Hes confident of a positive outcome in Coalition Talks he says hes prepared to enter into new government if the terms are right. I want to give a government to this country, but not at all costs. If another is formed, we must not approximate these issues. Germanys far right makes sweeping gains in two Regional Elections a blow to the countrys ruling grand coalition. Want to just bring you some eurozone final manufacturing pmis coming in at 47. 0 thats in line with the earlier estimate we had of 47 thats against the july final number of 46. 5 in terms of the output number, 47. 9, thats slightly higher than the preliminary estimate 47. 8 against the july number of 46. 9 dont forget, this is the seventh consecutive shrinkage in factory activity for the eurozone we have seen output continuing to fall not quite as drastically but jobs dont remember those cuts showing up for the fourth month running. Indeed, manufacturing still showing signs of weakness in europe as confirmed by the final pmi numbers. Friday saw a bit of a muted close for wall street. We had dow fractions and the others slightly around the stat line as well it has been a very tricky month for u. S. Equities. Generally speaking the dow ended the month about 1. 7 weaker obviously over the weekend the Major Development was that of the new tariffs imposed. The u. S. Have imposed tariffs on chinese imports covering about 125 billion worth of goods and also china has started to apply tariffs of their own up to 75 billion. That tit for tat is continuing and those tariffs went into play yesterday on september 1st this is a picture for europe the handover from asian equities was pretty mixed shanghai composite was trading stronger and what we see today for europe the stock 600 is also starting off the new day. 2 lets break it down on the individual indexes there is a lot of green on the board today. Ftse 100 up 46 points higher a lot of weakness in the pound trading back down to 121. 50. Also weakness in the euro. Generally speaking this will be a big week for Brexit Developments well get into that shortly, but we have Parliament Coming back from recess tomorrow could be a huge week in terms of how things progress the next couple months. We had Regional Elections over the weekend showed a big support for the afd far right party but not as well as some people had anticipated. Giving a bit of sigh of relief to german politics no imminent threat for the time being. We have been talking about italian politics having a strong start to the day up. 7 percentage point also seeing some bond inflows into btp markets as well. The yields are doing quite well. In terms of sectors a lot of green on the board, as i just mentioned. Right at the top food and beverages, utility some of the defensive sectors doing well and technology down half a percentage point. Real estate which was doing well towards the end of last week particular any germany has come off. Were starting off september a much better foot for european equities. That comes despite the fact that they have implemented fresh tariffs and further escalated their trade war. Washington instituted 15 billion. Beijing retaliated with 75 billion worth of u. S. Exports. The u. S. Plans to implement further trade barriers in october and december, it said. But President Trump has insisted trade talks will still take place this month china has not confirmed its own officials will return to those negotiations our colleague eunice yoon filed this report from the chinese capital. Beijing is signaling that the weekend tariffs arent helping with the trade talks state paper such as the peoples daily say escalating trade frictions wont solve anything news agency argues that the u. S. Should stop acting like a school bully and the communist party paper has an editorial that reads u. S. Shoots americans in foot both the u. S. And china impose tariffs on sunday. China imposed a 5 or 10 tariff on various Agricultural Products and 5 tax on crude oil. The u. S. Business community generally appreciates President Trumps tough stance on china but believes it comes with too much friendly fire but President Trump says its necessary to get the chinese to change their ways and believe trade talks are on track. We are talking to china the meeting is still on on hasnt changed they havent changed and we havent. Well see what happens but we cant allow china to rip us off anymore as a country. We cant allow china to take 500 billion a year out of our country. Reporter the u. S. The preparing for its next round of tariff hikes on october 1st, the same day that president xi jinping and the communist party are meant to showcase chinas achievement on the 70th anniversary of the founding of the publiceoples republic. China painted a divergent picture of manufacturing health. Showing factory activity in expansion territory at 50. 4, that came despite analysts expectations of a continued decline. But a survey from the National Bureau of statistics that focuses on larger staterelated enterprises indicates full and Manufacturing Activity for the fourthstraight month. Kaylan, lets start off talking about china. Interesting numbers over night in that came in slightly higher than expected even above that 50 expansionary mark. What is your take away from that that is pretty remarkable given the current sentiment around it, but on the whole, i think we are looking at kind of a managed slow down as a result of this trade war we have seen kind of mixed data from the u. S. As well from various states or various sector we may have a temporary blip but i wouldnt expect that to be the start of kind of a prolonged month on month string of growth. I think on the whole, kind of surrounding factors are extremely negative with the renewed tariffs. But while talks are going to continue on going, well see this deeper strategic rivalry between the u. S. And china starting to impact other sectors including the Financial Sector. The Chinese Government set a target of 6 to 6. 5 growth by the end of this year but probably on track to get around 6 but what about 2020 . Could we see chinese growth dip below 6 thats a possibility. At the moment, at the eiu were expecting growth of around 6 . Why is that really is government has managed to stabilize private debt over the last couple years. They were starting to look much more negative up over 250 of gdp which is a dangerous sort of area but while in 2017, that ratio debt kept going and the government managed to stabilize that to give them more leeway to use more monetary and fiscal policy to reencourage lending and help to stimulate the stateled economy which is still very much the delays i would expect that to give china more tools than the u. S. To keep growth at their target level. Were very close to that 2020 goal of doubling the size of gdp i think china will take out all the blocks to get to that final goal. Investors trying to forecast what might happen to both the chinese and the u. S. Economies, how important do you think consumer consumption data is at this stage i would put more stock in china than the u. S the u. S. Is still extremely reliant on Consumer Spending to offset more warning signs were seeing elsewhere in the economy. So the government has been a major contributor to growth this year because the Trump Administration is spending at higher levels than even the beginning of the administration. In the q2 gdp numbers in the u. S. , higher state spending contributed to the 2. 1 or 2 growth that we saw now, Consumer Spending is still stronger than in kind of the general private sector were seeing a lot of these warning signs of sentiment that we have seen in the more forwardlooking surveys of Business Outlook starting to really come into the data and investment slowing down the pmi data was the first time we saw a mild contraction below that 50 baseline i think to the large extent the negative impact of the trade war has been absorbed purely by the Business Community in the United States very little cost has been passed on to consumers, wage growth is relatively firm and job creation remains again surprisingly strong without that, the u. S. Gdp number would be a lot more worrying than it is now. Thanks so much for that. Stay with Us High School and University Students skipped the first day of class to attend prodemocracy demonstrations in hong kong today after a weekend of unrest. Police used tear gas, rubber bullets and Water Cannons to disperse crowds that gathered despite a ban on public demonstrations there were violent scenes in the citys subway system and activists again targeted the airport causing Flight Cancellations and delaying thousands of passengers. Coming up on this program, germanys ruling parties claim victory in Regional Elections, but the far right rfd makes significant gains. Well have more on that when we come back. clients voice remember that degree you got in taxation . danny of course you dont because you didnt your job isnt doing hard work. Its making them do hard work. And getting paid for it. vo snap and sort your expenses to save over 4,600 at tax time. Quickbooks. Backing you. Its how we care for our patients like job. His team at ctca treated his cancer and side effects. So job can stay strong for his family. Cancer Treatment Centers of america. Appointments available now. Applebees handcrafted burgers now starting at 7. 99. Now thats eatin good in the neighborhood now starting at 7. 99. My teeth have been feeling really sensitive lately. Well 80 of sensitivity starts at the gum line, so treat sensitivity at the source. New crest gum and sensitivity starts treating sensitivity immediately, at the gum line, for relief within days and wraps your teeth in sensitivity protection. Crest. Welcome back to street signs. Well, a court in milan ruled that they can vote against mediaset plans to merge its italian and spanish broadcast services the french group has the right to attend extraordinary Shareholders Meeting on september 4th and can vote against the italian firms proposed organization into a pan european broadcaster under a Dutch Holding company. Well, shareholder after its built up almost 10 stake in the german firm. But prosiebens ceo says they are not eager to have a merger let me talk to you about the changing landscape for european broadcasters like yourselves is it constant competition is it a cut throat competition do you guys see yourselves as possibly partners against the u. S. To some extent . Well, i think in general partnering is really important because were dealing with giant infrastructures in the u. S. And in china and i think for european media and entertainment infrastructures to incorporate is important we have just done a joint venture for the first time in 25 years to provide Advertising Technology to the German Market in a way that we can draw enforcers. We set up the European Media Alliance a couple years ago. And so i think well continue with that. Having said that, were very focussed on getting our entertainment footprint future proof, more local content, which is working and were beginning more digital reach so last quarter, for example, we grew digital reach 26 and were combining them which is quite unique prosiebens has very significant echo Platform Business those setsups are very synergistic and in fact theyre growing very fast. This idea to work with rtl is all about targeting audiences for advertising. Going forward into the longterm, do you think that a targeted kind of Business Model like that is complimentary to a subscription model yes i have a view that if you look at broadcasters we have grown up so were very focussed if you want also in the Digital Space on free trade. We Just Launched a streaming platform to a very strong start. Were eight weeks in and have more than 3 million app downloads more than 4 Million People using it. Its free and advertising. The big opportunity on the advertising side is to basically take that inventory, combine that inventory with tv inventory to provide more targetable solutions to advertisers if you look, for example, in the u. S. , 30 plus of all advertising is regional and local and today as a broadcaster i cant offer regional and local advertising. The moment i have digital reach i can do that very effectively. I want to ask you about the fact that its a crosscountry not merger but a crosscountry deal that has taken place between your Company German and Italian Company media set. Do you think this is the way the industry is moving and does it have to move in that zplex earlier in the year tlrt multiple instances of deals in your space and other space that have been blocked by european regulators but not so much in the media space. Do you think theres more scope for those types of crosscountry acquisitions to take place yeah, i think in general theres more scope im a bit careful on total company con sill dags. Were very happy with media set as a shareholder but i happen to think that theres more value in focussing on the key projects that drive the future, which is really on the consumer end streaming technologies on the advertising end and Advertising Technology and not entirely convinced that if you want combining the infrastructures is the way to afford because then youll spend years in structuring and working yourself through structures instead of focussing on how to create fantastic entertainment for our viewers out there. And fantastic Advertising Products for those that are funding those programs. Maxwell, thank you so much for joining us that was the ceo of prosiebens germanys two ruling parties are set to hold on to their top spots in the prospective strongholds in eastern germany governing partners the social democrats narrowly clinched in the state of saxny both parties lost significant ground to the hard right Germany Party rfd. Our colleague has been monitoring the results from frankfurt. What does this mean for germanys government, first of all . Reporter well, actually the earthquake berlin was sort of very much concerned has not happened it is a shock to the political system because clearly the potential the afd could realize in both of these elections is quite remarkable close to 30 mid 20 one should say. That is a lot and that comes very close to the traditional conservative social Democratic Party who have respectively been the leading parties in both of these states so, bottom line is that berlin has to wake up and to address also those concerns of those people who voted for the populist right wing party afd and those eastern federal states but as i was saying, thats not the end of the berlin government we are nowhere close to such a scenario because its just a federal election and the alternative for germany is nowhere close to potential as in saxny and braddenburg. Its an eastern german phenomena apparently there the rhetoric is working pretty well but having said that, the worst was, as i was saying, avoided earlier opinion polls suggesting that the afd could actually even come in poll position, that has not happened and that was mainly also on who voted for the conservative party. But nevertheless, it is quite clear that the Political Landscape also in berlin is far away from being very stable. They promised to have an assessment of the grand coalition whether to keep it or whether to walk away by mid october in berlin and then we have the crucial leadership contest from inside the spd first weekend of december which will yield a new spd lead which could call off the coalition or not. Back to you. Thanks so much for bringing us the latest there. Were also joined by global economist at the Intelligence Unit how bad is the economic landscape looking . Its a lot of risky everything we bring up is slightly concerning. Germany obviously have very kind of difficult start to the year and the latest pmi data from germany showed a slight up tick compared to july but again were still in negative territory. This will be the story that dominates the rest of the year as the u. S. And china appear to be getting further and further away from any sort of real resolution, this results gradual slow down in Global Economy in the annual growth and consumption in china and all this will just continue to weigh on germany what do you think they need to do here because the ecb president bank only said a week ago this isnt the time to panic. Certainly if you speak to people within industries of germany, he agreed with that look the data is slowing were not expecting a prolonged downturn here and therefore the government shouldnt panic what is your view . I think, yes, theres definitely something in that the u. S. Is kind of really in the same boat, i think, in that were starting to see negative economic signs but not truly alarming signs in the data now but were in a unique position in the economy starting to see a mild slow down but sentiment is still the main question there. So as we see policyled issues not necessarily a bubble in housing sector or in the Financial Sector or anywhere else, but the risks are coming from potential policy miscalculations or aggressive policies to weigh further on the economy and that raises enough of a question mark amongst the private sector that were seeing this really hesitant, really wait and see generating that stock market volatility. Its important that we distinguish between different types of fiscal policy so when it comes to germanys ability to stimulate, what is the what type of policy will give them the best bang for the buck that is a great question. I think in the next little while well see that i think Monetary Policy generally we have seen Central Banks around the world starting to say that the tools at their disposal arent going to be enough really to manage the crises that are coming definitely true for u. S. And china and same for europe. So it falls to fiscal policy and the prescription will be different for every country. Obviously the most important element for germany would be to find a way to reinvigorate manufacturing. That would be hard to do one quick question. As the u. S. Seems to get closer and closer to trade deals with countries outside of europe, that shows quite clearly theyre not very close to a trade deal with the European Union. So given that context, should investors be concerned that actually the biggest trade problems down the road will be between washington and brussels . Yes and i think actually so seeing the u. S. With the usmca the followup to nafta hasnt been ratified but is on the books exempting canada and mexico from possible auto tariffs and recent agreement with japan and south korea, all the other manufacturers potentially at risk from those tariffs are now slightly protected and that really leaves the e nurks a very vulnerable position. It would be a massive economic step for the u. S. To put those tariffs in place before 2020 its domestically very unpopular both politically and economically it would have a negative impact on the economy certainly on the Business Investment which were seeing slow down already and stoke any further fears that u. S. Trade policies will stay vulnerable but the eu it really is in a risky spot. Well leave it there. Thank you so much. Just briefly to make a correction to what we said earlier the cdu and sbd performed well top spots in two parts of the country the cdu performed better in saxny and it was the spd that performed better in brandonburg. Also coming up, the leader tells cnbc that a snap election in italy could happen at any time tas mi up. Lks, they dont have time to go to the post office they have businesses to grow customers to care for lives to get home to they use stamps. Com print discounted postage for any letter any package any time right from your computer all the Amazing Services of the post office only cheaper get our special tv offer a 4week trial plus postage and a digital scale go to stamps. Com tv and never go to the post office again welcome to street signs im willem marx. Im Joumanna Bercetche and these are your headlines. European equities trade cautiously higher after washington and beijing apply a fresh round of tit for tat tariffs. The dachshunx underperforms. Conservative rebel mps risk expulsion from the party in parliament if they help opposition lawmakers block a nodeal brex it in a move that could sacrifice the uk ministers majority. Italys Prime Minister says hes confident of a positive outcome in Coalition Talks as fivestar leader tells cnbc exclusively hes prepared to enter into a new government if the terms are right. Translator i want to give a country to this country but not at all costs we must not approximate mate these issues dorian batters the bahamas as florida braces for the impending category 5 storm one of the strongest ever Atlantic Hurricanes to make landfall just to bring you some uk pmi data we just got coming out manufacturing wise it is at 47. 4 for the month of august. Thats against the july number of 48. And its significantly lower than the reuters poll of 48. 4. Thats the weakest number since july, 2012 and thats the same thing for the output index as well the lowest since back in 2012. Its interesting that ihs market are saying that the pmi is consistent with the manufacturing output falling at a quarterly rate of nearly 2 natch thats contraction of 2 in the manufacturing sector. The manufacturing weakness continues into the uk. Obviously its not the biggest part of the uk economy, but its sort of plays in line and reflects the Bigger Picture were seeing for all of europe right now. And you know, we have seen the pound weakening there against the dollar over the last hour or two. Im going to be surprised if that changes in the next few minutes on the back of that data so lets talk about other currencies cable as we said is dropping and with the data thats obviously not going to help but pound started dropping any way on this very big week we have coming up for uk politics. Lots of questions still about whats going to happen brexit discussions and maybe possibly a snap election coming in the uk. Euro also interesting. Broken through 110 now, 109. 70 is where were at also trading softer had been trading in a tight range around 111, 112. But last week when it broke through 111 sustained down trend. Were seeing a little bit of strength to the yen but only to the tune of not even a. 1 percentage point first day of the month, european markets, it was a heavy month for stock 600 surprisingly the best performing index in the month of august was the ftse mib flattish and ftse 100 was down around 5 . All the four majors today are opening up in the green. It is a positive start for the month of september. Conservative mps are facing expulsion from their party in parliament they vote against the government thats according to the office that maintains order essentially amongst conservative lawmakers in that parliament it comes as they plan to bring forward legislation Nodeal Brexit as soon as tomorrow one source sid that tory rebels will destroy the governments negotiating position with the eu and conservative minister was asked repeatlied over the weekend if the government would abide by a law to block a no deal brexit. Take a listen to the exchange. Lets see what the legislation says im sure the answer has to be yes. Lets see what the legislation says youre asking me about a pig and a poke and i will wait to see what legislation the opposition may try to bring forward but we know what their condition is. Government to say we wont abide by legislation is impossible surely. Well, we will see what the legislation says when its put forward. For me is to bear in mind we have legislation in place which an overwhelming majority of mps voted for. We already have an eu withdrawal act. We already have the notice on article 50 process by which we leave the European Union tofr wheming majority of mps voted to do that. Meanwhile, the eu brexit negotiator has rejected Boris Johnsons request to scrap the irish backstop writing in the sunday telegraph the backstop is the maximum amount of flexibility the eu can offer to a nonmember state he also said he was, quote, not optimistic about avoiding no deal. So thats the response in brussels here in the uk, protests continuing over the weekend after the Prime Minister suspended parliament or announced he would try to suspend parliament estimated 10,000 people gathered in central london. Crowds also took to streets in big city like york kaylan burke is still with us. Where does the pound go from here its strengthened a bit. As an american who has come here for work it is a little bit worrying i think this is going to be given the monumental work that we have coming up in the next seven days i think theres not going to be a significant improvement unless we see some sign the two sides are willing to talk to another or this legislation proposed potentially for tomorrow could get a fair play would lead to some sort of agreement but when were heading increasingly towards no deal becoming a real option both for a limited time to get any sort of consensus parliament understanding we had two years to get to that point and the stakes are potentially too high and the eu dug its line further into the sand to say the irish backstop is all were willing to concede that does seem to point to this brinkmanship saying over the course of this week the main factor weighing on the pound. Do investors need to be aware of the fact that beyond the end of october theres no end to the uncertainty . Yes, definitely i think at this point its just knowing how bad its going to be or what the options will be, for example. What type of deal it will be will it be nothing will it be some sort of agreement. Will the irish backstop calm things the worst uncertainty is to know which of the three paths were heading down once thats known, the uncertainty will still be very much in play but businesses will know which sort of circumstances theyre going to be dealing with and preparing for. One other potential outcome we talked about many but one thing that people have been talking about the last 24 hours is the possibility of imminent snap election being called or tried to be called by the Prime Minister how do you think the market would react to that . I think this is yet another bout of uncertainty that would destabilize the market there is no clear outcome for how that election would play out. We had a lot more uncertainty to know where everyone stands and the likely government and therefore policies we have coming out really at this point there would be no additional certainty added by a new election. This wait and see attitude reflected in the manufacturing data we just looked at and all these things i think will just weigh on kind of investment for the next six months. But again, for the next three to four years after that as well. I asked you about Consumer Behavior in the u. S. And china earlier. Were talking there about businesses with manufacturing pmis and services being bit more resilient but whats the consumer doing in the uk and why does that matter same as the u. S its a lifeline for the economy as long as Consumer Spending remains robust enough to contribute to overall growth and make sure that that Thriving Services economy which again major contributor of employment that is going to be a critical pillar if that starts to wobble a little bit, then the overall picture gets increasingly uncertain. Well come back to you in a moment, kaylan another factory where politics is not making life easy for consumers thats italy because rome should have a new government by wednesday thats the view of the italian Prime Minister designate who says talks between the new potential coalition will conclude this week he hailed the relationship between the five Star Movement and the Democratic Party leaders saying the political mood was good. But five star leader dimaio hinted that a snap election is still possible exclusive interview he said a vote could happen at any time if an agreement snot found and he also told me that hes preparing plans to boost economic growth. Translator today we have a great opportunity in europe given that germany is slowing down and having some difficulties and this does not make me happy. We can take advantage of this opportunity to develop expansive policies at the european level if were coming out of a period of os tearty policies if today we want to invest in the environment, infrastructure, in new technologies and deduct them from the gdp deficits this is a great opportunity. I think even germany would agree. Were preparing big plans for investment so big plans for investment he added he expects a new Coalition Government to have difficult discussions with the European Union translator i believe that beyond the difference in styles all the Political Forces in italy are asking a change from europe in this moment of time on the front of the dublin firm, fact that europe must have a function of its institutions that places the European Parliament at the center but we all represent italys interests. In the past, someone did not do this well. Lets hope that the five Star Movement in the Government Coalition may improve the results that we need to obtain certainly in working towards the results that are sometimes frank and difficult interactions with the European Union, but the objective is very clear. It is to stay in the European Union and with the euro but with italy as a protagonist and one of the priorities dealt with in brussels. Lets bring back in kaylan burch. How important is it for italy to break away from the tense language its engaged with in brussels and turn a new page and move towards more constructi ii dialogue. I would say very important given the external circumstances. Its one thing a year ago to have this internal discord and complete lack of clarity on where italian politics are heading where you have some elements pulling towards europe, some elements clearly pulling away and no real Common Ground between the two. Again, were seeing these on going Coalition Talks a struggle to find any sort of consensus on what the government platform is going to be. That is much more difficult to maintain when the Global Economy is showing signs of slowing and require some coordinated monetary and fiscal policy to try to offset the impact of that within europe particularly this kind of constant battling is going to add to investor concerns that well still see that volatility not going in where. Both willem and i have been talking to various politicians in italy and the sense both of us get is that they seem to have some optimism that the next European Commission will have a bit more flexibility when it comes to their spending plans. Again, mr. Dimaio saying these policies havent led to growth how optimistic are you that this European Commission may be willing to bend the rules a bit more in the interest of progrowth policies . I think we are coming out of the era where os tearty was seen as the solution to any of the various economic ills that were trying to confront the uks in a similar position where i think there is across the policy spectrum one thing we can say concretely is that austerity is not shone the delayed aftermath of a Global Financial crisis it was a policy meant to get public back in the right position but i think thats becoming increasingly clear we have seened this continued growth of income inequality and i think moving forward new policy tools will be necessary and there is growing consensus thats the case. Indeed. Kaylan, well leave it there thank you very much for joining us for an extensionive discussion over the last 45 minutes. The global economist from Economist Intelligence unit. Now, Hurricane Dorian will continue to pound the bahamas today before moving toward the u. S. Later this afternoon. The second strongest atlantic storm on record slammed into the islands with storm surges of up to 7 meters. Nbcs jason garolla has more. Reporter tonight, our first look at the impact in the bahamas after a recordbreaking category 5 hurricane shredded the area winds topped 200 miles an hour and a storm surge towered two stories high pray for us im begging you, please. My babies, please. Pray for us. Reporter now dorian will swirl toward the u. S. While its not expected to make direct landfall in florida, it is likely to skirt the state, lashes the coast with severe wind, rain and storm surge residents in florida are growing increasingly concerned. The high intensity of it, the winds, ive never seen them this high and i have been through other hurricanes which were a lot less and all the hotels on the beach here were gone. Reporter dorian also expected to impact georgia, 12 counties there now in a state of emergency. Savannah still in the forecast cone impacting business. Shrimpers who brought one last hall say the timing is bad. We didnt want to come in here and mess us up. This is our best year coming up september. Reporter in south carolina, dorian is still days away but no time being wasted as residents prepare for a storm that could cause major damage even as dorian heads toward the u. S. , florida is already taking a hit, a big financial hit because of the lack of tourism this Labor Day Weekend well, for more on the catastrophic impact of Hurricane Dorian, head to our website thats cnbc. Com. And coming up on the show, currency controls return in argentina as the countrys debt crisis intensifies well have more details on that when we come back. Welcome back to street signs. Well, its technically the first day of the trading month, even though its september 2nd. So lets just take a quick review at what happened to some of the u. S. Indexes in the month of august. And that is the s p 500 for august down 1. 8 lets check out how dow did also a weak month for the blue chip index in the u. S. Down negative as well, 1. 7 . But the big moves i would say is also in fixed income space tenyear yields rallied more than 50 bases points for the month of august. Trading at around 150 now. And really huge move if you put that into the context of the equity moves the equis the down around 1. 5 elsewhere, argentina reimposed currency controls for the First Time Since they scrapped the measure in 2015 the central bank is now authorized to restrict purchases of u. S. Dollars having spent nearly 1 billion since wednesday to support the pezo who plunged since a president ial primary vote in august a government said the extraordinary measures are aimed at ensuring the normal functioning of the economy. And bank of America Merrill lynch is warning that low growth and emerging economies could spring skeletons out of the credit clos it they prefer mexico and colombia. Lets bring in the head of emerging across asset strategy from bank of America Merrill lynch. So its interesting that youre saying that you think we could start to see some skeletons emerge out of the emerging market credit closet but talking about fixed income i read in your note two thirds of emerging market debt is now trading in negative yield territory so, actually whats happening is that emerging market debt amounts to two thirds of negative yielding debt in the world. In other words, you have so Much Negative yielding debt all of this is becoming more attractive than it ever was and thats our key pushback against people who say oem is expensive, yes, its expensive relative to growth theres no growth in the world, but its not relative expensive compared to all this negative yielding stuff which gives you a guaranteed loss, right if so what really investors are struggling with these days is that you have this massive surge for yield. The yield curve is inverted which Everybody Knows means recession at some point but guess what the last time the yield curve went inverted like its today took two years before a recession came and you were still able to clip quite a bit of coupon. Were basically going for surge for yield but also put on some protection because you dont quite know when these skeletons come out of the closet. Do you think theres a risk that the fixed income space becomes a bit bubbly and that as a consequence of that we have some quite unpleasant outcomes for particularly consumers, individual businesses, individual consumers, individual investors, just individual households absolutely. You could the fixed income space is already bubbly by any historical measure in fact, particularly the Government Bond space and developed world but then also even Investment Grade credits in the corporate world at this stage a lot of it in the eurozone trade negative yield. Very expensive but at the same time, one of the best returning assets this year was 100year austrian bond which no one thought they were making any money but turns out to return 50 this year so its all about how aggressive do you think Central Banks will be in terms of cutting rates and of course, the fed could cut 200 bases points before they get to 0 and the ecb will probably go down 20 bases points in september. Talk us to about our bull bear indicator. What does that usually indicate being an a bearish. Positioning is very bearish the stock market is high but what is high are defensive stocks, utilities, Consumer Staples anything that has a high dividend yield is very high. Credit is also high but only the ig stuff, not the high yield in fact, people very, very long treasuries basically our indicators tell us that positioning is actually very bearish and that is one factor that makes us constructive. We have bullish Central Bank Meetings coming up the fed and ecb know its pretty much the last chance to prevent the recession and will try their best so these factors together mean to us that september is going to be good for risk assets including yen but not be carried away we do think 2020 will be very difficult year its more of a shortterm trade rather than trade for next year. David, well leave it there thank you so much for joining us, head of emerging cross asset strategy and economics at bank of America Merrill lynch thats interesting as well if you look at the seasonality typically what happens and that was in the note when you see a very negative month of august, which as we just went over for the month of august, u. S. Equ y equities were all negative you tend to see a bounce back. The ferrari driver used his maiden victory in formula 1 to pay tri bit to the french formula 2 driver who died at a crash in saturday. First victory but presumely a bittersweet one that the two were friends. Difficult for the whole motor sport world this one willem, formula 1 no exception to that. Bringing back memories in 2014 he was god father. So he knows all about that and the fact that it happened a day before on a circuit where he was driving, it was definitely in his thoughts. He said so himself afterwards. No celebrations after his victory, as you would hope he would be doing hope he would be doing himself after winning his first grand prix but every driver portrayed messages like this on their cars and of course there was a moment applause on that 19 his drivers number for him as well so incredibly poignant scenes and motor racing as was summed up by Lewis Hamilton saying these guys are heroes getting into these car they do it to entertain people and people love it and they love it and know the danger its very difficult for them leclerc did well to block out that Sebastian Vettel finished third. He drove well. Had a couple misses this year. This is the time where he made it all come good together. Held off a challenge from Lewis Hamilton who finished second, extending his overall drivers championship win it was all about the race winner the paddock dont like to see wire to wire winners but this time around it seemed completely appropriate that leclerc would cross the line first for his maiden grand prix win. He got out of the car pointing to the sky saying how much he was on his thoughts as well but it was a bittersweet moment for him and he spoke about that as well after the race. Its a very sad day i cant enjoy as much as i would like this first victory, but, yeah i dont want in my thoughts the whole race and im satisfied to win on a day like this to remember him the way he deserves. Not long turn around before the race weekend moves to the italian grand prix next weekend. Adam, thank you very much for breaking it down for us. 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