Coming out 124. 1, in june against last months 123. 3. We are also looking at Current Conditions expectations index, 106. 8. Thats the june against 106. 4 last month now, the Italian Government agreed to wind down two lenders. The deal could cost the state up to 17 billion euros. The government said it would offer additional guarantees to cover potential losses speaking at a press conference, he says it is to avoid disorderly failure of two lenders. This crisis reached a level that required rescue intervention to avoid risks to everyone over disorderly failure. This rescue intervention is directed as favoring account holders and savers of the two banks and in general in favor of the economy of the territory this is one of the most important territories for our National System and economy for the part of small and medium size businesses which certainly plays a major role and historically relies on these banks. You can see shares up 3 after the bank absorbed good assets from lenlders as part of the deal 4. 8 billion euros to keep its capital ratio. They say it is fully neutral in terms of the ratio and dividend policy we have spoken to a range of experts about intesa some say they could have approached in a slightly different way, most positive about the latest effort to clean up the financial system. What the government did this time was really to use money to safeguard the senior bondholders. I think at this stage could have been different choices. Such as it would not have undermined financial stability, i think overall this decision is positive although it reduces uncertainty. Theyre slightly caught. They have to exaggerate the significance to get away with state aid. In a sense, they have to talk up potential disaster, otherwise they wouldnt be able to take the action theyre taking. Thank god were getting pragmatism here. I cant help but think, when did tim geithner sort out u. S. Banks, 2009. Taken best part of a decade to do that in 18 months once you get through it, after the prices you come out strong. It is in the interest of involving the government to take on some of the capital hits in order to clean up the system and give the good assets of a Banking System back to the overall private Banking System and thats what weve seen today. Clearly italian taxpayers are on the hook for this is this a blow to rules we have seen instigated across European Banking Union . Well, they if you look at the press release this morning, great emphasis placed on different aspects of the economy that theyre looking to save talking about saving of 2,000 households and jobs of 3 Million People this is very much concentrated on a particular area of the economy. Rather than referring to overall Systemic Risk which the banking rules apply to whats different, you look at here and what happened in spain, you saw taxpayers werent involved in the situation, and indeed the bank that took over did actually san tanlder did have some effect on shareholders, given the equity rais raise, it is to protect an important part of italy. One of the announcements was the head of bank, exhead, is one of the people involved in liquidating two smaller banks. Is there a problem, a systemic problem in italys Banking Sector needs to be addressed and still not being addressed . Demonstrates lack of imagination as far as bringing old characters back into the game i think hopefully work for broader agreement, but theres insularity one of the reasons we saw so little progress in ten years what we hope to see is get momentum to acceleration and plan in place to be replicated Going Forward. Thank you very much gemma ak continue from cnbc. Germany social Democratic Party fallen further behind for polls ahead for general election in september democrats opened up a 15 point lead according to survey this weekend they urged Party Leaders to continue the fight. Joining us on the phone from kiel, ralf stegner thank you for joining us good morning. I just wonder with that poll situation over the weekend, is there any way back for your party in septembers elections do you think well, i think its not decided at all election not only in germany but other places, sometimes things come different from the polls. Last minute tax and things change what we will do and we just opened up the Election Campaign with our Party Convention yesterday, so if conservatives think they have one already, thats good for us. And nobody knows how things turn out. We started out anyway with Party Convention with a strong Party Program that showed differences, big differences between the conservatives and social democrats and after you see a united party that stands behind our chairman. You mention whether conservatives had essentially considered the election already over, one of the things thats potentially a problem for you guys is chancellor merkel doesnt want to get involved in campaigning. Does that frustrate your efforts . Well, that worked td system not to talk about Political Program worked twice for Angela Merkel not everything that worked twice will work for the third time because you can see in europe we have a crisis there, you can see the difficulties of relationships with the United States with President Trump there. People expect their political leaders to tell them what direction will be. Therefore i dont think Angela Merkel will have it as easy as the last two times just to get away with not talking about how the tax system will be, how the Pension System will be, how she wants to bring europe in a way together to withstand policies that donald trump is advocating. We have a very experienced european leader and we have a very enthusiastic politician was able to i think explain to voters what the social democrats want to do good for our country and good for the future of our country. Angela merkels experience and she was successful but doesnt have many ideas left for the future and i think the Election Campaign will show that. One other question for you, im intrigued about german relationships with the United States we have seen they have been quite difficult in the last six months since President Trump came to power. If Martin Schultz was elected chancellor, how would he change that tredirection . What we shouldnt do is take an antiamerican course. I mean, i lived there for three years, we should never forget that the relations of the United States are very important for us, for europe and us too. And they will survive Trump Presidency differently yet when george bush led the United States and this war against iraq, the right wing government in germany withstood this policy, and Angela Merkel at that time, leader of the opposition was in washington and said she would go along with george bush. And i think same thing is happening right now. Donald trump does a lot of things that are very worrisome for europe, make nationalistic developments in europe stronger. I think Martin Schultz will withstand that as much as he does that in other crises in terms of, for instance, the situation in turkey. Angela merkel doesnt say much about that, and i think in germany many voters will expect that german leader would say to donald trump certain moments wont go with us in situation where we have brexit and difficult developments in terms of relations to russia, we have turkey and threat through International Terrorism and all that kind of thing, i think social democrats have good chances as record of party of peace and good european records and therefore i think that will play a major role this time. Mr. Stegner, thank you for joining us, the deputy leader of the social Democratic Party of germany. Lets look at the european markets. We see positive markets. Ftse is up a half percent. Also up a half percent in paris. Up fourfifths of one percent. In italy, seeing it lift more than one percent if you look at the european sectors, we seafoe food and beverage doing well. Banking sector doing incredibly well getting a lift from news out of italy. Health care, both of them down negative this morning. We take a quick look at nestle shares, focusing on that sector, looking at the stock in particular almost 4 on the back of the news about taking stake in the company, driving change when it comes to a stake in loreal. More than 1 of swiss food giant owned by billionaire activist, called on the largest packaged foods market to share business including that stake in loreal. Gemma, they announce this in a move to investors. What are they calling on nestle to do . Summarize what they want done, they want three key things one to improve the actual operation. Looking to boost or identify a formal profit target around 18 to 20 , remember currently around 15 calling on nestle to reorganize its portfolio more aggressively, optimize assets. Divesting 23 stake in loreal thirdly, Financial Engineering looking to optimize what they clearly see as inefficient balance sheet. S three aspects. We see corporate which often move slowly compared to aggression of a hedge fund move on the top of their game such as a download while if you look at and lists, they think it is moving the right direction with regards to their portfolio. They want things moving more quickly and more aggressively. We have seen historically active investors havent done well with these. Why does down low think theyre different . They have a unique track record they dont always get exactly what they want, but they generally get some kind of change they have come out with a more aggressive plan, didnt get the merger but got an aggressive operating plan dow and dupont looking at redoing their merger, looking at ways to change it. Might not get exactly what they want, but they generally get something close to share price. Coming up on the show. Bank of International Settlement says it is time to normalize but how perilous are the risks for Central Banks. Talk pros and cons after this short break. These days families want to be connected 24 7. Thats why at comcast, were 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. Its time to normalize, thats the message from bank of International Settlements in the latest report. Central Bank Watchdog says with improving economic outlook, policy makers should begin unwinding and raising interest rates, despite upbeat assessment, they warn soaring debt levels and low productivity levels are persistent risks. Gemma is joining us. James, i want to talk about the dollar looking at the numbers, it is weakening against euro and sterling whats your long term outlook . Gl probably close to floors on the dollar the fed, we were surprised with that rhetoric from the fed, they upfwr upgraded Economic Forecast it suggests longer time six months plus we will start to see short term probably some weakness cooling off inflation, oil prices, et cetera. They probably have a little wiggle room. Policy normalization is important. As long as we dont see too much this summer, probably see another rate hike in september consequently, well see strength in the dollar. Lot of weakness in the vix. Youre calling for, bis is calling for, impacts for vix it is unusual, up 10. 02, less than 5 of the time is it this low. You look at futures positioning, it is varied trade, not in long positions, in short positions. You get a fantastic yield shorting the vix, it is in steep. When you hike interest rates, that yield becomes less attractive people start to unwienld four Times Standard deviation. There have been a couple of incidents recently we have seen the trade nearly unwind. Comey testimony we saw a vix spike 46 in a day from 10 to 15 . Ultimately, not our core view, remain in a tightening mode. Something to watch for and could create disorderly unwind in the market. That could now be impact on the markets, they suggest could be short term turbulence not really a great correlation between valuations and the vix. But in the last two years has been high correlation, suggests low volatility, poor sense of security meeting theresa may and david davis a week into negotiations of brexit. Do you see ongoing political turmoil in the uk as problem for instability . To some extent, yes there is this political theater versus reality political theater, expressing hard line, theresa may doing the same it is not off to a great start, behind the scenes theres more pragmatism and deals done than we can see by whats expressed in newspapers. Thank you very much head of research and Investment Strategy at Etf Securities and my colleague, gemma actin. Thanks so much for that. We have been talking about leader of Northern Ireland will meet theresa may, they try to finalize confidence and supply agreement. She told sky news she hoped to conclude another deal with the Prime Minister on power sharing. He told the bbc expects a bumpy ride in negotiations, insists both parties share common interest when it comes to signing a mutual beneficial agreement. They clarify about future writes of eu citizens in the uk what we set out to do is create a status almost equivalent, they get the same residence rights, unemployment rights, health rights, welfare rights, pension rights, and so on dont get the right to vote. Joining us to talk mark cahill i want to ask you about european Citizen Rights do you think people across the uk hailed from the european continent breathe a sigh of relief when they understand what the future holds sadly not yet unfortunately we have to see whats coming out of negotiations. Need to think about these people to make sure they feel comfortable and certain about their future. We heard from the chancellor and Prime Minister that membership of the Single Market is no longer on the table, membership of Customs Union with a few caveats doesnt seem likely do you think a quote, unquote softer brexit is a possibility what makes you think thats the case we hope for softer brexit hard, soft, smooth brexit is important to us. What we think we need in this country is unemployment. In the last 12 months, we have seen 80,000 bulgarians come to the uk and find work in the uk were going to need that sort of skills and talent to come to the uk at the moment, were almost at full employment. The deal thats been proposed on european Citizen Rights in the uk gives opportunity for people arriving between now and as yet undetermined cutoff date to earn rights we talked so much about. Do you think in your capacity that that will incentivize more people to come from europe to try to find work between now and the cutoff date . Not sufficiently. We really would argue for more incentive for people to come to the uk and work here what are the concerns is border control, maintaining control of the borders, theresa may promised to reduce immigration workers coming to the uk you think thats bad news for the economy. I do. We need an economy thats going to prosper, that will create jobs we need to attract and continue to attract people into our country to fill those roles. And up skill we need skills in europe to come across to the uk. One of the drivers was control of borders we heard from the chancellor he will prioritize the economy and jobs is that a real seed change in conservative body thinking i think were seeing softening of the hard line they were originally taking, now maybe a softer line and listening to business. Business should have a voice in terms of what we need in the Business Environment by way of people coming over to enjoy these jobs, boost our economy further. Thank you so much indeed. Mark cahill ukmd of man power joining us onset a quick break. Check out World Markets live that runs through the trading day. Welcome back to street signs. The gft strikes a deal to wind down two doubled lenlders and protecting senior bondholders. Shares of nestle top the european market, after they reveal a 3. 5 billion position with demands to reshape the swiss food giant. Closer to deal Arlene Foster returns to london in search of agreement to prop up theresa mays government as brexit minister david davis vows to secure a deal of his own. What i want is free trade agreement, customs agreement and so on. German business morale his a high and Angela Merkel conservatives pull further ahead of rival democrats three months before the country goes to the vote lets look at this green across the board of european markets. Ftse is up threefifths of 1 .