Resolves itself. Theresa may hopes her speech in florence will break the brexit deadlock as she prepares to offer better protections for eu citizens as well as outline the divorce payment plan. Loreal shares jump as the death of heiress Liliane Bettencourt puts the beauty companys agreement with nestle under review, opening the door for a stake increase or even a full buyout. Good morning its friday. Let me get straight to some data in the form of the eurozone flash pmi for september. We saw prints coming out of germany and france those were much better than expected what youre seeing from the eurozone is better than expected flash composite is 56. 7 verses a forecast of 55. 6 and an august print of 55. 7. Thats better than expectations. The euro dollar pair is rising on the back of these prints. Up by 0. 4 still below the 1. 20 handle. Currently at 1. 1990. Lets look at how european stocks are faring. The stoxx 600 off just a smidge. Just really a busy day not just for the markets, but also for politics. Everyone is waiting with bated breath for that brexit speech coming out of florence from theresa may. Well get through in a second. First lets show you what the indices are doing. There you go the ftse 100 under a slight bit of pressure. Xetra dax is off by 4, 5 points. That market is still trading close to two month highs as we go into the elections sunday the ftse 100 is suffering from fatigue in basic resources this came on the back of the chinese Credit Rating downgrade yesterday. Lets take you to the sectors. This is what you see some of the cyclicals underperforming. Basic resources the biggest drag off by 1. 4 . Food and beverages up by 0. 5 . And this might be the loreal effect we were talking about theresa may aims to change the course of brexit talks during her speech in florence. She will reportedly offer 20 billion euros to the eurozone. This would be paid over a tra transitional period where the uk would still have Single Market access we sent our own gemana to florence, italy. Why florence, and what could theresa may realistically say to turn the chorus of the stalled brexit talks good morning. Yes, its a glorious morning in florence will she delivery glorious brexit speech . Well see later. People were asking why she decided to give the speech in florence, the official line is that she wanted to emphasize that, y tshg yes, the uk may ben the eu but it is still a part of europe and plans to be a part of europe in the future and striking a more conciliatory tone than weve seen from the government in the past its worth bearing in mind that the context at this current point in time, the negotiations are a bit of a standstill. Many people are watching to see whether she will give further details on what type of ultimate treaty agreement the uk does envision with the eu and give more color on the security partnership, thats very important now following the terrorist attacks that have happened in the country. The more pressing issue were expecting to hear from is that of the transitional framework. This is something that liam fox, Phillip Hammond have talked abot over the summer. One by where the uk does maintain access to the Single Market and Customs Union for a defined period of time so they avoid a cliffedge brexit come march 19 today we expect her to spell out the conditions of that short time frame arrangement and then also how much theyre willing to pay to continue to have access to the Single Market the number touted in the media was 20 billion euros that would net out 10 billion euros a year, in line with the net contribution of the uk to the eu budget last year will that be enough . Will that constitute enough in terms of the divorce bill that the eu negotiators are looking for . We dont know. Hopefully well find out later hopefully thank you very much for that on that note, let me bring in Callum Pickering lets kick things around the 2 billion euros, whatever the number will be is that the number for the divorce bill or just for any payin to get access to the Single Market . To me it seems like the media lumps them together. Maybe no one has a clue what do you think that number stands for . That seems to be the number that the uk is willing to pay during the transitional period the eu wants the divorce bill which are the commitments through probably 2021. I have a sneaky feeling markets could be a little disappointed today. The conservative Party Conference is in a couple weeks, the beginning of october i think theresa may, after a very confrontational summer within her party, which would eventually reconcile, will want to use that as a full stop to the bickering. If she takes a position on the key issues, citizens rights, brexit bill, what type of deal the uk is aiming for, that will ultimately prove to be a divisive pillar, which could cause problems at the tory Party Conference i think she focuses more on the conference than the speech today. Will be enough for the likes of Michel Barnier . Theyre sitting in brussels, theyre waiting, theyve been twiddling their trum thumbs be there has not been much progr s progress will they be disappointed after this they may be disappointed on detail british politicians like to be vague. The eurozone wants money, bedroom wan theresa may wants a trade deal we may have to wait until the end of the year, with a little more time pressure before she signs off the brexit divorce bill which will allow the trade talks to move forward. You say maybe the speech today is not so much about playing into the fears of the European Partners about finalizing some details, maybe its about the leadership struggle within the conservative party. We saw that article being written by boris johnson, the backseat front see the argat ar. Do you think boris john sason h chance of running the party . The story is that the core conservative base has been driving party policy, im not sure he would be popular publicly almost half the people in the country did vote to stay inside the eu from a market point of view, heres my sense, the market is ready to go for the uk it looks good. 18 months of okay rowth. A central bank ready to tighten. Sterling is undervalued. If the trade deal looks okay, like the swiss deal, i think markets go to the races. So theyre hoping may provides clarity so that, you know, they can actually invest in an economy which is doing okay. Seems like theresa may at this current point in time, she is making major concessions. Well have to offer you some money before we talk about a postbrexit transitional deal. Do you think shell have to make further concessions . Is she becoming too soft already in the eyes of some of the hardliners . The key trait of the hard line brexiteers, they see benefits so the question iswho is driving the Underlying Forces . My impression is since the election, the remainders, chancellor hammond, amber rudd, but im not sure how much theresa may will publicly want to shift the dial from the hard line brexit talk that she had before the election to the more moderate i think mostly this will be a Public Relations exercise, not to divide the conservative party. And well see next week when talk begin again some detail on whether or not the uk is ready to make that payment to the eu lets look at sterling. 1. 3585 against the u. S. Dollar callum youve been one of the few ones out there watching the boe saying theyll be turning more hawkish sooner rather than later. Now it seems like youre right how dind kavindicated do you fel do you think 90 of what sterling is doing is down to the boe, not so much brexit or data . The reversal over the last two weeks, the uptick against the euro, the dollar and on a trade weighted basis is because of the bank of england the reason sterling is low because of economic fundamentals is because markets continue to price in the chance of a hard brexit so you and i sit here in front of our screens, even if Industrial Production is better than expected, we dont price it in because in two years what might it look like the bank of england is responding to underlying Economic Conditions where growth is kind of okay, its not that exciting, but demand is slowly creeping ahead of supply with very few resources in the economy, that means without Interest Rate hikes, inflation will begin to tick up. Callum, we have to leave it here callum ickering. You can watch the prime ministers speech from around 3 00 p. M. Cet, go to cnbc. Com. The uk posted its smallest budget deficit for august since 2007 standing at 5. 7 billion pounds the figure is down 18 from a year ago the Strong Performance has been driven by record sales tax revenues coming ahead of novembers budget. It could give chancellor hammond room to increase government spending. The white house is temporarily softening its stance on trade in order to preserve republican votes on tax reform thats according to cnbc sources. A Senior Administration official said most members on the house tax writing and Senate Finance committees are free traders, noting that trade actions like withdrawing from nafta or slapping tariffs on steel wouldnt sit well with them. Jpmorgan Ceo Jamie Dimon says the u. S. Economy could be doing better speaking to a cnbc affiliate in india, he said he was on board with the decision to start unwinding qe take a listen. Raising rates is not a big deal inflation is disappointed in light of that. I think the economy is growing strong i think it would be strong if americans did better policy. The fact is unemployment is coming down, labor is working, wages are starting to go up. Theres plenty of slack in the system, so the housing is in short supply theres more things to do. As long as they raise rates or reduce qe in a strong environment, i dont think its a big deal i think theyre doing the right thing to start the process is a dichotomy here the feds view is probably four or five rate hikes in the next 12 months but the markets are not pricing in half that whatcht whats the outcome if the fed is right . You cant look at one thing separate from the other. If the growth picks up from here and the fed is right, and they raise rates a couple times more, thats a good thing. Theyre not going to raise rates if growth is much lower. So theyre looking its har to fo d to forecast the future, but at one point they would be more right than the market. Wouldnt there be volatility in Asset Allocation . Should emerging markets worry if the fed were right little bit. But we see today in the world, its not synchronized, but growth in japan, growth in china, growth in europe, growth in emerging markets, growth in the united states. Brazil going from negative four to positive. Thats a good thing. If america is doing better and rates go up a bit, slightly changes the flow of funs betwfu between other countries and the united states, that trumps that growth i wouldnt be that worried about it. Commerce secretary wilbur ross will speak to cnbc today at 13 00 cet. Do email the show, you can find us at streetsignseurope cnbc. Com you can find us on twitter, streetsignseurope cnbc, and carolincnbc. Coming up, Angela Merkel is urging voters to get out in force for sundays election. Well be crossing live to berlin in a few minutes you wont see these folks at the post office. They have businesses to run. They have passions to pursue. How do they avoid trips to the post office . Stamps. Com mail letters, ship packages, all the services of the post office right on your computer. Get a 4 week trial, plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. Welcome back lets get back to loreal shares, theyre rising on speculation over the future relationship between the cosmetics giant and nestle following the death of loreal heiress Liliane Bettencourt. A joint agreement when nestle and the bettencourt family over its 23 stake in loreal will expire in six months bettencourt, the worlds Richest Woman died yesterday aged 94 ryanairs Flight Cancellations could cost up to 53 Million Pounds in compensation ryanair shares closed yesterdays session in negative territory amid concerns over the mounting costs resulting from the staffing shortage. The lowcost carrier is in the midst of a recruitment drive and offered many existing pilots pay rises as it seeks to prevented further cancellations. Lufthansa is set to acquire the bulk of the bankrupt Airline Air Berlin easyjet and condor are to take over the remaining assets. Negotiations between air berlins creditors and the bidders are expected to continue until october 12th, push back the original september 25th deadline ahead of the election at the weekend, chancellor Angela Merkel had this to say on the situation. Many people here are considering what will happen to my job to be clear, there are pilots from air berlin that weve wished all the best to, like all people who would like a job and would like to keep it, weve shown ourselves accountable in relation to this, i believe. Once again, worrying news out of north korea the country may test a Hydrogen Bomb of an unprecedented scale on the park ocean. The comments come from the regimes foreign minister. North Korean Leader jim jongun has promised to make a mentally deran deranged donald trump pay for his own threats. Both comments come after the u. S. President said he would totally destroy north korea if the regime threatened the u. S. And its allies the comments from pyongyang come as President Trump imposed new sanctions on the country reporter a united front at the u. N. Today as President Trump ordered some of the toughest sanctions yet against north korea, flanked by the leaders of japan and south korea. A new executive order will cut off sources of revenue that fund north koreas efforts to develop the deadliest weapons known to human kind. Reporter the sanctions target all individuals and companies that do business with the rogue regime, including trading goods, services and technology and in a surprising move Chinas Central Bank has ordered its other banks to cut off north korea. Mr. Trump has been pushing china to get tougher for months. That was a somewhat unexpected move, and we appreciate it. Reporter analysts say chinas involvement is critical. If there is any country that has the ability to move the north koreans towards negotiations and a more peaceful outcome of this crisis its china. Reporter the sanctions assign the president still wants to give diplomacy a chance, even after unleashing this threat earlier in the week. But if it is forced to defend itself or its allies, we will have no choice but to totally destroy north korea. What would be the definition of being forced to defend ourselves . An attack on us or our allies an actual attack . Of course, of course. Reporter still, the president s combative language rocket man is on a Suicide Mission for himself and for his regime reporter prompting north korea to compare him to a dog barking. The rogue regime has escalated tensions by testing 22 missiles since february, including a nuclear bomb in recent weeks i want to show you the Market Impact of this renewed war of words. Spot gold is up, 0. 51 the yen and the franc, theyre up against the u. S. Dollar with the dollar yen at 111. 97. Another sector i want to draw your attention to is the basic resources sector thats been suffering overnight, also australia on the back of weaker metal prices. This was a direct result of the downgrade of chinas Credit Rating china has hit back at s ps decision to downgrade the countrys Sovereign Rating over debt worries the finance Ministry Said the move was mind boggling as the Rating Agency provided no new information. Reporter its all about chinas ticking debt bomb. S p downgrading its rating for china citing unsustainable debt growth s p is the last of the three major agencies to issue a downgrade, moodies did this a few months ago and fitch in 2013 china is hitting back hard the finance anyoministry saying s p is wrong and ignoring sound fundamentals the language echoes a state media editorial that says western ratings agencies dont get the middle kingdom and that just because it doesnt look like a western model does not make it wrong. The timing of this is embarrassing for beijing its a few weeks out from the biggest political event in five weeks time, where we will see a leadership shuffle china has been working all year to clean up risks in the Financial System some analysts disagree saying debt levels are improving here and markets have posted a muted reaction to the news s p raises a salient point that debt growth outpaces Income Growth this is something that experts, economists have sounded the alarm bell over for many years, it does underscore chinas big tough balancing act, which is to install reforms, root out risks, all while still trying to prevent a sharp deceleration in growth cnbc, beijing. In mexico, workers are racing to reach survivors after the earthquake that killed at least 282 people Miguel Almaguer reports from a school in mexico city. Reporter after the frantic calls for silence, the rescue teams burrowing deeper into this elementary school. Conflicting reports of who may be trapped inside. Earlier rescuers saying it was children tonight the mexican navy says theyre all accounted for, but they are pic