welcome to "street signs." i'm joumanna bercetche >> i'm willem marx these are some headlines for you. european equities rally and basic resources hit their highest level in more than a month on a report that the u.s. and china struck a trade truce >> we're meeting with china, just so you know china has been paying us billions and billions of dollars. until i got here they never paid this country tencents. we'll see what happens with

china. xi jinping ahead of talks with president trump before the g20. bayer shares jump as the german chemicals group bolsters its legal team to address a multibillion dollar litigation challenge around its round-up we weed killer. and h&m reports sales of its summer collection are off to a strong start with the firm's shares on course for their best day in three months. good morning a bit of italian data this morning. italy june consumer confidence numbers are just out they've fallen to 109.6 verses a consensus of 111.3 this is the lowest italian consumer confidence number since

july 2017. overall business confidence has also fallen to 99.3 versus 102 in may manufacturing confidence has also fallen to 100.8, slightly below consensus of 101 also lower than in may that will paint a picture of slowing confidence in italy. that is the picture for euro, returning flattish around 1.1370 there hasn't been much movement in the euro. the story has been one of dollar weakness rather than euro weakness let's bring in our guest >> good morning. >> good morning. >> weak consumer confidence in italy. you look at fixed income you're a fixed income expert

italian bond yields keep going from strength to strength. >> certainly central banks are back in the driving seat mr. draghi at sintra did another semi whatever it takes, if you want.

if you look inside the government, there's two souls, two areas within the government. one that wants to look for compromise, look for a budget deficit, on the other hand you have other members of the government that are a little bit more prone to spending so they've postponed the budget planning for later on. you know, we're still looking to see whether there is going to be an excessive deficit procedure ultimately what the sticking point is going to be is the yield turn you will have automatic stabilizers with an increase coming up. >> for people watching this closely, you don't think watching the new set of numbers, the half-year budget from the

italian government will be that significant. you don't think the next european commission meeting where they might decide to pursue an edp is the issue, it's more the latter half of the year >> the latter half of the year will be more in focus. >> so just talking about -- we were talking about what fixed income has been doing. the politics are important on the sidelines of g20 there's a meeting between juncker and the italian prime minister, conte. that's another meeting happening on the sidelines, not just trump/xi isn't the more important driver what the ecb decides to do at the next meeting or in september? there's been a lot of talk among the fixed income community that they may be looking to change technical constraints. isn't it a blank signal to buy any fixed income asset in europe >> we have seen the return of the carry trade.

anything that's got a positive yield and there are not that many assets out there left with a positive yield, so we have seen that carry trade. it does feel like there's a lot priced in already. it's not obvious that qe is going to be restarted tomorrow, which in some areas of the market, that's priced in already. so there's a higher chance that perhaps they cut rates first, or even if they do corporate qe rather than sovereign qe >> is there a simple way that the ecb can try to provide the support through easing that we're talking about and that draghi hinted at while limiting that support and cutting out italy so that italy and the italian government are not encouraged to go ahead with the lower taxes, higher spending is there a mechanism for that?

is it politically impossible nothing is impossible as long as there's a will, but it's a challenging political decision it's difficult for the ecb they don't want to put themselves in a tough political spot there are constraints. there are constraints that have to be dealt with based on the latest discretions and rumors they are looking into that they don't want to give a free ride or perceived to be giving a free ride he to certain countries who are keen insurers. again, it's difficult to say it's more a political choice than anything else >> don't go anywhere we'll bring some market numbers to our viewers >> let's talk about some market movers yesterday we had a moderately better session for u.s. equities with the major indices posting a

little retreat but positive end for nasdaq a big bounce in semiconductors up 3%. that was the story we were watching yesterday chipmakers had a good session on the "new york times" report that some of them are still selling to huawei. that helped boost the chipmaker not just in the u.s. but in europe as well overnight, asian equities are trading positive on expectations of the trade truce all eyes on that saturday morning meeting between presidents trump and xi. that's happening at 11:30 a.m. japanese time. this is the picture for europe this morning about 60% in the green 40% in the red, trading slightly more positive for stoxx 600, up about a quarter percent. a bit more positive. switching to european markets, let's break it down. the relative underperformer today is the cac 40. trading around the flat line ftse 100 above 7,400

boris johnson, the prime candidate to be the next party leader and prime minister said there is a million to one possibility of a no-deal brexit. so at least a bit of optimism from the leading contender there. the market doesn't quite believe him. xetra dax up 0.7%. one name in particular we're focused on is bayer. the german chemicals company hired a group of legal experts to look into the cases being pursued against them in the u.s. that is perceived as positive from it the market ftse mib, we were just talking about italy, up about 0.60%. no real progress when it comes to edp, so no gonews is good ne. we can see the breakdown of underperformer and out-performers

defense and utility down retail having a good day h&m a real out-performer here. that stock up 10% on positive sales numbers. autos 1.4% firmer. we had that more positive risk tone out of asia. cyclicals in the driving seat today. asian equities rallied after a report that the united states and china agreed to a tentative truce ahead of the g20 meeting in japan sources have been quoted that the meeting between president xi jinping and donald trump would not go ahead if washington were to proceed with additional tariffs. the two leaders are provisionally scheduled to sit down on saturday morning the chinese newspaper said details of the truce deal are expected to be released in two separate press releases. trump told reporters a broader trade deal with china is possible this weekend. but he also said the u.s. could

impose additional tariffs if he cannot reach an agreement with xi >> we've been ripped off by everybody over the years they're not ripping us off anymore. a big difference right now we're meeting with china, just so you know china has been paying us billions and billions of dollars. until i got here they never paid he this country ten cents. we'll see what happens with china, with russia, with japan, with many countries. >> we still have andrea with us. i want to ask you about this meeting. does it really mat nter in terms of the way the fed will prepare for this or investors are positioning, how significant will this meeting be >> it's important to see how the market sentiment will evolve a lot of the turnaround in market sentiment that has favored treasuries in may came as a result of an escalation of the trade war tensions

so any easing of those tensions could have an impact onbroader market sentiment given that you have more than 100 basis points of cuts priced in for the fed. there's quite a bit of bad news already in the price ultimately what will matter for the treasury market is going to be really about u.s. growth. the big picture, geopolitical tensions do matter but the fact of the matter is u.s. growth is slowing we're seeing -- you were mentioning earlier italian consumer confidence. u.s. consumer confidence has also come down sharply you don't have the luxury of being able to use the fiscal lever like you had last year so in this environment, assuming that the fed is one of the few central banks who still has room

to cut rates, which is a luxury that not a lot of central banks do have, there's still room for treasury he yields to be well supported. >> let's pick up on that so much about financial markets is about what's priced in. so i read many previews as i'm sure you all have into this g20. it seems like the expectation is that they will agree to continue negotiations, not apply extra tariffs, but then not repeal existing tariffs what type of reaction do you think we would see in markets if we get that baseline scenario? both for the u.s. dollar and for fixed income and does it matter if negotiations are continuing and if the more imminent data is pointing to the down side? >> the more recently we've seen markets reacting less around the geopolitical -- u.s. geopolitical headlines and much

more to data it is more about what's going on in the u.s. particularly around the consumer and the job market. that's the one pillar doing okay until recently we've seen the latest nfp numbers coming in weaker so anything that indicates that weakness is continuing will be of focus everything else, politics, what's going on at the g20 will matter but address we've seen in the past, people already have or investors are expecting this is not the end of it. there will be a back and forth that will likely continue with ongoing escalation, slowdown, things getting better and then worse. >> all right we'll continued the c the conve shortly. in the last hour china's commerce ministry urged the u.s.

to cancel sanctions on chinese firms like huawei. they announced they are in talks with verizon about payments of their use for the firm's patented technology. arjun kharpal joins us on his way back from china where he has been talking from various huawei executives do you get the sense that huawei is initiating these conversations as a way to hit back at the u.s. >> it's certainly the right question to ask. i want to answer that by telling you the context. a few days ago we had a report that suggested huawei was seeking around $1 billion in royalties from verizon on over 230 patents that verizon uses of huawei's i spoke to the chief legal officer of huawei, he told me that he confirmed that huawei is talking with verizon over patents. he stressed these talks are in the early phases he told me that huawei licenses

hundreds of patents to verizon covering end to end operations of the company so very significant. no word how much huawei is seeking from verizon and those terms are still being worked out. the timing is interesting just given the fact that huawei is facing slower growth this year and next as a result of that u.s. pressure. i asked if this was a way to put pressure back on the u.s. firms. he made this clear he said huawei is not trying to weaponize patents. he said they should not be used for political means. huawei has over 87,000 patents globally over 11,000 of those in the u.s. they own a lot of critical technology, these are piece of technology critical in making mobile networks like 3g, 4g, and now 5g work.

there seems to be some awareness from the u.s. on how strong huawei could be on the patent issue. just a few days ago there was a piece of legislation filed by marco rubio that would stop huawei from fighting patent disputes in american courts. in a press conference today it was said that would be a catastrophe for global innovation the key message here, the key point to make here as much as huawei says this patent action is not political, there's many experts who i spoke to over the past few days who say the timing of this ramp up in searching for royalties from huawei is no coincidence. it's more than coincidence just because of the ongoing tensions between the u.s. and huawei, huawei is putting pressure back on the u.s. firms. coming up, elliott unveils a stake in bayer as the pharma company begins to fight tens of

thousands of lawsuits over a controversial weed killer. we'll have more details 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. 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. (danny)'s voice) of course you don'te because you didn't!?

your job isn't doing hard work... ...it's making them do hard work... ...and getting paid for it. (vo) snap and sort your expenses to save over $4,600 at tax time. quickbooks. backing you.

hey! i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass.

bayer shares are trading higher after the company said it appointed an external lawyer to help with its u.s. legal issues and elliott advisers confirmed a holding in the group bayer formed a special committee to deal with the 13,400 u.s. lawsuits which claims its round-up weed killer caused cancer the activist investor welcomed the legal appoint. annette weisbach joins us. bayer stock is performing well on the back of this news >> i think it's a two-fold explanation here one, clearly that the supervisory board also takes part of the responsibility for the monsanto takeover, and the ongoing problems they're having in the united states and that they're creating a task

force to tackle the issue. clearly that's a shift in strategy before bayer was more or less having a hard line approach when it comes to the issue in the states. they said there's no clear evidence that it is causing cancer but i think this strategy didn't work out they've lost three court cases in a row now with also the u.s. law firms getting on board, it more or less looks like they're aiming for an outside court settlement, which would be a good sign for shareholders and that is also where elliott comes in it's interesting that they are stepping out just a half hour after the official statement "a," confirming that they have a stake, quite a substantial stake in bayer and "b" saying it's a good idea to be proactive and try to find a settlement outside court

so the estimates are running that it could cost bayer as much as 10 billion u.s. dollars to settle out of court but that's nothing compared to the potential litigation costs they could face if they had to settle each and every single court case, which is threatening bayer. i guess what elliott is saying in that statement is also pushing shares and a good sign that they're changing track, aiming for an outside court settlement in order to get that out of the way and elliott being an activist investor, they like to free structure companies. that's something that bayer is probably now pushed into as well perhaps we'll see a splitting up of certain business areas. with that, back to you

>> annette, thank you. h&m shares surged after the swedish retailer said sales of its new summer collection had started strongly and that key markets including the u.s., mexico and india were performing well the company also announced its expanding its partnership with u.s. bank clarna h&m reported a dip in second half profit, in line with expectations. president trump continued his criticism of fed chair jerome powell. during an interfew with fox trump said the fed should have mario draghi instead of powell because of draghi's willingness to stimulate europe's economy. he is stepping down in november. could be looking for a job >> that would be something >> jokes apart, let's talk about

the fed here the market is pricing in more than 100% probability of a cut in july. 100% certainty more than two cuts by the end of this year. so far the fed have not pushed back >> yes they had every opportunity to tell the market, guys, really, this is a little too much. and now we have 35 basis point priced in for july 70% chance of a 50 basis point cut. that's quite a lot arguably data has been in line with this view we have seen a slowdown. certainly the geopolitical tensions do not help we do think that there's a chance of two cuts this year over the next six months or so the front end looks a little bit

stretched. again we will see. the thing about the fed, mentioned earlier, they do have the luxury to cut, which is not something a lot of central banks have in a world where the economy is slowing, global trade is slowing, a cut is not out of the question ea >> earlier this week powell said the fed is not looking at specific data points which individual pieces of data are you guys looking at as you try to position for the rest of this year? >> any data evolving around the consumer and the job market will be very important. in the u.s. but also elsewhere so far the majority of the weak ps has be weakness has been driven by

exports and so on. the domestic bit has so far been held in quite he okay. any sign that starts to give is going to be relevant for us. >> we'll leave it there. thank you very much for talking with us. >> thank you theresa may is arriving in osaka for the g20 summit she's expected to meet there with president vladimir putin of russia that's going to be a rainy arrival in japan it looks like for th british prime minister. eg and everyone i've ever loved away from me. everything. i blew my ankle out and i got prescribed pain pills by my doctor. if making my detox public is gonna help somebody i'm all for it. i just wish i would've had a warning.

welcome back to "street signs. i'm willem marx. >> i'm joumanna bercetche. these are your headlines european equities rally and basic resources hit their highest level in more than a month on a report that the u.s. and china struck a trade truce >> we're meeting with china, just so you know china has been paying us billions and billions of dollars. until i got here they never paid this country ten cents we'll see what happens with china. >> xi jinping touches down in osaka ahead of crunch talks with president trump at the g20 as

china's commerce ministry calls for an immediate end to all tariffs. bayer shares are on track for their best day since january as the german chemicals group bolsters its legal team to address multibillion dollar litigation challenge around its round-up weed killer. and h&m reports sales of its summer collection are off to a strong start with the firm's shares on course for their best day in three months. if you wanted to get enthusiastic about a g20 meeting, you can't imagine better weather than this this is the scene at osaka airport right now as the british prime minister, theresa may, she who is always so lucky with the visual context for her appearances as we may remember from some conservative party

conferences, she will be deplane ing from that british government aircraft she suspecting to be meeting with russian president vladimir putin, while in japan. that is a highly anticipated meeting as are some other meetings taking place. >> i hope they have an umbrella ready for her. >> doesn't look like a warm welcome. >> no. we'll keep an eye on that and other important meetings happening on the sidelines of g20, namely on saturday morning between presidents xi and trump. let's talk about asian markets we saw a big bounce across all the majors overnight this on reports that the two sides are indeed heading for a trade truce. so we have the hang seng up 1.4% shenzhen up 1% a bit of optimism there as we head to crunch time when it comes to trade talks knee snikkei up 1%

we have xetra dax leading the charge up 0.7% one name we're focused on there is bayer that stock is up more than 6% today on news of an elliott management stake in the company as well as news they appointed a legal committee to look into case and lawsuits against them that is one particular stock we're focused on in general we are seeing a big bounce in basic resources, autos and banks. let's talk about what the u.s. futures food looks like. we have all the three majors pointing to open up in the green. dow seen up 86 points. nasdaq up about 45 a better session for the tech index yesterday led by semiconductors, which were up more than 3% on the day. in terms of data, watch out for the final q1 gdp reading, as well as core pce that's the one metric that the

fed are looking at in addition to the jobless numbers that's something to watch out for later. >> for those watching u.s. toll picks, contenders for the democratic presidential candidacy clashed in the first two nights of debates. ten hopefuls took part in that first leg of two that included massachusetts senator elizabeth warren, new jersey senator cory booker and former texas congressman beto o'rourke jay gray filed this report >> reporter: hoots and hole eho as the candidates take the stage, then the official start of the race for the white house. round one of the democratic debate opening with a rapid fire format >> we need to make structural change in our government, in our economy. >> reporter: candidates sticking to the 60-second time limit. there were a few swipes at president trump. >> this president is literally

every single day ten minutes away from going to war, one tweet away from going to war i don't think we should conduct foreign policy in our bathrobe >> reporter: and watching from air force one on his way to the g20 summit he posted boring. >> i'm with bernie on medicare for all. i spent a big chunk of my life studying why families go broke one of the number one reasons is the cost of healthcare. >> reporter: the first real exchange coming as the discussion turns to healthcare >> the choice is fundamental >> reporter: the back and forth continuing [ speaking foreign language >> reporter: as the talks shift to immigration >> i will make sure number one we end the i.c.e. policies and the customs and border policies that are violating human rights. >> reporter: issues like gun control, claimant change continue to hang over the debate >> the biggest threat to the united states is donald trump.

>> the greatest threat that we face is that we're at a greater risk of nuclear war today than ever before in history. >> reporter: a crowded field searching for any way to grab the elliearly attention of votes the next ten candidates will take the stage tomorrow. jay gray, nbc news, miami. we are joined by james dubois how confident are you that a progressive candidate from this large and crowded field will make it through to the ticket? >> we can guarantee one of the progressives will make it forward from tonight and into the primary season the progressives had it easier last night they were far stronger in terms of being able to push their causes we saw people like elizabeth warren doing that. it's the moderates who had a tough night last night of course it's different to be

tempered and moderate in a debate climate like that which rewards people who interrupt and force their issues we saw people like julian castro do that and see a spike in his numbers. does it matter at all if people like elizabeth warren promise changes to taxation rules, that say changes to u.s. healthcare systems, the reduction of private healthcare, that's something she talked about >> she wants to repeal private healthcare >> if democrats don't control congress, it doesn't matter, does it? >> what was remarkable last night is the amount of empty promises being made. thesecandidates last night and tonight are playing to the democratic base. they're telling their supporters what they want to hear both senator warren there as well as julian castro promising things which are not within the domain of the president to give. castro, for example, made some great strides overnight in polling but he was promising to pass and get on the equal rights

amendment, a constitutional amendment. the president has little to do with that. he was talking about passing sweeping immigration reform in his first 100 days everybody knows they've been trying to get sweeping immigration reform for years it's not the president's domain to grant without the support of congress, these ideas are going nowhere. >> it's like getting a brexit deal through in two months >> you have to deliver >> i want to pick up on a point, you said you said they're playing to the democratic base. the democratic base has shifted more left and more progressive over the last decade or so there's numerous statistics and a out there that point to that the main two front-runners today, you have joe biden, the debate is tonight. more centrist, more of an establishment candidate. haven recently elizabeth warren and bernie sanders you have the progressives on the left the establishment candidates wasn't hillary clinton the

establishment candidate last time around? what have the democrats learned from that experience in trying to push forward yet another establishment candidate this time around? >> it's an interesting and really great question. the challenge you have is one of the reasons that joe biden is doing so well is straightforward name recognition he comes to the table with backers from his time in congress and in the senate and in the white house you know his first debate as a presidential candidate was over 30 years ago he brings with him a lot of weight on that level one of the challenges is is getting young people engaged in this that's one reason the progressive candidates are getting the traction they can make these great promises we saw that last night and we'll see it tonight >> a big topic we've been discussing on the show is that of trade it didn't feature at all on yesterday's debate the democrats do not have a stance when it comes to trade. do you think that will backfire against them given this is one

of trump's key priorities at this point >> you have to remember the candidates can only talk about the questions that they are getting asked. of course the three moderators last night chose to focus on different areas. we'll have an awful lot of debates moving forward i guarantee you trade will come up the suggestion last night we're at the closest point to nuclear war in human history perhaps misses the cuban missile crisis of 1962. >> all right, we'll leave it there. thank you very much for your thoughts very interesting time in the u.s. president trump has said he will not deploy troops to iran, but he's warned tehran that if there was a conflict between the two countries, it would not last very long. the u.s. leader made the comments in an interview with fox business news but did not provide details. iran indicated it will breach restrictions on its stockpiles of enriched uranium levels

today. trump said he is no rush to strike a deal with iran. >> iran can do whatever they want it's just fine i have plenty of time. they have a country that's in economic distress. it's an economic disaster right now. they could solve it quickly or they could solve it ten years from now whatever they want is fine with me whatever they want i have all the time in the world. i'm sitting here i have all the time in the world. in the meantime they have strong sanctions. they have to live with those sanctions. iran should do the right thing for their people i'm not sure that their leaders care for their people. >> boeing shares fell in after hours trade after the u.s. federal aviation administration found a new flaw in the 737 max. the agency said the planemaker must address the risk before the grounded planes can return to service but did not specify whether the issue will require a software upgrade or a more complex hardware fix

speaking of planes, british prime minister theresa may has laned in osaka that's a welcoming committee outside of her aircraft as she prepares to step out in blustery and rainy weather in japan ahead of her meetings with vladimir putin, the russian president and some of her other g20 counterparts >> it's not that beautiful weather, at least the heat wave is stronger in europe than it is in japan right now. coming up on the show, we will tell you which surprise source says the chances of a no-deal brexit are a million to one. you're telling me there's a chance that's when we come back unpredictable crohn's symptoms following you? for adults with moderately to severely active crohn's disease, stelara® works differently. studies showed relief and remission, with dosing every 8 weeks. stelara® may lower your ability to fight infections and may increase your risk of infections and cancer. some serious infections require hospitalization.

before treatment, get tested for tb. tell your doctor if you have an infection or flu-like symptoms or sores, have had cancer, or develop new skin growths, or if anyone in your house needs or recently had a vaccine. alert your doctor of new or worsening problems, including headaches, seizures, confusion and vision problems. these may be signs of a rare, potentially fatal brain condition. some serious allergic reactions and lung inflammation can occur. talk to your doctor today, and learn how janssen can help you explore cost support options. remission can start with stelara®. explore cost support options.

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.

theresa may, the british prime minister, has left her aircraft and arrived in osaka. that's her car there you can see the union jack on the front of the mercedes. she will be heading into town and amongst others meeting with russian president vladimir putin. this will be one of her last international engagements as prime minister at least that's what we think. that depends on the conservative

party leadership race that is still very much ongoing. in that race, boris johnson has played down the chance of a no-deal brexit he has described the odds as a million to one but he says the conservative party will suffer if the october 31st deadline is treated as fake. he said it is unlikely that parliament will be open to another extension on brexit. jeremy hunt said he would be open to an extension if a deal is in sight. liam fox who is publicly endorsing jeremy hunt, told cnbc he is open to working with boris johnson if he becomes prime minister dan spoke to liam fox at the conference in dubai. what else did he tell you? >> good morning. in this conversation we had with liam fox, he was able to explain why this is so important

he is in town to break ground on the uk pavilion for the expo we also took this opportunity to speak with him about the ongoing unfinished jigsaw puzzle that is brexit and of course the tory leadership race in the uk. on the issue of the leadership, he said he's still backing jeremy hunt, his commitment is unwavering i asked him if he was backing a losing horse he said no on the issue of brexit, this is on top of the agenda and indeed one of the biggest issues of national focus now, he said that there needs to be compromise on both sides, and he hit back at that commentary from boris johnson which suggested that the uk could be heading towards a no-deal exit he said that would be damaging for the eu and for the uk, and both sides need to come up with a solution listen in. >> my colleagues in the uk need to understand this is not a yune

r unilateral process any one of the eu leaders could decide britain is not getting an extension and we're leaving without a deal in a negotiation there are two sides. and i think we need to understand that. we want the european union in a position where for us to leave without a deal would be damaging for both sides it's clear the deal we have at the strength time won't get through parliament if we are genuine about wanting to first of all recognize the need to fulfill the democratic element and honor the wishes of the british people in the referendum and leave the european union but also do it in a way that causes minimal disruption, both sides will have to compromise. >> so fox outlining there that compromise will be necessary it really does remain to be seen who will emerge victorious in this leadership race the big question is will they be willing to compromise and will the eu also be willing to compromise on its own side

in terms of other conversations that mr. fox has been having here in dubai, he said he's also focused on engaging with the region as well that's also going to be very important for the uk as it makes its way out of the eu and it attempts to foster and build new relationships around the world certainly showing face in the middle east doesn't hurt back over to you >> dan, thank you very much for that interview kpmg downgraded its uk gdp forecast in the latest report business investment is expected to lag but consumer spending will continue to drive the british economy. our next guest joins us here what has changed over the last three months from your perspective to cause you to downgrade your forecast? >> most of it is actually outside the uk

we've seen the trade war continuing we're expecting a little bit of a pause hopefully, depending on what's happening later on this week we also have seen tensions in ir iran, that will put a squeeze on, and we have europe, we have germany week, still waiting with a potential showdown with the italian budget and there's an environment of really a lot of weakness in europe without even starting to talk about brexit. >> let's talk about brexit has uncertainty about when brexit happens and the form it ultimately takes, has that had a different kind of impact on consumer spending versus business investment? we mentioned your report talked about those two as separate drivers. one positive one negative

how has brexit and the uncertainty around it and the timeline around it impacted those two areas? >> it's interesting. when you look at the labor market, it is very tight when you look at wages, they're going up quite healthily given where we are in terms of productivity consumers are more or less consuming as usual we can always rely on the uk consumers to spend when you look at business investment, though we had this surge in q1, overall business investments remain weak. we expect that to continue remaining very weak given the uncertainty. that has a huge implication for even long-term growth in the uk. it is what we're really worried abou about. >> are companies saying we don't know what the future holds, rather than invest in a new factory, buy a new set of computers, we'll hire more people is that the dynamic at play?

you're seeing that tighter job market >> you do see tightening of the job market, but not so much right now. they're pausing at this stage. what we worried about is looking forward, you're going to see a potential uptick in business investment especially if we have a no-deal. you need to try to understand whether this is additive or a replacement. >> your 1.4% growth forecast for 2019, i guess you're working on the assumption that we get to some tomorrow of a transition agreement by the end of the year which is also the assumption that the bank of england is working on what analysis have you done for a no-deal brexit >> we've done a lot of analysis throughout the year. to be honest with you, numbers don't change if we have a no-deal brexit, we advise our climates to assume at least 6% smaller economy

>> what assumptions are you making when it comes to tariffs? the front-runner to become the next tory leader and prime minister, boris johnson, seems to think even if there's a no-deal brexit, under article 24 the uk can still engage in tariff-free trading on goods with the eu. other people have come back, liam fox, mark carney, they have said you would need buy-in from the eu to do that. what tariff assumption are you working under? >> we are working under the assumption that we'll get tariffs under wpo and under the assumptions that we'll have friction in the borders. because we do not assume that we will have the borders ready by the end of october to deal with a no-deal brexit >> just a quick follow-up question i mentioned bank of england governor mark carney what's interesting about the bank of england, they still seem

to be guiding towards rate hikes. when you speak to businesses, do you tell them they should be thinking about the possibility of rate hikes out of the bank of england if we actually do end up in a transition situation and withdrawal deal is agreed to is that the advice you're giving to businesses and customers? >> if you look at the uk economy, if you look at the productive capacity, we are at a point where you could argue that we're relatively tight unless we get increasing productivity the bank of england, if they raise rates, that will hurt investment so in that case i don't see rates going up significantly i do talk to clients and say you should expect a rise if everything goes smoothly, not just in the uk but elsewhere

>> boris johnson as the front-runner, he has advocated tax cuts for higher income brackets in the uk that kind of fiscal stimulus, what impact would that have on the uk economy long-term >> i think quite a lot of things have been mentioned. taxes are one of them. also numbers on investment and infrastructure generally we're in an environment where rates are likely to say low for longer, and if we are going to invest more on the fiscal side, if it's an investment that will cause productivity to rise, it makes sense. it's like any business appraisal. i would say that would be good if it just is spending for spending in terms of consumption, maybe less of a case >> thank you very much for your

views there. let's take you back to live pictures from osaka. this time the italian prime minister, giuseppe conte seems to be arriving for the g20 summit plenty of interest meetings happening there. watch out for the meeting between prime minister conte of italy and european commissioner jean-claude juncker as they discuss the potential of italy averting a quick look at u.s. futures the picture is positive across the three majors wat that's it for our show. i'm joumanna bercetche >> i'm willem marx "worldwide exchange" is coming up the first survivor of alzheimer's disease is out there. and the alzheimer's association is going to make it happen. but we won't get there without you. visit alz.org to join the fight.

you're here to buy a usethat's smart. suv. truecar can help. it's great for finding a new car, but you already knew that. it's also great for finding the perfect used car. you'll see what a fair price is and you can connect with a truecar certified dealer. so no matter what you're looking for, there it is. this is how buying a used car should be. this is truecar. (upbeat music) ♪

mno kidding.rd. but moving your internet and tv? that's easy. easy?! easy? easy. because now xfinity lets you transfer your service online in just about a minute with a few simple steps. really? really. that was easy. yup. plus, with two-hour appointment windows, it's all on your schedule. awesome. now all you have to do is move...that thing. [ sigh ] introducing an easier way to move with xfinity. it's just another way we're working to make your life simple, easy, awesome. go to xfinity.com/moving to get started.

it is 5:00 a.m. at cnbc. 6:00 in osaka, japan where air force one is expected to touchdown within the hour for the g20. big news crossing this morning that china and the u.s. are reportedly calling a trade truce ahead of this weekend's talks. but not all is well in the world of trade president trump blasting another trading partner in whfor what h calls unacceptable tariffs at blow to boeing as potential flaw is found in the 737 max. boom and bust. maybe back