good morning, and welcome to "street signs. i'm joumana bercetche. these are your headlines european stocks open lower as a wave of chinese data points to more signs of weakening. the world's second largest economy with industrial output cooling to a 17-year low european chipmakers sank after broadcom blames the trade war and restrictions on huawei for a global slowdown in chip demand. oil prices pulled back after a big surge as the trump administration blames iran for

tanker attacks in the gulf of oman, while tehran denies the claim. >> no economic sanctions. and ministers meet in luxembourg with one message for italy, respect the blocks. >> i think it would be wise to seize the hand given and take the adequate measures. >> well, good morning, everybody. happy friday it is that time of the month again, the iea released their reports and today they have announced they're cutting the forecast for 2019 global oil demand for the second straight month. the agency now expects growth of

1.2 million barrels per day this year and 1.4 million barrels per day in 2020. this is the first time they're releasing updates for 2020 on the supply side, opec and its allies continue to overdeliver on agreed cuts with without put from the group coming in at 533,000 barrels a day below target but outside of the cartel, outside of opec and opec plus, the united states is expected to contribute 90% of this year's supply increase. these are some of the headlines that have come out of the iea report let's take a step back and review what happened to the price of energy over the last 24 hours. it has seen a lot of development s. right now, energy trading softer, this after the fireworks of yesterday at the attacks on the oil tankers in the gulf of oman sent energy prices up more than 4%. but yesterday aside you can see the picture over the last couple of months, this is a weekly

chart, but the picture the last couple of months has been negative, breaking through some key levels here. wti at $52, we're getting very close to the december lows of $48 there. so technicians are really keeping a close eye on this. geopolitical concerns are very much on the front of people's minds after what happened in the last 24 hours. but let's go back and talk about the iea, very happy to say neil atkinson, the head of the oil industry joins us, always great to chat, to have you on the show i want to start off by asking you about your demand growth forecast because this is pretty much a gloomy picture, this is the second consecutive month where you've cut that demand outlook and indeed i read in the report that you have demand rising by only 250,000 barrels per day for the first quarter of 2019. that was the lowest since 2011 so can you tell us more about where the weakness is coming from >> yes, well, in fact the

headline you read after the top of your show gives some clue to this you referred to weaker economic data from china, you talked about the impact of the trade disputes and that is -- though that is two of the factors which led to lower demand than we originally forecast, we felt weaker performance in some of the european economies, so basically there is a question of confidence and that has been reflected in real data that we have seen so far in 2019 we took some gdp numbers from the oecd, which showed weaker gdp growth in 2019 than earlier expected and so we have adjusted our numbers down and we note that i think the other major institutions have done something very similar >> and neil looking at the shape of the oil curve right now, front end prices are trading higher than some of the medium dates. do you think that prices today

have now fallen enough to reflect the slowing demand outlook, given that it is something we have been discussing as you mentioned for the last couple of months and that in 2020, even in your outlook today you see demand picking up >> well, as far as 2019 is concerned, what we have seen in the last few months is the fact that the opec plus agreement has been more successful from that point of view than might have been expected when it was signed and they are producing significantly below the target level. plus the fact that growth in the nonopec countries is a little slower at the beginning of the year, but it is going to pick up sooner than later in 2019. so we saw price weakness, but the main focus, i think we should be looking at here, is that until very recently the geopolitical factors related to iran and venezuela and libya, they were at the forefront of

people's minds now we're starting to see that confidence in demand is taking over and that is the main driving factor behind the current state of the oil market. in 2020, we do see higher gdp growth we expect support from various governments and central banks around the world and therefore that lies behind our assumption of 1.4 million barrels a day growth in 2020 for demand. but, of course, having said that demand is at the forefront and has taken over from geopolitics, of course yesterday we saw because of the attacks on the ships in the gulf of oman that geopolitics can never be close to one side. >> how closely are you watching the geopolitical developments in that part of the world, as this is the second type of this type of event in the last month and if they were to occur with increasing amount of frequency, you would expect there to be more geopolitical risk premium price into oil right now >> i think what we saw yesterday, there was an

immediate reaction by the markets. the price did rise quite sharply in the immediate aftermath of hearing the news that was, of course, entirely understandable so far each of the incidents that we have seen in the last few weeks by themselves have not been significant in terms of oil supplies but, of course, if we are to get more of these attacks and they were to be even more effective than already and there were to be some kind of threat to the security of the spread of the moves, then we're in a very, very different situation but i think that so far the market has, of course, looked at the incident yesterday, it reacted immediately, but i think 24 hours on i think we're realizing that although we cannot be complacent, the situation is not yet representing a major threat to the security of oil supplies through the very important strait of hormuz. >> let's talk about your splupp outlook here

you mentioned strong nonopec growth but you also cited extreme overcompliance when it comes from opec and opec plus members, production cuts. they have a little leeway there. is it your view that because of all of this extra supply coming to the market, there will continue to be downward pressure on the price of oil unless opec continues with these production cuts >> well, in our report the data shows that the call on opec crude if we are to have a balanced market in 2020, is about 600,000 barrels a day or so less than they are currently producing. so that is a number which we'll be taking into account when they hold their meeting in the next few weeks, when they look at the outlook for the rest of 2019 and into 2020. but a noteworthy aspect of this 2.3 million barrels a day of growth in the nonopec supply in

2020 is that although the united states remains hugely important component of that growth, we are also seeing growth from other countries, such as brazil, norway and canada, so if you like, it is no longer just a u.s. story and we're very confident that that supply growth will materialize, and if it does, of course, it is going to present a major challenge to the other producers in terms of balancing the market and ensuring that prices remain within whatever the desired range is for the main opec producers. >> all right, neil, going to leave it there thank you very much for taking the time to speak to us on "street signs. that was neil atkinson, head of oil industry market division at iea. opec output fell to five year low in may on the back of lower saudi production as well as reduced supply from sanctions hit iran and venezuela the cartel also cut its 2019 demand forecast and warned of

global growth and trade riffs. so similar line as what we heard from the iea as well the u.s. blamed iran for attacks on two oil tankers in the gulf of oman. u.s. central command released footage it says shows an iranian patrol boat removing an unexploded mine from one of the vessels. iran has categorically denied the allegations. hadley joins us live and has been following the developments over the last 24 hours hadley, give us the latest from theground. >> no surprise, joumana, this is a major hot spot, not just, of course, for global shipping, but also for oil and frankly for geopolitics as well. just to mention it is over 40 degrees celsius here on the coast. this is one of the seven emirates of the united arab emirates and we're about 70 miles from where the two incidents took place early

yesterday. let's listen in to what secretary of state mike pompeo had to say >> this assessment is based on intelligence, the weapons used, the level of expertise needed to execute the operation, recent similar iranian attacks on shipping and the fact that no proxy group operating in the area has the resources and proficiency to act with such a high degree of sophistication. this is only the latest in a series of attacks, instigated by the islamic republic of iran and surrogates against american and allied interests >> now, speaking of this kind of intelligence, the u.s. has been loathe to share a lot of that so-called evidence and intelligence at least so far with the rest of the world this is something that takes us back a month ago to when the four incidents took place, two of those ships attacked at that point were saudi tankers as you'll remember. and it was interesting to be in washington at that time, i was sitting there reporting on this story, talking to folks within the administration, talking to folks back in this area, i was

also talking to folks from tehran and they were saying the messages are pretty clear that what happened was a direct result of some kind of iranian interventi intervention, but the gulf arab countries and the united states still loathe to raise the dialogue, raise the rhetoric because nobody really wants this to turn into some kind of conflict it is interesting to net that within 24 hours of the incidents yesterday, we saw mike pompeo, heard from the u.s. military saying we don't want a new conflict in the middle east, but at the same time we got to protect our allies, protect our sources of energy as well. but another note as well, centcom releasing video in the last few hours it seems to show an iranian revolutionary guard patrol boat near one of these tankers and they seem to be taking something off the side of the ship it is similar perhaps to what is known as a limpet mine the same video is being shown apparently in iran on their press tv, but that top bit where it shows them removing something

from the hull of one of the tankers, that has been taken out. when it comes to intelligence and who knows what, the blame game is in full effect as you heard, not just from the united states but tehran kicking back on this as well. they say they had nothing to do with this and folks telling me this is part of the iranian playbook, something happens and they immediately deny any kind of involvement and it has been interesting to note, still, no statement from the uae. >> interesting as you see we're in the middle of this blame game going on let's take it back to the bigger questions. we have an upcoming opec meeting, they haven't decided on a date because they can't agree amongst themselves this incident over the last 24 hours, it is adding another layer of complexity to a potential agreement out of the opec and opec plus members can you set the stage for us of what to expect in a few weeks' time >> it is difficult to do that at this point we're not hearing much noise coming out of opec on this what we understood a few days

ago is that alexander novek was going to head to tehran, encourage his counterpart to wait a few days. this is all within the more regional context as well of the bahrain future peace in the middle east summit we'll see next week, led by the treasury secretary steven mnuchin as well as jared kushner and certainly i'm expecting and i've been told multiple times there will be a gcc attendance so you have to take this in context against the backdrop of the other things happening in the region no doubt over the last 24 hours, seriously complicating things. >> excellent, hadley, thank you for breaking it down for us. the environment is pretty much risk off on back of the geopolitical developments we had over the last 24 hours also weak data out of china overnight as well. we'll get into that shortly. it is having a knock on effect sentiment on europe. all of the european indices are very much trading in the red on this last trading day of the

week ftse 100 down .3%. little bit of weakness there in some of the miners today we have the main underperformance by the xetra dax. cac 40 down. and italy still very much in focus in europe, let's not forget a meeting happening, a lot of sharp words being directed at the italian government there to bring their public finances back in order. some of the italian banks under pressure today to the tune of 1 percentage point let's talk about what's been happening in fixed income space. we're seeing a huge fight for equality go on the bund trading at minus 26 basis points you have the honor as an investor of paying the german government 26 basis points for the right to hold their government bunds this is an all time low, minus

26 basis points. this is a reflection of some of the negativity that exists out there and increasing pressure on the ecb to do something about the situation in europe. also just want to point your attention to ten year u.s. treasury notes as well, trading at 2.06. if you remember six months ago, who would have thought we would breakthrough 2% before we breakthrough 3%. that's the picture today lots of fear gripping the market lots of concern about the inflation narrative, demand narrative and we have oil in the backdrop as well and it is affecting the flight to quality. let's talk about the safe havens one in particular that i've been looking at today, gold got gold breaking through the 1350 level, trading up $13 higher on the session. 1% higher today. looking at some data from standard charts, inflows this week into gold have been the highest for the whole year since the beginning of january and indeed a lot of money is going into this commodity because of

concerns about the macro environment, geopolitical concerns, and then again fed cut expectations, weaker dollar, all of those things helpful. keep an eye on gold, moving to the upside, dollar yen, bid for the yen currency today, risk off, makes sense we're about a quarter of -- almost .2 firmer when it comes to the japanese yen. swiss frank, talking about the strong midstrength of the swiss frank and s&p didn't push back too much yesterday and their communication for the market we continue to see inflows going in there safe havens very well today. stay with us coming up next, we're going to be in luxembourg and this is ahead of the eco meeting stay with us unpredictable crohn's symptoms following you?

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mmm, mmm, mmmmm. ball. ball. ball. awww, who's a good boy? it's me. me, me, me. yuck, that's gross. you got to get that under control. [ dogs howling ] seriously? embrace the mischief. say "get pets tickets" into your x1 voice remote to see it in theaters. welcome back to the show china has warned the united states not to pass legislation that would call on the u.s. secretary of state to issue an annual certification of hong

kong's autonomy. lawmakers floated the idea in response to the crisis in the region over proposed extradition bill meanwhile, banks have reopened branchs in hong kong following the violent protests and more demonstrations are planned for the weekend. meanwhile, eurozone finance ministers stepped up calls for italy to make concession on its rising debt in an effort to bring the country into line with the eu fiscal rules. sylvia joins us from luxembourg. what is the latest on this ongoing italian saga >> well, the message from the finance ministers has been very clear, they told me here that they want to see italy following the fiscal rules, to respect that threshold, in the european treaties at the same time, though, they also expect the italian government to come to an

agreement in the coming weeks and we cannot discard that possibility. we did see that happening back in the fall when the italian government and the european commission were at odds about the deficit for 2019 but i've spoken to the vice president of the european commission, a couple of minutes ago, and he said right now it is up to italy to implement necessary steps in order to avoid having european commission stepping up its scrutiny on the italian economy. >> now i would say it is for italy to come forward with substantial correction of their fiscal trajectory concerns, both this year and next and also in line with afc statement, we stand ready to take into account additional elements which italy may be bringing forward >> yesterday i also spoke with

another commissioner who is in charge of economic affairs and he did say that he wants to see italy changing its stance to present new data, new commitments, that will avoid having the european commission opening up an official excessive deficit. let's see what the italian government is going to do in the coming weeks, let's see if we'll have changing policy there. >> sylvia, the chairman of the health budget committee came up with this plan, proposal a couple of weeks ago, that would address one of italy's main issues which is the very high levels of debt, the second most indebted country in the eurozone, by issuing mini bots and sold some of the debts they have indebted to the italian population as well as encouraging productivity so this plan has taken market by

storm. i believe you also had a discussion about that yesterday in some of your meetings. >> we know some supporters of this idea believe it will help reducing the country's debt, but there is also quite a lot of criticism surrounding this idea. some people believe some analysts have told me that it could be a way for italy to exit the eurozone and, of course, that sparks fears across the different european institutions across the different european capitals. so i asked yesterday christine lagarde whether she actually agrees with this discussions that are happening in italy. let's take a listen. >> on this strange financial instrument that has been developed in italy, we think there are many better ways to actually deal with the payment of areas it does not require the creation of such instrument

bonds, you know, italian bonds could absolutely do the job. so as to, you know, the enforceability, legality questioning of that, it is for the european institutions to decide, but in terms of financial and economic impacts, we think there are well known, well identified, legal framework, of that is known, accepted and understood. why bother >> christine lagarde there, the managing director of the imf, calling this negotiation, this discussion in italy about many of the ods as a strange instrument and questioning whether italy should be focusing on this matter, when this is actually other instruments that would help the country reducing its high level of debt let's see how this is going to evolve in italy, in rome, and how perhaps the markets will react to this ongoing

discussions. >> definitely. to her point, looking at a chart of italian ten year, trading at the lows in yields for the year. perhaps she is right, perhaps there is appetite from the investor commune toy buy up italian bontds thank you for bringing us the latest from luxembourg. coming up on the show, it is the biggest date on the calendar for the aviation industry. a lock ok at what to expect at paris air show right after the break. the first survivor of alzheimer's disease is out there. and the alzheimer's association is going to make it happen. but we won't get there without you. visit alz.org to join the fight.

good morning and welcome to "street signs. i'm joumana bercetche and these are your headlines european stocks open lower, more signs of weakening in the world's second largest economy with industrial output growth cooling to a 17-year low european chipmakers sank after broadcom blames the u.s./china trade war and restrictions on huawei for a global slowdown in chip demands. oil prices pull back after a big surge as the trump administration blames iran for

tanker attacks in the gulf of oman, while tehran denies the claim. >> no economic sanctions -- disrupt global oil markets and engage in nuclear blackmail. >> luxembourg, and one message for italy, respect the block's fiscal rules >> i think it would be wise to seize the hand given by the commission and take the adequate measures to fix the issue. well, there is a lot of red on the screen today in europe. let's take a look back at some of the price performance in the asian equities overnight you see for the most part we are also trading very much in risk off territory. the shenzhen composite in china is down 1.8% on the session. shanghai composite almost down 1% as well

so very much in the red, capping off the week of fluctuations to end the market, trading heavy, of course. this is on the back of latest developments, but this time on the macro data front let's go over some of them, the chinese property sales jumped by the biggest amount since october 2017 industrial output growth unexpectedly slowed to a 17-year low during the month and the latest sign of slowing demand. happy to see that eunice joins with us more and breakdown of numbers. chinese markets are not taking the data that well this morning. >> no, absolutely not. there is some speculation that the numbers had been delayed because they had been delayed by five hours in order to avoid a complete pummeling of the markets today. as you had said, the numbers looked pretty weak today just more evidence that china's manufacturers are getting hit. the reading for the industrial

output figure really stood out because it was the weakest reading since 2002 the fixed asset investment also cooled down. there was some hope that the investment number would look a little bit better, but not so, so this has been just raising expectations that policymakers here will have to roll out new measures in order to stabilize the economy. now, the bright spot was the retail sales figure. it came in with growth at 8.6% this was expected somewhat because the previous month in april, the 7.2% number was the worst that china has seen in 16 years. so there had been expectation of recovery some of that analysts say is because of higher inflation, could also be because the government has been rolling out incentives to try to get people to buy more stuff. but, still, a lot of concern now about the out-like for the second half of the year. especially because the trade tensions with the united states don't look as though they're going away anytime soon. still a lot of uncertainty as to

whether or not president trump and xi will be meeting in a face to face bilateral at the g-20. president trump has said himself that he plans to meet with president xi, but overnight the white house economic adviser larry kudlow had said that the white house expects president trump to meet china's president at the g-20, but a meeting has not yet been formalized. that hasn't been instilling a whole lot of confidence in people as to whether or not the two are going to be able to meet and work out a truce, which is seen as the best case scenario at this stage. >> that's probably trumping, excuse me for the pun, other market indicators now in china, all about the g-20 meeting thank you for breaking down the numbers for us that was eunice live in beijing. to europe, a chipmakers here are struggling after broadcom cut the yearly revenue forecast by 8% as the u.s. company warned

of a global slowdown in chip demand the trade war and restrictions on huawei were, quote, creating economic and political uncertainty. huawei accounted for around 4% of broadcom's total sales last year over 600 u.s. companies have co-signed a letter urging president trump to resolve the trade war with china the companies including walmart and target said tariffs are hurting american businesses and consumers. the warning is part of the national campaign, tariffs hurt the heartland, which sent many letters to the trump administration and comes ahead of a possible meeting between trump and chinese president xi jinping at the g-20 later this month. certainly something to keep an eye on moving back to the continent, again, the biggest aerospace exhibit on the calendar, the paris air show, kicks off on monday. for major manufacturers, airbus and boeing, it cannot come soon

enough very happy to bring in the head of the industrials equity research great to have you with us. how is sentiment going into the air show as i was saying, it can't come fast enough for boeing and airbus and boeing has been in the news for first couple of months of this year. tell us how is sentiment going >> i think sentiment is mixed. airbus will put on a good show they always do at paris. their fifth year anniversary they're also launching the a-320 xlr. you have probably around 300 orders there boeing may be slightly more quiet. but also i think oems went to more about green aviation. >> those are the major themes. let's talk about the interplay between airbus and boeing. do you feel airbus has benefitted from some of the woes that have been facing boeing on the back of the 737 max

incident >> i think it is difficult to say that certification is something very serious that the industry takes on and has to digest first and certification authorities will affect both manufacturers also short-term we haven't seen any airlines switching from one to the other one so we would see over time when the max comes back in service. >> equally there are airlines outstanding orders for deliveries with the 737 max. what are airlines doing in the absence of them being delivered. do they have contingency plans here, flying some of the old planes how do they deal with that >> they fly more of the existing fleet, sometimes been a little bit of a slowdown on demand. that helps to mitigate this. we haven't seen yet planes coming out of storage because generally people think the 737 max will be temporary. you're not going to take a plane back from parking, spend a lot of money on it, if it only lasts six months to a year it could happen if the situation

gets promoted. >> back to the granular numbers, it looks like a decent momentum for delivery of planes in may, higher than expectations are you expecting that to continue into the latter half of the year >> we think the q2, q3 will be better q4 was strocng it was a last push to finish online with the numbers. maybe this year the q4 will be more balanced. but it is -- airbus is making good progress on the deliveries and probably that's also why they won't allow the xlr. >> you mentioned the begin of the chat, one of the bigger themes that may be discussed and very important theme is that of turning green and you wouldn't associate the airline industry with turning 13% of all transportation related emissions and certainly

there is an increasing amount of public awareness from the younger community mostly and from businesses about our carbon footprint. so how is that going to impact the aviation industry in coming years? >> i think aviation industry is actually going to be a bit more proactive in embracing this than other industries like autos or shipping the green market or smaller planes, we reckon, is worth $170 billion from delivery starting with first plane in 2028, which is not that far out, actually. and you would have 16,000 deliveries market and you would have planes taxiing on electric power, landing with electric power and take off would be shared so jet engine and electric and cruise is jet engine. >> how close are we to that actually happening you said just now that it will be easier for the aviation industry to embrace it everything you hear about autos, even today, for example, they're

doing an ipo, plan to invest proceeds on the rollout of the electric vehicle cars, there has been a recognition and push from the other side to get ahead when it comes to electric vehicles and more environmentally sustainable products of the future how much of an investment outlay is this going to be and entail for the aviation industry. looking at it from the outside, they seem to be miles behind the auto industry. >> so we are, you know, behind where autos is, i think we can move very fast, given billions of dollars invested in r&d it will be a big thing, you're going to start to see that picking up in the industry you have 160 hybrid or electric initiatives out there. airbus and boeing and big engine guys have started investing in this and we think this new 50-seater plane could be worth $4 billion to development and the big guys have the money to go ahead and do this.

>> you say there are any particular names who are leading the push when it comes to those efforts. >> i would say airbus, boeing, utx, rolls-royce, they're pushing. more on the startup sides, they have some funding by the big oems they're credible opportunities there. >> all right celine, we'll leave it there something we'll be watching out for, and a theme with us for years and years and years. for more coverage from the paris air show throughout next week, head online to cnbc.com. we will be covering it extensively. a quick look now at how european markets are faring. just talking about chinese markets trading very heavy overnight from the sessions. some weak numbers there when it comes to fixed asset investment and industrial production, even though bright spots on the retail side when it comes to retail sales in china, but the

picture for europe is very much risk off mode. 2100, trading down .4, xetra dax down two thirds of a percentage point. the banks are very much in focus. let's switch and talk about foreign exchange, though the theme of the last couple of sessions has been weakness of the u.s. dollar. to date we're seeing the dollar trade sideways euro was flat at 112.80. firmer on the day. also seeing a bit of a flight to quality bid into yen, a tenth of a percentage point firmer and cable is trading yet again on the back foot, 12660 is where we're at now we're up at 127 handle a couple of days ago. there again. lots of questions about the political developments and whether or not everything that is happening in the uk right now may potentially lead to a harder form of brexit something we'll be discussing shortly.

okay in sports news, the toronto raptors have been crowned nba champions for the first time in their 24-year history. the raptors beat the golden state warriors by four points in a dramatic finish of the game six playoff. the raps gave canada the first ever championship title as the nation's only nba team setting off a celebration across the country. and switching to football, real madrid's new forward has been unveiled as the -- he joins madrid for a smooth 150 million euros and was presented before some 50,000 fans in the spanish capital. a loss for chelsea, a gain for real madrid there. coming up, boris johnson seals a first round win in the sv par

conservative party leadership race find out who's out coming up next

welcome back to "street signs. let's talk about some uk developments here. the former labor mp recently quit the main opposition party to set up the anti-brexit change uk group last week he quit that party following a poor showing in the european elections and he said he was wrong to think millions of politically homeless people wanted a new option on the ballot paper boris johnson sealed a commanding first round win in the race to succeed theresa may as the leader of the british conservative party he received 114 votes while the nearest rival jeremy hunt secured 43 villem joins us with more. boris johnson got more support

than anticipated he's clearly the favorite now. >> he was the favorite even before this, to be honest, among book keepers and pretty much most of the uk because of his high profile that's that makes this quite difficult to predict going forward. there are clearly still a lot of lawmakers inside the conservative party who do not want to see boris johnson as prime minister for the top job the question is whether those people can coalesce around one other individual candidate and because there are still six others in the race going into the end of this week, we have another couple of hours to wait until any more decide to drop out, not huge chance of that happening based on the statements of those still in the contest facing mr. johnson on sunday night, there will be one televised debate, another one on tuesday night, so far boris johnson is the only candidate not to commit to participate in those debates because this is not just about electing a new party, this is about choosing a new prime minister, his critics are saying

why shouldn't he open himself up to more public scrutiny given this is something that keeps the entire country involved. this is something that has a huge deal at stake for the british public as a whole. but, of course, in terms of the process, despite the tv debates, we'll have another round of votes on tuesday the candidates will need a lot more mps backing them in order to qualify for that round. that's going to be challenging to some of those who didn't fare so well yesterday. and then after that, we could have further votes if it is required to get you down to the two final candidates postal ballots go out to the end of first week in july. of course, we should have an answer to the question who the next prime minister toward the end of july. that will be very significant when it comes to brexit. that's been the major, major issue of british politics over the last two years, brought down theresa may and essentially will bring a man to power because the two women in the race were eliminated yesterday. >> that's unfortunate, for the

ladies out there. still many other hurdles to get through before we get confirmation on who the next leader will be i want to bring it back to boris johnson's platform and he has said repeatedly whatever happens, the uk is going to leave the eu on october 31st, even if that means a no deal brexit. he also seems to think he can extract some form of concessions out of the eu. we have an eu summit coming up next week. if they go back and reaffirm what they have been saying for the last six months, the withdrawal agreement is not open to renegotiation, what does that mean for the investment community out there? is that making us one step closer to that no deal brexit that everyone seems to be afraid of >> interesting, isn't it you go back a couple of months after the delay to brexit, the end of march, a lot of investors, a lost business owners, huge amount of

uncertainty, they did breathe a sigh of relief with a new prime minister, it may not be that they have a choice this is one of the really crucial issues about this leadership contest is that two of the candidates, boris johnson and dominic robb, the two most pro brexit, hard brexit candidates, have refused to categorically rule out the idea of suspending parliament's role and pushing through a no deal brexit just to meet that october 31st deadline. they haven't said they will do that, but they haven't ruled it out. that is something that should make investors concerned if that were to happen. >> absolutely. we have seen a bit of a dip in the pound over the last 24 hours. thank you for bringing us the latest from westminster. our top story today, the u.s. blamed iran for attacks on two oil tankers in the gulf of oman u.s. central command has released footage it says shows an iranian patrol boat removing

an unexploded mine from one of the vessels. iran categorically denied the accusations. just a quick look at the price of oil, yesterday we did spike up 4% on news of the attacks, today trading a little bit softer wti track backing to $52 it has plummeted in the last couple of weeks or so, trading at a five-month low. that on the back of the weak oil demand outlook but notwithstanding some of the geopolitical developments in the last 24 hours. let's bring in an expert here and neil roberts, ahead of marine underwriting at lloyds market association, very interesting to hear from an insurer's perspective how you're thinking about the geopolitical developments over the last 24 hours and also might be worth just reminding our viewers that this is the second type of -- this type of attack in the last month. they seem to be happening with

increasing amount of frequency >> certainly we are aware of tensions in the gulf and have been for a long time not only since the '80s with the tanker war, but up u.s. sanction program designed to exert pressure on iran last month, there were four incidents in a single day. and it was the decision of the london insurance market to list the area as an area of enhanced risk that means that any vessel trading to that area has to advise their underwriters they're going, they have a chance to assess the risk on the basis of that specific vessel. >> and is it right to assume that insurance premiums have gone up to reflect this new situation, this new categorization of the middle east >> there has been an element of reassessment of risk exposure and it would be prudent for underwriters to re-adjust the premiums to tankers,

particularly, and with the latest attack no doubt there will be further reassessment going on it will be up most in the minds of cruises as well as a concern going forward. >> it is one of the busiest shipping lanes in the world when it comes to not just oil shipments, but also just general cargo close as well. are you detecting a change in behavior when it comes to ship owners and lack of appetite to pass through that part of the world given how risky it is and how costly it is now on the back of these higher insurance premiums in. >> certainly concern they're reassessing. they are still trading trade was is constricted by the u.s. sanctions, particularly on the use of the dollar. we would expect to see much caution among owners, but for the time being trade continues it is a major oil route and 40% of the oil comes through there >> so 40% as you said, 40% of oil shipment comes through those shipping lanes in particular

you just mentioned that the premium for shipping in na part of the world has been up what type of pass through would you expect into ultimate oil prices here if you go on historical standards >> not directly connected. we saw the oil price move yesterday that will feed through much quicker to the consumer than any particular insurance increase. >> generally speaking, when you think about the insurance environment and just taking yesterday's geopolitical developments aside, have insurance premiums been going up anyway due to the slowdown that we're seeing in global trading activity due to the tariffs, the macro developments going on between the china and u.s. is it having an impact on the shipping community as well and that people are worried that, you know, deliveries in the future may not be as big as they were in the past due to the tariff environment >> quite a wide question directly on the shipping

insurance not so much. political risk perhaps contract frustration would be a concern there. but in terms of direct shipping, no, not really for a considerable period, the market has been depressed, very competitive market, set against dropping freight rates so it has been depressed for five years, i would say, so it is catching up >> all right so on that note, we'll leave it there. thank you for taking the time to chat with us, neil roberts, head of marine underwriting at lloyds market association. jeffrey gundlach believes the odds of fall naging into a recession is a 45% chance. he says consumer indicators and the yield curve are among the signals pointing to a sharp downturn gundlach thinks the federal reserve probably won't cut rates in june, but says the central bank is likely to make a move

later this summer. certainly that is what the fed interest rate market curve is expe expecting, 2 1/2 cuts by the end of this year morgan stanley recorded the largest ever one month decline, the figure which captures turning points in the economy fell to the lowest levels since 2008 the bank said the indicator represented a sharp deterioration in sentiment across sectors just before we head out, a quick look at how u.s. futures are locking. we have a very heavy risk off session today in europe. and it looks as though in the u.s., mildly off with the three majors trading in the red, all eyes on u.s. retail sales data as well on the macro front that is it for today's show. have a wonderful weekend "worldwide exchange" is coming up next. it was here.

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good friday morning. it is 5:00 a.m. at cnbc. here is your top five at 5:00. ceos blasting the trade fight. more than 600 companies urging the president to stop the tariffs. we have shocking new video to show you this morning. no bone to pick here online pet product retailer chewy shocking as the ipo rush rolls on a real estate rate shock, why tumbling rates could have a huge impact on the average american single biggest purchase of their lives. and congratulations toronto. the raptors winnin