And break the impasse. U. S. Treasury yields come off session lows on the new optimism after a bond rush pushes the tenyear to levels not seen since the middle of 2016 and hong kong protests take a violence turn again as police draw guns and use a water cannon in the 12th week of prodemocracy demonstrations to rock the chinese territory all right, good morning, everybody. It is a bank holiday in the uk but not so much for European Markets. Ill take you to all the price action were having and seeing today in some of those european indexes. Lets start off with germany were getting some data out. So let me just bring you those numbers there. We are seeing yet another decline in business german moral in the month of august it has come in at 94. 3, this is below the Consensus Forecast of 95. 1, so drop in the business clie mate index, kurn season index coming in at 97. 3. Again, this is the lower than the Consensus Forecast of 98. 6 forehandlooking basis, expectations at 91. 3 versus 91. 5 here just putting them all together, not only are Current Conditions missing, but also on a forehandlooking basis 91. 3 also coming in lower than expectations we also had some revisions for the july numbers as well, revised to 95. 8 for the Business Climate index. And that was 95. 7. So really a marginal revision upwards for the month of july. But i should tell you back in july, the drop was the largest decline seen since february, 2009 these numbers not giving a lot of comfort to investors that the german recovery is indeed on track. What were seeing is a dip in the euro down about. 2 as markets digest this data lets get a little manufacture color out of the president who joins us down the kline. Thank you for taking the time to chat to us this morning. Your take on these numbers because it doesnt appear to me as though the situation is improving on the ground in germany. Good morning, no, its not improving. Quite the opposite this is very bad newsindeed. Very bad because its not just manufacturing where the decline continues, but we now see that weakness is really affecting the service sector, which is large and important for the German Economy and nechb construction where the economy was booming, we see that there is at least a slight decline in our numbers. So the overall picture is really bad. Its interesting you mentioned construction because back in july it was one of the positive spots, but this is interesting looking at this ifo, the pmi numbers did show a little bit of improvement both on services and on manufacturing, even though manufacturing is still in contractionary territory are you suggesting that some of the numbers are not translating to Business Sentiment . It doesnt seem to be translating. The ifo Business Sentiment is based on almost 10,000 responses we get from german businesses, so its really very broad. And it seems that this the overall assessment, maybe this is very bad among companies. This may have to do with psychology also, but the pmi seems to be a bit optimistic in that light. German gdp in the Second Quarter we had negative prints the sentiment is very negative the pmi numbers are still in contractionary territory is germany headed towards a resner recessi recession . Well, it increasingly looks like that. That will be difficult to avoid. Were not there yet, but it will be difficult to avoid. It doesnt mean we get a prolonged downturn, but the Current Situation for these two quarters two and tleerhree, it s very bad. What should the German Government do to counteract that i want to refer to some comments out of the bank. Do you ascribe to that same view as well . Well, he said thats right. A technical recession is not a prolonged downturn nevertheless, i think the German Government should think of doing something. The government plans an income tax cut for 2021 i think we should bring this forward to 2020. The government should also do something about Corporate Income taxation one possible instrument would be depreciati depreciation the cost to the government would be zero. It would help company and set incentives to invest now i think the government shouldnt panic indeed but should do something. Most analysts i speak to tell me that the German Economy is one large shock away from a sustained downturn here and that could be in the form of either a Nodeal Brexit or further escalations on tariffs tariffs being applied on european auto makers how are businesses thinking about that on the ground in germany in the context of further potential head winds to come by the end of the year . I think most businesses are preparing for this and are really worried that we see this in our numbers this has to be taken serious of course the German Government can do little about foreign demand its coming from the outside some people say the German Government should invest more. What people think is Public Investment means build bridges and roads and the Construction Industry is running at full capacity if you decide to invest more now, something will happen maybe in one or two years. So thats why i think at the moment tax cuts are an effective option and then also the German Government should think hard about longterm confidence of German Companies this is then more indeed about topic investment but also about Energy Prices and the security andreliability of Energy Provision and energy policies, so it should turn its attention more than it has in the past towards industry, what the government has focussed on in past five or six years is mostly redistribution policies, social policies its time to think very seriously about how the manufacturing sector, which is so important for the German Economy can be settlized thank you very much for speaking with us, president of the Ifo Institute there after we just got the data. Let me take you to the dax heat map youre trading down. 3 percentage point it isnt just all about the weaker ifo numbers that has come out. Of course the focus has been on the developments on the trade war front, both the u. S. And china and now announcing further tariffs on one anothers economies respectively that has really hit sentiment over the weekend and the futures obviously on friday taking a bit of a nose dive we have had further information in the last 60 minutes or so but this is the picture for broader European Markets this morning. The uk ftse is closed. Its a bank holiday. We have fitsy mib up. 2 percentage points. Its a big week for italian politics as well so watch out for that later in the week but of course today the theme has been that of trade war speaking of which, President Trump said beijing told u. S. Trade officials in a call last night that it wants to return to the negotiating table. Trump called the move a quote, very positive development for the world. Meanwhile the Chinese ForeignMinistry Says beijing is, quote, resolutely opposed to fresh u. S. Tariffs, warning china will take more steps to protect itself interests in washington enacts the new duties it added that it hopes the u. S. Can, quote, return the path of rationality. Steve joins us with more its been a very, very eventful g7 over the last couple days, steve. It looks as though in the last hour or so there have been some conciliatory comments between china and the u. S. Its been a very conciliatory meeting all around, mistakes that were perhaps made by the canadian presidency last year where famously in quebec there was a communique waiting for President Trump to sign and he walked out without signing the communique it was a ranker all around between Justin Trudeau and President Trump. Mr. Macron, bit of enforcer with merkel seeing her influence waning as the lead country, leader of europe its interesting that macron has been very careful not to upset the u. S. Over a whole host of issues thats probably why we wont get a communique this time around. We found out in advance there would be no communique because there was so many differences of opinion over protectionism, over trade, over tariffs, over the environment, over climate and perhaps how to deal with brazil as well. There will be no formal group g7 communique in previous years its looked like g6 plus one, there will be no repeat of that, but it also means of course there is no forthright action no, coordinated policy action. Im sure all of you know by now, the g7 was formulated back in the 1970s to form an economic response, coordinated economic response to what happened with the worlds First Oil Shock in the early 1970s. And of course the economic mantra has been at the basis of what the g7 stands for ever since. But this time around, perhaps theres been a little bit of grumbling behind the scenes by some members of the u. S. Administration how president macron has made it about gender equality, climate issues none of which the french and the americans see eye to eye on. As you say the last 24 hours, perhaps a little more conciliatory talk coming out between the americans and of course the chinese chinese not being in the g7. Very important to make that point as well and the president making his point why he has had his stance on china. Lets listen in. If i hadnt won, our economy would have been overtaken by china and all these clowns sitting on television that have been running this government for many years that have been taken to the cleaners by china, theyre also going to say, well, i dont think the president is negotiating properly they dont know what theyre talking about. I have Great Respect for the fact that china called and want to make a deal i have Great Respect and i have Great Respect for president xi and i think were going to have a deal because now were dealing on proper terms. They understand and we understand and of course theres been lots of interesting sound bites from the president as well including the do you have any regrets about how things have done any second thoughts about how you enacted trade policy and the trade dispute with china yeah, i had a few second thoughts everyone thought he was going soft of course then we had Stephanie Grisham the white house secretary saying, no, the president s regrets was he wasnt tough enough on china earlier. One area where perhaps president macron hoped to make progress was nothing really to do with the g7 that was over iran, of course, because famously may 2018 the u. S. Came out of the jcpoa, the joint kbcomprehensive agreement with iran disagreeing how to go sfward with iran it was a pact formed in 2015 under the Obama Presidency as well the u. S. Had pulled out of that and there foreign minister of iran came here as well to the sidelines of the g7 which the americans were blind sided no, i knew exactly what the french were doing. They have my approval. But they can go their own path on iran and i will go my path as well he also made more comments about iran this morning. Lets listen in. They have to stop terrorism that is your number one nation of terror. Not in the last year and a half, two years because they cant spend like they used to spend. They took president obamas 150 billion and dolled it out to terrorists all over the place. I think theyre going to change. I really do. They believe they have a chance to be a very special nation. I hope thats true. But it does seem quite incredibly so much time has been spend talking about iran where there are so many Enormous Economic issues. We heard from ifo as well beginning to effect the european economy and indeed the Global Economy as well many will there be a coordinated response . Undoubtedly not at the moment because the americans very robust strategy towards china as well, not necessarily backed up by any of the europeans including the new best friends Boris Johnson and President Trump of course Boris Johnson has an International Strategy as well as wanting this great deal the president talked about between the british and indeed the u. S. As well the british need all the deals they can get and china is where theyre looking to back to you. We talked about all of these different issue, trade war, iran, surprise guests, climate change, gender equality all very important topics for g7, one top nick particular is looming large and that is brexit this was Boris Johnsons first big summit, steve. Did he make any head way when it comes to potential renegotiation of this deal are there any positive steps to take away and that we can look forward to in these coming weeks given how crucial the timing is now . Thats very interesting question has mr. Johnson made any progress on that the fact we havent gone backwards is positive. France 24 saying the u. S. President has the ability to make or break these Meetings International summits on the basis of his mood and indeed his twittercontent as well others were saying, look, the fact that there hasnt been a big disagreement here at g7, so that could be taken as mildly positive the fact that we havent seen more ranker between donald tusk and johnson, that follows the fact they have both been accusing each other of being mr. Bad deal, mr. Hard brexit, mr. Nodeal brexit who will be responsible for it as well many the fact that we havent gone backwards and mr. Johnson had cordial meetings with the french and germans as well, perhaps should be taken as a positive step again the germans making the point, what alternative arrangements have you got . Show us these. Show us your alternative so we dont get a falling out of the European Union on october 31st very interesting comments on our sister station sky last night with Boris Johnson went nfor a swim you can see some rocks out theres another rock a bit further that Boris Johnson apparently went for a lovely swim yesterday and he made the metaphor from the coast you cant see a way through this rock, but actually there is a way through it and he was drawing the metaphor with brexit it may look like you cant get away through this brexit quagmire but there is a way through a rock as well back to you. Thanks for the latest there, steve, of course that is the spirit thank you. That was steve live covering all the events at the g7 summit this weekend. G7 leaders are close to a plan tackling fiefrs in the amazon. They were finalizing a deal to provide, quote, technical and financial help to countries hit by the fires brazilian war planes have been dumping water on some of the affected areas after the president bolsonaro is fighting the blazes. As we head to the break, here is a look at how u. S. Markets are called to open lot of developments, but as we just spoke about with steve in the last 60 minutes or so, there have been some encouraging comments from the president about potential reconciliatory talk betweenhi cna and the u. S this is the picture, slight in the green. Well be right back. Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. They use stamps. Com all the services of the post office only cheaper get a 4week trial plus postage and a digital scale go to stamps. Com tv and never go to the post office again. Get a 4week trial plus postage and a digital scale take prilosec otc and take control of heartburn. So you dont have to stash antacids here. Here. Or, here. Kick your antacid habit with prilosec otc. One pill a day, 24 hours, zero heartburn. Welcome back to street signs. Our top story today, President Trump says china called u. S. Trade negotiators last night and want to come back to the negotiating table. Now, this is after a sharp escalation in the dispute on friday a mid a tit for tat tariff announcements china said it would slap duties on 5 to 10 on 75 billion worth of u. S. Goods. Beijing said it would reinstate 75 tariff on u. S. Autos and increase measures on 300 billion of goods from 10 to 15 . So 5 higher tariffs across the board. Trump ordered u. S. Manufacturers to leave china as well let me take you to the price action in europe today this is the picture for german autos. We are trading a little bit positive again this in line with the news that has emerged in the last half an hour or so whereby trump said the two sides have indeed engaged in a dialogue. Thats giving a little bit of boost to the trade sectors autos being front and center some of the german autos rebounding let me take you to luxury stocks as well. This is a sector were very interested in. All of these sectors have turned around in the last 45 minutes or so, but the picture at the beginning of the day was quite negative now at least some respite is in sight. Let me bring in the chief Investment Officer of italy from ubc Global Wealth management matteo, so much is going on in these Global Markets we will, of course, talk about italy. But first i want to ask you about your take on this tariff tit for tat that weve had