Powerful pmis. The European Manufacturing sector powers on with german and european pmis hitting a sixyear high. Good morning, everyone. Were back from a long weekend. We have plenty of data to get through. Want to tell you about the eurozone factory activity hitting a sixyear high in april. The eurozone final factory pmi is at 61. 7. Inflationary pressures stayed quite strong. Lets tell you what the european markets are doing. Were higher to the tune of a quarter percent. Euro dollar at 1. 0904. Lets look at the european markets one by one. What were seeing is that if we can swap on to the indices. We are broadly higher across the board. The cac 40 up by a quarter of a percent. Ftse 100 up by twothirds of a percent. The xetra dax inching higher to the tune of 10 points. Lets get back to the bigger stories. Ocado shares surging to the top of the stoxx 600 on reports of a tie up with marks and spencer. Better than expected numbers are lifting Aberdeen Asset management and bp. Lets show you what the sectors are doing. Energy is getting a boost from the bp numbers. Oil and gas up by a half of a spent. Real estate up by a half of a percent. On the down side. Basic resources, seeing a bit of pressure, chemicals and autos also under pressure. Lets get back to weekend news. President trump has renewed his vow to consider breaking up americas big banks. When asked by Bloomberg News when he would reevaluate his Campaign Pledge, he said hes looking at that now. Major u. S. Averages slipped on the comments but later rebounded. U. S. Treasury secretary Steven Mnuchin says the upcoming tax overhaul will eliminate all loopholes with the exception of Charitable Giving deductions and mortgage interest. In an interview, mnuchin reiterated trumps promise to provide relief for the middle class. Our focus is on creating middle income tax cut and simplifications. As i said, a lot of the reduction on the high end is going to be paid for by eliminating deductions. In many cases, peoples effective tax rate wont go down. Thats something, again, this is about creating jobs, this is about creating economic growth. Cnbc also spoke with wilbur ross who accounted for the Administration Delay in a nafta renegotiation process. The reason we have not had the formal negotiations on nafta is simply that congress has prevented us from doing so. Its hard to blame the president for something outside of his control. Lets talk about all the weekend news with thomas harr, of ficc research at danske bank. He joins us from copenhagen. The president also telling cbs hes looking at an infrastructure plan to come out within two or three weeks. Do you think this is largely cosmetic along the lines of what we saw with the tax overhaul, just a big announcement and not major details . I think youre right. The beta to what trump is saying is going down because were used to these big comments and not much has happened. For us here, were looking for fiscal stimulus whether its tax cuts, infrastructure, hitting the u. S. Economy in the second half of 2018. So that means we have a u. S. Economy doing okay, but not big growth. Its interesting, ben bernanke was on the record saying he does not see the u. S. Economy growing faster than 3 . Then we heard some comments coming from the trump administration, i think that was mr. Mnuchin also saying, yes, it will grow above 3 thanks to the tax reform and the infrastructure package. Which camp are you in . Im more in the less hawkish camp. I think it will take a lot for the u. S. To go to 3 in terms of growth. Maybe second half next year if they get all that fiscal stimulus, you could get to Something Like 2. 6, 2. 7. We have to remember growth in the u. S. Has come down, were probably close to slightly above 2. Even 2. 6 and 2. 7 is high. Its above trend. We have an upward gap which is more or less closed. Its important to remember the fed signaled they have to counter act fiscal stimulus. I think we should be careful not to be carried away in terms of expecting too much here in terms of u. S. Growth. We did see weakness in the u. S. Data points yesterday. Weaker than expected factory output, Consumer Spending was unchanged. Inflation pce number was lower than anticipated. Do you think this is something we should look through and we should not necessarily adjust expectations when looking at the upcoming june fomc meeting . I know this week nothing will happen. But in june the fomc might hike rates. In terms of data, we are seeing softness in u. S. Data and china data finally. We think the Global Industrial side is rolling over for the next three months. In terms of the fed, we think they have signaled clearly they will make an announcement around the Balance Sheet in june meeting. Our call is that they may only go in july. I think you can say despite the softness in data, the old story is that Central Banks are reluctant to become too dovish in this environment, clearly the fed wants to get going with the Interest Rate or Balance Sheet tightening. That you will see playing out despite a bit of softness in the data. What are you expecting for the allimportant jobs report this week or is it not allimportant anymore . We saw aberration in the march number. Do you think well see a big reversal here . I think youll see reversal. Is it very, very important for markets . I doubt so. We have seen some softness in the data. Gdp is likely to be soft in q1. We are seeing also softness in china, which is very important for the global economy. So i think in terms of fed policy, i think they like to get going on this Balance Sheet tightening and eventually raise Interest Rates. I think theyll do that, whether you have nonfarm at 90, 140, i dont think it matters that much. What do you do with the dollar index in the medium term . In the medium term, clearly the dollar is close to a peak. We will see dollar weakness over the coming one to two years because the fed is ahead in the cycle. Europe is catching up. And other countries are also catching up. Shortterm, we could probably see a bit of Dollar Strength again because i think the fed is underpriced. Medium term, the dollar is close to peak. Strong levels to g 10 currencies and emerging markets. Thomas, we will continue this discussion after this short break. Were also going to talk about the euro and what we should be doing with the common currency in the run up to the second round of the French Elections this sunday. Thomas harr from ficc research at danske bank sticking around. Get your emails in. Your questions are always welcome. Streetsignseurope cnbc. Com and you can find us on twitter, streetsignseurope cnbc and tweet me directly carolincnbc. I love reading your tweets as always. Still coming up on the show, as mateo renzi wins back the leadership of the democratic party, well have the latest on his return to the front line of italian politics. All right. Lets get to some corporate news. Marks and spencer and owecado a considering a tieup. Marks and spencer could be launching a grocer delivery service. Look at ocado. It is soaring on the back of this. Up by 8. 73 . Bps key earnings measure, replacement cost profit, came in at 1 1. 5 billion beating expectations and stronger than last year. The oil major maintained its dividend at 10 cents a share and says it expects organic capex to be 15 to 17 billion. Luxottica sales fell in the First Quarter hit by a new policy which reduces online discounts. Salt sales increased by almost 2 as growth was offset by weak Consumer Spending in the u. S. Bovis has said it will incur a 2. 8 Million Pound hit in relation to the two failed merger proposals from read row and g galliford. They say the company will deliver on its 2017 guidance. Aberdeen shares are rising after posting first half results. The british fund manager reported more than a 10 rise in revenues helped by market gains and cost cutting. Shares up by a little more than 3 . One of the worlds biggest asset managers, Alliance Bernstein fired its ceo peter krauss and overhauled its board. Kraus was terminated from both roles and 9 out of 11 directors were moved. The money manager has come under pressure along with the rest of the Asset Management industry and has seen tough competition from rivals like blackrock which offer more passive investment products. European data is showing strength after a strong pmi number from italy, spain, france, germany. Both the italian and french manufacturing pmis hit sixyear highs, german pmis also hovering near the sixyear mark. Lets get back out to thomas harr from danske bank still with us from copenhagen. If we look at euro dollar, it seems like its fully pricing in a macron win. Do you think thats justified . I think its right. It seems most likely that macron will win given the lead he has in the polls against le pen. I would say that if he wins, the Market Reaction should be relatively muted. Up to a half figure, so in euro dollar, because it removes a bit of that uncertainty and a rally in french fixed income. But the Market Reaction will be muted. I think what is interesting is that were seeing this European Data turning up, were seeing chinese and u. S. Data weaker. Does that mean more upside for the youre rov when it comes comes to other currencies . I think so. I think the fed underpriced a bit at the moment. That will tend to support dollar on the shortterm. But the more mediumterm outlook for the euro and euro crosses as such is for higher euro. Clearly the european economy is getting out of the crisis weve had for several years. Thomas, im sitting here scratching my head. Weve been through years and years of political crisis in europe. It doesnt seem like theres an end to it. We see more elections this year. Yes. The French Election may provide a euro positive outcome, but theres still the uk general election, the german elections. Do you not think the euro dollar should be showing more signs of nervousness right now . I dont think so. The French Election may be a positive for the euro. If macron wins, german election is a nonfactor. Both are pro euro. Then i would say,say, yes, you an issue for greece, but it doesnt matter for the currency. You are right about the brexit, but thats well known about markets. The euro survived a lot of storms. I think it will survive the ones weve seen over the last one to two years. If anything, the political dynamics over the last three months will be supportive of the euro. Whats your target for euro dollar then . Can it sustainably go above 1. 10 . I think it can. Our forecast is 1. 14. We will not break parity. The risk to the upside. We will go back to 1. 20 or 1. 30, but its a matter of how long of a time it will be before we go there. It seems like those calling for parity just a couple weeks ago that seems like a long time ago. Thomas harr from ficc research at danske bank. Lets turn our attention to italy. Italys industry minister said the collapse of altalia would be a shock to the country. Rome offered up to 400 Million Euros to keep the company afloat while an administrator decides whether the airline should be liquidated. And matteo renzi is back at the helling of the centm of the. Willem marks has been covering that story and joins me now around the desk. How much credibility does renzi have left after the referendum he said im leaving if this is against me. He has a lot of critics on both sides of the political spectrum, after a much larger pd party that he now runs. Quite a few dissidents moves away from his centerleft ground, the left wing side of things. They say he lost a huge amount of krcredibility. They say that decision haspeoplf renzi. He is taking control of a party with a much smaller base of support. The challenge for him is to try to unify the different forces on the left. Five Star Movement is the main challenge ser running at 29 when we look at the most recent polls. I guess renzi will have to build strong alliances to go up against that. Do you think thats feasible . I think the alliances are a feasible thing based on the fact for the five Star Movement theyre less likely to find Coalition Partners they would need to form a majority. Thats a challenge for them. Theyve been isolationists politically, domestically and in terms of the European Union. Theyve been critical of the eu throughout their movement. Renzi put the eu at the heart of his campaign. Its a Popular Platform among him, however things like air italia, job creation and the job deficit will be tricky to navigate and maintain that unified support from the left wing. Never gets boring when it comes to politics in italy. Whats interesting is some similarities were seeing to france. For example, one of the slogans that renzi used in the primary campaign is, i believe, the italian equivalent . On march. Do you think he can capitalize a bit more on that momentum that macron is receiving . He has a difficult path to tread. The five Star Movement, very critical of the European Union, called for referendum on membership with the euro. He put europe at the heart of his campaign the last few days, ended up in brussels. He has, when he was prime minister, been quite european over migration, italys deficit, the European Union pushing for italy to reduce that deficit to stay in line with their rules. One thing he will have to do is show he cares about europe like emanuel macron and wants to be a big part of what he sees with italys future but without pandering too much to european br bureaucrats. What pops up time and time again is the specter of early elections. Do you think theres reasonable chance well see that happening . Realistically the process by which that would happen would be quite an awkward one. He would have to say to paul ol gentiloni i will withdraw support of the pd, your own party which put new this position to succeed me to have the president dissolve the parliament. Now, there would be political reasons why he might do that. That would do with polls. If he looked like theresa may, if he looked like he was doing well against the fiveStar Movement in terms of likely voters, he might think now is the time to pull the trigger but its a lot of explain doing from him to show why this is a good time. Whelm maell wig willlem, tha. Hadley gamble spoke with the head of middle east in central asia and asked whether he thought egyptian president cici was guiding the country down the right path. The program has been running for six months. The impact was positive. Confidence came back. Investment came back. We are seeing certain numbers of positive signs. The parallel Exchange Market disappeared. There are still reforms to be implemented. Some of those are fiscal reforms. In addition, inflation went up higher than planned. And this is something that needs to be addressed. How do you think they should go about addressing it . Are we talking about higher Interest Rates . Addressing it by using the biggest fiscal instruments as well as also monetary instruments. So higher Interest Rates . Definitely all the instruments need to be put into the equation. I think what is important is to understand why we need to curb inflation. Inflation is negatively affecting the social situation. It is putting pressure on fiscal and on deficit. The risk is that we have a seconddown effect. For more on this story, you can head to cnbc. Com. All right. Well go for a quick break. Do check out World Markets live, our blog which runs throughout the european trading day. We have more data in the form of uk pmi data after this short break. Stick around. Hello. Welcome to street signs. Im carolin roth. These are your headlines. A First Quarter comeback for bp. The British Oil Major beating expectations supported by a better crude price. Shares in ocado deliver on more than 8 on a report that the company is considering a tie up with Marks Spencer that could see the grocer launch an Online Food Delivery service. Pension cuts and tax increases make up a longawaited reform deal between greece and creditors that should pave the way for Debt Reduction talks. Europes Manufacturing Sector powers on with german and french pmis hitting a sixyear high. Good morning. If youre just tuning in, heres a quick look at u. S. Markets. The s p 500 seen off fractionally by three points. The dow jones seen off by 35 points. The nasdaq set to fall by five points after u. S. Markets were trading yesterday. We did see a mixed start for u. S. Markets in the month of may. The maz dak closing at a record high. It was fairly narrow trading with light volume. The dow in the 78 point range. We have plenty of earnings to get through today. Among them apple the hv heavyweight. Lets show you whats happening on this side of the pond. The ftse 100 is up by a half of a percent. You have the likes of aberdeen doing better on the back of an upbeat update from them. The dax up by 10 points. The cac 40 higher to the tune of 0. 2 . Bp out with First Quarter numbers, which you heard in the headlines better than expected. When it comes to the sectors, these corpo