welcome to "street signs." these are your head lieps. germany's ten year bund line hits a low as fed chair powell. >> we are closely monitoring the implications of these developments for the u.s. economic outlook, and as always we will act as appropriate to sustain the expansion with a strong labor market and inflation near our smymmetric 2

objective. >> president trump continues his state visit to the u.k. playing down dirchfferences over huawein promising a great post-brexit trade deal. >> the united states is committed to a phenomenal trade deal between the u.s. and the u.k. there is tremendous potential this that trade deal i say probably two and even three times of what we're doing right now. >> the imf trims its 2019 frost for the chinese economy saying more policy easing could be called for trade tensions escalate. and hedro trades near the top of the stock after the aluminum producer delivers better than expected first quarter profit and signals production is closer to

capacity good morning, and a very warm welcome to "street signs. we've got fresh data coming through for the euro zone. that is the final composite pmi numbers as well as services. let me bring you what those numbers are. on the composite number, the final pmi has come in at 51.8 for may. that is slightly better than the flash estimate of 51.6 it also is higher than the number we saw in april, which was 51 p.5 the services of the pmi came in 52.9, also ahead of flash estimates, which were calling for 52.5, and that is up from april which was 52.8 now new business the component within the composite number, that number came in at 50.4, again, ahead of the flsh numbas numbers but slightly below what we saw in april. the forward looking element

there, that came in at 61.1, also ahead of the flash numbers at 59.7. overall a better than expected numbers on the pmi front this morning. we've had the country specific pmis come through early on this morning just to refresh. germany, the composite came in at 52.6, slightly ahead of the flash number germany the power house of the e.u. let's take a look now at european markets we'll see how the stocks are reacting not only to these latest numbers but a number of developments on investors' minds. a real boost to u.s. markets, the fed chair said that he is ready to act as appropriate to sustain the expansion. that triggered a risk on trade for wall street filtered through to the european session.

all four major industries trading higher the ftse, we are due for a reshuffle later today. also in focus, the fotse mib. fresh headlines around italy, the european commission could launch disciplinary procedures against italy today. european markets trading higher. let's take a look at sectors we'll see how things are faring sector wise. we've got technology, this follows very strong gaps -- gains for the technology sector. at the bottom of the board, oil and gas and banks. let's take quickly a look at european yields there. yesterday we did see a selloff in u.s. treasuries but in contrast we saw the rally

continue for european bonds. they failed to take part in that selloff. the german bund trading at negative 0.206%, and interestingly we've got italy, the yield there trading lower this morning, 2.5%, but the trend for italy btps have been higher in the yield space. just getting back to those fed comments yesterday, let me detail what jerome powell said he signaled that the central bank's willingness to ease monetary policy saying it will respond as appropriate to the risks prosed by a trade war. powell said the federal reserve doesn't know how or when tensions will be resolved, but that it is closely monitoring their impact on markets. federal reserve vice chair richard clarida echoed his comments he said the u.s. economy is in good shape but the central bng is ready to act. he said he will be watching the

current market conditions to decide whether the fed should go next. >> market pricing can go up and down, so we can't be handcuffed to that, but obviously we'll look at a range of indicators on where the economy is it's very simple we will put in place policies that need to be in place to keep the economy, which is in a very good place right now, and our job is to keep it there. >> meanwhile, chicago fed president charles evans said he's happy with current fed policy, but he's worried about persistently low levels of inflation. >> magnitudes of the one-off price increases that you would expect to see from a tariff increase or easily manageable and we can look through that, you know, the concern would be if you saw very strong increases in prices that somehow were accommodated by monetary policy that led to inflation, you know, upwards of 2.5% or more. i don't see anything like that. >> i'd like to now bring in the

investor director from fidelity international, where we stand moving forward firstly, on the fed chair's comments yesterday the market clearly took this as a strong signal that the fed is changing their stance away from being patient and now being willing to act. we saw the ten-year yield bounce off of 20-year lows. do you think this strong reaction is warranted? >> it's interesting to see that powell and other fed members had every opportunity to push back on market expectations of rate cuts, and yet they did not do so so that indicates that of choice the -- if trade concerns remain elevated as they are, the next step will be a cut it's not clear when this is going to happen, but it does look like that's the direction of travel. now, we have seen a rebound in yields in the ten-year part of the curve, even this morning

we're already seeing a bit of a retracement of that. we do think in this environment treasuries are going to remain well-supported. >> what do you think is the trigger? if you can talk me through what the fed chair's rationale and thinking was to come out, as you say he could have pushed back, but he didn't. >> there's a few things. yes, trade wars matter and they don't help risk sentiment. the fact of the matter is the u.s. economy has been slowing for most of this year already. if you look another q2 numbers, u.s. growth stays around 1% in q2, a far cry from the 3% in q1 courtesy of the lack of the fiscal stimulus that we had last year, and this year it doesn't look like they're going to have room to push the same button on the fiscal side. monetary policy may have to work harder to offset the slowdown.

>> in terms of monetary policy now having to work harder, i mean, is that likely is it possible that monetary policy at this point where we are where rates are can actually step up and plug the gap of fiscal policy? >> if you look at the u.s., the u.s. unlike other areas, unlike other countries is perhaps one of the very few countries, one of the very few central banks that can actually cut rate, u but they have room to cut rates if need be so you know, there is scope for monetary policy to do more -- provide more support. >> in addition to the fed, of course, one of the other main drivers of market moves has been the trade war, and last week the sentiment seems to be that president trump's move to impose tariffs on mexico in itself isn't a major surprise, but the timing was the key surprise, that he's shown a willingness to engage in multiple trade fronts at the same time how do you deal with that kind

of willingness to engage mutt l multiple trade fights at the same time? >> it certainly keeps us busy. it's not just about u.s. and china. there are -- there's a broader theme at stake here, you know, trump has essentially reversed on the last 30 years of global trade order, and for us it's a matter of figuring out what implications are for global growth global growth is already not doing particularly great the u.s. is catching down with the rest of the world if you want to say that way in terms of growth, and again, in this environment we do prefer to, a, focus on quality assets, government bonds, investment grade credit of choice, and again, increase ing sector

level. >> if i can just take you to europe in contrast to the moves we saw yesterday we saw the rally continue. it was the divergence in move between treasury and bunds have really widened what do you make of that move and where do you think bunds can go from here >> bunds have been pretty much in the passenger seat being driven by u.s. treasuries in the last few weeks in particular now, if you look at the latest data in europe, inflation is still nowhere. growth is not particularly great, particularly in the manufacturing sector and export sector, so as long as the tensions remain in place, the markets remain as nervous as they've been over the last few weeks, we see little scope for yields to go meaningfully higher in german government bonds at these levels. >> we'll leave it there and have some more time to chat later

getting over to italy a story in focus today, italian deputy prime minister ahave discussed breached the european's 3% budget deficit role. the leaders did not come to an agreement on the matter but will continue to hold talks this week the report comes after they settled on a common sense solution to an ongoing feud that threatened to dismantle the italian government meanwhile, the european commission will reportedly start an infringement process against the italian government over its fiscal policy. brussels is going to tell rome that its fiscal policies have hurt confidence and contributed to the country's economic slowdown the economic spokesperson hit back saying negotiations with brussels, quote, must not end with a compromise. up next we'll speak exclusively to heed roe's president and ceo as they posted

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welcome back to the program. president donald trump and prime minister theresa may hinted at a possible trade deal between the u.s. and u.k. after britain leaves the european union. trump highlighted the ties between america and britain and hailed the benefits of a potential trade agreement. >> our nations have more than $1 trillion invested in each other's economics. the united kingdom is america's largest foreign investor and our largest european export market that's a lot of importance as the u.k. makes preparations to exit the european union, the united states is committed to a phenomenal trade deal between the u.s. and the u.k there is tremendous potential in that trade deal. i say probably two and even three times of what we're doing right now, tremendous potential. 75 years ago this thursday, courageous americans and british patriots set out from this

island towards history's most important battle they stormed forward out of ships and airplanes risking everything to defend our people and to ensure that the united states and britain would forever remain sovereign and forever remain free. >> hadly gamble is near winfield house, the u.s. ambassador's residence. this is where president trump has been staying over the last couple of days i understand you've spoken to a pretty influential voice this what happens in these international relations. talk us through what you've been learning >> reporter: absolutely, this is of course day three of president trump's visit to the u.k it's one that's been filled with pomp and with circumstances. i'm standing outside the winfield house that is the residence of the u.s. ambassador here in the united kingdom, and in just an hour or so from now, the president will be taking off via marine one, traveling to portsmouth for a massive review

of british naval forces to commemorate the 75th anniversary of d-day we'll be headed to normandy shortly today ourselves. i had the chance to catch up in an exclusive interview with america's ambassador to nato and i asked her given the political climate when it comes to the united states, given america first, do you still think we would see that same level of allied support we saw 75 years ago? take a listen. >> we're going to have a wonderful commemoration of the 75th anniversary of d-day. everywhere i go in belgium and france, the people in these villages and towns in france that remember our great effort, the american effort that saved their countries, they are out in force, and it will be a memorable occasion that these people will celebrate what the brits and the canadians and the u.s. soldiers did on that day 75

years ago. they were brave and anyone who ever has the opportunity to go to normandy and look at those cliffs and see what those soldiers did just scaling those cliffs with the fire coming down on them, and yet they won. they prevailed, and they freed europe from a disastrous german government at the time, and i think the people of europe appreciate it, and they celebrate it every year. and it's very humbling and also, i think, important that we never forget that. it's why nato was formed, that we never forget that we must assess risk and be vigilant in our security before a war happens so that we will not ever

have another world war i or world war ii >> ambassador how does that square with the america first policy that the prosecuesident continued to espouse in your view one of the first speeches that winston churchill made in rallying the british public to continue to fight on, he concluded by saying that we should fight on until the united states, the new world comes to the rescue and liberation of the old. do you think that would happen in today's context >> yes, i do i think that's what nato was formed to do is to have the strength of deterrents so that we would never have to do defense. if we are together and we stay united, and we are fit for purpose, which is why our president keeps saying we need the 2% investment by every country that has committed to do this, it's so that we will be able to deter russia or any adversary that would try to

break us up and then start taking sovereign territory that we will stand and defend >> reporter: you heard there cay bailey hutchison, the former u.s. senator from texas saying deterrence is the best message when it comes to taking on any existential threats whether it comes from russia or elsewhere, emphasizing what president trump said yet in his press conference talking about how important that these nato members are paying their fair share when it comes to defense budgets, how proud he is he's made a lot of progress there and he's been echoed in that sentiment from the nato secretary general himself. a lot of progress has been made in upping that kind of spending. at the end of the day, still a lot of politics at play here, whether we're talking about the united kingdom or europe. >> thank you so much for bringing us that update. later we'll speak with

paschal donohoe and we'll discuss the outlook for a trade deal between britain and the u.s. with liam fox that's at 1350 cet. getting back to markets today, the ftse 100 is due for its quarterly reshuffle after the close today, some key names to watch, easy jet is expected to fall out of the u.k.'s blue chip index marks and spencer set to narrowly avoid dropping out. and getting right into some earnings in focus today, hydro, the norwegian aluminum producer posted an 82% drop as it counted the cost of a cyber attack in march. the firm reported underlying profit of 559 million crown z as the hack weighed on the bottom line the result was still better than analysts' expectations shares are up about 2.9% in

early trade. i'm very pleased to say i'm join by hilde merete aasheim. thank you for joining me these results were delayed due to a cyber attack. you've released them they're better than the market expected it seems as though you're making good progress in brazil. talk us through these numbers. is it true that you're moving in the right direction? >> yes, good morning, good morning from oslo. yes, our financials are heavily influenced by the brazil situation, and we're very happy that we now have got the message from the federal court that the em bbargo that they have had, tt they can only produce 50% at capacity, we will be back to resume operations in brazil. we had the cyber attack. we are now back to normal production from this attack,

which we also are very happy about. we have incurred some costs in the financial umbers, roughly 300 to 350 both these incidents we hope to be recovered from. in that sense it's good news our results are influenced by low prices in the market. >> now, i want to talk more strategically stepping away from the quarterly numbers for a moment you are recent -- are recently taken up the ceo role. one. if i -- one of the first things you've done is a begin a strategic review of your rolled products business. this has been a main focus of growth but the division has been under performing i want to understand better what is actually taking place in this strategic review what's on the table? how much could we seedy ve dievd >> we have been under performing

in this business area for quite some time. the specific review is about exn all opportunities to pursue this business it's too early to say what will come out of that process we'll have to come back on that. >> you of course are bringing product back onto the market now that nor ta is up and running. there have been some curtailm t curtailments in china recently because of environmental incidents. do you think that these curtailments are enough to sustainab sustainably raise the price of alumina again? >> it's a tight market any disruption has an effect on the pricing. what we are focusing on now is to bring back alumina and producing in a responsible way, having a good dialogue with the local community so that we are considered to be a good force and then to avoid any more

disruption, and an embargo they have had for a long time that is our focus right now. >> thank you so much for joining us this morning, hilde merete aasheim, president and ceo of hydro. and coming up on the show, president trump hits out at senate republicans amid a backlash to his planned mexican tariffs. more after the break you're here to buy a used car, truck, suv. that's smart.

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welcome back to "street signs. i'm julianna tatelbaum germany's ten-year bund yield hits a fresh record low as fed voice chair richard clarida echoes his boss in signaling the central bank is ready to ease in the face of the trade work. >> market pricing can go up and down we can't be handcuffed to that obviously we'll look at a range of indicators on where the economy is it's very simple we will put in place policies that need to be in place to keep the economy, which is in a very good place right now >> italy's equity market underperforms its european peers as the european commission

reportedly gets set to launch disciplinary action against rome over its growing deficit and the right wing party warns talk with the e.u. should not end with a compromise. president trump talks up the special relationship between the u.s. and britain as he continues his state visit to the u.k. playing down differences over huawei and promising a great post-brexit trade doeal. >> the united states is committed to a phenomenal trade deal between the u.s. and the u.k. there is tremendous potential in that trade deal. i say probably two and even three times of what we're doing right now. and the imf trims its 2019 growth forecast for the chinese economy saying more public easing could be called for if u.s. trade tensions escalate all right, we've got some more pmi data coming through for you,

this time for the u.k. the pmi for may in the u.k. came in at 51.0 versus april at 50.4. an acceleration from a month ago. also, slightly better than the market had been expecting. the expectation component came in at 65.4, also an improvement versus april and the highest level since september 2018 the ihs market who produces this data say that this data suggests that the u.k. economy is close to stagnation, so weak global demand weighing on the u.k. data there. however, it was slightly better than the market had been expecting, right in line also with the euro zone data we got a few moments ago that was also better than the flash estimates suggested, slightly better than the market had been expecting.

a rare bright point for european and u.k. data this morning the beat is still modest, bear that in mind you can see sterling ralinglyin 0.18%. breaking through that 127 4rele. green across the board as we just mentioned there in the headlines, ie tall unitalian st sharply in focus today the italian press have suggested that the european commission is set to start their disciplinary action against italy as soon as today, so weighing potentially on those italian stocks. otherwise the french index outperforming up about 0.55% this morning let's move on to 4 x markets tomorrow of course the ecb meeting sharply in focus for the euro, currently trading 0.2% higher versus the dollar markets still no doubt digesting those comments from fed chair jerome powell yesterday signaling a willingness to act to sustain the expansion in the u.s., sent ripples through bond

markets yesterday and the dollar as well. the pound trading about 0.2% higher above that 127 mark let's move on to wall street, see where we're poised to open this morning we're looking at a bounce today. yesterday we saw big gains across all three major indices it was the second best trading day of the year for all of those major indices led by a rebound of tech after a sharp selloff on monday is tesla also surging yesterday, about 8%, its best day of the year the fed really sending quite a boost across markets it looks as though that rally is going to continue for wall street on the trade front, i want to mention that u.s. senate republicans have told the white house president trump may not have support from party members to hit mexico with import tariffs. senior republican senator john thune told reporters a vote on the levy would not receive the same amount of backing trump's bord border declaration received

earlier this year. president trump has responded saying republicans would be foolish to block the tariffs he added that he expected them to go ahead unless mexico stops millions of migrants entering the u.s. through its border. >> i don't think they will do that i think if they do, it's foolish. there's nothing more important than borders mexico shouldn't allow millions of people to try and enter our country, and they could stop it very quickly, and i think they will, and if they won't we're going to put tariffs on. and every month those tariffs go from 5% to 10% to 15% to 20 and then to 25%, and what will happen then is all of those companies that have left our country and gone to mexico are going to be coming back to us, and that's okay. >> meanwhile, here in london, president trump suggested everything would be on the table during u.k. trade negotiations including britain's national health service however, trump later backtracked on the statement telling itv he

does not consider the nhs to be a bargaining chip. >> i don't see it being on the table. somebody asked me a question today and i say everything's up for negotiation and everything is that's not something i would consider part of trade that's not trade. >> i'm joined in the studio by dana allen, senior fellow international institute for strategic studies. i want to pick up there on president trump's backtracking on the nhs firstly so much to discuss, but president trump tends to use tariffs to create leverage, to get concessions for what he wants. do you think that the nhs was an intention to create leverage as he heads toward potential trade negotiations with the u.k. >> well, if you look at the film of president trump answering that question, honestly i don't think it's clear that he knew what the nhs was so i don't think -- i don't necessarily think it was an intentional effort at leverage, but the larger point is true in any trade negotiations between britain and the united

states, united states is going to have a huge advantage it's much bigger, and that advantage is actually taken away when britain is inside the european union, because the european union is a comparable trading block that can negotiate on equal terms with the united states britain cannot and will not. >> on that point, i mean president trump throughout the last three days here in the u.k. has really been dangling this idea of an enlarged trading relationship between the u.k. and the u.s. if the u.k. leaves the european union, he insists that a substantial trade deal lies around the corner is it really possible that a u.s., u.k. enhanced trading relationship could offset the u.k. leaving the e.u. and what that means for the u.k.? >> no, it's absolutely impossible trade is a function of many things but above all the size of an economy and the distance between the two trading partners

the u.k. exports, i think, something like 18% of its exports to the united states and 45% to the e.u., and there's a simple reason for that the first reason is proximity, the second reason is that the u.k. is integrated into the e.u. economy. nothing like that is going to happen with the u.s. >> and perhaps shifting gears to the u.s. and mexico trade dispute. as we just heard there in terms of support from congress for this move, the republicans, the senate republicans have warned that they may not back president trump here, and china in contrast was unique in that it did have -- president trump did have bipartisan support to take a real hard line how do you see this sort of rift evolving between president trump and his republican backers when it comes to mexico is this. >> well, there have been very few issues on which the republicans in congress have been willing to stand up to president trump, and it's interesting that this is one of them because this hits at american businesses.

it damages american businesses the comparison to china is not quite that telling because whatever one thinks of president trump's trade threats and trade policies towards china, that was about trade. in the case of mexico, he's combining -- i mean, he's using the threat of tariffs as retaliation based on vague demands that mexico cut off the flow of immigrants and refugees northward, which is frankly, you knows bizarre. >> given the difference in motivation for slapping tariffs on china versus mexico, i mean, should any country that's doing business with the u.s. be wary of getting tariffs slapped on them for any reason really under the sun? >> you know, president trump is a protectionist. this is deep in his bones, and it's something that came -- that was evident in his world view as expressed long before he entered

politics i think that the mexico example shows that, you know, president trump views trade as a form of war fafare by other means in a sense. no, i don't think under trump the united states can be seen as a reliable trade partner. >> in terms of support for these moves on mexico, we touched on the republicans and they're standing up against this move, but what about the voters? we're heading closer and closer to those 2020 elections, surely this is going to become an ocasio-cortezing cree increasingly important factor in trump's decision-making. are his constituents or his supporters likely to back him? >> i think his supporters have backed him through almost everything and i think they'll continue to back him on this obviously immigration is his signature issue. he has minority support but strong minority support for a very, very hard line, so no, i wouldn't expect this to damage him among his core supporters.

>> and one of the other key lessons that i think the market has learned through president trump's move toward mexico is that he's willing to engage multiple countries in trade wars at the same time, and there have been, you know, the belief that perhaps it would be more sequential wait until china was resolved before shifting focus to the e.u., for example, but now that we've seen his willingness to engage mexico at the same time as china, do you think there is going to be a willingness for him to target the e.u. in parallel >> he has targeted the e.u. recently. >> he's delayed -- >> he's delayed it i think it's probably a mistake to look for strategic economic policies from president trump. he's using as i suggested earlier, he's using trade threats as an instrument of bullying, frankly, and i mean, it's quite striking that he

engages in acrimonious conduct with the european union at the same time that he's trig ying to against china. you would expect a more rational strategic actor to line up support from allies before going against a competitor. >> not quite what we've seen in this case, though. >> not really. >> all right, thank you very much for joining me, dana allin senior fellow international institute for strategic studies. shifting gears to japan, tokyo shares have rebounded for the first time in six trading days after federal reserve chairman jerome powell signals a possible rate cut and eased concerns over the u.s./china trade war. >> reporter: the nikkei index finished 1.8 pre% higher, its sharpest rise in two months. investors were encouraged by the strong u.s. market the day before after chairman powell

said the central bank would act as appropriate to sustain the expansion and shares of semiconductors and other electronic component makers were snapped up a statement from the chinese ministry of commerce on tuesday that the trade conflict with the u.s. will need to be resolved through further talks. also relieved worries that the trade war would escalate further. additionally, reports that senate republicans were opposing president trump's plans to slap tariffs on all mexican imports were welcomed as positive news because tariffs on mexico would deal a heavy blow on japanese companies, especially on the auto industries as many makers have been pouring money to build production site there is nissan has three, honda two, and toyota is in the midst of building its second plant to start operations sometime this year the bulk of the finished cars are for the u.s. market but it's not just about losing market opportunity. japanese firms including electronics and other makers were looking at mexico as an

alternative production hub to avoid u.s. tariffs on chinese exports. now they may be forced to rethink their strategy back to you. >> thank you very much from tokyo. the mf has cut a growth -- 6.2% this year down from an earlier estimate of 6.3% uncertainty around trade was blamed for the downgrade with the imf saying more policy easing could be called for if tensions escalate further. the u.s. treasury has confirmed that steven mnuchin will meet with chinese central bank governor this weekend the two are set to meet on the sidelines of the g20 finance leader summit in japan it will be the first meeting between u.s. and chinese trade officials since president trump slapped a 25% tariff on $200 billion worth of chinese goods nearly a month ago. and coming up, we are live in dublin as president trump prepares to visit ireland.

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we've got a bit of sports news this morning. anthony joshua has officially triggered the contracted rematch clause with andy ruiz jr the british boxer lost his title after a defeat over the weekend. eddie hearn confirmed the rematch will take place in november or december this year. a shift in gears back to president trump and his visit here in the u.k. he is due to depart winfield house soon to travel to portsmouth in southern england to take part in d-day commemorations he's then scheduled to hold a reception with other european leaders after the events and later in the day he will head to ireland where he will meet with the irish prime minister willem joins us from dublin. what can we expect from the irish leg of president trump's trip >> reporter: well, there's not been that many details released

publicly about what's on the agenda they'll be meeting for around 30 or 40 minutes at shannon airport after air force one touches down at around 4:30 this afternoon. at that point once the meeting's over president trump will travel a little further west to his private golf resort. he'll be spending the night there before he travels to normandy for more d-day anniversary celebrations one thing that he'll be looking to bring up in his conversation with president trump is just last week the u.s. treasury department placed ireland on an economic watch list because of the size of their trade surplus, and that's something that clearly the irish economy very much focused on is the relationship with the u.s. it is by far the largest foreign investor in the irish economy and the large multinationals based in cities like dublin are a huge part of the irish tax take, so that's something that of course leaves the irish

economy slightly vulnerable to changes not only in the global economy but also in terms of the u.s. trade policy. no doubt that will be part of the conversations later on today juliana. but just to say that we're here in dublin inside the ministry of finance, when we're talking to paschal donohoe in a few minutes time stick around, tune in for that interview around 10:00 london time, that's 11 cet. >> thank you so much we'll look forward to that interview in a few minutes. federal reserve chairman jerome powell has signaled the central bank's willingness to ease in the wake of the trade war. speaking with cnbc fed voice chair richard clarida echoed those comments and said we'll be watching current market conditions to decide where the fed goes next. >> if we get a sense that growth is slower than we expect, and we get the sense that underlying inflation is below where we want it to be, then as chair powell and i and others have indicated

we're going to put in place appropriate policy to achieve those goals, and whether or not that means acting preemptively when the data comes in is going to depend on the context at the time understand that our goal is to put in place policies that not only achieve but sustain price stability and maximum employment we'll do that if we need to. >> so there are things you say you're going to do and think about, and there are ways that the market has already figured out what you're going to do before you know -- >> yeah, they do that. >> it's really quite amazing so the market has now priced in a large 50% probability of a rate cut in july, and in fact, there's two rate cuts built in through this year. >> yeah. >> are you happy with where the market is priced right now >> i don't think i want to get into that. what i will say is we'll have a meeting in june, a regularly scheduled meeting and we're going to look at a broad range of indicators not only where the economy is but where it's going. obviously we'll look at market praising as you know, you're a veteran, market pricing can go up and down we can't be handcuffed to that

obviously we'll look at a range of indicators on where the economy is again, it's very simple. we will put in place policies that need to be in place to keep the economy, which is in a very good place right now, and our job is to keep it there. >> well, jp mor begmorgan is stg with its cautious stance they continue to think there are better ways of playing stocks rather than having an all out bullish view year-to-date performance is up on the year around that 50 mark. that's about 11% higher year-to-date i want to bring in a guest from jpmorgan, eduardo lurkscobari i had a look at your fresh note published this morning, quite a bold line. 2019 is a year to forget about market direction and sector allocation what does that mean when you're deciding your strategy when it comes to stocks? is it really all about stock picking here >> i think so.

i think the wall of investing, those were direction in the market is very clear and then if you think things are going up, you should buy risk skprgs thann there is time when direction's not that clear and i think you have to think about opportunity. this is time to be thinking opportunity. and so far small cap europe is happier today but from the beginning of last year it's actually down. i think it is time to think about what part of this universe can make you money, and the good news is there are 2,000 of them, 2,000 mid cap stocks in europe, is a thousa 15,000 in the world. >> where are those opportunities? i've got to ask. >> what we're saying is, look, this is time when direction is not that clear, so focus on things that can give you high free cash flow yield, that can give you visibility, maybe because there's a structural growth maybe because there is a

self-help story, maybe because it's below market operations or maybe because the tstock has sod off. focus on solid balance sheets, of significant rerating in the market, which we don't think exists. >> which sectors fall into that category and check off all those boxes you just laid out. >> when it comes to sectors, if you believe the market is going to go higher, you buy cyclical forget that for now. think about this, one in every five small mid caps in europe is today down more than 25% from just the peak of last year now, mild recession is 25% down one in five stocks is already pricing that in. what a great basket from which to choose your next investments. >> small caps are a proxy for a risk appetite, though, and of course we see big swings in these stocks when there are headlines around trade

i understand that is not the basis through which you create your portfolio of re recommendations how has that risk appetite changed over the last week or so since president trump moved forward with his tweed to impose tariffs on mexico >> that's a great question i think most market participants, they feel is late in the cycle and especially when they think there is risk on the table. it's interesting if you look at empirical evidence, that is actually wrong if you look at the whole history of the u.s., small mid cap universe where we have most history, the russell 2000 has under performed by just 5%, but it has outperformed by 18% in the last 12 months, by 30% in the first 12 months. if you're trying to get in and out of, trying to perfectly time that recession, you're trying to make that bit of money and risking that and it's just a bad investment decision.

regardless of what you think about the macro and cycle through it all especially when you're in a world of low growth like we are today, think about this, the last 20 years of japan, the -- didn't make you a penny. you lost 27% in real house prices you double your money in small. >> just coming back to some of the recent market commentary that's been driving a lot of the moves, fed chair jerome powell's comments yesterday being a big one of those he signaled a willingness to adjust rates to continue supporting the expansion, if we do get more stimulus out of the u.s., does this change your approach >> no. it doesn't for a very simple reason for the market to go higher, either it has to rerate or earnings growth has to give you the upside we don't see a rerate in the story because we're sitting here on small mid caps all over developed markets in the u.s., u.k., europe at very near all time multiples when you factor

in the balance sheet there's not a rerating story as for earnings growth last year it was single lead earnings growth and this year even if we have a second recovery it's not going to be as good. the best you can hope for here is single upside when that's the case why take risk. >> very clear message, thank you very much for weighing in. that is the global small and mid cap strategist from jpmorgan. we are looking for continued gains across those three major indices. yesterday the second best day of the year for those, so we'll keep an eye on wall street's open that's it for today's show, i'm julianna tatelbaum "worldwide exchange" is up next. fun fact: 1 in 4 of us millennials have debt we might die with. and most of that debt is actually from credit cards. it's just not right. but with sofi, you can get your credit cards right - by consolidating your credit card debt

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topping your five at five this morning, stocks coming off a huge day as federal reserve chairman jay powell signals that a rate cut could be coming that rally running over overseas green arrows in many parts of the world, congress, though, playing a game of monopoly with big technology, and now apple's ceo is weighing in what tim cook is saying about government's big crackdown on big tech. could we hear more on tariffs today? we're going to take you there live and it's no fun and games, why game stop's stock is down about