♪ i spoke with speaker mccarthy we reached a bipartisan agreement and ready to move to the full congress. it is an important step forward. >> the deadlock is broken in d.c. as president biden and house speaker mccarthy strike a deal with the attention of the mid week vote ahead of the treasury deadline on june 5th. >> overwhelmingly excited.

every single negotiation with the debt ceiling and others, we get both sides voting to pass the bills. i expect the same. >> european univgaining. and turkey sinks to a record low as recep tayyip erdogan gets a third rule >> we said we would win in a way where no one would lose. in that case, today, the only winner is turkey and pedro sanchez takes a beating in the elections the conservative people's party flips areas ahead of the december national vote.

very good morning and warm welcome to "street signs." thank you for joining joumanna and myself president biden and kevin mccarthy reached a deal for the debt ceiling the agreement comes after a warning on friday from janet yellen that the government has until june 5th to avoid default. the deal which caps non defense spending and imposes work requirements for aid recipients and unspent covid funds will go to the house for a vote. some lawmakers were looking for larger budget cuts biden says this is good news for americans. >> i spoke with speaker mccarthy and we reached agreement now we're ready to move to the full congress. i think it is an important step forward. it takes the threat of

catastrophic default off the table and protects our economic recovery and the agreement represents a compromise which means no one got everything they want that's the responsibility of governing. >> as the deal heads to congress, mccarthy says most republicans are happy. >> finalizing the language on the agreement that the president, i believe, is worthy of the american people just to take you back to february 1st, i sat down with the president and said let's work together to raise the debt ceiling and let america work to cut the red tape and get work requirements to help people get back to work this agreement frames all that it doesn't get everything everybody wants. that's the divided government. that is how we end up.

>> we finally got a debt ceiling deal and we have spent weeks talking about the ongoing negotiations over the weekend, we got a resolution that is having positive ramifications for markets. worth stating today is a bank holiday across europe and u.s. the uk market is not trading today. the swiss market as well we are showing some of the european markets trading this morning and all of them are tilted toward the green. you can see the german index and dax coming off the recent highs. still above 16,000 here. .30% firmer on the day cac 40 in france is up .20%. just a reminder, last week, we were focused on the weaker macro data from germany as well as the pull back from the pro cyclical sectors with luxury seeing a selloff in the middle of last week you see most things are trading back to a risk-on sentiment. this is the picture for

currencies one of dollar strength mostly. euro trading slightly on the back foot. dollar/yen is pulling back the pound with not a lot of movement we saw an increase in the price of the dollar in the run-up of the debt ceiling discussions as the trades get peeled off it is not surprising to see the dollar sell off. with the look at commodities, this is a look at oil which is another bellwether for how people are feeling with risk sentiment. today, you can see oil spiking a little bit higher to .50% for wti and brent. worth noting the opec plus meeting coming up in a week's time if you recall, the saudi oil minister has been warning of the potential ramifications if you are short oil. that, again, is something

investors are keeping in the back drop here oil in the green this morning. as for u.s. futures, this is the picture. this market is not going to be trading today because it is a bank holiday over the next couple sessions, the boards will open tomorrow and they will open in the green. we had the positive data on the pce side on friday coming in important positive than market he expectation. with the debt ceiling discussions and positive resolution and positive data, the market has started pricing in the further rate hikes out of the fed. with that, i'm happy to bring in antonio, the head of generale insurance. good morning, antonio. let's start with the number one item on the agenda p ttoday. the fact that the u.s. has come to agreement with the debt ceiling discussions. it looks like we will not have

the discussion for at least the beginning of the 1st of january in 2025. to your mind, is this a relief valve now this deal is in place? >> good morning. the agreement with the government and the republican opposition was, by far, the scenario and we are not expecting a relief the rally. to be honest, it is possible the market in the next few days will focus on the execution risk. the agreement needs to be voted on in the house and this might

trigger the markets for a couple of days. >> the ramifications on interest rate policy with a view out there now this worst-case scenario is averted and we go back to data watching. this is surprising to the upside on the spending numbers and retail sales and revised gdp print for the first quarter. >> this is the issue the u.s. economy is proving to be resilient with the tightening the fed instigated in the last year and a half. the numbers keep on being stronger inflation is less polite than what the market thought and expected the possibility of a rate hike between june and july is there on top of the rates, we remember that now assuming there is agreement on the debt ceiling,

the treasury needs to review the general account. the treasurer had a pocket of liquidity worth $700 billion last year. now it is close to zero. this has to be for the remainder of the year and that adds pressure on the fixed income ma market >> antonio, the u.s. data has been more resilient than expected, but the world economy is showing lines of slowing down covid recovery in china fading the data out of germany has been discouraging the survey and pmi showing a massive drop in new orders we are seeing signs of some cracks and cooling in the labor market in the u.s. u.s. markets hit nine-month highs on friday. equity markets is there complacency with the economic outlook

>> i think tightening for national conditions this time is no different than making credit more expensive and less available. it will trickle down to the other economies. we need to keep in mind, we are coming from two years of unprecedented stimulus, monetary and fiscal the reaction time to the tightening is taking longer. in terms of markets, we need to look of dispersion of the markets. especially p the s&p. the other economies and the semiconductors which joined the last few days. all of these things together are depicting providing a picture of the market that is not really representative of the whole market outside those names, prices year

to date are lower performance. equal weight of the s&p is less reflective of the year and the remaining index is up. there is a complexity of the measuring index. >> antonio, you have taken me where i want to go next. the semiconductor stocks it has been staggering how well the likes of nvidia and other stocks have performed. nvidia approaching the $1 trillion club if not already there. what do you think of the action in the semiconductor group are they valued correctly? do you believe the hype? >> there is lots of hype on a.i. lots of hype on semiconductors it is no different from what you see 10 or 20 years ago with

other studies. learning from the past, there is a long-term trend around artificial intelligence that is there and a.i. will change the way society works and produce and consume. this, at the moment, justifies the hype in the short run, i think there is room to grow. the prices will be validated by growth for the moment, tit is too big o fail. >> and antonio, we see a bit of a pull back in the usd today coming off the highs toward the end of last year, of course. where do you see the u.s. dollar headed from this point onward and what extent is it determined by how many more rate hikes are left from the fed?

>> i think the u.s. dollar is probably to move sideways for a while. the fed has the chance of hiking one more time. if they do so, also europe will need to hike as well i'm not expecting measured moves there. assuming there is no material change in the risk capital of the world. >> antonio, thank you for sharing your views with us on "street signs. head of investments at generale. coming up on the show, more election drama as turks head to the polls in the run-off election we are live in istanbul when we return

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welcome back to "street signs. turkish president recep tayyip erdogan has been declared the winner of the election no candidate secured more than 50% of the vote in the first round earlier this month let's look at the lira trade

not a lot of movement against the dollar in the recent trade it has, as you see there, depreciated significantly. hitting a record low, in fact, versus the dollar. president erdogan declared a victory a win for all of turkey. >> translator: no one has lost today. all 85 million won as a requirement of the responsibility given to us by the nation, not offended or rese resentful. it is time to put aside the conflict regarding the election period and unite around the national goals and dreams. >> our own dan murphy has been up all night covering the election he is in istanbul with a special guest. >> reporter: julianna, let's continue to bring analysis on the vote in turkey i'm pleased to say the professor

of economics is joining me now here are in istanbul professor, thank you for your time we appreciate you being here let's go through the market reaction we have seen the lira crash to a record low stocks are stabilizing, but is this a surprise after president erdogan's victory overnight? >> it is not a surprise because the result after the first round was mostly expected. this was a priced election we have seen president erdogan clear about the road ahead with low interest rate policy in the inflation environment, if you don't protect the value of the currency, there is no surprise the assets would go down which is what we are observing right now. >> speaking of the road ahead, you wrote this is the end of the road for turkey's economy. can you expand on that >> sure. i does write a piece where i

said the run-off is the last exit before unexpected results could happen unfortunately, we missed that exit and moving into unchartered territory. why? the government insists on adopting low interest rate policies in an inflation environment disrupting your balance. we spent significant resources and right now, the resources are dep depleted that is why i'm word about the road ahead because if we continue with the same policies and lets say you keep low interest rates and you have no reserves to protect the value of the currency, then there are a limited number of outocomes. >> could we see a change of

policy from president erdogan? that means he will recognize there is mood for change in the country for international investors can worry about the status of the economy and that may prompt him to change his ways do you agree >> yes the narrow margin as well as the fact there are very limited resources left on the way ahead may cause a pivot. i see several paths. one, they may consider gradual rate hikes although they signal they will keep lower rate policies to limit the cost of borrowing in the environment, you have to inject central bank reserves to make sure there is no depreciation and the cost of imported goods are under control. we don't have that option. somehow you have the increasing interest rates and making lira

assets more attractive or capital controls and make them more strict and reduce local demand for currency or a combination of both. >> there were suggestions coming into the election that president erdogan was receiving support from the gulf states to prop up the currency and protect the economy. should we read into that >> well, yes erdogan said the money from the gulf states supported central bank reserves. in a healthy economy, you don't need support from any other country. for the first time in history, central bank currencies are in negative value negligenative $0.3 billion look an t the assets the central bank has been selling the liabilities. if you subtract the gulf states agreement.

it is negative $60 billion that is a very significant threat for the turkish economy that means the central bank has not only been selling the money it borrows, but selling the money the banks are keeping. at the time of stress, it could trigger a bank run i don't want to be pessimistic, but that is what central bank reserves are for >> we have seen bank stocks decline significantly as a precursor to that as well. what is the view on where the economy moves from here? we are still looking at double digit inflation and employment and lira at record low do you see midterm improvement >> i expect a slowdown in the economy. there is a reason the economists say the state policies are not sustainable. we have seen growth for a while, but each time the increase in inflation leads to a decline in

purchasing power and we see the decline in local demand. when you see another round for the economy which pushes interest rates down and demand goes up, but i think we are reaching the end of the road and we see a slowdown in the turkish economy. government deficit is already at dangerously high levels. i don't think after the elections we will see strong increase in government spending. local demand and consumption is slowing down because of the increase in inflation and decline in purchasing power. the intervention in the foreign exchange market and depreciation is bad for exports slowdown in the turkish economy is what i see in the road ahead. >> there is a view that perhaps a certain appointment in the economy ministry may change the trajectory for the turkey economy. is there likely any change would bring about any change for the

economy because it is also suggested that president erdogan still has full authority and command over the ministry, correct? >> i would assume if president erdogan agrees on the change, then he will already know how far he will go that would be after his approval even though there is a gradual rate hike, i don't think it would bring turkey, the turkey we know around it. credibility is mostly gone and a rate hike would create a balance crisis it does nothing to get inflation under control. >> so much to take in. we're out of time. thank you so much for sharing. >> reporter: that is the professor of economics with that, it is back over to you. >> dan, thank you for the interview and coverage for more on the erdogan victory,

check out cnbc.com in other election news, nigeria will swear in the fifth president since the end of military rule in 1999. array of international representatives will be attending, including a delegation from the u.s. and a special envoy of china's xi jinping. tinubu will take oath of office from the election claims disputes as they battle two-decade high inflation and smaller growth the international institute told cnbc that, it tinubu has a tougo ahead. >> he is taking on a broken economy. so, there is a lot of expectation that being the

tinubu he is, he will take on the responsibility what i do believe is niegds to pul -- believe is nigeria will pull out of this. and getting a drumming in regional elections we will look more at that election taking place in a few minutes. we'll be right back.

i spoke with speaker mccarthy and we reached a bipartisan budget agreement and we're ready to move to the full congress i think it is a really important step forward >> the deadlock is broken in d.c. as president biden and speaker mccarthy strike a deal. >> we did a conference call. 95% is overwhelmingly excited.

every necesgotiation gets both sides voting to pass the bills >> global equities welcome the move and u.s. futures point to a positive point on wall street after the long weekend turkey's lira sinks to a record low after president erdogan claims victory extending his rule into the third decade >> translator: we said we would win in a way where no one would lose in that case, today, the only winner is turkey and spanish prime minister sanchez's socialist party takes a beating ahead of the december national vote.

we're about an hour and a half into the quiet session of trade today with the number of markets closed the ftse 100 and smi closed. u.s. markets also closed for the memorial day public holiday. for the ones trading, by and large, reaction has been positive with the deal between biden and mccarthy the dax is up .30% cac 40 is up 40 points and most interestingly, the ibex 35 if spain up .35% after the huge blow to prime minister sanchez party and regional elections over the weekend we will have coverage and analysis in a moment it is notable the index support on the news. in terms of fx trade, the u.s. dollar gained 1% over the course of the week. now the euro is holding steady against the greenback of 107.34. sterling is at the flat line

against the dollar at 123.45 u.s. futures we normally don't give you these on a public holiday. a lot can happen between today and tomorrow given the debt ceiling news, we thought it was worthwhile. di dow jones industrial average is looking at 100 points jump at the open nasdaq also in the green spain's ruling socialist party returned losses in the regional and local elections this weekend the party managed to hold on to 3 of 12 regions holding elections and the rest, including the former socialist strong hold of valencia, likely taken over by rivals the people's party the social scientist told cnbc said the election results create more uncertainty >> the campaign was not

particularly nice. there were a lot of personal attacks and this is what it was suspected to happen in the next few months now that the conservatives vote was so strong, i'm not sure what will happen now because probably the coalitions that were expected to happen, especially on the left, are not there anymore. >> let's get to charlotte in madrid and she was in have a l - she was in valencia on friday. charlotte, what does this mean for the elections in december and is there a path forward for pp to win the elections in december >> reporter: joumanna, the earlier guest said we expected a blue wave and we got a tsunami out of the 12 regions were held

by elections, 6 have been flipped by the center right party. it took strongholds of the party and including the party which was flipped. valencia on friday, the crown jewel of the election, the center right hoping to take it it has been holding it since 2015 they did take the region and city big, big win there they also had mayor elections across the country if you look at the top five cities in the country, none run by the socialists. heavy defeat for the socialists in the election. of course, ahead of the national election in december the prime minister sanchez from the socialist party, heavily bruised by the election. we will have a look at what this means with my guest here

the chief economist. thank you for joining us >> thank you >> let's have a look at the results from last night. your thoughts on the result. >> clearly it was expected to be a blue wave and has become a blue tsunami as you mentioned. lots of strong holds of the socialist party have been plost to the center right. it paints a bleak picture for the government right now for the coalition. it has been a bad, bad result for the extreme left party it leaves a weak environment in terms of reaching agreements into the general elections because now both parties, socialist and the extreme left party, will want to try to differentiate as much as possible that doesn't bode well for a general election >> we can look into this

the center right with local elections. they were anti-sanchez will that work in december what does this mean for the next six snuns. >> -- six months >> i think the center right party has a clear picture of what spain wants to be from the nation standpoint. there is a lot of conservative with nationalism and interacsepa separateism. i think those two elements will play a major role in the general election it is clear, absolutely, so far the elections and municipal and regional elections, were based on national issues and discontent about social and

political elements however, as we approach the general elections, the center right party needs to present a more detailed program that certainly shows there is really a leadership contest >> reporter: full disclosure, you have been an independent candidate many years ago just so it is out there. looking at the economy, it is interesting, because this election would be run on the economy and inflation and cost of living crisis in other european countries such as france it has not been the case run through the numbers on paper. it looks good. where do we stand? >> the spanish economy is recover recovering it is the second-to-last economy in gdp it has an elevated level of debt unemployment continues to be the highest level of unemplunemployt

youth employment is a problem. that added to inflation figure that is coming down, but still accumulated with inflation elevated food inflation is very high. all of those things are not good to present a euphoric message. that was the mistake of the socialist government they started to talk about the economy as it was best as sliced bread. talking about record employment with the highest unp employment lev -- unemployment level that was not positive. it was not about the economy it was about the housing law and it was about a number of social lawsthat have been implemented that have created a boomerang effect on the coalition.

>> reporter: there have been a huge number of handouts by with the sanchez government with the pandemic and ukraine and transport and the run-up to the election to some extent. now spending is under pressure to curb the handouts it is likely now sanchez in the run-up to the next election will do some cuts there is talk of fiscal tightening starting to take place? >> i think so. i think the average spanish citizen knows that big cuts are coming it doesn't matter which government is in power, those cuts will come we have seen spanish economy in which the government has been able to run the deficit it wanted without any significant fiscal tightening imposed by the commission therefore, i think everybody

remembers 2011 when it was relatively easy for the government to say everything was going to be paid for and there was no problem people see very high levels of debt and very high level of deficit with record tax revenues at the same time, the budget cuts will happen i think we are likely to see that part of the debate taking center stage in the second part of the year as we approach general elections. >> reporter: final question about the far right party. they are the big winners from the yesterday's result they will be the kingmakers in the region with the center right making alliance with the far right in some regions, can it affect some of the votes in the general election can people turn their back on the popular vote if there is alliance on the far right?

>> the message has been that they want to be in power on their own. obviously everybody says that. it is inevitable there will be alliances. what we have to understand is we, in spain right now, people know the socialist party, center left, is going to have its coalition with the extreme left with the separatists that is a fact the alliances with vox is likely to be more questionable. it doesn't matter. at some point in spain there needs to be serious debate about why the center left party has been shut to the extreme by its coalition members and generated such a collapse. think about this the only region in which the

socialist party maintains a level of absolute majority is one led by member of the socialist party that was against the coalition with the extreme left and separatist. that is a big message to send over in general to the center left and center right. citizens in spain do not want radicalism and do not want extreme left policies or separatist policies. that is evidence in these elections. let's see what happens in the general. >> reporter: sanchez could be in trouble for the general election. >> very much sanchez placed the entire pillar of the mandate which has been to bring the extreme left and separatists, not just has sort of give-and-take members to help in the law or something like that, but key associates of the

parties. therefore, all of that is going to play a huge role in the general election i predict it is not going to be a lot about the economy either into the general election. >> reporter: okay. we will see. chief economist. interesting few months ahead sanchez coming out bruised out of the region elections. center right coming out in a strong position. they will make alliance with the far right. it is breaking down in spain very interesting months ahead before the general election in december guys. >> charlotte, thank you for analysis we look forward to the coverage in the months ahead. good you got some sunshine. let's switch and talk about the politics explosions are continuing to rock kyiv with the mayor confirming blasts have been heard in the last hour this as russia launches drone and cruise missile attacks on the ukrainian capital. the 15th assault this month.

ukraine says it shot down 40 targets. moscow intensified attacks as a counter offensive by ukraine ukrainian president volodymyr zelenskyy is hope thful for vicr in the 16th month of war >> translator: kyiv has seen various atrocities it survived them all it will survive them all none of the invaders will be here kyiv and all of our cities, all of ukraine, must put an end to moscow moscow it will not be saved by any other means of terror. power is in people it is in cities and in life. people are the most important for the culture of the city. still ahead on "street

signs," president biden and speaker mccarthy come to agreement. we are live in washington, d.c. next he snores like an angry rhino you've never heard an angry rhino baby i hear one every night... every night. okay. i'll work on that. save 50% on the sleep number limited edition smart bed, plus, special financing and free home delivery when you add any base. only at sleep number.

welcome back china's commerce minister accused the country of breaking international trade rules arn u -- and urged to correct wrongdoing chinese profits fell over 18% on the year in april over concerns of the global demand the data could trigger government intervention after the pledge to boost domestic demand sam fooled this report >> reporter: industrial slipping last month which is the uneven economy playing out. profits fell 20% for the year and april marking the 18% drop the numbers are consistent with

the weakness in the monthly data as companies continue to face a number of unfavorable conditions demand is softening. the manufacturing side has been slower to keep up with the pace of the post-reopening rebounce on the services sector as the property sector is slow and export growth is under pressure. producer prices also continue to stay in deflation territory which is weighing on the margins. the data continues to show imbalances in profitability. industrial firms in china show 13 of 81 industries saw profits rise year to date. businesses of power and heating and equipment manufacturing are reporting growth and metals are feeling the opinpinch. it caps off the data which shows the recovery is losing steam and causing a mix in the morning

session in china as investors review the data which will get the may numbers later in the week i'm sam baddas in singapore. back to you. morgan stanley is warning that spending in china will not return to pre-covid levels soon. this will hit one company in particular as we spoke earlier, the breakthrough on the debt ceiling is having a positive risk-on effect on the indices. let's look at the u.s. markets which closed friday with a lot of positivity. the dow managed to inch up 33 points higher. 1% higher on the session s&p is up 1.3% there was expectation that the deal could be inked over the weekend. it has to go through congress. we will talk about that shortly.

bottom line, that risk aversion was priced out of the market a very strong close for the nasdaq on friday up more than 2%. this on back of nvidia results with a strong reaction i conductors the dow ended down 1% for the week the nasdaq is the gainer and mostly boosted by semiconductor space and nvidia being up 2.5% for the week the inflation data last week and we learned u.s. pce was above expectation for april posting 4.3% for the year. core prices rose 4%. that led to traders raising bets on another rate hikes next month at the fmoc meeting. loretta mester says this doesn't suggest a pause. >> i would like to get to a

point in the funds rate where i feel that whatever the next move is and whenever that is, it is equally weighted with the up move and down move given the data, i don't think we're at that level. everything is on the table in june we don't pre-committe to the meeting in advance that is the discussion as important is thinking about where we were relative to get back to 2% inflation the fed is committed to get the inflation down to 2% president biden and mccarthy have found a deal to suspend the debt limit it may face a rocky move with the democrats and republicans criticizing the plan the house is set to bill this wednesday. if passed, it moves to the senate where it could face

further delays biden called on congress to pass the bill and avoid default >> it is creating good jobs and communities throughout the country. it protects social security and medicare and veterans and so much more. the speaker and i made clear from the start that the only way forward was a bipartisan agreement. that agreement now goes to the united states house and to the senate i strongly urge both chambers to pass agreement let's keep moving forward on the obligations and building the strongest economy in the history of the world >> nbc's brie jackson is joining us with more brie, you are joining us today because the deal was made over the weekend. is there any risk of it not getting passed through congress at this point? >> reporter: good morning. president biden and speaker mccarthy have both expressed confidence that this bill will make it through congress

there is going to be some push back that is what we expect when lawmakers return to capitol hill from the memorial day hole iday a breakthrough was made over the weekend. both parties announcing a deal had been reached agreement, which still needs congressional approval, would extend the debt ceiling limit for two years. there is not change to medicaid. there is a change on food stamp programs that was a sticking point for republicans. there are members from both parties praising the agreement made, some republicans and progressives have raised concerns president biden arguing this budget deal is good news for americans and urging both chambers to pass the legislation. lawmakers have to act fast they will have more breathing

room janet yellen has said the default deadline has been extended from june 1st to june 5th. >> brie, is there consensus to which side conceded more in the deal >> reporter: some democrats are signaling that the democrats gave up more concessions we did hear from republicans who were praising it saying they would be happy the devil is in the details. the text of the bill is what we will hear the next couple days exactly what is in this bill some democrats have hinted that they weren't happy with some of the concessions that were made by president biden >> brie, thank you for the coverage today and throughout the saga i hope it will conclude soon. >> it was a saga the good news is from all of this is it does make it through congress and we don't have to talk about it until january 1st,

2025 >> the lead-up to that date will be fun filled. we will see if they come up with a way to avoid the showdowns. let's check on u.s. futures. we don't show them on a day like this holiday in the u.s given the debt ceiling news over the weekend, we thought it was worthwhile the dow jones industrial average looking to open 100 points higher the s&p 500 and nasdaq also catching a bid this morning. joumanna, i think it will be interesting this week to look the semiconductors >> and see if that rally still has legs we will see that when the u.s. is back from holiday tomorrow. that is it for us. i'm joumanna bercetche. >> i'm julianna tatelbaum. stay with cnbc

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