♪ good morning and welcome to "street signs" i'm joumanna bercetche. >> i'm julianna tatelbaum. these are your headlines. >> the global rally loses steam as europe fails to pick up on the trade deal optimism after the u.s. and china agree a truce and first phase of an agreement. the world trade organization gives the green light to the u.s. to impose tariffs on eu imports over airbus subsidies. >> reporter: uk house builders and banks amidst the biggest

fallers in the fitsy 100 says a lot of work to be done to get a deal. the u.s. pulls last troops from syria president trump threatens powerful sanctions against ankara ♪ well, our top story this morning and the top story for markets, a very substantial phase one deal is how president trump described friday's tentative trade agreement between the united states and china. mow the first part of what's expected to be several phases of negotiations covers areas like agriculture, currency and intellectual property. the president also agreed to suspend raising tariffs to 30%

on $250 billion worth of chinese goods. while both sides agree progress has been made, the pact is yet to be officially written and could take weeks to finalize now president trump praised china following the agreement and said the deal is fair for both sides >> we've been through a very tough negotiation. there's never been a negotiation like this. in all fairness, i give china tremendous credit for 25, 30 years they've done very well with the u.s and now we're doing something jointly. we're doing it in a fair manner. i give china credit for what they've done over the last 30 -- tremendous credit. i don't blame china. i blame the people representing our country. now we have a deal they think ultimately will be just fantastic for china and fantastic for the united states. >> all right well, let's take a look how

european markets are fairing this morning as you can see, julianna, the full board is actually trading deeply in negative territory and this is somewhat surprising, you would think, after this trade deal or phase 1 of trade deal as president trump called it you would think there would be a lot more optimism in european market in friday, we saw a strong close. the dax up 2.8% on friday. pairing back some of those gains from the friday session, you can see across the board the four of them are trading in negative territory perhaps because the deal wasn't as all encompassing as we wanted it to be. ftse 100 just wantto draw your attention there, that index is down .4 percentage point, big week coming up for the uk and all eyes on the queen's speech in just a few hour's time as well so that is the context for european markets this morning. very negative. but let's talk more about the actual deal itself, the nuts and

bolts. eunice brought this probation report from beijing. >> president trump said the deal is one of the biggest with china, so big it has to be handled in phases. the chinese are not as exuberant, referring to the outcome of the trade talks not as a deal but as substantial progress beijing would see the results as progress, a tariff hike set for tomorrow on $250 billion worth of chinese goods has been put on hold, one of beijing's top demands. discussion about chinese tech giant huawei will be held separately and china's efforts to delay talking about trickier structural issues seemed to paid off. china will buy $50 billion of u.s. agricultural products president trump praise what had he described as a start of a ugs u.s./china love fest. >> phase two will start immediately after we papered phase one and phase one should

happen quickly you have intellectual property we have an agreement on intellectual property. financial services, the banks and all of the financial services companies will be very, very happy with what we've been able to get. >> reporter: the goal now is to hammer out the texts for the two presidents to sign by the apec summit in mid november official media here, though, are cautious the champagne should be kept on ice as based on its past practice there's always a possibility that washington may decide to cancel the u.s. has accused china of backtracking on its pledges in the past, showing how low the trust is between these two countries despite their new loving relationship. eunice yoon, cnbc business news, beijing. let's look at where things stands in terms of markets the worst performing sector is basic resources. you heard the details from ewe nice on the latest when it comes

to u.s./china trade. basic resources digesting a number of fairly down beat data points over china. one to highlight september exports number that was the biggest fall since february so some weakness driving the basic resources sector lower today. moving on we'll take a look at autos, which of course another china sensitive sector also trading largely in the red this morning. again, in addition to the trade talks taking front and center there for auto investors, we also got some china auto sales data out over night, which was again on the weaker side so adding to the weight that's hitting those auto stocks this morning. and chip makers, lets's look at where things stand for those a little mixed picture there trading slightly in the green. ams and st micro trading lower overall the narrative for europe is weakness today on the back of what was incredibly strong day

for markets across the board on friday let's bring in your first guest today, ginny yang. let's kick off with the data we got out of china down beat relative to exportations exports down 3.2% year on year how much is actually down to the trade war. >> i think very little to be frank. i think we've seen that the trade data has continued to worsen particularly on the export side but more importantly on the import side china is also importing less because of the domestic slow down it is a further evidence that the slow down in china is very much driven by domestic factors. the trade frictions i guess is more or less really a way for weakness on confidence in domestic spending. >> it's very interesting you say a lot of this is domestic weakness because the trade war offers a bit of a culprit, something for the chinese government to blame for this weakness what does that mean in terms of

beijing's negotiating stance is it actually in their interest to keep the trade war going in the background >> well, i don't think it's obviously going to benefit anyone to keep the trade negotiations on obviously. it's not only hurting consumption. it's also hurting investment decisions. as we know in china, actually consumption is driving more than 60% of gdp growth and we'll get the gdp figures on friday to confirm exactly whether domestic weaknesses are in terms of the negotiations with the u.s., this is a new normal i said it again, really it's about the fundamental disputes between the two nations. mainly on technology, on i.p this is a very easy bit which is for china to buy more agricultural goods but in terms of market sentiment, as we've seen, obviously market reacted relatively benign to the well positive set of trade negotiations mainly because we knew this was coming but this

was the easy bit now comes the difficult bit. that is something that won't be resolved for a very long time. >> i just want to take it back to something yousaid right at the beginning. you said weakness in the trade numbers that we're seeing today is not due to the trade war, which is interesting because actually if you drill into the details, as you mentioned, there has been a big drop in imports down 8.5% year on year imports from the u.s. were down 26%. so, yes, within the context of the weakness, imports are slowing down, but they're specifically slowing down from the united states. how can you not say that's part and parcel of the trade war. >> but if you look into the history of the trade data you'll see actually the shift away from u.s. and also europe has already been happening, even before the whole trade war, as it were, happened what we're seeing is actually china's trade with countries like brazil, india, russia is actually increasing at a much faster rate. it's a diversify indication of trade with multiple number of

countries, especially the belt and row countries. >> jinny what are the ramifications for the rest of the region on the slowing imports from china the focus has been on chinese exports but looks like today the focus is squarely on that rapid decline that we're seeing on the import side of things. if you look at actually the details on commodities still growing but at a much slower pace than it was in the past what type of effect is that going to have on surrounding countries around china >> well, both regional and global, in fact. because obviously it's going to impact on the supply chains around china, around asean countries who produce lower end of that curve. but at the top of the curve where we have, for example, europe hoping to produce and export more and more machines and autos, for example, to china, the slow down in domestic spending in china means that that weakness will continue for europe and the u.s., of course. >> as they triple r cut change

things, another triple r cut out of china >> at the moment china is focussing on how the delivery of the interest rate cuts will really take a much more fundamental shift. it's actually the reform of interest rates that's more important rather than the triple r cuts. >> you mentioned autos there and got fresh auto sales data overnight which was again disappointing for the month of september which is typically a seasonably strong time for the auto sector. so what's going on there is this all about a change in the subsidies program in china or are there more worrying signals to take from this? >> in fact, yes, we just had a national holiday which actually should be even stronger for september and october sales. but, in fact, this again is a piece of evidence that domestic spending particularly on luxury end of the auto market may be slightly weak. and probably what we saw in coordination with that is the fact that domestic producers in china are probably seeing a much more stable conditions in china

because actually when you have global recessions, particularly domestic weakness, we'll see the choice of count towards a much more average type of rather than luxury end of the spectrum but all in all, i think you'll see that across all types of autos, across global supply chains as well and also not to mention electric vehicles is something that's going to be new for china markets. so we may see is that pocket of strength in the auto market but probably for the wider market will continue to see that weakness as long as china's domestic consumption is slowing. >> thank you very much for sharing your thoughts for us this morning the world trade organization gave the final go ahead on billions of dollars of u.s. tariffs. they target a broad range of eu goods in retaliation for subsidies given to french plane maker airbus let's get out to willem who joins just outside the wto in

geneva the u.s. now have the formally have the go ahead from the wto to apply those tariffs in retaliation to the airbus subsidies. this was a ruling that came out last week, of course the bigger question for investors here is how are the eu likely to respond to this ruling >> reporter: so, just the context, the u.s. have come out with a statement in the last couple minutes, joumanna, talking about the idea that they will push ahead with these tariffs. there won't be a negotiation in the next three days to halt them saying, quote, we hope the countermeasures will encourage the eu to agree to genuine ses session of its wto subsidies and adverse effects that flow from them they're saying they would like to see a settlement much like the europeans said they would like to see a settlement the difference being once they take effect. there's a long period of time

where we might get a decision against boeing and the united states while the eu has sought to comply with previous wto rulings when it comes to subsidies to airbus, boeing and the u.s. publicly have done very little to try to stop washington state subsidies to the u.s. manufacturer so, at some point down the road we could see a situation where the europeans are given the go ahead for their own countermeasures. the u.s. will see their ability to impose these sanctions we're expecting on friday reduced because the europeans proved they have become compliant and you can see the tables being reversed whereby the u.s. will no longer have as much leverage and the europeans will have a lot more control at that point, lit then be up to the europes to decide whether they want to potentially provoke washington into further retaliation and that's where investors would have to get very, very concerned because you could see this move way outside

of the current sectors seeing 7.5 billion euros worth of tariffs potentially inflicted later this week, that could grow pretty dramatically if you take into account the auto sector, start talking about further tariffs on things like steel, aluminum that have been enacted before that's where this could get very, very ugly. >> indeed, willem. new reports are suggesting that the u.s. is considering adding swiss pharmaceutical products to its list of tariffed european goods according to media outlets over the weekend the u.s. is the second biggest consumer two stocks both respectively down adding pressure on this heavy european morning of trading across the board we've got fresh comments out of turkey's president erdogan, of course, all eyes on what's happening in northern syria after the u.s. decision to pull back its troops. when asked about the syrian

deployment to the border, president erdogan said he doesn't think there will be problems putin has shown a positive approach he's speaking in istanbul mind you there. arabs will be settled so the u.s. decision to withdraw troops from northern syria is a positive step that's turkey's president speaking there we will be going into detail on the latest on what's happening in northern syria a little bit later on in the show. well, if you want to get involved in the conversation with anything we've discussed from the trade war to phase one of the trade war to the trade data out of china, get involved in the conversations @streetsignscnbc or tweet us directly. it's shaping up to be another busy week in westminster. fortunately steve is standing by for us >> reporter: yeah, thank you very much, indeed. i'll tell you what, this is the most extraordinary country, at the height of the brexit crisis.

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♪ welcome back to "street signs. uk prime minister boris johnson's legislative agenda will be outlined today in a speech delivered by the queen. and just before we head out to steve, let's take a quick look at sterling because it has been on a tear. that is the trader term as performing very, very well over the last week or so. coming off a little this morning, down .6 percentage point but still up about five big figures just in the last couple weeks as the markets comes to terms with the possibility of a breakthrough when it comes to those brexit discussions later this week. so all eyes on the summit. but of course all eyes on the queen's speech as well let's get out to steve who joins us live in london. there hasn't been a queen speech

in over two years i believe, since 2017 why are they ramming it now, three days before this make or break summit >> reporter: yeah, it's very interesting. we have to have a stay opening of parliament, it's a question of how we do it. the real queen speech, full blown ceremonial state opening of parliament hasn't happened for 839 day. you have to go back to david cameron's government for that as well and the pomp and ceremony is quite extraordinary, one of the reasons why people internationally find this country so extraordinary and really quite amazing i have just seen the beef eaters going into parliament gee is queen's entrance the sovereign's interest in victoria tower they search the cellars ahead of the sovereign arriving there because, of course, we had the gun powder plot back in 1605 now, coming back to the 21st

century, you have these amazing pageantry with the queen and household calvary going into westminster to basically lay out the government agenda for the next parliament. the parliament is normally circle one year and 22 bill which is the government put forward here as well the opposition said, hang on a second, this is a stunt. it's ludacris. and basically what you've got is a government general election manifesto being dictated to by the queen from the sovereign's throne as well he thinks it's absolutely fast you have to think actually it is extraordinary this government is trying to lay out the agenda for the next year not knowing what it's going to do in the next week, which brings us back to the clear and present which is this torcherous negotiations between brussels and united kingdom picked up head of steam after all the doom and gloom, the tea shock the irish prime minister and the british prime

minister said we can see a pathway to a deal. it was a coordinated tweet fest from the irish and indeed from the british as well. yeah, we can get a deal. hence we saw eu negotiations, steve bar clay, david frost and his team all getting into a huddle which has been going on all weekend and getting on the next couple days and try to get some form of withdrawal agreement with the eu, with the united kingdom to take us to the next stage which would be a thumbs up on the 17th and 18th and then another extraordinary event here which would be a saturday sitting of parliament, ea special parliamentary session which the withdrawal agreement bill if it is presented could be presented to mps the problem of course is and we'll find this out the next couple days as well the government as you know does not have a majority, has a minority. lost the mps plus questions about the dup who had a supply and confidence vote procedure support package with this

government previous lly as well can they get the numbers to pass the queen's speech one of my producers pointed out that not since 1994 has a queen's speech been voted down and then stanley baldwin basically had to lose his premiership and a minority labor government took over there's an interesting historical presence in the likes of mr. corbin and mr. mcdonald will be looking at we could see all things happening. withdrawal of bill agreed or not if there's an agreement in the intervening period b, this is very interesting, the parliamentary act that is the ben act could then force on that day boris johnson to send a letter to the eu asking for an extension. and, of course, an extension of the article 50 process, but how long will that extension be? anything from a few weeks to several months as well that's, of course, if the eu

agree to it. so to have a queen's opening -- queen speech opening of parliament laying out all kinds of things on immigration, on national health service, on crime, a franchises, on the mental health act, all kinds of things to have that lay out the agenda for the next year plus we heard this morning that the chancellor is going to have a budget, post-brexit budget on november 6th it all seems optimistic and perhaps in this extraordinary time frame that is the brexit, that is ambitious, i tell you. >> you know what, steve, you broke it down for us so well and helped investors really grasp what is at stake here. huge week coming up for the uk as steve just said, the uk chancellor says a new budget will be delivered within weeks of a potential no-deal brexit and announced that he will deliver a fresh budget statement

on november 6th. set your diaries. well, moving on to a bit of corporate news for you softbank reportedly put together a multibillion dollar financing package for wework which could seemingly run out of cash by the end of the year. sources sited by several media outlets suggest the arrangement would hand control of the startup to softbank and further sideline co-founder adam newman. separately jp morgan chase is set to be working on a debt deal for wework that could reach $3 billion. elsewhere, facebook libra project is under pressure after another five members pulled out of the association mastercard, visa and stripe are among the firms to withdraw support for the crypto currency. in separate statements the company said they have decided to focus on other areas. facebook played down the departures saying he would, quote, caution against reading the fate of libra. members are due to meet in

geneva today and we'll have more on libra later this week when elizabeth hosts a pan yule among the panelists will be facebook's david marcus and the bank of england governor mark carney we're going to take a short break. still to come ahead of vladimir putin's first visit to saudi arabia in 12 years, the head of russia's sovereign wealth fund tells cnbc relations between the two countries are blossoming we'll cross live to riyadh next.

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la la la la la. ♪ welcome back to "street signs" i'm julianna tatelbaum. >> i'm joumanna bercetche and these are your headlines the global rally loses steam as europe fails to pick up on the trade deal optimism after the u.s. and china agree a truce and the first phase of an agreement. the world trade organization gives the green light to the united states impose tariffs on eu imports over airbus subsidies. shares amonk banks abig the biggest fallers on the ftse.

work remains to reach a brexit deal ahead of a key summit this week. and the u.s. pulls its last troops from northern syria amid a growing offensive from turkey while president trump threatens powerful sanctions on ankara all right. well, european markets starting the week out on a bit of a negative note. bear in mind, of course, this comes after an incredibly strong rally on friday when the stocks 600 ended 2% higher and the dax 3% higher. we're seeing a pullback this morning, but a lot on the back of an improvement did come on friday so investors now pausing for breath as we await the details of the outcome from those trade talks. now, we also are digesting a raft of china macro data that

came out over night on the weaker side. question now, how much will beijing move to stimulate the economy and how much of that downturn is actually the result of the trade war and then, of course, brexit front and center the ftse 100 down 0.4% this morning, really aligned with broader european markets the more interesting story coming through sterling which we'll look at in just a second first, let's look at sectors and see what the breakdown looks like we are seeing basic resources log the worst losses of the morning, down more than 2% banks also down significantly about 1.6% within the banks space, uk banks underperforming. but again, this is after strong outperformance on friday on the back of optimism around brexit and of course today, a very big day for brexit with the queen's speech coming up on that note, let's look at where sterling stands this morning right now trading down about .6% but still above that 125 level. we're coming off of the biggest

two-day jump in more than three years. so we saw quite a rally in sterling at the back end of last year euro also trading lower versus the dollar finally, let's look at u.s. futures and see where things stand for the opening of the u.s. session, very muted start to trade the three major indexes set to open a touch below the flat line but overall very contained just to mention on top of trade, on top of the on going impeachment inquiry, we are getting into q3 earning season that will be big this week as well joumanna >> french president emmanuel macron and angela merkel urged turkey's leader to halt a military operation into northern syria. in separate phone calls this weekend. macron said the operation risk creating a, quote, unsustainable humanitarian crisis and both germany and france suspended arm sales to turkey. meanwhile, the united states

says it will pull out its remaining 1,000 troops from northern syria u.s. officials say the removal will take place, quote, as safely and quickly as possible the announcement comes as president trump faces mounting criticism over his decision to take u.s. military forces out of the region and in a weekend treat, he threatened imposing, quote, powerful sanctions on turkey nbc's richard engel filed this report from inside northern syria. >> reporter: the u.s. is getting out of syria at the worst time just as turkey is making rapid advances in its war against u.s. allies the kurds of syria. advancing with the help of arab militia's. u.s. officials tell nbc news and they say militias include former members of al qaeda and isis it means turkey, a nato country is using alleged terrorists to attack the kurds who fought with u.s. troops against isis for four years and carved out their

own unofficial little state in the process. now, that autonomous zone the kurds called rozava is collapsing the big news dropped like a bomb nearly all of the 1,000 u.s. troops still in syria are leaving. announced by defense secretary mark esper. >> i spoke with the president last night he directed we begin a deliberate withdrawal. >> with no u.s. protection, the 2 million kurds in syria fear they'll be ethnically cleared by turkey and its militias and isis is seizing this chaotic movement to regroup hundreds of members broke out of a detention camp amid all this president trump tweeting the kurds in turkey have been fighting for years others may want to come in and fight for one side or the other. let them and tonight facing an assault they cannot stop, kurdish forces called on syria's president bashar al assad an ally of

russia to deploy around the border it's the end of kurdish self rule here which they earned fighting along u.s. soldiers it's a failure of u.s. values, helps american adversaries and gives isis a new lease on life richard engel, nbc news, northern syria. let's bring in mary jo, former u.s. assistant secretary of commerce who joins us in the studio thanks very much for joining us this morning. >> good morning. >> so just coming off the back of that report from northern syria, president trump sees this recent move to withdraw troops as fulfilling his pledge to withdraw from endless wars but doesn't this undermine trust in the u.s. as an ally >> i think it certainly raises a question about how reliable and formerly indispensable the united states was to its allies. and it is a clear signal of a change in direction for the u.s.

in respect to the middle east more broadly the question i have is if there is a vacuum created by the u.s.'s departure who will fill that vacuum? the turkish situation is driven by domestic politics both in america and in turkey and, of course, the ultimate loser will be the kurds but will the u.s. win? or will turkey win or will we have a situation where everybody loses? as i understand it, we're withdrawing the final troops from syria but also committing troops to saudi arabia what i'm watching this week is president putin. >> yep. >> because he's visiting the middle east in saudi and elsewhere. he has said that he is furthering economic diplomacy and my question is will putin emerge as putin the peacemaker and fill the void which the united states seems to be

leaving. >> which essentially is what he's been doing, muscling in where the u.s. is pulling out. what do you make of the president's decision to potentially impose sanctions on turkey on back of this incursion? because some people are just saying, look, this is basically virtue signaling at the end of the day, president trump gave the green light to president erdogan to go on this offense snif what is the point of applying sanctions now? >> i agree with that assessment. it's difficult for people not around the president in the white house and perhaps people around the white house and the president as well to understand what his real policies are and what his real end game is because to withdraw, to basically give turkey free reign and suddenly say, hey, wait, hang on. treasury secretary mnuchin said we can impose sanctions from hell what does that mean? how do you do that how do you get turkey back out

>> what do you make of president trump's general foreign policy so far he's been very ambitious on multiple fronts. north korea one day, china trade war, attacking the eu, but ultimately it looks as though he's alienated traditional allies and hasn't secured the big staple election pledges that he wanted to when it comes to foreign policy >> i would classify it as incrementalism and classify as tactical rather than strategic he is very good bilaterally. he is very clear in bilateral discussions about what he wants. that sometimes changes later on after the discussion ends. but it is all very tactical. it's all very transactional as you would expect from a commercial property developer in new york. >> we also were just covering the wto today they authorized the u.s. to go ahead and impose those new tariffs on eu goods. interesting comment from the u.s. side saying that they

prefer a negotiated solution to this aircraft subsidy dispute. but given the trump administration clear pension for using tariffs to make their way in trade registrations, is there really much credibility to that at this stage? >> i commend u.s. trade representative bob lighthizer. i have known bob for many, many years. and to persevere in this situation negotiating on so many fronts i commend him for that. but it really is tough to see how the united states can fight trade wars on so many different fronts about so many different products, services, issues and what the end game is china is a great development, but it is just that. it's a development it's not a solution. it's the start towards a longer term solution. and there are still a lot of things left to be worked out, just the details from friday to be worked out let alone the coming phases. and the issue of tariffs

possibly in december. >> do you think tim peachment inquiry will have an impact going forward on the u.s.'s decision to disengage, we're seeing disengage from the middle east, phase one of a trade truce with china, you know, talking about potential negotiated settlement with eu, are we bound to see a new face out of the president as we head through the different stages of this impeachment inquiry? >> i think the president is intensely focussed on november of next year he sees the impeachment as a distraction and for any president it would be. and we are in uncharted territory because we never pursued an impeachment inquiry in a re-election period. president clinton was already re-elected and president johnson going way back when. it's a different place to be and creates a different set of focuses for both parties, not just for the president and the republicans but for the democrats as well who want to retake everything next year. >> now, on the impeachment

inquiry, polls suggest there's a big rise in support to proceed with this impeaching the president among democrats. significant increase among independents and modest up tick in support among republican senators what do you think the odds are we see republican senators come out in any number of size and actually desert president trump and support the impeachment? >> i think it's pretty clear that the house wants to impeach and 227 members have said so and you only need 218 to vote the articles the senate you need 67 votes to convict. and i think unless there is something so crystal clear that the president has done that hasn't been adequately asked and answered, i think it's unlikely he'll be removed from office then you have the specter of running for re-election president who has, in fact, been impeached and acquitted. >> we'll pick up the

conversation mary jo jacobi now, russian president vladimir putin says he can help to soothe tensions in the gulf regi region putin is set to meet with saudi leaders including the crown prince mohammed bin sal man. saudi aramco is eyeing a potential ipo in october, according to report from the rerks a news agency sited aramco's chairman. a second report, quotes aramco executive says an announcement is coming very, very soon. let's get out to hadley from riyadh, never a dull day in saudi arabia, there's so much to talk about and not at least least with the potential listing of the aramco ipo and also president putin is there this is the first time in over a decade he's visiting saudi arabia break it down for us, hadley what should we be focussed on? >> reporter: so many elements

around this story. a lot of excitement around the visit of russian president put it's knowledge that bankers will be gathering over the weekend to discuss valuations and discuss what's going to happen next there. it would be no surprise to those watching this aramco ipo very, very closely we might hear movement on it i or monday of the coming week. also, against the backdrop of what's happening in the region, russian president vladimir putin, as you mentioned, coming to the region for the first time in a long time he's here in saudi arabia today. he'll be in the uae tomorrow there's a lot of noise about whether or not the president might be able to open up a dialogue when it comes to what's happening in syria and the backdrop of what we saw happen in the red sea with this explosion on an iranian tanker just a few days ago, there's been a lot of tit for tat on that a lot of noise about what's

happening in the persian gulf, but optimism from the head of the rdif about what could potentially be russia's role but he told me interestingly enough that we're not here to replace the united states. listen in. >> it's not an attack on u.s. presence in the region, but it's an opportunity to build very important bridges because saudi arabia is obviously key player in the muslim world, a key player in the region and i think we need to go back to basics by the way, i'm sure the saudi example is interesting to try at some point to restore relationship with the u.s. if we could do it with saudi arabia in four years why couldn't we do it with the u.s. going forward. >> i asked the ceo of the russia direct investment fund about the u.s. presence in the region, whether or not he feels that russia has become or is becoming the main power broker here you know, at the end of the day, this is not just about economic diplomacy, it's also about energy diplomacy as well we have seen this relationship growing over the last four or

five years initial whether i that $10 billion investment, 2.5 has been allocated since mohammed bin salmon visited russia back in 2015, this is the story that you know i have watched very closely not just because it's interesting to me but but also because it has serious ramifications for energy as well as diplomacy listen in to the former head of saudi's intelligence services. we had the chance to catch up yesterday in abu dhabi and i asked his royal highness about how quickly this has moved the dial forward when it comes to energy and if he's surprised by the fact that the united states is sending troops to saudi arabia to protect oil infrastructure while at the same time abandoning allies in syria. listen in. >> it's always been about energy, hasn't it, since 1945. when mr. roosevelt met with the late king abdul aziz and in spite of what has been publicly

declared as american independence from foreign oil, the oil market binds the world together and what happens in saudi arabia doesn't always stay in saudi arabia it has somehow managed to affect other countries. so i'm not surprised that the u.s. would be interested in engaging with the kingdom on defending oil industry it is surprising that america would abandon her allies in syria. that is something for mr. trump to decide. >> reporter: there you have it real questions about the future of u.s. policy right here in this region. guys >> thank you for breaking it down for us, hadley, important week ahead for saudi and russian relations. the saudi arabia's foreign affairs minister says the kingdom is not behind a reported strike against an iranian oil tanker in the red sea.

they reported the vessel was hit by two missile strikes siting a senior security official teheran called it cowardly we are joined with more from teheran. this is all happening at a time when it's emerged that the u.s. are now delivering more missile defense systems and troops to saudi. how does that play into the overall calculus of how iran responds >> reporter: well, it makes th situation a lot more tense iran has been very critical of the troop deployments to saudi arabia, the hardware there they accused saudi arabia of being a stooge of the united states and yesterday's iran's highest authority, the supreme leader said that iran isn't looking for a war but if one was started the other side would regret it deeply he also without mentioning saudi arabia warned the countries in the region about letting the u.s. set up troops and hardware in the region, but with that

said, there is feeling that people are trying to tone down the fiery rhetoric initially when the iranian oil tanker was hit, teheran said their vessel had been hit by missiles which they blamed on saudi arabia that immediately raised fear of further escalation in the region as it is already been a very volatile period this summer here between iran and arch enemy saudi arabia with tankers being sabotaged, with alarming frequency over the summer. drones being downed. saudi oil facilities being hit and as you just mentioned the u.s. troop deployments in the region have made things very tense. but a real tinderbox here. but yesterday the pakistani prime minister was here on a mission to try to diffuse the situation between iran and saudi arabia he's going to saudi arabia later on this week to convey mess aags from teheran

yesterday teheran walked back the accusations it had made against saudi arabia saying well, maybe it wasn't saudi arabia and a full investigation needs to be conducted which shows that both sides seem to want to dial down the tension because of a cost of a war between saudi and iran would be incredibly high for both parties. >> that's right. live from iran, thank you very much for the latest. now, coming up on the show as well, an ere of confidence from president trump who called it a very substantial trade one deal more details in just a few minutes.

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♪ a very substantial phase one deal is how president trump described friday's tentative trade agreement between the united states and china. the first part of what's expected to be several phases of negotiations that covers areas like agricultural, currency and intellectual property. the president also agreed to suspend raising tariffs to 30% on $250 billion worth of chinese

goods. now, trump said china will immediately start buying, quote, large quantities of agricultural product and said the agreement would be positive for the country's industry >> a tremendous deal for the farmers. a purchase of fr 40 to $50 billion worth of agricultural products, that would be 2.5, 3 times what china had purchased at its highest point thus far. >> a mary jo jacoby is still with us in the studio. do you think president trump wants to get a deal done before his re-election campaign kicks into high gear is it in his interest? >> it is in his interest it's in the country's interest and it's in china's interest as well, domestically and internationally to get a good deal this is a start. i'm not sure it's the love fest that the president described it as, but i think it's a good start. and there are still a lot of the details of this deal to work out

than the rest of the phases to see where we go. and the outstanding question of huawei. >> you look at the u.s. economy today, you know what's interesting, there's a wedge between the hard data and the soft data. the hard data is a lot better than some of these sentiment indicators do you think the hard data will catch up with the weakness in sentiment, or can sentiment turn around and be a little less negative about the u.s. economy's prospects? >> certainly can turn very, very quickly and usually does on sentiment. i think you have to be very two quarters into a recession to know you're into one for a while earlier this year it seemed like we were talking ourselves into one because it's been a long time, we'reov overde and the economy is still cyclical timing is everything if we go into a short shallow and coming out by november, the president isn't hurt if it's longer and deeper,the

president will be hurt my former boss president george h.w. bush was dramatically hurt by a recession that we were well into recovery but people didn't feel like it. >> certainly economic incentive to avoid the recession going into 2020. thank you for joining us on the show mary joe jacobi. quick look at u.s. futures after what's being called phase one of the trade truce between u.s. and china. you can see we're kind of tilting towards green s&p and dow almost above the black line. nasdaq slightly below after a very strong close on friday but a very weak start to the week for europe that is it for our show. i'm joumanna bercetche. >> i'm julianna tatelbaum. "worldwide exchange" is up next. (danny) let me get this straight.

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♪ it is 5:00 a.m. and here your top five at 5 will trade optimism and the markets higher today asia finished up strong. futures here are in the green to start the week but, china's state owned music saying hold the champagne about any partial china trade deal and warns washington to avoid back pedaling. britain gearing up for the queen's speech what happened if parliament votes against her. saudi arabia minister says focus on oil stability rather than the price, but there's one bith