10% stake in the ver mgerman broadcaster. good morning, everyone some breaking news at the top of the hour, the ecb, the european central bank has warned that challenges to europe's financial stability have increased alongside downside risk to the economy as well. the central bank says uncertainty about growth prospects has helped to trigger periods of high volatility in financial markets. it adds that a continuation of this trend and an escalation in

trade tensions could push asset prices lower a quick picture of the european banking sector right behind me you can see all of these banks were already trading in the red. this financial stability report obviously has just come out. you can see the key names, deutsch at the bottom down 2.3%, a name that continues to come under selling pressure of course we spent a lot of time talking about italian banks the last couple of sessions. some of the main names there, unicredit down more than 1%. the ecb are flagging one of the financial stability risks is coming from the low profitability in the banking center let's get out to annette ta who can give us a little bit more clo color. the european banking sector is already trading in the red the ecb has flagged the system as a whole as one of the key risks they're concerned about

from a stability perspective. >> they're concerned about low profitability and the outlook for the banking scene in the euro zone. they don't see them actually on average earning the cost of capital, which is a very negative news to investors because clearly what's warranted is that they at least will earn that cost of capital when we're looking at the profitability levels so essentially what they're warning is that there's a perfect storm coming for the anyway already weak banking scene. with the worsening of the economic outlook, if all goes -- if those downside risks materialize, nonperforming loans could grow even further. in some countries that would be a big problem. they don't name the country but it's clear we're talking about italy here and then we could also see more pressure coming from the sovereign space. they're also warning in case there were downgrades to the sovereign market we could see

more pressure even on the bank clearly many banks are having a lot of sovereign debt on their balance sheet. here again we talk about italy, the nexus between the sovereign and the banks is clearly not broken in italy where banks have a lot of their -- the country's debt on their balance sheet. that's one area. in general they are saying, the report is saying that they're also seeing a deterioration of debt quality overall, and that's something which is not only true for the euro zone, but i guess people are searching for yield that's another concern for the european central bank taking more risks because clearly yield levels are very, very low everywhere, and so this could actually, if we see a reversal of that trend could actually lead to a lot of selloffs and potentially default as well.

this is what the ecb is currently concerned of i bring you an interview with the vice president who actually is responsible for the financial stability review at 1:00 ct from the ecb. with that i'm sending it back to you. >> excellent, and we all await that interview let's take a quick look at the european bond picture today. yesterday we saw a very big rally in u.s. treasuries, ten-year yields trading at an 18 month low. the german ten-year bonds minus 16 basis points, we're about three basis points away from its all time low of minus 19 basis points so you get the honor of pig t paying the german government 16 basis points in this case to own its securities spain good rally today at 75 basis points, and then even italy which has come under pressure the last couple of sessions is trading a little bit firmer today just shy of that

270 level. that is the picture across the board right on the back of this european central bank financial stability review lets put out the conversation, i want to bring in a couple of our guests on the show today, the european economist at sp global ratings, and senior investment director at aberdeen standard investments who both join us one of the downside risks posed tr th from this ecb financial stability review is that of growth, saying that there is downside risk to economic growth but that it is going to detract from growth prospects but not fully derail it. i see in your own forecast you've got growth of 1.1% for euro zone this year. i mean, what would be the catalyst for things to start picking up again in your view? >> yeah, so that's a good point. i think what's been happening globally has had an impact on the euro zone growth outlook so we've seen trade slow down

significantly. it has had quite an impact on export economies like germany but even italy the hope is that trades globally will kind of stabilize or at least pick up in the second half of this year but of course we still see a lot of uncertainty around the future of trade relations globally, so there is still a risk that this does not materialize, although the latest data seems to suggest we've seen some stabilization of the economy in china, which was kind of the major economy pulling down global trades so far. >> i just want to bring you into this conversation as well. how much trouble do you think european banks are in? there's a laundry list from the ecb here for what banks need to do including, you know, diversify their revenue streams, try to divest some of their legacy assets that perhaps aren't performing, is that something that you would advoca advocate is it something these banks need

to be doing, or is this really just about the low interest rate environment? >> as part of that, the difference between say the ten-year yield and the very short-term yields in germany has also gone down if you're a bank you're borr borrowing very short-term maturities and trying to lend further along the curve, so every time that dynamic happens, profitability gets squeezed, and it's got squeezed again. ecb needs to try to do something to help here i think deposit rates which are actually better value for banks than say other kind of account holders with help, they need to get out there with another tltro or a lending program for the banks to help encourage credit growth in a less risky way across europe, but underneath all of this, actually, this is not a bad situation. the ecb are doing exactly what you'd hope they do they're warning you about risks, but you're getting well paid for

a lot of those risks if you're in credit markets. equity difficult to say, but from what i see across the credit landscape, there's lots of attractive opportunities around european banks with a few risks. >> just to pick up on that and reading through kyour commentar you say banks remain your largest exposure one-third of your exposure is to the european banking system but equally you hear the european banking this morning citing the financial sector as one of the main risks to its financial stability. if you're buying it at fixed nlnl income why not buy a duration instruments rather than taking on the possibility of there being significant credit widening if things don't go to plan or if growth for whatever reason continues to get derailed >> it's about carry as well as it's about risk. if we take say the one asset we've got in italy, actually, a uni creditor bond that's only until june of 2022 when the call

is, the yield on this instrument is getting 8, 8.5% in euros, so even if the price goes down a bit, we're going to get that every year, and that covers an awful lot of problems from a yield dropping or a yield or spreads going wider. now, you're right, i would have loved to have been in the ten-year german bond for the last three, four weeks, you would have made a decent amount of money from that, but that's not to say you could get a really good risk adjusted return of those bank bonds around europe, but you have to be really selective i think there are risks around that, if you're looking at really good quality spanish banks now or french banks now, there's plenty of opportunities to pick up really good quality banks and bonds from them. >> i want to bring marianne back in to ask you about the macro environment in italy we're looking at when we talk about italian banks. if you look at the sustain b

sustainability of italy's debt, based on its current debt load, the ecb, it's extraordinary the difference between that and the rest of the euro zone, and i just wonder whether there's anything that you're seeing in the italian economy that will change that chart in the next five years >> right, i mean, i think italy is really the country that kind of gets singled out in the markets right now because it has a big debt load, right so every time there is kind of a bit of tensions, also regarding fiscal policy as we've seen in the past few days, investors start to worry, and we see kind of tensions appearing. the question is really when growth will pick up because that's been the problem for italy for a number of years. what's hampering growth is low productivity, and at the moment we don't see that really changing, so probably potential growth for italy is around 0, 0.5% so it's not that high. so this means on the other side

that fiscal policy needs to be sustainable or at least keep the debts level where it is and not too far away from where it is at the moment otherwise it becomes a self-fulfilling dynamic and it will be problematic. >> yeah. >> do you pick up on the disparity between the way the market is treating the likes of italy and even in that ecb chart versus the likes of other periphery countries as well? in many respects a lot of the peripheries have branched away from being flagged and put in that category and are treated more like core instruments than peripheries. ten-year greek bonds are trading at 3.2%. that's only 50 basis points above italy. they've got a higher debt level. they're barely out of an imf package and yet the market continues to reward that country over italy how much of this is about the

politics versus what's happening economically on the ground >> i think there are a few dynamics at play in the kcase of greece, it's true, it has had a lot of issues in the past. they've done a lot to cope with the current fiscal solution. they're not due to repay their debt, the maturity of the debt is very long they even have cash on the side. if you're investing now in greek bonds, it's not an issue what what's interesting as you said there is not any -- they used to be priced similarly in the euro zone crisis, but being priced like a semicore economy, so what's been happening is of course there is a divergence in growth performance spain has been doing very well compared to italy. spain has also tone a lot of free forms which is less the case for italy, so when we see investors are starting to really differentiate between all these

countries. >> luke, i want to bring you back in to talk about bank profitability once more and the margins. of course if these banks aren't able to organically grow their revenues in europe, the one way they can improve their margins is to cut costs. where does that need to happen the most, and how can they go about cutting those costs do you think? >> well, germany definitely we need to see costs coming down. if you look at things like funding costs for deutsche bank, they've been going up and up and up, and it's a problem for them. their revenues are under a lot of pressure. profitability's under a lot of pressure you've still got a very large branch network right through germany that you can do a lot of work with digitalization we've seen this in the u.k you know, you can close branches down and keep customers right across europe, and that could cut costs pretty dramatically across the board italy perhaps, you know, there's bigger problems there in the banking system and how technically they can get through

the system to clear these really long-term defaulted loans out of the book, but you know, i think that cost side of it is the way that you're going to see a lot of these banks address the problem. try and grow volume, but really get the costs under control. it doesn't feel that the revenue growth is going to be pretty unexciting, i should say, for the next few years it's going to be really tough for them with this current environment. >> and ultimately as a fixed income investors you're looking for the parts of the capital structure, obviously, that are more likely to benefit i want to take it back again to fixed income and i want to understand your take on what is happening right now across fixed income markets globally. with seemingly the bond market telling you a very different picture than what stock markets are saying stock markets are just off their all-time highs, but bond markets continue to rally and go from strength to strength it wasn't that long ago we were talking about u.s. treasury yields at 3.5% now it looks like we're heading closer to 2%

do you think the bond market is flashing signals of an upcoming recession. >> i think, as all these things it's always in the detail. we've got 1.5 cuts priced into the u.s. curve never mind what the fed tells you they're going to do, and the fed is saying we've got no plans to cut anytime soon. we don't expect them to cut anytime soon i think we're just in the throws of a reaction to trade wars getting more and more heated between china and the u.s., rather than actually any logic about what's going on in the real economy the companies we talked to in the states are not pointing to the collapse of economic growth in the u.s the companies we talked to in europe are not pointing to a collapse in the economic growth in europe or indeed in china, so hold your nerve, i think, at the moment understand that yields are being driven down because of concerns around trade, but that's probably not going to last into

the medium term. we could easily hit 215, 210, or even 2% in the u.s. in the next few days or weeks, and in the u.k., i mean we're down to nearly 80 basis points as well i think this is a temporary loan before we can actually move on from this trade concern and understand the limited impact it's going to have. >> luke, thanks so much for your time this morning. that was luke hickmore, he's a senior investor at aberdeen standard investor. and marianne she will stay with us for a little longer coming up on the show, the search for a new leader of the european commission has begun, but there's already some bad blood in brussels after last night's e.u. leader summit we'll have details for you after this break ♪

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i know how to those guys in here. let's pause the internet on their devices. wohhh? huhhhh? [ grumbling ] all: sausages! mmm, mmmm. bon appetite. make time for what matters. pause your wifi with xfinity xfi and see the secret life of pets 2 in theaters. welcome back to street signs. let's go over some of the market price action over the last 24 hours. it was not a pretty picture for u.s. equities, all of the three majors ending the day deeply in red territory. in fact, the three of them are on track for their worst month

of the entire year, so putting it into context there. again, the narrative's% completely gri complete completely gripped by discussions between china and the u.s. the president is saying they are not ready yet to make a deal with china china in response reportedly considering putting some extra tires or restricting exports of rare earth materials which are quite significant components when you think of the tech sector and global supply chain that's had knock on effects across the board the heat map for europe is basically almost entirely in the red this morning stocks already down 1.2% for the week we're down 2% a lot of red today let's get into the individual indices and break it down. every single one of the european indices is trading in soft territory. rare earths getting some attention today. the minors are exposure to some of those components also struggling in the u.k.

german index down 1.2%, again, here a lot of focus on the auto industry yet again basic resources, all of the sectors that have exposure to china are coming under pressure this morning let's not forget about the ecb financial stability review which has placed bnanks firmly under the spotlight again. one name we're looking at is casino, the retailer has been downgraded by s&p. so that's trading quite heavy this morning, and then the italian index also down 1.3% as well taking a look at sectors, though, the breakdown and you can see every single one of the sectors in europe is trading in the red. basic resources i mentioned down 2% retail i mentioned as well we also have some exposure via technology to rare earths. the chip makers in europe are struggling on the news all of those chip makers are down 3 to 5% banks down 1.6%. as i mentioned up at the top, the relative outperformer but

still in negative territory, the defenses, real estate and telecoms not a pretty picture today for europe. >> staying in europe, leaders have held their first rounds of talks to discuss which men and women should take the top jobs in the new european commission the 28 e.u. heads of state greed to finalize candidates for the chi rol key roles before their next summit in june talking to the leaders there, sylvia, did you get the sense that the disagreements we've heard about between european leaders like merkel and macron were that pronounced >> reporter: well, the point is at this stage everything is open the names that we've been talking about, they're all still on the table what they discussed yesterday is how to interpret the results of the european elections in the appointment of the next european commission president so if you look at the outcome of these european election results,

we saw that the center right party got the majority of seats in the european parliament however, they lost quite a lot compared to their position back in 2014. and at the same time, we saw a lot of support for the greens and for the liberals party, so the question is whether instead of going -- choosing someone from the center right, the leaders should actually choose someone from the center left yesterday in the sum mimit i di notice a sense of urgency in these discussions. the idea is to have a compromise by june 20th that's when they have another summit scheduled, and the reason behind this urgency really the instability at domestic level. if you look at the u.k., for instance, prime minister theresa may, in germany chancellor angela merkel is no longer the leader in spain pedro sanchez still has to form a government, and then when you look at greece as well,

prime minister called a snap election on sunday night in the aftermath of the european elections. when it comes to greece, the expectation is that the voters will head to the polls on july 7th. this is after the party had a 10 percentage point difference from his opposition party, the new democracy in the european elections, so he felt it was the moment to call for an early vote yesterday here in brussels i managed to catch up with the opposition leader and this is what he had to say about the upcoming election. >> on sunday greece took a first important step towards -- and we proved that we can defeat the forces by focusing on the issues greeks care about the most, how to track investment, how to create new jobs, how to reduce taxes, how to make greeks feel

safe again in their neighborhoods. and as we move towards a national election, we will work very hard to convince the greek people that we deserve their trust. there's no reason to change our strategy after four very difficult years, greeks deserve the truth. they deserve realistic solutions to improve their lives, and i'm sure that we will be able to deliver. >> can we expect some sort of market volatility as a result of this election, though? >> i think the markets are craving for political stability and people both within greece but also outside greece know that our number one priority is to grow the economy. we have a very clear plan on how to attract investment, how to make greece an investment friendly country we have set a very clear target towards achieving a growth of 4% we know how to deliver it, and we are entering this campaign

feeling very confident but also feeling, you know, quite humble, r respecting also the people who did not vote for us, and we will work very hard to convince as many greeks as possible that we deserve their support. >> reporter: so when it comes to the upcoming election in greece, the question is whether new democracy, the center right party will manage to keep the lead in the polls and potentially form a majority government as you can see, there's plenty to monitor across the european union, being here in brussels at the institution level or across the various member states. >> thank you so much for bringing us that interview we're still joined by marianne, the seep your european economist at s&p global ratings. thanks so much for staying with us let's talk about political cohesion we heard there's disagreements over who to put in charge of the

next commission. why does that matter for the european growth story do you think? >> well, i think at the moment what's at play is who gets the top jobs in europe we will find out who gets the commission, and then there will be this political game of who will get the ecb there are a lot which are becoming available today it's not going to go to one country, but there will be some kind of balance. it seems that there are some tensions, we see they don't decide last night. it will matter for the ecb it's quite an important post for monetary policy. at the same time the way they decide about monetary policy is in a group manner. there's not one decision maker so it probably won't change the face of everything. >> can i just ask youas a rating agency how you're thinking about that? the analysts that i speak to about the upcoming ecb selection of the president, i mean most people will say when it comes to

actual interest rate decisions, tinkering around you know zero deposit rate, there probably isn't going to be that much of difference between a frenchman or a german man. the difference is what thely would do in a crisis and the willingness to quote, unquote, do whatever it takes to fix the system as a rating agency, will you take that into consideration when you go back and assess what the upcoming new president has to say about their willingness to act in a crisis, when you think about the containment of europe and, you know, how resilient the system is if there's another recession or another sovereign crisis. >> yeah, i think it matters. i think our view is more that the constitutional set of matters rather than the person because it's not one person deciding of course one person, the president of the ecb will have a lot of influence in a time of crisis, but what we've seen over the past few years is they've already put in place all the instruments we need for the

cris crisis it's true now we're at negative rates so there will have to be something more for the next crisis, but i think they've shown they have the potential to be creative, and it's not just down to one person but the whole institutional setup in my view. >> creative ecb then, all right, let's see what they come up with next week. hopefully they'll be creative then marion, thank you very much for spending the half hour with us also coming up, on the show, don't say we didn't warn you chinese state run media hints the country may use rare earth materials in its ongoing trade spat with the united states. we'll have more on that story right after the break.

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text the keyword on the screen to 20-20-20 for your complimentary bottle. that's a complimentary bottle by texting the keyword on the screen to 20-20-20. . welcome back to "street signs. >> these are your headlines. >> european stocks follow asia and wall street into the red as the bond market sends warning signs about the global economy, and european yields mirror the sharp downward move in treasury rates. the ecb warns that challenges to europe's financial stability have increased and the

region's economic recovery has been delayed but not derailed. we'll hear from the center bank's vice president. also arcio sinks to its lowes -- due to weak demand. shares surge after media bias a 10% stake in the german broadcaster. all right, markets are firmly in risk off mode today. all of the european indices are trading in the red ftse 100 down 1.1% german index down a similar amount a lot to digest for markets. overnight the theme doesn't seem like there is any end in sight to the ongoing tit for tat trade

war between the u.s. and china certainly the u.s. said they're not ready to sign a deal yet, and then there are of course reports that china themselves are looking to retaliate by applying tariffs on these so-called rare earths goods, which are important materials in the technology sector and going to the manufacturing of things like electric cars, x-rays and hard drives. the tech sector in europe is getting quite hit today. you can see that being expressed in the overall indices, particularly in germany where a lot of those tech names are ago refwated, and he -- aggregated a lot of red on the board today. it's not just about the trade war narrative, but also markets continue to digest the fallout from the european elections. italy continues to be a focus, and all eyes on brussels's decision with regard to the public finances next week and whether or not they will formally put italy into an edp lots of things going on here let's take a look at currencies to see what the price action has been so far this morning

europe pretty stable, continues to be stable surprisingly so 11160, and we've really been struck in that range of 111-12 for a while now even though the fixed income market continues to go from strength to strength really, really big moves in fixed income, not so much the case for fx. dollar yen seeing a lit bit for safe haven currency, no surprise there, and then cable again still stuck above 126. this will be a key level to watch if we breakthrough that to the downside critical time coming up for u.k. with an 11th contender now throwing their hat into the toy leadership race, so that's going to be the main focus of u.k. markets over the next couple of weeks. no surprise that swiss haven is also seeing a bit of a bid as well that is the picture for currencies quick look at u.s. futures and

it looks as though we are going to have another weak session for u.s. markets, all three of these indices are seen opening in the red. the dow about 120 points lower i should tell you that these indices are having their worst month for the year. chinese state run media has hinted that beijing may use the export of key rare earth materials as a bargaining chip in the ongoing trade spat with the united states. that news sent shares in several chinese rare earth manufacturers higher our colleague filed this report from beijing >> reporter: beijing is threatening to use its dominance in the rare earths industry as a weapon against the u.s. in the trade war. rare earths minerals are used in a lot of different technology products and china produced about 80% in 2018. beijing sent its veiled threat via the state media, its top economic planner told cc tv if anyone were to use products that were made with the rare earths that we export to curb the development of china, the people

of south jiangxi province where rare earths are mined as well as all the rest of the chinese people would be unpahappy. the president initially raising speculation that china would use the minerals as a counter measure. the editor for the global times newspaper tweeted that china is seriously considering restrictions on rare earth exports to the u.s this morning the paper said the u.s. should have seen that china has the rare earths card and the official people's daily posted an editorial saying don't say we didn't warn you. analysts say it'd be difficult for china to pull the plug on the u.s. right away since the u.s.'s direct imports of rare earths are relatively small and other countries that would use the minerals in their products probably wouldn't be subject to any restrictions cnbc business news, beijing. the u.s. treasury department said none of its major trading partners has met its criteria to

be considered a currency manipulator, but the department said it still has quote, significant concerns over china's currency practices and it insisted that it would continue to monitor the country. in a new report, it called on beijing to be more transparent about its exchange rate and reserve management goals the treasury department included germany, and italy on the list of nine countrys th s. >> all of those countries have a trade surplus with the u.s., but pure coincidence there huawe, this is the chinese telecom firm's latest move to fight the trump administration's targeted sanctions the company's u.s. legal team has argued there are problems with the national defense authorization act, which has banned federal agencies and contractors from purchasing or using huawei equipment the story we've been watching very, very closely, and we have an expert on it, argen has more

from the huawei campus do they have any hope of winning this case? >> i mean, that's a tough one to answer at the moment because this is constitutional law we're talking about. there is a bit of precedent, a russian cyber security firm, they try to go a very similar route to huawei in challenging the constitution, in challenging a specific part of this ndaa but actually ended up losing, so the precedent for huawei isn't exactly promising but they are arguing that their case is different, that they have different arguments to make. this is something that's going to play out over the next few months, but actually, what we've got today is the next step in that proceeding. of course a few months back huawei filed a lawsuit essentially suing the u.s., and it was around this ndaa and a specific section in there which specifically named huawei and said that government agencies, federal agencies in the u.s. were not allowed to buy huawei

equipment. huawei argued that this part of the ndaa was unconstitutional and today filed a motion for what in legal terms is known as a summary judgment it's essentially ask asking the court to rule in favor of huawei on the matter of law that is that the company is saying this case is about law, which is the ndaa and the u.s. constitution and does not tupt have a at this point have any disputes over the facts if the court rules in huawei's favor, there's no need for a full blown trial the next hearing is scheduled for september 19th this is going to carry on for a few months right now of course huawei continuing to fall out, to tedel with the fallout from being on the u.s. blacklist, so-called entity list where american firms need government permission to sell components, software and hardware to huawei i had a chance to catch up exclusively with the chief legal

officer at huawei, and asked whether huawei is getting ready to take legal action against its blacklisting in the u.s. let's listen to what he has to say. >> the executive order issued by the u.s. government has not specifically named huawei. the addition of huawei to the entity list is a dangerous move because they have disregarded facts and evidence it is speculation and political reasons. based on speculation and political reasons without facts and evidence, they have imposed most severe sanctions on the company. in addition, it is hurting the welfare of 3 billion customers of huawei. it is denying them the freedom of communication services. what's more, it's threatening the partnership and cooperation in global supply chains that took a very long time to build this means businesses may face risks of being cut off when having to choose u.s. components

in technology. this will also hurt the u.s. over the long run. right now we're considering various remedies including what you mentioned just now, legal actions. >> reporter: in my interview there with dr. song, the chief legal officer at huawei, it's the first time the company has mentioned that it is considering legal action against being put on this u.s. blacklist, and it's clear huawei wants to go the legal route and not try and get involved in the politics i asked dr. song in another part of the interview whether the overarching tension between the u.s. and china and this trade war could actually affect the outcome of this legal battle they're fighting in the u.s. he said that huawei does not want to become a pawn in this trade battle of course donald trump has said that huawei could form a part of this broader u.s. trade deal now, i want to just give you a sense, because i am here at huawei's headquarters. i want to give you a sense of the mood in the camp here. i was walking around the halls earlier, and there was a tv

screen that displayed a picture of a russian world war ii bomber that had been shot to pieces, and on that picture there were the words, which translate a hero is born through hardship and challenges it's a message huawei's giving to employees and the outside world, and it's trying to remain strong despite that continued u.s. pressure. of course questions remain over the long-term impact that huawei being on this u.s. blacklist could have guys, back to you. >> excellent, and if you can send us a sneaky shot of that painting that you referenced there. all right, for more details on huawei's new legal action against the u.s. government, head online to cnbc.com. shares have hit their lowest levels after the country said it would make further cuts to its steel production the world's largest steel maker blamed weak demand and high imports for the move it said it was a difficult decision to make but given the level of weakness in the market it is the prudent course of

action standard & poor's has down grouted casino's credit rating to single b. the parent company filed for bankruptcy protection last week. casino has canceled its dividend payouts until it can decide on a more sustainable debt repayment plan it raises questions around a parent company's governance standards and of course it's a story we've been following very, very closely, governance standard is key in that respect with many investors short selling the stock last year. it's coming under renewed selling this month. italy's mediaset has made a move it's taken a 9.6% stake in the german broadcaster prosiebensat. it called the move a long-term

choice it said the investment will not impact its 2018 dividend distribution, though, that's due to be discussed at a boarding meeting in july. if you have any views on that move by media set, get in touch on twitter you can also talk about anything that interests you about this morning's news >> football. >> even football and get in touch with us directly speaking of football, arsenal and chel sea, they're set to face off in tonight's europa league final why some fans have returned their tickets and how political tensions have already clouded the game unpredictable crohn's symptoms following you? for adults with moderately to severely active crohn's disease, stelara® works differently. studies showed relief and remission, with dosing every 8 weeks. stelara® may lower your ability to fight infections and may increase your risk of infections and cancer. some serious infections require hospitalization.

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the top executives at japanese automakers nissan and mitsubishi met with the reno chairman in tokyo to discuss fiat chrysler's proposed merger with the french carmaker i'm happy to say we're joined by

mikiko at the nikkei who has the details. >> at the meeting, he laid out the -- the deal would bring significant benefits to the alliance especially in terms of sharing the cost of the procurement and developing next generation automobiles now fca or fiat chrysler automobiles, renault, combined would have 50 million units a year while joining the fiat renault merger it would risk weakening its position in the alliance renault owns over 43% of nissan while nissan holds a not voting stake in its french partner. nissan has been the main driver of the partnership in size and technology accounting for more than half the 11 million units sold by the trio in 2018 fca's partnership with waymo, which launched an autonomous taxi service is also a concern

in terms of capital, the merger would bring complications ads th influence of the french gof government which holds a 15% stake in renault would be diluted. at today's meeting, nissan's ceo said he was not against the merger but added that nissan would need to look into the details to decide how to proceed. that's all from the nikkei, back to you the spanish soccer team, real madrid finished the season without a trophy, but a new study has still named as europe's most valuable club. kpmg has measured the enterprise value of top clubs across europe and says that real madrid is worth $3.6 billion beating out manchester united from the top spot united has an equally poor season on the pitch.

champion's league finalists livable, they're down in seventh and ninth place in that survey respectively, pretty extraordinary numbers there. >> english soccer teams chelsea and arsenal will be a long way from home this evening when they play in the final of the europa league they are to play a match which has had a controversial buildup. adam, i've got to ask you why are two british teams traveling more than 5,000 miles to play this match >> that's just because they wanted it that way the final was decided two years ago. they didn't know it was going to be two english sides, but baku is the venue for the first of the all english finals this week it's the europa league final we should be talking about the fact it's chelsea against arsenal and if arsenal get their hands on the trophy they'll make it into next season's champion's league

we are talking about the fact that this game is being played nearly 3,000 miles away from london in baku these clubs are separated by around about ten miles in london, but they've gone all that way to play this europa league final such is the distance that this game is being played away from the home stadiums of these two teams, they haven't even managed to sell out their 6,000 each allocation of tickets. arsenal returned over 2,000 tickets, chelsea has returned something similar as well. fans have made it out there, but it's not going to be a particularly buoyant atmosphere fitting of a final, many delegates and locals are going to be in the stadium, but not so many fans from the -- from chelsea and arsenal. now, it is going to be a very strange atmosphere, and the

chelsea captain has said that he expects a strange atmosphere, and it's maybe a shame that more fans can't make it out there. >> it's a pity that we can did not get more support because it is such a place to get into it it's a long journey. and i'm sure and i know that a lot of supporters out there, they would like to go there. they are not able to goch as i said before it's a pity we would like something different. like the last time we played the final, that was amazing, but we're not the ones who choose the place. >> this is a big club. big club is about this, try to win trophies it doesn't matter if you have a change or not. he won 50 titles so some think it is great also we are in another europe final, so we're going to try to do our best to win another trophy. >> i'm just intrigued to ask you, you know, there's a lot of

money at stake here, but what else about this game matters for next season at least >> absolutely. as i just briefly touched on before, the arsenal if they win the trophy, they will get into next season's champion's league. that has ramifications on how much money they may be prepared to spend in the transfer market. it also has ramifications in they are starting a new kit deal with adidas in the summer as well more brand exposure for them for chelsea on the other hand, their manager, he could very much be playing face future. i was down for chelsea's media day last week skpr, and he saide hated the fact that it was going to come down to just this game whether or not his future is going to be determined he's never won a major trophy. chelsea is used to winning trophies despite a changing of managers in charge emery, he's won this competition three times already. >> there's some controversy

about a certain midfielder, i can't say his name, but apparently, that was a big issue ands it was really blowing up just a couple of days ago. he's not going to be playing in this match. >> it's still carrying on. the armenian midfielder of arsenal has not traveled he wasn't sure, safety concerns fact that he's an armenian going to azerbaijan, which is a shame really this should be about futbol and not about politics he's decided to sit out of that. there have been sightings of arsenal fans walking around baku being stopped by police. the mere mention of his name, the mere sight of his name is often -- seems to be causing controversy as well, which is a bit of a shame he would start for them, but

yeah, he's not going to be there, but apparently roman is going to be there. he's had his own visa issues in london as well. >> visa getting intertwined with sports there thanks for breaking it down for us a quick look at u.s. futures before we head out it is a risk off day across the board for european equities. a similar theme playing out for u.s. equities as well. dow down about 150 points. we get the richmond fed data watch out for that really all of this is knock on effects from the china/u.s. trade war. in a couple of hours, our cnbc colleague talking to -- that is live at 1:00 p.m. central european time. >> and that is it for today's owi'm joumanna bercetche. >> and i'm willem marx hey! i'm bill slowsky jr.,

i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass.

the rate shop topping your five at five on this wednesday morning. the bond market making more big moves in what could be a big warning sign for your money. ramping up the rhetoric china out with a warning for america today. the two sides no closer to a trade deal huawei speaking of taking new legal action against the u.s., and for the first time in a long time, you will hear directly from one of huawei's top executives relentless flooding in the midwest pushing commodity prices higher the tough scenes and the price reaction ahead. and what do you think about the trade fight? is the stock market reacting too much or not enough we asked you we've got the surprising answer