Companies will meet today to thrash out a rail deal nestle says it will speed up share buybacks and pursue external Growth Opportunities as the Swiss Company pledges to improve margins and cut costs. Good morning, everyone its tuesday glad youre with us once again we have another jam packed show. Lets kick things off with a look at the equity markets youre onehour into the trading session. Were fairly even steven at this point. The latest escalation in the war of words between north korea and the u. S. Is not helping. We are largely brushing that off. Stoxx 600 is close to session highs. Safe havens are seeing inflows are gold, the yen and the swiss. Markets one by one, the xetra dax is just clinging on to the flat line, off by 5 points ftse 100 off by 0. 2. Cac 40 up by 0. 1 . When it comes to sectors, a couple interesting things to tell you about oil is not doing too badly up 0. 3 this as brent is moving closer to the 60 a barrel mark. Tech seeing underperformance. You have it down by 0. 3 this is as we see the weakness specifically in apple shares in the u. S. Moving closer to correction territory there are plenty of reports out about apple trying to cut some of the supplies coming for its iphone 8 that might indicate that demand is weaker than expected. The other big deal we were talking about. Cnbc sources say Supervisory Board also gather later today to discuss a potential deal between german industrial groups siemens and Alstom Siemens is likely to get a rail deal with alstom rather than bombardier this as they look to face a Global Expansion drive by chinas crrc straight back to politics, Angela Merkel has begun the task of trying to build a Coalition Government after a fourth term as chancellor. A Jamaica Coalition remains the top option but talks could be tough as one party said they would not agree to a tie up at any price. Merkel also kept the door open to a rerun of the grand coalition with the centerleft s spd. Translator we will look to start discussions with the spd and the greens i believe its important that germany gets a good, stable government i heard what the spd said about going into opposition, yet we should stay in contact. Angela merkel struck a note of caution ahead of emanuel macrons speech on reforms merkel said she wanted to see countries become more competitive. Macron hoped to work closely with merkel on reforms, but the election forced the chancellor to strike a much more moderate tone lets talk about this with len grabe taylor yesterday we did see some spread widening that seems contained this morning do you think that was a knee jerk reaction . Yeah. Its more of a longerterm perspective how to trade the german election result i think the possibility of future liability sharing has done down with the fdp likely to coming into any cole lying it makes sense that you saw a bid for german paper i think whats more interesting, if you did have any crisis related blowup or event, like italian elections coming up a risk event, theres a soft cap there on yields. Also in the shortterm its difficult to see 100 bits being broken in the spread of spain over germany this day factor, liability sharing has taken a back seat. Macron will be holding his important speech tonight that was going to be the centerpiece of his new legislation for europe he was hoping for more burden sharing for a eurozone budget, for the eurozone finance minister merkel cant commit to any of this, she hasnt built her coalition yet. It might be many, many weeks before that comes to fruition. Do you think hes franticly rewriting his speech do you think hell stick to his guns and what he was planning to do i guess theres more uncertainty about what he can expect from Angela Merkel. I guess hell stick to his guns, put background pressure on the Coalition Formation talks. And yeah, big picture, its difficu difficult even before the election, merkel was in a difficult place to where macron was in terms of eurozone budget and finance minister because of the Election Results shell have to be further away from that. Its difficult to see progress being made most realistically, where do you think the two sides will meet what do you think the outcome would be will we get a euro area budget will we get a common finance minister no, there might be token efforts on the budget front, so maybe a tiny joint budget, and yeah maybe some de facto guy or girl who has a title but limited power. I guess no one wants to do that job, except for the title should we worry about perceived limits when it comes to burden sharing . Fewer bailouts its all hypothetical. The eurozone economy is firing on all cylinders were doing well theres no bailout in sight at this point i think when we get this next big risk veentevent, it will weve seen very chunky bit of populist in germany, when you split the linker party and the afd. So i think when you do get a risk event whether thats italian elections or something else, you will see a bigger move in spreads because of the lack of progress on liability sharing. A lot of client also talk about we will get jergerman electionsd make progress in the eurozone. In a sense, listening to demayo, the new leader of the five Star Movement in italy over the weekend, it doesnt seem like this party would pose a threat when it comes to populism in italy he said were not a populist party. Is there really a threat coming from italy you to . Its still viewed by the market as a risk veentd on the h event on the horizon i think its still in the back of Market Participants minds, but wont come to the fore until we get to january, february, march. Interesting note you wrote on potential implications for the ecb. The election in sdwregermany hao direct bearing could there be a limit when it comes to the violation of the capital ecb . I think when it comes to watering down some red lines in the program, theres a slightly higher wall to cross now with that situation in germany. So the margins, yeah, it makes it much harder to extend qe. Theyre running out of bonds, making tapering more certain once again, were showing bond prices. Theyre barely moving. Whats the best trait at this point given that were looking at a whole lot of uncertainty when it looks at the Coalition Forming in germany we like going long portugal versus italy we like the return to Investment Grade bond indices as well as your election situation. Thank you very much for that. Lets focus back on the german elections annette is on standby in berlin according to the most recent poll, the germans are warming up to the prospect of the Jamaica Coalition. Thats exactly the case a poll conducted by the public broadcaster, ard is showing that 57 of those asked actually think that a Jamaica Coalition, meaning a coalition between Angela Merkels party, the fdp, and the liberals and greens is something very good or good. I think germans come to the conclusion now that fgoing forward, if we get such a coalition, it could be a good thing for germany as this coalition could be more proactive when it comes to policy reforms the liberals made it clear they want to push through major points, lower taxes. The greens are adamant about the fact that they need to see a green footprint also in the next government if theyre taking place in that government so it could overall be quite an interesting four years, and also perhaps a positive four years for germany. The big question mark is whether they come to a conclusion when it comes to the Coalition Talks, and whether we are going to see a Coalition Contract at the end of these negotiations. Nobody expects that to happen very much before christmas, even some people suggest it could be early next year. The spd is somehow playing a role in that equation with Angela Merkel saying she wants to keep the dialogue open with the social democrats, even though they have now not only once stressed they want to go into opposition. I caught unon tp on the ground h the deputy leader who also gave us his take about whether theres a bit of room open for negotiations or not. Take a listen. That was a black day for the social democracy in germany and was third election in a row that we didnt win the election on the federal level. The voters were clear we have to go into the opposition theres another reason for that. Because for the First Time Since world war ii, we have a right wing extremist entering the parliament with double digit margins. We cannot possibly led them lead the opposition in the parliament thats the role the spd has to encounter. On the other hand, i think we have with the greens and liberals, four parties who have talked a lot about their ideas, from modernizing germany, they can show they can do that in their campaigns and governments. So thats their role, our role as the opposition. In case the Coalition Talks are getting difficult between three or four parties, if you want to have a fourth party like the ccu, would you then say we can rethink our role and then also start Coalition Talks is that like a fixed no. The door is closed the voters have spoken though remade good work in the government, our ministers s dssd we have lost votes i think its clear we have to regain strength in the opposition lets look at the Party Program and huge criticism comes from many people that your party moved to the center. Is the future for the spd that youre going to move to the left and play more the social card . I think chancellor merkel tried to give the impression there are no differences between the two parties. Thats wrong there are differences. Its easier to show them if you dont govern together in a coalition cabinet, but rather lead the opposition against the conservative policies. We have totally different understandings of tax policies, policies for elderly people, for education,policies a lot of other things. Dont want a rise in the military budget 30 billion euros a year, we would rather spend the money for education, families and future. There are huge differences they will come more easily if were in the opposition. I guess that will be the fundamental for winning the next election in 2021, four years to go now its time for gous to got the opposition youre sticking with your partly leader, Martin Schulz, also responsible for the bad results of the cdu spd why are you sticking to him as the party leader i think Martin Schulz led a remarkable campaign. He was elected as chairman of our party just half a year ago he started the reform process. Its very easy to just throw out leaders after loss of elections, but i dont think thats the right thing to do. I think many people in the social Democratic Party want Martin Schulz as leader of our party. We have elections for the leadership of the party in december marnt sh Martin Schulz is the right person to lead the party i think the internal power struggles have now just started. We have seen this agreement, the chief whip of the party in policy, so thats just the beginning of the story i think everybody keeping their feet quite keeping it very quiet at the moment before these Upcoming Elections in lower saxony it could be a bad sign also for them to lose another federal election this year so Coalition Talks only will start after the 15th of october in germany and could drag on as we were saying for quite a long time there is, of course, an adverse risk scenario that if they are not coming together, those three or four parties, if you take into account the Bavarian Sister Party of Angela Merkels party, it could also we could also end up in a scenario where germany could end up in new elections this is something that could drag seriously on the German Economy nobody wants it here in political berlin i dont think anyone has the stamina for that now thank you very much for that email the show. Streetsignseurope cnbc. Com you can find us on twitter, streetsignseurope cnbc and tweet me carolincnbc. Coming up, north korea says a tweet from donald trump amounts to a declaration of war. Well get the latest after the short break. My name is jeff sheldon, and im the founder of ugmonk. Before shipstation it was crazy. Its great when you see a hundred orders come in, a hundred orders come in, but then you realize ive got a hundred orders i have to ship out. Shipstation streamlined that wh the order data, the weights of , everything is seamlessly put into shipstation, so when we print the shipping ll everythings pretty much done. Its so much easier so now, were ready, bring on t. Shipstation. The number one ch of online sellers. Go to shipstation. Com tv and get two months free. Did you hear directvs latest deal . Its cheap and gets you all the big games. It starts at sixty bucks a month, but jumps to over 100 after 3 months. Cool i think . And jumps again to over 150 after a year. Noooo. And ends up costing over 3500 bucks over 2 years. Youre cleaning that up. Dont get caught off guard by directv. Touchdown. Get the best with xfinity. Welcome back the uk brexit secretary david davis promised that the uk will honor preexisting financial commitments to the eu. Speaking after the start of the fourth round of brexit talks, davis said a divorce bill would need to be linked to a deal on future economic ties on the financial settlement we do not want our eu partners to worry they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave the uk will honor commitments we have made during the period of our membership but its obvious that reaching a conclusion on this issue can only be done in the context of and in accordance with a new deep and special partnership with the European Union. So the uk is absolutely committed to work through the detail the stalemate over the divorce bill threatens to drag on with the eus Michael Barnier reiterating that trade talks cannot begin until the financial settlement is agreed upon. The European Union is keen and eager to understand better how the uk government will translate the prime ministers speech into negotiating positions. This is essential and would enable us to advance this week, i hope, and make Real Progress over the coming months Real Progress under three main issues, citizens, financial settlement, is essential to move the discussion as well as on the future lets get back to one of our top stories. Tensions between the u. S. And north korea reached a new level as the foreign minister said trumps havent comments amount to a declaration of war, threatening to shut down american aircraft outside of north korean airspace. T off the comments, gold rose to the 1300 level. Lets go to chery kang this is all based on one tweet that donald trump sent over the weekend. Exactly we saw we can sort of expect north korea to react quite sensitively to tweets like that because its basically taking north korea the wrong way. And some say this could be the north korean way of building up justification over what could come next as we have been warned by north Korean Leader kim jongun himself late last week about how the regime is ready to make the u. S. Pay dearly and this is north Korean Foreign minister releasing yet another statement as he wrapped up his new york schedule, calling the latest tweets and words coming from the u. S. President himself a declaration of war take a listen to what he had to say. Translator the u. N. Charter stipulates the right of all countries to selfdefense. Since the u. S. Has made a declaration of war, we will have every right to make counter measures, including the right to shoot down the United States strategic bombers, even if they dont come into our airspace we know north korea has a long history of making claims that some actions by the u. S. Or south korea is a declaration of war. But certainly the optics of it this time around, and i think thats what markets are reacting to, is that what we are seeing from the u. S. Leader is quite different reacting to north korea in a very similar level of harsh rhetoric this time around. And in the meantime, the white house, the trump administration, other than the president himself, is finding themselves having to defend some of his comments and this takes us back to the u. N. General Assembly Speech by the u. S. President there was that l. A. Times report talking about reporting how the president was advised not to provoke the situation and attack kim jongu in that speech, but trump did the very thing he was advised not to in that report. Here is White House Press secretary Sarah Sanders refuting such reports thats a false narrative. The National Security team was involved and engaged throughout the speech writing process and was happy with the president s speech at the u. N. Looking ahead into what could come next coming out of north korea, the south Korean News Agency this morning was reporting some spy Agency Officials in south korea that north korea is boosting defense on its east coast and moving some planes to that region certainly tensions remain very much high after that ungenera. N general Assembly Speech. Ahmed north koreas provocat