welcome to street signs. these are your headlines the rally spreads to europe where stocks look to close a volatile month on a positive note amid signs in a cool down in trade tensions days before fresh tariffs on chinese goods come into effect >> italian prime minister and leader of the pd party matt matteo renzi told me he doesn't

want a role in the new government but tells me rome is open for business. >> i can have vote of confidence i can support. i can block salvini and give a message to international investor, please invest in italy. >> europe's real estate index hits the highest level in a month fuelled by german property stocks following a report that a plan could be less strict than previously expected. and boris johnson vows to step up the tempo on brexit talks as he braces for a show down in parliament next week with opposition leaders ready to ignite attempts to block a no deal

well, a very warm welcome to street signs happy friday to you. markets ending the week on a positive note as far as we can tell extending games this morning the stoxx 600 up about 0.6%. this followed a solid day where the benchmark ended 1% higher. we saw strong gains in most regions. in particular strength in the ftse mib closing up nearly 2% yesterday. a lot of movement on the political front and resolution coming with the new coalition formed and con terks lete leadiy there. so a bit of respite coming through but overall this morning the gains continue this followed a strong day on wall street. yesterday we saw some c conciliatory comments come through. so a sense of calm no escalation at this stage.

we have new tariffs coming through september first and the prospect of in person talks between beijing and washington signals that will take place in september. let's look at the individual regions. the ftse mib outperforming broader europe up about 0.5% so right in the middle of the board i would say relative to the gains elsewhere in europe the dax is up 0.7% i mentioned in the headlines, we're seeing very strong gains in the german property sector and that comes after a report in a german newspaper that we may see a plan less strict than expected fste 100 up 0.4% let's move into the different

sectors. green across the board not only do we have every region trading in the green but every sector at the green. german property stocks fuelling that rally autos, basic resources and technology round out the rest this morning china exposed trade sensitive sectors as we head into next week conte is working to create a new cabinet that he hopes to put before the country's president in the next few days this after the leader of the pd and five star agreed to form a coalition government now she's had an incredibly busy week along side all the italian politicians. i know that you sat down with an exclusive interview with one of the key players, mateo renzi what is his role and why is he

so key in terms of what we can look for next? >> thank you actually you may notice i have a different location from where i was yesterday. today we're standing in front of the deputy of chambers where mr. conte is expected to show up shortly and start consultations with all the different parties about putting the government together and as we found out through the course of the week that we indeed have the intention to get together into a coalition government the big question is still about the list of ministers and whether or not they can be approved mostly by five star movements given their open democracy platform system. so still a few sampling points to get through but it did, as you mentioned, have the opportunity to sit down with the former italian prime minister and a bit of a history recap here, i wanted to give viewers a bit of the background and you may recall he put forward a

referendum and then he lead the party into the elections last year in march after we saw a big decline in polls where it was very, very low it was interesting to see all of a sudden the last 15 or 16 months or so we see this turn around because he's still very much a heavyweight within the pd system he said maybe this is an opportunity to enter into discussions with five star perhaps this is an opportunity for us to get into government and start changing the narrative. technically right now the leader of the party

that's obviously a secondary element to think about when we think about the future dynamics of italian politics. so one question i did ask mr. renzi is many people are talking about the possibility of you spinning off and doing your own thing in the future. what do you say to that? >> everything is possible in italian politics let me be honest with you. i'm a very lucky man i became mayor of florence, the most beautiful city in the world when i was 54 years old. i became the youngest prime minister in italy. i won the competition. the problem is in italy, i think the necessity to invest in a new

direction for the future of this country. unfortunately i lost the referendum to change constitution because my idea was exactly to abide the system with the same traditional gains in policy my dreams were i will invest in a new model more similar to usa or to france with the winner election night and four years of stability. i lost in the referendum, 2016 wasn't a very goodyear to celebrate the referendum in italy as in the u.k. now we will see what could happen in italian politics but before to discuss about my party, about the latter in italy, everywhere there is discussion about the future of the left, my opinion is first we

have to block salvini and his very dangerous idea ability relation with russia and about relation with anti-european parties and about hate speech against women and black man. then we will discuss about the division of my party please come back to home or beach with mojito and all the dancing. this is his dream. second we discuss about politics. >> very interesting. he doesn't rule out the possibility of perhaps doing his own thing in the future. he says anything can happen in these crazy italian politics so that's worth bearing in mind but he did, reiterate and has been reiterating this over and

over again the number one right now is to stop salvini. >> another topic is a major concern for them is italy's relationship with the euro what did mr. renzi have to say about that >> it's a very valid point investors are focused on what this could mean in terms of the relationships, the diplomatic relationships with europe and when it comes to the negotiations on this important budget we're getting into that season come october and you could say the previous coalition government was combative in nature but also from the five star leader. you also may remember a diplomatic incident not so long ago where he met with the head of the yellow vest investors in france and that sparked a tussle between the two countries so no doubt that it's still linger and it's something that may actually come back to bite him right now. but they want to turn the page

with europe and they want to reconcile the relationship between italy and france and yet one of the bigger questions, we did have europeanelections tak place this year. we have new european commissioner coming in, perhaps this is the time to be ambitious in terms of how you think about europe's future, particularly when it comes to that. so i asked mr. renzi about that he for the first time used the expression flexibility i think it's important to have

partner for stability but without growth there is not stability. without growth, they risk the instability and italy show that very clearly my view is a new strategy for european institutions. and let me be very clear, today the risk for europe is not populism it's not nationalism the risk is the lack of vision of institutions. it's very important to be clear and committed about development in europe and confidence, i believe in europe, i'm very proud to be european but we need a different europe

>> very proud to be european but we need a different europe the biggest risk to europe today is not nationalism it's the lack of vision. at the end of the day, how can you have the growth and stability pack if you have no growth the lack of growth will lead to instability so perhaps in the future you may be looking at a broader europe that's focus will be primarily on reinvigorating european growth and that could bring a little bit more stability to the block as a whole. days after a controversial decision to end parliament

he has instructed his team twice a week in the run up to the european summit. while i have been encouraged with my discussions with eu leaders that there's a willingness to talk about it it's now time for both sides to step up the tempo. meanwhile opposition labor leader jeremy corbyn vowed to bring forward it as soon as they return from recess next eek. we are going to try to politically stop him on tuesday in order to legislate to prevent a no deal brexit and also try to prevent him shutting down parliament during this utterly

crucial period. >> meanwhile, the ecb said it's too early for a huge package of stimulus measures. in an interview with market news she described an asset purchase program as a last resort the central bank will unveil stimulus measures in the september meeting including bond purchases to combat an economic slow down. christine lagard argued the ecb has room for further rate cuts she also stressed the central bank must stand ready to act against a potential downturn however lagarde warned of the dangers that low rates pose to the banking sector thank you for joining us this morning. let's kick off there on various

commentary we heard some relatively hawkish comments do you think there will be enough to prevent this from coming through in september? >> i don't think so. they were pretty clear that they want to act and that it's going to be a package. all the parts of that package were mentioned the asset purchase program as well as a change in adapted guidance perhaps a state or threshold based guidance yes there's resistant and you mentioned the usual suspects there but there's a clear majority for action. >> and in terms of the economic

impact or potential economic impact, what do you think at this point how effective will lower rates more asset purchases be for stimulating growth in the euro area >> well, if you ask the question that way around you have to be skeptical. we are at the lower bound. interest rates are already very low. there's a little bit of stimulus to be had but it's not going to work immediate monetary policy always works with the lag so perhaps the second half of next year, the earliest we might see impact but of course you could ask the question the other way around, what if the ecb does not act and that would be the worst outcome because that would mean the ecb tells us it can't do anymore and won't do anymore and markets will price out any action but ultimately they don't hold the key to new growth, it's the german finance minister. >> we'll pick up on germany in

just a moment but just rounding out the conversation about on the monetary policy front how significantly different do you think things can be under a madam lagarde? a lot depends on the fiscal side of things but within the ecb how much of an impact is it going to be to have her at the helm >> well, hopefully not very much we need continuity it's been crucial not just in trying to get back to target but also in terms of defending the euro zone against the biggest crisis ever faced in 2011 and

2012 also this will continue. she's obviously less of a -- she has less record you'd have to say. i think draghi is going to announce for him to follow through on and when that is up for renewal, we'll see how she acts but continuity is the name of the game here. >> if we can just look a little bit more closely at italy just before we begin this conversation we were speaking to him reporting from rome on the latest developments there. in terms of the policies of the new coalition that's come together, do you have a sense yet or a prediction as to which structural reforms will be on the agenda of this new coalition? >> i doubt it. >> so far the conversation is more about who gets which rather than which policies.

it has to be said in terms of economic policy, the tax cuts and supply site and business friendly approach had more supplies in terms of the income and these sorts of ideas and the pd, the center left party that moved perhaps a little bit to the left since mateo renzi is no longer the prime minister or party leader is not going to necessarily add a big touch of pro growth and pro business reforms either the good news is that fiscally things look better than we thought they would at the beginning of the year

but in terms of structural reform. >> thank you for weighing in just a reminder that you can follow us on twitter at street signs cnbc and tweet me directly if you want to weigh in and have any thoughts or questions on what we're discussing on the show kmuk after the break, germany's manufacturing sector continues to weigh on the economy with concerns mounting the country will enter a technical recession in the third quarter we'll take an indepth look after the break.

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welcome back to street signs. let's take a look at germany's real estate companies. they're performing strongly this morning. gains of more than 10% in some cases. that comes after a planned rent freeze by berlin's regional government could be less strict than previously thought. citing attendees of a meeting between political parties, the paper says they could allow slight rent increases in line with inflation so clearly a development very welcomed by the

market across the board. strong gains and that's lifted the broader european real estate index to the highest level in a month. declining by 2.2% since june however year on year sales growth remains solidwith much of that growth being driven by e-commerce now germany's economy contracted in the second quarter as exports fell at the fastest pace in six years. the weak reading adds to growing jitters about the health of europe's largest economy let's push on. before the break you suggested it doesn't come down to the ecb at this point. it's all on schultz that we need to be watching what are you expecting at this front? >> the government already

adopted a budget for next year which will see it stays. the government doesn't want to borrow that limits the scope of fiscal stimulus at the federal level. we'll probably allow them to do a little bit of stimulus and we'll have to watch what the state governments and municipalities will do that's a good thing because there was tightening i think bigger stimulus will only come in 2021. that's when they said it for many households. that could be the platform for a bigger stimulus.

>> your point about more coming from the regional governments i want to ask you about the story coming through overnight considering less strict than previously thought rent freezes in berlin. german property stocks strongly on the back of this. how significant is this development in your view well, in a way it shows the dangers of an election in germany where the left, so the green and the left party form a majority government. they're already doing this in one small state in germany as well as berlin and others where they're working together these parties are close to a majority in the polls. so it's quite possible that we'd end up with this left wing alliance and if that happens berlin could become a blueprint for the whole country. these parties seem to be keen on

intervening in the markets for various things you mention the story of rent. there's another story that they might try to forbid negative interest rates so these will increase that's probably not the recipe to unleash growth in germany i think we need structural supplies reforms once again on that side as well and i think actually the reforms will always be more important for growth in the long run than short-term fiscal stimulus. >> what about taxes? this is the small and medium sized businesses that account for 60% of jobs in germany just for our viewers and knowledge. how much of a difference can tax cuts like these actually make? >> oh, they can make a big

difference germany has a huge state quota so almost half of the economy goes through the pockets of the states in one way or another he mentions tax cuts but presumably he wants to finance that elsewhere that is a structural reform which would be welcome and good to boost economic growth does it set the right incentives is it fair across the spectrum of companies >> finally in terms of the cyclical downturn it's extremely hard to call the bottom so perhaps a more reasonable question would be how have we seen companies adjust to the slow down in the manufacturing sector in terms of their prom duction capacity and hiring amid this weakening in demand

>> i think we're a long time coming that's why we saw the labor market continue to do well that's what you do if you try to look through a cyclical downturn but this is driven by broader global forces and also by domestic structural issues so companies are starting to adjust they're bringing down the inventories and reducing production levels and production plans. they're probably investing a little less in the capacity as well and they're starting to fire people at least not to hire anymore. this is bad in the short-term but there's still flexibility and they're going to adjust so this is, in my view, the beginning of the turn around but i don't think that the turn around will happen before the second half of next year. >> excellent thank you for your thoughts on

such a wide range of european issues well, coming up on the show, trade tensions ease as the u.s. and china signal face to face negotiations will resume in september. stay with street signs

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he won't take up a role in italy's new government because of personal issues with the movement and ensures investors that rome is open for business i can block salvini and i can

send the message, please invest in italy the highest level in a month fuelled by property stocks following a report that a freeze in berlin could be less strict than previously expected and boris johnson vows to step up the tempo on brexit talks as the prime minister braces for a show down in parliament next week with opposition leaders ready to ignite attempts to block a no deal let's take a look at european markets and see where things stand on the last day of the week and the last trading day of the month we're in positive territory across all regions here in europe across all sectors as well now overall, we're seeing support from relative calm on the u.s.-china trade front yesterday we of course just moments after the session began heard from china's commerce

ministry but they want to continue trade relations with a calm attitude and they're opposed to an escalation now the two sides have signalled they will resume in person trade negotiations in september. so a bit of support coming from that so we have tariffs on september 1st. plenty of uncertainty still looms. let's see where things stand on the currency front the euro retreating about 0.15% versus the dollar in the last 24 hours or so we did get hawkish commentary from a couple of ecb members. so some die jex of that that means. the bound is down. this is the dollar at 1.217. next week the big show down in parliament

and finally, u.s. futures, gains across the board according to the implied open for the three major indices there. that follows a rally when we saw all the indices gain more than 1% and the mood on wall street boosted in part by the comments from china's commerce ministry and relatively upbeat comments around the trajectory of the u.s.-china trade relations >> now they will resume in september. president trump said fresh discussions taking place would be held at a quote different level in a fox news radio interview. he didn't elaborate on what that meant but a white house official told cnbc that both sides remain in communication at various levels now a foreign ministry spokesperson said face to face talks for next month are being discussed. eunice has more from beijing

chuy goods will be subject to a 10% tariff and one minute later china will impose tariffs on $75 billion of u.s. goods in a range of 5 to 10%. 1,717 items are on the list including soybeans china is urging the u.s. to call off the additional tariffs saying the move would create favorable conditions so the two sides can make progress in talks. the commerce minister hinted beijing might not retaliate. the trump administration says officials are speaking over the phone. though no word on whether it would lift the taxes the business community is calling for an end to the duties the head of the u.s. chamber wrote a piece in the washington post entitled lift the tariffs the chief of the u.s.-china business counsel said his members are in china for the long-term and encouraging the two sides to get back to the negotiating table.

meanwhile, the nikkei is reporting authorities are putting more restrictions on the banks on converting into other currencies and on real estate developers access to foreign currency bonds possibly a sign the authorities are getting nervous about capital flight with a weaker yuan >> it's on pace to be a down month and in the u.s., the dow and s&p are lower by almost 2% month to date while the nasdaq has fallen by 2.5% meanwhile, gold and the yen have enjoyed a relatively strong month. now to help us understand what wesaw but in the last week or

so we have seen markets pair back the losses. it's been a pretty good month in terms of positive momentum do you think it can continue into september >> it can and if you think about it and look at the year to date, markets are still up especially in the u.s. and if you think about the economic indicators being from personal consumption. even manufacturing is a bit weaker in some of the most recent readings. the economy is still robust. markets realized it is a slow down and it is coming but we don't anticipate a recession and i think the markets, the volatility we have been expecting it and it's typical of a slow down but not a recession

it's typically seen as a barometer of economic activity it's in correction territory off from its 52 week high. is this not a signal that the rest of the market is due for a steeper pull back? there are signs of a slow down the whole kind of conversation around trade talks and slow down back and forth that we have seen over the last few months is making investors nervous it's just reflecting that

nervousness of investors and companies slowing down on the activity in face of uncertainty. >> it's down 2% for the month. within that, the ftse 100 has been the real underperforming. down almost 5% a lot in there how are you thinking about the u.k. market at these levels? if uncertainty is the word of the day, more so in the u.k. than anywhere else in europe we talk about it today already in terms of the government and potentially on negotiations around brexit and i guess what the u.k. economy has, its very much external looking in terms of the export and not as much to domestic consumer. if there is a global trade slow down and if we see the economy slow down across the board, u.k. companies will be effected especially large u.k. companies.

and then the currently will work there. so it's not surprising to see them underperform but it's in the context of a fair amount of uncertainty surrounding the u.k. and the u.k. economy as well. >> looking further ahead, as you say, a huge amount of uncertainty in terms of what can happen but there's several economists that believe that the u.k. economy will be more resilient than the market is currently pricing even if we see no deal happen on october 31st what kind of bounce back could we see in the ftse 100 and ftse 250 in the back half or in 2020 overall given where we are in terms of valuations now?

>> the currency continues to deteriorate and we expect that happens especially if we have a shock again with the no brexit or no deal coming upso we migh not see the ftse 100 recovering for awhile but in terms of the solid fundamentals of the economy, they are still there but we are just following suit in terms of the global slow down that we are seeing elsewhere. >> and then finally, another, in addition to the political uncertainty and some what connected of course, the yield curve inversion has been a huge driver of the sell off we have seen in equities given the

signal that it sends around incoming recession what are you thinking here about the downward move we have seen in rates is it signaling a recession or just a long period of growth >> we have been calling that for awhile the bond market is kind of got it over the last few months, last 6 to 9 months and then you'll see that coming through on the yield curve. you have to go back to the strength of the companies and their value sheets and the strength of the economy in general to see if it is actually forecasting a stronger

slow down than numbers so again you can think about it before i don't think investors should expect it to go back to normal levels because there isn't a normal level there isn't a version to be observed and we're going to have to get used to this type of environment with not much coming in from the fixed income markets. >> it's a difficult environment to find those returns. thank you very much for your insight. according to the iif, it's the worst month since president trump's election in 2016 slow down concerns and increased trade risks prompted the exodus

and daimler shares were upgraded from hold to buy they expect earnings to improve in the second half of the year they also argued that daimler has been overly derated. the lender is hopeful to secure a deal within the next few weeks. now the move is separate from the plan to snap up the german banks brokerage unit both declined to m comeant and some fresh news on huawei, u.s. authorities are probing fresh allegations of technology theft by huawei. according to the wall street journal prosecutors are looking at instances of alleged property theft over a number of years as well as huawei's recruitment strategy the tech company has been caught in the cross hairs of the u.s.-china trade war with washington labeling it as a

national security threat and saudi aramco is considering a plan to split it's ipo into two stages according to the wall street journal, the state owned oil giant is looking at first listing some shares on the saudi stock exchange later this year before an international listing in 2020 or 2021. dan has the full story. >> there's new reporting on saudi aramco's highly anticipated secondary listing. the wall street journal says tokyo is now a destination of choice with top saudi officials saying uncertainty in hong kong and brexit worries in the u.k. could take the exchanges off the table. the journal said it was still a preferred choice but officials cautioned him against it as critics expose aramco to u.s. litigation or disclosure hurdles. while tokyo doesn't have the liquidity of other international markets it's not necessarily a surprise front runner.

japan is a major customer of aramco's crude and would offer the firm a stronger gateway to the asian markets. on the timing of a potential ipo, it's also reported that $50 billion worth of stock could be offered on the domestic saudi exchange as soon as this year with a follow on offering on an international exchange sometime in either 2020 or 2021 they have said no final decision has been made about where, when, or how any listing would take place and all options remain on the table. the timing is also of course highly dependent on the outlook for crude oil prices which remain in bear market territory. back to you. >> that was dan murphy reporting on the latest when it comes to the saudi aramco potential ipo coming up it's sports time europe's top football clubs find out who they'll be facing in this season's champions league reaction to the draw on the way.

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two other prominent campaigners were almost arrested adding to the 900 people detained since protests broke out in mid june against china's rule over hong kong. he became the face of the umbrella protest in 2014 he had been released from prison in june after serving a five week sentence for contempt of court. president trump cancelled a trip to poland saying he wants to stay in the u.s. to help them prepare for hurricane orian.

>> well, i promised you sports this morning here we are. the group stage draw for the top football club competition, the champions league has been revealed liverpool kick off their title defense with trips to italy, austria and adam joins us with more. >> here we go again. the champions league is back after the group stage draw was made as you pointed out. let's have a quick run through who is in the group starting with group a and coming out of two was paris and two was real madrid they could be contending the final next year in istanbul because speaking of istanbul, they're in that dprogroup as we. now they are the top seeds in group b. tottenham getting to the final

last year only to lose to liverpool. manchester city. now, juventus are craving the champions league that's why they bought cristiano ronaldo. can he go further with them and make a champions league success for him and after the draw he was speaking and saying what he achieved last season and if he could translate that to this season. >> when the year start i'm always confidence and this year i'm not change my mind last year was amazing. i won the national cup for portugal so this year we try to do the same. champions league, we have the euro cup as well

step by step >> they have napoli again. he picked up a bit of silverware for them yesterday as he won the men's player of the year as well >> very exciting stuff thank you for giving us the low down let's take a look at u.s. futures as we head into the final trading day of the month for wall street. positive momentum for u. s. stocks. we're going to end the month on a high note. september 1 sst new tarifst new in that's it for street signs dwe chges mi ungp next devices are like doorways

that could allow hackers into your home. and like all doors, they're safer when locked. that's why you need xfinity xfi. with the xfi gateway, devices connected to your homes wifi are protected. which helps keep people outside from accessing your passwords, credit cards and cameras. and people inside from accidentally visiting sites that aren't secure. and if someone trys we'll let you know. xfi advanced security. if it's connected, it's protected. call, click, or visit a store today.

it is 5:00 a.m. and here's your top 5 at 5:00 finishing strong the end of the morally set to roll on but what is behind the sudden resurgence. do you want to make money? a not so sexy bond market has been making some investors serious coin some of the red hot ways people are profiting. meantime, the clock is ticking new rounds of u.s. and chinese tariffs set to take effect on sunday all of this has tension in hong kong rising with a big story and development overnight. florida preparing for the worst. hurricane dorian getting stronger and heading for the coast. and th