francine: central banks hold fire. the fed skips the hike believes june on the table. the bank of japan holds up extra stimulus. deutsche bank beats, shares jumping. the ceo cuts costs. upwardly mobile. facebook tops estimates; zuckerberg pushes for more control. ♪ francine: welcome to "the pulse," live from london.

let's quickly check on the markets. we have the boj not doing much, and you can argue it was a lot more hawkish. this was taken tin stride by the markets, yen higher, brent crude above $47, something we touched yesterday, a level we haven't seen since september. this is the picture for deutsche bank, gaining 3.3%. wet me just take off with -- seem to be putting a member on what the scandal cost. first, let's get to the bloomberg first word news with nejra cehic. nejra: thanks. the yen has surged after the bank of japan maintained its record stimulus. more than half the economists in a survey predicted action for the central bank. meanwhile, japan's core consumer price index rose the most since april, 2013 after difficulties in breaking free of deflation.

the federal reserve skips an interest rate hike, but left the door open for action in june. fomc omittedt, the previous language that "global economic and financial developments continue to pose risks," instead saying officials will closely monitor the situation. facebook has soared in extended trading after sales and profits beat estimates, after it spent more to advertise its videos on the social network's made mobile app. , creating a new class of stoxx subject to shareholder approval that will help mark zuckerberg maintain control. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . francine? francine: thank you so much. we've been trying to figure out

what has been going on in the world of earnings, and coming up, we have an exclusive interview with the ceo of electrolux. today, andrew wilson great toman sachs, have you. a simple question. we've that having to figure out what is correlated. i have this charge made, that shows the s&p, and the earnings per share, and earnings per share. i still can't figure out -- these markets, are they german by profit, or are they driven solely by central-bank action? >> it's really a bit of both. central-bank action has been at the forefront, and we have come to rely on central-bank policy. the reactions overnight from the boj show how much markets are focused. some of that is also driven by the fact that the outlook or

global growth is definitely softening. compound those things together, and it makes it tough to forecast greater earnings from a company perspective. francine: two big central banks hellfire, but you can read into fire, andks helbanks held then you could see as lily were hawkish federal reserve. >> we would view it more of a tweak. they kept the door open for june hike, but that has gone up. they soften the language around the global environment but highlighted the domestic weakness. gdp this afternoon, the expectation is it will be relatively soft, somewhere around .6% for the quarter. an acknowledgment by the fed that the u.s. is strong, and i think they have kept their options open, but the likelihood of a june hike remains around 20%. we think that seems a pretty fair assessment.

francine: what does gdp surprise on the upside? is the june rate hike really back on the table? i think a lot of people are going through the numbers -- more important is the labor market. next friday, we have payrolls again, so if we saw payroll numbers continue to strengthen, and importantly wage numbers picking up, that would give the fed some pause for thought. that is what we need to see to give the fed to move. it looks likely that you won't be off the table. francine: going back to the chart, we have a lot of earnings. a lot of the industries have been beating expectations, but it is on cost cuts. they have been cutting expenses, tightening the belt. when do we see them starting to be more confident about the future, spending? >> it's what you need to say, right? topline growth, and that is not

what we're seeing. that comes with economic outlook any improvement of that soft q1 gdp number. you understand why people can afford to wait; there is no need to move faster. i don't know if the u.s. election is playing a part, but there is also that on the horizon. ita way, being rewarded for impatience is what they are doing. francine: what dcs the biggest risk? we talked about liquidity and markets before. one of the challenges you face, away from monetary policy -- i think it's probably the biggest risk out there, that either pboc for the fed or the ecb messes up. , they get if rates are a challenge from an investment point of view. that remains a key challenge, the growth story. just how sustainable is this chinese growth? we saw jpm 6.7% year on year, but the sequential number dropped to 6%, and there remains a big concern that is there a

sustainable growth rate? is this being fueled by further expansion of credit? that could be fine for another month, but sooner or later, some of those issues are going to have to result. francine: right, but we understand that authorities are managing. it's credit that we worried about. the most is the bubbles being created by cheap china lending. it isbt, as long as managed by local authorities and managed ok, could just keep on rolling for years if not decades. >> it can keep rolling, but debt levels are increasing. it,e's was to say that is but just a conscious that the debt in china is very high and sooner or later it will have to be paid off or worked out. it's slowing at the same time debt is expanding; that's not a sustainable situation. that is what we are focused on, and that is what markets have

concerns about. francine: everywhere i see, i see risks. if you're chair yellen, why would you hike this year at all? >> there are certainly a lot of risks, and maybe that is always the case. to write, there is nowhere -- you're right, there's no urgency at the moment. if you look across the u.s. economy, clearly we were soft and q1, but the one area remains the labor market -- as we come further below the unemployment rate, which i think most people you start towhere see wage rate increase, and historically that is true, the further we get below that, the more nervous people will be. there may be softness in other parts of the world, but at the labor market is tight, wage markets picking up -- i think that remains the central issue. francine: so this is what wage increases we are looking for? thefed is waiting to see white eyes of inflation? >> i think it's likely to come

through wages. oil prices have also increased, so inflation has been held down because of low energy prices. it'll take a while for that defeat through in terms of gasoline prices, but for the second half and last quarter, we may see headline inflation start to pick up. you could get that combination of higher wages, increase in headline inflation, and suddenly people could be talking about the fed being behind the curtain. francine: thank you so much. we will come back and talk about oil and negative rates. he stays with us. breaking news out of vw. as promised, we understood that they were going to put a figure on the scandal, and as soon as -- coming out now, volkswagen targets about 10 million deliveries this year. we're seeing matthias mueller speaking. they have updated on the recall; this is the first carmaker are

we heard about cheating emissions scandal's, and they're saying the recalls of the audi brand are making progress. they still have a good bit of work ahead of them, but so far, it seems like everything is pretty much in line with expectations. imf we have a share price for vw -- it is down a touch. including as up, deutsche bank reports. we will to get to the winners and losers so far from europe's banking sector. and counting the cost of the scandal. shareholders. zuckerberg sees good news ahead. will analyze the newsfeed. ♪

francine: welcome back. let's get to the bloomberg business flash with nejra cehic. nejra: thanks conferencing. first quarter profits beat analyst estimates as they capitalized on a lull in apple products. also announced a

share buyback worth $1.8 billion. deutsche bank has posted a first-quarter profit, defying analysts who predicted almost half a billion euro loss. net income was 214 million euros this period, still down 61% from the year earlier amid a slump in trading revenue. the executive officer is shrinking europe's biggest investment bank, slating to cut 9000 jobs, offload risky assets, and scrap dividends to restore market confidence. britain's biggest mortgage lender said pretax profit was 2.0 5 billion pounds, exceeding the 2 billion pounds expected. the chief executive officer has pressure to intensify cost-cutting and that concerns over slowing economic growth in the u.k. a 23% group reported decline in first-quarter earnings this morning as an

engine glitch and supply issues delayed handover. shares traded lower this morning. the ceo said the setback shouldn't affect their goal of delivering 750 aircrafts this year, or its forecast for earnings matching last year's level. that's the bloomberg business flash. francine: thanks so much. the boj governor, haruhiko kuroda, says they are doing nothing. economists forecast it's an insteadoday, but they opted to take time to assess the impact of negative rates. stocks tumbled in tokyo. let's get more with andrew wilson from goldman sachs. andrew, i was reading through what happened -- i wasn't sure whether i should read it as hit capitulating and saying, well, i need to understand the effects, or his backing out completely, saying may be negative rates

were a mistake. >> i think it's a short time from a central banker's point of view. certainly they disappointed the markets; you can tell that by the stocks. the markets were certainly expecting something, and i think their disappointment is reflected in the market reaction. it does take time for these actions to start working, and during the press conference, he highlighted the fact that lending rates have come down, which is true, but there hasn't been much going on. it will take time for policy actions. it was also disappointed because there had been some speculation about reducing the rates of lending to banks, which he said was not discussed -- francine: that would have been away -- i got a chart, thirty-year jgb in red. credit was negative. >> and look at the scale.

it's quite incredible. the question -- is it really going to work in terms of generating lending, not working? inflation numbers out were much softer than expected, back for where they were three years ago when he started this policy action. there is concern that this pretty aggressive policy in place is not doing the job in terms of generating growth, in terms of getting inflation up, and that is why the market is pushing. we saw what happened to bank stops when they went negative, and the idea of some form of public lending trying to offset that. in the end, they did nothing. our viewers will have to move, probably by q3. we had a 20roda --

minute interview the day before parliament. he said it wasn't discussed. the next day he goes negative. how much does he not want to be in the hole chair yellen is? >> i think there's an element of that. he likes the surprise; there is a lot of expectation. maybe he could come up with something that is a surprise to markets, that we will have to wait and see. the underlying problem is that there isn't a problem in the parliament. he said it wasn't discussed. the next day he goes negative. how much does he not want toecot picked up. francine: andrew, thank you so much. andrew wilson. let's get on to electrolux. they have reported first-quarter profits beating analyst estimates. the company abandoned its $3.5 billion plan to buy general electric's household goods business. -- he joins us on the phone from stockholm. thank you so much for joining

us. you had a little bit of weakness in the housing in the u.s., and yet you are confident about for your growth. how will you offset the weakness he saw in the u.s.? of market bonds grow by 8% in the first quarter in north america. we do expect that to week in a bit for the remainder of the year, but we still see some nice growth numbers for the remainder of the year. francine: you're, as we were saying, a great bellwether, trying to understand global growth, what households are more confident. talk to me about latin america. is there any end in sight? especially in brazil? we havenk in brazil seen demand is down by about 20% in the first quarter. currency is still very unfavorable, although it strengthened that against the dollar toward the end. we want this market environment to continue for 2016.

francine: and what about europe? >> europe, we see good consumer demand. we are taking share and growing market. i think consumer confidence is good, and unemployment is going down, interest rates are low. it's a good environment to launch innovative products in the kitchen and in our laundry areas. francine: talk to me quickly about margins. you were successful in increasing margins. can you do the same in the u.s.? >> yeah. think it's driven by launching i thinkve products, and we have a really good line of that will help consumers get more out of their cookie experience, more out of their laundry. yeah, we are confident that we will continue to improve by launching innovative products. francine: talk to me about acquisitions. there was disappointed for the company -- the suffering of the

deal with ge, disappointed shareholders. are you looking at buying something else? >> yeah. we were disappointed by the gene a deal, but we came out of that with a strong balance sheet, and a good operating performance. we're looking at a number of m&a opportunities, and it's very difficult to call out when that will happen, but it is something we are working on. francine: how much firepower did you have? and is there a specific region you want to target, within or to acquisition? >> we do have little bit of firepower on a balance sheet. the main focuses of our professional areas, where we have a very well-run operation where we can grow that in some categories and regions. in someill interested emerging markets, where we have

less presence. africa, asia, so one. francine: jonas said nielsen, thank you for joining us. -- jonas samuelsson, thank you for joining us. congratulations on your performance today. yesterday, u.k. industrial production shrank, an gdpd growth slowed. that's one risk -- if you put that aside, you can clearly see from the electronic ceo that he is confident he has the firepower to do more m&a, and that is something they are actively seeking. let's talk about ceo confidence and the rest of the economy. andrew wilson from goldman sachs asset management is still with us. andrew, we just look to the electrolux ceo, and he seemed more confident. he has only been in charge since january, but he seemed confident, and said it was

important to go through acquisitions. the caps on seeing -- when will we see ceos actively seeking m&a, not because of valuations are tax aversions, but because they are confident? >> that the holy grail, right? what do central banks need to d? some see it as giving the economy more clarity, notwithstanding the fact that q1 looks pretty soft. for us, it looks like a 2% growth rate. historically, that isn't very exciting, but we are seeing them unemployment come down. we are coming toward the end of april, but not very long ago we were talking about whether the u.s. is going into recession. it is worth bearing in mind that it has been a tough start to the year. we seem to be getting over those concerns, and it looks like there will be a lot more clarity around u.s. growth. we have got the support from ecb in the form of kiwi. -- of qe.

i think ceos are not being rewarded for being bold, and they are showing impatience. once we get them clarity around the growth picture, there will be improvement. there just has to be confidence that we have a stable growth rate, around 3%. that will be enough to get ceos to start acting. francine: what kind of world do we have? the normal cycle, you could argue because of all this monetary policy and the subzero world, you can leave that. at some point, we'll have to see central banks normalizing. they put so much out there, and equities have gone up by so much, that at some point we will be back to square one. inly, the prospect of a recession today, is quite a scary one because central banks don't have a lot of firepower to deal with the downturn.

we think we have another couple years of moderate growth and a good number before we need to worry about recession. i think there's a good chance we see some improvement in the emerging markets. we have seen a big adjustment in many currencies that provide some sort of boost. oil we touched on briefly. it is now more stable; many of those emerging markets rely heavily on oil exports. i think the conditions are in place for a reasonable outlook rather than one of lean times. that comes back to is that providing enough comfort? ceo saying, i need to invest and grow? atncine: brent at $47, wti $45 -- are we at a range? u.s.,ale producers in the they can turn off the tap at $50. >> i think we are down in a more stable trading range.

the bulk is pretty high. if the price goes up, the share prices will come online quite quickly. i think it is reassuring to see that we have maintained these levels. for us, it was always a supply demand imbalance, and there is some dividend to suggest that supply is earning to run off. if we saw inventory come down, maybe that even puts us a slight leg up. francine: andrew, thank you so much for coming on today. andrew wilson from goldman sachs. we have a lot of earnings coming out. we are just getting some like a lot- it looks of the chinese companies are reporting that first-quarter net income is pretty much in line with what icbc also came out with last year. e'll convert that to dollars so it makes more sense, but it seems pretty much in line. states, first-quarter total

revenue on the screen, in line. there is was saying, no outcry of anything bad happening in china at the moment. up next, we talked germany and deutsche bank earnings. ♪

♪ francine: welcome to "the pulse." life from bloomberg's european headquarters in london. i am francine lacqua. let's get to bloomberg's first word news with nejra cehic. nejra: bank of japan retained its -- maintained its record stimulus. japan's for consumer price index sunk by the most since april 2013. states, the federal reserve skipped the interest rate hike but left the door open for

action in june. economic andlobal financial developments continue officialssks, instead will closely monitor the world's situation. facebook has soared in extended trading. business spend more to advertise. 52%. quarter revenue grew facebook is creating a new class of stocks that will help ceo mark zuckerberg maintain control. global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . francine. francine: nejra cehic with the top news on markets. mark barton with your check. mark: disappointing about the boj today. over half of them expected some sort of policy from the japanese

central bank. the boj deciding to sit on his hands after implementing negative interest rates. consequently we are seeing stocks fall. this resources the only industry group that is rising on the stoxx 600 which is down. it is 1.25% lower. it is a day dominated by earnings. first i want to talk about the yen. this is how the yen is faring after the boj disappointment. we have data from japan for the boj which shows inflation sank in march by the most in three years. the boj is no closer to achieving its inflation mandate. it pushed back its inflation goal for the fourth time in the last year. all of these major currencies are falling against the japanese yen.

the best performer is the new zealand dollar. it is down by 1.4%. busy week for bank earnings continue. deutsche bank hosted a surprise drop it in the first quarter. legal expenses dropped its trading possesses. -- trading businesses. restoreder pressure to investor confidence. fouris how the big investment bank players have fared in 2016. performer, down by 14%. deutsche bank down by 20%. credit suisse is the worst performer, down by 30% in 2016 alone. let's finish with another lender , bbva. look at the shares.

intraday, down by 7.5%. drop in first quarter profit . lower trading revenue and currency fluctuations. also a one-time sale was not repeated. very much a day where investors are focusing on earnings and central banks. the fed did nothing, slightly more hawkish than boj. francine: i like a little more hawkish. mark barton with your acid check. -- with your asset check. predicted dish the lower expectation: difficult periods -- germany's biggest lender has fallen than its competitors. digital --is at the otto dichtl. thank you for joining us.

cryan up the scene, john has been going through a tough time. concern about their solvency. this is something, if you look at share price, it doesn't look as ugly as the data last week. -- areanks are wending winning the expectation game. investors might think you're not doing enough to cut costs. cutting costs actually does force some pain. banks are finally delivering but yes it looks like a relief. francine: this is -- i had a conversation with bill winters at standard chartered. because -- too much you cannot cut too much because you want to see how it hands out. assets is on track.

with deutsche, if you look across the operating members, they look a tad better -- operating members look a tad better. there is a bit of a relief. expectation was quite low. alsodeutsche bank, it is important to remember maybe unlike some others where the balancing act is more delicate, with deutsche bank, there was a clear need for drastic changes. they really started with a massive restructuring program which will last two or three years. this is q1 into those two or three years. it is a good start. troublesome, extraordinary in terms of better

operations. it is to start to this whole program. francine: i am going through the main points. we heard about the results and some of the -- the cfo is talking about litigation costs. there may be material -- this is not great. he wants to suppress the markets in the first quarter but watch out for the rest of the year, we may have huge costs. that is a little counterproductive? >> i think it is managing expectation. this year is going to be a right off. writeoff.be a i believe it is crucial to come out and say that are these coming. francine: do we worry about deutsche bank too much? are they going to go under? the worse case is what? that they will have to actually do losses and cut deeper?

this is not a bank that is going to go under. otto: you could argue that some of the concern are a bit too negative on deutsche bank. it doesn't sometime overlook that the bank does have some strong and well entrenched franchises which they are not giving up on. they do have issues, i would agree they might have a solvency issue that seemed extreme to me all along. that may be a part of today's thoughts that those concerns -- is this issue related, concerns over 81 cocoa coupons. that is much more driven by annual earnings then deeper issues. the first quarter having a small profit puts deutsche bank a

little bit ahead in that respect. francine: john cryan saying he doesn't see any more issuance into cocos. cocos almost bought deutsche down. lionel: the bank was able to capitalize on some of those worries. it was back some bonds. -- it walked back some bonds. this is about capital and leverage. again, that is a big challenge. capital ratios went into reverse this quarter. it is not a great outlook for the upper capital -- for the other capital. francine: how does deutsche bank stack up? i think there is an issue that may not so well understood yet, which is the ecb is

actually does not really look at 81 cocoa's very much. the threat assessment which is supervisory review and really what matters the most basically for regulators, they do not look at 81 at the moment from a solvency perspective. that is also behind, coming from dutch bank. -- from deutsche bank. in the eurozone, there is much less of a focus by the banks on this 81 asset class. ramin: guys, thank you so much. gadfly has been having some major pleases. if you're a terminal user, just check it out. forext, facebook, the ceo

-- visio pushes for more control to investors like what they see. ♪

francine: facebook shares surging in premarket trading. that is after revenue moved past analyst expectations.

a revenue of $5.4 billion. 52% -- the big suppress was a proposal for a new class of stock. mark zuckerberg wants issued a new class of shares so that he can continue to make big bets. nejra cehic issues the very latest. this is a blockbuster set of results. nejra: this is the latest in a string of strong record results. both sales and profits on estimates out of the water. this is about the boom in mobile advertising. facebook has been giving its users videos that have been playing automatically. it is opened up instagram to more advertising. this is helped. it sent the stock surging toward a record. facebook stocks up 4% this year. it is outperforming its competitors, amazon, alphabet, netflix are all down on the year. the big news is this new class

justnvoting shares here it shares. francine: what is zuckerberg's reasoning? he wants more control so you can make the decisions that he thinks will work. francine: -- nejra: that is absolutely right. if this goes ahead, it will give zuckerberg more control, rather maintain the control. it will can -- it will encourage him to rent desk to remain involved in a leadership role. with the new stock structure, what he said i will be up to keep control on facebook so that we can continue to build for the long-term. this is what it is about for him. it is about the long-term. we know earlier this month, he laid out a 10 year vision. away from the main social network and apps, he is investing in more ambitious ,hat's -- ambitious bets

including virtual reality. a class that gave the founders a similar mix of company control but it freed the back risky technologies. that, --at, -- out for facebook did rise again in the first quarter while alphabet dipped. another thing he said seeing more bold moves in front of us rather than behind us. francine: never chance there. -- mary change their. dw just provided the numbers for the vw france performance last year. the carmaker is holding a press conference right now. ryan chilcote has been monitoring it all. they put a figure, but it is not

a -- recalls are going as planned. ryan: we get the vw group numbers for fourth quarter for the year. what we are getting insight into that investors will be interested in. today is the figures of the vw brand itself. volkswagen cars within the stable of the 12 brands that the volkswagen group has has been in particular -- a particular focus for investors here it it is always had pre-emissions prices, a probability problem. raising the operating profit margin to 6%. it was 2.5% in 2014. they just announced it fell in 2015 to 2%. that is because of the emissions scandal. they are selling more cars, revenue figures are doing well, but obviously this has cost them a whole lot. investors thought the number might come in sub 3%.

2% has been very upsetting. a lot of people think they could've handled the crisis better. ryan: absolutely. this has not gone very swimmingly for them. you can see that when i was at the press conference last week. they had this plan to talk about their internal probe. they had to apologize because they cannot give those results now. they are effectively saying they have been told not to do that. what you've got is in the hands of a very small group of people, most of the power of the company. the porsche family has 52% of the shares. -- the regional government you have the regional government. the porsche family has been awol since this crisis begin. porsche whoerdinand designed the beetle for hitler and then went on to make the

porsche car, his family did not contribute a whole lot did that is given -- a whole lot. that is given to labor unions in germany. .hat has upset the qataris they are pushing for more power. you have other things that -- six months ago were unimaginable, bringing consultants -- bringing in consultants to advise them. there is change. as the pain gets inflicted, we're seeing a little bit of change from the top. francine: ryan, thank you so much. that news conference still going on. we will monitor any headlines i know you will bring us. you can follow it on your terminal. -- the fed takes a slightly more hawkish tone. we break down after the break. ♪

francine: welcome back. let's get to the bloomberg is a splash with nejra cehic. nejra: samsung has hosted first quarter profits that beat analyst estimates. it penalized on -- it could capitalized on -- the firm has announced a share buyback worth

1.8 billion dollars. -- $1.8 billion. deutsche bank has posted a profit. still down 61% from the year-earlier amid a slump in trading revenue. co-ceo john cryan is shrinking europe's biggest investment bank pledging to cut 9000 jobs. strap dividends to restore market confidence. lloyds has joined the dutch make an posting -- deutsche bank and posting profits. that exceeded the two point -- the 2 billion pounds. antonio auto soria has been under pressure to intensify cost-cutting amid concerns of a slowing economic growth in the u.k.. evans group has reported a decline in first quarter earnings as an engine blitz

stalls.- engine glitch shares trading lower this morning. tom and his says the setback should not affect airbus's goal of delivering aircraft this morning. that is the bloomberg business flash. francine. francine: the fed left rates unchanged and gave little additional guidance for the u.s. rate policy. economic development -- officials will closely monitor the world situation. that of course has an impact on credit in the middle east. manus cranny is in the -- manus cranny is in abu dhabi. what are you seeing? manus: we saw in that credit story, abu dhabi issued $5 million of bonds. treasuries,

likewise here in the region, we've got money flowing in to the regional bonds. they are making record after record. storynks and the credit is really what is driving. if you think of the bond market down here, they've got some pretty good -- we're hitting records, $62.5 billion. that is a sign of the abu dhabi benchmark. let's look at the bloomberg bond index. youcredit side, if i told you got the .5% in dubai, that would give you a little bit of a soupcon. francine: there have been some interesting movements in the bond market. is there any correlation and oil? -- correlation with oil? manus: the dollar is a little bit lower. --had the run-up to do half

run-up to doja. the equity story a little bit of a short come. look in the banks. we are back in bund territory. we are up 20%. overnight it was all about the banks. the government with join cash. that seems to have slowed down in terms of the bank story. oil is the underlying tenant for everybody in the region. deposits are down. the government has been putting cash into the banks but that seems to have sold -- seems to have slowed. from a glorious sunshine of the dobby. i hope your desk sunshine of i would dobby -- sunshine of i would dobby. francine: i expect everyone to be up bright and early. bloomberg surveillance is up

next. ofonversation with the ceo blackrock. that is a great conversation that we are looking for two. -- looking forward to. ♪

francine: this is what we are seeing on the markets today. central banks hold fire. the fed skips a hike but leaves june on the table. deutsche bank beats shares, posting surprise profit. the ceo cuts costs. upwardly mobile. facebook tops estimates; zuckerberg pushes for more control and investors like with a seat. this is bloomberg "surveillance." tom keene is off. vonnie, we have a great day.