welcome to "street signs." i'm juliewe julianna tatelbaum. >> i'm willem marx >> european stocks open higher as the bond rally pauses record low yields remain in sight as the market grows concerned about a slowdown in the economy. british car production drops the most since the financial crisis as ongoing brexit uncertainty drives widespread factory shutdowns. read all about it. axel springer shares rocket

after the group says it is in talks with private equity firm kkr about a strategic investment. and u.s. national security adviser john bolton directly accuses iran of ship attacks in the uae as gulf leaders meet for an emergency summit amid rising tensions in the region good morning a very warm welcome to "street signs. european markets as you can see are on the mend today. this comes after very steep losses yesterday the stoxx 600 ended nearly 1.5% lower bringing month to date losses to more than 5% lingering u.s./china trade concerns were in focus yesterday. also concerns emanating from the bond market weighing on equity investors. yesterday we saw a further inversion on the u.s. treasury curve yesterday.

we'll get into that in more detail having a quick look at where things stand here. italian markets are trading about 0.3% higher. german stocks are racing ahead outperforming the broader european space up nearly a half percentage point in the uk, we have the ftse 100 trading about 0.27% higher let's get into european bond markets. the yield curve sharply in focus in the u.s. yesterday. in europe we also had focus on bond markets here with the german ten-year just beside me here trading now around negative 0.16%. that is right around record lows investors seeking safety in europe another one i want to dra your atte draw your attention to italy is at 0.6% concerns about another faceoff between brussels and rome keeping investors at bay when it

comes to italy the german ten-year really in focus. let's look at u.s. markets, treasury yields. the curve yesterday sharply in focus with the ten-year yield falling to the lowest several since 2017 right now trading around 2.27% concerns there around a global slowdown and the concerns that stem from the inversion itself let's look in particular at the three-month ten-year spread. i want to take you over to this chart here which shows how this spread has come to the widest since the financial crisis the gap there as the market grows concerned about a slowdown in the global economy. here is the three-month and the ten-year there keeping an eye on that today and what this means for the global outlook. we'll discuss all that on "street signs. >> thanks. our u.s. colleagues sat down

with bill winters. they asked him whether the inverted yield curve signaled a recession was on the horizon >> got the late stage recovery with some totally independent trade wars and other geopolitical issues. you get a little bit of pressure but it's offset by good stuff in terms of consumer confidence it's feeling tired, this long-term recovery, then you have the volatility around the trade war. if this goes the full duration and magnitude, it would be a big impact on the global economy the market feels that. >> we are joined by george saravelos. is there any doubt in your mind this inverted yield curve does signal a recession is that based on the precedence in the past or are there other factors? >> i think the current situation is a difficult one to be expressing confidence in the u.s. yield curve has proven

an incredible powerful indicator in the past. the big concern is the context we're in a recovery that in a few weeks time will be the longest in history ever. then you have a huge negative shock to the economy in terms of uncertainty. whether it's coming around brexit negotiations in europe, the china/u.s. negotiates in trade. you have prevailing uncertainty across a wide range of trading relationships in the world the starting point is already one of weak confidence especially around export growth. that really is a big concern >> when you look around the world at those various uncertainties, in terms of currencies, can you give us your winners and losers >> historically when the economy slows down sharply tends to be a winner when the economy slows, the global economy slows down, relatively the u.s. tens to do well the japanese yen and swiss franc

are another. when we talk about positioning in fx markets, we like defensive currencies the difficulty with the u.s. are the risks around the fed rate cut. the market is starting to price that if that was to happen it would change the dynamics around the dollar significantly >> do you think there's a chance the markets force the fed's hand when it comes to rates and forces them to cut sooner rather than later >> that's unlikely in terms of the rate market. the market started pricing the long fed pause starting from jun june/july when it was taking out rate hikes financial conditions, equities and credit spreads, if those start moving, which they haven't, i think that would force the fed's hand >> is there a chance that the market is being too gloomy about the outlook, given what we've seen from china terms of their policy response when things do spiral and get much worse, they

have stepped in, very reliably and presented a downturn from accelerating isn't there a chance that cooler heads here prevail >> if you get some magical resolution in the g20, assuming that president trump and president xi attend, that leads to a reduction in the uncertainty, that would be a material positive. if that doesn't happen, when we look at china stimulus, a lot has been front loaded in q1. it's not just china, i mentioned brexit, uncertainties around the european negotiations on auto tariffs, those are coming up these are broader issues i'm not sure china will be able to save the world. >> i want to ask you a question about the currency situation in terms of the yeen n as an automatic safe haven, do you have a pair you prefer >> we are negative on asian currencies there's two drivers. one is the trade war irtself, te

second is the specific issues related to the tech cycle. we have done a lot of work trying to understand what the tech cycle means the tech cycle is the cycle for asia it's an incredibly strong driver of growth. as we're seeing with these sanctions on technology firms in asia, that is an additional head wind we see asia currencies weaken. we see dollar china move through, and i think that relative difference between yen as a safe haven and other asia currencies as victims of the trade war is quite a compelling trade. >> all right george, we'll leave it there and come back for more a senior chinese diplomat said to provoke a trade dispute was a form of "naked economic terrorism. our colleague eunice yoon filed

this report. >> reporter: the vice foreign minister of china said beijing opposed the use of big sticks like sanctions and tariffs and called the u.s. approach naked economic terrorism, economic homicide and economic bullying the state media has become explicit about beijing's threat to use its influence in the rare earths industry as a counter measure in the trade he war. the peoples daily posted a column saying don't say we didn't warn you. the comment follows the state economic planner's veiled threat and xi jinping visit to a rare earth facility last week analysts say china could restrict sales to the u.s. in the name of national security. chinese are seeing the peoples daily warning as serious, since the last two times the paper made similar remarks under the same column, china went to war

with india and vietnam the vie the this year beijing says it has randomly selected the american chamber of commerce, and the australian chamber of commerce >> you just came back from asia, you made a bold comment in your latest research note you've been going there for more than a decade. this is the most concerned that you've seen asian investors. what exactly is worrying them so much is it the trade war? >> it is it's the fact if you look at the drivers of asia growth over the last five, ten years, it's been the tech sector. it's been this building and supply chains and the complexity

of the spupply chains, this is t the center and the front of the trade war. when i've been to asia, it's been the most optimistic region. i have to say it's not the case this time around >> you talk about the complexity of the supply chains, unwinding those and making adjustments for business will take time. do you think there's a long way to go before we see the impact of these tariffs in the hard data >> i think the risk is it happens much sooner than people anticipate in tu look at the last quarter of t of last year, you saw a very, very sharp slowdown in expert growth it was very quick he that took the markets off guard. i think there's two speparate conversations. one is the end point of supply chains the more immediate one is the direct impact on growth. that's what i'm most worried about. >> we've seen authorities in

beijing make various announcements to try to support local businesses, chinese businesses given the hardships these trade tensions have created. i wonder, we're seeing the u.s. treasury department releasing a report yesterday about currency manipulation, saying china needs to be watched, they're not officially meeting our criteria. do you think that could change do you think the authorities in beijing will try a bunch of measures, think this is not enough and start looking at one? >> if you look in the big scheme of things, the yuan is one of the few currencies that has failed to deprecate against the dollar the seven level has been so important in terms of psychology if the data continues to weaken, particularly if this last round of tariffs goes ahead after june, the path of least resistance is to allow it to weaken it will help the export sector monetary policy has been eased we've seen an injection in liquidity over the past few

days one of the small rural banks in china has been under stress. it's an easy way to accommodate policy >> so you're saying q3 that could start to happen? >> we think the risk is after this g20 summit, if you don't generate progress, dollar/china does go through seven. i want to pick up on the end point, the longer term effect of the supply chain changes from a currency perspective what other asian countries are you looking at that could benefit from these shifts in supply chain? >> it's a difficult question to answer because the supply chains are so complex everyone is focused on the negative impact of china the bigger value added is in korea and taiwan definitely up front we could see the bigger negative impact out of the smaller economies now, medium term, if the entire supply chain does shift to them,

another big beneficiary is vietnam. you could see more upside there. i would stress a lot of the value added in the supply chains already is in these countries. china, all it does is assemble components the high value growth is already taking place in these economies. >> how much importance should we be placing on china's warning via the state newspaper that the u.s. should not underestimate the ability of beijing to strike back it's gotten a huge amount of focus over the last 24 hours is this just rhetoric or is this something that will change the direction of travel from here? >> one of the most important takeaways from my visits in asia over the last few days is how large the swing has been in the domestic press this message is given across the board to the local chinese i think that's something that we should be concerned about in terms of preparing the population for the long haul

china does have a fine line to balance. if there is a threat to foreign companies in china, if the sense is china is no longer a reliable trading partner, there's a loss associated with that we will continue to see this mixed messaging. >> just to wrap this conversation up, from the u.s. perspective you have talked about the potential for fed easing and what that would do to the dollar what factors could strengthen the dollar in the near-term do you think? >> i think a continuation of the status quo if we have the june fed meeting coming up. if the fed was to say consumer confidence is holding up, unemployment rate is at a record low, if the fed was not to listen to what the rate market was doing and stay on this extended pause message, the dollar will continue to do quite well as a safe haven >> george, welcome back to you just to stick to the theme of u.s. china trade tensions,

the u.s. commerce department said chinese mattresses and beer kegs are priced below fair value and it imposed new anti-dumping duties the u.s. also imposed new tariffs on stainless steel beer kegs if you have a view, get in touch with us on twit ter. coming up, chancellor philip hammond warns an election won't break the brexit deadlock. ♪

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the deal those comments follow renault's decision to lay out the proposal to nissan and mitsubishi leaders at a meeting in japan. british car production saw its biggest monthly decline in a decade after it plunged 45% amid uncertainty about brexit the society of motor manufacturers and traders said the decision to shutter various car factories last month was largely responsible for the decline alongside continued global trade tensions. a british court has summoned boris johnson to face allegations that he committed three criminal offense os of misconduct while in public office johnson is the public favorite to replace theresa may as conservative party leader and therefore prime minister but he is accused of lying saying that the uk could spend

350 million pounds a week on its national health service after leaving the european union johnson's lawyers said the case against him was a stunt. uk chancellor philip hammond warned a general election may not break the brexit deadlock. he also urged the candidates who will compete to replace theresa may that they should all remember the importance of fiscal responsibility. the chancellor incested he would not support a no-deal brexit out of choice but acknowledged the uk must be prepared for such an ability. the race is on to decide the next european central bank president. mario draghi will leave the role at the end of october. the ecb used its latest financial stability review to warn europe's economic challenges have increased amid greater down side risks.

annette spoke to the ecb vice president. >> if we go to a full blown trade war, for sure that could be detrimental, it would affect not only the volatility of markets but the real economy quite rapidly. especially because you have to take into consideration, you know, the moment of the economy that we have now because there is a slowdown. that could be negative news for the world economy. >> george is still with us george, let's talk about brexit. let's talk about the possibility for a no-deal brexit let's talk about the possibility for continued conflict between rome and brussels.

are those two issues in your mind the two factors to watch for in europe when it comes to economic possibilities >> absolutely. they're going to be the two defining issues until the end of the year if you look back to our china conversation, which was all about trade, brexit is the same thing. it's all about the fundamental trading relationship between the uk and the eu. if you look at one of the sources of the european slowdown, it has been the uk being quite a big drag in terms of export growth >> if a general election is the way to break the brexit deadlock, what does that mean for the pound? >> initially it means a weaker pound. the reason is the uk electoral system, so the person who wins is not the one with the biggest majority, it's the one with the relative biggest majority.

so the party or the platform that will win is the one that is the most united. the risk is even if you believe remain is the majority, if the hard brexit platform is most united and the other side is splintered, you could end up with an outcome that is negative that's not a given but if you look at the pricing, implied volatility in sterling is low i think easily we could be at the lower end of that range. >> how has positioning shifted in the pound over the course of the last couple of weeks in particular from before we knew that theresa may's resignation was imminent to afterwards we can see the price action there. i'm scurious how positioning ha evolved. >> q1, the market spent unwinding this large sterling underweight on the back of hopes of a deal. so first quarter of the year,

sterling was the best performing currency in developed market space. the last few weeks, sterling has underperformed our ken sus census positioning t shifted that much. it went from underweight to flat i don't think we shifted back to big underweight. the market is tired of these headlines. we're not seeing huge engagement in terms what's going on with the pound. >> perhaps shifting gears then away from sterling to the euro, you started the year with a positive view on the currency. i see you have abandoned that view and think the euro could break through the 1.10 level through the summer what changed >> we were looking for that cyclical recovery. we are more optimistic on trade talks and brexit none of these key drivers ended up realizing in a positive way so the uncertainty will remain on the flip side, we're not

expecting a large crash in the euro lower the reason is it has many features that make it look similar to japan huge external account surplus positive that's why it's proving so sticky we are looking for a slow gradual move lower don't expect a large move below 1.10 >> i have a totally different subject to touch on before we let you go next year's u.s. presidential election you have an incredibly crowded field on the democratic side with a lot of different positions about taxation should investors pay attention to some things those candidates are saying >> absolutely. if joe biden, who is perceived to be the centrist candidate, if he does not end up being on the ticket, it's one of the others, the uncertainty around u.s. tax policy will rise a lot of the candidates on the democratic side espouse policies that are completely different to what the trump administration has been doing i would say quite negative for

the s&p. we're talking about european and asia uncertainty this year as we go into next year, we'll have uncertainty around the u.s. that's why it's difficult to become optimistic on business confidence >> george, thank you for your time george talking to us there about a gamut of subjects. coming up on the show, another subject. middle east leaders meet to discuss regional attentions as john bolton says iran attacked saudi oil tankers in the gulf. we'll be live from saudi arabia after the break. what happened to the real men of america?

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welcome back to "street signs. i'm willem marx. >> i'm julianna tatelbaum. these are your headlines >> european stocks open higher as the bond rally pauses record low yields remain in sight as investors grow concerned about a slowdown in the global economy british car production hits the brakes in april and drop the most since the financial crisis as ongoing brexit uncertainty drives widespread factory shutdowns. read all about it.

axel springer shares rocket after the group says it is in talks with private equity firm kkr about a strategic investment. and u.s. national security adviser john bolton directly accuses iran of ship attacks in the uae as gulf leaders meet for an emergency summit amid rising tensions in the region. european markets are on the mend rebounding from yesterday when the stoxx 600 fell nearly 1.5% u.s./china trade tensions weighing on u.s. sentiment here as beijing ratchets up the rhetoric against the u.s but the shaky session overnight in asia is not concerning european investors they are shrugging off those

losses we are seeing green. some european markets closed today for ascension day. those open are trading higher. a few single stories in focus. in the media space, we'll go into a bit more detail shortly on those, daily mail and axel springer stocks are boosting that sector, outperforming the broader european space overall a positive start to trade. looking at fx markets. the u.s. dollar index rose yesterday on pace for its second positive week in the last three. this morning we're seeing a bit of a bounce in the euro, up 0.5% above that 1.11 handle the pound also strengthening slightly versus the dollar let's look at u.s. futures we are looking at a bounce according to futures the s&p, dow and nasdaq looking at a higher open

investors yesterday closely he watching that yield curve which slid deeper into inversion sending a warning signal to investors. it looks like we'll see reverse the reversal of that trade today. the daily mail is higher saying pretax profit beat expectations shares in axel springer are rallying after the company announced its in talks with kkr about a strategic investment axel springer owns a number of media properties and cautioned the two firms have not yet signed an agreement and there's no guarantee kkr will go ahead with the offer we are joined by ian whittager why are investors so excite about this possibility >> with axel springer in terms

of what's happening there, it's interesting if you look at the media sector this is like the third transaction in the european media sector after mediaset buying a stake and pay tshv buyg a unit kkr bought out the minority of gfk, the market research company listed there if you look at axel springer itself, it's quite interesting people focus on the newspaper assets but if you look at the bedrock of its business, it really is online classified businesses, employment, property, so on. that's really what has been driving the profitability of that group >> on the decision to start talks with kkr, and then that mediaset announcement yesterday, are these big european media companies getting nervous about

the growth of their competitors on the other side of the atlantic >> if you take if mediaset buying that stake in proceban, there is not -- >> is being bought because of the tie-ups and complexities around a future deal >> a couple of things. it's a sign of support for mediaset cynically it helps the proceban share prices there's that angle to it in terms of axel springer, in talks with kkr, springer is the main driver in terms of direction of the company share performance has been volatile recently. for some of these companies there's a feeling that if you are in the spotlight of the stock market, the media sector has been under pressure from the stock market trends, is it better to be listed or actually take the necessary steps and actually go private and do

things, do what you need to do without hogging the spotlight. >> in terms of doing what you need to do, we know axel springer in 2015 looked at buying the "the financial times. they lost that contest to the japanese group with kkr potentially on board, do you think they'll pursue deals like that? what could they do >> probably not in the newspaper space. if you go back to 2015, there was a feeling that the ft was trophy asset also probably a feeling they could do more with that brand. for example in business information. they bought business insider for a high price if you look at what they're more likely to if focus on now, you e a lot of activity in the space you've got the upcoming listing of nasp aars, their classified

assets there's a lot of activity happening within this space at the moment >> you mentioned axel springer's reliance on the classified ads that's a huge driver of their business also quite cyclical and i think cynical observers would look and say they're highly exposed to the volatility that comes with being exposed to the job market. do you think the timing of this bid is a reflection of where we are in the cycle >> probably not. if you look at the online classified portals, what they have benefited from, the model that would see them most closely resemblings is th s is the old pages model. they were not immune to the cycle but they were economically rez resilie resilient. there is an element here that the people who are posting jobs sort of still need to use these services

they are affected but not as much as you would think. >> private equity has so much money at the moment, they have to invest it in some ways. what other media space could be the target next? >> you have so many sectors there. if you were to look at what private equity might be interested in, there's been activity going back to the classified portal space. gout 24, that was bid on the shareholders there turned that offer down. so, you know, there is an element, that is an area, and that fits into what private equity would want, high margins, good top line growth, good cash flow an interesting area to look at, you have to look at what's

happening in the agency space. the agency in terms of share prices over the past two years have seen a sharp de-rating. you would look at the valuation and the assets they are. it's the thing private equity would be interested in >> thank you for weighing in john bolton has accused iran of carrying out attacks on tankers off the coast of the united arab emratd irates earlir this month he said there's no doubt in anybody's mind in washington who is responsible for this. he did not provide specific evidence to support the claim. a spokesman for the iranian foreign ministry described the statement as ludicrous

dan murphy joins us now from jeddah it seems like the saudis have been broadening their invite list can you give us a few more details? >> that's right. by broadening the invite list, what we've seen is saudi arabia attempting to cooperate not just its friends but some of its perceived foes we are looking at an invitation to the qataris to attend this upcoming emergency summit. that's significant it's been more than two years since any representative from qatar stepped foot in saudi arabia you might recall since june of 2017, qatar has been cut off from the rest of the jcc amid an economic, social and political blockade it does seem now like saudi arabia is willing to open the door in the face of further -- in the hope of further isolating iran and in the face of these ongoing tensions between the u.s. and iran and saudi arabia

and iran as well the inclusion of the qataris is significant. we're also looking at an emergency summit that is expected to be held in the coming hours hosted by saudi arabia bringing together leaders from arab companies, the ioc, the gcc, working to form some kind of unity and to further isolate iran as you also pointed out what we heard from the u.s. national security adviser was a direct blaming of iran for the attack and sabotage of those ships off the coast of the uae, just recently, that were owned and operated by saudi arabia at the same time we have seen the united states ramping up its own presence and volumizing its own voice in the region. not just via john bolton but also by the president himself who made the decision to deploy an additional 1,500 troops on to

the ground in this region. basically an attempt to show u.s. support for this saudi-led mission, if you will, to further isolate iran when it comes to the overall u.s. position, president trump has said he would not like to see war with iran, nor would he like to see regime change. what he would like to see is a cushing of iran's nuclear ambitions. for the iranian side, they stopped short of commenting today or in the past 24 hours, but they said they would not like to see war. so what are the possible scenarios that could come out of this emergency summit? the best-case scenario would be some kind of joint cooperation statement being led by saudi arabia that incorporates its allies in condemnation of iran and what might come from that remains to be seen the worst possible case scenario would be a breakdown of talks.

now, that doesn't appear to be the case at this point anything could happen in this region, we have to continue to monitor what will happen as this meeting gets under way the u.s. special counsel robert mueller back in washington ended his nearly two-year silence over the probe into russian interference in the 2016 presidential election mueller said he never considered charging donald trump with a crime because of existing department of justice rules that a sitting president could not be indicted but he added his investigation did not fully clear the president either pete williams has more details in the only public statement he has ever made about the investigation, robert mueller was clearly he intended it to be his last >> now, i hope and expect this to be the only time that i will speak to you in this manner. i am making that decision myself no one has told me whether i can or should testify or speak

further about this matter. >> reporter: he left little doubt he has no intention of testifying before congress >> i would not provide information beyond that which is already public in any appearance before congress. >> reporter: most of mueller's nine-minute statement today -- he took no questions -- summarized his 448-page report but he removed one lingering mystery about his investigatio into whether president trump obstructed justice he said he and his team made a decision at the very beginning of their work that longstanding justice department policy would not allow indicting a president. >> charging the president with a crime was therefore not an option we could consider >> reporter: but the attorney general says he asked mueller in early march whether if not for justice department policy, the report would have found that the president committed a crime. >> and he made it very clear, several times, that that was not his position >> reporter: that's no contradiction, a mueller associate says, because the policy prevented his team from

even considering whether the evidence amounted to a crime >> we concluded that we would -- would not reach a determination one way or the other about whether the president committed a crime. >> reporter: mueller's summary of his own investigation over the trump campaign contact with the russians was more limited. >> the special counsel's report did not find any evidence that member of the trump campaign or anyone associated with the campaign conspired or coordinated with the russian government >> reporter: mueller today did not say his team found no such evidence in that part of the report >> this volume includes a discussion of the trump campaign's response to this activity, as well as our conclusion that there was insufficient evidence to charge a broader conspiracy >> reporter: but in a statement unusual for any prosecutor, mueller did not clear the president either >> if we had had confidence that the president clearly did not commit a crime, we would have said so. >> reporter: and he tellingly noted that the same justice

department policy says a president can be impeached >> the opinion says that the constitution requires a process other than the criminal justice system to formally accuse a sitting president of wrongdoing. >> reporter: and with that, robert mueller formally ended his role as special counsel. pete williams, nbc news, at the justice department coming up, arsenal feels the blues. highlights from the europe pa league final next. ae pa league final next. pa league final next. pa league final next. a league final next. league final next. unpredictable crohn's symptoms following you?

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chelsea have won the europa league that's after they thrashed arsenal 4-1. olivia giroud opened the scoring with the header before pedro doubled their lead minutes later. eden hazard who could have played his last game for the blues scored the third from the penalty spot arsenal's alex aiwobi briefly

gave the team a bit of a chance with a strike from outside the box. the belgian, hazard, he dashed any hopes of a comeback after he added this fourth goal the result means arsenal miss out on a spot in the champions league next season i know there are some heavy hearts in north london this morning. >> my heart goes out to those heavy hearts disney's ceo bob iger played down concerns over the impacts of ongoing trade tensions between washington and beijing iger told cnbc that disney has plans to expand its parks business in china. he also said the media giant still sees ample opportunity in the country despite subdued growth in chinese tourists visiting disney's theme parks. >> our visitation to our parks is modest. we have other markets in the world, the uk, canada, mexico, they are much bigger than china. we have seen nice growth i read the articles about slowdown in chinese visitation

to the united states i don't think we've seen anything that would be perceptible yet. i was just in shanghai last week i can tell you that the popularity of that park is still high. the u.s. has seen slowing economic growth amid weaker consumption data and looming fears over the impact of those global trade tensions, that's according to our next guest who says a quick resolution is not in the cards nicholas joins us in our london studio i want to bring up a comment from brian moynihan yesterday saying he's concerned about the second quarter numbers we'll see. do you think that's a reflection of the slowing u.s. economy? do you think we may see more hard evidence of that when the first q2e estimates come out later today? >> we will get the revision of the numbers today. i don't think there is anything in those numbers that should be

overly surprising to investors but the evidence is overwhelming that the economy has in fact slowed over the last three quarters if you look at where things were about a year ago today, giving t the sugar high we've had off the fiscal package, core domestic demand was quite hot we have decelerated three quarters in a row, today it's under 2% there's no questions even absent of what's going on with trade that the internals of the economy have slowed a bit. >> i think speaking at the same event, the head of wells fargo consumer banking in contrast said that he thinks the u.s. consumer is in decent shape and he reminded people that australia grew for 28 straight years. is there a possibility that we do just see this trend we're seeing now extend and roll on? >> yeah. that is certainly a possibility.

there's two things to keep in mind here. the fundamentals in terms of what's happening with the consumer is strong unemployment is the best we've seen in our lifetime the other thing to think about is by definition what happens with the consumer is a lagging indicator. it is possible that the economy is slowing investors are slowing their investment cadence >> is that slowing of the investment cadence from business, the idea that business owners and ceos are saying i won't spend on that project now. i won't build that new project now because they're waiting to see what happens between washington and beijing >> i think so. for the last 25 years or so, u.s. businesses whether public or private has globalized their supply chain so we spent the better part of 25 years figuring out how to lower costs.

now just given everything that's going on with the u.s. and china trade discussions, it's possible that they'll have to figure out -- they'll have to flex their supply chains in ways that maybe people were not expecting even three years ago >> do you think adjustments to supply chains could include an onshoring of manufacturing jobs to the u.s., which is one of the stated aims behind the trump administration's conflict with the chinese? >> it's possible and i would say it's likely. the distinction i would draw however is that that on-shoring will come with a high degree of technological use. so you won't see the job growth come back to the extent that maybe some are hoping. >> i understand that you have some expertise in small caps in particular small caps are highly vulnerable and susceptible to swings on the back of headlines. if you're a bottom-up equity

stock picker how do you mick those calls when the market is so vulnerable to tweets and headlines that are macro driven? >> on an asset class level small caps in many ways are proxy for risk appetite in the market. it makes sense as you start to see these headwinds that peoples risk appetites have ebbed. on a bottom's up level, you have to think about not just the revenue exposure for these companies, but you have to do work around the supply chain and the company's ability to flex the supply chain that will enable the company to protect their margins and profitability. >> unlike the s&p 500, the russell 2000 failed to reach a new record territory in april. do you think we could see that happen >> well, you know, markets certainly are always -- there's always the possibility that markets will reach record levels it's hard for me to imagine that

we'll be in a scenario where stocks continue to make multi-year highs as people work through some of these uncertainties. but if you look at the underlying fundamentals in terms of what companies are saying, where businesses are today, what's happening with margins, there's not anything overly alarming now i think the second quarter reporting session will be instructive on that point. >> we'll leave it there. thank you very much for joining us and let's take a quick look at u.s. futures before we hand you over to our u.s. colleagues. we're looking at a positive start for trade on wall street that's it for today's show i'm julianna tatelbaum >> i'm willem marx "worldwide exchange" is coming up rig nhtow

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looking for relief wall street pointing to a higher open following yesterday's big slide. we'll find out what's fuelling that turnaround. boeing's ceo apologizing for two deadly plane crashes over the past year, but what he said about putting his family on the grounded 737 max planes that is sure to get a lot of attention we'll bring you his comments commodity prices pushing higher as more devastating floods rip through america's heart land it is thursday, may 30, "worldwide exchange" begins right now.