welcome to "worldwide exchange." we're watching, of course, some relief in spain services sector, pmi, march contracts for the ninth straight month. this ahead of a key auction debt this morning. investors waiting for the ecb to see if it is planning a an exit strategy from the prices fighting mode after the fed dampens hopes of further stimulus.

and talking tough on financial reform. he says the way to boost private financing is to break up the monotony held by china's state-run banks. and in the u.s., the focus shifts to the job market as today's adp report is expected to show another strong month of hiring in the private sector. welcome to the program. with christine tan, i'm ross westgate. eurozone pmi 49.2, better than the expected figure, 48.7. it's still in contractionry territory. the february services pmi was 48.8, so it's a bounce up from that. it was interesting to look at some of the breakdowns we had earlier. the spanish services pmi 46.3, which is a lot better than the

expected 40.42. the point is, though, it is the ninth month of contraction. but it -- the point i suppose is it's better than expected. euro/dollar is down on the session 1.3181, the session is at one-week highs today. let's get reaction to what's going on with the euro zone. joining us for the first hour is the chief investment officer at capital. between what the pmis are telling us for the eurozone, and between the uk and u.s., as well. what are investors to do with the growth story in europe bearing in mind the banking sector?

it's very hard, recession contraction about .5% across the heart of the eurozone, but they have in essence changed the story around. you know, if liquidity was a handicap to growth elevated. and the investors' confidence still remains very low and the business confidence is improving in some areas still quite weak. areless pessimistic than the worst expectations, which is very good news. having a real economy impact down the line. and hopefully this is a continuation of the trend. the worst expectation might turn out to be a threat across the board for the eurozone, that means there are huge differences between the eurozone with france and germany and others still contracting quite badly. so we looked at spain and we know that this year's going to be quite the year, almost 3% contraction, the spanish economy

for this year and given the austerity program that is on the table that means there's more contraction in store for next year, as well. >> yeah. we'll get on to that. good to have you on. if you have questions, e-mail cnbc.com. 3.5 billion worth of bonds auctioning up today across three issues. this is after yesterday. they raised the debt to gdp forecast for the end of 2012. we'll get into that, let's recap what's happened in the session today in your part of the world? >> as you can see, not a good picture here in asia for a wednesday. we had the fed minutes, we're signaling the fed stimulus, and that drove profit-taking across the region. nikkei falling drastically, 2.3% below the key 10,000 level, we have a stronger yen, which spiked to a three-week high against the dollar. that triggered profit taking among some of the exporters, topix is up 1.8%. we have the shipbuilders and the

builders declining as a result. the australian market managing to recover a little bit to end flat. the market was hit earlier by trade data, weaker than expected trade data. trade deficit while many economists were expecting a surplus. the australian dollar fell. trading a bit to the upside and sensex down 1%. closed for the festival. we also had comments by wen. that's going to be interesting when the markets open to see how the greater china markets are going to react, ross. >> one hour into trade in europe, you can see we are dominated by red. there are only some 36 stocks at the moment in positive territory. after losses yesterday for the ftse 100 were down on the session low with losses against the rest of the imports. dax down, cac down, nearly 1.5%

for dax, cac down 1%, ibex, 1%, as well. we've got this $3.5 billion in three issues for spain. the yield's back up over 5.52%, we'll keep our eyes on that, the yield's been up 55 basis points notwithstanding today's move since the end of february. and this is -- but the good news for spain and auctions is after today, 50% of the total issuance. and two, four, and six-year will be the bonds we get. we've got services pmi coming out of the uk in under half an hour this morning. we're waiting on the pmis this week have come in better than expected on the manufacturing and construction, as well. the dollar index i talked about. this is up at a one-week high, euro/dollar is being pushed down to the lows for the last week and a half, 1.3177 is where we

stand, dollar/yen 82 at the moment. the aussie dollar weakening, 480 million, a big trade deficit, but we're expecting a surplus. sterling, we're over 1.60 yesterday, back below $1.58. we'll look at the services pmi number. coming up on today's show, just a little tease of what's up on the day. one man claims to have the award-winning contingency plan for a breakup of the eurozone. we'll ask what a world without the euro will look like. now the king of fast food is dusting off his crown to go public again. but one buyer is getting the royal treatment. we'll get the details later. and numerous tornadoes rip through texas as the dallas suburb faces damage. plenty of things to go through today, ross. >> absolutely. and ecb today is meeting. they're going to leave interest rates unchanged at 1%.

pressure's already mounting to reveal an exit strategy. and spain's ability to avoid an emergency bailout. sylvia has the latest in frankfurt. the real focus as we look at the increase to debt gdp forecast for the end of 2012, i suppose that the question here is whether the ecb sort of switches its policy settings from in history it set policy for a weak germany. whether it can set policy more for the weak peripheral. >> reporter: well, the bottom line is i think at the moment, the ecb's not going to finish anything. i think the markets might not like to hear that, but the ball is firmly in the court somewhere else. brussels, berlin, paris, amsterdam, the ecb has flushed the money markets with cheap money two three, $1 trillion. money into the market. not to mention the other

nonthree-year ltros and the standard procedures. the eurozone money market is a wash with money. lowered interest rates twice, we've still got a bond purchasing program that's dormant but could be reactivated. we've got a covered bond purchasing program, the ecb's done for the time being. of course, talking about exit strategies is premature, probably foolish, but i think that's more of a political backstop position for the bank that have to make their voice heard and say, yes, but we will have to have an exit strategy early enough. we will have to find out how to basically haul in, how to rein in this extra money that is more speak than do. and for the time being, we have to wait how these two ltros really filter through if at all to anything like the real economy. we know the first one was basically aimed at sort of unclogging the dysfunctional

money market that has worked to some extent. the second one was more or less designed to make sure that the banks are confident enough now to start lending money to the real economy. phase two has clearly not happened yet, but it's early days. we shouldn't knock it on the head yet because it takes some time before these kind of things, he said last time around at the press conference, they hadn't got enough data to see how the first ltro landed. give it time, it's something markets don't like to hear, but i think at the moment, ecb's done their job. further easing is not going to be the game-changer even if they give us another rate cut, which will probably come somewhere down the pike, but not just yet. at the moment for the ecbs, we've done our job, now you carry on and do yours. with a bit of luck it'll swing into action sometime this summer. >> stay with us, sylvia. we'll also concentrate what's going on in spain.

as i said, they're selling 3.5 billion euros of debt. we'll get the results around 40 minutes later. they have completed nearly half of the 2012 funding requirements. madrid has pushed forward issuance plans. the ecb's ltros. portugal will sell 11:30 cet, and falling yield compared to previous auctions. the european economist at rbs joins us for more. silvio, i've seen this flash from smp suggesting europe will be out of recession by late 2012. which suggests they'll be in recession for this quarter and the next one at least. >> yes, well, we pretty much agree with this reading of this type. though, there are substantial downsides. our mainland scenario.

the recession is a done deal and at the moment we could see basically flat growth in the second quarter of the year followed by very, very modest recovery. i think the main risks are related to fiscal consolidation and probably also will be tougher in france post elections and renewed that we expect in the second quarter. but for the region as a whole, we hope that growth could turn positive in the second half of the year. >> yeah. let's just look at that. because the spanish forecast that they're implementing. they announced their budget, the debt to gdp ratio is going to raise from 68.5 at the end of 2011 to just under 80%. >> yes. yes. that's obviously a very worrying dynamic. i think the market recognized the fact that the peak debt to gdp ratio remains relatively to

the countries. if you look at the debt the last few years, spain has probably experienced one of the sharpest one. which is basically what's important from a fiscal responsibility perspective. where is debt going? now in the growth, the growth dimension is going to be the most challenging item for spain certainly. and also for many countries, including portugal. the risk here is that we will see -- it was clear in greece whereby basically the downside on growth makes your budgetary limitation substantially tougher than you would have anticipated. and i think for spain, it's a very, very substantial reason we expect it to materialize. >> silvio, the fact that europe is not basically a two-speed train really. you've got france and germany doing extremely well on a

relative basis and absolute basis, as well. and the rest struggling badly. probably would have really bad recession this year and might be lucky to come out of recession next year given all the austerity they signed up for. >> and i would also add to this, i think there are a number of dimensions which suggested also within the so-called core there are some elements of divergence and variables. the unemployment rates between germany and france, right, where say in france we've got an unemployment rate which is trending above the long-term average of the last 20 years while in germany has got completely different dynamics where you've got the lowest rate. so i think this will add some importance, certainly, about the medium term growth that also the core itself will experience within the next few years. and especially if you think that

the next french government would like to probably implement some very substantial austerity measures. >> okay. actually, his line is going to go. thank you. but i know sylvia wants to ask you a question. sylvia? >> reporter: well, we've been talking about on the one hand there are exit scenarios played by the ecb and others calling for rate cuts, has not monetary policy at the moment come to the end of its tether? >> pretty much. the ltro really was a substitute for cutting interest rates. now the ecb needs to wait to see how it fits through. we've already seen the ten-year bond yields for countries like italy have come down. .5% to 5.5%. i think we need to give it a bit more time to see the real

economic impact, to see if it eases the availability of credit within europe on the. i think cutting the interest rates by another small amount is not the big issue. the big issue is whether down the line in three or six months time we're going to have another round of ltro or not. and i think that will really depend on the market reaction to the how the austerity packages are agreed and divvied upon. keeping the confidence of the market intact and what we have seen recently is that the lead indicators for spain where the debt to gdp is rising yet again and the banking sector has been buying a lot more than the new issuance from the sovereign side is indicating the stress levels are building up in spain and i think that's where the attention is going to be focused in terms of the help coming from ecb. it doesn't need to be across the whole region. i think it needs to be directed to the member states that are likely to hit a brick wall in the second half of this year. >> all right.

for now, thank you. sylvia, we'll catch you later during the program. christine. well, in the u.s., federal reserve officials have poured cold water on the hopes of more stimulus as the minutes from last month's meeting revealed only two central bankers thought further easing could be needed. growth expectations remain, but most of the ten-member board seeing no upward revisions to gdp for the next two years. kelly evans filed this report for us. >> reporter: stocks swoon, gold collapse, and bond yields jumped after minutes from the federal reserve's latest policy meeting suggests policymakers may be less inclined to move forward with stimulus than analysts hoped. officials in their meeting on march 13th discussed positive signs in the u.s. economy, like faster job gains and an increase in real household incomes. also better conditions in financial markets in the u.s. and in europe.

they stayed committed to the highly accommodated stance of monetary policy. namely keeping interest rates to zero through late 2013. there's no real talk of another round of quantitative easing, no hopes on what a scheme might look like. and that lack of news pushed stocks to the lows of the day. the dow posting a rare triple digit loss before recovering somewhat. the ten-year u.s. bond yield rose to 2.45% to 2.16% just before minutes were released. the dollar jumped in gold. and overreaction? quite possibly for one the fed's meeting came amid worries about the climbing price of oil and gasoline. that optimism has been already tempered by renewed concern about slower growth in europe and ariel sharon kra and oil prices have somewhat stabilized. if friday's jobs report doesn't measure up, it could do another

180. the economy will first have to get worse before officials step in to make it better. just another head-spinning day on wall street. back to you guys. well, let's get to more reaction. of course these fed minutes contrast sharply to comments made by ben bernanke last week, which gave the impression another round of stimulus was around the corner. are markets reacting today? are markets overreacting, do you think? >> not necessarily. i mean, if you think about the growth trajectory in the u.s. since the start of this year has been forming the cycle has been happening the way it should be. implementing quite nicely and beginning to come down. i think most would like to see it below 8%, it's around 8.4% or so. and if you look at the consumer spending is holding up and rising just slowly. that's also a very good sign. and i think about all you can see the credit to the private sector, the consumer sector is

expanding, which is quite good from the economic standpoint. so this year, i think the economic outlook continues to be quite good for the u.s. reduces the need for more quantitative easing help given to the economy. however, we should not forget that the u.s. has yet to take any measures to think about putting its house in order in terms of the fiscal imbalances. and obviously nothing can be done before the election. and once the election is out of the way, we have to come back to see some of the programs if they are not renewed are going to take over a lot of growth from 2013. and i think it's when you start focusing on the contractionary impact of the budget reduction plans, which will be agreed after the election, the fed will have to standby and look at it and decide whether another round of quantitative easing is necessary to stop the u.s. economy to stop too slowly or going into a recession. i think it's not completely off the books right now.

it's just been postponed until after the election. >> all right. we've got a bit of news out. concerning investors. the german court has backed the night flight ban at frankfurt airport. the german court has banned flights between 2300 and 0500 so that won't please investors in either frankfurt. christine? >> interesting to know that. ross coming up next, premier wen making comments saying china needs to break up the big bank's hold on the sector before private financing can flow. is this easier said than done? analysis coming up next. ca refu

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welcome back. chinese premier wen jiabao has dubbed the chinese bank as a monopoly that need to be broken up. >> here's what some of what premier wen jiabao told the radio. he said our banks are in profit too easily. why? because a small number of large banks have a monopoly. we must allow private capital to flow into the financial sector.

wen jiabao's comments came as economic growth is dwindling to the slowest pace since the second quarter of 2009. with growth in the first quarter of this year. the official q-1 gdp figures will be released next week. as china's growth slows, it is getting increasingly harder for private companies to raise funds. state-owned banks -- to help engineering and soft lending. beijing approved financial reforms to encourage private investment in local banks. as for the premier's latest comments, there's been no market reaction since the greater china markets are closed today for the chinese holiday. back to you, christine. >> thanks for that. we'll give you action tomorrow. still to come, there's 250,000 pounds up for grabs for the best idea on how you might want to break up or how you

could break up the eurozone if necessary. we'll speak to one man who has been short listed for the prize. we'll find out his plan when we come back.

all right. this is "worldwide exchange." still feeling the pinch, spanish pmi contracts for the ninth straight month at a bond auction today. but it has risen. we've had numbers out of the uk,

again, services pmi outperforming 55.3 versus 53.8 in february. investors also nervously awaiting for the ecb to see if it is planning an exit strategy after the fed has dampened hopes of further stimulus. and premier wen jiabao talks tough on financial reform. he says the way to boost private financing is to break up the monopoly held by china's state-run banks. in the u.s., a focus shifts to the job market as today's adp report is expected to show another strong month of hiring in the private sector. it's another strong pmi number for the uk. services pmi, 55.3 beating the consensus 53.4, it's 53.8 in february. it's the highest since the second quarter of 2010. input costs for the uk services

firms have risen at the slowest pace since august 2010. so stronger business activity and slower input. because that's pretty promising for margins. and pmis signaling the uk pmi this week, gdp growth of .5% quarter on quarter, for q-1, which we started the week saying we would be in recession by the end of q-1, that forecast now looks wrong, basically. the chief investment officer at london capital. your reaction to this number. it's been a week of much stronger pmi, sterling's rising again on the back of this. also, a little warm weather, one doesn't know how much that has contributed to it. but it's a much better than we might have thought. >> absolutely. it's very good news. to start off, the warm weather has been helpful for the u.s. and uk. what we have seen is that, you know, all the fiscal reduction

plans, which have been announced in the last year, year and a half are slowly beginning to bite in and a lot of people were expecting the economy is going to be in a tough ship perhaps contracting. the fact we are projected for .5% is indeed very good news. it means that it can stay its course, you know, without giving way in terms of all of the crisis getting from a lot of the opposition saying the cuts are coming too fast and too thick. >> services firm confidence about the year ahead pretty much near february's level, which is the highest in a year. what also seems to be encouraging about the breakdown i'm reading is chris williamson from the market is saying the confidence is encouraging firms to take on more staff. that would be a very good thing, indeed. and how the uk numbers are sort of divorced themselves slightly from the eurozone numbers, is that trend sustainable? >> i think so. in a way, if you look over the last four or five years, the

trade weight of sterling has come down quite hard and improved the competitiveness. there's a long lag between the exchange rate and the import cycle. so hopefully after two years lag, you know, we're beginning to perhaps get the positive impact of having had a devaluation of around 20% on a trade weighted basis coming through on the better economic outlook. >> all right. that's the uk pmi. to recap, sterling was above 1.60 yesterday, but rebounded after selloff this morning because what the fed said back to 1.59. and there'll be a certain element here if growth is stronger of deciding that there won't be anymore qe. a bank meeting tomorrow. it'll be fascinating to keep voting for an expansion of the quantitative easing program. they've started to get back up to the session high off the pmi stronger than expected. this time the services side,

meanwhi meanwhile, the policy makers work out how to save the eurozone, others have been working out how to break it up. offering 250,000 pounds, the highest economic award outside the noble prize to those who can best articulate how to manage a breakup of the single currency. five entries have been short-listed for the prize. joining us a little bit earlier today was short-list contender nordvic, and he had this to say. >> i propose to have those type of assets redenominated into a basket of currencies so they can be settled efficiently and fairly in a full breakup scenario. >> so it's one of the five finalists. our next guest is one of the other five. he says defaults coupled with

devaluation are inevitable, even desirable. joining us is the partner and chief editor at variant perception. congratulations on sort of making it to the final five. feels like a game show, doesn't it? but it's a lot more important than that. you've concentrated a lot on in your paper currency breakups in the last hundred years. i suppose the question is how valid is it to look at those as a forecast for how we might proceed with a euro breakup? an awful lot more complex. >> well, the euro is one of a kind in the way many economists describe it. we haven't had anything quite like it. but the closest analogy would be the crown in 1919 where you had many, many different members. it's actually sort of geographically close to where the euro is. and the big difference is between the euro today and other previous currency breakups and there have been over 69 currency

breakups in the last 100 years. so you have 1919, indian/pakistan in 1997, pakistan and bangladesh in '71, and russia when it broke up. so this happens very often. the big difference, of course, is back then, you know, you didn't have electronic transfers of money very simply where it was difficult, you had to physically take your coins from a bank and try to take them to another country. and the trains of money were moving from one place to another wherever people thought they could get a better deal. now you have capital flight. but clearly the problems are not currency exits, per se. the real problem in europe is that people are aware of the fact if the -- if greece exits or if portugal exits, you would end up with de-valued -- and de-value -- a big lack of competitiveness, these currencies are overvalued and there's far too much debt that will never be taken -- >> devaluation is part of the

solution for some of the countries. my concern with any -- the problem i have with any euro break you know plan, how do you prevent catastrophic bank runs? and also, how do you solve the problems of contracts that have been based in one currency and resolving all those problems? whether it's for debt or for normal business? >> well, on the first issue of capital flight, i would argue that the horse has already bolted the barn on this one. if you look at deposits in europe, real narrow money. people have been taking their money out of greece and spain and portugal and depositing it in french, german, and swiss banks. that's clear. the dangers people are worried about have already transpired. and if you're talking about the redenomination of currency and debts, that's obviously the most complicated issue. the easiest way to look at it is to think every state should be able to denominate its own currency in whatever it wants.

and that's a legal principal. so if greece decides the currency should be the drachma, they have the right to do so. they would then be able to say that all currency and debts will be settled in drachma. the problem is that europe's very interconnected. you have cross-border debts, cross-border claims, and clearly i think what would happen it would be very much like asia in 1997 where everyone was borrowing in dollars. so you had a lot of korean companies clearly earning one domestically and borrowing in international dollars. what happened, almost all the private sector in asia went bust at the time because they had too much debt in a foreign currency. >> johnnathan, exactly precisel the point i wanted to bring up. i was covering news stories -- we saw the currency devaluation, the currency crisis, the economic crisis, how companies really collapsed, we saw how

things caved in around as foreign debt ballooned. i'm wondering, we managed to recover very quickly because we took harsh steps, could we see the same scenario if the eurozone was to break up? >> i think so. i think asia in '97, russia in 1998 where they had devaluation and default and argentina in 2002 are very good examples. clearly there's a lot of pain to be had in the short run. if you look at asia and russia, the contraction was very sharp, but lasted no more than two to four carter quarters. then asia grew from 98 all the way until 2008. so it was ten years of growth. and in all the cases of emerging markets in the last 15 years where we've seen defaults and devaluations, all these countries have achieved peak gdp level within two to three years. the real problem is the eurozone is a straight jacket and it's going to continue -- if they do

exit, it'll be a lot of pain, then they'll grow quickly again. this is what happens regularly in the world, and it seems strange that many people who think that, you know, that the euro is a good idea, you know, they would think that the gold standard, for example in the 1930s was a bad idea. they're very similar. and many countries went on to the gold standard at too high of a rate. many countries have too high of inflation. >> we covered the issue of capital flight and, you know, out of the banking sector and we have seen some precursor in what happened to greece. but we have seen hardly any capital flight in spain and italy. at the end of the day, for the currency to break up capital control, do you introduce things otherwise it doesn't work because the banking sector has to be nationalized because the deposit disappears completely? >> it would be inevitable to

have capital kro controls. previous cases of defaults and devaluations all instituted capital controls. sometimes these involve bank holidays. i think it's inevitable. it's not to say this sort of -- that it's going to be good. but it's certainly better than the alternative, which is to continue to contract and not solve the underlying problem which is too much debt and lack of competitiveness. i don't think like capital controls in general, but i think they probably would inevitable. >> do you expect the banking sector to become garment owned? >> if you look at the low sort of tangible common equity that these banks have, there's tangible value, rather. you can see that they have extreme reliance on wholesale funding and they have very little equity that exposes them to liquidity risk. >> just finally, john. what did you make of the 11-year-old dutch boy? he's already got 100 pounds with his pizza drawing of how -- this

is online on cnbc.com. if you want to find out his plan. he identified how, you know, greek people wouldn't want to exchange the u.s. for drachma because they knew that the drachma would lose value considerably. are you worried about the competition? >> i think he probably has a bright future ahead as an economist understanding the power of incentives. the competition is tough. it's quite amazing to see everyone who submitted papers and the finalists and it was a pleasure to meet them yesterday. >> good thing is now you're at least 10,000 pounds richer. >> yes, i have changes to resubmit. i imagine everyone will. so there'll be 10,000 pounds for the five finalists and then obviously the 200,000 pounds which will go to whoever wins. >> okay. do you know when we'll actually get a final? >> yes, it'll be a month later. there's a resubmission of the papers and then july 5th is the

announcement. >> we look forward to speaking to you july 5th. and congratulations to him, as well. shares of transocean, after the company along with chevron received an $11 billion lawsuit from a brazilian federal prosecutor in relation to an oil leak at chevron's offshore freight field northeast of rio de janeiro. hi, carolyn. >> reporter: hey, ross. and i do want to remind you this is actually the second lawsuit filed by the brazilian federal prosecutor in this matter in the space of only five months. now this lawsuit in particular deals with a leak that's been discovered at the beginning of march. so we're not talking about the bigger, more damaging leak that has been discovered in november. but this second lawsuit essentially doubles the stakes here in damages to $22 billion. it's a massive number. and you know analysts would agree that this number in damages, this is probably a

little bit over the top. it doesn't stand in relation to the size of the leak, which is much smaller than the one we saw in the bp oil spill more than two years ago. and they do say that the prosecutor probably is a little bit overzealous here. chevron in its response says this filing of a second lawsuit is outrageous and without merit. very quickly, i do want to touch on and give you the latest between roche and illumina. sent the second letter to shareholders after the board has rejected the increased offer of $51 a share. in its letter, once again, it urges shareholders to tender their shares and to vote for its independent director nominees at the agm in two weeks, ross? >> thanks for that, carolyn. elsewhere, international powers reject a 6 million pound move to buy a 30% stake in the company it doesn't already own.

>> it's considering all options including a possible withdrawing of its offer after it was rejected this morning by international power. gdf is offering 6 billion pounds, $9.6 billion for the remaining 30% of international power. in a statement, international powers say that the members of its independent committee concluded that the offer of 390 pounds per share undervalued the company. it also said it was legally restricted from making a full offer for the company until the 3rd of august 2012 unless it receives the backing from this independent committee according to the "financial times," they would have to raise its offer at least 15 cents a share to convince the shareholders of the company for gdf to take control of international power in february 2011 with around 17% of the company.

let's have a look at the share price of gdf suez under french market after this rejection this morning, the stock is down 1.2%, that's 18 euro, 82 per share. spanish auction results, thanks, stefan. they sold. they that had three issues, looking to raise 3.5 billion. now 17.1 million euros in 2015, and 489 in 2020. do my mind, that adds up to about 2.5 billion as opposed to 3.5 billion that we were looking for. bid to cover ratio on the three-year is 2.4, it was 5 on the last auction, on the four-year is 4.5, 2.6 at the last auction, bid-to-cover on the 6.3. have we got yields? the three-year yield 2.96. the four-year yield, 4.368, and

the yield on the six-year 5.36. so they have indeed sold less than their planned amount, 2.58 billion versus the other 3.5. but they were looking for cds spanish five-year credit default swaps are up eight basis points on the day. not helped by those auction results. they had all -- i suppose the key thing, they've nearly raised now 50% of their total planned issuance. we've seen this jump up in bond yields around 55 basis points. and these auction yields are a little bit higher than previous, as well. it seems like spanish debt has had the best of it. >> i think so. and also, i think the number that you pointed out is that the cds for spain keeps rising and that means that the investmenor are getting more nervous about owning it. we'll end up where the spanish debt will be owned by the spanish banking sector which in turn is going to repo them back

to the ecb. in essence, are we going to end up with a situation not dissimilar to greece where the ecb ends up holding a very, very large tranche of the government debt because of the outside public does not want to own it. so i think it's, again, a telltale sign of worse things are in store with regards to the spanish yield or the next six months. >> yeah. euro/dollar just dipping down to a session low right now on the back of that spanish auction. just remind you, i think the key thing here is that they stay having had some auctions where they've had tons of demand, they've sold nearly 1 billion less than the maximum planned and that's what we're reacting to, christine. >> focusing here in asia, ross. india services sector, growth dropping hitting a five-month low, of course, in march. another sign of faded optimism about the country's business environment. live from mumbai.

>> reporter: hi, thanks for that. like you mentioned, it is five months down for the pmi services data that came in around 52.3 versus 56.5 in february. remember, it's the first time that -- or it is the slowest pace of growth that we've seen in the pmi services data since october 2011 in october 2011 we had seen a contraction in the services data. so about 50 indicates it is an expansion, it has come in around 52.3, but has slowed down since the november 2011 figures. what does this mean actually for the gdp growth data? well, the gdp growth data for the fiscal, which is basically january to march is expected to be better than what we saw in the q-3 of the fiscal year or the financial year of fy '12. that means the growth is around 6.9% this time around and versus the 6.1% that we had clocked in q-3. the data is indicative of that,

remember, we did see the iip figures come out in the previous months, as well, which were quite significant. we also had the coal manufacturing data which came out at a growth of over 6% indicating the iip figures for february too will indicate a stront growth this time around. hence, the services data could be indicative of the fact that maybe we would sustain that 8% to 9% in this quarter. remember that services is a large contribution in terms of gdp growth for india hence the services or the services pmi is extremely -- the bc services, pmi is important in terms of indication of what we could expect for gdp growth. however, we have pointed eed ou that inflation continues to be quite significant and a head wind for our markets. remember, it had been a head wind for quite some time. most economists expected to average around 6.5% to 7% for the fiscal, but what does that mean for the rbi on april 17th?

it could mean they won't really act as aggressively as assumed before. that for the entire fiscal year could come down to as much as 50 to 75 basis points as opposed to what we had estimated up around 100 to 150 basis points. >> okay. all right. >> the deficit continues to be tight in the indian market. so we could expect some amount of easing on the crr front as most economists have put it. but let's see how that works out, as well. >> thank you very much for that. live from mumbai. well, not too far away, china's premier wen jiabao saying china banks made too much money. saying monopoly needs to be broken to allow private capital back into the financial markets, financial sector. wen's comments comes days after beijing said liberalization methods for the city. it's all part of trying to spur investments in local banks.

the city's success should be replicated nationally. let's get reaction to this interesting development. we're not getting reaction because the choina markets are closed. miranda, we've heard this rhetoric before. how serious is china this time about financial reform? >> well, you've got two separate things in the story. the idea that they're going to break up the major banks and break up the monopoly that the bank has is vaguely -- i mean farcical. obviously they're going to keep nipping the main line supply of finance to the economy. he was talking about small companies who are struggling to raise capital. and as a sock to the audience, he was saying they're going to allow more private capital in. so the ones strapped for cash and can't raise money from the banks can be allowed more private capital into their sector. in terms of overall reform and really opening that up, it's

very, very small scale and you're seeing some experiments. but not a sort of major shift overall. >> from what you're saying, it's kind of like a warning to the state-owned banks, because they've been criticized for not lending enough to smaller companies. if they do this, this is just a threat, do it if not, we break you up. is that what wen's trying to say? >> no, the state-owned banks have got quite a lot on their plate. they've got to fund affordable housing, fund key state projects like the railways. putting more on to them by having to lend to smes is too much. this is why they're saying to the smes who are obviously complaining. their export markets are suffering, they're suffering, they can't raise money from the banks. we'll allow private capital to help you out. the issue, you do have financial reform being pushed at various

different levels. but that's all being stopped at the moment because we're in the changeover period and nothing's happening on that. so we're going to have to wait until next year at the earliest until you actually see radical where he form, i think, in the banks. >> miranda, thank you very much for your insights. good talking to you. head of research at nsbo in france. the yen, the dollar, and the pound off the spanish auction results, the yield on the debt has gone high. we'll have more of a recap on that. we'll be in frankfurt. 

spanish yields up across the board, post the auction ten-year yield back up over. as you can see 5.56%. that's the high since early january. this is after the auction this morning. they raised about 1 billion less than the maximum planned. the yields much higher, also high, as well. so keep your eyes on this. this also dragged the euro and will have an impact on asset prices across the piece. we've got to keep our eyes on this story. this is going the wrong way. >> i think so. this shows you the nervousness that's present in the marketplace right now. i think that, you know, besides the spanish banks and the ecb,

there's no -- in the spanish debt at this time. and that's reason to get very concerned. you know, the yields could easily back a lot more from here on. i think all the attention for the next few weeks will be focused on spain and how to maintain the rise in the yield. >> we'll take a short break. still to come, jackie will join us state side. we'll also have the early calls and how this plays into the u.s. market. and the results of the portuguese debt auction, as well. we'll be right back. úp@@@@y

welcome to the program. the headlines today from around the globe. the pain in spain intensifies. ten-year spanish bond yields rise to the high since early january in response to a disappointing auction of three, four, and six-year notes. and in the u.s., the focus shifts over to the job market as today's adp report is expected to show another strong month of hiring in the private sector. and premier wen jiabao talks tough on financial reform. he says the way to boost private financing is to break up the monopoly held by china's state-run banks.

all right. welcome to the program. just joined us at state side. plenty of data in europe that is moving asset prices. the latest of which is that eurozone february retail sales down .1% on the month as forecast down 2.1% on the year. forecast to be down 1.2% on the year. and the january sales were revised. so the retail sales basically declining slightly as rising unemployment really crimping consumers' spending power. but the key bit of data that we found out in the last 15 minutes has been the results of the spanish debt auction. euro/dollar down to 1.5166. and this is on the back of basically spain. we're looking to raise a maximum plan 3.5 billion euros, raised

around 2.5 billion. and we saw yields as we thought were going to be higher across the board on the three, four, and six-year maturities. that indeed happened. i think demand was not as good as we thought it was going to be. and as a result, we've seen across the board spanish yields rise, ten-year yields in response are up at their highest since early january. and we've also seen cds spreads widen this morning. that's also brought the dow jones euro stocks the volatility surging this morning. and to date, we've got the stocks 50 down at the lowest level for two months. this is impacting european stocks overall. recap where we are as far as european borders are concerned right now. we are weaker on the session. down about seven on the ftse 100. dax, down well over 1%. ibex down three quarters.

jackie, welcome to you. how is that reading into the futures? >> good morning, ross. yeah, looks like pressure in the united states, as well. the futures are lower indicating a lower open on wall street. if the markets were to open now, the dow would be lower by 88 1/2, the nasdaq by 19, and the s&p 500 lower by just about 10. this after the u.s. markets closed lower yesterday, but well off the session lows, but the major issue yesterday impacting the markets here are those fed minutes, the latest from the fomc that qe-3 may be less likely than previously thought. ross, back over to you. let's move to the ecb discussion. outside the headquarters in frankfurt as they deliberate, whether they should be thinking about exiting from the ltro program. they won't be happy to see that spanish auction result, silvia. how do you think that will focus their minds? >> reporter: i don't think they will be happy, but i don't think

they will be surprised either. right at the moment, even when we just -- when some of the ecb council members like the germans throwing things like we have to think about an exit strategy into the ring. i think that's a just bit of a verbal backstop saying, look, guys at some stage we'll have to rein in the excess liquidity. we have to put a stop on, okay, we've had ltro number one and number two and when is number three coming? they want to put a dampen on these hopes. okay, if yields blow up, we'll see the next ltro. and that job has been more or less done. the market doesn't speculate for another one, at least not for the time being. may be later in the year, may be in autumn, but not until we really know where these -- where these trillion euros have settled and what they have done to the money market and possibly to the real economy. so at the moment, i think we are where we stand. the ecb and monetary policy have

done what they could to buy the eurozone, buy the euro group some time. and now the politicians have to get the esm on track and maybe whatever bailouts are needed in terms of bank regulation or in terms of helping the sovereigns out there that will have to come from state side so to speak and not from monetary policy because monetary policy for this stage reached more or less the end of its tether. >> all right. we'll catch you a little bit later. jackie? in the meantime, fed officials have put a damper on hopes of another round of stimulus here in the united states. minutes from last month's fed meeting revealed that only two central bankers thought more bond buying could be needed to support the economy. joining us now is our guest host for the hour and to talk about this issue is dan greenhouse, chief global strategist at btig and cnbc contributor. great to have you with us this morning.

let's talk about those minutes yesterday. not anything new out there in terms of what we're expecting from the fed. what is it that impacted that market sentiment yesterday? >> i think to oversimplify things, there was just a greater probability assumed in the market of additional round of asset purchases. and when the fed minutes came out, which said basically what you would expect more or less to have said, markets reacted negatively. if you look back over a couple of releases, you've seen similar reaction. any time they indicated they were less inclined to add more liquidity to the system, the market has in the short-term reacted negatively. but the larger point is really, really positive. what basically the minutes are reenforcing are the idea that the overly accommodative fed believes to a smaller degree that markets in the economy need additional liquidity. and that in the longer term, in the medium term is a positive for investors. >> absolutely. and some of the analysts i've

spoken to said we need to look at the fundamental picture about growth in the united states and where we're going as we move forward. it's not really about the short-term. at the same time, we can't help but worry about those short-term moves in terms of how the market trades. how do you think this will trickle into trade over the next few days? or will the markets get over this today? focus on the jobs report on friday? >> listen, the economic data's been improving for a while. the fundamental data has been improving for a while. and that's supportive of a generally improving landscape. and yesterday's data just sort of plays into that story. so there's no reason to believe there won't be additional short-term blips. in fact, btig is base-case scenario is that markets are going to trade a little sideways here. we've had an incredible rally. and going forward, investors will increasingly focus on the fundamentals which underpin higher stock prices. there are numerous head winds and the fed recognizes this, which is one reason they're not stepping back from the idea of easing further entirely. >> and some of those head winds, right, we are talking about a

jobs number, the fed coming out before and saying they were surprised at the level of the unemployment rate continuing to be so high. in terms of our expectations, do you think there is potential that we can see in this jobs report a little bit of a decrease? or we're going to kind of tread water? >> well, yes, i think expectations for last month's job numbers are certainly a little lower than they might have been in january and february, but there's -- i don't want to overly bore viewers, but there's a debate about the impact of whether on the numbers and statistically how you measure for that. i would smooth these numbers out and get a general underlying trend. whether the number is above or below consensus when it comes out on friday. a, nobody will be around the u.s. to trade on it. but even if we were, the underlying trend is one of improvement, one of better data, and that, again, is supportive of an improving economic landscape. but again, getting into the head winds as long as we're on the show. a lot of those out of europe, the federal reserve and investors remain very concerned about what's going to happen when you have elections in greece, when you have elections

in france. there's a big story in the ft today about whether monti's honeymoon is over. there's a number of things. >> certainly a big election year globally as we're looking in the markets and the united states, as well. i want to shift gears for a second because we were talking about the corporates and the success they've been seeing. we're going to kick off with alcoa next week on tuesday. what are you expecting in terms of the first quarter earnings? do we expect that trend to continue? >> well, certainly. the problem with earnings season right now is where we are in the -- well, problem is not the right word. but where we are in the cycle. you are in the period of time in which earnings growth slows, that's perfectly normal. >> it's seasonal? >> in general, we've been expanding for some time now, earnings are not going to be growing double digits overnight. so earnings has been slowing. what you hope that compensates for that is investors -- is to some degree and again to oversimplify, multiple expansion.

which you're starting to see moderately. multiples are a sign of confidence. if you feel better about the environment, you're willing to pay more for that same dollar of earnings, and that is what you've seen. the question is whether or not that continues in perpetuity. and i would argue it does not given some of the head winds we've talked about. but with respect to expectations, i expect to see earnings growth continue, albeit a slower pace of late. >> great to have you with us this morning. dan is going to stay with us and give us more of his insight. he's the chief strategist and a cnbc contributor. more to come from him. also, beside the data and the auction results out of europe, a german court has upheld a night flight ban on frankfurt airport. ambitions in the cargo space, the share price reaction when we come back.

good morning. and welcome back. time for your global markets report. let's start here in the united states. take a look at the u.s. futures. see how we're setting up for a trade on wall street. some of the pressure overseas impacting us here at home. if the markets were to open up, lower by nearly 20 and the s&p 500 lower by ten. this, of course, after a tough day for the markets yesterday.

we close lower, but well off the session lows. this after the minutes from the latest fomc meeting suggested that qe-3 may will less likely than we thought. nine of the sectors closed lower, only utilities posting a slight gain yesterday and the laggards on the dow exxon mobil, chevron, caterpillar less, as well. >> just two hours into trade here in europe, around about 40 stocks in positive territory. losses yesterday around .6%. we're over the percent for the ftse 100. what's taken us lower? it's really been the spanish -- we were a little bit lower, it's been the results of the spanish bond auction that have pushed us down to the session lows. keep eyes on this, the ten-year spanish yield 5.58%, the lowest it's been -- sorry the highest it's been on the yield i should say since our early january.

and we've seen cdss also rise this morning getting up to around sort of november highs on the spreads. the reason is we got disappointing demand, raising around 2.6 billion, the maximum is 3.5. yields are high, as well, and the auction results for three, four, and six-year auction that we got this morning. now, there was some expectation to that. there will be question marks, as well, having raised nearly 50% of their planned debt for the year, the spanish government also decide we weren't going to accept any cheeky bids this side of easter. keep that in mind as far as your concern on that. as far as the rest of the bond markets are concerned, it hasn't helped -- we got an auction out of portugal. we're going to wonder if we're going to end up in a program later. also a little high, 2.2%, really good services pmi number out today. we came in with a figure 53.3, much stronger than expected. suggests the uk has avoided a recession. ten-year bund yields lower at

1.81. it's also pushed euro/dollar lower, down session lows, a 1.31 handle. dollar/yen 82.50. the aussie dollar has weakened, as well. a trade deficit just posted this morning which pushed the aussie dollar lower. sterling not getting a lot of benefit from the pmis. we did rally above 1.59, but back down to 1.58. christine, over to you. >> well, here in asia, negative picture because, of course, the fed minutes revealing reduced chances of any sort of stimulus from the federal reserve. so markets are taking the excuse to take some profits off the table. nikkei 2.25, 9,819, down 2.3%, but stronger yen spiking to a three-week high against the dollar. also not helping the exporters driving this market. topix is down 1.8, kospi is up, shipbuilders also declining, as a result. the australian market paring in

earlier. people were expecting a trade surplus, instead it was a surprise trade deficit. that drove the dollar lower, the new zealand is up, down to the downside, 0.6%. overall, a negative picture. but bear in mind we have those comments from wen jiabao. it'll be interesting to see how they'll be reacting to those comments tomorrow. that's it for me. i'll be back tomorrow with the news. moving markets here in asia. thanks, christine. have a good evening. a german court's upheld night bans at the airport. the owner of the airport patricia's got more in frankfurt. hi, patricia. >> hi there, ross. i would call this what we're seeing collateral damage. at 3.5% because it really doesn't circle around lufthansa,

it circles around the airport, and then it was basically approved, however, as one judge pointed out last month that it was more or less under a condition that is there might be a night flight ban attached to that. then, of course, a fourth runway was built. and then the local government, the government did approve about 17 night flights, which then caused a total outrage of all the people living and suffering through the noise during the night and really took basically to the arms, to the airport and demonstrated substantially up to 5,000 people causing huge disruptions, as well. all in all, it is not good in terms of the investment plans of lufthansa. they've already agreed something needs to be done with the cargo because this nighttime ban, the numbers don't add up anymore. and they may get out of cargo. there wasn't any statement from

lufthansa yet because the final decision about night flights in general lays within the state and for now there might not be any night flights, however, there might be other decisions based with regards to the principality. jackie. >> thank you so much for that, patric patricia. the commodities future trading commission is expected to sue jpmorgan this week over lehman brothers collapse. they will pay a $20 million fine. the cftc is expected to accuse the bank of overextending credit to lehman for two years prior to its bankruptcy in 2008. the times says the suit alleges jpmorgan improperly calculated lehman's worth by counting customer money as belonging to the firm. under federal law, companies can't use customer funds to extend or secure credit. taking a look at shares of jpmorgan at this point, frankfurt down at 34. and moody's downgrading

general electric citing ongoing risks. moodies says while ge capital has improved the liquidity and capital level since the financial crisis, there are still issues with the models. ge says the credit rating is strong, saying it has healthy balance sheet and more than $80 billion in cash taking a look at the ge price, as well, overseas, down about .25%, as well. meantime, coming up next on the show, monsanto is reporting second quarter results today with the ag giant. will they be able to plant the seeds for future growth? that's the big question. we'll preview the numbers straight ahead.

welcome back to worldwide exchange. monsanto reports fiscal second quarter results before the opening bell. earnings are forecast to rise about 14% to $2.12 a share. the agriculture company generates about 60% of the annual profit in the second quarter as it coincides with the start of the planting season in the northern hemisphere. joining us now to talk about the earnings with the preview is michael cox senior research analyst at piper jaffray and dan greenhouse. michael, welcome to you and thank you for joining us on the show. a critical quarter for monsanto. at the same time, you were saying there is some upside to your estimates at this point. and you also think the street

estimates are conservative. break it down for me. >> yes, the combination of high grain prices, the onset of early spring weather is leading farmers to look to plant corn. we heard it from the usda last week and we'll see it in the results this morning. >> in terms of guidance, you think there's a potential for them to lift the full year. do you think what's happening is going to have the full-year impact? >> no, the company had a strong start to the fiscal year starting off in brazil and argentina with uptake of higher technology seed. we're going to see that follow through, and given as you say the 60% of the euros made in this quarter, that gives the visibility to lift the guidance. >> what about competition? a lot of competition coming out of india, china. how is the company managing that? >> this has been a competitive industry for decades and monsanto has weathered through this and is a technology leader. they're seeing strong uptake. we'll see that in the results again today. so i think they're keeping that competitive edge. you can't rush breeding, it's a growing cycle each year and they stay ahead of that. >> okay. and looking at the guidance.

we've been watching very closely for some clues out of these companies about greater demand in terms of global demand. do you think we'll get anything out of this management? this particular management that will give us a greater sense of what's going on? >> well, the first target market is latin america. they're seeing regulatory agencies in brazil, other parts of the world have been slower to do that. i think it's going to take a few years before we start to see that play out. >> hey, michael. you've gotm monsanto. what would be the risks to your forecast and rating? >> sure. well, if we were to see as we move through the planting season, clearly if we have very strong yields that would put pressure -- downward pressure on corn prices, particularly agriculture stocks perform poorly. so we're looking at weather trends, watching mother nature just like everyone else. >> and let's talk about some of those other risks in terms of

mother nature. pests are an issue. how is the company managing some of these more technical issues? >> sure, there's been a lot of discussion around root worm resistance. the company has introduced a number of new seed technology, that includes packages that can combat root worm. i think they're doing everything they can to try to stay ahead of these issues. again, it's mother nature. we see evolution with pests and monsanto is aware of that. but their team is working on that. >> michael, if we can step back for a second from monsanto specifically. a lot of these stocks have had great runs but well below levels of before the crisis. in monsanto about $80 a share, it was about $140 or so. what is the primary reason that investors, even though the stock market in general is much closer to its peak, a lot of the names remain at depressed levels? >> well, as we speak with investors, there's the general uneasiness of the high level of

commodity prices, the sustainability of ethanol as well as global demand for grains. i think as we see these trends prove to be sustainable, we'll see the stocks perform very well. >> can we say that investors who have done quite well over the last couple of weeks and months, if the stocks haven't done even better in an improving commodity environment, if we are entering a situation where high commodity prices perhaps moderate or turn down somewhat, shouldn't we be more bearish on the sector as a whole? >> sure. i think there's some degree of a seasonal trade with these names, as well. we've seen that here through the spring months. with the southern hemisphere becoming a bigger part of this equation, again with brazil and argentina. i think we'll see the seasonality spread out and they'll start to see the stocks perform better through the course of the year. >> certainly something to watch for. we'll be watching the numbers closely. thank you for joining us this morning. michael cox and dan greene house will be with us. coming up on the show, the s&p 500 has ended the quarter with a 12% gain, but can the index keep up with the pace of

growth? we're going to discuss it next. 

good morning, and welcome to the show. the headlines from around the globe. here in the u.s., the focus shifts over to the jobs market as today adp report is expected to show another month of strong hiring in the private sector. markets react as the pain in

spain intensifies. ten-year yields rise to the highest levels since early january. in response to a disappointing bund auction of three, four, and six-year notes. investors also nervously awaiting for the ecb to see if it's planning a strategy after the fed dampens hopes of further stimulus. nice to have you here on worldwide exchange. if you're just joining us, let's take a look at the u.s. futures, see how we're setting up for trade on wall street. does look like a lower open. if the markets were to open now, the dow would be lower by 90. the nasdaq would be lower by 20 and the s&p lower by 10.5. this after seeing a little bit of pressure in the european markets, seeing pressure in our markets yesterday after getting the latest fomc minutes suggesting that qe-3 may be less likely than previously thought. the release of the adp private sector payrolls ahead of

friday's jobs report. those are going to be the key things to watch for. ross, how does it look in europe now? >> we're down pretty much on the session lows. we were heading lower earlier this morning. we saw services pmis better than the flash number for the euro zone are still contracting for the eighth month in a row, though they were at the best levels since august of last year. we've really responded to what's been going on in the spanish debt auction, the ibex chart, lows not seen since november of 2011 at 7,800. spanish ten-year yields rise to now 5.6%. we haven't been at these levels since early january. cds spreads on spain have also blown out to levels we haven't seen since november. just to remind you what happens, spain this morning, they raised $2.6 billion. yields were higher than they were last time. that was expected.

i think it was the weak demand that's knocked people off a little bit. and the clear implication is, whichever way you cut it is investors are now just asking for a higher risk premium to hold spanish debt. and so that is a complete reverse, of course, of the trend that we had between november and january, jackie. >> absolutely, ross. and we'll continue to watch that. meantime, the s&p 500 ended the first quarter more than 12% higher on the total return basis. this marks the only the ninth time that the index increased more than 10% in the first quarter in more than 60 years. despite the growth, a selloff is not imminent. joining us now is billstone at pnc financial and still with us our strategist dan greenhouse. let's go ahead, bill, and talk about the stock market in terms of what are your expectations are. you still think the valuations favor stocks over bonds, yes? >> i think so.

you know, i think obviously the one thing you have to say after such a strong first quarter in history would show this is how it has played out. you would expect you're not likely to keep up that pace. as you mentioned as we looked back since 1950, every single instance it did slow down the pace. but in most cases, it's still continued along at a nice clip. so there is some good news in there. i think the most important part to me is that valuations aren't yet in the way of things. >> bill, i want to bring you this note. doug kaster's written to us this morning on cnbc quite a lot, a contributor. he says in the near term stock bond and gold prices are in jeopardy. on the basis there'll be no more qe-3, no more twist. and so therefore after the absent of more easing, investors are about to experience natural price discovery. what do you make of that? bill first and then dan.

>> well, i think there's some -- i guess some truth in that in the sense that, you know, i was hopeful, actually, that we wouldn't see qe-3 for a couple of reasons. one is that, you know, i think if we had it or we're going to see it, that would signal there was worse data or worse economic data that we would've experienced. second is i do think it does give rise to maybe some sort of i'll call it a sugar high in the financial markets, and i think that's a bit of what he's talking about. i don't think necessarily we have to recover or sell off necessarily a whole bunch from here because i actually like to say, well, yes, we had a big move here in the first quarter and maybe the data wouldn't necessarily things had grown that much. but i think you have to think back to last year when earnings grew by about 15% and we got paid essentially nothing in the stock market. so -- and i think a lot of that was because the euro zone was hanging over. i think it was a catch up. there was a couple of thoughts there. >> dan.

doug is asserting this has been a liquidity rally and now it's over. >> well, i partially agree with doug and partially disagree. and doug is a great friend and i don't want to embarrass him on air, but there obviously has been an element of liquidity to this, whether it's the boj or the bank of england or the ecb, or the federal reserve. we know that central banks have been extraordinarily accommodative, they've lowered interest rates significantly below zero and that tends to be supportive of higher equity prices. and i don't believe doug touches on this note, but where i would disagree is that this was primarily or only a liquidity driven rally. clearly the underlying fundamentals have improved that may only be sort of a temporary high and perhaps central banks have injected methadone into the markets and we're just sort of pushing off into the future. something i agree with. what will inevitably be disturbances. but again, that is over time

supportive of higher prices. we are entering the worst seasonal period for equities. and i wouldn't be surprised at all if we sort of traded sideways or recoup some of these gains over the next couple of weeks and months. >> yeah, and bill, just to come back to this point about earnings about how that plays into it. because there is a chance here that earnings aren't going to be growing as strongly as they were. >> well, you know, i think there's little doubt that they're not going to grow as strongly as they were. i think, well, just in consensus estimates, they're not going to grow strongly. i think that slowdown, i hope has already baked in there. but you're right, you can't count on you're not going to see 15%. i think consensus is more like 8% this year. and i do think there's -- i think there's a chance you make it there. we have estimates a little bit lower than that. but you're right, i think a little bit of head winds on that side is no doubt. >> okay. bill, dan, stick around. plenty more to come up,

including weather. up next, residents and businesses are picking up the pieces after tornadoes swept through the dallas area. the latest on the damage. bertha is on the ground joining us in a few moments. >

welcome back. res dentd dents in north texas are cleaning up after a swarm of tornadoes ripped through the dallas-ft. worth area on tuesday. as many as a dozen twisters may have touched down stripping roofs from homes and in one case tossing trailers from a truck yard about like toys. no one was killed, but there were injuries. our own bertha coombs is live in lancaster, texas, right now about 20 miles south of dallas. what's the latest on the ground there? >> reporter: jackie, later this morning at about 8:00 a.m. new york time, the assessors from the national weather service will come out and try to determine just what was actually a tornado. there'll be three teams leaving and assessing in the area. this has come across a wide area of northern texas, stretching from dallas and surrounding suburbs. and the preliminary number right now looks like about 13 or so storms. some of those, though, may not have been. when you take a look at the damage in communities, arlington

and lancaster, we are declared states of emergency. yesterday they were calling them disaster areas and it's pretty evident when you take a look at it. people did have warning, they were able to get out of the way. the amazing thing is that so far there are no reported deaths. according to the red cross here in lancaster, texas, alone, they estimate some 650 homes have been impacted, some more severely than others. about 150 people were staying in shelters yesterday. in terms of the business impact, of course, the most amazing video is that video at the schneider national truck yard. this is their operational center here in dallas. about 250 trucks and tractor-trailers were in the depot. they were able to get out of the way. although the winds picked up those 7-ton trailers and tossed them around like little lego blocks. no one was hurt, a lot of damage there at the depot.

they're going to be assessing and cleaning up today, that's an awful lot of work there. the airports shut down dallas ft. worth airport officials say as many as 100 planes may have been damaged. not by the wind, but by hail. we drove up here from houston yesterday. we were covering another story, and even into the evening, there was just tremendous weather. tremendous thunderstorms, and hail people were saying as big as golf balls. american airlines did cancel some 450 flights, so that's likely to continue to ripple through today. over at love field, southwest canceled nearly 50 flights. so, again, that's going to be part of the ripple effect for the rest of the nation today. you know, take a look at this behind me. mike seidel from our sister network the weather channel says take a look at this damage. and the winds here were

somewhere in the range of 136 and 150 miles an hour. there are two cars that are wedged into the front of this house. it's not clear if they came from here. that's how it was. this thing kept touching down, touching down. it is amazing, guys, that no one was killed. back to you. >> yeah. absolutely amazing that no one was killed and amazing to see some of those pictures and the force of this storm. thank you so much to bertha coombs. ross, over to you. >> okay. thanks for that. amazing to see those trucks at that depot swept up. here in europe and certainly going to impact the u.s. open in terms of futures and where we are with european stocks has been the spanish debt auction. you've just tuned in this morning. disappointing spanish debt auction, disappointing in the sense they're looking to raise around $3.5 billion maximum, only raised about 2.6. it could have been the spanish government decided there were cheeky bids they weren't going to accept. and this is after some auctions, of course, in january. but nevertheless, the three, the

four and the eight-year this morning, yields were higher. we thought they would be higher. bid to covers were lower and they didn't raise the general amount of money to have. and the take away really has been that investors are demanding higher-risk premium for spanish debt. the result has been yields higher across the board. the ten-year now 5.6%. we've seen the ibex. that yield is the highest since early january. now the widest since november. what are the implications for you where you watch these spanish yields. what does it mean? >> well, here in the u.s., and really globally, there's been as we talked about earlier almost a soothing of market concerns whether it was the ltro or quantitative easing in the u.s. but really we haven't solved a lot of these problems. and in the case of spain, portugal, and ireland, we don't believe that this is over and done with. and, indeed, 2012, that is to say this year, we're going to

see probably portugal and maybe even ireland needing more money. and with respect to the spanish budget, it may not be up to snuff, so to speak. i think a lot of investors looked at how he is handling things and thinks he may not be as aggressive as possible. although, to compare what they're cutting to the united states, you're talking about somewhere around $300 or $400 billion in cuts. they're doing something but may not be a enough. to your point about yields and cds, this may have gone away for the last couple of weeks, but it has not gone away for good. >> that's a great point. and certainly a lot of moves parts. coming up on the show, we're going to look ahead to the trading day on wall street. the labor market, top of the agenda with private sector jobs data out today ahead of the nonfarm payroll numbers due on friday. stay with us.

ecb is meeting today, no change expected in rates. but renewed concerns about spanish finances will certainly be asked of the cohorts. sylvia is outside frankfurt with her own views. what do you think they might say about this rise in spanish yields? and particularly i should ask i suppose whether it means if the ecb at some point might be forced to step back into the secondary market. >> well, they won't tell us anything about that right now. we will find out next week or the weeks that follow whether the ecb can revise its bond purchasing program and whether spain will be on the shopping list. could very well be the case. but at the moment, we haven't

seen a dramatic move. we've seen a move to the upside, which nobody can really like. and nobody can be happy about. but i think nobody was really surprised by it either. so i think at the moment for the ecb, it's still a bit of a wait and see attitude. but they will keep a close eye on yields. their attitude was bond purchasing has always been, we haven't got a target level for the respective yields for the respective countries. that's something that the markets kind of have in their own heads. what they're concerned about is a disorderly development. so if they should see an explosion in spanish yields would then drag along portuguese yields and maybe irish yields along the side or maybe even italian yields. i think they will step in. but at the moment, i think, it's more a case of guns at the ready, we watch the situation, we see how the market is developing. and we still watch how the two, three-year ltros have actually affected money flows in the money market and then possibly

also credit flows for the real economy because that's a little early days yet to say whether it goes. so at the moment, today for the ecb is more a wait and see attitude than any sort of action plan. >> absolutely, thank you so much for that report, sylvia. of course reporting live from frankfurt. mitt romney makes a clean sweep taking republican primaries in wisconsin, maryland, and washington, d.c. further cementing his status as the front-runner for the gop nomination. romney picks up at least 74 delegates with about two dozen yet to be decided. i don't rememb rick santorum is predicting a primary win in his home state of pennsylvania on april 24th. and sandisk is cutting the first quarter revenue outlook blaming weak demand. they make memory chips, but many of the customers have been scaling back on the orders. sandisk expects sales of $1.2 billion down from the previous

estimate, we saw shares dropping 7% in the after hours session. they're down 36%. and burger king is shining up its crown with plans to go public again, the fast food chain expecting to relist the shares on the nyse in the next three months. bk's private equity owner 3g capital will sell a 29% stake to justice holdings for $1.4 billion. justice was founded by activist and investor bill akman. justice will shift the listing from the lse to the nyse. burger king was taken private in 2010. and the march adp employment report is out at 8:15. 200,000 private sector jobs last month versus 216,000 last march. down nearly half a point from

february. joining us now, of course, still with us, bill stone at pnc financial to talk a little bit more about it. bill, going to be interesting in terms of what we see in the adp number today before friday's report. and also interesting to note it's not a trading day on friday so investors won't be able to react to the news in aggregate until monday. what's your take? >> well, i think you're right that people probably watch the -- just like most months watch the adp pretty closely for the clues. it doesn't always match up. but certainly they should be heartened and i hope it's what we expect that you will see a pretty decent money. we're looking at about a 200,000 number for payrolls on friday is our thought. i think if you see something around that area, it's certainly going to make people feel a little better we continue to move in the right direction. >> okay. and how important do you think, you know, we saw the minutes from the fomc yesterday, we talked a little bit about this. how important do you think that number -- unemployment number is going to be in terms of the fed's decision on whether it eases or doesn't ease?

>> yeah, i think in terms of -- it's tough. unemployment gets to be a little tricky because i think they would expect more people to come into a labor force. i think of it in terms of the payroll or the amounts added to the payroll. i do think it's a major component. so they kind of -- when they talk about the minutes, it's data-dependent in terms of whether qe-3 happens. if we continue along with this pace, they are not going to do qe-3. >> all right. and i just want to quickly get your take on the dollar, as well. after the minutes came out, we saw the dollar spiking. long-term, you think the dollar's going to retreat? >> yeah, i think it's -- kind of the dichotomy, there is qe-3 generally or any sort of quantitative easing generally weakens, you expect it to weaken the dollar because some more people took it a kind of little more off the table. you saw the strength in the dollar. over the long run, the way i look at it is we have policies in place and perhaps we'll change them.

but we have policies in place that we, i guess, aren't really doing a lot of things to try and strengthen the dollar for various reasons. trying to continue to boost exports. that's why over the long run, it's not a disorderly retreat in the dollar, but at least a move over time lower. >> okay. and this is something that we haven't talked that much on the show about. dan, your view on the dollar and also some of the commodity price movements we've seen in terms of gold and oil. >> sure. i have been remarkably consistent in my view. i think bill is pretty much accurate. clearly the main problem for the dollar is the fact that our country does not operate in a manner that would be supportive of a strong dollar. we have not had one, a strong dollar policy that is since 1985 when we had the quarter. if you go back and look at the chart, generally speaking the only time we had a strong dollar was in the surpluses of the late '90s. and that's where i disagree with bill. certainly accommodative central

bank policy weakens currency, there's no doubt about it. however, i would simply remind people as i always do that the federal reserve raised interest rates from 1% to 5.25% in the last tightening cycle and over that time frame the dollar weakened the entire time and gold strengthened. >> that's a great point. that's a great point. and we'll have to leave it there, dan. but thank you so much for joining us. dan greenhouse and bill stone, as well, investment strategist at pnc financial. >> thanks for that, jackie. just to recap, besides the spanish auction, we've just had a portugal six-month bill auction. debt average yield 2.9%, bid-to-cover ratio, 8.5 month, the yield 4.53. they did sell the maximum targeted amount. we'll see how it plays into the u.s. futures. that's it from jackie and up. up next, u.s. "squawk box." good-bye for now. ♪

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good morning. it's only wednesday, but we're already talking about the jobs report on friday. private payrolls could give us early insight. it is 4/4, april 4th, 2012, "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick. and we have a huge show in store for you this morning. it is packed with news makers. among them, our guest host barry sternlicht, he'll be joining us 6:30