Euros. Oil prices climb amid mounting tensions between the u. S. And iran as washington ratchets up economic pressure with major new sanctions and President Trump tells nbc news he never threatened to demote fed chair Jerome Powell but claims he has the power to do so if he wants. I have the power to do so. Thats not a threat just a reminder that you can. I have the right to do that but i havent said that. What hes done is 50 billion a nont quantitative tightening, its ridiculous. Well, good morning and happy monday, everybody. To kick off the week were getting german data out. So lets break that down for you. The june efo survey german business moral has fallen in june the Business Climate index came in slightly higher than expectations at 97. 4 versus the forecast of 97. 2 however the execations index come in at 94. 2 versus forecast of 94. 5. Little lower on expectations current condition index risen to 100. 8 in june versus forecast of 100. 2. On forward looking indicators sentiment is little worse. May index revised to 95. 2. Yet to see if thats upward or downward revision. Bottom line, the expectations have come in slightly lower than expected here. Commentary here saying the German Economy is heading for the dull drums they cut their forecast for not only this year but next year as well its still slightly higher than the germans own forecast. Its pretty remarkable what they have to say visavis the commentary German Economy is headed for the dull drums still very much in contraction nar territory and thats what people care about in the context of germany more on that later when we will be speaking to the ifo president in a few minutes time our other main story for today, shares in dime ler, the auto maker are trading lower after the german car maker cut its 2019 earnings outlook. It blames increased expenses thanks to, quote, various on going governmental proceedings focussed on diesel vehicles at its mercedesbenz unit the company warned it would set aside provisions worth a quote high three digit million euro amount im happy to bring in the head of research at bank house mezler join the line. I want to get your take from diamler over the weekend the Investment Community perhaps wasnt ready to take on this amount of negative news that has come out of the company. Yes it was surprising. Certainly we all thought that the new ceo was around only for about a month would have a better start, would have a good start into his new job and that he would even bring us some new perspectives for daimler this is not the case only four weeks after he is in the office he has to deal with old things like the diesel scandal. On the other hand, and this is the Second Thought on the whole thing, what daimler says here reads too much like an excuse, i think. It looks like, it sounds like, if you want some oneoff effects which caused daimler to take a look back, says picture in the first five months minus 5 is really weak and this is a deeper problem. Of course just to touch on that over the weekend, daimler also announce that i had may have to recall up to 60,000 vehicles, diesel cars in germany after the regulator found that they were fitted with software that allowed them to bypass these tests. Back in april, the eu antitrust regulator specifically charged volkswagen, bmw, daimler for this issue how much pr issue do they have with this . Both sides have a pr problem. Certainly daimler. They always said we did not do anything wrong, which is i think certainly not the case and even four years after diesel gate was opened if you want, after the case was opened, we still talk about these things and we still hear the same kind of excuses from daimler. This is certainly not good but on the other hand, the German Authorities like the kba, they come four years later with still some discoveries so to say and this is certainly also everything is but positive that it takes so long to come up with these things. Jurgen, you talk about daimlers excuses. Lets talk what they said over the last 24 hours. They blamed the rise in provisions on various on going government proceedings and measures the company has given no further detail to the media or investors than that. What do you think that actually means . I think this is principally one Diesel Engine which is investigated by German Authorities. This is not completely new we knew that this is german kba. If you want this Auto Industry authority looks at this one specific engine and so what daimler said here, they have to call back 60,000 vehicles. This is probably not the full true, not the full story we hear from other sides that all together some 4 to 500,000 vehicles could be affected including some transporters and this then leads to the warning on this special division, if you want, as this warning is concretely focussed on daimler vans which is the transporter business of daimler and the background is indeed this investigation on this one Diesel Engine. Thank you so much head of research at bankhaus method going back to those numbers sticking with germany, we saw the expectations come in the last few minutes the current predictions for may revised to 107, expectation is 94. 7 Current Conditions 100. 8 in june versus the forecast of 100. 2 were being joined by the president of the Ifo Institute to break down some of those details. Thanks so much for joining us, sir. The Germany Economy in the dull drums. Any chance that changes soon well, thats unlikely what we see at the moment is the weakness in manufacturing continues and its now spilling over to other sectors, in particular the service sector. So here we see that some in particular Industrial Services weakening, for instance. We get negative readings from the Logistics Sector another sector there has been going very well for a long time, construction now also weakens a little at very high levels, still. But all that suggests that this slowdown of the German Economy is going to continue for some time you know, sir, this is a little bit in contrast to the day that we had on friday. The pmi manufacturing numberings that came out showed that the Manufacturing Sector has actually started to improve. Are you not showing green shoots as well . No, we are not seeing that. We see an across the board continuation of the weakening. Its not fast decline, but we see no recovery here so far. But only recently you revised downwards your 2020 growth forecast you have now got 2020 German Economy growing at 1. 7 percent up from this year. Thats a quick recovery and turn around from 2019 to 2020 your prognosis is correct, are you confident that the German Economy can still grow at 1. 7 next year . Well what we see is that this year will be weak, as you say and next year we would expect manufacturing to stabilize there are some factors suggesting that. We expect the World Economy to stabilize further. We have strong domestic demands, so there are some factors that are positive, but currently we have no data suggesting that the turn around in manufacturing is already happening. One final question for you from me, sir weve heard a lot about external factors brexit uncertainty, weaker demand for german products, trade disputes involving the u. S. And china are there any new external factors youre hearing beyond the typical ones i dont think there are new external factors, but there are not just the external factors we have uncertainty about Energy Prices and energy policies, other countries are cutting taxes. Germany isnt. So, all of that suggests that the conditions for manufacturing in germany are not great at this moment last week the European CentralBank President outgoing president opened the door to more easing. Given that germany is now one of the weak spots in the eurozone economy, do you think thats a Welcome Development . Well, i think its an appropriate reaction you know, there is no case for tightening at the moment the question is will it help and because mario thinks it wont help much, he has called upon policymakers to do more on the fiscal front i personally think more should be done to improve investment incentives in germany and other countries that means tax reform and other things i dont think Monetary Policy will save us here. Im sure many people would agree with you, sir. Thank you for taking the time to chat to us coming to us the president of the Ifo Institute. Up next a top chinese official says both beijing and washington should make compromises on trade ahead of a key meeting between President Trump and xi details on that when we come back hey im bill slowsky jr. , i live on my own now ive got xfinity, because i like to live life in the fast lane. Unlike my parents. You rambling about xfinity again . Youre so cute when you get excited. Anyways. Ive got their app right here, i can troubleshoot. I can schedule a time for them to call me back, its great you have our number programmed in . Ya i dont even know your phone anymore. Excuse me . what . I dont know your phone number. Aw well. He doesnt know our phone number you have our fax number, obviously. Todays xfinity service. Simple. Easy. Awesome. Ill pass. Welcome back to the show some company news for you. Carefour sold a majority stake to suing. Com they sold 80 of the unit for 620 Million Euros values its entire chinese operation at 1. 4 billion euros including debt fierce local competition and strong Online Market meant its sales decline sharply in the last year. And the german retailer metro has received takeover. They undervalue the company and urged shareholders not to accept it ep Global Commerce made the 5. 8 billion dollar bid an acquisition volume and represented 3 premium on fridays Closing Price analysts have been quick to upgrade metro but they raised its rating from underperform to market perform and in the airline industry, luft han sa will start to peg its payout ratio to its net profit the german executive board announce they will pay out a regular dividend of 20 to 40 of net profit adjusted for onetime gains and losses its previous policy stipulated a payout of 10 to 25 of group they issued a profit warning last week but says this new plan will allow it to be more flexible. And natxis sold off some of its Bond Holdings and scrapped entry fees for all of its funds. Its designed to limit recent outflows after the firm suffered significant client withdraws morning star raised concerns about liquidity and governance at that fund all right. Lets take a look at how markets are shaping up this morning. Quick recap of some of the price action head into friday. By the end of the week a lot of optimism in u. S. Equities faded out, but still we had a very, very strong week for u. S. Equities last week s p making record highs for the week indexes up about 3 . Very strong week for chinese equiti equities it was a very strong week for equity performance as well as fixed income and a multitude of other Asset Classes as well. Commodities very much in focus with energy jumping anything from 5 to 6 today, the mood is a little more cautious we have the stocks 600 trading little flatter on the session about. 1 point weaker slightly more red on the board than there is green but all eyes are on the upcoming g20 summit and whether or not there will be progress on the u. S. china trade discussions when the meeting does occur between President Trump and president xi thats it for the macro. Lets look at the individual markets and look at how the breakdown is all of the majors are actually trading in the reds. Ftse 100 just trading around that flat line slightly in the green but treading on water. A lot of scrutiny on autos daimler is right at the bottom that stock is down more than 4 after issues a profit warning over the weekend and higher provisions for their diesel cars so that has been dragging down not just daimler but the Auto Industry as a whole. Other key names down about 1 as well the airline issued a profit warning today theyre announcing a change in the dividend policy dragging down the german index cac is down. 1 . Stock markets reacted quite well to that the name is up 2 Percentage Points. Then the italian index down about a third of a percentage point but after some positive developments on the public finances front with the eu stopping short of going ahead and pushing forward a procedure seems like the two are coming to some form of a resolution. But we are seeing a bit of a negative reaction. In terms of sectors, this is the breakdown on the board we have media up at the top up two thirds percentage point. Food and bench up a quarter percentage point at the bottom, we have autos, daimler down 1. 7 . Banks also in focus down about. 6 Percentage Points banks really have been struggling ever since the ecb turns pretty dovish and yields have rallied fixed income also german tenyear bonds trading close to their alltime lows chemicals down. 6 percentage today. Starting off the week more cautious than some of the price action we had lots more red on the screen than we had towards the end of the week last week. Outside europe, chinas vice commerce minister said both the u. S. And china must make compromises in their trade negotiations the two sides resumed talks ahead of president xi jinpings meeting with President Trump donald trump at the g20 later this week. He did not refer to the u. S. By name but said the tariffs from, quote, certain countries represented a threat to the Global Economy and the u. S. Has targeted the Chinese Super computer industry with export. Added five names to socalled entity list. Eunice young filed this report. The Chinese Government took a cautious but stern line on the g20 listing the parameters for trade talks. They are, no breaching of chinese sovereignty, speak as equal partners and both sides need to compromise, not just one. No mention though of what china would compromise the vice commerce minister a lead chinese negotiator said the trade teams are in discussions ahead of the meeting between president xi and trump the nikkei is reporting they could hold dinner saturday after the summit ends and the minister said that china hopes the u. S. Would remove, quote, inappropriate action against chinese firms, like blacklisting more chinese tech names. The u. S. On friday added Chinese SuperComputing Companies to its socalled entity list. President xi is expected to remind President Trump of chinas influence over north korea after xi visited kim jongun last week. One issue china wont discuss, though, hong kong. The officials today say the issue was a, quote internal affair and not for the g20 in case this doesnt result in a breakthrough, the Chinese Media is saying fear is not in our vocabulary there might be a possible olive branch from the u. S. Vice president mike pence was expected to make a scathing u. S. Policy speech about china tonight in washington. Those remarks have been postponed. Eunice yoon, beijing well, the Financial Holding company Raymond James reported 5 increase in client assets during d month of may. Its ceo says market gains have been strong over the past week despite uncertainty. Paul riley joins us now. We hear a lot all the time about geopolitical uncertainty, turkey, u. S. , china, the gulf and yet equity markets have not performed that badly at all if you look at them in the round. Why not . Despite the uncertainty youre seeing globally which worries all economies its Interest Rates and the fak that all government are adding stimulus or not raising rates as in the uk has given the market kind of a boost and its kind of hard to go into fixed income assets when Equity Assets are having higher yield. Its pushing the market up. So you agree with the inflow data i was just looking at some of the flow data. Last week was the biggest week of inflows from i think early on in the year since a couple of months back. The interpretation from the Investor Community is dove Central Bank Gives the green light to go into stock markets why are people reading it that way and not as a warning that perhaps the economy is slowing down so much that the Central Banks will have to be a little more aggressive with the little less fire power than they had in the past its absolutely right you would think with a downgrading of Interest Rates or outlook people would stay away from equities but its been the opposite because of yield and return they cant find it in fixed income so there are cash its paying more but not that much you want a 4 or 5 yield you go into equities. Thats still where the average investor is going thinking theres still time in the equity market before theres any kind of major correction. We had a major rally in fixed incomes. You think its set to