Transcripts For CNBC Street Signs 20170920

Earthquake in mexico tops 200 people as the quiake topples dozens of buildings. Good morning its fed day we havea lot to get through. Lets get to one of our top stories on the corporate front shares in thyssenkrupp are trading sharply higher in early trade, this after the german metals group and tata steel agree to merge their european operations in a 50 50 joint venture. Gemma has the details. This deal i dont think comes as a surprise to anybody what were seeing here is its been widely expected for a long time, about 4,000 job losses expected, 2,000 from each company. Looking at Pro Forma Revenues of 15 billion euro. These talks have been ongoing for 18 months. Been waiting for the news we had earlier this month of tata steel being able to dispose of 15 billion pounds worth of pension liability, which means this was able go ahead. Still a few hurdles. Still need both boards to approve it still need the European Commission to approve it need support from the unions support has been tepid from the unions, but more promising than earlier this month thats one reason why weve seen a sharp rise higher and its come back. It was up around 5 an hour ago. Now looking at 2 , 3 higher with regards to the Overall Companies themselves, lets look, what were talking about here is a company dealing with an industry in a decline weve seen a tough time from the Steel Industry since it peaked in 2008. A bit of a rebound in recent moves, but a move thats seen a reaction positive on the part of shareholders on both sides we news of this deal becoming more and more likely in recent weeks that tata Share Holders drove the price to a sixyear high gemma, you can find out more about the deal on our website, thats cnbc. Com. We also have a comment from thyssenkrupps cfo on the impact of higher raw material prices. Thank you for walking us through the details. To me t doesnt seem like a combination of strength. This is a declining market were not seeing a huge amount of demand for construction were seeing cheap imports coming from china. Is this a defensive move definitely a Challenging Market what both sides said is there will be job cuts, theres a lot of sensitivity around that, but a lot less if we had to carry on by ourselves the number two player, that puts them in a much more powerful position we think about how quickly tata rose up. It had its 2007 acquisition which propelled it from the 56th biggest steel player in the world to the sixth on the back of that, doing this as well. Consolidation seems the right way to get ahead so theyre cutting 4,000 jobs i know the unions in germany are not happy about that theyre saying well need job security here. Thats one part of the story what about the financial rational here . How do the analysts feel about it the analysts are positive you can say both Share Holders and analysts are positive. Thyssenkrupp, we have to remember the other side of the business, the core capitol goods business producing elevators, highend car parts that seems promising as a standalone business. If they can get that off and get a pure play reevaluation once steel is doing its separate thing, thats something analysts are willing to get on board with do you think this will spark more consolidation in this sector i think it would have to. Its hard to be standalone as more and more players consolidate. The threat from china doesnt seem to be conceding european steel has done better on the back of autos, but that could change as selfdriving cars come in and theres less need in steel for cars Going Forward. Definitely pays to be on the front foot gemgemma, thank you very much that seems to be the only excitement in european trade other than that looks quiet. The stoxx 600 is flat as a pancake. Were evenly split between gainers and losers on the stoxx 600. Markets are trading in a narrow range ahead of that announcement, understandably so. Even yesterday we were little changed. Telecos were outperforming as we saw that tie up between tmobile and sprint in the u. S. As we look at the indices, a bit of movement to the upside. Xetra dax is up by 6 or 7 points ftse 100 hardly changed. Cac 40 eking out a gain of 6 points when it comes to the sectors, financials have been doing well in the run up to this fed announcement today not so much today. Telecos leading the gainers. Of course this is the top news today, the fed is widely expected to announce it will begin winding down its Balance Sheet, a hate hike is unlikely at this meeting, but investors will be looking for hints of a move that could come late their year and the path for further rises in 2018. A quick look at the dollar not doing a whole lot. Dollar yen is off a touch, 0. 2 . 111. Thats the level its been trading at for the better part of this week euro dollar bangon the 1. 20 handle up by 0. 1 on the day. Lets get more analysis on what to expect from the fed with david riley head of credit strategy at blue Bay Asset Management also joined by peter rosenstrich in switzerland, and gimana is on set with us. Peter, you say the dollar and other assets could be in for a shock once we see the tapering or the reduction of the Balance Sheet by the fed why do you think that is i think what were seeing now is the calm and indecisiveness of markets showing the uncertainty the markets have in what the fed will do tonight and the effect it has on markets is still more undecided what weve seen so far is the economic fundamentals especially inflation, rejected the underlying fundamentals. We have not seen the rise of inflation. Yellen looks at that in a different light. She realizes that, yes, inflation has not gained traction, but on the other hand, it could change at any time. You look at the underlying labor markets, you are seeing a strong market there across regions, across industry. Labor scares job openings are at an alltime low. Trump is actually causing sort of a merger of the proaistwo ai which put together a tax reduction and that would cause economic stimulus and hyper boost the growth forecast. So all of these things could shift the u. S. inflation forecast or trajectory very quickly. I dont think the market fully appreciates how quickly that can happen i think yellen is wary about taking a slow path and gradual path i think what well see tonight is, yes, an opening volley in terms of reducing the 4 4. 5 trillion Balance Sheet, but also the fact that theyre going to be more aggressive than the market is pricing in we see in the shortterm that will mean some Dollar Strength david, do you agree with that view weve seen this disconnect between what the market is pricing in and what fed is forecasting when it comes to the dot plots. Thats not new in itself i wonder how the fed or maybe the market will try to close that gap will it lead to a lot of volatility i think that is the issue facing the market when you think about rates and the dollar we had an extended period of dollar weakness even as the fed has been increasing Interest Rates, twice this year, december last year. I think this meeting will prove a watershed meeting. I dont think we should completely discount the impact of the announcement of the Balance Sheet will gradually be wound down this is the beginning of the end of the era of quantitative easing that has a lot of implications over the medium term for the way Financial Markets and asset price behave in the shortterm this will be on the dots. If as we anticipate the f moshgs c is going to say stick to their forecast for another rate hike by year end, thats a pretty firm signal. The market is still a long way from getting to that point i think youre right if theres a potential risk to equity, to credit, other risk assets, we could see volatility in rates i dont think it will come straight after this meeting. But i do think theres something to watch out for Going Forward isnt there something to be said for the fact this time it is better telegraphed than tapering so theyve been talking about qt for months we pretty much know if it doesnt happen at this meeting, it will happen the next meeting. Most Analysts Expect it to happen today they released the mechanism as to how they will taper, 6 billion treasuries, so theyve been pretty transparent about the mechanism. Other people have done analysis on how much they expect the tapering to impact the term premium of the curve there are estimates from anything to 40 basis points to 80 basis points. But tenyear treasury yields have been tame yeah. Why have they not moved more. Yeah. I think youre absolutely correct in terms of the analysis and in terms of saying that this time theyve telegraphed and set out a path theres still some uncertainties. We dont know what terminal size of the fed Balance Sheet will be we dont know whether they will shrink it by a trillion, 2 trillion or more secondly, part of what happens in terms of the market also depends on what the u. S. Treasury does. They will have to effectively fund the repayments back into the fed on the maturing debt will they do that with t bills impact the short end or on longer dated debt. Then as your previous guest highlighted, we have uncertainty around fiscal policy one thing which we shouldnt forget, we have leadership change potentially at the fed. Five changes in the sevenperson board of governors at the fed including yellen herself we could be talking about a different fed in three to six months time. Peter, back out to you. What does all of this mean for Trading Opportunities at this point . You gooiguys think there will ba shock, the dollar will be on the weaker side. Does that mean the carry trade will continue especially when it comes to the em currencies we think there will be a period of getting used to the fed reduction in the Balance Sheet, and that should cause Dollar Strength in the nearterm. We understand the gradual and the transparency the fed put forward. The longer term, the weakness in the yield curve globally will continue to allow yieldseeking behavior and were seeing solid growth. Its not just the fact that investors wanted higher yields its because the stability in many regions, specifically asia, will allow for greater opportunities from an investment standpoint david youre on the same page you think em is the most attractive when it comes to global risk assets for how much longer . We have been increasing our allocation to emerging market assets, in particular to local currency debt, both corporate as well as sovereign. Fundamentally its about the Growth Profile one way to think about em is that its sort of a high beta to Global Growth. When you have an upturn in Global Growth and the widening growth cap, em assets typically outperform i dont think you need a situation where you have a strong further rally in em fx for it still to be attractive and pick up significant real yields and in countries like brazil or turkey the other thing which is quite nice about we think about emerging markets, is that you have divergence. You have idiosyncratic risk and diversity. Making the right country selection and credit selection does pay off david, thank you very much for that david riley, partner and head of credit strategy at blue Bay Asset Management and Peter Rosenstreich in other news, very sad news, the death toll from the earthquake that hit central mexico is over 200 people. Thats according to mexican authorities. The 7. 1 magnitude quake has also caused gas leaks and major fires with dozens of buildings destroyed or damaged its the second major earthquake to hit mexico recently reporter a powerful earthquake struck mexico, rattling the capital sending people flooding into the streets. More than 20 buildings and other structures in mexico city collapsed. Emergency workers and ordinary citizens raced down to the city lifting rubble with their hands trying to free anyone struck underneath this witness said unfortunately i saw it collapse, thinking there are children inside it was regrettable. The way it collapsed was very shocking alma said she was rescued from the fourth floor of her building after being trapped. This quake struck on the 32nd anniversary of another major disaster, the 1985 quake that killed as many as 10,000 people. Dren residents who hours earlier took part in earthquake drills to mark the anniversary raced to the streets when the real quake struck it is the second most powerful quake in a century the epicenter is 70 miles southeast of mexicocity. The president of mexico said he is traveling to mexico city and has an emergency plan already in place. He also deployed the Mexican Armed forces to help now the latest on hurricane maria. Its battling st. Croix and is expected to hit puerto rico. The potentially catastrophic category 5 storm has sustained winds of 165 miles per hour. The region is still recovering from the devastation of Hurricane Irma ranked as one of the most powerful atlantic storms on record coming up on the show, falling out of fashion why invests are dropping inditex shares from their shopping baskets. Plenty more ahead. Kingfisher shares are topping the stoxx 600 after better than expected first half profit they posted underlying pretax profit of 440 Million Pounds total sales rose 4. 5 . The owner of bnq sounded a cautious tone on the economic back drop in the uk and france. Inditex shares are under pressure the owner of zara said gross more gin of margin as a percentage of sales slipped a year ago this as inditex reported a 9 rise in first half profits diageo shares fell as the drinksmaker says the later Chinese New Year and a ban on alcohol sales near indian highs will weigh on sales growth diageo expects better margins in the second half of this year toshiba reportedly selected a group led by bain capital to buy its memory chip unit the deal is worth a reported 2 billion, though it has yet to be formally announced it comes as toshiba looks to plug a financial hole toshiba and bain have not commented on the reports. As we were talking about before, sprint and tmobile are in active merger talks again, thats according to cnbc sources. Shares in both Companies Led the Telecom Sector to the top of the market in tuesdays trade. Reporter sprint and tmobile and their parent companies, softbank and Deutsche Telekom are in talks those talks, while they may not end with a deal have become quite serious. The two sides are now engaged in trying to hammer out a term sheet which would include an Exchange Ratio for an all stock deal under which tmobiles parent, Deutsche Telekom would be the largest single owner of the overall combined company masa son who runs softbank would remain a Significant Shareholder through the softbank ownership of the combined sprint and tmobile it would bring together the number three and four players in the u. S. Wireless market it is a deal thats been discussed in the past, engaged from both sides on in the past in different variations, but this time they are, it would seem, quite diligently pursuing the possibility. That does not mean they will reach a deal, though it perhaps will be as little as three weeks to a month before we may know whether, in fact, they have succeeded or not that will be one step, if they do get to an actual agreement the next would be, most importantly, whether or not they can get it through the Regulatory Regime here in the United States. That would be very difficult, many people believe giving it as high as but no higher than a 50 50 chance given the fact that it is the most important bill many consumers pay in a given month, and the existence of both sprint and tmobile has led to a price war in the u. S. Amongst all the carriers that has benefited the consumer so, here we are waiting. Well see what happens the combined company would be run by tmobiles current management led by john ledger. Softbank would be a minority holder of the combination should it come to pass. Back to central banks. The fed is not only Central Bank Meeting this week. The bank of japan began its twoday Monetary Policy meeting today. Makiko utsuda has more reporter yes, its widely expected the board will keep its easing policy unchanged. Board members are seen to be in broad agreement that the economy is picking up. For the three months through june, the japanese economy marked igts sixth consecutive quarter of growth. On the other hand, Consumer Prices climbed half a percentage point in july which is far from reaching the banks goal of 2 . Interest rates are likely to be kept unchanged at zero one issue that i be north korea and how its provocative actions could affect the economy, though there was limited Market Action when a north korea missile flew over japan on friday tomorrow is the yunyear aoneyr anniversary of the yield curve control, a measure aimed at bending longterm Interest Rates at zero and keep Monetary Policy loser for longer that led to a 60 increase in japanese government bonds in the past year. Jgbs offer a minimum annual coupon of 0. 05 which is an attractive alternative around five times more than what retail banks currently offer. Another topic of interest this time is that two new members have joined the board. They replaced two members whose term ended in july, who are known to be frequent dissernts again dissenters against the banks easing thats all from the nikkei back to you. Makiko utsuda, thank you very much for that. We will go for a quick break. 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Its great when you see a hundred orders come in, a hundred orders come in, but then you realize ive got a hundred orders i have to ship out. Shipstation streamlined that wh the order data, the weights of , everything is seamlessly put into shipstation, so when we print the shipping ll everythings pretty much done. Its so much easier so now, were ready, bring on t. Shipstation. The number one ch of online sellers. Go to shipstation. Com tv and get two months free. Chances are, the last time yoyou got robbed. An, i know i got a loan 20 years ago, and i got robbed. Thats why i started lendingtree the only place you can compare up to 5 real offers side by side, for free. Its like shopping for hotels online, but our average customer can save twenty thousand dollars. At lendingtree, you know youre getting the best deal. So take the power back and come to lendingtree. Com, because at lendingtree when banks compete, you win. Hello. Welcome back to street signs. Im carolin roth these are your headlines shares of thyssenkrupp are surging ae ining as the german combines with tata to create europes second largest steel producer, with plans to cut 4,000 jobs. The death toll from the 7. 1 earthquake in mexico tops 200 people as the quake topples dozens of buildings. Im just looking at some retail sales data for august for the uk they easily beat expectations. We are seeing a print of 2. 4 year on year i think were expecting a number much closer to 1. 3 . So this is very convincing beat here when it comes to the monthly figure were seeing a jump of 1 thats the reaction in the currency markets quite a strong one cable, sterling dollar at 1. 3574 a nice spike on the session chart. Weve seen a nice rise in sterling dollar over the last couple of weeks. Its been rising by to the tune of 6 obviously we see all the speculation about brexit, about boris johnson. Does he stay or go thats been leading to a bit of sea saw action in the pair at least in yesterdays trading session. Lets continue with a look at the markets. Heres how u. S. Futures are shaping up were looking mixed. The dow jones seen up by 18 points after seeing yet another record close yesterday the s p 500 also had a record yesterday. Seen up modestly to the tune of 1 point. The nasdaq seen off by 1. 3 even the nasdaq saw a record close yesterday. We had a trifecta yesterday for the markets. The dow rising for the eighth straight session when it comes to the european markets, looking more mixed. The ftse 100 off by 0. 3 this goes hand in hand with the strength of the pound sterling and the xetra dax is up by more than 4 points. We have one outperformer, that is thyssenkrupp. Shares up by 5 after striking that joint venture for tata in the steel sector when it comes to the fx markets, theres pound sterling the dollar is trading sideways ahead of that widely anticipated fed meeting where we might get the first clues as to how and when the fed will be pairing back its Balance Sheet euro dollar bangon the 1. 20 handle interesting reports from reuters saying a strong euro is driving a rift between ecb policymakers and that could prolong bond buying into next year. That led to a bit of a dip in the euro dollar yesterday. We are just a few days away from the german elections. Angela merkel is on track to win a fourth teerm as german chancellor ary the pro business fdp takes third in the latest poll with 11 . In an interview with rtl, merkel gave her thoughts on what the next coalition might look like translator im not thinking about any coalitions now i have said that we will not form a coalition with the vafd we will also not form a coalition with the left. Apart from that, were work on a good election result er fromming to the social democrats, you can ask whoever and whenever you want, they never roll out a coalition of red, red, green this is wrong in my opinion annette is in berlin with the latest last time in 2013 it took the two parties around two months to form a coalition if a Jamaica Coalition were to be formed, do you think that would be quicker it seems like theres disagreement between the three parties as well. Everybody im speaking to says these Coalition Talks will be more difficult than in 2013 people are more or less are thinking it may take three months or longer to form a government Coalition Talks will ab tricky issue f theres not a surprise result, strong showing of the liberals that could give them a majori majority, together with Angela Merkels party having said that, there are many Critical Issues here still to be discussed. The parties are not agrees on europe and other issues. Domestic issues, like taxes, for example. So there will be a lot of discussions after the official electi elections which are next sunday. I was speaking a lot here on the ground about how the integration of refugees is going remember, its not long ago two years, not even, that Angela Merkels popularity ratings were really dropping tremendously because she opened the doors to a lot of refugees in germany still that topic is highly discussed and one of the reasons why the afd, the right wing party in germany has such a strong showing in the opinion polls. I spoke to the managing partner of the association of german employers about how the integration of the refugees is going, what he thinks and how long it will take. If we Work Together on both sides, politics, economics, trade union, its a realistic approach we have some areas in germany where we have full employment. We have to target on longtime unemployment which is solid on a level moving side ward we have to cover more on education. Where we see new challenges on the horizon. I dont see its overambitious but realistic approach its supported by the demographics germany has a shrinking population if we move cleverly towards education and other approaches, we will have a solid move in that direction not sure that full employment is good in economic terms because it means theres a scarcity of lane ner some respect. How much would the refugee influx have and how is integration going here the German Economy is the most open economy within europe. And this includes labor market migration. We have been integrating not only refugees, but Skilled Labor into the German Market not only by small but growing numbers. We will do that in the future. If we have a sudden inflow, like during the refugee crisis, its not so easy to solve the task. The first is language, language, language, which is the most serious precondition for integration into the labor market number two is skills, skills, skills there is a certainty amount for uneducated labor, but its a growing demand for highSkilled Labor. This cannot be only fulfilled by refugees, but we are an open society to Skilled Labor as well so i yes, you are right there can be a damage and the growth limitation, but staying an open society and staying an open economy, we can solve the challenges why the refugee crisis has shaken certain parts of German Society quite a lot, above all eastern germany people tend to vote more for the right wing party ever since Angela Merkel opened the doors to many refugees at the same time, one also has to say that angela americaal is benefiting from the stellar Economic Performance of germany and also that the labor markets are in such good shape, shes, as we were saying earlier on, shes modeling her campaign once again that shes a safe pair of hands, and that stability is something she will always assure during the next four years in germany. That seems to be working for now. With that back to you. Definitely bland, but as you say, seems to be paying off. Annette, thank you very much for that uk Prime Minister theresa mays reportedly ready to pay a 20 billion euro brexit divorce bill to the eu thats according to the financial times. The offer will reportedly be included in mays speech in florence, italy on friday. The hope from mays team is that addressing the exit payment will encourage brussels to move forward on a post brexit trade relationship between the uk and the eu Spanish Police arrested catalonias junior economy minister as part of a morning raid on several government offices. The arrest comes after scuffles broke out between police and protesters as a proposed referendum looms pro succession activists tried to prevent police and the court clerk from leaving the building. This after offices were raided by police. The government in madrid has declared the referendum illegal. Now, still coming up, Donald Trumps made in the u. N. Speech made waves around the world. Well tell you why when we come back the fed is widely expected to announce it will begin winding down its Balance Sheet the Reduction Program is set to kick off in october. Steve liesman has more from our poll reporter the cnbc fed survey for september showing no change expected in rates at the end of this meeting here. Rates 100 of our 42 respondents expect rates to remain unchanged after the meeting. The third rate hike, 76 believe there will be another quarter point hike before the end of the year a little higher than market prices might suggest finally, 68 say by october the Federal Reserve will begin to reduce that 4. 5 trillion Balance Sheet. The outlook for rates, theyve come down, compared for example from our march survey. The same for 2017. But look what happened for 2018, down by 0. 3 , down by 0. 2. The long run rate, well watch that tomorrow to see if fed officials are bringing down their estimate for how far they have to go in this right rate cycle as for expectations for the Balance Sheet, its expected to go down to 2. 4 trillion dont get too excited. Some people say its like watching paint dry, it will take 4. 4 years to get there we also asked an interesting question here, how low can the Unemployment Rate go before it sparks inflation . 3. 7 , thats pretty much below the 4 level on the 4. 4 level where we are right now so theres room to run, according to these respondents, before inflation but note this, 45 say theres little or no connection of the Unemployment Rate to inflation that tells us what we already knew, namely the phil p phillips curve seems to be broken a quick look at u. S. Futures, theyre turning more positive. Dow jones seen up by 22 points the s p 500 and nasdaq seen in moderate positive territory this is after we saw a trifecta of record closes in yesterdays trading session. The dow rising for the eighth consecutive session. When it comes to the dollar rates this morning, we are seeing the dollar pretty much moving sideways in anticipation of that fed statement later on today. Look at pound sterling against the green back 1. 3579 after better than expected retail sales out of the uk for august. That shows theres an ongoing squeeze of real wages in the uk. Keep in mind these retail sales tend to be volatile. Shares in fedex fell as much as 4 in after hours trade after the company reduced its Earnings Guidance the Delivery Firm said it expects to earn about 1 less per share due to the impact of the cyberattack on tnt express fedex said its business was hurt by the attack. Investors are seeking to raise 1. The most active week for ipos since june three Chinese Companies are leading the charge reporter its ban sluggi isa sluggish year for ipos, but the action is picking up, thanks to china. Investors are seeking to raise a billion dollars from seven initial Public Offerings this week that makes this week the most active week for ipos since june three Chinese Companies are set to debut, let by best inc, the biggest ipo of the quarter overnight the company cut the deal size to 472 million, down from 869 million best will start trading on wednesday. Its competitor is not offering great comfort, they went public in october, now down more than 20 . Also from china, secoo holdings. Rounding out the china offerings, biotech form, zia lab. Next week is a strong one with two Tech Companies coming. Roku, and used car service, car gurus from the founder of tripadvisor. Likely valuation, 1 investors are encouraged by the aftermarket trading of ipos that have gone public. Sure, blue apron and snap have been failures, but theyre the exception. Ipo etf, a basket of thes 60 most havent ipos is up 27 . Many of those stocks had big outperformance including ferrari, square, first data public investors drive a hard bargain and want initial prices as low as possible, they have been rewarded. For every blue apron and snap out there, theres plenty of winners. Lets turn our attention back to President Trump. He is reportedly using funds from his Reelection Campaign and the Republican National committee to cover his legal fees the rnc kwconfirmed more than 230,000 have gone to Trump Lawyers working on the probe former Trump Campaign manager Paul Manafort is demanding a government investigation into media reports that government authorities wiretapped him his spokesperson suggested surveillance was politically motivated. Paul manafort was briefly trumps Campaign Manager last year but was pushed out amid power struggles and concerns about his business relationships with the russian establishment. In a speech that drew plenty of criticism from World Leaders, President Trumps first United Nations address criticized the Iranian Nuclear deal, promised to put America First and had a strong message for kim jongun the United States has great strength and patience. But if its forced to defend itself or its allies, we will have no choice but to totally destroy north korea. Lets get out to tracie potts who joins us from washington with more reaction there were hopes going into the speech that maybe the president was going to sound a lot more president ial, but that wasnt quite the case, was it well, the president did exactly what he was expected to do, number one, which was to focus on sovereignty that was a big theme of this speech he mentioned it more than 20 times, America First, an america not afraid to take on kim jongun as you heard in that portion of the speech. He came out perhaps a lot stronger than people expected he would in directly threatening north korea. He said he would totally destroy north korea if they dont stop these missile tests. In fact, the north Korean Foreign ambassador, who was there, walked out before President Trumps speech started. He was not directly addressing north korea in that room nevertheless, President Trump was very clear that his philosophy of America First, he wants to cooperate, but that every country there should be putting themselves first that they shouldnt be paying more than their fair share, that he was willing to take on north korea, seemingly in an isolationist way in the way that the president mentioned it yesterday. And also that hes not a fan of this Iran Nuclear Deal he brought that up again we have known he wants to pull out of it. He has a deadline of next month to make that intention known thank you very much for that round up of yesterdays speech lets discuss it further with Jeremy Shapiro. Thank you very much for taking the time you have two things on the spectrum here you have macron talking abg America First, about nationalism. Was any of this a surprise really no, this is classic trump this is what he campaigned on. This is the type of rhetoric hes had throughout his presidency the issue people are having snow whether any of it matters. He had a lot of bluster about sovereignty, about attacking various countries, north korea, iran, you name it but nothing really ever seems to happen. After his speeches, his advisers go out and basically brief quietly and say, you know, pay no attention to what the president said the real question now is whether it matters what donald trump says do you think it mattered to other World Leaders . They had to sit there, listen through that speech. Overnight we saw plenty of criticism from other World Leaders. Others were more quiet did it make him more isolated or not change the status quo . Hes already quite isolated, i think, among World Leaders we saw that at g20 this summer people dont feel like they relate to him. Macron in his speech, i think made a pointed effort to distinguish himself, to present himself as the antitrump. So certainly what the president of the United States says matters politically, matters to other World Leaders, the question is does it matter for u. S. Policy . Thats an open question. Want to come back to macron trump used the word sovereignty 21 times macron used it once. We saw the two World Leaders shaking hands yesterday, making jokes about a military parade in the u. S. On july 4th, emulating what happens on bastille day with so many differences in policy, do you think this can happen and be fruitful i dont think anybody has a Good Relationship with donald trump, except his family the question of policy is irrelevant as to whether you have a Good Relationship with donald trump hes not that interested in most of these policies. I think macron has cleverly decided to stake out policy positions which are quite contrary to donald trump but not to be rude to him. To be pleasant in person, to flatter him in the way he likes to do. To try to have the best of both worlds to have a stand but maintain your relationship with the United States and its president. You guys have done some Interesting Research on how the european governments, World Leaders in europe have adapted ed to the new u. S. Administration you talk about the regency effect talk to me about what that means. Its a reference to mad king george iii in the united kingdom. When he went crazy, his advisers, his family formed a regency around him and isolated him from policy and made all the decisions. Thats the view of european countries, thats whats happening in washington. People like jim mattis, hr mcmaster, rex tillerson, these are the people that are actually making policy. The mad king gets up every once in a while and makes a speech, but it does not have any effect on u. S. Policy the mad king, your words, not mine jeremy, thank you very much for that Jeremy Shapiro thats it for todays show thank you very much for being with us once again im carolin roth Worldwide Exchange is up next. Whuuuuuat . Rtgage offer from the bank today. You never just get one offer. Go to lendingtree. Com and shop multiple loan offers for free free . Yeah. Could save thousands. You should probably buy me dinner. No. Go to lendingtree. Com for a new home loan or refinance. Receive up to five free offers and choose the loan thats right for you. Our average customer could lower their monthly bills by over three hundred dollars. Go to lendingtree. Com right now. And im the founder of ugmonk. Before shipstation it was crazy. Its great when you see a hundred orders come in, a hundred orders come in, but then you realize ive got a hundred orders i have to ship out. 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