In connection to the manchester attack. Further attack may be imminent. The change in the threat level mean theres will be Additional Resources and support made availability to the poliavailab police as they keep us all safe. Legacy issues hurt like for like sales for two of britains top retailers. France still provides a headache for kingfisher, with sales down over 5 while clothing weighs on m s. Good morning. Youre watching street signs as always at this time of the day. Glad youre with us once again. We have another busy show for you. Lets get straight to the European Market action. The ftse 100 a bit higher to the tune of 0. 2 across the board were seeing a fairly uneven picture. The dax is down a notch. The cac 40 is up by two points. A fairly uninspiring trade at this point in time. Lets show you the sectors one by one. You heard it in the headlines. Basic resources the biggest underperformer off 0. 6 . This may be down to the cuts in chinas Credit Rating and maybe oversupply in the iron ore space. Travel and leisure doing better, along with healthcare and media moodys has downgraded chinas credit grading to a 1 citing an economywide rise in debt levels. Beijings final strength is waning and recent Reform Efforts will increase its liabilities rather than spurring growth as the economy becomes increasingly reliant on policy stimulus. Speaking earlier on cnbc, marie duran expanded on the reasons for the downgrade. We will continue policy actions, thats an important part of the Sovereign Rating here. We will look at what is being announced and what are the likely implications of these announcements when the mergers are implemented. Theres been a wide range from a forecast on mixed ownership as a way to enhance Corporate Governance productivity was given a lot of focus last year this year there is focus on shadow banking and risks related to that. These are three areas that we will need to monitor closely. Lets look at the Market Reaction for the downgrade. It was fairly muted. The onshore yuan, buy and large shrugging this off. The offshore yuan slipped and the recovered in later trade. The aussie dollar a touch lower to 0. 0012 . I m the shanghai comp ending up in positive territory. And the csi 300 flat. Eunice is in china, maybe the Market Reaction wasnt so exciting but maybe the comments coming from the chinese officials calling this cut inappropriate. Why . Yeah. I think that you hit the nail on the head. The reaction in the market was quite muted. We did see a fall of about 1 in the early hours right after that announcement was made just because it was the timing was so surprising. However the finance ministry, as you would expect, did not welcome moodys decision. In a statement they said it was absolutely groundless to believe that local government financing vehicles as well as Stateowned Enterprises would add to the government debt. They also had said that the methodology that moodys used was inappropriate. And that it exaggerated the challenges that the economy faces as well as underestimated the pace of Economic Reforms here. The ministry also said that the debt is rising at a reasonable pace. And also said that the risk, they believed, would not be meaningful in 2017 compared to 2016. So here we see the government trying to really tamp down some of the concerns about the rising debt. They have long said that their financial position, especially fiscally is sound. The debt is controllable, and theyve also been, carolin, pushing the idea that they are pushing ahead with Economic Reforms despite what critics have said in the past. All right. Thank you very much for that. Before we talk about this top ingtopic, Financial Stability risks in the eurozone are contained but remain significant and have increased in some areas over the past six months, thats according to ecb. Concerns of a debt sustainability have risen while the clean up of the banking is slow, and a repricing in bond markets remains significant potentially leading to major ka tall loka capital losses. Lets get out to jane foley over at rabobank. Do you think the chinese story will dent sentiment for other emerging asian market currencies . I think it certainly dents sentiment. Even if we look at the g10 currencies overnight, some of the worst performers a the yare japanese yen. They have exposure to china as do a lot of countries in the region as do other commodity countries. There is a big issue with china related to the debt. This is what moodies is highlighted again. Moodys has not pressed that panic button. Chinese paper is still investment grade. But it does send a signal. What it suggests is that it may be less of a good thing, of course, for International Investors to invest money in china. Now, those signals are very much there. What weve had in china in recent months is an effort for them to try to protect the value of their currency. Not let it push down. By doing that, they have stopped people from being able to take money out of china. That, too, has been a bad signal for many investors. Of course without investing investors coming into china, there is the problem that more own news will onus will be on domestics to keep up the pace of growth which may be unsustainable. If you look back at some of the japanese newspaper stories over the last few months, there are stories that many japanese companies, this will also relate to u. S. Companies and other foreign companies, are having difficulties because they cannot take money out of china and back to the parent, this is creating issues. Again, this could be detrimental to investment in the same way that the moodys story could be. All of this is adding up to perhaps bigger signs of stresses and weakness within the chinese economy. At the same time we saw a fairly muted relaxed Market Reaction. Now moodys is essentially only on par with pitfitch. Maybe the next to cut the rating for the country will be s p. This may already be in the price. Indeed it would. Certainly the fact we have this downgrade was not a shock to the market. We had so many warnings over the recent weeks and months about the debt situation in china. From that perspective it is not a big surprise. I think this is all possibly just an extra bit of bad news. This could be mounting up to bigger strains and bigger stresses in the market. So, it is something which i think International Investors do have to watch. I think it is something which Central Banks of other economies that are related to china. So the ones with big exports to china are also watching. For instance, if we look at the rhetoric coming out of Central Banks, such addres australia, n zealand, we see a high level of caution there, even though the domestic growth figures are good. In japan, too, a lot of good news for japan this year, but a lot of export growth is to the chinese market. If china does stutter more, the waves will be really quite aggressive into the world economy. This is something that we really do need to watch very, very closely. Jane, lets change direction for a moment. Lets talk about the u. S. Dollar. We get the fed minutes this week. Some people say they might be outdated given the political noise out of washington, really the spate of weak data. Do we still care about the fed minutes . Isnt what the fed officials have been saying over the last couple of days more important . And last night the st. Louis fed president saying maybe he will be worried about a couple of twoweek inflation prints. I think youre probably right. At the same time we still have to look at those minutes and see what they say. It is interesting that we have had a couple of fed officials more concerned about that weakness of the cpi. Even so the market is well positioned for that Interest Rate hike in june. Perhaps what we will get is the Interest Rate hike in june, and that may create more anxiety within the market. What they may not do then is go again later in the year. Maybe well get the two this year rather than the three they promised. We also do need to know what they are thinking about that Balance Sheet. Because there is quite a strong impression in the market that they at least want to have a plan in place before Janet Yellens term comes to end next spring. So, there is some the risk time is getting shorter. The market needs to know what it will do. Thats a big signal for the u. S. Dollar that the Balance Sheet is huge, 4. 5 trillion u. S. Dollars. There are some fed officials who indicated it should be a 2 trillion handle. Now, if that happens, that could be a big draw of liquidity of dollars out of the global system. We do need to start thinking about and need to know what the fed are planning from that Balance Sheet, when they want to start draining those dollars out of the system. And hopefully there may be a signal with that in these minutes. To be honest, yesterday that fed official i was talking about said that the reduction of the Balance Sheet by the fed would be like watching paint dry. Maybe it wont be as unsettling to the market if we only get two hikes from the fed this year, do you think its enough to kick start the dollar bull run again . Probably not. I think that theres a different dynamic. Certainly when we had the dollar bull run in the final weeks of last year, the market was so caught up with the reflationary trend, we had a different set of very different environment for the euro. At the end of last year the market was very concerned about Political Risk in the eurozone. Also concerned about slow growth in the eurozone. If you like, weve had a big turnaround in the tables. The market is more concerned about Political Risk in the u. S. Than it is presently in the eurozone. And weve had a lot better growth data in the eurozone. Weve seen a big rush of funds coming back into the eurozone. If you like, that is exacerbated to the softer side of the u. S. Dollar. That is a big difference to last year. I think that better turn of the euro, better outlook for the euro for now should prevent the dollar seeing the bull run we had at end of last year. Jane foley, thank you for your time. Vedanta resources said it is looking at next years fullyear results with more confidence after posting an increase of revenue in 2017. Core profit rose over 36 due to stronger commodity prices. Earlier we spoke with the ceo, tom albanese who commented on his chinese business. Weve been seeing overall rating improved rating sentiment over the course of this year with our results. As you look at whats happening in china, i would say its more of a sense of some of the stimulus that was put in place is just beginning to run its course. Unless its refreshed, will you see a slow down in construction and demand for commodities. The u. S. Government has filed a lawsuit against fiat accusing the carmaker of emissions violations. Fiat has cheated emissions tests by deliberately using software to skirt controls on over 100,000 vehicles, accordinging to the doj it could face a fine of 140,000 for each affected vehicle sold before 2015. The carmaker denies any wrongdoing. Shares off a half of a percent. German police raided a number of daimlers offices as part of an investigation into emissions fraud. Daimler said they are cooperating with prosecutors and said well known employees are under investigation. The investigation partly relates to criminal advertising as the environmental values of some cars may have been exaggerated. We will go for a quick break. Do email the show. The address is streetsignseurope cnbc. Com. You can find us on twitter, streetsignseurope cnbc or tweet me carolincnbc. The uks Terror Threat level has been raised to the highest possible level. Well be live from manchester as britain responds to the deadliest terror attack on its soil in over a decade. Well be back in two. With type 2 diabetes a lower a1c is a lot about choices. But it can be hard sometimes, cause different sides of you struggle with which ones to make. Well, what if you kept making good ones . Then . You could love your numbers. Discover oncedaily invokana®, a pill used along with diet and exercise to significantly lower blood sugar in adults with type 2 diabetes. Its proven to lower a1c better than januvia®. Invokana® works around the clock by sending some sugar out of your body through the process of urination. Its not for lowering systolic Blood Pressure or weight loss, but it may help with both. Invokana® may cause dehydration, which could make you feel dizzy or weak when you stand up, so be sure to drink enough water. Important side effects to know may include kidney problems, genital yeast infections, changes in urination, or potentially serious urinary tract infections. As is risk of fracture, or increases in cholesterol or potassium. Ketoacidosis is a serious condition, which can be life threatening. Stop taking invokana® and call your doctor right away if you experience symptoms. Or if you have an allergic reaction, with signs like rash, swelling, or difficulty breathing or swallowing. Do not take if you have severe liver or kidney problems or are on dialysis. Taking with a sulfonylurea or insulin may cause low blood sugar. The choice is yours. Lower your blood sugar with invokana®. Imagine loving your numbers. Theres only one invokana®. Ask your doctor about it by name. Welcome back. Vigils took place across the uk and around the world on tuesday night to honor the 22 victims of the terror attack in manchester. The prime minister, theresa may, raised the countrys threat level to critical, the highest level warning another attack may be imminent. Speaking in the last hour, home secretary amber rudd said the attacker was known to Intelligence Services saying she believed he had eventually returned from libya. Show added th ed she added that the critical level was expected to be temporary adding that 3,200 soldiers will be out over the uk. Willem marx joins us with more. We know properties were raided yesterday in parts of south manchester. Amber rudd has been releasing some information about salman abedi. As you mentioned, she believes he has recently been to libya. One criticism uk Security Officials have had is the leaks coming out of the u. S. Amber rudd said it was irritating that some of the first bits of information coming out of this attack were from the u. S. We had information from the French Interior minister. He said to French Television that the man of libyan origin, salman abedi, travelled to libya and then maybe syria. When he was asked how he nude abedi had been to syria, he said this was information that french and british Intelligence Services already had. Asked if he was part of a potential network, the French Interior minister said that is not known yet. But perhaps he had links with isis. Islamic state has claimed responsibility for this attack. In the statement they put out yesterday, not a great deal of detail. A lot of people said that seemed to indicate potentially they did not have much involvement in the attack. Here we have the French Interior minister saying this man did have links with islamic state. Some people say that the uk should have been under the sort of emergency state like france has been since the awful terrorist attacks back in 2015. Since we had the west minute sfe westminster attacks. Since the fact we raised the level to the most severe level does it make a difference as to how many police and staff will be deployed . Hugely. At the moment we have a lot more Armed Police Officers here in manchester, Manchester Police requested those from other parts of the uk. The military, amber rudd drafting in the military, they will serve underneath the Police Across the uk. Theyll be guarding installations like buckingham palace, downing street, the palace of westminster, at large sporting events including the f f. A. Cup final and the rugby final at twikingham and more foot Police Across major cities. There will be a massive impact after this threat level has been raised to critical overnight. Thanks very much for that. Just seeing on the wires, france plans to extend its state of emergency until november 1st, thats according to a statement coming from the president. Again, france planning to prepare a new security measure and legislation in the coming weeks. Lets talk a bit more about the threat of terror and isis with jean debdland. We dont know to what extent isis was involved if it orchestrated this or if it was a silent backer. What do you think . This is the type of model that isis is trying to inspire. Two things to draw out, the model isis has been inciting does not fit with the mom. O. Of this attack. Wlifrnlgts no why not . They have been often frustrated to travel to the battlefield theaters in syria and iraq in particular, and to instead target domestic targets at home, drawing on everyday objects with vehicles, rental trucks and knives. This attack is different in that it does require planning in terms of time, but also know how, skills, expertise to build this kind of stable device, successfully carry it off, and actually in the past many of these attacks that have been the kind of hit rate in terms of success from the terrorists perspective is relatively low in these attacks. Those skills and know how are difficult to gain, particularly outside of the kind of battlefield experience that you get from terrorists traveling to syria or iraq or afghanistan, pakistan. Does take more preparation and its easier for Surveillance Systems and governments to pick this up and that ward these kinds of attacks many of them across the uk have been thwarted successfully and thankfully. Is there any particular reason why you think this fell through the cracks . Or is it just sheer luck or unlucky . I think it is very telling that the kind of pace of counterterroism and investigations and arrests weve seen over the course of the last year and certainly with the pressure that they are under in iraq and syria, and certainly there is going to be more returning fighters. That has been a very strong driver of the threat in western europe and particularly in belgium and france, the attacks we saw there. But also in the uk. Clearly individuals who have a european passport and seeking to carry out these attacks are high value to these groups because they can move much more freely and within western europe. So they are actively being sought out and recruited for that purpose as well. I think an attack of this scale unfortunately on soft targets was built in to how the government and the Security Services were pursuing and largely expected at some point this was possible. Obviously when it happens its extremely traumatic. I think the focus at the moment is on establishing in the investigation what was that support network that made this attack a viable attack. Just very briefly, given that the fight against isis has been going on for more than three years, and its gaining traction with the u. S. Government, at what point can we realistically expect that those terrorist attacks across europe will lessen . That well see a lot fewer . Right now it seems like the frequency has been the same over the past two, three years. I think if you look at kind of the number of attacks that theres been in western europe and germany, belgium, france, also the uk, yes, there has been a very, very noticeable increase since 2015. Thats driven by return of foreign fighters and driven by the tools that isis have used in terms of recruitment, online and social media and inspiring these lower tech attacks. Right. Jean, thank you very much for your insight. Appreciate it. Jean devlin, partner at control risks. Check out World Markets live. Thats our blog which runs throughout the european trading day. Well be back in two minutes. Welcome back to street signs. Im carolin roth. These are your headlines. First cracks in chinas great wall of debt. Moodys downgrades the countrys Credit Rating, citing beijings warning financial strength and rising liabilities. A potent combination. Concerns over excess iron ore supplies coupled with chinas credit downgrade chip away at europes mining stocks. Merger talks and bunge shares up 60 , did you be but deny the talks with glencore. The British Government deploys nearly 4,000 soldiers on the streets of the uk after raising the countrys Terror Threat level to critical as Police Conduct a series of raids in connection to the manchester attack. Further attack may be imminent. The change in the threat level mean theres will be Additional Resources and support made availability available to the police as they keep us all safe. Lets get you the latest from opec. Irans oil minister says the opec production ceiling will continue but its not clear whether it will last for three, six or nine months. He said saudi arabia is attempting to drive up oil prices adding that irans Oil Production will not decrease. Brent crude 54. 50. Wti crude at 51. 77. Both up by 0. 6 . Lets get out to steve who joins us from vienna. There seems to be a lot of ambiguity in the comments coming from the iranian oil minister. I thought nine months was a done deal . Very interesting, actually. The iranians have been on board for this since the deal was announced last november because they were allowed a small increase, up to about 3. 8 Million Barrels a day. Ranians h themselves heard. One official said we think well go 3 Million Barrels higher at some point per stage. Thats way beyond their capacity at the moment, especially if there are heightened sanctions from the u. S. On iran, which is more of a threat now under the Trump Administration than under the obama administration. As far as the comments about saudi trying to drive the price up, of course theyre trying to get the price up more. That goes without saying. Theyre t whether theyre trying to get up to the 80 plus we have seen, is unlikely. Do they want to be at a 60 handle . Absolutely. Whether youre in iran, venezuela, you need higher revenues for your budgets. Thats a major problem for all of these countries going forward, even if youre saudi what are they likely to do . It slightly appears to be on the table whether theres a three, six, ninemonth extension. Theres no month in only having a six. That would take us to the last quarter of next year. The First Quarter of 2018 is probably going to be low any way. So seeing that flood in 2018 would be disingenuous. So nine months makes more sense. But the announcement over the next few hours could be more deeper cuts, to get the price higher if thats the aspiration of the saudis. The problem with deeper cuts is where would they come from. Saudis are already shouldering a larg larger burden. So saudi would be loathe to go further, especially when compliance has been shaky at best from the likes of the iraqis and the uae over the period of six months. Those two countries only had about 60 compliance rates, even though the total compliance has been good. Opec has been successful in getting a lot of countries on board, but have they got the price up . That answer is no, not really. Libya and nigeria have had product shion increases. We have the head of strategy of europe from wisdom tree. Steve made the point that nine months should really be the extension or else it wont make a difference. What else needs to happen from oil prices to get the prices up . They need a stronger message and they need to make sure theyre adhering to the production cuts. Getting a strong message out about where they want to see production, making sure they stick to those figures. Take nothing account the countries like nigeria or libya. How important is it in this context of the hope for Higher Oil Prices to give enough time to speculate to the investment community. They were crucial when it came to building up the long position after the last announcement in november. Is nine months enough . Thats a key point. Net long positions have fallen dramatically, having gone and reached a high in february. You have a couple of messages coming across. One, saudis dont really want to see oil at 25 a barrel, but youre hitting a trading range between the 50, 55, does it get to 60. When it gets to 60 does it matter . Then you encourage shale producers to come back on stream. I think youll see a trading range. I think youll see upside from a positive statement from opec, but probably capping at 60 a barr barrel. Not overshooting that. Steve . What about the elasticity of demand. First quarter of 2015, 9. 8 Million Dollar rel barrels, an going up if we get a 60 handle, 65 handle, is that going to promote World Economic growth . I dont think the oil price will hit demand, what will hit demand is a different factor like chinese growth. Its something to do with the chinese economy. We have seen a downgrade by moodys on chinas debt. Perhaps the growth on the demand side will be driven by the likes of china, which are important in that context. Because theres real demand and then demand which has been built up in terms of inventory. Its this inventory issue that keeps coming back. We understand theres record crude inventories around the world, 1. 4 billion barrels, and then oil products inventory at 3 billion barrels. What hope is there that that will come down in consuming anything thats . At the moment thats been disappointing for opec, they barely got a barrel off the table in terms of inventories. Thats part of will they do what it takes to keep the levels and a run down of those stockpiles with trump talking about running down stockpiles as well, that might help the oversly ove oversupply inventory. Last time in november we saw a 15 spike in oil prices in the two days following the announceme announcement, then a 30 slump in the months following. Will we see the same reaction this time . No weve seen a big reaction already. Wti has gone up the past couple of weeks. Well see a little bit of a pop, perhaps up to 60, then it will ease back down and well be in a trading range based on statistics on demand and supply. If we get this ninemonth extension, doesnt this entice the u. S. Shale producers to come in and fill the gap . Absolutely. Thats why you will get a cap. You dont go beyond 60. Its not going to 80 in the sense that you will just get excess production straight away from the shale producers when its massively economic for them to do so. The oil price got down to, wti, mid 40s, slightly lower. Brent down to 48 quite recently before the most recent spike up again. Is there now in effect a draghiesque put on the market, an opec put on the market where we will get a floor at those levels . Could the speculators that you were talking about, if they decide to turn and are disappointed with what opec comes out with, could the speculators push this market aggressively lower, perhaps down to the mid 30s levels . When you look at what speculators tend to do, they tend to be less on the short side, they just lower their long position. Most of that valium and olume ay is on the long side, you see them reducing the long position rather than going actively short. I think there is a flaw in the price. I think opec set forth its stall in what it wants to do. Thats creating a floor for the oil price. Thank you very much for that analysis. Want to thank steve sedgwick. Lets have a look at the fx markets. Were seeing the dollar pulling back from the 6 1 2 month lows s weve seen in previous days. The euro dollar is back below 1. 112. The aussie dollar down just a touch. This is a reaction to the downgrade of the chinese Credit Rating given that the aussie dollar is often seen asproxy for the chinese economy. Lets see what the u. S. Futures are doing. S p 500 up by 3 points. Dow jones gaining 8 points, and the nasdaq 10 points. Major averages saw their fourth straight day of gains yesterday. Once again the trading range was narrow, maybe investors seemingly regaining some trust in the trump trade. Lets see how long that lasts. European equity markets, this is the picture. Fairly uneven. Ftse 100 a bit higher by 0. 2 . Xetra dax is off by 25 points. Cac 40 is off by 0. 1. Some of the biggest stories today on the corporate front. M s annual profit tell 10 while quarterly clothing after postin the first revenue increase in sales in two years. Shares up by 1. 3 . Kingfisher shares hit the bottom of the stoxx 600 after a weak performance in france dragged down First Quarter sales. Shares off by 7 . The Home Improvement retailer, which said it was cautious about prospects in country, posted a 0. 6 drop in sales from stores open for more than a year. Performance in britain and ireland was better. Shares in aircraft equipment maker safran and zodiac are suspended pending an announcement. Safran has been under pressure to scrap itsed by for zodiac. The takeover target issued a string of profit warnings prompting several safran shareholders to call on the firm to walk away from the deal. Glencores agricultural arm has made a formal takeover approach for bunge. Shares were 16 higher in yesterdays session. The American Firm said it was not engaged in takeov joefover. Gemma acton joins me. Are they or are they not talking . They could very well be talk bug perhaps not exclusively. This is a sector rife for consolidation. Glencore last year when it reshaped its agricultural business, moving down debt quite a lot. Prepared themselves for m a, so theyre talking to bunge and others. Shares of bunge went up 17 , but thats not a friend doutremendo given how much has sold off recently. The prices for soybeans have fallen so much. The problem is the margins are getting crushed. If you can dominate, its helpful. Secondly, geographically its important for glencore. The u. S. Operations is somewhere where glencore does not have a huge presence. It would give them access to a potentially interesting market. Whenever we talk about these deals, mega deals, we always think, is this the top of the cycle . I know were not necessarily talking about a super commodity cycle right now, but do you feel like were getting closer to it once again . It depends. In some ways its opportunistic in terms of where the sector, grain sector is trading now. Tough time for the grain sector. Theres a huge oversupply there. Its very difficult to make money there. On the one hand, glencore could be opportunistic and work out well for them. Looking at the price moves, doesnt look like theyd be paying an awful lot. So, probably wouldnt be that expensive for glencore at this given point in time. Would they lever things up . Would they use leverage for this . Less than two years ago we were all concerned about glencores debt levels. They brought them down sustainably. What would the financing be . They have done a great effort. They about halved their debt. Whats particularly important in this case is the agricultural unit now thhas its own standale Balance Sheet it could do this it could lever up, look for support also from the two outside investors. None of this would affect the glencore Balance Sheet itself. Okay. Gemma, thank you very much for that. Still coming up on street signs, President Trump walks back Campaign Promises proposing drastic funding cuts for medicaid. Well give you the details on the white house budget after this short break. Hi im joan lu. As President Trump continues his foreign trip, he het fmet f private minute 30minute talk at the vatican. The two posed for pictures and exchanged gifts. The president gave the pope books from Martin Luther king jr. The Trump Administration has unveiled its Budget Proposal to Congress Asking lawmakers to splash 3 3. 6 trillion in federa spending over the next decade. The budget seeks 600 billion cuts in medicaid, the Healthcare Program for the poor and 200 billion cuts in foot stad stampr the next ten years. Reporter on his campaigns first day save medicare, medicaid and Social Security without cuts. Have to do it. Reporter President Trump promised he would protect the safety net, but his first budget released today wouldnt do that, instead making deep cuts over the next decade. 72 billion from Social SecurityDisability Insurance and at least 610 billion from medicaid. The cuts could devastate americans like Adrian Gunter who has multiple sclerosis. My medicaid coverage takes the burden away from endless medical bills. Reporter the administrations defense. Were not going to measure compassion by the amount of money that we spend but by the number of people that we help. Reporter President Trumps 4. 1 trillion plan would make good on a series of other promises including infrastructure, paid parental leave, defense and border security, including a 1. 6 billion downpayment for the border wall. President trump says he can do all that, cut taxes and still balance the budget in ten years, but that assumes the economy will grow even faster than it did in the booming 1990s. The plan landed today in congress with a thud. Some in the gop echoing the Number Two Senate republican leader, john cornyn, who warned it could be dead on arrival. Is it dead on arrival . Yes. Reporter is this budget dead on arrival . I dont think ive served in congress ever where somebody didnt say that about a president s budget. The president s budget is going to set the contours for republicans to consider, but at the end of the day its the republicans in congress who will write the heart and guts of this budget. Reporter casey hunt, nbc news, the capital. In other news, Federal Reserve bank of philadelphia president Patrick Harker said an Interest Rate hike by the u. S. Central bank neb monxt month re a possibility. Harker warned the fed could hold off in hiking should inflation continue to disappoint to the downside. Minutes from the may meeting are due to be released later today. And lets get back to one of our top stories. Moodys downgraded chinas Credit Rating by one notch to a 1 citing an economywide rise in debt levels. Beijings final strength is waning and recent le foreform e also increase rather than spur growth. Speaking earlier on cnbc, the reasons were expanded upon for the downgrade. We will look at policy actions. Thats an important part of really the Sovereign Rating here. We will look at what is being announced, and theres been a wide range from focus on mixed ownership as a way to enhance Corporate Governance, productivity, deleveraging, removing excess capacity was given focus last year. This year, focus on shadow banking and risks related to that. These are three areas that we will need to monitor closely. Lets look at the onshore yuan, by in large shrugging things off. We saw some weakness in the offshore yuan, but it has recovered. Same for the equity markets in china. Chinese Companies Invested 46 billion in the United States last year, this according to a report from the National Committee on u. S. china relations. An increasing number of chinese firms are seeking to bolster Manufacturing Capabilities in the United States as President Trump seeks to bring factory jobs back to american shores. Eunice yoon has more. Reporter in the vision of the future, everything produced at this factory in china will be made in america. He found kier, but three years ago he started building a plant in South Carolina an investment that will total 2 220 million. The u. S. Has obvious advantages he says. There is a lot of concern in washington that the u. S. Is not just competitive compared to countries like china, but more and more chinese businessmen believe the opposite. That the u. S. Is gaining competitiveness in manufacturing and theyre looking to invest. American john ling makes a living helping Chinese Companies find locations to buy in the u. S. Chinese companies are going to the u. S. Because they think by doing so they can lower their costs of production. In certain pockets of the u. S. , the land will be much, much cheaper than china. The electricity rate, natural gas, the logistic costs. Reporter in addition, he says his raw material, cotton, is also cheap bringing his total costs down by 25 compared to china. American workers are more expensive, but he says with wages in china rising 30 a year for most of the past decade, that gap is closing. In the u. S. The labor cost is just a little over double what we pay in china, he says. He plans to have 500 workers at his u. S. Plant by the end of the year. If trump gets some of his agenda done, chinese manufacturers could find the states even more attractive. If we get our congress or the president to agree to something, we probably would be able to lower our tax rate, Corporate Tax rate. How big a trend is this now . I dont believe we have scratched the surface yet. That was eunice yoon reporting out of china. Before we wrap up the show, lets have a look at u. S. Futures. We are expecting a slightly higher open. The s p 500 looking to add 3 points. The dow jones seen higher to the tune of 11. The nasdaq set to add 11 points. This after major averages saw their fourth straight day of gains yesterday. When it comes to oil markets, brent crude at 54. 51. Wti crude at 51. 78. Well above that 50 handle. Up by a similar percentage. There is increasing optimism that we will be seeing a ninemonth extension to the current cuts. European equity markets. The ftse 100 is slightly outperforming. Up 0. 2 . The xetra dax, cac 40 and ftse mib slightly under water. Want to show you whats happening on sect by sector bas basis. Basic resources are among the decliners partly because of the chinese credit cut and ov oversupply concerns for iron ore. Autos off as well. On a programming note, join us at 12 30 cet for our interview with vitor constancio. Im carolin roth. Worldwide exchange is up next. See you tomorrow. Good morning. Breaking overnight, moodys slaps china with a Credit Rating downgrade. Market tests, key comments from the fed in an upcoming opec needing are on todays agenda. Plus trump meets the pope. The president continues his first overseas trip with a stop at the vatican this morning. Its wednesday, may 24, 2017. Worldwide exchange begins right now. Good morning. Welcome to worldwide exchange