high after reports the i.t. company may be sold to rivals for 20 billion u.s. dollars. an appalling and detestable liar that's what the u.s. attorney general jeff sessions denies allegations he colluded with russia in a heated exchange with lawmakers on capitol hill. >> i recused myself from any investigation into the campaign for president, but i did not recuse myself from defending my honor against scurlous allegations. the london fire brigade confirms a number of people have died in the massive blaze that has engulfed a large tower block in the western part of the city. dozens are injured the cause is unknown >> in my 29 years of being a firefighter i've never seen anything of this scale i'm very sad to confirm that there have been a number of fatalities good to see you this morning. i'll start with the breaking news from the iea, the latest monthly report on what is going on in the oil market recent weakness in oil demand growth is likely to prove transitory that's what the iea is saying according to the latest report the brent cruise price trading down 1%. that's on concerns about the huge build we're seeing in these markets. we saw the api data, very positive for the oil bears yesterday, an increase of 2.8 million barrels a day. 511.4 million barrels. we have the eia data coming as well brent solidly under $48 a barrel it wasn't supposed to be that way for a bit. wti trading a couple bucks lower to that. what is the iea saying today oil growth is likely to prove transitory global stocks remained stubbornly high with a modest demand acceleration in 2018 to 99.3 million barrels a day the point is there's a golden level, 100 million barrels a day of global daily demand they reckon they might get there in the fourth quarter. their report today is called whatever it takes. this is what opec has said, whatever it takes to get the supply/demand balance back in check. this is the point they're making at the iea, it's taking longer you guys talked about the death of opec a lot out there. it's not the death of opec, but opec doesn't have the same bang for the buck as it used to while it's policy, it will take longer, and this is the tenet of the iea report today more record highs in the session for the dow. we have seen the s&p at record closing levels and the russell 2000 material sector, materials, where did that one come from five out of six sessions gaining a drift into materials, rotation out of some other names and out of technology. technology had that bad two-day run on friday and monday as well here's the european bourses. positivecy across the board ahead of the fomc announce that's 2:00 p.m. local time in the states eastern time 1900 bst then mrs. yellen will speak after that 0.2 for the ftse mib and the cac 40, with macron riding his white charger into the palace, full of all his new mps in a week or so's time, compare that with the united kingdom where we can all admit on both sides of the political spectrum, it's a bit of a mess xetra dax 0.1% higher. the ftse 100, 0.1% higher. let's look at some individual sectors. telecoms, 0.8% lower technology rising 1.2% there's an element of recovery for those big tech names stateside plus the fact the stock in the headlines, hexagon -- i know a lot of you don't know about hexagon, but it's an interesting question i'll do a deep drill on that stock later on in the show so the federal reserve is widely expected to raise interest rates by a quarter point when it concludes its policy meeting today a hike would be the second this year the fourth of the cycle that began in december of 2015. economists are forecasting a third rate hike later this year. most are saying possibly december and september it's a likelihood but not as likely as that december hike the market is obsessed with something else other than pure rate hikes it wants to know what fed will say about reducing its balance sheet. janet yellen has signaled the central bank could begin unwinding the 4$4.5 trillion of bonds it holds later this year how does that work how do you start unloading 4$4.5 trillion of bonds? has anyone ever tried this before investors are look for more details about when and how this process will begin the federal reserve is widely expected to raise rates by a quarter point at the end of the meeting. steve liesman has broken down the results of the cnbc survey on watching wall street and what they're watching for >> the cnbc fed survey ahead of the federal vefs meetireserves g shows 100% think a fed hike will happen, 54% in september 64% say the balance sheet will decline by december. you can see the three rate hikes this year, up to 1.4%, 2.1% in 2018, then a little bit more modest in 2019, leading up t 2.8% which they believe is a terminal rate. that's a bit below where the fed's own forecast is for 2019 and for the long run kind of pessimistic when it comes to the stock outlook 2429 is the current level, going up to 2442 for the rest of this year they think most of the gains are in this year but a little bit more in the 2018, up to 2562 for 5%. but some optimism as to the reasons why stocks are at current levels earlier this year, 82% thought it was expectations for fiscal policy from the new trump administration that's come way down, 29%. 63% believe what's underpinning markets are economic fundamentals and earnings. now, when it comes to the outlook for growth, that's come down a bit, in part because they factored out policy expectations was 2.5% in january, it's come down to 2.25%. for 2018, it was 2.75% you can see the reason, how much growth was factored in from policy stimulus, it had been a quarter point, almost all gone for 2017 40 basis points was factored in from trump policies for 2018, that's just 0.2% that reflects an expectation, if there's going to be fiscal policy, it's going to happen next year, not this year >> thank you, mr. liesman. let's get to jeffrey cleveland from pagan and regal i asked the question at the top of the show. that question was is now the time when the markets start obsessing about monetary policy again rather than obsessing about trump? i remember a time going back years, november last year, before that it was all about monetary policy. now it's all about trump to be fair to the administration -- i'm being apolitical here, we have not seen the action yet but we've seen the market movement on the back of it is it more about monetary policy >> monetary policy has taken a backseat i think that's a good thing. i think we were too central bank focused for too long i think central bankers themselves would love to retreat to the sidelines and let fiscal policymakers take over that's not a bad thing i think in the u.s. in particular, expectations for fiscal stimulus got way too far ahead of themselves. the washington political reality is that we don't see something taking place on the tax reform front until later this year maybe next year. >> you said that in the past tense. they got way too ahead of themselves >> they did. >> yet dow up 16.3% since the u.s. election. we're still obsessed by this fiscal action which we're waiting for. >> the bond market has taken a different tact so equities have remained boymen buoya buoyant. i think the bond market is pricing in a different economic scenario than the stock market >> that comes to my second question how does this work my first question, has anybody tried dripping 4.5 trillion worth of asset back into the market not on that scale. >> i think the bank in japan in the early 2000s had an experiment with quantitative easing this is unprecedented. we have five major banks with 20 trillion on balance sheets, including bonds, equities and reits. this is truly unprecedented. how will it work it will work if you're thinking about your own bond portfolio. if you do not reinvest the proceeds of your maturities, of your principle coupon payments, you will start to accumulate cash in your account what the fed will do is say instead of taking cash, reinvesting it, they'll give it back to the u.s. treasury. >> what's the rational for the fed hiking gdp data was okay. retail sales similar employment figures, underwhelming. what is the rational for another hike >> i think the rational is that the federal funds rate is at an incredibly low level compared to the economic conditions. the last couple jobs reports have not been stellar as you noted. but the u.s. labor market i'm here to tell you is in fantastic shape. we have layoffs at record lows lower than in 40 years >> i looked at the jolts, i was impressed, the hires at 2% >> we have record job openings when you look at the jolts data. >> but where is the wage increases? >> i think it's coming i think it's something that arrives later in the cycle i think we are just now arriving there. a year ago, two years ago, if we were having this chat we would be talking about people working part-time who want to work full time people who maybe left the labor market because they couldn't find work. that's changed those conditions are back to levels we saw in 2007. >> we haven't talked too much about the political side of things, the fiscal side. we will come back to you if we may, jeffrey thank you very much. >> my pleasure all right. jens wideman, a man worth listening to this is great, political pressure compared to the fiscal side of thing. the germans should be doing more ecb's weidmann says europeans safe bond must be private to avoid perception of euro bond. easier to split new sovereign bonds into junior and senior, adding it could be a stepping stone to euro bonds. i will come back to jeffrey briefly on this one. how do you feel about the prospect of common-issued european bonds it's something that macron will be knocking on the door of the chancellory and trying to get that on the agenda >> i grow with thagree with tha. you have a large percentage of the bond market with negative yields that's reflecting an absence, a shortage, scarcity of safe assets, liquid assets to invest in there's not many alternatives. the issuance of a pan-european type security would meet the needs for many global investors. >> all right fabulous thank you very much for that there may be a role for national governments to play in the supporting of the correction of the nonperforming loan market. the ecb vice president also said that bank profitability may not reach sustainable targets in the next three to five years even in benign conditions. okay that's interesting given the recovery we've seen in european economy. london's mayor says questions need to be answered following a deadly fire in western london firefighters are working to contain the inferno that started overnight in a large residential tower. dozens are hospitalized. the commissioner of the london fire brigade gave this statement within the last hour >> in my 29 years of being a firefighter i have never seen anything of this scale you must recognize firefighters are work very hard at the moment so i'll give you a brief press statement and i cannot take questions at the moment. we will supply further information. this is a major fire that affected all floors of this 24-story building from the second floor upwards i have over 200 firefighters and officers attending this incident with 40 fire engines and a range of specialist vehicles including 1 14 fire rescue units in attendance based on the level of resource needed for this fire, we declared this a major incident early this morning london fire brigade's control room took multiple calls to this incident with the first call coming in at six minutes to 1:00 our first fire engines were on scene in under six minutes crews wearing breathing apparatus and extended duration breathing apparatus have been working in extremely challenging and very difficult conditions to rescue people and to bring this major fire under control london ambulance service has confirmed currently 30 people have been taken to five hospitals. at this time i am very sad to confirm that there have been a number of fatalities i cannot confirm the number at this time due to the size and complexity of this building and it would clearly be wrong for me to speculate further equally the cause of this fire is not known at this stage we will be here all day and we will provide further updates we are working closely with our colleagues in the metropolitan police and the london ambulance service to bring this situation under control. >> and coming up on the show, our door remains open. france's president says britain could still stay in the european union. but when does that door shut we are live in paris in around 15 minutes time. right here on "street signs. whoooo. you're searching for something. like the perfect deal... ...on the perfect hotel. so wouldn't it be perfect if there was a single site where you could find the right hotel for you at the best price? there is. because tripadvisor now compares prices from over 200 booking sites... ...to save you up to 30%... ...on the hotel you want. trust this bird's words. tripadvisor. the latest reviews. the lowest prices. tthat's why at comcast,t to be connected 24/7. we're always working to make our services more reliable. with technology that can update itself. and advanced fiber network infrastructure. new, more reliable equipment for your home. and a new culture built around customer service. it all adds up to our most reliable network ever. one that keeps you connected to what matters most. welcome back to "street signs. a look at a couple of stocks inditex, one of the most fascinating companies for you to look at in the retail space at the moment inditex posting terrific numbers, double digit increase in earnings for the first quarter. it's a spanish owner of all kinds of things including zara 18% rise in net profit slightly ahead of consensus with a 17% jump on the ebita measure. sales were strong with a 12% year on year rise. great numbers. fantastic run up why on those figures, which any other retailer would adore, why is this one down 0.6% on the day? there's a bit of an answer, over the last three months, it's up 14%. this stock has moved in one direction. there's a couple brands, zara, the flagship brand let me explain to you why this stock struggles. it's a metaphor for the valuations in broader markets generally. if you watch "squawk box" i talk about it a lot the headline figure was 12%. if i strip out fx movement, you have 10.8% unbelievable figure. fantastic figure this is the key point i wanted to make. inditex trades at 29 times forward. a lot of tech stocks in 1999/2000 don't even trade on that 29 times forward. your broader retail sector trades at 16.9 that's the right valuation, not one trading with an 11% increase double digit increase in sales the problem is you have a highly priced sector with a highly priced premium company at the top. i referred to karen cho on this one, this is the company 29 times forward it's trading at you see value, you have to chase it this is owned by a chap who is 81 years old, second in the forbes list after mr. gates, $7 billion is what this man is worth. this man has made a stunning amount of money in this company and built up an enormous franchise, growing its retail offering left, right and center. let's move on to hexagon i wouldn't be surprised if you have not heard of this one it's a measurement technology company. it does software, sensors, things that help industries from pharma, agriculture, oil shares have hit a record high on the back of reports that the company is putting itself up for sale the wsj is reporting that the potential acquisition could value hexagon at to bi2$20 bill. a lot of you, including me, have scant knowledge of it. the company said it is evaluating its options three-month change, up 19% strip out todays, up about 6% in the last three months. let's look at this one it has all kinds of issues why is it up for sale? because the man who runs this is a guy who has about 22.6% of shares, but owns well over half of the voting shares the problem is with him is he's not well he stepped down as chairman. and there's an investigation going into the ceo the company is standing by him about insider trading on an outside investment the company says he is innocent. he remains ceo industrial digitalization, i could not have said that shorter. no matter what company, seemiems honeywell, it's about digitalization it's in the sweet spot, so it's not going to be cheap. and looking at this report, some evaluations, this one trades at high teens multiple of enterprise earnings before amortization that may be why they're selling. here is why the buyers like it this is the sticking point. we will take a short break up after that break, fresh data on the uk jobs market. i'm looking for the average earnings compared with yesterday's cpr. we'll come back on "street signs" and look at that data and see where the jobless rate in the be, if it remains around 4.6%. we'll be right back on "street signs. unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock. a warm welcome to "street signs. i'm steve sedgwick european stocks trading cautiously higher as i investors look for answers on whether the fed will provide details of the great unwind of its huge balance sheet. the euro slipping from session highs as ecb board members say the central bank may come under political pressure to keep monetary policy loose. hexagon shares hitting a record high in stockholm after reporting the i.t. company may be sold to rivals for 20 billion u.s. dollars and the london fire brigade confirms a number of people died in the massive blaze that engulfed a large block in the western part of the city dozens are injured the cause is unknown >> in my 29 years of being a firefighter i've never seen anything of this scale i'm very sad to confirm that there have been a number of fatalities we will t had the uk inflat numbers yesterday. i'm not concerned about the headline numbers, it's the average earnings figure i'm interested in. thesfigures are hitting the wire let's see about the state of the uk economy as these numbers hit. okay uk april adjusted jobless claims up 7,300 at 2.3% of the work force as well. the total weekly earnings are up 2.1% year on year. a poll was looking for 2.4%. this is the figure i was interested in. yesterday, cpi up 2.9% today, total earnings up 2.1%. that's a squeeze on peoples income it's the weakest figure since february 2016. april alone was up 1.2% now. average weekly earnings excluding bonuses were up 1.7% again, below expectations of 2%. the pound is doing nothing at the moment 1.2754 ons revised wage data series to improve method ol swri fology ml businesses let's look at asset classes in the united kingdom cable trading at 1.2757. euro/sterling under a bit of pressure the pound has fallen pretty aggressively since the brexit vote, since 23rd of june last year is it really only a year since the brexit vote? seems like we have elections every ten minutes -- oh, we do you can see what the pound has done recently. a blip up when perhaps people thought that may was going to get her solid majority to make more cohesive uk politics, and has been coming off as ramifications of the uk election show let's look at the ftse 100 if anything is benefiting, it's those big international companies, those dollar earners which have benefited from a rash of buyers due to the disparity in the local evaluation in pound sterling and the dollar. the one-year change on the ftse 100, 24% higher. it doesn't matter about the political shshenanigans, or the data, international companies like bp, rio tinto, like the tobacco companies, like the pharma companies, when you see the dollar earnings, it becomes a dollar issue what about the mid cap, the 250. surely they won't be rallying as much as this kind of. a little bit of a discount 20.75% the ftse 250 up over a year. is that where the valuation trap is is that where the problems are if the economy data is average and people are struggling to buy homes, struggling to top off credit cards, they're worried about brexit and the inflation data was about two things, food inflation data and computer games. lost on me i didn't play candy crush. sterling trading higher against the dollar amid signs that the uk prime minister could be forced to soften her stance on brexit a host of senior figures within the conservative party includin the former prime minister david cameron -- david cameron haven't heard from him in a while. urging theresa may to make a more collegial approach to brexit just like you did, mr. cameron we had plenty of punch and duty when you and ed millenbrand. the french president, emanuel macron, raised the prospect of the uk abandoning brexit altogether >> translator: the door is still open while the brexit negotiations are ongoing but the decision has been made by the sovereign people to leave the eu, i respect the sovereignty of free people i cannot say whether this decision needs to be changed from the standpoint of eu members, as long as the decision on the organization of the exit has not been taken, there's a possibility to change the course of the events. >> extraordinary just prodding away at those brex brexiteers the danish foreign minister also said he is open to the uk staying in europe if britain changes its mind we don't need another vote, do we earlier we spoke with the european parliament's brexit sherpa who said the eu has a unified position as it gets prepared for brexit negotiations to kick off next week. >> we have not asked for brexit. the door is open we are ready to negotiate from staying in the european union, from internal markets, from customs union, but they want only free trade agreement. first of all we have to do a divorce deal i think everyone, citizens and business want to have a solutio solution >> let's get to claire in paris. macron is in a stunning position at the moment. it looks like he'll have a national assembly purring to his every word as well compared to mrs. may who is in a pickle how are you reading things >> well, indeed it's a stark contrast between the uk's prime minister who seems weakened by this general election, while emanuel macron as, you know, witnessed a landslide of his party in the first round of the parlibiliamentary election whica to be confirmed next sunday. but he could get more than 400 seats out of 577 at tafrlment. that means he can implement reforms which he hopes brings jobs back to france and growth as far as brexit is concerned, you heard him say the door is still open to theresa may. but while he was saying that, he also said as soon as the brexit talks start, it will be very difficult to turn back it would be very difficult to walk back. that's pretty much what he said when he paid his first visit to theresa may back in february as a presidential candidate he said theresa may should not expect any particular favor from her european counterparts. if you think about it, emanuel macron sees advantages to the brexit because that means he can focus on the franco german couple and more integration, more economic integration within the eu and a common defense project that's easier without britain in the picture. also emanuel macron wants to take advantage of the potential loss of industrial manufacturing jobs or finance jobs from the city that could ab conbe a consequen the brexit so a defensive stance. >> stay with us. jonathan fenby joins us. and jeffrey cleveland is still with us as well. jonathan, you're just back from paris as well. a country rejuvenated, question mark >> it seems to be. on the one side a country rejuvenated with a young, cavalier emanuel macron. he's leading the country up to the summit there's no stopping him. >> a modern day joan of ark. >> no, john of ark is waiting down in mar sseille for him some of macron's people are worried about getting too big a majority getting a lot of starry eyed neophytes in parliament who will expect things to change immediately. the question of how macron will manage this majority and the reaction in the streets and from the unions in the autumn is the big question >> i like everyone else, i'm full of hope that something good will happen in france. this will work let's be honest about it he's not tackling the 35-hour week he's not tackling the 62 years amg retirement level which seems bonkers in an era where we will live into our 90s. he will lose 120,000 public sector jobs, 60 billion off the balance sheet. i'm not entirely convinced this fantastic young man can do this. this is a five-year project, as someone who is over the french retirement age, i think everyone could work longer. you would get an upturn from that the economy is looking pretty good real wages, you were talking about what's happening in britain, they're going up in france so there are plus points plus the unions are less eye nighted than they were in opposition on the labor front. we'll see a lot of progress there. largely depends on the relationship with germany.jeffr situation potentially, but the draghi put remains firmly in place. does this mean any change for french government bonds? >> i don't think so. the earlier conversation we had befo about the shortage of safe assets that's paramount i don't think the ecb is moving on interest rates any time soon. not in 2017, certainly 2018 maybe we could have a conversation that keeps the front end of the bond market pinned down low. that's the overwhelming issue. politics getting a lot of attention. i do think euro area economy from my standpoint from my vantage point looks fantastic. better than it has in probably a decade in terms of the forward looking indicatededdeddicators of growt. >> except for italy. germany and merkel, will she have a coalition with free democrats which would be good for the markets rather than with the social democrats but you have that italian uncertainty. the five-star lost a bit of ground in local elections last weekend, but it's still uncerta uncertain. >> jonathan, you have written many great things on germany and france but also a book called "the making of modern day france" to which i ask when do we get the modern day france is this the bit where we will see the making of a mo eadern dy france >> you have the macron phenomenon there's no doubt about that. but policically, the old political mold which held flarac back since mitrione. you have the disenfranchised on the hard left and hard right but who will only get a dozen members of parliament. this is the opportunity for macron to build something and tear down the old walls. >> i don't nknow, but we've seen in renzi, in tsipras, in trump how does he get over that problem of once he's in problem getting things done? >> macron what he's done, he's done a lot of brilliant things, including that handshake with trump which he worked out carefully. he does his homework there what he is, he's the perfect incarnation of the elitist french reformist orthodoxcy. everything he stands for is there. we've been talking about it for 25 years but he's managed by breaking the old mold to present himself as the insurgent which he's not he has a much better chance than sarkozy before him or other would-be reformers >> gentlemen, i think will you stay with us claire, thank you for setting up that story for us. coming up on this show, discretion from sessions the u.s. attorney general repeatedly refuses to answer questions about his mrooiprivat conversations with the president but denies allegations he collude with russia. the full story after this short break. it's what busch is known for. what are you known for? i'm cool under pressure. what is that? a fish hook? (chuckling) golly! [sfx: buschhhhh] london's mayor says questions need to be answered following a deadly fire in western london firefighters are working to contain the inferno that started overnight in a large residential tower. dozens have beeneen hospitalized the london fire brigade is still looking for people inside the block. a structural engineer is monitoring the stability of the building and it appears safe for now. the commissioner of the london fire brigade, dany cotton, says crews have been as far as the 19th and 20th floors of the block. >> let's get back to one of the bigger stories overnight this is the grilling of u.s. attorney general jeff sessions, where he denied he coclued willt russian interference calling it a detestable lie testifying before the senate intelligence committee sessions repeatedly refused to ask question from senate democrats saying it would be improper for him to discuss private conversations he had with the president. sessions defended his recusal from the russian investigation as a procedural matter rather than an indication of any wrongdoing ron wyden pressed sessions on the circumstances of his recusal. >> mr. comey said there were matters with respect to the recusal that were problematic and he couldn't talk about them. what are they? >> why don't you tell me they are none, senator widen there are none i can tell you that for absolute certainty, you tell -- this is a secret innuendo being leaked out there about me, and i don't appreciate it. >> just reading various copy on this, and i can't comment and i can't recall were words repea d repeatedly talked about. so, very interesting that whole investigation and inquisition. earlier we spoke to mark weinberger, a member of president trump's economic advisory council >> it's like a car crash you don't want to look, but you can't turn away. it is sucking a lot of the oxygen out of the air and taking the attention away from some of the folks, and the president in particular the economic team continues to move forward that same week this was happening, we had these 200 plus companies in washington. the secretary of treasury was there, speaker of the house was there, all talking about the economic agenda lots of machinery is moving the issues forward even at the same time this distraction is going on >> i didn't think it was a car crash. i thought he was stonewalling quite hard it was a shame he didn't become more forthcoming on certain elements he said i'm not about to say what the president said in privacy in case the president doesn't want to say anything about this when he's asked about his views onthis how do you think it went for mr. sessions >> washington, for investors, is creating a lot of noise. the ultimate question that u.s. investors and floebl global invs need to ask, is there self sustaining growth in the u.s.? do we need washington to come through with stimulus to keep the economy going? i come down on the side that the economy is keep growing. >> challenge yo i will challeng. the markets have been riding on the back of washington for the last few months, now to say it's not washington, i don't mow if i buy that >> when you look at stocks, and when you should worry is when the business cycle is about to end. if a recession is imminent due to a policy mistake in washington, it's very important. if not, if we have a couple more years in this economic cycle, which i think we do, then you can still feel confident in your investment >> fair enough with all thehubbub going on around the trump administration, whether it's a car crash or a fender bump, whether that distracts from the kind of economic measures, tax, infrastructure, everything else, then as you say, whether that plays into the slowing down the cycle in the end so you don't get the stimulus at the end of the cycle, which people expect i don't know the answer to that. >> that's something we asked mark weinberger about, about the trump tax reform plan. the markets interpretation of the time frame >> only 80 legislative days left before the end of the calendar year they have a lot of work to do to get this off the ground. the business roundtable ceos did a survey, they asked if deregulation were to continue, 70% would hire more people 80% would invest in capital equipment to increase productivity if it doesn't, 90% said they would cut back it's important to get that done. the idea now, is that after the august recess, they'll become more public, try to work it through congress we'll have to see how it looks at that time >> steve liesman did a piece around the federal reserve the fed must be watching closely what happens on fiscal policy here the conclusion of the piece was that it's a 2018 issue now not a 2017 story any longer. would that be how you generally feel about it? we'll only get progress on this now? >> the tax reform? >> yeah. >> it's a good question. conventional wisdom, in the second year of a president's term, it's harder to get these things done. they'll do everything they can to try to get it done this year. even if it gets done this year, the effective date of the tax changes wouldn't be until 2018 the economy effect would be 2018/2019 at the earliest. it's still possible and hopeful this fall that they'll try to move something through the legislative system to become law. >> jeffrey, it's the distract n distraction. it's the delay, the twitter frenzy, to be fair the president is kind of a past master at creating a twitter frenzy unlike any other popular leader, will he get distracted? will it delay what a meaningful, necessary reform is in the united states? >> i think we'll be delayed. we're already halfway through 2017 if you are boosting your 2017 gdp forecast based on something getting done on tax reform, that's off the table you can push that out into 2018. >> jonathan, his political capital is against a tight timeline i know he's elected for four years, midterms coming up. republicans have to work out if they'll run on backing trump or not backing trump or distancing themselves, like democrats have had to worry about whether they will run on backing obama or not. this is a tight timeline for the president. >> this adds another uncertainty to it. the uncertainty builds on the uncertainty in a sense because you then get uncertainty of pushing through legislation, pushing things out into 2018, then you get towards the end of 2018, the time gap for the effect of legislation on tax cuts, all this is a huge bundle of uncertainty in a political context the question out there, could there be a reversal in congress in the midterm elections and trump finds himself up against at least, you know, hostile hosts. >> how does he get his legislation through. it's tax reform, isn't it? >> for the markets, it's tax reform whether you talk about personal income tax, corporate income tax. those are the two key pillars at the top that investors were hopeful for that they think will boost growth >> and when are they releasing prospects? >> to make the link back to france though retalk abowe talk about reform for macron, if he cuts high corporate tax in france, that adds the problem of the budget deficit if you get this revenue. then you have to have merkel on the side saying we'll give you a holiday for a couple years >> france has had a holiday throughout the entire financial crisis even before the draghi perk, they never got challenged, unlike btps, spanish paper and greek paper. nobody challenged french paper, which for me was extraordinary >> bit of noise here and there >> how hollande got away with it was extraordinary. people still in the end say france has all these problems, but it's a rich country. it will be linked to germany it won't get into the problems of italy or greece >> one more for you, we came into 2017 thinking political risk left, right, center, france, netherlands, german elections, is political risk a story lessening for broader europe now >> it is i don't want to say why after the the event, but the potential for the populist to change government policy was hugely overrated after brexit and trump. le pen was never gone to win the presidency, wilders was never going to make it, but italy remains the cloud on the horizon. >> jonathan fenby, thank you great speaking to you over the last hour, jeffrey cleveland we'll take a short break we'll be back the same time tomorrow whoooo. you're searching for something. like the perfect deal... ...on the perfect hotel. so wouldn't it be perfect if there was a single site where you could find the right hotel for you at the best price? 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"worldwide exchange" begins right now. ♪ good morning a warm welcome to "worldwide exchange" on cnbc. i'