welcome to "street signs." i'm joumanna bercetche i'm willem marx. these are some headlines for you. european equities follow wall street into the red and gold retreats from a six-year high as jerome powell dampens rate cut expectations. the question my colleagues and i are weighing on is whether there will be a call for additional monetary policy

movement president trump threatens owe obliteration if iran attacks anything american in the latest war of words between washington and tehran we'll speak to u.s. treasury secretary steve mnuchin within the hour and thyssenkrupp shares get a lift on a report of a possible offer by engineering firm kone for the elevator unit. and european chip stocks rise after micron beats third quarter forecasts and resumes shipments to huawei despite a washington ban on the chinese tech giants. good morning the federal reserve chairman, jerome powell, has warned that the outlook for the u.s. economy has deteriorated since early may thanks in part to uncertainty about global growth and trade. powell said publicliey during a

speech that the federal reserve remains independent. he insisted the central bank has yet to decide when is the right moment for a rate cut. >> the question my colleagues and i are grappling with are whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation many fomc participants the case for more accommodative policy that strengthened, we are also mindful that monetary policy should not overreact to any individual data point, doing so would add more uncertainty to the outlook. we will closely monitor incoming information for the economic outlook and will act as appropriate to sustain the expansion. >> james bullard says now seems a good time for a 25 basis boint c point cut and this would be

sufficient in an interview with bloomberg he said he sees 50 basis points worth of cuts by the end of the year bullard last week was the only fshg fomc member who voted for an immediate 25 basis point rate cut. >> let's look at the reaction to those comments from powell and bullard yesterday. half of the losses in u.s. equities have been once those two started speaking particularly bullard he's the only member of the fed who called for an imminent cut at the last meeting but poured cold water over the notion that they should go for a 50 basis point cut in july. that was taken a bit more hawkishly by the market. we saw some losses in u.s. equity indices across the board. dow ended down about 0.7% weaker it's about the fed, disappointment there and geopolitical tensions and how can we forget the upcoming g20

meeting. asian equities traded more muted. the picture for europe today is more negative. 70% of the heat map is trading in the red 30% in the green stoxx 600 is down 0.3% today as well a lot of this, the sentiment surrounding the upcoming g20 summit has been priced in. switching to individual markets, every single one of them is trading in the red ftse 100, we're back above the 7,400 level. we've been toy iing around that level. a little bit weaker, down about a tenth of a spent taj point. xetra dax moderately weaker. kaing cac 40 weaker as well.

we have real estate, defensive down about 1 percentage point. healthcare lagging, down 1 percentage point utilities. many of the defensive sectors are actually underperforming on a day when the broader index is not doing so well. that's quite interesting turning your attention to technology here. i did mention that the nasdaq in the u.s. was down about 1.5% yesterday. we are seeing life in european chipmakers today on reports that some of the u.s. companies, intel and micron, have been bypassing the huawei ban that's positive for european chipmakers up at the top, oil and gas up 0.4% because of what's happening in spot price. let's talk about the price action we're seeing in energy. wti up 1.8%. brent up 1.4%. it's not just geopolitical tension at play, we had stockpile data coming out of the u.s. showing that the fall in

u.s. crude inventories have -- the inventories have fallen in the last month that has led to a spike in the price of oil. the highest level in the past month. spot gold, up above $1,400 a bit softer today generally speaking we've seen a lot of inflows into the commodity as well as a flight to quality bid on news that the fed may be looking to cut, the global growth environment is slowing down and we're back at a sick-year high geopolitical tensions are behind the possible moves in gold, and president trump threatened iran with owe obliteration after the country's president questioned the mental competence of the leader trump said the comments were ignorant and assaulting and warned iran on attacks on anything american. the u.s. released fresh new

restrictions on iran's oil production and the revolutionary guard corps. sticking with the middle east, u.s. officials have urged middle eastern leaders to grab the opportunity of the century as the trump administration unveiled an economic package as part of its peace plan for israel/palestine at a summit in bahrain president trump's senior adviser and son-in-law, jared kushner, defended the plan from criticism that a political solution should be a higher priority >> to be clear, economic growth and prosperity for the palestinian people are not possible without an enduring and fair political solution to the conflict one that guarantees israel's security and respects the dignity of the palestinian people however today is not about the political issues

hadley gamble is in bahrain. the plan has been met by skepticism, but there are some high-profile business names attending the conference what is the word from some of the business people you've been talking to >> there are some high profile names on that list indeed. not just business leaders but the head of the img, christine lagarde, so this is not a conference just with regular attendees. i want to talk through what you've seen over the last day or so with your visit in bahrain. you guys are massive investors in this region you are global investors, but you have about 1.5 billion invested in the region when it comes to who is on the ground here you seem surprised by how good a crowd they have

drawn? >> yeah. first, thank you for having me on your show it is quite interesting today. first, i should say what surprised me is the depth and breadth of international insfreinves investo investors. it is a testament to the king democrat of bahrain. i'm grateful for what they've done to put this conference together i believe there are a lot of things that could be done in palestine. many different fronts. it's terrific for this forum to showcase what could be done in that part of the world to a global investor base who may want to have the chance to learn about palestine. >> and who have probably never given it the time of day for most folks here whether they praise him or not, that does have to do with the son-in-law of the president >> certainly certainly the backing of the

gulf states and the united states goes a long way when we talkabout a 50 billion commitment for palestine, that gets a lot of attention, not just because of the capital amount but it sends a message of trust and confidence of what palestine could become in the future as a private investor, that's what we like to hear i hope we can play an active role in that journey >> walk me through the sectors that look interesting to you healthcare, i. he t. sector andn the most basic he nee iic needs people >> it's a journey and we shouldn't forget that. the private sector has promoted about $30 billion into the palestine project. palestine today is fortunate in a way. they are within a 1,000 mile radius of a 200 million population of countries, relatively wealthy that could be a good base for

trade. trade agreements and opening of trade with that part of the world is important first and foremost it has to start with infrastructure. infrastructure plays an important role both long-term and into creating a viable sustainable palestinian economy but also in the short-term infrastructure employs a lot of workers and that goes into easing the poverty and the challenges that the palestinians have today >> there's no doubt these opportunities are there, but at the end of the day it requires leadership to move the dial. when you have the israelis and palestinians not attending, when you have so many variables within the palestinians, whether it's hamas, the palestinian authority, all of them very, very negative about the president's plan here and jared kushn kushner's plan how do you see this playing out? opportunities are there, but making them a reality is a bigger question. >> it's a journey. the journey has to start somewhere. how is that first step

there's no right or wrong answer what's important is we collectively have a collective responsibility to make that first step >> you believe this is it? >> economic prosperity, coupled with dignity will ultimately provide peace. i hope that is the path which palestine will take. >> i heard steve schwarzman last night describing what's happening now in the palestinian territories and the opportunity for them to be like a singapore and like a dubai but singapore and dubai have top-down leadership structures the israeli/palestinian question is there's no leadership really on either side >> so probably the more relevant case studies, hadley, would likely be rwould ra rwanda or s. in the case of rwanda, it's been the last 20 years, not generations.

hopefully with the right will, with the right political and economic plans in place, there's no reason palestine cannot be one of the most thriving regions in the world i've known many palestinians, many of them are good friends. they're tenacious, hard working and committed people i have no doubt that the 5 million or so palestinians in palestine with the right structure will be a force in the world in the next 50 years >> what's been interesting in the world as far as the attendees at this conference, not just from the united states but the gcc presence as well we were forewarned before we came that this wouldn't be about foreign policy they would try to stick to the economics and the financial side of things. we've seen delegations from the saudi side, the saudi finance minister is on site. one of the top advisers to prince mohammed bin salman the majority of the money has to

come from the gulf arab countries, doesn't it. >> i'm not privy to those discussions. a large number of the panel are from the private sector. private sector capital will follow emerging markets with the right legal framework, political safety net and structure in place. if those ingredients are in place, i suspect the 50 billion will not be a challenge. again, it's journey. like many other countries have gone through they have to live that journey palestine will have to take their own journey. it starts with basic aspects of dignity and statehood and it will evolve into economic feasibility. >> we have to leave it there thank you very much for joining us back over to you >> thank you so much for that. moving to the united states itself, we'll hear from former special counsel robert mueller he will testify before congress on july 17th that's in response to a sub

phone from house democrats the lawmakers had requested that mueller cooperate with them to address the legitimate concerns about his investigation into russian meddling in the 2016 election we'll also be hearing from the current treasury secretary, steve mnuchin, in about a half hour's time with hadley. stay tuned for that. and stay tuned for the heat in continental europe we are bracing for a major heat wave temperatures in france tomorrow could hit 40 degrees celsius authorities in paris have issued an orange alert. french government officials may hope to avoid a repeat of 2003 when an estimated 15,000 people died during a period of extreme heat forecasters say hot winds from the issahara desert responsible

for the heat >> if you have any questions, get involved in the conversation, @streetsignscnbc or tweet us directly coming up, micron defies the downturn for chipmakers and washington's ban on huawei details on that after the break. you need to buy a car and you want to get an excellent price you'd think with all these options it would be easy. but with terms like msrp, invoice, list price, things get confusing pretty fast. you just want to get a real price and that's where true car comes in. only with true car can you see what other people paid for the car you want and you can connect with certified dealers who offer prices based on this same information. none of those other sites do that. from end to end, true car is your only one stop solution.

welcome back the london stock haexchange has announced on july 1st it will stop trading on 250 swiss stocks this is because of odds over an equivalence agreement. if the two sides fail to reach a new agreement swiss authorities are expected to bar eu exchanges from trading swiss equities. the irony is the uk is trying to leave the eu and they're tasked with trying to police this on behalf of brussels over the kind of equivalence agreements that

we hear these tory candidates pushing. >> swiss stocks are down about 0.6% on the news another name that we're looking at today, thyssenkrupp has risen to the top of the stoxx 600 after a report that finnish engineering company, kone made an offer for the german firm's elevator unit. the steelmaker has been involved in several potential deals shares in thyssenkrupp rose in mid-may after an initial report that kone had interest in its elevator unit. earlier this month thyssenkrupp's potential merge wmerger with tata steel was stopped. lots of deals or potential deals for thyssenkrupp >> a busy few weeks for the m&a

bankers. let's talk about a u.s. corporation. fedex beat quarterly profit estimates but the company said u.s./china trade tensions and the company's decision not to renew its agreement with amazon will lead to some losses fedex sued the u.s. government this week and said it should not be held liable if it unintentionally ships products that violate a ban by the trump administration micron shares are trading higher in extended hours after the u.s. chipmaker beat analyst expectations for third quarter earnings and revenue the company also said it expects demand for chips to pick up later this year. micron added it resumed sending some shipments to huawei in the past two weeks despite a u.s. ban on the chinese tech giant. micron said it had lawfully

determined that it could begin shipping some products to huawei so very interesting developments there coming out of micron it has been a positive qucatalyt for european chipmakers. asml up a fraction steam micro up 1 percentage point. so finding a bit of relief micron is one of the u.s. companies that the "new york times" reports has side stepped the trump administration's ban on huawei. intel and other chipmakers have also been funneling products to huawei for three weeks to take advantage on the provision of labeling of american made goods. white house officials are said to be aware of those sales several rural u.s. telecom carriers that use huawei gear are reportedly in talks with ericsson and nokia to replace

these products reuters reports that the carriers are looking for discounted prices and support from the u.s. government, but they have yet to reach an agreement. ericsson and nokia declined to comment on that report arjun joins us from shanghai you have been speaking to some key people involved in these deals. >> absolutely. look, ericsson and nokia are key players in the 5g rollout. 5g really is front and center here at mwc shanghai one of the biggest shows for the mobile industry globally not only those two, but also huawei, one of the rivals very much in focus. ken hu one of the rotating chairman was speaking today talking about the rolling out of the 5g strategy and how many 5g contracts it won huawei is caught in the middle of this broader u.s./china trade war and it has been under

immense pressure from the u.s. administration it's been trying to fight back against some of that pressure. it's gone on a media and legal offensive. and last week i reported that the company is thinking about using its intellectual property and patents and ask more u.s. companies for royalties. huawei has over 60,000 patents globally some of its rivals including nokia and ericsson use some of huawei's patented technology i had a chance to catch up with the ceo of ericsson, one of the big three players when it comes to telecom equipmentmakers globally, and i asked whether he thought he could see backlash from the company let's listen in to what he had to say >> it's been a global standard that's the big reason why mobile technology has scaled in the way it has so of course we need to make

sure that we have a well functioning system and for us we are going to fight hard to keep that system workin and working globally it requires the companies to adhere to the patents. ericsson will do that. >> just reading in between the lines there of mr. ekholm's comments, he is urging not to take the route of being more aggressive with patents. ericsson has been an aggressive player when it comes to litigation around patents it holds. that's the irony there this patent story is just one story on the ground here i asked whether mr. ekholm could give assurances on equipment manufactured in china is safe. he said that he can guarantee that the equipment is safe

so security and 5g are top of mind here from the leaders in the telecoms industry. >> definitely a story we're keeping a close eye on. the ecb approved a bill from the italian government that says gold reserves held in the bank of italy belong to the state rather than the bank itself. opposition lawmakers have strongly criticized the legislation. they say the coalition government of five star and liga could try to sell the goal to reduce the country's huge debts. this is coming at a time as gold has fallen back from a six-year high after the fed damped down market expectations for a 50 basis point rate cut that's the picture for gold. all that glitters is gold. six he six-year high. jeremy hunt says the uk needs someone reliable to handle brexit hunt told the bbc he had not

called boris johnson untrustworthy but said negotiations over a new deal with the eu will be about the personality of the prime minister hunt also insisted he will strike a deal with the eu that can unite all sides of the conservative party. coming up, fed chair jerome powell dampens rate cut expectations and takes a stand for central bank independence. details after the break.

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. welcome back to "street signs. i'm willem marx. >> i'm joumanna bercetche. these are your headlines european equities follow wall street into the red and gold retreats from a six-year high as jerome powell dampens rate cut expectations. >> the question my colleagues and i are grappling with are whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation we're mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment.

president trump threatens obliteration if iran attacks anything american in the latest war of words between washington and tehran we'll speak to u.s. treasury secretary steve mnuchin in the next 20 minutes. and thyssenkrupp shares get a lift on a report of a possible offer by engineering firm kone for the elevator unit. and european chip stocks rise after micron beats third quarter forecasts and resumes shipments to huawei despite a washington ban on the chinese tech giant we had a waeseaker session u.s. equities into the close and half the losses occurred after powell and bullard started speaking about what the fed may or may not do. bullard throwing cold water over

the notion of a 50 basis point cut at the july meeting. the mood translated into the asian session overnight. cautious trading there you can see the picture for europe all of these indices are trading moderately in the red. just a touch below the flat line xetra dax down about a tenth of a percent taage point. thyssenkrupp, the german engineering company, right at the top of the stoxx 600 today, up about 4% on reports that the finnish company has made an offer for its elevator unit. lots of deal talk there. broadly speaking european markets are trading more cautious today in the session. switching to foreign exchange, to break it down further, euro is coming off some of the strength that we had the last couple of sessions 1.1350, still notably higher than where we were when the ecb had the sintra conference last

week dollar/yen, yen trading on the back foot as we're seeing some pressure come off there. and a little bit of a more positive spin as we head into the g20. cable just shy of 1.27 the swiss index pretty much flat as well. let's take a quick look at u.s. futures. i did mention the three majors were trading in negative territory yesterday. nasdaq yesterday was down one and a half percentage points the s&p, dow and nasdaq seen to post moderate gains on the u.s. open in a few hours time watch for durable goods orders coming out and wholesale inventories. jerome powell has warned that the outlook for the u.s. economy has deteriorated since early may thanks in part to uncertainty about global growth and trade. powell said publicly during a

speech at council on foreign relations in new york that the central bank remains politically independent, despite the repeated pressure from the white house to cut rates dominic chu has more >> reporter: federal reserve chair jerome powell speaking at the council on foreign relations saying the federal reserve will act as appropriate to sustain the economic expansion he says uncertainty over trade and global growth have increased, but is he grappling over whether these uncertainties will continue. still powell saying the economy has performed reasonably well this year and that the baseline outlook remains favorable and that policy should not react or overreact to any one data point. powell also hinting at potential insurance rate cuts pointing to research that shows it's best to act sooner and more forcefully >> i think in a world of lower interest rates, research seems to show and i think this is fairly widely accepted, that it's better to act preemptively.

the thought being an ounce of prevention is worth a pound of cure. this after james bullard spoke on bloomberg earlier he said now seems like a good time for an insurance rate cut but that a 50 basis point cut may be overdone. he says he sees 50 basis points of cuts in total by the end of the year and hopes fed action will straighten out the yield curve as well. we're joined by jim reid from deutsche bank thanks for being with us why do you think mr. powell wants to keep his options open between now and july >> he's got a very delicate balancing act and the market raced ahead and priced in over

100 basis points of cuts in the next 12 months i don't think he's quite convinced of that. unless he gives the market some impression that he is willing to be flexible and keep optionality, the market will probably aggressively selloff, which will make his job more difficult. he has to play along with the market a little bit. >> do you read it as him keeping his options open or is he saying we're not succumbing to political pressure, but we will do whatever it takes -- that's quoting draghi, not powell, but do what is necessary to keep the expansion going. he's not ruling out the possibility of a rate cut but says maybe 50 basis points could be too much in one go. >> yes i think the market has run far ahead. the market has run further than the fed. the fed acknowledges they need to cut rates the fed are almost certain to cut rates in july. don't want to say we'll cut 100

basis points over a year they want the data to evolve the balancing job is to balance the market and their views why is it that the market startedincrements of 50 basis points? what was the catalyst there? i think the combination of trade, break evens of five-year inflation numbers going down survey data. there's definitely some evidence of a global slowdown so there is evidence of slower activity, which i think the fed are acknowledging. the market thinks that evidence is stronger than the fed that's the basis >> so powell said yesterday he doesn't want to overreact to any individual data point. we heard the clip from our colleague, dominic chu in the u.s. if you were to suggest he looks at specific data points, which would be the ones you would

recommend he focus on? >> well, i mean, the ism is usually and the pmis are usually the most realtime indicator of activity they have to be backed up by hard data. at the moment the survey data is pretty weakening aggressively. the hard data has not followed as powell said, sometimes to act early is the best risk/reward you can reverse it i think he's acknowledged that >> when did they stop with this notion of insurance cuts everyone is coming around to the view that while the economy is not necessarily flashing red on every single metric, as you say there's a distinction between the hard data and the soft data, people have come around to the view that the fed do want to go ahead and do this insurance cut in case things do get worse. how many cuts are sufficient for insurance cutting? how long is an insurance cutting

cycle? >> i think one of the biggest problems the fed what is we developed a financial system that is so big that it has the power to dictate monetary policy because if you -- if the market says something that they think is going to happen, then the fed or another central bank disagree, you could get some pretty severe selloff, then you get financial conditions tightening, then you're kind of creating a bit of a vicious circle so they are a little bit beholden to the market >> the market is beholden to trade concerns as well how significant do you think the meeting between the two top presidents, xi and trump, will be this weekend in terms of market reaction and what that means for policymakers >> cue problyou could probably a thousand analysts -- >> we got you today. we want to hear what you think >> none of us know what the

meeting is going to bring. my gut feeling is that we probably wouldn't have gotten announcement they would meet unless behind the scenes talks progressed a bit still think it's unlikely you'll get anything other than a handshake to move in the right direction. there won't be a deal over the weekend. if we get past the g20 without it breaking up that will be good for trade. >> jim, stay with us coming up on the program, hadley sits down with steven mnuchin as tensions rise between the u.s. and iran. that is a first on coming on after the break. unpredictable crohn's symptoms following you? for adults with moderately to severely active crohn's disease, stelara® works differently.

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welcome back the united states is reportedly unwilling to offer trade concessions at the upcoming g20 meeting between presidents trump

and xi, but the country still aims to restart talks afterwards the trump administration wants beijing to retable the concessions it withdrew before talks broke down in may. that's according to a senior administration official speaking to reuters washington, d.c. says it will not accept any conditions around their own use of tariffs we still have jim reid from deutsche bank with us. we asked briefly what you expect from the meeting, and you said none of us really know regard will of the outcome, how much do you think markets will have to react to it given the impact it's had on markets, corporate earnings and trade flows? >> after the may 5th tweet from

mr. trump, markets acted, then we learned that trump and xi are meeting this weekend we may be back to neutral now in terms of news flow so we probably need talks to continue to propel further any sign they have broken down would be a difficult point for markets. you have the tariffs, the 300 billion remaining in tariffs that are ready to go and if talks break down, one would imagine they won't be too far behind >> if it weren't for the fed changing tact and turning dovish and completely turning 180 degrees the other way since the beginning of the year, do you think stock markets would be lower than where they are now? yes, we have spent the past year or so talking about trade war, the impact on companies, but so far it's hitting sentiment indicators it hasn't hit where stock markets are trading. >> no. i think, as i said earlier, the financial system now is so big

that it basically has the ability to kind of -- i wouldn't say manipulate policy, but the ability to heavily guide central banks. and in december when the fed raised rates, the market signal was pretty horrible. and that may have contributed to the more dovish powell in january. the market still has a lot of power. >> you have ten-year bunds in germany at all-time lows, yields everywhere are trading in negative territory is that not a market that's really flashing red and telling you that something perhaps more sinister is about to happen? >> i probably would phrase it the level of yields in europe reflect a financial system that is very vulnerable these are not healthy signs, but

it doesn't indicate that will cause a problem in the short-term it probably tells of an inherently unstable financial system we created. >> we've seen much stronger growth in the u.s. compared to europe over the years. one of the drivers has been the u.s. consumer. some sentiment data indicates that may be weakening. pow important is that for market participants >> one thing in the consumer conference board numbers that we got the update from yesterday is the difference between current expectations and future expectations is close to the widest it's ever been. that's been a predictor in the past of a cycle turn it's not great to see consumer expectations this low. present conditions are okay. rates are low. the unemployment rate is low people are getting more worried

about the future >> with -- we were talking about yurp a europe and growth divergence between the u.s. and europe, there is a convergence but to the down side. with the fed turning dovish what options do other central banks have in the world trying to be dovish at the same time? i'm talking about ecb specifically ever since that sintra speech last monday, the currency has been higher. >> the ecb have moved to a more dovish tact. they will cut rates either in july or september. as draghi hinted, asset purchases are back on the agenda the key thing i took away from sintra is the rhetoric was stepped up in the ecb trying to pressurize governments to spend more, or those governments that

can spend more on the fiscal side you are likely to see the ecb to try to continue to pressure the governments that can spend more to spend more in future meetings the ecb can only do a bit more of the same. >> that appears to be a pipe dream, we've been talking about that in the context of europe for years and years, yet the biggest offender is germany. still this year you see marginal fiscal spending. what do you expect to happen the next time there is a recession in the eurozone. do you need to stare at the abyss to get governments on board or perhaps by buying more time, the ecb buying more time, eventually they can convince governments to really buy into this project of more fiscal spending in the interest of the eurozone project as a hold >> the irony of the ecb being continually dovish is that it probably delays the day of

reckoning. it doesn't avoid it. if the ecb wanted to accelerate the day of reckoning and force governments, it would be less dovish that's a risk they wouldn't be prepared to take >> can i ask about market reaction yesterday to powell and bullard's comments it seemed, if you looked at the movement of asset prices, that everyone thought he's being a bit more hawkish including the dollar you saw things pare back slightly. is that because people digested his comments, thought about what he was saying and realized he wasn't pushing in any direction at all >> maybe the financial markets are a little bit more disappointed that bullard, who spoke a little bit before powell, that he wasn't gunning for a 50 basis point cut >> he is the most dovish member

and markets gave themselves up to him hinting that 50 basis points was likely. that was the more interesting speech of the two. we were talking about the dollar impact on the euro in the interest of the upcoming cutting rate cycle, is it fair to say on the back of that you could expect to see dollar weakness is it as simple as that and one for one? >> the u.s. has a twin deficit all other things being equal should probably be a dollar weakness story but it is more complicated than that europe as a whole has a current account surplus. so, all things being equal the euro should be rising against the dollar

then you have the interest rate differentia differential >> we talked about trade wars, the fed, the other development the markets are focused on are the geopolitical developments. we've seen gold back up trading at six-year highs. do you have a view on the pressures metal here i think it was interesting to see bitcoin up 180% since spril. some of that because of the libra project. there's an element that central banks are going to be this aggressive, then alternative currencies do become more attractiv attractive >> jim, thank you very much for

chatting with us on "street signs. jim reid from deutsche bank. president trump threatened iran with owe obliteration in a tweet president trump called rouhani's comments as insulting. hadley has an important guest. hadley >> i am indeed thank you very much for that i'm joined by the u.s. secretary of the treasury, steve mnuchin mr. secretary, thank you very much for joining cnbc. i want to kick off by asking you what has been happening over the last several days, the war of words between tehran and washington we've seen the latest round of sanctions coming out walk us through the next steps for your government? >> thank you it's great to be here with you again. i think you know we continue to

have the strongest sanctions ever this week the president signed a new executive order giving treasury even broader authorities to put on sanctions to the supreme leader's office and assets held by them. i announced this week specific sanctions against individuals that have been responsible for bad activity we believe the economic sanctions are working. the president is willing to have conversations. he doesn't want war but the president is determined to enforce the u.s. and our allies interests in the region. >> so you said there are going to be more u.s. sanctions coming down the pike. those could include the foreign minister, could you confirm that and walk me through what other tools you have in the bag. already 80% of the iranian economy is under sanctions,

that's according to the u.s. secretary of state there are fears that you're running out of tricks in the bag. >> i don't think so. again, they are at about 80% now. we will allow for humanitarian activities our issue is not with the people of iran but with the government. we will continue with the sanctions which are working. >> i want to read some of thee comments to you that we heard from the iranian government. they called the sanctions outrageous, idiotic. they have even called the white house mentally retarded. how do you respond to that kind of rhetoric? >> let me comment on the sanctions issue. that must mean they're working if they're this upset about the sanctions, that's an acknowledgment that they're working. again, i want to be very clear, our issue is not with the people of iran. there is really bad behavior

they're sponsoring terrorism throughout the region. creating instability they are endangering our partners and allies and our interests and we will not stand for that >> walk me through what's happening at this peace to prosperity conference. there's been a lot of criticism ahead of the conference. a lot of people are saying this is a waste of time without any political solution on the table. what's your take >> my view from the last 18 hours here is really this has gone quite successfully. first of all, we had an enormous range of participants from both private investors, from the world bank, the imf, government people throughout the region, and this afternoon i'll have a finance minister panel that will be the concluding session. what everybody hears and what everybody is echoing at the table here is really this is a

very manageable plan this is something that can be done and will lead to tremendous opportunities for the people of palestine and for the people of the region this is not just investment in palestine, it's investment in jordan, lebanon and in other areas. this is about economic opportunities. and as i said, there's a path that people really see is very doable steve schwarzman said yesterday, you know, the $5 billion of investment into palestine alone, that is one or two deals for them there's a big commitment with the right governance and environment that people are excited about the economic prospects of the company >> i was discussing i had comments yesterday he was basically saying the palestinian territories are like

singapore decades ago. he said low on natural resources, high on human capital and human potential. but at the end of the day, dubai and singapore had real leadership the question for the palestinians and the israelis now is is the right leadership in place to get a political solution that could lead to this kind of economic prosperity that you're looking for will this take a different leader than benjamin netanyahu to get this done >> let me say i think this is both top-down leadership and bottom-up leadership i think netanyahu has demonstrated terrific leadership in the region. they have built a tremendous economy. >> the palestinians don't trust him. >> i won't comment on that i think trust is built up on both sides this needs to be an international solution this is not just about israel

and palestine. this is about an international solution and economic support. and i think when the palestinian people see that this is a very, very real plan for economic prosperity, for the young people there, there are great opportunities. that's something that we support and something that the united states and its allies are committed to >> and the president plans to lead on this >> absolutely. >> walk me through what you think will happen in the next several days of this meeting of the g20? will we get a deal the president was saying he's not anticipating a deal. but what could we see take place? >> i think this will be a very important g20. he has many important relationships around the world the u.s. is the bright spot of economic growth. there's slowdown in china and a slowdown in europe

so we will talk about the economic opportunities around the world. trade is high on our agenda and it's about free and fair trade we're looking forward to the meeting between president trump and president xi ambassador lighthizer and i have been involved in negotiating i hope the message we hear is that they want to come back to the table and continue i think there is a good outcome for their economy and the u.s. economy to get balanced trade and to continue to build on this relationship the president layi >> the president there saying he will try to keep some sort of goodwill what's your reaction >> i look forward to the meeting. i hope we can move forward with a plan the president wants to see the right economic opportunities this has been going back for the last 2 1/2 years