headlines from around the globe, today leadership change in europe weighs on investment sentiment as hollande beats sarkozy. and austerity talking fail. invest ors spooked by the latest eurozone pmi. sharply lower than consensus. much of that down to a big streak in german manufacturing p mchpm pmi, fastest decline since 2009. and pmi out of china, as well, stabilizing in april, but

remains in contractionary territory. repho reinforcing the case of further stimulus. >> and phillips at the top of the dow jones stoxx 600 as the ceo says conditions for a turnaround are in place. >> we are pleased with a good first quarter. on our past value and reaching our midterm targets by 2013. >> eurozone pmi numbers, c composite estimated at 47.4, forecast at 49.4, a decline for the march com miss it number of

49.1. no surprise to see euro-dollar hit the session low at 1.3139. trading in a item range. manufacturing disappointing 46.3 respect few orders index 49.9, all big declines for march's numbers lower than expected ten months of contraction in german. french pmi number composite 46.8. chris williamson is chief economist. chris, very disappointing. particularly i guess in the core of the peripheral. what's going on. >> two areas of weakness, one is german manufacturing. very weak number there is. but also when you look at france, the service sector,

modest gdp growth rate, but france, probably a 0.5 rate of decline. so france is turning down quick steeply. and you only have to look beyond the core countries to see why that is. index will even weaker than in march. so conditions deteriorating even faster than before. >>. >> julian, what's your interpretation of where this means for the economies in europe? >> first data for april and it's looking weaks as you're saying. and i think that people will be expecting gdp not just to have contracted in q1, that's widely expected, but for the second quarter, as well, we likely see contraction and then the question becomes what is going to turn will this economy around in the euro area. where is the major new force, major new stimulus that's going to be coming through here.

and that's really quite hard to identify. european central bank doesn't look like it's going to be doing an awful lot near term. >> and new orders from germany sharply weaker, as well. how much is that stern internal how much external? >> any hope of germany decoupling from the eurozone is a false hope really because everything is so integral in terms of vad. so a huge weakness there. maybe the most common factor was no demand from southern europe. >> walmart is under pressure after allegations of bribery and claims of a cover up. we'll look at the implications. plus pfizer signed a major deal

selling its baby food business for $11.9 billion. we'll have details on that. but it's a pmi day. and that impact and of course what's going on in asia, as well. hi, christine, good to see you again. it's been a while. >> it's been a while. you've come back into my life which is great. i missed you. well, i did anyway. this is how the markets are looking today. risk aversion across the board. indian markets did end lower because of caution ahead of the fed meeting. shanghai market off 0.8%. remaining weak despite april manufacturing data beating expectations. banks pretty much lower ahead of q1 results later this will week. the hang seng off 1.8%, china mobile the biggest drag.

nikkei 225 off 0.2%. ebb investors really selling out on stocks to buy jgbs after an article reported the boj would expand the asset buying program. so that is the main theme driving this particular market. australian market down 0.3% ahead of key cpi data out tomorrow. all this supporting the case for a rate cut by the rba when it meets next week and the sensex off 1.1%, still trading it make your market. so a sea of red. >> just 11 stocks right now in positive territory the out of 600 headed by phillips. so after a weak of gains last week, right now dow jones up. remember, up 2% for the ftse last week.

currently down 1.6%. xetra dax done 2.5%. ibex down over 3% this morning. what's that doing to bond spreads? we've already seen german bonds down near record lows on the moment near that level at 1.675. we know in the netherlands of course we'll talk about this, the government could get agreement for austerity. they could snap elections. yield out near a three year high. three month high spreads between italy and ten year bunds. italy yields raise rising. in france election results 3.1% at the moment. as far as currency markets, aussie dollar a little weaker today against the dollar. sterling pulling away from the

5 1/2 month highs last weak on retail sales. dollar-yen 81.86. pretty tight. christine. >> and china's factory output rideses, but not enough. the index has been stuck in contractionary territory for the sixth trait month. more from chris williamson. and brian, i know this private survey by hsbc is skewed to a smaller firms, but does it tell us enough that china can avoid a hard landing? >> that's our call. i think what this and other surveys have been showing is that growth in china is moderated, but it hasn't

collapsed. conditions in the manufacturing sector are subdued but steady over several months now. we actually think that you're going to see growth start to pick up a bit in the months and quarters ahead. so hard landing i think is still a down side risk, but not the central scenario. >> markets have been building up the case for another round of easing by the pboc. what do you think the chances of that happening? >> i think we could get that any time really. we've already had a few cuts in reserve requirements over the last five or six months and these things you don't tend to get a lot of warning. at some he stage it could happen, but i don't think you're going to see a he very big policy response from beijing because as i said, i think where we'll see growth start to stabilize and recover over the next few months, so it doesn't really require a huge policy response. >> it's a fine balancing act. we need to ensure liquidity

reaches small to medium sized companies which make up the bulk of the growth coming from china, and also making sure it doesn't flow into the red hot property market which is the government is trying to cool down. >> and that's why we won't see any let up on the restrictions in the property market. anything that they can do to try and get credit loosened up for those key sectors of the economy, i think that's going to be a real priority. >> chris, what stood out for you? >> the biggest segue here is the employment numbers. it's very encouraging to see the output stabilizing, but the employment numbers are signaling a second significant decline really. and that's the worse scenario

sense around 2009. so i think that eat one that policymakers will be focusing on. >> i was always told it's the ministry of employment that dictates so will they respond to this. >> if this is born out by other numbers, this is the key mum they'll be looking for. >> there's been suggestions that they'll be expanding on the fiscal side if china. and there is a lot of monetary easing that can be done cutting reserve requirements. perhaps even cutting interest rates. but even so, it's hard to see how things are going to improve very dramatically in the near term. our view would be probably some graduate you'll improvement in china coming through in the second half of the year. i think we should bear in mind as well, the fulls are consistent still with industrial production that's growing. not growing very fast.

that's the problem. so we have to start thinking about the chinese role in terms of driving the global economy and the commodity markets as possibly changing a bit particularly over the next few months. >> as china seems to rebalance the economy in a face where foreign direct investment is falling, how successful do you think china will be coming from the domestic side? >> that's really like a five year time frame. it won't happen to drive growth in the next three or six months. it's very much a long term process. i think the focus of policymakers will be what they can do to support growth this year and so you'll still see limited moves on the currency and you're going to see as i said before some target relal in

reserve requirement cuts. is won't drive the longer term rebalancing of the chinese economy. >> thank you very much for your thoughts today. good to have you. brian jackson and chris williamson. jewel began will continue to stay on with us as our guest host. >> plenty more to come. francois hollande has inched ahead of sarkozy. final round of voting concludes in two weeks side before stef e stefane. >> the big sur surprise came 18% of the votes to the extreme right, sarkozy claims that he'll not negotiate anything but crucial for him to convince more extreme right voters to supts

him in the second round because for the time being, according to a survey, only 60% of the extreme right voters will vote sarkozy in the second round of the election. as a result, the social list leader would win the election with 54% of the votes according to a survey. what does it mean for the french economy, should the bankers be worried? we'll discuss the outlook with the bureau chief of the economies in paris and she will be with us in the program in 20 picture ins time. stay with us. ross, back to you. >> plenty to talk to you as far as that is concerned. politics dominating in the netherlands. mark ritter will hold a cabinet meet to go try to hammer out a deal. it this is after weekend talks collapsed. carol in-is in the netherlands. actually, is there any hope of getting any agreement or are we

facing the prospect of elections? >> that prospect is very hike willy at this point. new elections will likely take place sometime in september or early october. but there are more ramifications. most importantly, the country will unlikely reach the 3% deficit to gdp target. also very important is this one, the country will likely see its aaa credit rating be down graded even before the budget talks collapsed. finch warned that this might happen possibly in june. and the markets are definitely worried. just this morning, we're seeing yields in the ten year ticking higher. also cds spreads close to record levels now. and what's probably more telling is the fact that the german and dutch ten year spread is now at more than 72 basis points. so is the netherlands still one

of the core deficit complying eurozone members. and the government has repeatedly critz sized those countries, specifically greece, which haven't been able to stick to their deficit target. so as we have seen over the last couple days, this country is definitely not practicing what it's preaching. back over to you. >> okay, carolyn, thanks. julian, politics is part of the reason we've got such a hur row zone debt crisis and it doesn't appear to be getting any better. >> i think the message we take away from the weekend's developments is really that there's going to be a lot more on the political front still in store. we have to watch these developments very closely and i guess what is a concern is just a slight sense here that the electoral is starting to sign against the austerity. perhaps a few hints of that in the fremp first round vote particularly in the way that it doesn't come out in line with

the opinion polls. >> effectively saying no to the euro, they are generating support. >> the fact is you don't really see a lot of choice out there. you just have to get on with it, do the fiscal consolidation, hope that the monetary environment will support you. but i think the politicians are starting to question that more and more and that must be a concern because it's not clear how you can really resolve this without going down the austerity route. >> julian, stick around. more to come. christi christine. >> coming up next, ali baba.com's first quarter earnings. expected to miss estimates, but one brokerage boosts his ratings on the web portal.

the imf may have won global commitments to double the size of its war chest, but collecting the funding may be the next

challenge. they've been arguing for more power in imf decision making and while the brics did not withhold funding measures, nations say they expect program on power sharing but will they it actually give. the imf has been careful to say that the new funds could be used to help any region not just europe. >> spain urging leaders around the world to place sanctions on argentina. spanish foreign ministry has called for the move. this after it last week planses to were revealed to seize control of repsol's ypf unit. other reports suggest ypf has cut computer lengths with the parent company. sources suggest ypf has sut down electron he can communications which pre-vebltsed repsol from accessing information about its venture. and it's a done deal. pfizer is selling its infant

nutrition business to nestle for 11.9 building. naesly oig expects the acquisition to generate around $2.4 billion in sales this year. fess lig "and pfizer in terms of stock performance, necessarily down 2.98%. pfizer in frankfurt fairly flat. >> ali baba coming out with results just as we speak net profit at 339.2 million chinese yuan. and q1 revenue coming in at 5.19 billion chinese yuan. to do the conversion into dollars, but these are some of the things that come out at the moment. hard to find by answer for this particular company, but let's throw to our guest.

are these numbers more or less what you're expecting? >> i think these are a little better than on expectation on revenue, but in line with earn heings. street consensus, they're more or less in line. this is a subscription business model, not a transaction business model, which we like better. in a macro environment which is slowing down, but also a top of that, alley back pa.com's customers are all small to mid size businesses and this is the economy facing the most challenges right now. >> also expectations of course of privatization. this essentially means that once it becomes private, we no longer

talk about it as a listed company. do you think privatization will go through smoothly? >> i two. we expect them to final the report by this friday and the company has announced a 1350 privatization price. we fully expect privatization will go through, but of course 75% of its minority shareholders need to approve the privatization in the next 120 days. >> what does this privatization mean for the strategy of the company? essentially it gives management some leeway when it comes to some decision making. with a do you think will change here? >> what we have always believed, the privatization is just a part of the bigger plan which is to take back the bulk of the group company owned by yahoo!.

we think that maybe an assess swap going on as part of the strategy to buy back let's say 25% of the 0% owned by yahoo!. >> operating in a very competitive environment. what are the chances, what come they need to do to compete better? >> for the business environment, ali baba.com is actually the biggest player. i don't think it's a problem for them. they already have the strongest pe difference positioning. it's really the problem was a business model and also because it's overly relied upon the external environment in europe and the u.s. >> what about contribution coming from ali express? >> the two transaction

transaction platforms they've laenched over the last couple years. in the near term, the contribution from these two plat forms are likely to be quite minimum. so we don't think they will be a meaningful part of the overall revenue or earnings contribution at all. >> with the expectations of ali baba going private, that's not a really top pick for you. what would your top picks be in the chinese internet space? >> our top picks are seena and know cuss media. >> and why is that the case? >> for sefa, we continue to see the modernization of its platform has already started. it will be a critical year for them to show a monetization potential. in fact this week the company is having a big conference with its

advertisers to showcase the potential in terms of the monetizing power. it's leveraging positioning in anti-virus and blouzer to move into the monetizing products. such as the desktop product. >> and you have no personal or company holdings in either of these two companies. thank you very much for your insights. good talking to you. >> good to be here. >> still to come, european tour starting in germany where he's met with angela merkel. find out what wen thinks china and germany have in common when we come back. [ male announcer ] this is lawn ranger -- eden prairie, minnesota. in here, the landscaping business grows with snow.

to keep big winter jobs on track, at&t provided a mobile solution that lets everyone from field workers to accounting, initiate, bill, and track work in real time. you can't live under a dome in minnesota, that's why there's guys like me. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better.

did his appointing data out of euro sooe syou'reurozone cem recession. >> and hollande beats sarkozy in the first round of the french presidential election. and a political crisis looms in the netherlands as austerity

talks fail. >> and china factor output stabilizing in april. but remains in contraction territory. reinforces the case for further stimulus. >> and nestle buys pfizer's infant nutrition business. >> pmi number weaker on both the services and the manufacturing side than all economy i.s poist. just 13 stocks on the dow jones stoxx 600 are in positive territory right now. phillips is the top of the bunch after better than expected numbers.

after gains last week of around 2% for the ftse, down 1.4%, xetra dax down 2%. ibex down 3%. we keep our eyes on what's going on with the bond markets. that's been telling us fears about debt. you have the ten year bund yields down near record lows. we're seeing the spread between ten year bunds and dutch out to three year highs as the dutch government failed to agree on austerity cuts. they now potentially have the option of calling snap elections. we'll know more today and the spread between italian dealt and ten year bunds out at three month highs. french debt fairly steady this morning, no major auctions from france in this week after the first round of presidential elections. as far as currency markets are concerned, we've seen aussie dollar a little bit weaker post data out of australia, rba will

cut rates this mond and also the chinese pmis. dollar-yen steady. euro-dollar weak are but in the ranges. >> not much of a reaction here but markets kind of paired losses earlier, but actual remain in territory. worries about what this means for the financial sector ahead of q1 the reports on friday. hang seng market off because china mobile was the biggest drag. boj suggesting it would expand its buying program. elsewhere, kospi off 0.1%, australian market down 0.3%

ahead of key cpe data out tomorrow. producer price index today reporting a larger fall. all suggesting building up the case for rate cut when it meets next week. and the sensex trading to the down side 1.1%. so risk aversion clearly still in play here in asia. >> hollande has won in the first round of presidential election. they go head to head on the the 6th of may. the question is will sarkozy only lost about a percent in in first round, will he anable to pick up any of the 18% who voted for the national front. >> and according to a survey, sarkozy would get 60% of the votes from the extreme right, but probably won't be enough because he would, defeated in the second round of the election

with 56 5 4% of the votes. what other implications for the french economy? we'll discuss the situation with the bureau chief of the economy in paris. thank you for being with us. do you think the stock market should be worried of france having a socialist leader? >> i do think that there are worries in a caricature way. at one point there were concerns that if he was elected would have to take into government some of the xhun eyists. this is the canned dad who stood to the left of the social list party. but i think those concerns have faded away. but the concern that is still there is whether or not francois ol land oig wi hollande can keep to his commitment to reduce the deficit in france. it's very high. already hollande said he's not going to do it until 2017. at some point he's going to produce a new budget that could

probably be during the month of july after june elections. and that the point, i think the markets will look very closelily to see how exactly is he going to keep to those deficit reduction plans when he's going to have very weak growth. he's made so many promises on spending. so i think there will be he extremely close surveillance of his budget plans. >> do you see frank being downgraded? >> we've already seen france lose its aaa rating from one of the agencies. that was earlier in general. another rating agency has put france on very cho surveillance and possibly give it negative outlook. i think there is a sense of wait and see about this. they want to see how hollande tackles his first days and months of the presidency if

elected. any sign that and he is not prepared to keep to those target, any sign that he'll simply put up taxes everywhere in order to meet the deficit gap i think they could be extremely ruthless with them. p. >> sarkozy talking about austerity during the cam been, do you think they would be able to avoid austerity? >> hollande's plan is to avoid austeri austerity. he'll go to better minurlin and plan to promote a growth agenda. he's very much against the fiscal pact that merkel cherishes. for her it's the cornerstone of efforts to resolve the eurozone crisis and hollande wants to put growth at the heart. the problem is that for him will the pretext of them not going ahead and making the sort of cuts that france also needs. because it's a very difficult

balance that's out will between stimulating growth and also getting the spending under control in trance. so i think he'll have to bring about special cuts. >> how do you see the relationship with hollande? >> i think initially it will be very difficult. if president hollande goes to berlin and brings with him this sort of direct challenge, it will make things extremely difficult with her. and i think that we'll see some very sense negotiations and difficult times in the first few weeks. down the road i k the relationship would work well. and there are actually probably will find a way of working together. they're not very dissimilar in terms of personality, but the

initial few weeks and months will be very difficult. >> thank you very much. bureau chief to the economist in paris. ross, i send it back to you. >> pfizer selling its infant new trigs business to nestle for $11.9 billion. pfizer put that and its animal health unit on the block as focused on its core junk business. nestle's stock is a little lower than the rest of the market. >> m&a also making headlines over in japan where shares of drink maker have bubbled up, danone is thirsting for more. the nikkei has the story live for us from tokyo. >> hi, christine. stocks took off today.

shares in the drinks maker rose to its highest level since october 2 1s, 200 2008 followine report on sat temperature danone is in talks to increase its stakes. they want to send directors to the board and strengthen ties on r&d and distribution. one of the attractions is its expanding reach in the emerging markets. however, there are indications that talks have run into difficulties over control issues. this is not thesely bad news for investors as share prices may rise further. sources it familiar with the talks say if negotiations fall apart, danone may launch a tender offer. back to you. >> thank you very much for that.

>> i have tried those little thinking yogurts as you say. it's a heavy earnings week. phillips kicking off proceedings this morning. reporting better than expected profits. also novartis, total and wpp also reporting, as well. phillip wills an outperformer today on a much lower market. shares in fact the best performer in the dow jones stocksstoxx 600. they were up 4% earlier on. investors seem pretty happen with what seems like the first positive results. ceo speaking to cnbc earlier this morning about the new strategy. >> we're seeing good growth

opportunities and we are addressing some of the competitiveness issues, taking overhead costs out. so with all that we're doing, we believe that we are on track towards our midterm are targets. >> doccoming up, automakers are flashing their latest from the auto show. when we come back, volkswagen's latest moves to strengthen its presence in china. >> not before 2016, in our midterm plan, we are concentrating all our investments and capacity to support and contribute to the local chinese market. there no export plan up on 2016.

julian, let's get a final thought from you. we've seen a big dws kriscrepan

germany. ifo survey going up, pmis con trarting. which one shall should investors? >> ifo is a much wider survey. it involves more smaller companies. whereas the pmi tends to be larger companies and it tends to give you a pulse on what's happening in the global economy. so the pmi for me is a concern. and if you look at the charts and you look at manufacturing in the impt fo versus manufacturing in the pmi, you can see that most of the team, particularly in terms of an upswing, but also a down swing, the pmi will tend to lead the ifo report. so the ifo is giving us a signal suggesting german domestic demand is improving a bit, retail sales might be come you through, certainly seeing it in the real estate sector. that's all quite positive. but the pmi for better mgerman

exporters, the picture is weak. must be said a lot of the european orders are actually coming out in asia and conditions there on the soft side. >> chris also intimated these numbers suggest we're going into third quarter of contraction for the eurozone. when we look at what's going on as far as the politics of combined with this, what's your assessment of what happens for investors this year and the european economy as we see bond yields starting to rise again? >> our view for some time has been you're probably safer off in the united states right now. europe does still have a lot of challenges. a really important one is that the fiscal consolidation has yet to really fully be felt on the european economy. if you look at the measures that are being put in place for spain and italy, the degree of retrenchment in terms of spending cuts is yet to really hit those economies.

>> and how do investors react if hollande can't get agreement on an austerity plan, if holland owing becomes the president and says i'll renegotiate the fiscal pact. >> we'll sea generally weak equity markets, wider risk breed yum. and then people will start having to think is the european central bank going to come into play here. suddenly if we see spanish government bond yields get back up to 6.5%, then i expect the ecb will come back in and buy debt will in the spanish and potentially the eithertalian bond markets. so there will be a lot of friction around it and the new factor that we're being reminded of i think this morning is that there is quite a lot of political risk out there and you've got may 6th greek elections, second round of french elections, still quite a

lot of hurdles that need to be overcome. >> and it's the political angle that is the hardest they think for investors to quantities file. thanks so much for joining us. german exports to the eurozone may not be so great, but that's why they've been relying so much on exports to the emerging markets. what's happening with that? christine has more. >> i've got the car story for you. volkswagen of course has its eyes on china. expected to sign a contract with visiting chinese premiere wen. they may need the boost after admitting 2012 will be a year riddled with challenges. we go live to the auto show with more juicy details. >> it's been an amazing day here at auto china 2012. because although the numbers may point to slowdown in economic growth, even in the auto sales numbers in the first quarter,

you certainly don't feel that here in auto china. volkswag volkswagen, this is a critical market for them, it fresh investment that they're making in western china is very significant because it is the first time that a foreign automaker will have a facility in the western part of the region. as you know, the chinese government has been trying to make the auto industry a pillar of economic growth and a lot of the analysts and ceos i've been speaking to throughout the day say that over the medium term, these production bases that you're hearing about today are going to serve as export bases for china. i had a chance to sit down with christian clinger, board member of volkswagen. and this is what he had to say. >> what we have said is we believe essentially european markets will be more complicated in 2011. the rest of the world seems to run in terms of total market pretty okay and seems to be confirmed. so are the risks increasing or not, it's more or less what

we've estimated. so in why not yes, we still believe it will be a demanding market particularly in europe. for the rest it seems to be more positive than we had maybe seen six months ago. >> with this new facility you're building about, maybe a couple years down the line, are you considering that these facilities this be export basis to other regions? >> china is one of our broad bases. u.s. is a very big, as well. we continue to grow as well as in russia and end i can't. so not only china. if you come to the western regions in dhi in a, it is true that the development, economic development in china was in the first maybe last 20 years more concentrated in the east. so now it's going accept by step to the west. >> and of course this is

geographically very close to other emerging markets. russia of course and maybe potentially pakistan, central asia, as well. is that in your cites already? >> what we believe is that the plans what we have in china producing costs for dhi in a essentially. because we have a very strong demand. products are very well accepted and we have increased even market share last year. so we're in a very good track record. as a consequence, we he believe that it's important that we have this chinese plans for the chinese market. >> and 10 million mark for volkswag volkswagen. how strategic is that and how close are you? >> we have a clear vision. we want to become the most competitive common factor. so we want to have the best people. it means as well we want to have the best customer satisfaction. we need to make some money. but on the other side, as i said before, we want to have the social responsibility and environmental responsibility.

the social responsibility, 500,000 people working directly for the group. they have about 2 million working endirectly through suppliers and through the dealers. so a large responsibility that we need to take seriously. and if we chief all these targets, then we believe we are the most competitive manufacturer. >> so overtaking in the numbers game jgeneral motors is not a target, it's a myth? >> it needs to be balanced between all the targets. we will still continue to improve ours and question every day how can we take one they think to the a better than the day before. >> after a day here at auto china, there are key themes kree

merging. one is electric cars. and china is very keen to promote the technology. they have great ambitions for 2012. what they're trying to do is get the foreign automakers to set up joint venture, set up local brands to sell electric cars. that's why you heard daimler and nissan coming up with new brands. but today the market is growing in the suv segment. that's why we heard from companies like ford rolling out new suvs. and the luxury segment, there is just no sign of a slowdown here. this remains the key market for all of the luxury segment here in china. back to you. >> thanks very much for that. silvia is also following wen's trip to germany. when you look at the new orders, 44.9 tenth month of contraction,

i dare say they need as much demand and help in china as we can get. >> absolutely. the chinese market has become more and more important especially for the german automakers. if you look at the top brands for example when it's audi, whether it's porsche, whether daimler, record sales in china even during the teams of the crisis, these were the markets that were booming. so yes certainly more important. and china also as a banker, as a money lender, as supporter more important. this is why mar kell herkel is woo china's interests in the eurozone and what we've heard in terms of statements apart from a lot of back slapping is certainly that the chinese kind of sitting back at the moment and saying, yes, we do want to live in a multi-polar world with

the euro, but at the moment, i think you europeans have to sort out your crisis yourself. >> all right. silvia, thank you very much. we've just gone from beijing and better lip and now to the east coast of the states. i wish i was getting air miles for this. >> good morning. great to see you back. here in the united states, no economic data today, but a busy week ahead with reporting on housing, consume are confidence, durable goods and first quarter gdp. the fed is holding a two day meeting and ben bernanke holding a press conference wednesday afternoon. and another big week for earnings with about 180 members of the s&p 500 reporting. today got three reporting before the bell. we'll take some of your questions coming up in the next hour. stay with us. [ male announcer ] this is the at&t network.

a living, breathing intelligence helping business, do more business. in here, opportunities are created and protected. gonna need more wool! demand is instantly recognized and securely acted on across the company. around the world. turning a new trend, into a global phenomenon. it's the at&t network -- securing a world of new opportunities. ♪ one golden crown. come on frank how long have we known each other? go to e-trade. they got killer tools man. they'll help you nail a retirement plan that's fierce. two golden crowns. you realize the odds of winning are the same as being mauled by a polar bear and a regular bear in the same day? frank! oh wow, you didn't win? i wanna show you something... it's my shocked face.

[ gasps ] ♪ [ male announcer ] get a retirement plan that works at e-trade.

welcome to the show. headlines from around the globe this morning, here in the united states, walmart under major scrutiny after reports of a massive bribery campaign and cover up at its mexican unit in the past decade. >> disappointing data cements fears the region is stuck in recession. pmi falls more than expected in april. also hollande beats sarkozy in the first round of the french presidential election and a political crisis looms in the netherlands as austerity talks fail. >> and china's factor output

stabilizeses in april, but remains in contraction territory. flash pme reading eases fears of a hard landing, but reinforces the case for further stimulus. >> you're watching "worldwide exchange." let's take a look at the u.s. futures, see how we're setting up for trade. looking at lower open. dow by 95, nasdaq by 18, and s&p 500 by 11 1/2. this of course after we saw a see saw week last week. friday we ended with the dow up 65 points, but the nasdaq lower by 7. a slew of corporate earnings out, a mix of economic data. so it led for providing the backdrop for see saw as i said back and forth. but again looking at a lower open right now. how about europe? >> not great. we were up 2% for the likes of german and english uk markets last week. the french market was flat and

as you can see, we're down 1 1/2 and nearly 2.5% for the xetra dax. composite pmi number 47.4rks much weaker than the 49.3 that we were forecasting. and follows a steep fall as well in german manufacturing pmi, 46.3, the new orders component 44.9, tenth month of contraction. french pmis were weaker across the board. so the fear is that the peripheral can ticketities have spread to the core. and now fears of contraction will move into a third quarter. >> so putting pressure on the markets. here in the u.s., it's all about walmart this morning. wall hart could face some legal scrutiny following allegations of a massive bribery campaign at its mexican unit. "new york times" reporting that executives learned of the scheme in 2005 and internal probe found

bribes were paid to obtain building permits. but senior management shut down the probe and failed to notify u.s. or max can authorities. walmart is conducting an investigation into possible violations of the foreign corrupt practices act. it now says it alerted the sec and justice department of the new probe and began a review of compliance with the corruption law last year. joining us now as our guest host for the next hour to talk about this topic and many more is a cnbc moneycontributor. are you expecting to see a lot of pressure on the stock or do you think investors will say -- >> i don't think so. i thinks news is probably priced into the stock. i think it willing -- could have a short term effect, but here's the bigger issue. in an age of smart phones and all of this new technology, you're going to see a lot more

exposure of things like fraud whether it's secret service investigation that's going on now, walmart or other fortune 500 companies. things that were going on in the past are now getting greater exposure. we've got 500 million journalists now that can have a voice recorder or a camera and i think it's a very interesting time and you'll look for more fortune 500 companies to do internal reviews, i believe. >> that's an interesting point of view. so saying that digital issues right now making these issues more pervasive and making them more accessible i guess in terms of spreading that information out there, but when we look at mexico specifically, do you kind of feel like that's part of doing business there, is that what this is really going to expose, also? >> no question about that, but that's also true for china and other parts of latin america. so corruption, an expression in china that there's good bribery and there's bad bribery. that's when you bribe the official in china and then

theydy pot to do whatever you were wribing th inin ining brib anyway. there's a hire likelihood of disclosure and that's where the risk is for these companies. in the united states, we run it about as clean as we possibly can. these foreign corruption act practices will be prosecuted by the department of just sis. so if you're a general docounse waking up in a fortune 500 company, what are we doing wrong and how can we stop it. we both know this has been going on. it didn't just start happening at walmart ten years ago. my guess is it's happening fairly rampant around the world. >> and we've seen some cases of this in the past. siemens, halliburton have dealt

with the issues. and the investigations are expensive and extensive for these companies. how do you think the walmart case will play out in terms of a settlement that they might potentially have to pay and how that might impact the company? >> when we were talking at the break that a lot of the officials that are responsible for this bribery case are either leading walmart in the midst of retiring or have already left walmart. so it will be interesting to see who will get tagged senior levels here as it relates to this particular situation. but, yes, i do think that a fine will possibly be paid, i do think that there will be shall type some type of ramification and it sends a message. this is probably the third or fourth largest market capitalized company in the fortune 500. is rook for there to be fallout. >> okay. over to ross.

>> let's recap what's happened in the eurozone. private sector took an up expected slump in april composite pmis for the zone, 47.4. 49.1 in march. and five month low. manufacturing pme 46 and 47.7 a month earlier. also we saw a sharp drop in falling orders. sger man numbers in particular disappointing. manufacturing pmi 46.3. we're look for a figure of around about 49 on that one in new orders running again month contraction, as well. this is after come out with its estimates for debt to gdp. most are in line with government projections 1k3e79 in ireland where they're frfting a deficit of 13.1% of gdp, which is much mier than the government

projections. we spoke to market with compiled the pmes and their view that this is indicating the recession contraction is spilling over into a third quarter. how are investors on your side of the world reacting to what's going on? we've got political stories going on and growth that doesn't exist. >> i don't think anybody on this side or on your side for that matter thought that we were going to get better data than what you're kufrptly experiencing. we're in this sclerosis growth period primarily born from the fact that we're dealing with post-traumatic stress from the ghoeb al financial crisis. there is no way that you're going to heal this type of excessive leverage in two or three years. just not going to happen. so look for the markets to roll

over here a little bet about that we were talking a lot about this about three weeks ago when the markets were on such a fantastic run, people were saying why is volatility so low. and then you could look around the world and you could see what you're experiencing here in this data which is slow growth, moderate to low employment growth, it's leading to potential political change, possible political unrest in europe and who knows who could happen in china with their regime. so i will tell you none of this stuff is unexpected and i could see the markets here further correcting as a result of this data. >> does it go back to the extremes that we had in november when clearly everybody was worried about some sort of systemic financial impact? >> well, i don't think that's going to happen because the federal reserve and the ecb are still very open and accommodating as it relates to

their monetary policy. what we saw in november is when the federal reserve decided to pull back on qe-2, you saw a dramatic rollover in the markets. right now whether it's operation twist or the statements that are coming out of the fed, it's still quite accommodative. i know that eventually they'll pull back, they're talking about june about possibly pulling the money back in, but with this kind of economic data, look for the fed to maintain it accommodating monetary policy. >> okay. great spoints of vipoint of vie. still to come, the prospects of political change in france leaving investors jittery as presidential hopeful hollande narrowly overtakes sarkozy in the first round.

let's start in the states. take a look at the u.s. futures. looking like there's pressure on the markets. this after we saw a back and forth last week, but we ended up on a high note. we saw the dow up 65 points on

friday and of course we have a lot of earnings coming out, smiks mixed economic data. utilities and consumer staples doing quite well. it was ten and financials that were has goning on friday. >> just 17 stocks right now on the dow jones stoxx 600 in positive territory. phillips came out with much better than expected profits. it shows you how heavy the selling is in terms of weight of stocks this morning. 2% gains for the german and british markets. the cac 40 was flat. particularly in germany. we keep our eyes on what's going on in the bond markets. best indicator of what's happening with the debt crisis. spread between german bunds and

dutch debt hitting a three year high at the moment as the dutch government failed to create austerity measures. they may be calling staff elections in holland. and also spreads hitting a three month high this morning. jeelds in france also higher at the moment, 3.10%. as far as currency markets are concerned, euro-dollar slightly weaker. pmis coming in weaker than the expected 49 figure. aussie dollar is lower. data suggests rba will cut interest rates again. and sterling trying to hold on to the gains it is made last week against the drar. >> asian markets looking like this, dominating news today of course with its private hsbc survey which showed manufacturing in china is stabilizing taking away concerns of a hard landing, but risk aversion clearly in play here in

asia ahead of fed meetings later this week. shanghai composite down 0.8% today. thanks were lower ahead of q1 results later this week. the economy not out of the woods just yet. so that is dominating sentiment. hang seng down 1.8%. biggest worse daily loss in more than six months. nikkei 225 off 0.5 2rs. i an article reported the boj will expand its asset buying program and target bonds with longer maturity. so that theme dominating the japanese equity market. producer price data supported the rate cut. and the sensex to the down side 1.1%. still coming from asia, infosys

shares have slipped after the company says u.s. authorities are investigating staff documents related to employment eligibility. india's second biggest software supporter says it is skrut sizing form 19 for errors. the form is used to verify whether employees are allowed to work in the u.s. infosys could face fines and penalty. that's it for me. i'll be back tomorrow with the news moving markets here in asia. see you tomorrow. hollande has edged ahead of sarkozy in the first round of the french presidential election. two men now go head to head in a final round of voting on may the 6th. in the first round, figures are pretty close. hollande got 28% and we saw sarkozy get 27%. what next? stefane, we know holland will are probably pick up the votes

from the left. what rts chancare the chances o picking up the votes from the centrist party and the right wing? >> it will be more difficult on the right side. only 60% of the people who choose will vote for sarkozy in the second round. 18% of them would vote for hollande. and 22% claim that they are not going to vote for the second round of the election based on this calculation would not make it the second round, he would be defeated by the socialist leader. that's the reason why sarkozy has to convince the extreme right voters. he wants to shift to the extreme right. we're expecting sarkozy to campaign in the next couple of days on securities and also

perhaps a bit against the you're propose so the left side, the extreme left candidate had a weaker than expected result of the first run which means that the socialist candidate will not have to campaign too much on the left to make it. that's potentially good news for the financial markets. and for the french economy. all in all as i was saying, sarkozy is likely not to make it by the second round of the election. he would be dweetsed by hollande and hollande would be the first socialist leader in 17 years. >> thanks so much. anthony, i want to get your point of view on the elections in france. a lot of problems in the eurozone. one potential solution is to get that political will this place. but your take on this. >> i think it's negative as it relates to the austerity programs and what's necessary to improve the european markets. the fact that sarkozy and merkel

have such a close relationship and that could change with the election is probably another problem for the markets. i also think the white house is looking at the election results very carefully and saying what does this mean for us come fall. what i don't like about this is that you're going to have to face austerity in europe whether you like it or not and the electorate is proving that they do not leak austerity, so will this means you could be kicking that can down the road a lot longer than every one of us would like to. one last point. if they keep doing this, the market will force most political ideologies in to the center so either party will have to do the exact same thing, which is cut the budget, raise taxes and go in for some kind of austerity and reform. >> all right. anthony will stay with us. and still to come on the show,

political concerns are plaguing the netherlands, as well. default swaps are proceeding all-time highs as talks break down. we're live for the latest.

it may turn around because we now understand the british regulator in the uk says it is now investigating bskyb's sky news over e-mail hacking. they're investigating the fed privacy issues. only 13 stocks out of the 600 up. so happy to be one of them, but they now have an investigation from the british media regulator into sky news over e-mail hacking. and don't forget of course that both james and rupert murdoch tomorrow and wednesday will be

giving evidence to the inquiry over the phone hacking scan dell. so we continue to follow that. hundred die motor has upped its 2012 sales targets. the south korean carmaker expects to sell 800,000 car this is year, but despite growing demand, he has no plans to build further plants in china. they're at the top of the list of three stocks to buy right now. the top of that list belongs to portfolio manager at william blair. good to see you, ken. thanks for coming this. you have a fund that runs global growth stocks. in your universe, anything over a billion. why is hyundai at the top of that list? >> people don't think of the auto industry globally as a global growth industry. but it very much is. and there are certain companies that have been able to take advantage of the growing demand in emerging markets, but also

the need for low cost high valued cars. and hyundai motors we think is the leading company in that regard. they've grown now from being a low value, low cost offering company focused on the korean or emerging markets to a vast global footprint, they manage in several markets. including the u.s. where they have over 8.5% market share. sthf's grown market share in europe as well as in the rest of saz i can't. >> when you contrast that with solar winds, completely different sectors, i like the eclectic stock feel here. in europe, solar panel makers are totally dependent on subsidies. is it different in the states? >> the irony here is that solar

winds have nothing to to with alternative energy. so i'm not sure of the original of the nail. but the company itself is a high quality maker of software products for enterprise network i.t. management and that's a complex area what with the web video on demand, virtualization. and we want the highest quality companies that are perhaps innovative such that they can control their own decembstiny. >> withe space of change in technology is change. we made a big bet on this management team as we've known them quite well for several years. it's interesting what they offer is a process duproduct that the

deliver over the web as opposed to the bigger vendors, they can respond very quickly to what an i. ti manager needs and they deliver at literally a tenth of the cost. >> we have to leave it there. but you a lot more we could talk about with you. >> and coming up on the show, china's manufacturing picks up momentum in april, but is it this enough to ease concerns about a hard landing. we'll ask you that next. with the spark cash card from capital one, sven's home security gets the most rewards of any small business credit card! how does this thing work? oh, i like it!

[ garth ] sven's small business earns 2% cash back on every purchase, every day! woo-hoo!!! so that's ten security gators, right? put them on my spark card! why settle for less? testing hot tar... great businesses deserve the most rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? here's your invoice.

here in the united states, walmart is under major scrutiny after reports of a massive bribery campaign and coverup at its mexican unit. >> disapphoning data cements fears the region could be suck in recession. >> and also weighing on

sentiment, hollande beats sarkozy in the first round of the president shap election. >> and flash pme reading eases fears of a hard hand, but reinforces the case for further stimulus. if you're just joining us, we'll take a look at the u.s. futures. seeing some of the pressure in the international markets trickle into the u.s. here. if the markets were to open now, the dow would be lower by 106, the nasdaq by 22 and the s&p 500 lower by 13. this of course after a see saw week last week. >> european stocks are lower here.

given up last week's gains. cac 40 down nearly 2%. ftse down 1.3%. and ibex down over 3% again morning. pretty much down to the weak pmis that we've had out of the eurozone. 47.4. looking for something around 49.3. core economies weaker than expected. >> meantime over in china, preliminary flash pmi recovered slightly in april from march's reading, but this is now the sixth consecutive month that the index has read below 50 marking contraction airer to. tracey chang has more of the details. >> good morning. that's right. we saw a slower pace of production than in the previous month. the new orders sub index bounced to 48.9 from the four month low

seen in march. analysts say it signals the economy has reached or is near its low point for the year. and that this will help in the peck up in bank lending starting to show results. although the risk of hard landing risk has mostly diminished, would he seeing it in a dismal q1 earnings numbers from manufacturers. and while new orders appear to be stabilizing, backlogs work did not rise. also worth noting that the hsbc manufacturing index has not been consistently above the level of 50 since june of 2011. although it is far above the readings of low 40s during the financial crisis. >> anthony is still with us.

anthony, your take on the china pmi. obviously fears of this hard landing are diminishing, but at the same time, we have to see the policy easing. >> i do think that the china central banking system is going to ease here to try to help them. but you're also seeing in china the government supporting a lot of companies to keep unemployment as full as possible. you're seeing them subsidize companies that in the u.s. would probably be in bankruptcy protection. so the pmi numbers are not where they were at the crisis levels. not above 50. so that should give us some pause. if the chinese economy does roll over, however, i don't think it's going to have a huge impact on the u.s. or europe as people are saying. and the main reason for that is i think we've become more insulated in europe post crisis.

>> so we're seeing them implement a bunch of different measures to ease of landing. >> yeah, it's a totally different economy there. it's less market base. it's more state driven. what these people really want to do is avoid at all costs high unemployment. they have to create 25 million or so jobs a year just to say even. so it's a very, very difficult tenuous situation for them. growth rates below 6% in china will feel like a fatherly steep recession to the chinese and so look for the government to do everything they can to stimulate. but remember, in china, they have to use 4 x to stimulus because it's not a market based economy. >> and that was a component in the pmi that was perhaps the most disappointing. the question for an investor is where that day it take, what are you supposed to do with the

commodities sector at the moment shall because china is a swing factor for them. >> no question. if you see that pmi number continue to dip, look for futures if places like copper and other raw materials to roll over and slide. but this stuff has been baked into the market, so i don't see a lot of dramatic movements in those markets right now. >> okay. and also it's a done deal, pfizer is selling its infant nutrition business to nestle. nestle expects the acquisition to generate about $2.4 billion in sales this year because the exposure in emerging markets. nestle down 2.5%. not much reaction pfizer stock. they are down, but outperforming

pretty weak german market. also talking about the stock market, another survey out of money managers. >> that's right. u.s. money managers are optimistic about the stock market in the year ahead. 55% are bullish on stocks over the next year. nearly half think that the market is undervalued expecting the dow and s&p 500 to rise 6% by year end and the nasdaq by 7%. however, 81% are bearish on treasuries following the multidecade bull market. you are bullish, also. >> if you look at a dashboard of fundamentals for stocks, relative to other asset classes, it's very cheap still. and so names like home depore or

men city, i would recommend that the u.s. is still on sale as it relates to large gap global companies that are still growing around the world and look because of the cash balance sheet that the s&p 500 has, look for a lot of acquisitions like what you see today with the baby food. it's a great move for pfizer. when you have a 2%treasury yield in the u.s. and you can get 3% to 4% on most u.s. based large caps with high dividends, that's a very good long term prospect for stocks. usual getting two times the risk free rate and looks good on an opportunity cost basis. >> not to be debbie downer, with you what are our biggest head winds? about.

>> i think the biggest concern is the election. changes in the electoral landscape. the marco zi alliance if you will if that fractures in europe, what does that mean for the global economy. there are still going to be issues as it relates to us here in the u.s. i think our unemployment situation and taking nation is terrible. so still a lot of uncertainty, but you're looking at stocks since 2008, where they are today versus the last 25 years, they look quite attractive here. and sometimes as i've said, the consensus could be right. not say that we won't see near term volatility. but i do think that these guys will be right. >> all right. we'll have to leave it there. anthony will stay with us.

still to come, dutch credit default swaps approaching all time highs as talks on austerity measures break down. 

[ male announcer ] this is genco services --

mcallen, texas. in here, heavy rental equipment in the middle of nowhere, is always headed somewhere. to give it a sense of direction, at&t created a mobile asset solution to protect and track everything. so every piece of equipment knows where it is, how it's doing or where it goes next. ♪ this is the bell on the cat. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪ hard to escape the politics in europe.

dutch prime minister currently holding a cabinet meet to go see whether he can work out any deal on budget cuts needed to bring the country in line with eu targets after weekend talks collapsed. carolyn is in the hague. what are the prospects, what are the chances now that after failing to agree on necessary cuts, he feels highwaas to quit essentially call an election? >> the chances of an election taking place in either september or october are actually pretty high. but remember, they're still trying to find some sort of consensus on these budget cuts. with the elections looming in the fall, political positioning starts right now. the netherlands will most likely see its prized aaa credit rating downgraded. it is one of the four remaining

countries with that coveted rating. and maybe that's the more important one, the likelihood of the netherlands reaching the 3% deficit to gdp target set by the eu, those chances are very slim. and it does make you wonder not even a core eurozone company like the neter hands can achieve thoefs levels, then who can. markets are jittery. we saw the german spread at three year highs and cds spreads close to record highs, as well. >> all right. thanks for that. just worth pointing out that spreads between dutch benchmark debt and better man bunds have hit a three year view. ibex down some 3%. anthony, you said whatever happens with the politics, markets will force either side to come up with austerity.

us austerity without the benefit of an exchange rate cause as deflation deflationary spiral and that won't chief anything. i wonder if it's growth we're more worried about. >> i hear what you're saying. thely you have to devalue or right size. so i understand the argument that we need to pump more money into the system to try to create the growth. but what you're finding is that government induced stim uhe slus no longer having the expansion effect that people would have predicted. and we're sort of already pumped

out. a more prudent strategy would be to set targets for the populations and say we're going to spend 18% to 19% of their gdp on government services which includes things hike medicare, medicaid, whatever is the equivalent in europe. we'll do the same thing with the military. we'll cap things at around 18% for 19%, set the right expectations. western politicians are borrowing from the future and pay existing voters that money in the form of benefit so is that we can main taken our jobs. this is a failed strategy long term and i recognize your issue about deflation. but deflation and inflation are also about expectations. and we need these politicians now to step up and set the right expectations of what is realistic as it relates to what

we can afford for this generational live today. >> and that's the question. much more to come. meantime investors have a lot on their plate in the u.s. this week. they may divide their focus everyonely on t everyone evenly on the fed meeting and the earnings reports.

eu trade commissioner making his voice felt over serious concerns over the business investment climate after argentina repatriated ypf. saying it sends a negative signal to investors. absolutely it does. but i'm not sure what the eu will necessarily do about it.

we've heard an investigation into sky news over e-mail hacking allegations. sky news admitted that they made unauthorized entries into other people's private e-mails. so what will the probe focus on? >> that's true, they have admitted it and they in fact handed over material to the police and said that the the hacking was very much in the public interests and it involved one case involving e-mails around the notorious case where someone had faked his own death to claim life insurance and they hacked e-mails for his supposed wid did he who knew what was going on all along. so i think they'll be able to not justify that, but murdoch stepped godown as chairman and then this admission came out. so this is all very interesting.

and of course it comes as james murdoch is preparing to testify tomorrow and that will be a forensic grilling on just how much he knew about phone hacking and about the links to police and even alleged payments to police which could get news corp in trouble in the united states. and rupert will also be in front of the inquiry on thursday. and this is the longest period of time quodevoted to witnesses far. >> is his wife going to be there? >> i don't know. >> wondering if we would have a repeat of the target. thanks for that. you'll be following the questioning. jackie. >> walmart could face legal scrutiny, as well, following allegations of a massive bribery campaign at its mexican unit in

the past decade. "new york times" reporting that executives learned of this scheme in 2005 and an internal probe found bribes were obtained to maintain building permits, but they shut down the probe and failed to notify authorities. walmart is conducting an investigation into possible violations and now says it's alerted the sec and justice department of the new probe and began a review of compliance with the corruption law last year. meantime there's no u.s. economic data out today. it's a busy week ahead with reports on housing, consumer confidence, durable goods and first quarter gdp. the fed is holding a two day meeting with the central bank updating its economic forecasts and ben bernanke holding a press conference on wednesday afternoon. so all eyes on that. and another big week for earnings with about 180 members of the s&p 500 reporting. today we have conocophillips, d.r. horton, state street and xerox reporting before the bell. after the close, a mary prize

financial, net the fliks and it texas instruments. of course still with us, anthony, your take on earnings so far. do you think the momentum will continue? >> earnings have been quite good, yet the market stalled out. people are expecting that earnings will continue to outperform analysts expectations. what does that mean for the third quarter and second quarter coming up? i happen to think that we're going to have fairly robust earnings. the problem is we're having these earnings with a lack of job activity at least here in the just. so doesn't bode well for the data presented this week. >> those earnings are coming at the expense of course of the employee. the share of gdp that companies have at the moment is huge.

so is that balance going to change or not? >> i think the only way you're going to create job growth here in the united states is through the small businesses. i think what we've learned since the crisis at these larger businesses can head jobs and they can grow their earnings and their about the line, top and bottom lines, with less people. that doesn't bode well for the employment situation, you're correct, but the way to improve that is through small businesses. something like 60% of the job growth comes from small businesses. >> and i wasn't suggesting a pure keynesian strags. you can't offset a austerity with a weak currency because we're tied into a gold standard. so they either need to pull debt or go the other way. i don't see a middle ground. >> there's no middle ground.

the u.s. has the research currency and that's why we have more lat attitude on the monetary policy. markets will be concerned if the mercozy alliance if you will fractures. i do agree with you on that point. >> and we'll leave it there. that wraps it up for today's show. great to have anthony with us of course. >> and i'm ross westgate in europe. coming up next of course, "squawk box" and the count down of markets state side with joe, becky and andrew. we'll be back tomorrow and we hope you have a profitable day.

good monday morning. we've got a big scandal at the world's most powerful retailer, walmart, allegedly paying bribes in mexico to grab market dominance and to make matters worse, its executives are said to have covered it all up. european fears are growing as well. stocks extending losses overseas as the outlook for the euro economy grows worse. and u.s. sentiment is not immune. u.s. equity futures are point to go a rough start. it's monday, april 23rd, 2012, and squawk begins right now.