>> i was told europe hit the corner, and then the contraction that was going on in the industrial sector which had com to an end. these numbers today showed that, in fact, the contraction has continued in manufacturing just to give you a little more context to this as well, earlier on we had the french numbers france surprised to the up side on both manufacturing and services germany seems to be here, and the jirnlan numbers came out 15 minutes before the show started. disappointing both manufacturing and in services as well. then as you were just saying, people's sentiment is also getting dented as well when it comes to business and economic expectations too >> the pound continues to hover after theresa may suffered another cabinet -- and suffered kaulgsz from members of her own party to step down supporters and commons leader andrea resigned. she says the new withdrawal bill does not deliver on the 2016 referendum result. our colleague steve sedgwick is down in central london steve, what's been the reaction exactly to her quitting, both from members of may's cab flet and from members of house of representatives own party? >> there are severe reporting restrictions in place because we are in a live european parliamentary voting situation from 7:00 a.m. this morning in the u.k. to 10:00 p.m. there are certain things one can't say, of course, of what's going on at the moment there are a whole host of issues and events and meetings that happened yesterday, including the fact that the 19 it 2 committee met i'm told not once but twice to discuss the future of mrs. may and whether laws can be changed to challenge mrs. may as leader of the party and, hence, prime minister as well. viewers will recall back in december mrs. may was challenged for the leadership in a ballot of back benches and will survive that and actually in the letter of the rules set down by the 1922 committee cannot be challenged for a year. the question was yesterday did members vote or not to change the rule so she could be challenge brd that as well safe to say spin forward to tomorrow, and we understand that the chair of the 1922 committee will be meeting mrs. may to try to flesh out a resolution as well looking at how things would move on if indeed mrs. may were to announce her resignation, one thing that viewers need to know is that actually the leadership election of a conservative party leader takes on average between four to six weeks as well. it's a tuesday election as well, and basically, any mp who wants to put their name forward can do it with the backing of two other mps. that would then go forward to a series of ballots where the person with the least votes will be witled out of the process until you had only two candidates and then it can -- not necessarily will -- go forward to the 125,000 members of the conservative party to vote on. now, looking at the historical context which willem, i know you know full well, very often the most popular candidate in the shires in the tory heartland doesn't necessarily become the leader of the tory party and, hence, potentially the prime minister as well looking back historically, the likes of michael hessletien, michael, david davidson and others that may be a nod to the aspirations of the man who is leading many book makers odds of becoming the potential next prime minister as well we'll leave that our viewers i think it's not too hard to work out it will be a convoluntarily outed process. anyone that thinks that mrs. may would resign and then be out of the job by the end of the week they are just plain wrong as well in fact, many people believe it will be at least june 7th or 10 th after the normandy kmem rags, after mr. trump's visit to united kingdom brm mrs. may would say that's it, i'm out on it will be a long convoluntarily outed process we understand things will move ahead tomorrow bough. >> thanks for that, steve. as we say, the sterling has been under a lot of pressure in the last couple of days. just above that 126 handle let's talk about broader market price action there is a lot of red on the screen for europe. the handover from asia was weak as well. we have shanghai composite trading down 1.5% overnight. the trade war really is moving on to phase two. that is that of tech war as more companies internationally cut ties with china's company, it's having knock-on effects of the telco industries down .8% already, and this is, of course, to do with the trade discussions that are going on in the world. woef also had some very weak macrodata coming out in europe let's just flip over and talk about the individual indexes here i want to start off with the german dax you can see index is leading the decline. well, just about pretty much all of them are down 1% already. germany is very much in focus. some of the sector that is are under scrutiny as well the auto sector having declines at the moment as well as the banking sector, too. we'll get to that in a second. cac, here surprisingly we had better numbers on both the manufacturing and services side of things, but that hasn't really helped or dew point dented some of the trader pessimism that's being expressed in that index today as well. ftse mib down 1% then just a quick look at the u.q. ftse 100, also down .6% i talked about sterling weakness in just a few minutes ago with steve. yesterday that had a positive impact on the index. today the market is really gripped in the risk-off territory. switching to sectors, let's talk about some of the performance there. the only sector in the green today is health care up about .2% some of the defensives also, as you would imagine, on a day like this, are outperforming. right at the bottom we've got autos down 2.7%. one in particular we're looking at here that says daimler. that stock is down about 7%. it's gone exheavy dividends, and they're having their agm today and talking about the strategy of the future. part and pashsel of the longer term, the bigger narrative that's playing out, and that is all tariffs and the trade war and europe potentially being next in the line of fire despite the six-month reprieve oil and gas also continues to struggle remember, we have that much higher inventory stock number out of the suts two days ago and it continues to have an impact on the stock price. that sector is trading weak. retail also struggling down 1.5%. >> there's some of the soft data we've had across europe. germany's manufacturing sector romained in contraction in may weighed down by continuing trade tensions flash manufacturing pmi fell to 44.3 down from 44.4 in april. the country's services activity also fell. meanwhile, french business activity hit its strongest level in six months with flash composite pmi coming in at 51.3 for the month of may joining us to talk about this is antonio garcia he is the chief european -- thanks for being with us let me ask you this. you seem to think that german manufacturing pmi is the number to be watching closely is this all about trade? >> it is a big part of our trade, about confidence, and about investment if export sectors. it's such a big share of the german economy and the euro area, and the effective trade is both the real numbers from trade are weaker also, the sentiment around it. investment in all the sbeks has been a bit of a laggard. all the issues that china and the u.s. are having is not helping. it's a lot about sentiment and what they're telling us is that the firms are not going to be in a rush to actually inverse those sectors. when we get the real numbers, i will not be surprised if those are, again, weaker they're not so bad q1. i will not be surprised you see a q2 before the fiscal kicks in, because that's already budgeted, and it's a bit of an up and down now we're a bit clearly in the down, and depending on trade delivers and it's coming forward. >> you have been predicting 0.3 to 0.4%. i wonder whether any of the numbers you have seen this morning changed that forecast. >> i think for germany so what you mentioned is the euro area, but i think for germany it's fair to say we learned today that we have a weaker q2 than 1 q1 the question is how much weaker will it be will it be a .3 or .2. >> an aggregate disappoint, manufacturing particularly, but the services pmi for germany given at 55, and that's still quite a strong number relatively speaking is that fully offsetting the decline in manufacturing, do you think? >> this is a good point. >> it is truex port sectors are not doing so well, and ek port contribution is not great. it can be taken away it's not doing bad that's a row flexion that consumption, and then theballo is picking up. that is a reflection of the services number that are better, and twoul, the fiscal imports will grow through the year why. >> it's interesting you said the word fiscal impulse with germany multiple tiemds. when people talk about germany, it's usually in the context of no fiscal impulse, or not enough you seem to think that what germany are doing it's actually having an opposite effect. >> it will it will. >> you are right relative to the potential to spend, perhaps they don't do it enough, okay they're doing far more than last year i think that's the key that is also true for the other three larger euro economies. that adds up to something. that's why you see a bit of a pick-up midyear in activity in germany and the rest of the euro area >> i want to pick up another point that you mention you mention private consumption. how important is that in the grand scheme of things in sustaining european gdp growth at the moment. >> it is the largest driver. this is the largest driver it is the largest driver for france italy is a bit of a problem, but it's in the category in terms of political risk, funding cost, and uncertainty, banks weakness. all of it is relatively bad news which is keeping consumption weaker than the rest >> stay with us. thanks antonio, the chief -- at barclay's. >> i think after the numbers, there could be some down side projected for q2 gdp numbers for europe if you want to get involved in the conversation, we are on twitter at street signs cnbc also on twitter directly >> coming up, burb bank chairman is addressing shareholders in german lendsers agm as he comes under pressure to step down. we'll have more details on that next >> before we go to break, let's take a look at chinese markets as trade concerns weigh on indexes. you can see that the shanghai composite is down 1.4% we're at a four-month low now for many of these asian indexes. we'll be discussing more about trade tensions with the wto directoror general that is at 10:30 cet and about 50 minutes time. n'gonyere. cake in the conference room! showing 'em you're ready to be your own boss. that's the beauty of your smile. bring out the best in it with crest 3d white. crest removes 95% of surface stains... in just three days. the wifi that set just raised the bar again. introducing xfinity xfi advantage. it comes with everything you love about xfi. the best speed, coverage and control. but it doesn't stop there, you also get enhanced network security, safer browsing, and more. plus it helps to optimize your network's performance. giving you the best coverage from attic to basement. so you can focus on streaming your favorites. not finding a signal. make the best wifi even better,with xfi advantage. simple, easy, awesome. skbro welcome back to street signs. let's take a look to what he is saying >> it is also -- because it is so important for german, but also for european economy, and because deutsche bank is needed. now, that's what clients from all over the world confirm to me every day. let me try to put this into a few numbers. with more than 20 million private and commercial clients we have the biggest asset. german clients trust us with more than 300 billion euros of client assets. part of our corporate investment bankers is the number one clearer of payments globally we settle more than 5% of global foreign exchange transactions, and we do so successfully. our asset manager as a total of 700 billion euros of client assets under management and thus ranks among the top five in europe ladies and gentlemen, those are just a few facts and figures which demonstrate that the work we do has a tangible positive impact it boosts the economy and fosers growth we help companies great jobs now, why am i starting my speech on supper a fundamental note because today we will be involved in lengthy discussions and understandably we'll hear a lot of criticism we'll be talking about falling revenues and cost programs we talk about control and about a disappointing share price. please believe me when i say that there's no one who is more disappointed with our stock market performance than i am ladies and gentlemen, i'm fully aware that this seems contradictory. we restore the bank to profitability, and, yet, the share price is close to its all-time low i will not let up. i will work with all my strength to boston stock price. however, none of us should lose sight of it is big picture the role we play for our clients, economy, and society as a whole. to deliver -- it's about change and growth looking back at last year we can say with confidence a lot of confidence and also some spried pride that we have achieved all the objectives that we set out for you here one year ago. ladies and gentlemen, that wasn't a given in the years following the financial crisis, it is from 2008 until april last year deutsche bank hardly achieved now of us publically stated objectives that's why it was clear to me from the beginning that we have to win back trust. we are committed to objectives, and we are doing everything in our power to meet them since then we've been implementing it rigorously day by day, week by week, month by month so we have a clear agenda that you can use to track our progress. now, what have we achieved in 2018 as promised we strengthened our more stable businesses, but our private and commercial bank of global transaction bank and asset manager dws. in the first quarter of 2019 they already contributed 63% of our revenues it's 4% more than in the prior year at quarter. as promised, we focused our investment bank more closely around its strength. it also means that we scale back those activities where we don't see oursds as leaders. now, year-on-year we have cut our balance sheet by -- >> that is the ceo of deutsche talking there about the bank's challenges and what he is able to do to change the narrative around the bank saying that they are prepared to make tough cutbacks to the investment bank the shaerz not helped by the fact that the u.s. federal judge has ruled that the german bank must hand over president trump's subpoenas for democrats in the house of representatives the bank calls its am in fraipg further today, as you are seeing there, and some investors have demanded a no confidence vote in chairman paul -- our colleague joins us live from frankfurt where she's been monitoring those comments from. can you tell us more about the shshld criticism of the chairman, annetta? >> it's actuallieth set to be i the role he was playing over the last year when he was selecting various ceos who apparently didn't do a good job and, also, he was presiding over the strategy changes, which in the end didn't result in any better future for the bank. his role is highly questioned during today's agm as to what i'm hearing is even though there's a lot of criticism, he might actually still get the approval by shareholders because many others, like a proxy advisor was saying they still support the management board, they still support the advisory board because the alternative is like a bank in trouble without any management left. the other big focus clearly is the investment banks how is the plan. it's clooer that they're losing a lot of money in the united states it's also one big factor by the share price is touching another record low after the other there needs to be a credible story what they are planning on doing about this, and it's also about all their legal troubles whether we now feel like the hump year or whether there's more to come, i think there need to defense investors that they are actually now really getting serious about handling all these issues back to you. >> excellent thank you for breaking it down for us very important day for deutsche's stake holders here. i just want to bring it back to the discussion with antonio garcia, the chief yourp even economist from barclay's talking about germany and the weak numbers we had earlier today how close do you think the ecb are monitoring the situation and do you think in light of the fact that these pmis have started a downward trend again, are they likely to sound more dovish next week in two woeks, actually >> they've been dovish already i think. in the last meeting they recognize some of the better activity, and i think they did that on purpose. they want to looefd themselves space to see what's happening in china, u.s., and back in europe and germany. the big next issue is i think that's the business for june whether they're going to improve the terms to offer some negative rates to banks to borrow from it and i think that's coming. they're suffering from negative rates. will they go down that path? people negative in june. i don't think so i think this is not a business for june the issue of helping the banks with the eb for later and more negative rates is for later depending on what the fed does >> okay. fair enough. a little bit of dovishness, but not the bazooka. antonio, thank you so much for joining us antonio garcia, the chief european economist from barclay's. also coming up on our show, stay with us because we're going to be speaking to the world trade organization director general roberto as china calls on the u.s. to behave rationally in its dealings with 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you have nausea, ♪ heartburn, ♪ indigestion, ♪ upset stomach, ♪ diarrhea... girl, pepto ultra coating will treat your stomach right. ♪nausea, heartburn, ♪ indigestion, upset stomach, ♪ diarrhea... try pepto with ultra coating. welcome back to street signs. >> these are your headlines this morning. >> the dax has weaker than expected manufacturing in may, and dow futures point to a sharp drop amid rising u.s.-china trade fears. >> the auto sector leads declines falling to a five-month low dragged down by daimler as the carmaker announces a major cost review and those ex-def dends. >> a top huawei executive confirms that the company could be ready to launch its own operating system this year >> deutsche bank shares hit a record low as they brace for a contentious shareholder meeting calling for -- for them to go. they're trading deep in decline territory, and the selling has kicked off the last half an hour or so you can see german index down 1.6% >> chinese indexes overnight, and also trading down as well. as i mentioned earlier, it really feels as though we're moving on to phase two of this trade war and that it's manifesting itself as a tech war with many other suppliers also in europe. now, cutting ties to the chinese telecommaker that's having knock-on effects of the telecom industry and tech industry we had plenty of macrodata to digest earlier today the market had been anticipating some peck-up in the pmi composite numbers for europe they didn't actually transpire still a lot of weakness in the manufacturing sector specifically when we look at germany and that manufacturing pmi is still very much in contraction territory. the markets have not really reacted very much to the pmi numbers either a lot of bad news for european markets today. a lot of red on the board. ftse 100, u.k. index also down 1% as well today don't forget that there are a lot of political developments to digest the prime minister lives and survives another day, but many analysts are saying that her days are indeed numbered let's take a look at how currency pairs are traegd this morning. euro is on the back foot the pmi number is disappointing. manufacturing services, 1 11.30 is where we're at. a bit of a bid for the end this morning. safe haven trading back .2 firmer for the end, and then cable at 1267 now looks like we're going to break through that a lot of the risk premium, potential change-over in leadership as well as we need to get priced into the currency today down .4 periods on the back foot. currency is also very much in red territory. i said we had a lot of price action in asia overnight. remember, this is another bargaining chip so to speak. the u.s. has been very vocal about the need for china to keep the currency under control ever since phase two of this trade war we've seen a weakening of -- it looks as though that move is continuing in today's session as well. the picture there is not pretty either we're looking at triple digit declines for the dow almost 200 points weaker at this point. max also seeing 80 points lower. s&p about 20 points lower as well across the board a lot of red to price in, and don't forget, we also get macrodata in the u.s., and also have the pmi services and manufacturing numbers there as well to look forward to. his negotiating team had no current plans to travel to beijing for talks, but he said he was still hopeful we could get back to the taebl. there are no beeners from global trade tensions according to the dutch trade minister she said how she would like the e.u. to approach negotiations with the u.s >> the appropriate noun to use what we're doing in full support of commissioner armstrong is to renew all opportunities where he we have dialogue with the u.s. as you know, commissioner armstrong has been mandated by the member states to start discussions with united states on the basis of a limited area, industrial goods, and recognition of our regulatory framework and reciprocal manner. we hope this will create a better atmosphere and also enlarge the comfort zone with a very long and entrusted ally with whom we want to team up and obviously tackle together all the other issues that will affect us when you look at the global economy >> we're joined by the director general at the world trade organization thank you so much for joining us this morning, sir. trade reps from the u.s., e.u., japan, they're all meeting today. they're going to be looking to try and change the way that governments can support industries in those countries, and the obvious target for these changes seems to be china. do you not think it would be fair to include chooirn in these discussions? >> i think part of that discussion is to figure out how to address this particular issue of industrial subsidyization in the world trade organization i think there are conversations ongoing where china is present it is sometimes desirable also to have like-minded countries to discuss and see whether they at least among like-minded ones, whether they can have a common position to make proposals to try to move things forward this is not the only process there are other processes ongoing, but it may be helpful >> like-minded countries, are you presuming currently by the fact that the u.s. is prepared to engage these kinds of discussions at all >> i think like-mindedness is always relative. there is not absolute convergence, but there is clearly at least among those three a desire to move in a particular direction for example, it reduction or limitati limitation industrial subsidies, how to achieve what the limitations and those are not necessarily entirely among the three, but at least the direction is the kind of like-mindedness i'm talking about. zroo sir, just taking a step back, the wto has kibtly said a rules-based trade system is essential for growth and development, but many people say that these rules are either too restrictive or not an accurate reflection of modern day economy. what do you say to critics of the wto who say that the institution hasn't really kept up with the times and if you look at the digital trade rules, for example, these were set in the 1980s and 1990s. snoo these rules that you just mentioned, they are not imposed by the organization. these are contracts. these are agreements that the parties agree on, so the members agree on the reality is that in the past -- these rules are criticized for being too restrictive or being too loose or not existent sometimes. it's about significant down and developing them. the reality is that for a long time we have not had any kind of negotiation that would really update these disciplines, and that's where we are at this point in time. when we talk about wto reform, rear talking about modernizing, updating the discipline so that it is more reflective of the situation on the ground today. in the past many of these things, including industrial subsidies, they were on the table, but the major players, china was not there. they could not agree amongst themselves. >> i will ask our economist in the wto to work on the this and analyze. there are a few common elements among the analysis that -- the first one is we're talking about 508 billion dollars of restrictive measures that were introduced in the last year. they're holding back investors this is holding back consumers, and that, of course, is having an impact on the expansion of the global economy that's another common element of the nalgsz about the economist every single country will lose unless we find a solution for this >> can we get more explicit with you, sir they're currently facing restrictive measures you may have heard in our program, we tufrpd on the fact that the u.s. treasury secretary it's potentially another set of tariffs on $300 billion worth of chinese products what would your message be to him in the trump administration? >> fact that these measures are going to have an impact on consumer prices, it's obvious that's economics 101 you impose measures that tax income and enput and consumer goods to the extent that we are talking about, there will be an impact now, i understand that nobody is putting these measures in place because they like to make life more difficult for skurmds. >> the regular citizen is not immune for this. in fact, the lower the bracket of income of the citizen, the more they will be affected, he or she sflo the united states has been the most vocal critic of the wto in the last couple of years. they've gone as far as blocking -- which is the main dispute mechanism. what can the wto do to bring the u.s. back to the discussion table again and start thinking about real estate solving all these issues from a multi-lateral perspective instead of just going at it alon alone? ment u.s. have very, very much involved in that we are trying to lead to subsidies, and the u.s. is one of the champions the suts is not saying that the wto should not exist i heard explicitly them saying the wto is important and it has a role to play, and if it didn't exist, it needed to be vented. however, having said that, it is not working properly, it is insufficie insufficient. >> vice governor is sthag trends of the chinese exchange rate will depends on economic fundamentals, key economic indicators are within a reasonable range this is the chinese central bank vice governor saying that the macroleverage ratio in china is basically stable and that fiscal and financial risks are under control. that the country's 4x are ample and international payments are largely balanced if perhaps it has overshot a little bit, but interesting that they are reaffirming the fact that the reserves are affirmle because they want people to work stay with us also coming up on the show india's ruling takes a look as more 600 million votes are counted. we're live next in new delhi ♪ ♪ ♪ ♪ ♪ ♪ ♪ applebee's new loaded fajitas. now that's eatin' good in the neighborhood. >> indian prime minister will lurn to power with a renewed mandate after electoral commission dates that showed his bjp party has won enough seats for an outright majority in the lower house. more than 600 million ballots have been cast in the world's largest election with final results due this evening the benchmark index hit a record high in early trade. prime minister modi has been the winner of -- the verdict is out, and we are just confirming that a couple of the local agencies as well, but this is pretty much a ferry gone conclusion because from the start of the session right from the word go, the numbers look strongly in his favor, and in the favor of his body the party. also, in the favor of the -- which is the vj plus allies. they have come back with a landslide victory. the strongest mandate seen in 35 years, which is essentially that they have a stronger dominance in the lower house, and, remember, neck year by 2020 they would have two-thirds of the majority in the upper house, which essentially means they will be able to, you know, push forward on clearing some reforms. remember, from here on it's really going to be the march towards the $5 trillion mark in terms of gtp for i understanda, and one will noeks on how the government puts the right policy measures in place to insure that growth rate picks up to achieve that milestone ing great to have you with us. let's talk about the indian price action india's market price action. first couple of months of the year didn't do much. in march we saw a big bounce in the indian sbeks do you think that investors can now go back to focussing on fundamentals, earnings, the usual things that you would look at to evaluate stock market performance. >> it's an interesting conversation i think that's been the big problem in india for maybe even a year we're expected to win something maybe in the range of, let's say, 260, 270 seats. what we're seeing today and we have to wait obviously to find the results is something close to 330 or 340 seats, which would actually be an improvement on the last time around what that hopefully alleviates is this concern that you would have a change in leadership, you would have a change in political spectrum in india, and people can get back to the fundamentals which actually have been pretty strong >> absolutely. we do have this continuity of government in terms of the fundamentals and in terms of the economic agenda of the bjp, what does that look like for investors, and what do they have to anticipate over the coming term? >> we've seen over the last five years in our minds actually a pretty good example of a government come into power and implementing pretty meaningful reform goods and services tax will be the number one that we would point to and say that's a big structural reform and should have meaningful benefit going forward. i think with this mandate, which is a surprise just in terms of the magnitude of the bjp victory, we would like to see land acquisition reform, labor reform come back to the fore they're not easy to -- they're socially sensitive for sure, and there's a lot you can do let's take labor reform as an example. because of how restrictive some of the rules are in india, actually what you have seen is a huge amount of investment into automation in india in manufacturing rather than this pick-up in labor manufacturing, which is important for you to try to build jobs for the hundred plus million people to come into the economy in the next decade. >> what's your view on broader asian effects given the developments over the last 24 hours. >> we would still be positively in line towards emf in general and asian fx in terms of that. >> we'll leave it there. thank you very much for joining us like, market specialist over there. for our u.s. viewers arks that is it for today's show world wooitd exchange coming up next for our european viewers -- >> stroun. we're going back to frankfurt. preparing to make tough cutbacks at the lebder. the latest innovation from xfinity isn't just a store. it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. >> market alerts futures point to to a big drop at the open. we'll find out what's weighing on wall street that's straight ahead. sfwlierjts a major developing story out of the united kingdom. pressures mounting on british prime minister theresa may to step down. we'll take you live to london, and hidden gems in the retail wreck. one stop popping this morning on an earnings beat plus, the one retailer jim cramer says could take on amazon we'll bring you those names. that's coming up it is thursday, may 23rd, and worldwide exchange begins right now.

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