plant and morgan stanley cuts its bear case on tesla to $10 to $97 plaming the debt load and waning chinese demand. >> european chipmakers are gaining after easing restrictions on huawei the founder has said the united states underestimates the tech firm's capabilities. in an interview with chinese state broadcaster cctv ren said the u.s. decision to allow huawei to continue using the goods means little to the company, which he says has been prepared for such a scenario he added that huawei can make the chips it buys from the u.s. but cautioned it would not stop

buying u.s. tech younis yoon has the latest on the story from beijing snoo huawei's founder says his -- he spoke to a group of chinese journalists on cctv this morning where he dismissed the u.s.'s decision to walk back a ban on his business saying the move didn't mean much to huawei since his team was already prepared for any potential disruptions. he said in teemsz of peace, huawei searches half of his chips from the united states, and it could make its own. the congress department had put huawei on a black list that cut its supplies of u.s. components. over the department said the u.s. would granted huawei a reprieve for 90 days it allows huawei to make its -- google had suspended some of its business with huawei, and the "wall street journal" is now reporting that the u.s. tech giant has put those plans on hold.

>> to respond the fed would have to cut rates back to zero within the year morgan stanley cautioned that a reactive policy to a full blown trade war might not be able to avert the tightening of financial conditions and a recession. powell said business debt -- urged investors and regulators to work on the problem while tiemds are good.

>> from my viewpoint, there are risks out there in the marketplace that suggests the economy may perform worse than we expected. there are other risks that would suggest they might do better we might see a lot of the uncertainty be viewed as going away, which could trigger a lot of investment and really heat up the economy quickly. >> that's obviously a broad range of issues, but how does the idea that the trade problem could go away if it betweened or some kind of deal was made and change your ability or affect your ain't to address it

the tranl ektry of the economy will then affect hoz we expect the economy to move forward and then that will then, in turn, suggest what an appropriate course for a policy might look like right now, you know, they tell me, well, i don't know what the rules are going to be a year from now i'm just going to wait if things go one way, then they'll be this course of action another way, they'll be this course of action right now i just have to be open to the possibility that businesses can do either and that has different applications for what -- >> once that hams, then capital will be deployed in ways that --

my business case is that the economy will continue to perform. last year the economy grew over 3% it is going to grow less row buttsly than that. the market seems substantially priced for a rate case every cut wrrn 50% only up to 80% in january. is the market off sides here relative to the fed in your expectations >> the market is ahead of where i am i would say i'm not expecting a rate cut to be imminent. certainly not by september.

>> let's see how things are fairing. they've been open for one hour, and the stock 600 off to a pretty strong start. up 0.39% at the moment. >> i want to draw your attention to 6% higher this morning. yesterday its was the sharp underperformer amid mounting signs of fracturing within the coalition government in italy, and, of course, ahead of the

european parliamentary elections kicking off on thursday. in let's dive into the sectors today we are seeing technology strongly outperform. up about 1.3%. stark contrast to yesterday where tech of the worst performing sector, so a clear cyclical slant there industrial banks, construction all trading higher overall it looks as though we are seeing a little bit of a reversal of those trends we saw

yesterday. now, i want to bring in jeffrey sacks ahead of investment strategy for citi private bank thank you for joining me this morning. now, just moments ago on the show, we were discussing morgan stanley's very bearish call on the impact of a further escalation in u.s.-china trade their view is that if the u.s. imposes 25% tariffs on the remaining 300 billion, this could trigger a global recession. you are focused on -- what is an escalation in u.s.-china trade mean to you when it comes to europe?

also, at times like this week we see certain sectors being hit in terms of their stock prices on technology this week >> i want to jufrm on to the sector technology now, we are seeing a big bounce back. really cyclicals trading well today. this is a data point that's early trade right now where do you stand on cyclicals versus defensives in europe right now? >> what's notable is some of the erjz down grades were largest in material sector over this reporting season we're turning more cautious on cyclicals and share prices in the sector have been strong. we started to look at some of the deep value sectors within europe, and within those we're looking for stocks that have got catalysts or not for value >> deep value stocks have struggled in 2018. what is going to change that is it going to be corporate events like perhaps you are suggesting what's going to get that value to start performing? >> well, it's going to be

idiosyncratic by stock certain banks have got real talent, but beneath the surface, certain banks have not got problems their balance sheets are strong. you could take -- it's a stock that they're recommending as a buy. a 40% target price over share price gain over 12 months. the dividend yield is 80%. the price is 0.9 the roe is 11 periods, and the catalyst there is whether management can deliver on what they said in terms of cost cutting bringing the cost income ratio down >> that's a key topic across the financial space in europe. of course, cost-cutting with all the yurp even banks really struggling given the low rate environment. earlier in programming today there was a lot of conversation around the german banks. do you think that we are going to see consolidation we've been talking about it for so long. do you think we're going to see consolidation finally, and secondly, do you think that

european banks can perform if we don't see the ecb raise rates, which is, you know, not going to happen for quite a long time >> firstly, we will see some consolidation, but it will happen gradually, and we're not expecting that to be a big focus within the sector, although outside of that sector, we expect significant m&a activity. the bank sector looking forward is going to be partly dependent on ecb actions, so they told us that they're going to introduce another tlrto, a lending program which hopefully will support banks profitability. in addition, they're going to adopt a tiered deposit system, which could support bank profitability further. apart from that, really what you are looking for is cost-cutting from a larger bank >> now, part of the ecb is the detail that they are expected to give in june will be dependent on the data. of course, what we see here in europe later this week we're looking to get further insight with flash

pm is coming out for europe we think there will be slippage due to the reacceleration of global trade war, and also, we think that the focus of the trade war will move towards the e.u. in the koong months that will be a negative. then when we look at some of the supports for the uptick in european data in the first quarter, we don't believe that it's likely to be sustainable. particularly, in the manufacturing sectors across europe and also the u.k. >> all right well, thank you, jeffrey we'll leave it there plenty more to talk about coming up shortly jeffrey sacks, head of investment strategy, citi private bank now, nigel, brexit party, may be leading in the polls ahead of this week's european elections, but his campaign has hit a

sticky note. former the leader was campaigning in new castle when he had a milk shake thrown at him. the man has been arrested on suspicion of common assault. it's the latest anti-e.u. figure to have a milk shake thrown at him in recent weeks. stay tuned we'll be crossing to brussels for the latest developments in this week's european elections after the break. (client's voice) remember that degree you got in taxation? (danny) of course you don't because you didn't! your job isn't doing hard work... ...it's making them do hard work...

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welcome back to the program. dprench president emmanuel macron has held talks with the e.u. council president donald tuchk in paris ahead of the european elections in a tweet tusk said they looked ahead to the u.n. council summit and will make appointments to key positions like e.u. commission president now, sylvia has all the latest from brussels. good morning, sylvia it's closure from the meeting that we saw yesterday between president macron and donald tusk, the president of the european council

this discussion, though, are being kept very secretive. one official explained to be here yesterday, but next week when the 28 leaders gather here in brussels to have the first discussion on who gets these top jobs, we'll have no advisors in the room the discussion will really be up to 28 heads of state to indeed decide who gets these four top jobs at the e.u. level the big elephant in a the room next week is going to be brexit, though the prime minister theresa may will have a say in these discussions. naturally, because the e.u. is still a full member -- the u.k. is still a full member of the e.u. however, some officials here in brussels have told me that they would like to see the prime minister theresa may abstaining from these discussions the idea is really that these four top jobs and the next people in charge of these positions will be taking care of the future of the e.u. and that something that the u.k. does not want to be part of at least from

within the e.u we spent a lot of times talking about specific countries like italy, france, the u.k., but what about the divide between the east and west within europe? >> that is one of the biggest issues in the european elections. it's being overlooked. the presence of the yourp even council this was something the czech prime minister said he wants to have someone from the group leaving one of the big

european institutions. at the moment, though, the president of the european council is indeed from holland, but he doesn't have the support from the ruling government there from the nationalist party law and justice, so indeed this is one of the big issues that the leaders need to take into account when they gather here next week. >> just looking at its specifically, woef seen some really interesting price action in the market yesterday. italian equities underperforming quite sharply. some concern around fracturing the coalition, but also, of course, the yourp even parliamentary elections. what happens if the right wing party ends up with a more favorable result in termds of the expectation now, where do things stand with its and what does this mean for their path afterwards if we do see legia come out on top? >> well, so the yourp even elections, you know, it can be interrupted as referendum on

national plikds. let's see how that's going it play out when we get the results on sunday night. still, the biggest party is supposed to be the biggest party elected in italy he could be -- he could have the third largest national party at european parliament as well, so indeed he is going to be one of the big players in policymaking at the e.u. level in the next foif years >> thank you so much for bringing us the latest from brussels let's get back to jeffrey who is still on the desk with me. head of investment strategy from citi private bank. i want to pick you up on the point that sylvia is making there about the party being in such a strong position here. the price action we've seen this week suggests that investors weren't positioned for more fracturing within italy given the big sell-off we saw

yesterday. weltd continue to be underway. the problem is he gets a slieer than 30% vote, then he will become the dominant partner within the coalition, skbo fixe

income with the ten-year bond looks to us to be far below where it traded during periods of uncertainty last year if we see that spread rise above 300 basis points, that will be a concern. we also are watching the five-year swap, which has been very steady at about 210 basis points so far this year. that's a measure of italian risks. if it's upwards, that would be a concern. zroo rounding it out beyond just italy, we are poised do see a rise in populist support across europe at these elections. if we do see that result as expected, what does this mean from the euro? >> well, we think it would be negative for the europo. the euro coming into the elections struggled to reach 112 headlight 50 on the up side, and now we think it's seeing more shorting pre pressure. at the same time the cost of going long euro is expensive

given the rate differential. we think with a rising populist vote we could see further down side our traders are saying the range on the down side where they looked to accumulate the your yes gain is 110-11.50. >> now, shift to the currency market, but shifting gears for sterling we've seen a big step down over the last week after the formal cross-party talks broke down interesting to see given the markets seem to have little expectation or little hope that they would actually yoeld something. what do you think is priced into the pound now, and do you have a strong view -- strong position you take on it here? >> we think all of this year not to chase the rally even though sterling was cheap in -- by any historical measure. the concern that we have is domestic politics, and what we now have is the growing likelihood of a kwv leadership challenge with the strong

possibility of a hard line brexiteer winning. that is potentially going to be the negative because it might bring forward the snap election scenario that we would be concerned about on the sterling standpoint >> what does this mean in termds of the outer bounds you're looking at for sterling? where do you think it could go >> well, we're looking at 125, 125.r 125.50 as the initial support level. >> one of the scenarios that is out there, if the tories perform poorly in the elections, it may accelerate theresa may's timetable, and nigel talking about running in a general election for many tories, it is prospect taking away some of the vote might force the party to back a no deal brexit yet, if it does, they could lose more moderate conservatives. putting this all together, it

looks like the conservative party is in a pretty difficult position are you pricing in or are you taking seriously the risk of a labor market -- a labor government coming into power it's a risk where the vote for labor is falling so. they're likely to see both labor and conservative policies towards brexit move towards extremes that we think is going to cause market uncertainty and the sterling is continuing to be the barometer for brexit risk, so we see down side pressure over the come weeks zo down side pressure over the coming weeks thank you very much. jeffrey, head of investment strategy citi private bank coming up on the show, mg shares sink amid reports that a prominent french businessman wants to take a stake in the utility. woel have more after the break ♪

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>> we are seeing a rebound in european stocks this morning quite a contrast to yesterday. right now all four major indexes are trading in positive

territory. in particular, italian stocks trading up 0.77% today that comes after sharp underperformance yesterday for the itsian bench mash. green across the board yesterday hua we ei front and center with the fall-out for the european chipmakers and the ban on hua we ei and what it meant for the supply chain to huawei now, verz get back there reverse on the trade that we saw yesterday. the dollar index hit a kpro-week sbra-day high. we are seeing the dollar strength continue today. reason the euro was trading 0.2% lower versus the dollar around the 111 mark the pound losing ground versus the dollar down 0.3% under that

127 handle the pound took a big step down after the formal party talks broke down between conservatives and labor, and we are seeing the pound keep below that 127 level. let's take a look at u.s. futures. of course, the main impact of the huawei ban taking effect on u.s. stocks yesterday. we saw all three major indexes end in negative territory marking back to back losses. now, we are looking, again, just like in europe at a rebound for u.s. stocks. looking atten implied open higher s&p 12 points. dow joens jones about -- and the nasdaq 43 points we're looking at a slightly more positive day of trade for the u.s. as well now, in addition to these top-down themes that i have mentioned, we also have a few stories coming into focus in europe this morning. one, i want to highlight north -- shares euro trading about 5.5% higher, but they're getting a lift after being given

permission by a brazilian court, given permission to resume full pruk at an aluminum plant. now, output at the world's largest factory was curbed in february by regulators after a spill of untreated water from the refinery quite a big development there for shares, and shares are reacting accordingly neon taking a stake in mg. a potential deal would also see ng buy control of neon however, the groemt would need

for them it's off of their competitiveness. today we have to reconcile the ability to go fast as fast as we can to take time to really go there supper a way that we don't trigger any price or bill increase if we don't integrate massive savings, it's not off the table. >> jumana at that forum in paris this morning jumana, you have been there now for a couple of wide range of leaders. give us the latest on what you have been hearing out of paris

>> she took over the helm in within stated goal it was one of fran's largest utility companies into a clean power champion she unveiled the strategy a few years ago. net asset sales and anything really that engenders a coal powered generation shift away from that into more sustainable investment things like ren newable energy, renewable electricity grids, and the insfra structure that goes along with that. the strategy from the very beginning. the stock performance, however, hasn't been that great relative to its peers just a few months ago she unveiled an update to that strategy investors community was a little underwilliam womened by it this really nderpins one of th dominant themes here at oecb we're here talking about the short-term challenges and the long-term challenges facing people today, and that is one of them is climate change

i thought it was very interesting about, look, people want toco it so long as they don't have to pay for that transition you can't change too quickly without giving something back. very interesting comments there. also, no surprise, as you mentioned. there seems to be more sustainable energy company circling around ng to acquire a stake in that particular company. france set to be the president of the g-7 summit. one of the am bigs they've set for this year's theme. the minister of equality, and i chatted her about many different

topics one was about what france can do to help put forward the cause and why is it so important for france to have a global platform when it comes to reducing gender equality in the first place? let's take a listen. it's important to be the execution with other countries, and that including the united states recap that we also invite ministers of countries and do you think this

is about regulating technology it's not just about making it fair from a taxation perspective, but also making sure that technology takes into consideration fundamental mum rights and obviously gender rights as well >> yes it's very important. the president emmanuel macron launched a code with the -- in paris last week we made a

statement to put off every violent content. we are waiting for twitter and facebook to take it. >> she said that no country in the world has achieved gender equality and is something that -- they're expanding it beyond g-7, and the other countries are getting involved in this very, very important conversation as well as we know -- it's vocal when it comes to social media regulation, and the quest to create the platform that is safe for everyone to use, and there, again, we heard saying that ultimately, governments have to put more pressure on social media and on these tech firms to do more to regulate the content that goes up on-line so that it's safer for everybody not just for women if it comes a place.

>> actually, hunlly important topic. thank you for bringing us the latest in other corporate news t-mobile proposes a take-over of sprint, and they appear to have won the approval of regulators fcc chairman and commissioner -- both saw it rally on the news before pairing gains amid reports the doj may still oppose the merger shares in deutsche telecom which

owns around of 0% were modestly higher. separate recent reports also mentioned several potential suitors, including allianz and ubs. now, it's a big week for german banks with both commerzbank and deutsche bank holding agms in the wake of their collapsed merger talks annetta, who is joining us in frankfurt this morning has been covering these stories for quite some time. now, annetta, you have spoken with wufrt executive board members of the bundas bank i'm cure wrus what he had to y say. >> actually, he was saying that

it kind of is positive, but the banks didn't merge just because it is a good idea, like in terms of having a bigger bank. he was saying that in ermz it of consolidation, things have really made sense, but why don't we, first of all, take a listen and then speak a little bit about the wider picture for the german banks take a listen of what he had to say about the consolidation efforts in the german banking industry >> the large scale consolidation is more difficult. finally, it's the institute that's just -- there is the results case, because it's reasonable, but it makes sense, and in previous discussions, there has been the result that it doesn't make sense. that it's respected. of course, by the regulators and by the supervisors, and we are

at least fine with the outcome because it shows that there is no idealogical approach. there was a clear reasoning by the two management and with the results that we can live as we live with that setup >> let's talk about cross-border mergers. there are some people saying it's not really possible in europe who say that's correct or do you think cross-border mergers are possible approximate >> they are possible, and we've seen that very rarely. we have seen that only in the finance area, and also in the areas that mergers -- cross-borders are a success.

this is not always the case. kos-border create other and more challenges than mergers within jurisdiction and there's also the culture of the issue there is the language different business attitudes, but when you look at the overall structure of the market, it is, of course -- there is also an element of risk-sharing within the yourself dikz, which is positive. it has to be on a days by case basis. they are too small to compete with others. >> well, the german banking structure mirrors the german

industry structure, which consists of very, very smaller size companies, which lead to different services than an industry with only the -- this is a consequence of the structu structure. the economy is suffering from a lack of financial services the german sector provides what's necessary and ang open economy, also in the financial market our industries and our countries can also take advantage of services which are -- singapore and from this point of view there is no need for a bigger player

shareholders will demand some new strategy or at least some sort of vision how they want to boost their profitability going forward. tomorrow it's the big day for customers bank their agm is taking place close to frankfurt in these parts. shrls want to know whether there's any truth in those speculate that ing is interested in taking over commerzbank or if credit is interested in taking over commerzbank or someone else i guess here the onus will be on the management to actually provide some more information and, clearly, thursday will be deutsche bank's big grueling day for the board and also for the head of the supervisory board.

for all these years, all these strategy shifts, all these lower and lower share price developments i guess there will be a lot of pressure on our side for thursday's atm at deutsche bank. sources are telling me that deutsche bank still is expecting him to get it from shareholders, but at a very low level they are expecting some 60% of shareholders to vote in favor, which would be a very poor result at the same time the management board is clearly under very much pressure to show that they also can boost revenues, not only cost cut costs clearly, that's a key problem for deutsche bank. also, the question whether u.s. investment banking does not need a substantial shrinking will be a crucial topic at the agm on thursday that's back to you >> thank you very much

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debt load and geopolitical exposure adding it's primarily around concerns of chinese demand for tesla products. >> thank you for joining me, charlie. we've got home depot, best buy, lowe's a number of names reporting. which metrics are you going to

be most closely watching this week to get a real read of where things stand in terms of the u.s. consumer? >> the consumer reacted to their businesses and is moving in the right direction. >> on your point about competing with ak zblon, we heard from wal-mart last week

committee there are retailers like wal-mart for one-day shipping >> i'll -- wal-mart has been using that store base. there's 5, 300 plus locations in the u.s. wal-mart has been leveraging those for the last few years now to support the on-line business. we see that as the terrific strategy we commented on this for several years now. i think we put our first on-line piece out in late 2012.

>> home depot is one of their many fulfillment centers, and there are fronts going in and out of there all day long, and that's amazon's way of competing with wal-mart and its brick and mortar retailers to get to consumers faster we view delivery as kind of an arms race. what kind of pricing pressure

are you expecting to come through on the u.s. retail side? >> well, there will definitely be pricing pressure. the question is the larger retailers are obviously better positioned they've shifted sourcing they've got better hours it will definitely happen. the key question for us is how long does it last? you know, this could be quick. >> how long does it last that is the key question we'll have to leave it there thank you for joining us this morning. worldwide exchange is coming up next ♪ (vo) i know what you're thinking. electric, it's not for you. and, you're probably right. electric just doesn't have enough range. it will never survive the winter.

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>> here are the top five at 5:00 global growth is just crossing the wires. we are live with the headlines in moments trade truce? maybe. the u.s. walking back restrictions on chinese giant huawei jay powell is sounding the alarm of corporate debt. we'll tell you what i said is apple the real victim in a trade fight. why the iphone is front and center for your money even if you're not invested in apple