Capitol hill, and Christine Lagarde tells cnbc that the fed will not cause another taper tantrum. I think it has already learned from that experience both at the fed left avel and ad the world. The fed itself has measured exactly how to communicate and oil markets trading solidly higher were waiting keough pey opec d well be speaking to bob dudley in 30 minutes time were seeing almost solid wall of green this morning and this is despite the fact that markets are very much in wait and see mode waiting for yellens testimony later today stoxx 600 already up over half a percent. Across the board, up pretty high ftse and the cac up around 0. 7 . Xetra dax almost half a percent higher lets look at some sectors almost everything is in the green. Its really media the only laggard here spring in oil and gas not surprising that oil itself was up in yesterdays session and again in todays session tracking about a percent and a half higher. Janet yellen is expected to field questions of Interest Rates today. The feds tapering plans and her own future when she appears in front of congress. The fed chairs testimony comes amid a flurry of reports suggesting that President Trump is unlikely to nominate her for a second term. National Economic Council director gary cohn is the leading candidate to succeed janet yellen that is what politico reporting citing four people close to the process. He was with Goldman Sachs before joining the Trump Administration meanwhile imf managing director Christine Lagarde has publicly disagreed with Janet Yellens prediction that there is unlikely to be another financial crisis in her lifetime speaking exclusively to cnbc, she advised policymakers to remain on their guard against black swan events. I dont want to call it the miscommunication, but there was this taper tantrum thoo we had about, what, three years ago i think everybody has learned from that experience both at the fed level and around the world other countries particularly the emerging market economies that have experienced an outflow of capital at the time have strengthened their fundamentals. And i believe that the fed itself has really measured exactly how to communicate, how early, how much, and as also i think internalized the fact that they could be spillover effects outside the United States which would eventually spill back to the United States which as a result make it relevant for the purpose of defining the Monetary Policy of the country. So i have every confidence that janet yellen and her team will anticipate and will be very cautious about how they do it, how they communicate it, and i have not seen any g20 finance ministers and governors of Central Bank Meetings where she has not very clearly indicated that she was aware of external consequences of what was decided in washington. Janet yellen communicated a message to the Global Community the other week and this was around Financial Stability and youve been at the forefront along with Central Banks in trying to overt another financial crisis the message from janet yellen was that another financial crisis will not happen in our lifetime and she was comfortable that we will not see another financial crisis i plan to having a long life and i bet she does, too, and so i wouldnt bet on that there are cycles that we have seen over the past decades and i wouldnt exclude that. There may one day be another crisis where it will come from, what form it takes, how international and broad based it will be is to be seen. And typically the crisis never comes from where we expect it. So our duty and certainly the message that we give to the finance ministers, to the policymakers is be prepared, make sure that your Financial Sector is under good supervision, that its well regulated, that the institutions are rock solid and anticipate with a buffer so you can resist the potential crisis lets move from one powerful woman to another all eyes today are on janet yellen from the fed to hear her testimony on capitol hill. And we have the fixed income director from fidelity joining us to discuss it what are you expecting to hear out of chairman yellen today i think its unlikely that she will move too far away from the latest commentaries and statements that weve heard already. The tapering is still there. We think that they will announce tapering in september. And that is fine for the markets so far if you look at treasuries, they have been selling off a little bit, but yields are in that typical range. There hasnt been that much of a shock certainly and weve not seen the tapering tantrum that matter feared. They made an effort to sign post very clearly what they will do is the market reflecting what the feds message is or does the market have different expectations despite the clean sign posting the markets have taken any sign or negotiation of tapering quite well for two reasons first of all, there is demand for yield and that is supporting treasuries and fixed income markets more broadly and also the fact that there is a lack of inflation in the u. S. And more broadly is making it so that the market is actually quite comfortable in getting okay with duration and adding to the duration exposure at these levels so we think that the market as weve heard from mrs. Lagarde from previous mistakes that the fed may have done. So it will be less impactful today a taper than any indication of tapering was seven years ago. There are wide expectations that gdp in the u. S. Will be stronger than what we saw in the First Quarter. Do you agree with that diagnosis . There are expectations that gdp has strengthened, yes, although what were seeing is also a slowdown in investment that many expected to counter act the slowdown in consumer if you want so lower capex may imply perhaps downward surprises to gdp in the quarters ahead and again, this will support a more cautious stance by the Federal Reserve next year. Ill pick up on a point you made earlier can and that was inflation. A problem in the United States, but equally a problem in the eurozo eurozone what is your outlook for how inflation will behave in the coming months in the eurozone . We are actually of the view that inflation will drift quite a lot lower from the peak that weve seen at the beginning of the year clear lir because base effects that have inflation in the eurozone close to the ecb targets are temporary effects. So we think eurozone inflation will likely go towards the 1 area and what does that mean for the ecb . It means the ecb while draghi made great efforts to be positive about the outlook will have to tread very cautiously in the next two quarters. And markets are expecting that . Yes and no. If you look at the selloff that we have seen in German Government bonds in particular, the change of tone by the ecb has caught some invest are tore s by surprise, but we would be happy to take the other side of that argument. Ors by surprise, but we would be happy to take the other side of that argument so while they may signal some reduction next year, which is just filed, the economy is better in europe, but if they dont have wage inflation, they cant afford to take the foot off the axle rate tore too quickly. And let me turn to the uk there has been a bit of confusion over which way the bank is of england is headed saying they dont think the time is right to raise Interest Rates. What dounkt bank o you think thf england will do . We think that it will stay put, will keep rates unchanged and even if they were to raise rates, they will keep a very dovish tone. The consumer in the uk is getting squeezed, real wages are falling. And you saw how the lingering brexit uncertainty in the background, so this environment the bank of england has to keep a cautious stance. And if they were to hike rates again, they would have to counter act that more dovish tone if the fed raises rates a bit, doesnt that risk too big of a gap with the uk yes, and this is something that we are looking at in terms of relative value for example between the two markets. Also in terms of what this im y implies for the currency because as the fed hikes rates, the case for stronger dollar versus sterling will be Even Stronger and a weak sterling means higher inflation in the uk so we may see some catching up, but wed rather see them lagging the fed than not the macro environment in the uk is very different than the u. S thank you so much for your views, fixed income director at fidelity what we would love to hear from you, so do email the show streetsignseurope cbnc. Com or reach tout us on twitter. At street signs cnbc oig or to me directly. Well, coming up, send in the cows well explain how a load of farm animals is playing a role in the qatar crisis plus a top middle eastern developer is how the boycott is affecting business in the region hey youve gotta see this. Cmon. No. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. Welcome back ill kick off with a little bit of breaking news out of china. Looking at money supplies, were seeing that chinese banks extended 1. 54 trillion yuan in june they only predicted 1. 2 trillion and lets also look at m2 money supply which grew 9. 4 in june expect about tags about tagss w. And lets get back to the key stories moving markets here in europe lets start with Foster Wheeler under investigation over use of a third partys bribe beery and corruption offenses. The british oil and gas services fir firm said it will cooperate fully and it did not expect the investigation to to affect its takeover by john wood group. And to a riser, burberry shares opened hire after the Company Announced yund lying Revenue Growth of 3 the luxury brand led by a newed 478 Million Pounds in the First Quarter. Stronger demand in china and continuing good performance in the uk were key factors. And over to weathther spoons, tl sales rose 3. 6 . A closed more pubs than it opened since the start of the Financial Year and we caught up with their ceo tim martin in the last hour and says politicians are exaggerating the difficulties around the brexit process. There is a phony war going on to an extent because you cant if you are a laborer and you cant say how great tories are or vice versa, its not a great story to say everyone is united, so i think its going okay lets look at the first profit warning in more than two years at bilfinger this before the newly appointed ceo took over a year ago the German Engineering Company logged a Second Quarter operating loss and now only expects 2017 ebitda to break even and barratt increased output by just 76 homes. The figure was revealed today as they announce increased pretax profit of 765 Million Pounds despite the output, average prices for their houses rose by 5. 9 and moving out to the middle east where sanctions against qatar will continue until demands of the four arab states leading the boycott are met. They released a firm about statement as secretary of state Rex Tillerson visited douthe mie east qatar is importing 4,000 cows, the first of which are arriving this very week the situation in qatar is raising uncertaintyabout business in the region, including for real estate, this as a new report says the fall in house prices could be reaching an he said and i end. And im joined by chairman of the dumac. Thank you so much for joining us since weve just had a read about it, wed tlouf get yolover thoughts on the qatar situation because you do have Property Developments in qatar. Is this causing difficulties for you at the moment . Qatar and uae are one family and hopefully the issues will be sorted out in the near future. As far as business, i think its doing very well. Markets are very stable and demand and supply are very much in equi will i be reup and hugh about oil prices, has that been affecting demand oil prices have come down in the last couple of years there are countries which will have some challenges in the region, but dubai does not rely on oil g gdb is less than 4 . Its for tourism and investments and operates for Different Countries around the world lets look at london where we are happy to welcome you to. You seem to be doubling down on your bet on london prime real estate you are looking to expand. This is quite contrarian at the moment because we have seen some pain in the prime london market particularly for developers. Mar continues being cut, land values being written down. What are you seeing that other developers arent seeing its into the what we see opportunity has been here for a long time and a large land bank. Could be suffering we dont have a land bank. We have one piece of land we bought two years ago, we continue to sell our Customer Base is mostly middle east asia so with the drop in the pound, they are benefiting. So the same apartment they are buying it 10 , 15 cheaper we see the potential in london because land prices are coming down not drastically. Still a very competitive market. But at least there are more offers and we see that an opportunity for us to buy more land and to develop more projects. We are looking at london as a Long Term Strategy were not looking at london as a short term project so let me pick up on your point about customers. Many from asia and middle east weve seen some difficulties there in the home market for instance capital controls in china as mentioned the oil price. Also affecting russian buyers who had a long history of purchasing Luxury Properties in london are you concerned about the Customer Base at all, are you broadening your marketing to a wider set of nationalities, as well our customers come from 102 countries. Majority are sub be ccontinent. 3 to 4 hrs comi4 coming from a wediald i cant, pakistan, very little russia i know that you said in prior interviews that you dont like discussing politics, you like staying away from it, but you have two partnerships with President Trump so it will inevitably come up do you find being in business with such a controversial character loved by many, not so loved by others, is that problematic or drawing the wrong kind of attention to your business we have done a deal with Trump Organization and were very happy with our business relation with him. I have met the president several times when he came to due bbai o advice irt when he wasnt president. I find him very dharm icharmingy easy to talk, to smarts. But a tough businessman. Today we are doing business with his sons and we are very happy with that relation do you have further Business Plans with him no, we have have no further plans. Thanks for joining us on a broad range of topics. Lets get back to more local stories. Because ryan air has reiterated its warning that there will be no flights between britain and europe if the two sides fail to reach a brexit deal. The ryan air ceo might have bwa edge brexit that would leave holiday marks stranded he is loving for the uk to remain part of the skies agreement after 2019 still on brexit, britains foreign secretary Boris Johnson has told the eu to, quote, go whistle over its final brexit divorce bill about that responding to a fellow eurosceptic in parliament, johnson was urged to condemn demands by some eu officials for what he teams extortionleate fia payments the sums that they propose to demand seems to be extortionate and go whistle is an entirely appropriate expression speaking to cnbc conference, the former governor of the bank of france said paris can replace london as europes Top Financial Center after brexit. What i see is that the vast majority of institutions if not all are planning to put in their trading room why . Because more activities require high Skilled Staff and paris is a city where you can attract those high skilled people, not only because the city is nice, but because its a big city like alone done, t london you have the ecosystem, the lawyers, you have jobs for spouses, you have international schools. You have easy connection to london and the rest of europe and the rest of the world. Markets waited with bated breath yesterday to see what Deputy Governor had to say, but he said hes not ready to raise Interest Rates yet in an interview, he said it was, quote, too tricky to make a Decision Just yet. He cited a nervous mood among businesses as one reason why he was wary of pulling the trigger on rates and now we have to take a quick break. But do check out World Markets live, or blog which runs throughout the european trading day. Listen up, heart disease. you too, unnecessary er visits. And hey, unmanaged depression, dont get too comfortable. Were talking to you, cost inefficiencies and data without insights. And fragmented care stop getting in the way of patient recovery and pay attention. Every single one of you is on our list. For those who wont rest until the world is healthier, neither will we. Optum. How well gets done. Welcome back t