good morning welcome to "street signs." i'm joumanna bercetche >> i'm willem marx here are your headlines. president trump confirms he will meet with xi jinping at the g20 summit but blackstone's ceo steve schwarzman tells cnbc he's not optimistic a deal will be reached. >> i think that's extremely improbable because there's been almost nothing happening since may. >> asian stocks follow u.s.

equities higher on renewed helps elsewhere for a potential u.s./china trade deal. that confidence fails to spark european market. president trump takes aim at jerome powell ahead of today's policy meeting saying he could consider demoting the central bank head. and trump also blasts ecb president mario draghi and his stimulus plans that sent the euro lower against the dollar. >> there are risks mainly because of brexit, also because of the trade conflict. even the persistence of these risks are a risk in itself president trump has increased pressure on the federal reserve to cut interest rates. bloomberg reported the white

house in february examined the possibility that the administration could demote jerome powell from his role as fed chair. the news agency reported that the white house legal review had made a case to replace powell as fed chair but said the move would be open to a legal challenge. trump also hit out at the ecb after mario draghi hinted at further stimulus for the eurozone draghi's comments prompted the euro to slide against the dollar trump tweeted a soft euro made it unfairly easier for them to compete against the usa. the president also said that europe had been getting away with this for years. here is how trump addressed those twin topics, the ecb and jerome powell's position in comments outside the white house yesterday. >> let's see what he does. i can tell you that draghi and the eu, if you look at what's going on with the euro, they have a much different stance than our folks do.

as you know, we did something today that was very dramatic frankly it helped that part of the world. we'll see what happens they'll be making an announcement pretty soon we'll see what happens i want to be given a level playing field. and so far i haven't been. >> annette joins us live from sintra where she continues to talk to economists and central bankers. >> it's an interesting day here and was an interesting day yesterday with a lot of surprises coming from the ecb, which prompted president trump to even react across the atlantic as we just heard. i'm now joined by the chief economist of the imf thank you very much for joining us >> thank you >> it's an interesting time. two months ago you said there will be a delicate moment which

we are currently witnessing. so how delicate is it? >> yes we were concerned about something like this playing out when we presented our outlook in april. things look precarious at this point in time. while we've seen tentative signs of stabilization in the global economy and our projection is for recovery in the second half, we think there are many headwinds to that recovery so we are quite concerned. >> one what are the main headwi? >> those on the trade front. the tensions between the u.s. and china. the escalation of that is an important factor, including it moving over to technology. that's another important factor. second, near our home here is brexit the possibility of a no-deal brexit remains we have to wait and see how that plays out. and lastly we are living in a world with high levels of debt

both in the private and public sector right now it looks like that situation is fairly easing around the world, and in that situation there could be distress >> on the ground pem are argople arguing the fiscal side needs to do its job, but you would say that's dangerous now because we already have a high level of debt >> there are countries and the example we all like to make is germany, where we believe there is fiscal space, and there is good reason to invest right now for raising potential growth in education and infrastructure so we would see a good case that at this moment with very, very low interest rates that countries that have this close space should use it. >> let's go to the trade war or trade frictions. what do you think?

even ifget an agreement, if there, did it already do substantial amount of harm that we are not seeing growth coming back >> the environment that has been created is one of flepd doutrems uncertainty. if you polled people around the world what is the biggest risk, policy uncertainty is a big one. trade is a big piece of it there could be an agreement in the near-term or maybe there may not be if there is, it's possible things will change six months down the line. so this kind of uncertainty is dampening business investment. investment is one variable we're seeing not recover yet let's move on to the central bank policy. clearly they have shifted tremendously since the end of last year. how credible is action from a central bank which has interest rates at zero and has a big

amount of quantitative easing? >> there is some space left. with unconventional policy in europe, you could use more conventional policy in the u.s. because there's still some scope in terms of interest rate cuts, but it is indeed the case. i'm sure monetary policymakers will say the same thing, there's only that much monetary policy can do everybody is closer to their limit. other measures would be required including on the fiscal side >> how dangerous is the rhetoric from president trump in terms of safeguarding the independence of the central bank clearly he's trying to push central banks to cut -- or his central bank, as he would call it, to caught rates? >> we constantly emphasize the importance of independent central banks especially on the operational side, when it comes to making policy decisions and that has to be preserved there's a lot of benefits that come from the independence it's important to maintain that. >> do you think a little bit of a higher or lower exchange rate

will make or break the competitiveness of the united states >> most empirical evidence will tell that you will not be the case >> let's look at the wider picture for the eurozone you were referring to brexit as one of the big risks it seems policymakers seem to underestimate that risk. >> there is a lot going on in the world right now in terms of the various risks popping up in various scenarios. as october rolls around i'm sure the brexit issue will become salient if not before that but it is an important issue it matters a lot to the uk economy, maybe less so to countries in europe. if you take a country like ireland, the consequences could be significant >> what would your best advice be like? a deal stay in the union or -- >> when we estimate the costs of a brexit, in our scenarios

it's -- there is a cost. it's minimized if the uk remains in a free trade area with the rest of the european union so that would be one positive scenario >> thank you very much for your time enjoy your stay here in beautiful sintra >> okay. with that, i'm sending it back to you motor co more to come from us on the ground today will be the day they're discussing the challenges ahead for the european monetary union on the ground in sintra. back to you. >> very interesting insight there from the chief economist from the imf there has been a very dovish tone prevailing in europe over the last 24 hours. not least stirred on by comments by mario draghi. one of the big haven't take res of that is what happened to fixed income you have seen a huge rally

behind me is the ten-year treasury note, trading at 2.07 but the ten-year bund, german bunds are trading at minus 30 basis points an all-time low. we rallied four or five basis points yesterday a huj rge rally spurred by hope that the ecb is looking to cut the rates. gilt at 84 basis points. and then ten-year italian yields, 2.14 now we have come off a bit this morning. the real question is whether or not the ten-year italian-year-old or the u.s. treasury yield will be the first to break through 2%. switching on to european markets, in equities the mood is not as pretty. we had a strong session overnight on hopes that there will be a meeting between the president of the united states and china at the upcoming g20

meeting and of course on fed and what they may do later the mood is negative today in europe ftse 100 down 0.2% xetra dax down 0.10. a couple sectors weighing down here the airlines industry, more negative news there as well as the retail sector. that's the mood for europe, slightly negative compared to the price action we had yesterday. >> stay tuned for more of cnbc's coverage from sintra the vitor constancio joins annette when we come back. wanna take your xfi to the next level?

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that's xfi advantage. make your xfi even better. upgrade today. call, click or visit a store. president trump kicked off his 2020 campaign with a rally on tuesday night in florida. he told the crowd of around 20,000 supporters he's prepared to walk away from a trade deal with china if it's not "fair." >> we have never taken in tenceten cents from china we would lose 5$500 billion a year with china. we rebuilt china they've done a great job

but they took us for suckers, that includes obama and biden. they took us for suckers >> the u.s. president had already written in a tweet he would hold an extended meeting with xi jinping at the g20 summit next week in the last hour china's foreign ministry struck a positive tone on reaching an agreement with trump saying a trade deal is in the interest of the whole world. and our colleague, eunice yoon filed this report from beijing >> president trump is presenting himself as a tough guy on china, but here in china the state media has been painting president xi jinping as the one with the upper hand. official news out lets pointed out that president xi took the phone call at the request of president trump and that he is willing to meet next week in japan. the papers have been reiterating

how the u.s. side attaches great importance to the u.s., china trade cooperation and hopes the two sides can start communication. a meeting is welcomed news, but it's unclear whether it will lead to a trade deal some believe a best case scenario would be a trade truces for a couple of months i speoke to some people on the chi he these sinese side and tha is still wary. the way it's been explained to me is what is to stop president trump from doing what he did with mexico with china, and that perhaps it's better to wait things out stocks in the u.s. and asia

surged on hopes in a break through for those discussions. but steve schwarzman said this morning in london that he did not have high expectations himself. >> i think that's treeextremely improbable there's been almost nothing happening since may, when the discussions ended. so this would be a restart with a senior frame work, then you would see what happens >> so that was the ceo blackstone saying a deal is unlikely at the upcoming g20 let's bring in maya from thread needle investments great to have you on the show. how are you thinking about the upcoming g20 meeting in the context of the sideline discussion between president trump and president xi does it matter for markets

>> we need to take a step become and remind ourself there's are three trade wars, there's the u.s./mexico trade war, u.s./china and then the u.s./european trade wars, where i think we'll have some resolution or certainly some outcome by november. we think that on balance that the threat, if you'd like, of trade wars probably persist until the last of those. so until november. now, around osaka, i would suggest that there's a little bit of asymmetry here. i think insofar as the best outcome or a good outcome would be a postponement of the tariff increases. and the alternative would be we would have a really large tariff, 25% on a large chunk of mainly consumer oriented chinese goods. so the risks are asymmetric here the consequences are meaningful. >> that's true

the consequences are meaningful. we spend a lot of time discussing the impact of trade war economically on the world. we just heard from the imf chief economist who said one risk is an escalation of the trade war you look at markets, the s&p is 1% away from all-time highs. central banks are in the driver's seat here >> absolutely. they've been in the driver's seat here and they have been the driving force for markets sense october of last year, between october and december when we had that selloff it was all about discount rates rising, central banks turning more hawkish the rally so far this year has been driven by falling discount rates. those expectations around central bank easing while the risks have increased so at thread needle, from an asset allocation standpoint we have been de-risking portfolios

and lightening our portfolios for precisely that reason. >> you mentioned rate expectations i wanted to ask about that do you think investors looking for consequences of today's policy meeting at the fed, do you think they could be forgiven for thinking there's a distinction in how the markets are predicting rate movements in terms of separate markets? if you look at the fx market and the fixed income market, they have a slightly different view from the yield in the bond market >> i think currencies reflect a whole host of things rates are one of those things. what i would say is that i think markets to our minds have gotten ahead of themselves in the rate cuts they're expecting this morning before i came here, you know, i think we're looking at slightly over 100 basis points from the u.s. fed in terms of market pricing.

the your euro/dollar curve is slightly inverted. we do expect that scale of cuts. we think the dollar is likely to be somewhat weaker rather than stronger i think a nice way of thinking about the dollar is an option smile framework. the dollar tends to do well if you have risk off, which trade wars, a lot of what we're talking about could generate, or if the u.s. economy is really meaningfully outperforming everywhere else, so money flows into the u.s we're not in that scenario, but the other end, risks rising and the dollar gaining from a safe haven bid is a risk out there that we need to be mindful of. >> the other risk, if we're in the center of that option smile, the u.s. economy plods along the fed turns more dovish. that puts weight on the u.s. dollar i want to take it back to the asset allocation

you said you had been derisking away from equity portfolios. it's he easy to see after getting a 20 basis points rally that fixed income could have been a very good trade do you still see upside there given that central banks are really turning on the heat when it comes to that very dovish policy >> well, i think insofar as we don't share the markets expectations of the depth of rate cuts, i think the answer will be no more broadly from an asset allocation standpoint we do question the role of core government bonds in portfolios i think for the last 35, 40 years there's been a huge benefit from owning government bonds. the nice thing about a government bond is you're shown what you're paid the bad thing about a government bond is if 2% is a number, that's what you're locking in. you're not locking in much by way of returns as you showed in europe, you're actually paying for that privilege. if you hold a bund to maturity,

you are almost certainly locking in a loss. >> just to put it into context, are you putting a higher proportion into cash at this point in time and waiting to see what happens with the rollout of the g20 meeting and the upcoming fed and the message that they deliver? >> we like from a broad asset allocation perspective we like credit, an asset that does nicely at this point in the cycle. we like uk property. when neutral equities, neutral cash, and we are underweight or cautious on core government bonds. >> earlier in the show we played video of president trump talking about jerome powell, and news agencies in the u.s. have been reporting that early this year his administration was explorin the possibility of demoting powell as chairman how concerned should investors be at apparent threats like that to central bank independence >> i think it is a threat that's worth being mindful of, if you'd

like we do have a pretty long history of independent central banks does it make it harder for jerome powell today in terms of the language he uses there's going to be pressure from some quarters to cut rates, there's going to be a lot of people watching to make sure he doesn't bow to that pressure what do you expect out of the language from the policy meeting today? >> there's a lot of focus for today on whether that word patience is removed. i think -- i don't think many people -- we are not expect iin the fed to act today i think a failure to strike a slightly more dovish tone and keeping with the commentary we had from the fed prior to the blackout period would create a little bit of a risk in terms of financial conditions you who have a bit of risk off and tightening in financial conditions if we didn't get that dovish forward given the market pricing. we are not expecting the fed to

act on that today. there's lots of parallels being drawn with '95, '98, will we get that insurance cut from the fed. i just point to a little bit of caution on that. i think we're in a different place today than back then real rates are much lower today than in '95 or '98 economic activity is firmer than it was in either of those periods. but equally, you know, we do think there will be some easing. i don't think the 100 basis points that's been priced into the u.s. is what we expect to be delivered. i want to switch tact completely and ask you one final question about cable and about sterling, going into october 31st deadline we had a lot to of developments over the last 24 hours sterling has slowly been creeping lower we're actually down at a 125 handle we were at 130 not long ago. do you think investors are pricing in some possibility or

at least a higher possibility of a hard brexit or no-deal brexit come october 31st given the language we've had out of potential contenders for prime minister >> i think all options are still on the table i think sterling, if you'd like, is the more sensitive to those options. i think a change in leader is certainly one thing that is going to happen. a change in tory leadership doesn't change the parliamentary math there is no consensus in parliament as we've seen already for any options on the table but clearly markets are pricing in an increased chance of a no-deal brexit, and portfolios will be mindful of sterling risk reflecting that. >> something to keep an eye on thank you very much for joining us an extensive chat about some macro risks ahead.

coming up, find out what sir martin sorrell thinks about boris johnson's bid to become next prime minister. (danny) let me get this straight.

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welcome back to "street signs. i'm willem marx. >> i'm joumanna bercetche. these are your headlines president trump confirms he will meet with xi jinping at the g20 summit but blackstone's ceo steve schwarzman tells cnbc he's not optimistic a deal will be reached. >> i think that's extremely improbable because there's been almost nothing happening since may. >> asian stocks follow u.s. equities higher on renewed helps elsewhere for a potential u.s./china trade deal. that confidence fails to spark european markets president trump takes aim at jerome powell ahead of today's policy meeting saying he could consider demoting the central bank head. the imf chief's economist says independence has to be

maintained >> we emphasize the importance of of independent central banks. and that has to be preserved and trump also blasts ecb president mario draghi and his stimulus plans putting the euro under pressure >> there are risks mainly because of brexit, also because of the trade conflict. even the persistence of these risks are a risk in itself the latest uk inflation data has been released. for the month of may the cpi is up 0.3% against the previous month, up 2% against the previous year. that matches the reuters expectation of a 2% incarerease year-on-year

uk april house prices are up 1.4% year-on-year, that's against 1.6% year-on-year back in march consume r prices are up 1.8% year-on-year, slightly higher than the poll but the left since back in september of 2016. slightly higher on inflation, that gives ammunition to some of the hawks on the mpc committee going into the bank of england meeting tomorrow we have -- it has been a heavy central bank week. the bank of england does meet tomorrow it will be interesting to see if there's a split there. this is the picture for fx markets. euro was trading on the back foot yesterday after those dovish remarks out of draghi they have recovered ground we're back at 1.12 what's interesting is even though we've seen a huge rally in fixed income, the currency market is not reacting to the

dovishness coming out of the ecb. a bit of a bid into yen currency safe haven and cable has been trading a little bit softer. the trend over the last couple of weeks has been softer seeing a bounce on higher inflation. but still trading around 1.25. lots of questions heading into october 31st and what that could mean for a trade deal or any deal with the eu depending on the language coming out of the possibility prime minister contenders let's talk about european markets. we had a better session overnight for asia not the case for europe. even though some of the sectors such as basic resources and autos are doing better the theme is read across the board. ftse 100 down 0.30%. xetra dax down about 0.10. lufthansa was a big name that dragged down this index. that's having repercussions on other airline names this

morning. ftse mib down 0.25% today. huge fed meeting today lots of questions that investors will be asking all the three makers are seen opening up. geo van vanni tria told the financial times that italy doesn't need other currency instruments, that puts them at odds with mateo salvini who said rome will push ahead with bills that will allow them to function as a currency. the remaining five candidates who are battling it out to replace theresa may as leader of

the by theish conserritish cons. boris johnson who topped the second round ballot, he came under fire on a range of issues from islamophobia to brexit. the contenders clashed over the prospect of a departure from the eu without a negotiated deal johnson defended his position. >> we must come out on the 31st of october because otherwise i'm afraid we face a catastrophic loss of confidence in politics politics need to take their responsibilities and act maturely and soberly in the interests of democracy and get this done. >> if i got to the 31st of october and there was no prospect of a deal to get us out of the eu, then i would be out, leave without a deal if we were nearly there, i would fake longer. >> if we're almost there on october 30th, we just need an

extra couple of days to do it, who could object to taking an extra 24, 48 hours to get it over the line. >> i disagree with jeremy and michael on this we've got to learn from our mistakes. one mistake we've made is having this flexible deadline if you don't have a deadline you don't concentrate minds. >> it is not going to be possible to negotiate a new deal with the european union by the 31st of october. >> in the end we are in a room with the door. the door is called parliament. i'm the only person here trying to find the key to the door. everybody else is staring at the wall shouting believe in britain. >> martin sorrell has told cnbc that he had a good working experience with boris johnson and speaking to karen he warned that chances of a no-deal brexit would increase under his leadership >> depends on which boris turns

up i ran a ceos committee with boris when he was mayor of london for four, five years, he was excellent. there's a view if boris is not a detail man -- that reminds me of some things you hear about president trump, doesn't take to detail briefing. but if you surround him with good people, people who are diligent and deal with the detail, maybe it will not be quite as bad as some people portray him. my experience with him was pretty positive. i had very little if any contact with him as foreign secretary or beyond in terms of his mayorship, he did a good job >> boris johnson said his strategy was to deliver brexit and -- >> i think he'll delay i don't think it would be physically possible to determine whether we will have a deal before october 31st. when you think about politici

politicians, when they're faced with a problem what do they do they delay the evil day. the odds are we will get a delay. what about no-deal >> it's a possibility, but not on october 31st. it may happen. the probability is increased with boris if he is the leader or becoming the leader, it is still unlikely to happen there will be some deal worked out. the question is the strength of it >> european commission president jean-claude juncker is set to speak in sintra. we will bring you that speech as it happens we are looking at images of a dark room now. hopefully jean-claude juncker will lighten things up bruno lemaire says he asked g7 central bank heads to write a report on facebook's new cryptocurrency libra because of his concerns that it could threaten privacy separately maxine waters has accused facebook of unchecked

expansion into the lives of users. facebook says it looks forward to answering all of these worries. elizabeth joins us for more. looks as though already that the regulators are circling around facebook and saying, not so fast with your cryptocurrency idea. >> we got some quick reactions after facebook unveiled its cryptocurrency called libra yesterday. this has been a project in the works for a while at facebook. they unfaveiled this as a consortium with about 27 other tech companies this will be governed under a non-profit in switzerland. facebook trying to distance itself from the direct governance of this in a white paper the association put out they highlighted importance of cooperation with regulators saying the success of this project depends on cooperation in the financial system. we got an early reaction from mark carney on this yesterday. take a listen. >> anything that works in this world will become instantly

systemic and will have to be subject to the highest standards of regulation. so that's operational resilience including sicyber, counter terrorist financing protections, it would include some being effectively an open platform so that others can join and it's seamless, data privacy would be required, then as central banks we have to look at how the systems are evolving to ensure we can deliver what people expect >> facebook defending how it's going to address privacy concerns around this new cryptocurrency we know it doesn't have the best track record here's what the head of the project, david marcus, told cnbc yesterday. >> we don't have control over the network, don't have control over the currency, we'll have control over the wallets that will operate in facebook and on top of our network it's not the point to use data

on calibra, the wallet, to market to you. that's not the point at all. that's not the way we'll monetize the principal way this will accrue to facebook in the short-term is basically -- not in the short-term, but after this network launches and is adopted by lots of people, which will take time, is actually going to be removing friction for transactions between the 90 million small businesses that we have on the platform and the 2.7 billion people who use our product. >> facebook emphasizing the impact this product could have on the unbanked, people who don't have access to bank accounts saying they can provide payment services for those people it remains to be seen if those people will sign up for this service. >> the stock reaction yesterday was underwhelming. the stock ending a bit weaker. thank you for breaking that down. european commission president jean-claude juncker has taken to the stage at the ecb forum on central banking in

sintra let's listen in. [ speaking foreign language >> too often we lose sight of how far we have come and the true value of that success today i want to stop the clock on six moments in time six lessons in history that have shaped europe and the european union as we know it. lesson number one, europe is a political project. the first moment in time goes back to the crisis of the european exchange rate mechanism in '92 this story starts one-year earlier, when as a finance minister i was in charge of the economic and monetary aspects of the conference this led to the master treaty of december of '91 which paved the

way for the single currency. this is a time in which there are only two survivors, the euro and myself two years after the fall of the berlin wall, the signing of the mastery treaty was a proud european moment. together with the launch of the european single counsel and the law of 1989, the mastery treaty was about creating a new future for europe it was about europe taking its destiny into its own hands as often in europe, our collective will was soon put to the test under the pressure of the markets, the united kingdom chose to leave the european exchange rate mechanism in december of 1992 to make the deal i had already

proposed -- that was in may of '91 -- i had already opposed to opt out from the single currency the year before. now the united kingdom was leaving the exchange rate mechanism. in some ways i believed this parting of ways was perhaps the start of the journey that led to brexit other countries also faced increased market pressure. in 1993, the financial ministers of germany and the netherlands also wanted to leave because they believed that economic fundamentals whereby far much stronger than those of france and others for me, as a young finance minister of luxembourg, it came with better fundamentals this put me in the uncomfortable

situation. our currency at that time was the belgian franc. though countr countries were le, luxembourg would be placed under pressure it was the british chancellor, dme kenneth clark, he woke us up he said in the room if you let germany and the netherlands go, you will never have the single currency personally i would like my br d grandchildren to be able to pay in the euro one day. the british chancellor, kenneth clark, a real statesman. he was right we had to find a solution and look at the biggerpicture.

this is what we did by widening the exchange rate mechanism from 2.25 to 15% to make the system less vulnerable to speculation it was a difficult moment. jean-claude was there. he was dreshirector of treasury. i had to convince the finance minister the merits of the central bank jean-clau jean-claude. he would say we are fiercely independent, i remember the moments we spent in luxembourg during that period of time the next day after this decision

it was determined it was the end of the single currency, but in reality it was the rescue of the single currency. at this point i have to make a solemn confession to a room full of central bankers while we were working to find the solution, the luxembourg government secretly printed 50 billion in a new and secret currency, the luxembourg franc we even put the image of a person onthe face of the bank notes in order to hide our intentions as much as possible nobody will believe that with the image of the old on it that

we would be launching a new currency in europe such action would be totally unthinkable, irresponsible, wrereckless now, but back then, relying on another currency and the risks to the markets we had to hedge ourselves against all eventualities. luckily the luxembourg franc never had to be used i'm standing here today decades later and i strongly reject this sort of behavior it was a well kept secret between the grand duke, the prime minister, and myself until we -- >> that was jean-claude junker speaking at the sintra conference, talking about some of the longer-term challenges faci facing your. tehran will not negotiate with the u.s. under pressure, the iranian president has said

rouhani said pulling out of some nuclear deal commitments is a minimum measure. opec has agreed to move its next meeting date to the beginning of jiuly, breaking an impasse with iran over the date. members will meet july 1st and will be joined by the rest of the oil ministers on july 2nd. the meeting is set to discuss the extension of production cuts hadley joins us with more from abu dhabi. we finally have a date >> we do it's like chris mtmas and my birthday all in one. we can finally plan our summers. what was behind all of this, there was a real push by these ministers to wait until after the g20, they were hopeful that there would be a u.s. president donald trump meeting with the chinese premiere, xi jinping it seems that's what they will

get. they are hoping pofor guidance when it comes to forward growth. we are expecting the saudis to push for cuts again. it was a blow when the united states decided to extend waivers for countries this year, and something that folks here felt like the united states pulled the rug out from under them. this is something they want to avoid going forward. this is all taking place against the backdrop of serious tensions in had region. one thing i want to mention s a rumor we've been hearing, it may be highly likely that the united states as part of the fifth fleet will end up taking payment to escort many of these tankers through the strait of hormuz that would change the game and seemingly be another win for president trump, you know he has stated over and over again while he plans to stand tough when it comes to tehran's nuclear work they have not made too much of a commitment beyond this 2,500 soldiers to the region other

than to say there might not be a reason to go to war just over tanker attacks >> hadley, thank you very much for that. president trump piled more pressure on the federal reserve to cut interest rates after bloomberg reported the white house counsel had examined demoting jerome powell as chair back in february when he was asked by reporters if he is still considering that possibility, trump said "let's see what he does." the fed will announce i latest policy decision at 20:00 cet. earlier in the show our colleague annette spoke to the imf chief economist in sintra and she said the federal reserve does have room to ease further >> there was some space left with unconventional policy in europe, you could use more conventional policy in the u.s. because there's the scope of more interest rate cuts, there's only that much that monetary

policy can do. everybody is closer to their limit. and other measures would be required including on the fiscal side certainly expectations are building ahead of the fomc meeting coming up later today. let's bring in lindsay piegza from steifel do you think powell will signal a rate cut >> i think the fed will take a softer tone in the june fomc statement, at least opening the door to the possibility of a rate cut is it likely they signal a calendar specific timeline no i don't think the fed wants to back themselves into a corner. it's unlikely they use language surrounding next month or july specifically again, they do want to acknowledge some of the weakness that is bubbling underneath the surface, and that growing disconnect between fed

expectations and market expectations as we've seen a maritally inverted yield curve clamoring for one if not several rate cuts this year. >> that brings me to my next question what are you expecting out of the dots how much lower do you expect them to shift? how many members of the committee do you expect to call for a rate cut >> i think we'll see a noticeable shift in the dots there's more dovish leaning members that will pull those dots lower specifically two to three members. but will it be enough to shift the median consensus that's the big question. it may not be enough at the june meeting. going forward, as we approach the end of the year, we could see a further shift in those dots as far as the june fomc dot plots, it's likely the median remains unchanged. but the dispersion and that lean towards a lore level of rates,

that should ease market concerns that the fed is digging in its heels. there is a growing faction among fed officials that are questioning whether or not this perpetual continuation of the expansion is sustainable >> i want to dig into the possibility of the language choices coming out of the fed. what do you expect them to say differently that might allay some of the markets concerns >> i do think there's a real possibility they remove the patient language as we saw from the chairman's comments earlier this month at a fed event, the chairman removed that longstanding patient commitment and instead focused on reiterating the fed's commitment to data dependency, focusing on the data, reassuring markets that should growth and inflation continue to disappoint, the fed is more than willing and able to step up and

provide additional accommodations so it's likely that we see that same sort of emphases in the june statement removing potentially that patient language >> lindsay, thank you for giving us your thoughts on the upcoming fed. no doubt an interesting one for investors. apple has asked some of its major suppliers to examine the potential costs if it were to move between 15% and 30% of its production capacity from china to southeast asia. that is according to the nikkei asian review apple is looking to restructure its supply chain amid ongoing concerns over the u.s./china trade war. even if a deal is agreed to between both sides apple will still push to diversify production in order to mitigate risks of centralized manufacturing in china. tune in to cnbc today when our u.s. colleagues will speak

exclusively with huawei's ceo. let's look at how u.s. futures are shaping up as we head into this all-important fed meeting. the three makers are err errs m around the flat line we had a big rally in fixed income the market is tugging between two forces here, one is the potential for the fed to sound dovish, but on the flip side optimism about the upcoming g20 meeting is providing some relief to stocks and to yields here that is it for today's show. i'm joumanna bercetche >> i'm willem marx "worldwide exchange" is coming up next.

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it is 5:00 a.m. here 5 p. 5:00 p.m. in china huawei punching back cnbc sitting down for a rare and exclusive interview with the ceo and founder of huawei. why is he brushing off the financial impact of the u.s. blacklist. nine hours until the fed rate call. will your borrowing costs drop again? and let's see what he does trump putting fed chief jerome powell on notice with that comment yesterday as word leaks out that