On trumpeconomitrumponomics. Theres this protectionist threat which is not clear. Russias economy minister is detained over an alleged bribe related to mega domestic oil deals. Trump brer, brexit, the glo bond selloff. We have a stellar guest lineup just for you. Hi, everybody. Good morning. Welcome to the show. We have a bit of data thats trickling through. Italian preliminary Third Quarter gdp 0. 3 quarter on quarter. 0. 9 to the upside yearonyear. Consensus was for 0. 2 . Its coming through a little bit stronger than anticipated. Second quarter gdp revised as well to 0 . It means that the yearonyear figures come down just a tad from 0. 8 . The economy in italy growing more than expected in the Third Quarter by the looks of thing on domestic. The divergence with the german data we got out a bit earlier everybody expects the german data to hold up. Coming in shy of forecasts. So a bit of a surprise you might say. Of course there may be more susceptible to the free trade fears, protectionist fears. Wonder whether well go back to looking back to data or focus dont political environment and with the elections coming up in italy or the referendum for december. Equity markets this morning were flat to a little bit higher seen right now the stocks are up by 600 with a few more stocks trading slightly on the upside than the down side. Moving on and showing you European Equity markets, a mixed story on equities. The ftse 100 up by. 7 . You got the dax and ftse both seeing a in the any bit down. Sector positions, trump trade retail, oil and gas, real estate leading the way higher. Basic resources flip flopping from yesterday being off by 2. 5 one of the main gaining sectors, insurance and banks not far behind. Join us now to give us a better picture is john baker. John, good morning. Thank you for joining us. Wondering whether or not we can take our eyes off the trump trade which has been concentrated in the u. S. We heard some bold statements talking about a new paradigm shift, a new normal when you look at whats happening with rates. Do you think investors are getting ahead of themselves . In the short term the moves weve seen which has been very aggressive with the u. S. Ten year treasury now at 2. 2 , 10 year gilt at 1. 4 and bond yields moving into positive territory the speed of that fall in prices, rise in yields suggest in the short term there could, indeed be some pull back. I think whats happening is that market is focusing very much on the positives of the Trump Victory. The market was encouraged in the first instance by the moderation and the tone of his initial speech. Thats when we saw developed markets begin to rally. And also clearly pro growth, fiscal policy, infrastructure, tax so on and so forth. So far the market is ignoring potential negatives. And this perceived pull back end free trade coming from a trump white house. The german data out this morning, germanys economy they are concerned about any pull back in globalization. Do you think thats a real concern or are there also concerns whether or not that stimulus can be put into place . I think we need to see how difficult it will be for donald trump to push his agenda through congress. Yes, we do have a republican majority in both the senate and the house of representatives. But trump will not be able to rule by executive decree so, therefore, the actual outlook for the continuation of the north American Free trade alliance and wider trade issues with china are still very much questionable. Germany, yes, its europes largest export economy it will be susceptible to any reduction in global trade but its the important not to just focus on one single data point because the trend for the eurozone in general has been positive. Lets say that parts of what they have been saying that were moving towards a new world order however you want to interpret that. But in terms of more protectionism coming to the forefront and we see more in europe as well, noirn uk, more coming out of france and germany some other countries as well for how long can a trade to the upside in equities continue before we see a reversal on that on protectionist worries. The equity markets weve seen so far this year, certainly the risk of political uncertainty. Were seeing a rise in populism right across europe or populace rhetoric as you mentioned, by the movement in italy and so on and so forth. I think the market is now going to begin to focus on december 4th referendum in italy for reform of the upper house there. A negative result and its looking very finely balanced at the moment would clearly be negative for markets. But its much more important to consider the fundamentals. What are the companies themselves actually saying by and large, commentary is positive. Q3 reporting season has been strong. 38 of European Companies have exceeded expectations by 5 or more. Go ahead. And also valuations are supported as well. If you look at adjusted measure of valuation support for equity markets. You would say be long equities . What are your main trading strategies at the moment or investing strategy . As an Equity Investor i think were always biassed to see the outlook for equities than other asset classes. Theres a lot of commentators out there calling for a fall in bond prices and increase in yields. We would suggest thats not negative for equity markets. Equity markets generally trade positively when we are in a period of tightening u. S. Monetary policy. So the overall framework as we would perceive it is positive. Are you encouraged by the gains were seeing in u. S. Financials a lot of it down to the Rate Adjustment were seeing but hopes that donald trump may have some deregulation that could be more favorable to bank. By extension, yes, it is an environment where regulation is becoming less severe which should allow banks to increase their return on equity which is quite clearly essential for their valuation. But the move in bond yields is definitely positive for european banks as well. It allows them to earn higher what we call net interest margins which is basically the spread between lending and borrowing for banks. So that environment if it were to continue should suggest earnings upside for the financial industry. All right. Thank you so much for joining us this morning. Thats john baker European Fund manager at jpmorgan asset management. Were going to bring you up to speed coming from the German Foreign minister about turkey. Hes citing increased concern about mass arrests and treatment of the media in turkey. This comes as additional fears over an increased power grab for the turkish government. The government is saying were trying to improve relations with turkey in a against breaking off talks with turkey as well. Still very curious to see how the u. S. Now plays International Foreign relations card and how trump manages to garner these relationships with the turks, the kurds, the iraqis. We heard so little because during the campaign, during the debate so much focus on the domestic picture. By all means, get involved. Good morning, everybody. You can find us on email. The address is streetsignseuropeastreetsignse e streetsignseurope cnbc. Com. Lets get out to carolin. We have more coming up from the u. B. S european conference. Well be talking about how the Trump Victory might impact the italian refer rern dum. We have Lorenzo Codogno waiting in the wings. Well be back in a few. Cod. Hi, everybody, welcome back. Youre watching street signs here on cnbc. Italian bond yields hit a one year high after the Prime Minister gave his biggest hint yet that hell step down if he loses next months referendum on constitutional reforms. Asked in a radio interview what he would do should a no vote prevail he said if i have to stay on in parliament and do what everyone else has done before me thats to scrape by and float there that doesnt suit me at all. Carolin is at the ubs conference in london. A lot of people are to concussion on italy and what happens if its a no vote. Reporter yeah. A lot of people say this is the big next risk event for europe. Were joined by cod vislorenzaoo visiting professve professor. The Immediate Reaction that we have seen is that in northern italy the far right movement is actually taking a stance and some local alliances with the Italian Communist Party collapsed. And that could be the only thing is who is the underdog. The Prime Minister is isolated. He looks like hes fighting this battle alone and he might be perceived as the kind of the antiestablishment person oddly enough and so you never know. I think its very difficult to predict the outcome. Reporter thats a real interesting point who is the establishment or who is antiestablishment at this point. Weve seen widening in bond spread they wideened to 180 basis points because theres so much nervousness around this italian referendum. It could be considered as the next shoe to drop after brexit now the italian referendum. You think those fears are overdone. Why . I think they are overdone. I think, you know, i think the markets are not concerned just about the political situation. The market is concerned because of still relatively poor economic performance. The Bank Situation which is very good and the political situation. As for the political situation its not severe enough to justify these concerns keeping in mind they take risks basically in early elections, prolonged. Built. These are really very small probability events. Im a bit more concerned about the banking situation which might be, again, a situation that might actually justify some jittery in the market. But maybe for, not for this reason, for the elections, for the referendum but for the Banking Sector which is something thats not going to be addressed immediately. I think once the referendum is out of the way, then banks will start, you know, announcing capital increases and then well, you know, be a key moment for italy. Reporter weve seen successful debt to equities that was announced yesterday. What else do the banks need to do to regain confidence . Its a very difficult question, i think. They are stuck in a sense that theres a lot of regulatory pressure and regulators and ecb is forcing banks to recapitalize themselves in a very tight time frame and at the same time clean up their balance sheet. They are trying to do that and i think its working in a number of, you know, banks and, indeed, they are very much focused on long capacity. If the capital increased combined with disposal of nonperforming loans is a successful story then i think most problems for the italian Banking Sector will disappear. Reporter lets come back to politics. What if we get a no vote and the polls are too close to call and no one wants to second call. They were wrong with brexit, they were wrong with trump. What happens . I think if the no wins theres a very high chance the Prime Minister will resign. It would be a vote doesnt cost much to him because the president would reappoint him immediately because hes a leader of the major party. So he would have a chance to reform another government which would be effectively very similar to the current one. However, the risk is that some centrist party would no longer support him and if thats the case theres no chance, no other chance but a grand coalition which effectively means buscolinis party back in power. I think we get to Something Like 98, 95 probability. Extreme case is. Built is very low. Do they have a viable alternative to renzi . Is there another figure that could replace renzi . In case we get similar, a government similar to the one we have now with a majority almost by default renzi would be the Prime Minister. If we go for a grand coalition renzi would not be Prime Minister. In that case we would have a weak institutional figure leading the country for about 18 months between now and the next general elections and with limited mandates say passing the budget and reform. Thank you so much. Really appreciate it. Lorenzao codogno. We have more coverage coming up from the ubs european conference. Well be back you in half an hour. Sounds good for now. Thank you. And on to corporate news. We got quite a lot going on. Were looking at shares of nokia because they have been sinking after the Company Forecast that its Network Market would fall by 2 next year. Updating on its 2017 outlook it said it expects operating margins in the range of 8 to 10 with sales declining. Now addressing fears nokia is in a similar situation to rivaler i canso er i er ier rickson. Host europe is one of europes largest independent web hosting service. Its expected to be valued around 1. 7 billion euros. Other bidders are go daddy, United Internet and center bridge. Vodafone reported an earning with a rise. Growth was boost bad pick up in italy and germany. However the british narrowed its expectations. Foods fell due to weak grocery sales. Its maintained its full year expectations and expecting sales to grow by 2 to 4 during the second half of the year. And Land Securities have reported a loss. The uk Property Company says demand for office space in london is hesitant with vacancy rates on the rise. Speaking to cnbc earlier, robert knoll was asked how difficult was it to sell in the current market . The market is fairly liquid. The point our sales last year we were using very buoyant Market Conditions to sell secondary assets. And insue late us from market turbulence. So were sitting here really very relaxed about the position we sit in and on that move well be going back into the market to reinvest. Now easy jets profits dropping by 28 . The british low cost airline blamed currency headwinds amaid postbrexit. Facebook and google made moves to spread Accurate Information online over concern over fake news site. Google is working on a policy to restrict ads on fake news sites. A facebook spokesman said the Company Updated its ad policy to add fake news site. 13 f filings David Einhorn reduced its stake in apple and General Motors and bought a stake in u. S. Steel. It still remains green lights position. Warren buffett berkshituber hathaway revealed substantial stakes in airlines. Reporter interesting news out of Berkshire Hathaway where investors possibly Warren Buffett himself or one of his stock picking new lieutenants loaded up on Airline Stocks. Starting with united airlines. Berkshire bought delta and american bought a position in southwest after the quarter ended. Buffett would not explain the reasoning behind these moves. Elsewhere in todays filings david tepper was on a buying spree purchasing over 4 million shares of bank of america. He bought 2. 5 spider puts. He hasnt returned my message to try to figure it out. Like buffett he bought delta also but sold 3 million shares of southwest leaving just a stub position in that airline per hind. The big investor activity in financials is all over the shop. Even as david tepper bought, druggenmiller also bought bank of america. Fairholme sold shares of bank of america. Back to you. So it is interesting were seeing the shift. I have to say looking back he was joking back in 2003 he set up a phone line where he had an urge to buy Airline Stocks he would say iman airoholic. When you talk about investors. 1989 the industry has changed dramatically since then. Warren buffett isnt the only one who used to say stay clear of airlines. But when you look at the changes that these airlines have gone through, many people expecting oil to stay relatively low for longer. I wonder about the dollar trade whether or not that will buflt tourism when you think about on the reverse side the pain the uk airlines are going through. That they are not going to continue to move lower ploy. United, american airlines, delta and southwest authors the four that he just recently bought. Stocks certainly liked it. Elsewhere japan is planning to lower taxes for Small Businesses that hike wages in hopes that higher wages will spur economic growth. Lets get out for more from the nikkei. Reporter japans finance minister is in discussions to give larger tax breaks to companies that hike wages and the finance minister is supposed to make an announcement on wednesday. A rare move of the minister to announce anything ahead of the council. The announcement is aimed to show the governments strong will to get businesses to boost wages. Now the socalled wage hike tax cut was introduced three years ago and regardless of size that raises wages from the year before will be allowed to deduct 10 of total wage hikes. This time the government is aiming to double the rate of Tax Deduction from 10 20 of the total wage hike just to mid and small size companies. In fiscal 0 20e 14, 68 how businesses applied for the tax cut. The government is hoping greater tax breaks will make it easier for maul Business Owners to reflect improved earnings. Prime minister abe has been urging to wage raises but wean with the tax break it may not be so easy since more businesses are faced with falling revenues this year. Thats all from the nikkei. Back to you. So still much to come on street signs. Keep in touch with us and get us on the world market. Well be back with more on the other side of the break. Well be talking about u. S. Election. Well head out the saudi and back out to the ubs conference as well. See you in a second. Good morning and welcome back to street signs. Hi, everybody. Your headlines this morning. Oil stocks and utilities lift equities in europe as crude prices rebound. Plus banks drag in early trade shrugging off the rally stateside. Erics