welcome to "street signs." i'm julianna tatelbaum these are your headlines oil prices jump amid escalating tensions between washington and tehran after a u.s. official tells nbc a navy drone has been shot down over the strait of hormuz european equities hit a six-week high after the fed signals potential rate cuts this year as jerome powell flags concerns about the health of the u.s. economy >> in light of increased uncertainties and unit inflation

pressures the committee will monitor the information and act as appropriate to sustain the expansion. the bank of japan also holds fire echoing the fed in warning of rising risks to the outlook while attention turns to the bank of england and whether they'll stick to their rate hike message. delivery hero jumps to the top of the stoxx 600 after the berlin-based food business ups its full-year sales guidance now i want to bring your attention right away to a developing story in the oil space. oil prices have jumped amid another escalation in tensions between washington and tehran. a u.s. official has told nbc news that an american military drone was shot down in international airspace over the strait of hormuz the device in question was an rq4 global hawk.

a u.s. central command spokesperson separately responded to charges by iran saying that no u.s. drone was operating in iranian airspace today. as you just saw there on the screen, we are seeing a jump in oil prices on the back of this also oil stocks as the oil price moves higher we will continue to monitor developments throughout the show. i want to bring in a guest on this topic, ali ahmadi who joins us live from tehran. thank you for joining us this morning. this has been a sensitive area over the last week today's development marks the latest attack in a series of incidents. what does this mean in terms of where the story goes from here >> neither iran nor the united states want to go into any kind of direct conflict with each other. iranian mps are waking up to the news of this demanding an investigation, demanding it goes

before the u.n. security council. the irgc says it is a clear message against the united states trump who had saw george bush's presidency burn in the iraq war and doesn't want to two into direct conflict with iran but a lot of people around him do who argued in favor of u.s. attacks on iran. it might come down to whether trump sees this as warnings of accidental conflict coming true amidst this military escalation, or whether he's persuaded by pompeo that this is proof of iran being aggressive. >> why are these aggravations happening with increasing frequency just now >> since the u.s. pulled out of the jcpla, the nuclear deal a year ago, there's been escalating tension between the two countries. iran announced its limiting its partnership in parts of the jcpla a few weeks ago and this

escalation is continuing what is also happening is the u.s. is being more aggressive in the region, declaring the irgc to be a terrorist organization that escalation is less controllable it's harder to understand how exactly that's going to go because there's a lot of risk of accidental conflict. >> when you talk about whether this is controllable or not, is this the type of incident that could lead to an all-out war between the u.s. and iran? >> well, the nature of a drone is that there's no pilot the political sensitivity of this is lower. this can sort of fade into the general noise of hostility between iran and the united states whether this happened because of military escalation is unknown iran said it shot down an american drone over western iran in 2001. the u.s. said it crash landed. so the u.s. military has in the past shown it's not necessarily

concerned for iran's territorial integrity when operating in the region as long as there is no contact or communication between the two countries this will continue if you remember, there is a u.s. naval ship or two small boats that lost control and floated near an iranian island years ago. back then there was not a relationship because of the nuclear deal, the situation wasn't pretty but it was uas diffused you don't have that now. >> ali ahma-i, thank you. coming from norway, the central bank has raised rates as expected the key policy interest rate is now 1.25%, that's up from 1% in line with expectations in terms of the commentary that they're offering, they say that the policy rate is in line with

forecasts, inflation is projected to remain close to the inflation target in the years ahead. with a policy path like this, it will be adjusted in response to changes in economic prospects. they see for 2020 the exchange rate at 1.0303.3 that is the news from the norway central bank they have raised rates to 1.25% in line with expectations. in the central bank space, the main event this week that invests across the globe are watching, the federal reserve. they signaled a possible rate cut in the coming months as they kept interest rates on hold at the june meeting citing rising uncertainties, chair jerome powell said the case for somewhat more accommodative policy has strengthened steve liesman filed this report

from the federal reserve >> the federal reserve left interest rates unchanged at its june meeting but had a major change in i outlook that suggested it could cut interest rates in the months ahead, maybe even in july the big changes are the federal reserve ended the policy of patience that word came out of the policy statement. it emphasized uncertainties in the economic outlook and said it would act as appropriate to sustain the economic expansion as recently as march no fed official forecast a rate cut this year. now eight fed officials forecast one in 2019 and seven of them forecast two jay powell said even though not forecasting cuts in the current survey are leaning that way. >> a number of those who wrote down a flat rate path agree the case for additional accommodation has strengthened since our may meeting.

doi >> what will it take for the fed to cut rates powell made clear the committee wants more clarity on the outlook. and he wants to know how trade talks with china will work out it seems clear the fed will respond with rate cuts, that could happen as soon as july steve liesman, cnbc business news, washington yesterday european markets traded flat in the lead up to that all-important fed meeting today we are seeing a positive response all four major indices here in europe, all regions trading higher, leading the way is the dax, up about 0.72%. as you heard there from steve liesman, the fed has removed the

word patient from their statement. they said now they're willing to act as appropriate to sustain the expansion. but it remains unclear when the rate cuts could come and how much we could see when they actually do start moving on the rate front in terms of equity reaction in europe, it's positive across the board. in terms of sectors, we are seeing trade sensitive sectors outperforming. the likes of basic resources, autos, tem cchemical, technology increasing tensions in the middle east providing a boost to oil and gas stocks let's look at yields treasuries led a global bond rally as you would expect in the wake of the fed statement. the ten-year treasury yield dipped below the 2% mark right now it's trading just there, about 2%. european yields, the italian

german bond yield spread the tightest since september 2018. the spanish ten-year hit a new record low bonds across the board are seeing yields drop on the back of that fed news president trump has preetedly hit out preeted repeatedly hit out at the fed policy earlier this year the president looked in to whether powell could be demoted >> i think the law is clear, i have a four-year term. i fully intend to serve it >> i want to bring in a guest, steven whiting, chief investment strategist and chief economist at citi private bank in terms of the fed meeting yesterday, we did see them mroef the word patient from their statement. by ultimately they didn't move on rates they had one disseptembnting vo who voted for a rate cut what do you make about the

overall statement at the press conference yesterday >> we have strong expectations of easing monetary prices priced into markets and chairman powell increased those expectations so we have a full 25 or 50 basis point rate cut priced for the end of next month, which is a little bit risky in the sense we have a wide diversion in where policy rates are expected. different members of the committee go in different directions it's a bit of a hodgepodge and you have to recall that they're citing uncertainty in policies policies that are out of the scope of the federal reserve to deal with, like trade policy uncertainty as the reason for taking these actions >> i want to come on to trade policy in a moment firstly he as i mentioned in the lead into this interview, president trump, of course, has been putting unprecedented pressure on the federal reserve chairman do you think this played a role

in yesterday's decision? did it tie their hands perhaps they didn't go ahead with a cut because they didn't want to look like they were caving to the pressure >> i think you can hear chairman powell's response to the question about political pressure you can look at how politics has influenced the fed over the long history of the federal reserve and certainly the heat is up around the federal reserve i think they're more conscious of potentially making a mistake. we saw the federal reserve off course last year there was a great deal of policy uncertainty about when they would end their outflows from their balance sheet. now they're perhaps more sensitive to err in the direction of accommodation right now. >> in terms of the actual impact of cutting rates, we have now seep the debate around the size of the potential rate cut enter the conversation in a big way, whether it will be a 25 basis point cut or a 50 basis point

cut. how impactful can either of those be on the economy at this stage? is it going to make a difference if the economy really is struggling >> look, i think that is a very legitimate concern, that easier monetary policy, all else constant is relatively helpful interest-sensitive parts of the american economy were actually weaker last year in coming into the early part of this year. we saw a down year for housing, not a bad one. across construction and sales last year and coming into this year, and you could perhaps argue that monetary policy played a role. you have to think about if the federal reserve is going to be easing monetary policy when asset prices are relatively high, when the economy is relatively strong, when there is a real fundamental challenge, it can make it more difficult again, you will take more radical steps required out of the federal reserve to make a difference then. so i think that is a legitimate concern. sure, at least over the near-term relatively easier

monetary policy, while times are good, will make them better. we do have to worry about what happens on the other side. >> coming back to your point about the external pressures that are out of chairman powell's control, the u.s./china trade war. when asked if the resolution to u.s./china trade would take the possibility of rate cuts off the table, chairman powell said it comes down to global growth concerns they look at a number of different factors. when it comes to your investment strategy, how do you play this >> this is the unpredictability of the current environment it need not be a bad environment, but there's no guarantees as we saw with the case of mexico, there was a significant warning about tariffs on a free trade zone member. what that might mean then suddenly that turned out to be a false warning you can see a rally around that. chairman powell took his time when he answered that question

because in fact a trade deal with china at the end of this month would be quite material to the outlook and there is some risk that if financial markets ease a lot and we see a stronger growth outlook we may also see a jump in short-term interest rate expectations it's been difficult again for markets to be very, very bullish on falling interest rates and solid growth at the same time. the federal reserve can do that. they did that for a good part of the cycle. sort of giving you a no-lose kind of put option on the market but the federal reserve, its long history, they have not been able to offset any real fundamental shocks to the economy in realtime that may be a risk for tomorrow. >> all right all eyes on that july meeting. thank you very much for weighing in steven whiting from citi private bank. a new phase in u.s./china

trade negotiations, that's how chinese state media is describing upcoming trade talks with the u.s the editorial team at the china daily wrote both parties are in the mood for serious dialogue, but that expectations are too die verb divergent. robert lighthizer said on wednesday he will speak by phone with his chinese counterpart in the next day and a half. they are expected to meet in person at the g20 summit speaking of xi's team, he said they're very tough negotiators, and we're certainly willing to engage huawei's ceo, remember zhengfei has told cnbc that banks were aware of the business activities at the center of a u.s. case against the economy and ren's detained daughter,

meng, officials say she lied to hsbc and othether lenders both huawei and meng deny wrong doing. ren said he has not spoken with the chinese government about a recent u.s. ban on huawei. listen in. >> how would i have the chance to be able to meet with them and talk such a specific matter? and in china, huawei is a very small issue and on the table of the u.s. side it is not even as big as a sesame, so it is not worthwhile to talk about our issues, and we will counter ourselves to address the issue we still do trust the judicial system in the u.s., and we believe the judicial system will address the issue. >> mr. ren, how can you say this you have 180,000 employees you are one of the biggest companies not only in china but in the world why would it be strange to talk to chinese government officials when you are such an important company to china and in the world?

>> translator: because we are fully capable to deal with those issues on our own. why should i ask help? we have full confidence, and we have full capability to address the issues on ourselves. the sanction and also the entity lists that have been published for quite some time. >> let me just remind you that we love to hear your feedback. you can follow us on twitter, streetsignseurope@cnbc or you can tweet me directly. if you have thoughts or questions, get in touch with us there. we'll be live from england coming up eaahd of the central bank's latest rate decision.

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welcome back to "street signs. we already talked about the federal reserve, they are not the only central bank in focus today. the bank of japan warned of escalating global risks as it kept monetary policy unchanged the central bank maintained i interest rate targets an reiterated its position of easing

among the risks were rising protectionism and uncertainties over u.s. policies the australian central bank above nor h governor has signaled at rate cut by july. he said the latest quarter point cut would not be enough to boost growth and called for greater fiscal expansion from the government. in the uk, the bank of england is widely expected to hold rates steady later today while reaffirming the potential for a high in the coming months. joumanna is at the bank of england this morning the bank of england looks set to stand alone today as they expect to rehe affiaffirm plans to rai interest rates any plans to change this message? >> whoever said central banking is boring was wrong. we've had an exciting week within the central bank community with almost all of them turning dovish here

the bank of japan easing bias, the fed yesterday. ecb turning more accommodative with the language. with two exceptions, norges hiked and we have the bank of england. what's interesting from the messaging, so far they've been sticking to their hawkish stance we heard from a couple of members in the last couple of weeks. the chief economist wrote a message in the sun saying that a small rise in interest rates may well be needed relatively soon to ensure against the need for bigger rises in the future this echoes some commentary we heard from more hawkish members like michael saunders who also said the market may be underpricing the risk of future rate hikes the market does not quite believe the hawkish commentary if you look at what is priced into the curve, seven basis points of cuts are priced in for august 2020. two things are going on. the bank of england will be overlooking some of the short-term volatility we've had

in the data. most eventually the tracking data has started turning negative the month-on-month gdp print for april came in at negative 0.4% this was after a strong first quarter. the question is whether or not they're willing to look through that now given some economic risks posted to the down side when you look at global trade and the external environment on the flip side, what does stand out in the uk is inflation. if you look at inflation expectations, this is the one market in the world where five-year inflations have been dipping upwards rather than the downward trend that we've seen for other central banks. they will be looking at that and thinking that at least they have the inflation pretext to sound a little bit more hawkish today. but the other big question is brexit a lot of uncertainty there they always worked on the

assumption there would be a smooth transition. whether or not we get that is debatable. today you want to watch out whether or not they keep that limited and gradual language >> definitely not boring when you put it like that thank you for putting the context out there for us tune in later today for the bank of england rate decision catch our live coverage from 12:55 cet. in some corporate news, slack is set to go public today in a direct listing with a reference price of $26 per share. following in the footsteps of spotify, the messaging app has chosen not to sell new shares or use the help of underwriters for a traditional listing opting to list shares directly on the new york stock exchange. leslie picker has more details if slack were debuting its initial public offering we would be learning about its ipo price. instead slack is doing a direct

listing meaning the company has not been marketing a price range to invests nor will it be setting a price relative to that range. so to get a sense of where slack might trade investors are turning to what the stock has done in the secondary markets or markets where shares of nonpublic companies can exchange hands. slack discloses how its class b shares have traded over the last ten months shared have soared in value. the price in may representing 2 1/2 times the price from last august slack says its shares traded as high as 31.50 last month which would represent a valuation around $17.8 billion now, over the last ten months slack's class b trade volume reached 3$365 million they say that represents decent liquidity for price discovery purposes making invests more likely to turn to secondary markets as an actual benchmark for the price. coming up, we have some

politics for you who will take brussels top jobs? a preview of today's eu summit next ♪ ♪ applebee's new loaded chicken fajitas. now only $10.99. the first survivor of ais out there.sease 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.

welcome to "street signs." i'm julianna tatelbaum these are your headlines oil prices jump amid escalating tensions between washington and tehran after a u.s. official tells nbc a navy drone has been shot down over the strait of hormuz european equities hit a six-week high after the fed signals potential rate cuts this year as jerome powell flags concerns about the health of the u.s. economy >> in light of increased uncertainties and unit inflation pressures we emphasize that the committee will monitor the information and act as appropriate to sustain the expansion. >> a hawk among the doves. norway's central bank hikes interest rates driving the krona up against the dollar, but the bank of japan echoes the fed's

concerns over economic risks while attention turns to the bank of england's turn later today. goo siuseppe tells brusselse eu's threat to sanction rome is inco incomprehensibl incomprehensible we have some fresh data hitting the tape now for the uk ahead of the boe meeting later today. this is uk retail sales for may. volumes were down 0.5% month-on-month vers aprversus a this is in line with expectations it marks the biggest fall since december in terms of year on year movementsales volumes were up 2.3% not quite as strong as the move in april where retail sales were up 5.1%.

this is the smallest rise since october. it is just shy of expectations economists were looking for a 2.7% gain, versus the 2.3% we saw. excluding fuel, retail sales volumes were 2up 2.2% in april the uk may retail sales deflator came up 0.4% year-on-year versus april when it was up 0.2%. cool weather seems to have hit uk retail sales in may, boding poorly for the economy in q2 let look at fx markets you saw sterling is moving higher, 0.6% versus the dollar in the lead up to the boe meeting. you heard from joumanna about the hawkish stance so far. we did see norway move interest rates today but compared to the fed, compared to the ecb and the

bank of japan, the boe is standing steady with that stance the your ro traeuro also tradinr against the dollar european equities are off to a strong start the italian and german indices leading the way higher, nearly 1% up. this comes on the back of the fed meeting yesterday where they moved to remove the word patient from their statement and signal potential easing u.s. futures, we saw equities flat in the lead up to yesterday's meeting. we did see the major indices move higher ending in slightly positive territory it looks like the gains will continue today all three major indices looking at a higher start. the dow looking at a near 200 point jump at the open we will keep an eye on that as the morning progresses

on italy, i want to give you more detail on things there and how the political situation is developing, italian prime minister giuseppe conte said his country is not seeking special treatment on eu budget rules he added that rome is committed to cutting its deficit by 0.2% in 2020. he also criticized brussels saying the interpretation of eu rules has so far penalized italy's efforts to boost growth. earlier this morning an italian newspaper reported that the government is planning to use 5.2 billion euros to improve its budget and avoid eu disciplinary action for its high debt. the bargaining in brussels will ramp up today as leaders gather for a summit to decide who will take on the eu's top jobs most notably, who will replace jean-claude juncker. an issue will be u.s. ties amid trade and regulatory tensions. willem marx joins us live now

from brussels. go deeper for us into terms of the implications of the new appointment of the european commission president for u.s./eu relations. >> of course whoever ends up leading this executive arm of the european union -- you can hear some security presence already here in brussels -- whoever it ends up being they will clearly be faced with a huge challenge when it comes to the relationship with the united states it was last july that jean-claude juncker went to washington, conducted talks with president trump and the two sides agreed to work to eliminate barriers when it comes to tariffs, some of the non-tariff-related barriers and also to eliminate some of the subsidies to industrial goods. that's nearly 12 months ago now.

we have not really seien any men menning meaningful progress. the u.s. side is waiting to see whether the candidates put forward for the commission job, whether some parties in european parliament, whether they will be as willing to engage in negotiations in the same sort of spirit that this current outgoing commission has been able to do some individuals vying for the job are significant figures. one is willing to take on big u.s. tech firms. one would transition as a champion for eu jobs to the top job, that could create some challenges when it comes to regulation and

trade, there's a huge amount in the entry of any incoming commission chief, and that the going to be something no doubt at the top of the minds of those meeting here today and tomorrow when they make their decisions and they continue their debate about who the person should be >> thank you very much, willem president macron is just arriving in brussels, as i understand we'll keep an eye on those developments we'll see whether we have any resoluti resolution, any agreement by the european leaders over the coming days here in the uk the final two candidates are set to go head to head to become the new leader of the british conservative party this will be revealed later today. two further rounds of voting will whittle down the four remaining contenders the favorite, boris johnson boosted his support.

very pleased to be joined around the desk by lucy frazier, a conservative mp and who has backed boris johnson in 2016 you were a remainer, now you decided to back boris johnson. give us insight into your rational >> i think boris johnson is the right person for two reasons the first as you rightly identify is in relation to brexit the country voted to leave we need to leave, but we need to leave with a deal. we tried to get a deal we have not achieved a deal the parliament is willing to pass. we need to change negotiations in europe. i think boris johnson is the person to do that. secondly, once we achieved what we want to do in relation to a deal with europe, we need to concentrate on our domestic agenda we need to do things like raise living standards, improve ed keg, those are things that boris johnson not only talked about but delivered as mayor of

london >> i want to come back to the domestic picture in a moment sticking to brexit, the european side has made clear they don't want to renegotiate the withdrawal agreement they are adamant about that. boris johnson insists he can find alternative arrangements when it comes to the irish back stop, the key ind drans hindrann getting the deal through parliament >> you are right the eu said a number of times they will not renegotiate. that will be a challenge no one is doubting the massive challenge that that is the eu has already been clear. it doesn't want the uk to leave without a deal so it's in both parties interests, both the uk and the eu to come to some sort of arrangement that will satisfy both the issue is not in relation to the withdrawal agreement, it's not in relation to the relationship going forward the issue that parliament what

is in relation to the back stop, which is a temporary arrangement which nobody wants to come into effect the issue in relation to this deal is something that nobody on either side wants to happen. so i would hope that we would come to some arrangement in relation to that >> in terms of the math, it remains the same as it was for theresa may. at the moment boris johnson says he doesn't envision calling a general election before the uk leaves the eu. is that going to be necessary to try to change the math if we do want to see parliament agree on something? >> the math is challenging i think if boris johnson is able to come back from brussels with something new, i think that might well change the math in parliament i think if anyone can persuade parliament and those who voted to leave the eu, the deal he got from europe is one we should take boris johnson is a significant

player in the louvre campaign, i think that's quite an important factor >> philip hammond is set to warn that a no-deal brexit would harm the economy, devour nearly 27 billion pounds of the brexit war chest and risk the break up of the uk what do you make of these comments is he right in warning of impact of that magnitude? >> i think he's right to identify no deal will pose challenges that's why nobody this side of the channel and the other side of the channel wants a no-deal it would be foolish to accept there will be challenges in relation to a no deal. but it is also interesting to note that since the uk voted to leave the eu, in fact the uk economy has grown at a faster rate than the rest of europe we have 1.3 trillion pounds investment into the uk we continue to have record

levels of unemployment i think we absolutely have to avoid no-deal, but we also need to prepare for it. i think boris johnson suggests and those people who voted leave suggest this might be an opportunity for britain in relation to trade with other countries and setting our rules and regulations. we have to take advantage of that opportunity >> coming back to the domestic side of things, you mentioned that's one of two reasons you supported bore res johnsois john in terms of what he offered as prime minister, he's been criticized for lacking detail. he talks about his ambitions but has not nailed down what he would do he has not committed on the tax front. what do you think he can actually do? can this leadership style deliver? >> i think he can. i think we should look at his record as mayor not only was he reelected as mayor for a seconde

he cut taxes for people living in london. he reduced crime by reducing the homicide rate. he achieved a significantly greater number of people getting the london living wage he improved infrastructure, cross rail was on time and on budget he reduced delays on the tube, on the underground by 30%. i think he has a significant record of delivery, which you can't brush under the carpet in relation to his delivery as mayor of london. >> thank you very much for joining me this morning. getting back to some corporate news flow of the day, delivery hero raised its 2019 revenue guidance by 200 million. they expect second quarter revenues to come in slightly higher than q1

dixons carphone slashed its dividend after it reported a 22% fall in full-year profit the tech retailer blamed exceptional costs and a tough telephone market for the results. shares in swiss watchmakers are trading higher after data this morning showed swiss watch exports rose 11.4% year-on-year in may that's a rebound from the 0.4% decline reported in april. deutsche bank is reportedly under federal investigation in the u.s. for failing to stop money laundering american officials are looking at possibly problematic transactions including some linked to president trump's son-in-law and senior adviser, jared kushner. the times says other lenders are also being investigated. deutsche bank has declined to comment. once again, you can follow us on twitter, @streetsignscnbc

and you can tweet me directly. up next, we'll continue our coverage of the escalating u.s./iran tensions stay with the channel.

welcome back xi jinping has arrived in pyongyang for the first state visit by a chinese leader in 14 years. xi's delegation includes his foreign minister, top diplomats and head of state planning talks with kim jong-un are focused on nuclear development and tensions elsewhere, saudi arabia has dismissed a u.n. report which said there is credible evidence that crown prince mohammed bin salman and other high-level officials are liable for the murder of jamal khashoggi. the report calls for an

investigation into bin salman and suggests sanctions on his finances >> this u.n. report is the first independent investigation into the killing of the "washington post" columnist jamal khashoggi. and it say there is credible evidence into the killing. she says he should be hit by targeted sanctions during that investigation. >> it's a logical step for me to be asking for him to be included in the sanctions until and unless there is evidence provided that he was not involved. >> she says there was credible evidence that the saudis thoroughly even friend orensica

cleaned the offices in istanbul. it says the trial of 11 men in saudi arabia should not be suspended. the saudi foreign minister says this report is nothing new, there are baseless allegations and contradictions in it and only the saudi courts are competent to try these men there is little likelihood of independent trial as a result of this no independent evidence could be gathered it's almost as if the report acknowledges this in calling in the end for justice in a political, diplomatic and financial sense. so that the saudis who bear responsibility for this, according to the report, should pay some price bill neely, nbc news, do ha,

qatar. a u.s. official told nbc news that an american military drone was shot down in international airspace over the strait of hormuz as you can see there, brent is trading up 2.4%. wti up about 2.7% on the back of this development hadley gamble joins us with the latest from dubai. this attack is just the latest in a series of incidents in the region how significant is this development? >> that's a very good question at the end of the day it's all about the u.s. response here already we heard there is some pentagon statement or perhaps even a briefing forthcoming. we have not seen much el other than the fact that a u.s. official confirming earlier to nbc news that a drone was shot down they say it was shot down in international airspace over the strait of hormuz earlier this morning we brought you reports from iranian press tv, the iranians claiming the

drone was shot down over iran. the u.s. disputing that. they say this is a significant escalation they're calling for a briefing later. i want to point out a couple things here. this is on the back of a series of attacks on tankers in the last month or so in the strait and the broader persian gulf we were covering it last week, lots of questions about who was behind those attacks, the united states, the united kingdom and saudi arabia laying the blame on tehran, though they have had international push back for more evidence the international community loathe to tag iran for the blame on that. thinking about the military hardware in this region, when we talk about using a surface-to-air missile to bring down a drone, we have to think who has the capability in this area of the world. this is a heavily armed region when we talk about missile defense systems, the s400 has a range of 400 kilometers.

when we talk about the patriot missiles, 150 to 200 kilometers. you have to think who has the capability to do something like this but also think about who would be the most obvious actors that's something that the united states is looking at we have not just seen tanker attacks happening in isolation over the last 24 to 48 hours some rocket attacks in iraq targeting u.s. areas, and they've been targeting international oil companies. >> hadley, thank you very much for the latest i want to bring in a guest i'm joined by neeve mcbernie, senior analyst with maplecroft how important are the developments in iraq that hadley mentioned there? >> as hadley mentioned, the iraq developments are important in a slightly different way the new tanker war, if you will, that we're seeing a reflection

of similar things happened in the 1980s, iraq is a separate sphere of concern for the united states the incidents we've seen there, the rocket attacks on two different oil assets ultimately suggests that it's iranian-affiliated actors who are acting, we think independently at maplecroft. this is part of the broader story, but we need to consider those two things separately. the american response to the incident today will be important. frankly, it's very unclear to so he where they go next. there is no secretary of defense. patrick shanahan is no longer in the running. trump is in a difficult position mike pompeo is already doing some heavy lifting i think the americans find

themselves in a difficult position what are their options what can president trump himself do in response to this today >> well, hadley mentioned it was a surface-to-air missile that was launched by the iranians, the revolutionary guard kors co confirmed it was them, they impeded in their airspace. the u.s. said it was international airspace we can't be quite sure yet because we don't have the coordinates. obviously there has been discussion about the americans launching attacks or trying to respond to iranian aggression in iraq, as a sphere of influence for both countries that would really undermine american interests in iraq there's an awful lot of business deals that american companies are looking to benefit from and also the americans would undermine their own weak relationship that they've been trying to strengthen with

baghdad but have been failing in this it's very, very unclear to see where this goes next >> ultimately the u.s. in your view doesn't have the appetite to turn this into an all-out war with the egion >> not at all. this is another intensifying shot across the bow by iran, but i don't think it's in either country's interest to launch a war at this time frankly in any of the countries in the region. >> thank you very much for joining us we'll leave you with a picture of u.s. futures. that's it for today's show i'm julianna tatelbaum thank you for joining me "worldwide exchange" is up next.

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oil prices are spiking after a u.s. drone shot down over the strait of hormuz iran claiming responsibility the united states calling it an unprovoked attack. we're live in the middle east. futures are shrugging it off. we are seeing some big moves in the bond market and the yield on the ten-year just did something it has not done since trump was elected. it may be thanks to the fed. mexico putting pen to paper over the u.s. new trade deal president trump calling on our congress to do the same or just do something new details onhe