headlines from around the globe, all eyes on spain asth madrid has a credit downgrade. >> u.s. and chinese officials pledge mutual respect and cooperation as high level talks get under way this beijing, but the unraveling of a high profile dissident case strains the conversation. >> and socgen sees q1 profits drop but shares rally.

and the ceo says he's encouraged by the performance in april he start of the year. >> this quarter again confirm the capacity to generate profit. and a mixed bag of earnings out of germany. bmw records its best first record ever while supermarket metro suffers from penny pinching european shoppers. >> hello there, welcome to "worldwide exchange." i'm chloe cho along with beccy meehan. we're going to find out what is going to keep the tire sector rolling in a first on cnbc interview with continental ag cfo. and sticking with the auto theme, we preview gm's earnings. analysts say truck production could help the numbers, but find

out what else our expert is looking for at 11:35 cet. and what is nude, has green leaves and a bust and was last night beaten by a scream? stay tune for the answer. that is a $120 million question. >> the cost of servicing spanish debt expected to rise by more than a percentage point at an auction today. the treasury seeking to raise up to 2.5 billion euros in the first debt sale since their credit rating was slashed to bbb plus. a key factor to watch after the boost by the ltro holdings. banks holdings jumped to 30% in march. so the european central bank likely to keep rates unchanged and hold off to take any new steps to combat the crisis. according to economists, ecb

president mario draghi will want to see signs of firmer deterioration before take aing measures. the bundesbank has opposed any potential interest rate cuts or reactivation of the bond purchase program which could be used to bring down spanish borrowing costs. silvia, i was in madrid earlier this week and i didn't have much call for sunglasses. so i'm quite jealous. >> at least at the moment. in the morning, we were still freezing. so you don't have to feel so bad. yes, you put your finger on it, we have the spanish economy that's still faltering. unemployment that's still soaring especially youth unemployment, of course. a lot of structural unemployment. we have a banking system that is still in crisis and in dire immediate to restructuring.

and we've got a government that let's say it pays rip service to restructuring but is reluctant to really implement it, even though he would have the luxury of many of his other european colleagues don't have not to face elections in the next three years. so he could actually push through some unpleasant reforms without being punished by the electorate immediately. but all that is not happening. what is happening is that once again the pressure and the focus is on the ecb to deliver on things that are not in their mandate, but that they have to deliver if they don't want to restructure themselves out of business so to speak. we've had the two ltros, the shine is coming off, that's quite normal. and expected. we've seen that with qe 1 and 2 from the fed, as well, and from the bank of england that after a while sort of the real hammer effect is gone. and now we're talking about two

spanish bills auctions which will be up of a litmus test of how scared the markets really are about the spanish situation going tipsy-turvy again. and we might see a revival of the bond purchasing program of the ecb sooner than we think. the ecb so far has maintained the bond purchasing program is intact. we just saw no need in the past weeks or so to really jump back into the market. but that we know very well could change more quickly than anything else. and the concerns of drying up credit flow are still there because the real economy hasn't seen much of all that wonderful ecb money through ltro one and two here in the markets yet. >>. >> okay. stick around, silvia. i want to bring in our guest host and get back into this conversation, as well. chris wiley is with the us for

the hour. obviously we don't expect them to do a great deal it time around, but just sketch out for us the situation you think the ecb finds itself in now. are things deteriorating still for the eurozone crisis? >> there's no doubt that the economic data which we've had in april through the survey has been really quite disappointing. draghi a couple months ago was talking about the worst being over and a tentative recovery perhaps being under way.latest survey data which is significant because it's the most afford looking data which we get has got worse. so i noticed that last week when he was speaking, he changed miss tune a bit. so it would seem a likelihood of some sort of action on interest rates downward, of course, has increased. 58 out of 58 economists polled i noticed are saying there will be no rate cut today from the ecb. in the old days, the ecb used to delight in surprising markets

and it's certainly true, but if you want to have maximum impact from any moves, you should do it when nobody's expecting it. but the germans seem to be actively against it. but i would be surprised if you don't get some hints that an easing in interest rates might be on the way perhaps in if june or july. >> it's not just for interest rates. there's various things the ecb can do. we've had the two rounds of three year ltro talk about more bond purchases, et cetera. what do you think is the likely cause of action of the ecb could take some because we have more unusual measures comes out. >> the ltro was never a panacea. it was a liquidity fix. very necessarily liquidity fix. which was quite cleverly structured to have the subsidiary benefit, but in the short term, a funding issue in sovereign debt, as well.

but that was never going to persist. i'm sure they will do more if it's necessary. the principal which was clearly established at the beginning of the year is that the ecb will be the lender of last resort and that will remain intact. whether they'll come in and start buying more bonds, i think they will to support prices looks as if 6% is the level they will defend. but it would be nicer if we didn't get into that territory. you get into that game of what is the ecb to do, if it's not in harriman date, the market might say let's call the ecb's bluff. but i think that's still in the back more kpocket. >> chris, you were saying there's a hope that draghi might hint at further easing down the road. i just wonder whether he hasn't

changed the tactic, communication tactic. it sounds a lot like bundesbanker to me than trichet did because he seems to have gotten off the word coding, the monetary closely and the watch out for and next month and what not. i have the feeting that he won't let on when he cuts rates. am i wrnk? >> i take your point. it used on to be a code with trichet, it was all about those key words. and i guess his background as an investment banker rather than a central banker means he's perhaps less versed in that language. i'd love to see him come out and really do it today. really surprise people. and who knows, maybe he will. he surprised people with the ltro program last year. we're still learning how to live with the new head of the ecb. so i think you may be right, but

the markets need something. he's playing with fire a little bit. i'm not sure he wants to take that risk. so i'd be surprised if it there isn't something today, about not for the bulls, to put a bear of peril at the bears. >> we'll come back to that in a few moments. silvia, thanks so much. chloe, let's send it up to you. >> thank you so much. take a look at the asian map. a soft picture. the bounce we saw yesterday didn't have a longevity. quite a bit of caution given the ecb meeting and the auctions. japanese equity markets out of action today and tomorrow. we've been focusing in on the dissident drama happening in beijing, but we're getting pretty good headlines. one interesting headline to focus on is u.s. officials say

they're talking with chinese officials on easing up on this dividend policy. this is huge and could have huge implications in terms of how china manages to reform its economy. remember we know that the chinese government wants to get the domestic consumers to spend and that will somehow level the playing field. but the key point is even back up 2007, the chinese were talking about getting state run enterprises. fr 10% or 15% for the state. will this is going to have huge every implications because part of the reason that chinese consumers he said up saving is because social services are under funded. and that seems to be a critical point that they're talking

about. >> a quick check, too, on the european markets. we're seeing gains across the board, ftse lagger but still up 35 points or so. cac up by 1.4% and the ibex adding some ground to the good. a quick check of the bond markets. in germany, the ten year at 1.62. in spain ahead of the crucial auction, 5.86. 5.56 in italy. and here in the uk, the gilt just over 2%. >> and top officials from the world's two largest economies are holding high level talks at the strategic dialogue in by jink. timothy geithner says america

and china share a mutual interest in open property rights and these are certainly some of the issues the united states has long pushed. geithner recognizes china has moved towards a more market based exchange rate, but he does know that the yuan has more room to strengthen against the u.s. dollar and other currencies. he says a firmer yuan will give beijing more flexibility when it comes to balancing growth and inflation. take a look at the u.s. dollar versus the yuan, pretty much unchanged. hillary clinton touched on a host of diplomatic issues urging china to play its part when it comes to diffusing global tensions particularly with north korea and iran. clinton addressed prickly human rights issues which have taken center stage following the news

surrounding dissident chen guangcheng. >> as part of our dialogue, the united states raises the importance of human rights and fundamental premiefreedoms. because we believe that all governments do have to answer to citizens aspirations for dignity and the rule of law and that no nation can or should deny those rights. >> and our very own emily chan has been following these developments and she's standing by in beijing. and what can you tell us the latest developments? >> there was some concern earlier today or basically leading into this fourth strategic and economic dialogue the drama unfolding with dissident chen guangcheng. it may upstage or derail the talks that will be happening over today and tomorrow. but basically you heard from

hillary clinton in other comments about human rights, she did not mention chen guangcheng's name specifically in the case, but basically what happened is the foreign ministry has said they're extremely unhappy with how the united states is handling this case and they have this afternoon repeated their condemnation of the u.s. handling. chen is into longer in the u.s. embassy, he's believed to be seeking medical attention in a local hospital.he says he doesn't feel safe nor his family and they want to relocate to the united states. they have asked obama to help him and his family to do so. an official for the united states saying they are ready to help if he does not want to stay in china. now, earlier it afternoon, chinese officials say they have no information on him will that he wanted to go abroad. president hu jintao on his part has asked china and the united states to respect each other's concerns when comes to this case. so basically heading in to these

ro two d two days of talks, sentiment has been positive, but this is a headline story, so we cannot ignore it, as well. >> and we've been seeing quite a few headline flashes coming from the ssnd, but wondering whether the u.s. and china can go belong this will dissident issue and actually have a heart to heart session on how to rebalance their trade ties, how to proceed with economic reforms. what are you hearing? >> of course it is very important that these two big countries be able to cooperate. and of course this is a big year for both china and the united states as they both will be engaging in leadership changes later it this year. now some data or some comments coming out in regards to the trade surplus between the two, the ministry of commerce in china saying that the trade surplus with the u.s. is due to u.s. export controls. and with that, geithner has pledged action to loosen export

controls before too long he says. now, the april trade surplus is expected to come in at around $10 billion. and that's compared to 5.35 billion in march. and also they're saying that a exports are likely to have risen, but only slightly. >> emily, thank you so much for that. we'll check in with you in a bit. let's also get comments from chris wiley. certainly a delicate time between the united states and china. but what do you think is really the focal point for china to come out of its current growing process and get to the next stage? is really the exchange rate, is ultimately reforming the economy? what do you value the most? >> the debate on the exchange rate is quite interesting. we've all lived for years with this notion that the exchange rate is undervalued. but it's interesting to note that the international monetary fund has actually reversed its position on this point and

concluded that actually the exchange rate isn't undervalued after all. and when you look at the balance of trade for china, there's been evidence to suggest that that's correct because the real problem has been the trade imbalance with the u.s., but not other trading partners of china. and of course the japanese yen has been extremely strong. so it's an interesting base on the cexchange rate. the big consensus is that the chinese currency would gradually appreciate, it's become more of a two way debate. so that's one thing. the rebalancing of the economy, that's already been discussed a lot. that's under way. wage inflation is going to continue to happen. so you can sort of appreciate your costs in two ways. you can let your currency rise

or your costs rise. and they're certainly doing that. >> and interestingly enough, we already have a comment from the commerce saying the rate plays a minimum role. so we'll keep following the flashes. just to though we'll have more coming up from the and you can over in beijing. emily chan will be back with us in in just about 20 minutes. >> and time to go for a quick break. still to come, con continental says it's confident about business in the second quarter.

so connie thental time maker says it's confident about the start of second quarter and is on track to meet targets. we have the cfo with us. and about patricia is also with us. to start with, how is business going in europe? we've been speaking on the show about how things are continuing to deteriorate for the eurozone crisis.

could this have a negative impact on your business in this region in coming quarters? ? >> actually, we do see a stable development for the next two or three months.>> actually, we do development for the next two or three months. first quauks production was down 7%. we see as conatinental a stable quarter and slight improvement to probably minus 5% for the total year. >> some analysts are saying you could have been more optimistic. tell me about the great clouds you're seeing that keeps you from perhaps upping your forecast. >> actually there are for on concrete gray clouds which we are seeing. but i think like you were starting a little bit, there are events which could influence the

financial market which is are still volatile and could have an effect as well on the real economy and i think nobody can exclude that for europe at the moment and this is why we're still careful and we would like to have the second quarter, as well, if real terms to finally forecast or perhaps change our forecast for europe and for the total continental group. >> so we may have to look forward to that one. i'm happy you mentioned the second quarter. i'm wondering about the price development. rubber material, but raw material prices in general. what are you calculating with and how will you defend your margins? >> compared to last year, raw material price increases. it year, much more moderate. you might remember last year we had roughly a billion of raw material price increases. mostly on the rubber side. we foresee from this part only but still another 100 million this year.

on the automotive side, we see rare earth as a topic for us. how are we dealing with that, last year we did increase our prices to the end consumer on the rubber side and managed finally to pass the bill uniionr to the end consumer. we probably have to continue in that if the raw material prices are developing as we have seen now. >> wolfgang, this is chris wiley in london. i had a similar question but more focused on labor costs. both to yourself and perhaps for your compatriots in germany. we've had reports of wage pressure. is that something which you're seeing and how do you balance that out internationally? >> well, of course will is some wage pressure, this germany there are negotiations at the

moment in the metal units. we see wage pressure right now, areas of the world, southern america, as well in parts of china and some cities. so this is not purely a germany or one region specific problem. while this is included in our guidance for this year and we have to try and do everything to pass this over to our customers, as long as we cannot compensate it with additional ratio measures. >> you are seen as being far more -- raw material prices also prove to be volatile, will that affect your cash generation and result in more operating numbers? >> we are more leveraged. this is stemming out of the acquisition in 2007.

but if you k at the last three years, we have managed to reduce our debt substantially there more than 11 billion to now 6.about 8 billion. and with that the last crisis, were beside one of the cries city quarters, we were cash positive. so our cash generation capability is quite high and there should be any other crisis coming, no reason why this should be different in a future price. this is a cash strong company. >> wolfgang, thanks for coming along today. and thanks also of course to patricia. let's move on. shares in socgen after the firm beat forecasts reacting to the results, socgen generated good

risk management and given reassuring guidance on solvency. the ceo told us the bank would stick by its full year targets despite a challenging year. >> i'm happy with the beginning of the year because there are three main elements. first of all, sound business performances across the group. if you look close to the first quarter 2011. secondly, strong capitalization. goes from 9% end of 2011 on 9.4% in just one quarter. and the results though the capacity on on do that. we give more information on

basel free road map and we confirm that we will be able to meet the 9% hurdle at the end of the present. thanks to our revenue generatio generation. dispose of assets might be used to finance selective group of our businesses. so a lot of comfort on to deliver the basel free topics. >> what's the outlook of the second quarter? april was rather difficult on the financial markets. >> it's difficult to comment. we've just had one month and we all know there is a seasonality. and so in the first quarter, i would say the rebound after six months which were difficult in some element which is were nonrecord, but overall, april remained i think pretty decent. i'm very happy in the way we managed the risk also.

of course on the credit risk, we see no deterioration. so that also gives me comfort going forward. >> breaking news on the uk services pmi figure. has fallen more than expected. the april services pmi number coming in at 53.3. that's down from march and it's worse than the analyst will expected. analysis of that number after this break and more on the pmi figures. of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes...

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all eyes on spain asthma drid attempts its first pond sale after suffering the credit rating down grade and with the ecb meeting in barcelona. >> united states and chinese officials pledge mutual respect and cooperation as high level talks get under way in beijing, but the unraveling of the high profile dissident case strains the conversation. >> and mixed bag of earnings in germany. bmw records its best first quarter ever while metro suffers from penny pinching european

shoppers. so we've just had the uk services pmi data out. slowing more than expected for april. just to bring you the headline figures, april number came in at a reading of 53.3. worse than expected. the consensus was for 54.1. and also worse in march, too, when we had 55.3. so a decline had been expected, but not such a steep decline and we are seeing an impact on the markets. sterling falling as a result of that, for instance sterling down by 0.1 respect. so off the lows of the day. let's get to rob dobson to help put the figures together. so why the steeper decline than maybe analysts have been expecting? >> again, i think the key point to mention here is we're still seeing the service sector expand. it makes up 75% of the uq gdp, so to see it expanding is poos in itself. but we've also seen new order

infos continue to rise. but, yes, this is a five month low and coming on the back of the down beat gdp numbers we saw for q1, it suggests the uq economy is maybe not as weak as data suggesting. tracking broadly sideways. >> you can tell us where the relative strength and weakness is amongst the sector? >> areas such as financial services doing better and maybe the official day it take showing. where we tended to see some weakness in the past has been in the summer based services. but, again, if we take this it on the back of what we saw from the manufacturing and construction numbers, they were both also showing that growth

slowed in those sectors. >> we know financial services has been historically pretty important for the uq, but it's rather beleaguered by political concerns.k, but it's rather beleaguered by political concerns. we have the mayoral election in the uk today so that's particularly in focus. do you have an impression for how well the financial services sector can keep up with that relative strength compared to its peers when there are pressures from outside on how they do business? >> what we're really asking about is current conditions. we won't get an idea as to what they're seeing for the outlook based on political factors. this is a whole uk survey. london obviously makes up a

sizable portion, but not the entirety of it. but if you get a mayor or a government which is less favorabl favorable. >> we have to leave it there. thank you very much for coming in, rob dobson from market. so a mea culpa from the bank of england. king has admitted the central bank failed to properly identify the potential risks in the banking sector. the bank of england should have given a stronger warning about the financial crisis. >> we should have shouted from the rooftops that a system had been built in which banks were too important to fail. the banks had grown too quickly and borrowed too much and that so-called light touch regulation hasn't prevented any of this. >> mervyn king this there, governor of the bank of england. and banks certainly in focus

asia side, as well. boc bank of china for $2.5 billion and they sold it at the lower end of the indicative range. >> heart, as a matter of fact market watchers hold different views on the sale. signals a shift in investment strategy as tomasic was burned by it exposure during the 2008 financial crisis. so the say the investor may want to further trim stakes in underperforming chinese banks. but doesn't necessarily bode ill as temasek picked up a $2.3

billion stake in icbc. although chinese banking stocks have rebounded so far this year, the put of pnkss remains unclear as slow growth and hurdles continue to playing the sector. last week the big four posted weaker than expected first quarter earnings. >> several raised a lot wiof questions. thank you so much for that. and staying on the theme of china, the big dialogue with the extra teenlg r teenlgic and economic dialogue happening in will beijing, hillary clinton touched on a host p dip lof diplomatic issues it her remarks at the dialogue in beijing, clinton addressed human rights issues which has taken central stage following the news of chen

guangcheng. >> the united states raises the importance of human rights and fundamental freedoms because we believe that all governments do have to answer to citizens' aspirations to-to-dignity and the rule of law and that no nation can or shoot deny those rights. >> chen has appealed for asylum in the united states, a deal that had reportedly been struck between beijing and washington. chen now says he fears for his safety if he remains in china and wants to take his family to the united states. chen left the u.s. embassy on wednesday and is in chinese control in a beijing hospital. china says it has no comment on chen's request to go abroad, but beijing has expressed its anger over america's involvement in its domestic affairs. and on the economic front, treasury secretary timothy git in they are says america and china share mutual interests

especially regarding open markets and intellectual property rights issues. the u.s. has long pushed. u.s. officials said china was considering significant reform such as the feasibility of boosting dividends. state owned companies are require to go pay. this is something economists have argued that beijing should do. they say the additional revenue will help beijing pay for social programs which in turn could fatten its citizens pockets. emily chan has been following this and other developments. so just when we thought dissident issue could take some of the attention, it looks like progress is moving right along. what do you think? >> that's right, we are well into of course the dialogue and earlier this morning we got comments coming out from hillary clinton as well as timothy geithner. we have saying both side shoes make the most of the platform to make cooperation in trade, investment, finance,

infrastructure as well as science and technology. i'm joined now by jason lee, managing director and ceo at yatsom associates to talk more about the two days of talks. thanks very much for joining us today. i want to start with relations. hu jintao says china and the u.s. need to trust each other. is there a lack of trust right now? >> i think there's nationalis tick element wills on both sides, but i think both countries realize how important this bilateral relationship is. you go so far to say that future peace and security in the world, the stability of the global economic system, really depends on china and the u.s. getting on together and i think the real decision makers on both sides understand just how important that is and will make it work. >> in erms of the decision makers, this is a year of leadership change for both countries. will the consensus that they reach by the end of the two days

actually be carried out by the success ors? >> so hard to say. i think on the chinese side, china is known for its conservatism it in politics. i think so people will be surprised that the new leadership team will make any large changes this policy direction. particularly before they get their feet under the table for too long. >> like various things that we are expecting them to discuss, of course the yuan, we have seen them widen the trading ban by 1% each day, international -- will intellectual property as well as market reform. isn't this much of the same some anything new you're expecting this year? >> i don't think there have been a lot of great xenkt tagss or public expectations. a lot of these talks have been kept very much under wraps. i think there may be interesting surprises that come up in terms of concrete things that are put on the table. but you mentioned market reforms, intellectual property currencies. all of this i feel is driven by this this economic reform, it this reform generally that china

is undertaking and think a lot of the specific issues will fall out as a consequence of this broader reform. >> on this reform, there has been suggestions that the united states and china was going to be reforming state owned enterprises basically raising the amount of dividend that they have to pay. you can weigh in on this? >> yeah, about will terms of reform, china is shifting the nature p before it was all about exports, chief labor, massive investment. on which inefficient investment. thousand it's so much more about domestic consumption, about improving competitiveness. breaking down some of these monopoly, making sure capital is allocated in a much more efficient way and making could i sneeze much more competitive is part and parcel of the reform agenda. so in many ways the world doesn't have to bash china or force china into for instance appreciates the renminbi, but that is part of the reform

agenda. as the renminbi slowly appreciates, it shows there is the emphasis being taken off exports and putting more into domestic consumption. that is part of the agenda. >> thank you very much, jason lee, managing director and ceo at ya tso this. associates. also getting comments that china should liberalize interest rates graduatery. so srnl remains to be seen how progress we see. and switching gears to south korea, samsung unveiling it latest flagship smart phone. out of london, is in the big challenge to the iphone? >> yeah, the phone will be out in london in about enhours time. why london? samsung is trying to ride on the hype over the summer olympics

grabbing the hearts of the global customers. according to local media reports, the phone is set to run on the android os, its broadband technology also set to download data twice as fast as the previous third generation phones and the screen set to be wider, possibly incorporating a 4.8 inch display. very slim. the latest will further boost samsung's q2 bottom line and remember 70% of the company's operating income came from its hand set division in q1 and with the global smart phone becoming a race between samsung and apple, competition will heat up of course. bh back over to you. >> still trading at record highs. getting flashes through with results of the spanish bond auction. this this is the first since the downgrade by s&p the past few

days and confirmation that spain has gone into recession. so selling the 2017 bonds with a bid to cover ratio of 3.1, sorry, 3.7 it seems to be. the last auction was 2.7. so bid to cover ratio has increased for the spanish auction. they have sold 773 million euros for that 2017 bond. the 2015 bond bid to cover was 2.9 and last auction it was 2.4. so the bid to cover ratios increased for both of those auctions. just waiting for the average yield to come out. that is the crucial one we'll bring you that as soon as we have it. but they have sold 979 million you're rows of the july 2015 bond and 764 million euros of

the january 2017 bond. and the bid to cover ratio of each of those has ticked up since last time around. just waiting to get the outcome on the yield. but just looking at what's happening with the euro, we're looking at a level of 1.3142, just dipping slightly against the dollar right now, but we're still trading in this narrow band where we've been for some time on euro-dollar looking too across to what's going on on the spanish bond markets and where we're trading right now on those yields, we have the ten year at 5.83%. so below that 6% level which has been causing a headache just recently. so the total sale of just over 2.5 billion euros. still waiting for the figure on those yields, but we'll get that to you just as soon as that comes through. spain has managed to get away

just above the top of the range in that government debt auction. we'll go for a quick break. still to come, though, what's nude, has green leaves and a bust and was last night beaten by a scream? stay tuned for the answer to that $120 million question.

bust and was last night beaten

spain's july 2017 bond came in with an average yield of #.96%. that is an increase from last time around. the last auction was a yield of 3.696%. so up by over a percentage point there. the january 2017 bond yield coming in with an average of 4.752%, up from 3.565%. so again up by over a percentage point. and the shorter dated bonds, the 2015 bond, average yield came in at 4.037%. last time that was 2.617%. so significant move to the up side on the yields for that auction, as well. let's just get a thought on this issue now with chris wiley who is still with us. so spain got away more than they

had hoped. the bid to cover rose for each of those auctions. but the average yield has gone up significantly. is that a disappointment to you? >> i'm not surprised it was well covered at those yields. the point is they can get the debt away, it's just a matter of the rice. so that's good news in a accepts. it shows that demand hasn't completely dried up, we don't have a strike. but those are pretty high yields and does i will straight the problem that spain has. it's interesting that six months ago, we were all worried about the italian debt situation. now it's all about spain. italian ten year yields have drifted lower to about 5.5%. spanish yields have gone up. it's basically about the banks and the fact that the spanish banks, we've not yet seen a convincing resolution plan for the spanish banks and people therefore think that the bank liabilities will fall back on the state and therefore the

state less good credit and that's why the yields go up. so the key remains let's get a decent bank resolution plan in place and then maybe we can see some stabilization in these yields. although rising quite quickly, not unsustainable, provided they get a grip of it over the next year or two. >> which is the crucial point, isn't it. let's leave it on that note. chris, thanks for staying with us the past hour. so it has been a big day it for corporate results in germany, as well. consumer goods firm beat forecasts. its new strategy to focus on its flagship skin care brand is paying off. bmw also moving higher by 2.8% after strong demand from asia. companies has recorded the best first quarter pigs ever in terms of sales volume, revenue and

earnings. metro trading by 1.2%. a surprise loss in his first quarter. and higher energy costs in the first quarter. the firm will have to hike prices to offset rising costs. and the other earnings out of germany, patricia, we have been keeping you busy. >> yes, but it was fun. i like these kind of days. definitely in and out of the numbers. it was very interesting to see what loout tan sa had to say. definitely worse than expected, but interesting to see how the shares react. top line revenues were up by 5.6% and better than expected. so what we have is lufthansa trading down about 1.5% and then they moved in to positive airer to and now they're flat lining. so i guess the announcement of really doing something about the

higher fuel costs like for example cutting 3500 administration staff is something that at least the company is trying to tackle. other interesting numbers coming through this morning, metro, you mentioned them will, i think here dispose able income is a key issue. also they are reducing investments, trying to not necessarily indonesia for example trying to save money there. and better than expected raising forecasts. >> okay, patricia, thanks very much for that. a busy day for german earnings. we still have a whole hour to go of the show. jackie has joined us in the states. what else is coming up? >> good morning, ladies. it's a record bryce for one of the world's most famous pieces of art. edward munch's painting the scream was auctioned last night. the final price, $107 million. but including commission, the bill came to $119.9 million. the previous record was for picasso's nude green leaves and

bust which sold for $106.5 million in 2010. >> it was an amazing night. to see the world record smashed. but i don't think anyone was surprised. when you add up the quality, rarity, condition, it adds up to a masterpiece, you know. >> the buyer matt winning bid by phone and sotheby's hasn't revealed the person's name. there are only four versions of the scream in existence and this was the only one in private hands. it was sold by peter olson, a norwegian businessman. that's it for us for the moment. a lot more coming after the break. break. [ 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. ♪

welcome to the so he. all eyes on spain. madrid sees borrowing costs jump and the ecb meeting in barcelona. >> u.s. officials say china is willing to consider reforms that may force state run companies to boost their dividends to the state. the change aimed at increasing the spending power of it citizens. >> and sock general sees first quarter profits drop, but shares rally as the french bank has a 36% jump in fixed income revenue and the ceo is encouraged by the

performance in april. >> this quarter again confirms the capacity to generate profit. it is clear. >> so more breaking news for you. the french debt auction will this time around, now france has sold various bonds today. let's start with some of the headline figures. the 2025 auction, they sold 1.473 billion euros of 2025 bonds in france. the bid to cover 2.5. so well covered there will. and the average yield coming in at 3.31%. the 2022 auction as well, 3.2 billion euros of that bond. 2.96% was the average yield. the bid to cover 1.98%. so france coming out with various bonds today. the average yield on the 2017

auction, 1.89%. the bond yields then below previous levels as had been expected from that bond auction and this in the context in spain. results came out as expected, we saw average yields moving higher on the span, auction, with you very well covered across in spain. a bid to cover that was improved from last time around. so spanish and the french bond auctions getting away pretty much in line with what had been expected. we also have breaking news from eurozone ppi figures, as well. the march factory prices increasing by oil really. producer prices including oil increasing. the producer prices up by 0.5% month on month, the draft an mcof 0.6% and according to the reuters consensus figures, the

producer prices year on year number an increase of 3.of 3.3% far from analysts expectations. the french auction, spanish auction, all happening here. it this is what's going on in the equity markets as we see the results of that ticking through. we had already seen equity markets just coming off the highs from the last time we checked in earlier in the show. gains still 1% for the dax, cac and ibe sxchlt. so just off the highs earlier today. the ftse just up by 0.4%, positive and coming off the highs of the session. switzerlan switzerland, almost half of 1%. >> taking a look at the u.s. futures, not seeing much of that

positive momentum trickling over here. a slightly higher open, dow, nasdaq and s&p just above the flat line at the moment. stocks ending mixed yesterday after recovering from earlier declines. we saw the dow and s&p lower, nasdaq logging a nine point gain. worries of course over the weak adp employment report keeping investors on edge ahead of tomorrow's jobs report. we saw al company at biggest loser on the dow, intel of course leading the way higher. one of the technology names, energy and financials led the s&p lower for the day. >> let's get back to the news out of spain. the cost of servicing spanish debt rose by more than a percentage point today. treasury managed to raise just over 2.5 billion euros above the top end of the targeted range. in the first debt sales since standard & poor's slashed the credit rating and also since the gdp figure out which confirmed the country is if recession. joining us now as our guest host

is ian, managing director of absolute strategy research. as expected, yields in spain pushed a good deal higher. but they had a huge number of bids for this debt, very well covered. how much of a concern is spain when we look at the levels they have to pay to pay off their debt? >> i think you still have clear problems here. our concern is that eurozone sovereign debt is trading much more like corporate debt. and so anytime that we get economic weakness coming through either globally or within the eurozone, we'll see these yields being pushed higher in the periphery. and so our sense is that this crisis is not resolved. clearly spain is trying to take measure, but the bad news is that it still looks as though the ecb has lost control of the front end of that yield curve. they haven't managed to pull

down those peripheral yields across the board back towards the type of lower rates in the way that the fed has done in the states. >> account can the ecb do that? they still have problems in the banking sector. still an over hahang. some of the figure i read were tear he guying. unemployment at 25%. hundreds of billion of euros of overhang in property and construction. >> the eurozone banking system is probably still one third too large. so we expect that you'll see further consolidation, qui sooi nationalization and certainly the involvement from both the eurozone shorts and the imf. nationalization and certainly the involvement from both the

eurozone shorts and the imf.ui nationalization and certainly the involvement from both the eurozone shorts and the imf. our sense is that over the next month or so, you'll have further economic weakness which will once again intensify the problems for the eurozone markets. >> let's bring jackie in. >> as we look at the bigger picture, obviously the ltro has bought us some time, but when we're looking longer term, how long will take to work these problems out in reality? >> if you look at history, what you see is that look back at the latd continue american debt crisis for the u.s. that took a decade to work out. we're still a listening way through this. for us, there will be some

technical measures, things like the ltro liquidity it, but the bottom line is that monetary policy has to loosen dramatically enough to more than offset the fiscal tightness that you're seeing imposed. and the only way you can do that when you're already close to zero interest rates is for that euro to weaken. so our conclusion here is we'll independent up with the euro well below its purchasing power of 115 against the u.s. dollar, probably closer to parity. >> ian, we'll come back to you very shortly, but in the meantime, let's move on and figure out what's going on with the ecb. likely to keep rates unchanged. run us through some of the options that are out there for the ecb. >> talking about the discussion you just had, i'm sure the ecb and many european leader would

be only too happen if the euro were headed towards 120, 115 or even parity. but lo and behold, 2 1/2 years into the crisis, we're still are we are now. stands to reason there are currency structural issues that do still support the euro because can't be because the euro's own economy is going so strong. but the options, i think in terms of the options in terms of probability, we're not going to see any rate cut, we're not going to see any new projections in terms of new economic outlook. we won't see a new ltro. but of course many a market participant is gazing at the ecb as if it were a kind of magic show and they could pull out yet another rabbit out of their monetary hat every time they come along. i'm not sure they got that many rabbits left to put it mildly. could they come in with rate cuts? yes, mario draghi could certainly surprise us.

we know that he's done that before. but whether that would really swing more than half an hour's fun in the markets remains to be seen. the interesting angle might very well be the discussion that draghi had with angela merkel last week when they were indeed talking about not only honing in on fiscal compact and austerity, but maybe what this eurozone needed was something that might be called a growth compact. and that's something indeed mario draghi had put a finger on even at the last press conference. so maybe we hear a little bit more about that what could be done to spur growth. but the ecb can at best give us some flanking help here. >> silvia, just coming back to ian here, just taking you up on that point, while i agree with you wholeheartedly that we'll see very little from today's meeting, if there is will this willingness to see the exchange rate weaker, my view is what we would love to hear from the ecb

is that a lower exchange rate is not inconsistent with our inflation targets. just that phrase i think would be very useful. >> i agree that's what the markets would leak to hear, but not necessarily what you get. the ecb never comments on the exchange rate. they haven't done that in 12 years. >> because it's the politicians decision. isn't this the point where we need to see the ecb and the politicians talking from the m same sheet and talking about the growth compact being achieved and without an inflation risk. >> yes, but even if you look at what the u.s. has done, the u.s. has allowed a lower exchange rate, but what did they say, what was their verbal line, they've played lip service.

every time trichet said, yes, but my good friend ben said that the u.s. stands for a strong dollar policy. they've always said one and allowed the other. ecb has never really said one continuing or another about the which change rate. european politicians have not said one thing or another. and yet the euro keeps going stronger. talking the euro weak i don't think that would help. it's never helped in the past to talk your currency weak. to allow your currency to get weaker, that is indeed the magic trick that the u.s. has done for many years and said, no, no, we want a strong dollar and they got a weaker dollar and they smiled their way all the way to the woolage. >> silvia, thanks so much for that. and also ian will be staying with us for a good bit longer yet. and still to come, general motors is due to report results at 7:00 a.m. will the automotive giant follow in the steps of it german peers and see profit rise on asian

demand? we'll have analysis on that.

welcome back. time for the global markets report. let's start in the united

states. since the bond auction results in europe have come out, we've seen the futures go slightly lower. looking at a lower open on wall street. if the markets were to open now, the dow would be lower by merely 17, nasdaq by nearly 4 and the s&p 500 lower by nearly 2. this after a mix willed session yesterday but we did recover from earlier declines. worries over the weak adp number setting the stage for tomorrow's jobs report. investors on edge. energy and financials were the worst performing sectors. how is it in europe? >> loads to digest. in the equity markets, we're off the highs of the session, but we are higher nonetheless for each of the major markets, as well. ftse 100 up by 0.3%. and we have dipped below the 1% levels that we were at when we last checked in on the markets, but the dax still higher by 0.8%.

and in spain, levels of just over 1% to the good for the spanish trade. let's have a lack, tc look at t markets. we've had results of the french and spanish debt auctions. in germany as a comparison, the ten year in germany is at 1.61, so very low yields will. this has been the theme of this safe haven trade. in spain where we have had levels of over 6% on the spanish debt, we're looking at 5.8% right now. the auction of spanish debt got away and they had a huge number of bids. bid to cover was very high. but when you look at the yields that have move up by over a percentage point since the last auction, that can explain parts of that. we have seen a shift to domestic investors, too, for the spanish government bonds in the past few weeks. that has been evident from some of the data. now, in italy, 5.5% is where we are on the ten year debt. bear in mind as we were just

talking about, it's not long, just a couple months ago since we had italian yields well above the spanish yields. they've reversed since then is the areas of concern for investors for the eurozone crisis. and finally here in the uk, the ten year is at just over 2%. so checking if to the euro rates, euro-dollar still slipped by 0.2%. we had ppi data out today, as well, for the eurozone. we see oil continues to be an issue as far as the inflation picture is concerned. 1.3131. euro dipping by 0.2% against the dollar. dollar-yen trading at 80.0. the dollar just moving up by 0.2%. aussie dollar down by after a percent. 1.0277 roughly. and the sterling is at 1.6174. sterling down by 0.1% or so today. we had services pmis out during

the show, as well, we had the chief economist there for market joining us to talk through the figures which had declined more than expected. sterling con raiste sterling contraction till still above 50. >> you can understand why there was caution kicking into the asian section because of worries about what the yields would be in terms of spanish and french debt auctions. services pmi you talked about, as well. so certainly that ral aly that we saw didn't last long and ultimately as we gear up for the big jobs data out of the united states, this is how we're looking and continue to grind a slow move in the equity markets, as well. remember, we've also been focusing on china especially with the sned, a couple big headlines came through. one big takeaway so far, tomorrow the final session, is about what the united states officials have been saying about what chinese companies, state owned companies will will do in terms of returning some of their dividends back to the state. they already have that policy in

place. they've been talking about lifting the ratio currently somewhere around 10%, 15 about% to even as high as 30%. how much they could enforce the state companies that's going to be a critical issue. because this this is an issue that goets all the way back to 2007 and a lot of the state companies have been making good on their word. so this is going to be another key issue, another quick flash came in just a short time ago, the pboc governor saying that they are interested in liberalizing the exchange rate, but that also probably will happen at the chinese pace, if you will. so we'll keep following he's developments, as well. these events come against the backdrop of this disso he dent issue. deny chaguangcheng wanting to go the united states. >> china and the u.s. still in

talks about chen. chen spoke to me from his hospital bed and says he wants to go to the u.s., but throughout negotiations while in the u.s. embassy, he said he wanted to stay in china. u.s. ambassador says chen was never pressured to believe, but chen says he believed if he stayed, his family would be sent back and possibly face harm. he told me he was given a very warm welcome at the u.s. embassy initially, but then interests came into the equation. my interpretation is that the u.s. wanted to give china face and avoid tensions ahead of the talks. u.s. and china put on an alls well front today as they opened the strategic sxhik talks. secretary clinton did did mention human rights, but most of her remarks were around cooperation. president hu jintao urged mutual respect between the between countries. with the case receiving so much media attention, it is likely that china needs to salvage it face that has been lost by two embassy incidents in the past few months. so chen may not be allowed to go to the u.s. immediately, but judging by the past cases,

similar cases, the release may come later. what this does is highlight the degree of human lights abuses at china local government levels. i tried to contact the government of chen's hometown and they said everyone has left and nobody could do interviews. meanwhile china's global times newspaper says this issue has been blown out of row portion by the u.s. government and western media. back to you. >> and after talking to chen guangcheng earlier this morning, she tried to get back in touch with me later in the away, but what i've been tolden t is that phone line is completely dead. so maybe he is out of touch, maybe the authorities are doing -- it's hard to tell from our angle. but that will do it from us in asia. have a fantastic show, guys. >> all right, chloe. have a great night. meantime, still to come on the show, shares this socgen are up over a percent and a half after

earnings beat forecasts. we'll hear from the ceo. ffrs

shares in soeck going highe on earnings moving ahead of expectations. socgen demonstrated good risk management and has given reassures guide answer.socgen d management and has given reassures guide answer.expectat. socgen demonstrated good risk management and has given reassures guide answer. >> we have low sovereign exposure. around 600 million euros. so that's in my view very strong comfort for the people who might not be confident in the capacity of spain. >> ubs annual shareholder meeting later today after a similar a anywhescenario played urging investors to vote defense what they deem to be expencessi pay. some shareholders say the pay structure is not strongly correlated to performance.

i'm not prepared to say something that will make me look like an idiot, a rare outburst from george osbourne. they struggled to reach a deal on bank complaint requirements. osbourne accused other ministers of trying it to side step the capital rules laid down by the basel committee. arguing that he represents the largest financial center in europe. the uk chancellor reduced to read the news on his phone as he waited to be included in discussions that went over ten hours. is ian, this brings us back to the issue of banks having to get their house in order. is there a political will to make this happen? >> i think there is a political will, but what we're seeing, the difficulty about the negotiations highlights the scale of the problem that's out there. european banks are down 5% relative to nonfinancials over the last 12 months.

and when we've given back most of the gains that you've had post ltro. i think that our concern is it that until we get a growth narrative coming back, until we get resolution of the way that we saw the irish tackle their problem, as i said,s's about merging these banks and then recapitalizing them with international money. you can't rearrange the deck chairs on the titanic. you have to get fresh capital coming in. then you're not going to have a resolution to these crises. >> how do you see equities valued? >> what we're saying to investors is if you're really an investor, you have a three to seven year time horizon, equity valuations in europe are great. what we'll end up with here is a region that is very structurally different from the one that you had ten-years ago. short term, however, we are still in these political sized

capital markets where sentiment is king. and that means that you just have to be looking at things like the economic sentiment, is that rolling over, is that getting so bad that actually things can only get better. is the actual trading sentiment at an oversold level. at the moment, we're in very neutral territory for both of those. so our sense is that you aren't going to find a big direction and you'll be driven off tomorrow's data. >> we are standing ahead of the french elections. an important factor when we're talking about the economy within the eurozone. how does the outcome of the election impact what we'll see in terms of policy there? >> i think we're not convinced temperature change policy a great deal. the scope for adjustment in france would be fairly limited.

weetd like confirmation that the new french government don't have a willingness to lee negotiate the righty. we don't believe that they will. but if anything, what might be a slight left ward move would help to encourage more of a growth dialogue, a growth strategy and really force both germany and france to unite together to provide a slightly different narrative from just the austerity narrative that we've had up until now. >> all right. we'll leave it there for the moment. ian will stay with us. coming up, general motors reporting first quarter results in about 90 minutes time. will the company be able to maintain momentum sense regaining its ground as the world's largest automaker last year? we'll preview those numbers coming up next.

headlines from around the globe, all eyes on spain. madrid sees borrowing costs jump. ecb meeting today in barcelona. >> u.s. officials say china is willing to consider reforms that may force state run companies to boost their dividends to the state. the change is aimed at increasing the spending power of it citizens.

>> and socgen sees first quarter results drop, but shares rally. and the ceo says he's encouraged by the performance in april. >> in quarter confirm the capacity to generate profit. >> if you're just joining us, let's take a look at the u.s. futures. looking like it will be a slightly lower open at this point. the dow could be lower by 10 of this, the nasdaq by nearly 2 and the s&p 500 just under the nataline. this after we had a mixed session yesterday after recovering from an early decline.

in-ha investors still on edge before the key jobs report tomorrow. >> equity markets managed to hang on to gains but have come off the highs of the session. the ftse 100 is just higher by about about a third of a percent. smi relatively weak, as well. in in the bond auction, they got away as much government debt as they had wanted. european central bank likely to keep rates up changed. silvia is will barcelona to cover the event. spain sees its borrowing costs jump he first debt sale since that s&p downgrade. silvia has more from barcelona. >> obviously that's not good

news, the fact that the borrowing costs keep going up for spain, as well. latest round of bond auctions haven't calmed nerves here. but not a disaster. what can the ecb do in terms of help the spanish restructuring process. the bottom line is that spain has to get its act together. europe can help, of course, with some flanking measures. we can talk about the esfs and the esm, what they can possibly pump into the spanish banking system. but the bottom line is we have the government in the plush position of not having to face the electorate for another three years that has to really push forward with structural reforms not only on the labor market ugs

maybe combining some of the banks. so the ball is clearly in the court of politicians, but they keep kicking it back to the ecb and keep asking for more flanking measures there. what can the ecb do? the tool kit is well-known. they could lower interest rates further. that doesn't seem to be in the cards certainly today. they could come with more ltros, at least long term. that doesn't seem to be in the cards anytime soon. and they could come with -- they could revise the bond purchasing program which is something we might be seeing nearer to the time. the ecb has insisted so far that it's never been abandoned, that it's they ever been abolished, but it's been dosh mant and the ecb so far has only stepped in

when they felt there was disorderly conditions. at the moment at least that isn't the case. >> thank you so much for that report, sylvia. silvia joining us with the latest. switching gears, general motors reporting first quarter results at 7:00 a.m. the world's automaker by sales is forecast to earn 85 cents is share on revenues of nearly $37.6 billion. high sales of trucks could be offset by weakness in europe. gm's april u.s. sales fell 8%, but is raising its full year targets. joining us to talk more about it is andrew jackson, head will of automotive analysis. and ian harnet is still with us. expectations not on the high side, but you remain cautiously optimistic? >>. >> yes, that's correct. certainly what we can see with regards to the april figures for u.s. sales, maybe not quite what they would have liked, but certainly the overall quarter's performance so far, it's up on

last year. so they are optimistic going forward and hence have raised their forecasts. >> and in terms of the vehicle sales specifically will, we're looking at truck production and full size pickups being one of the bright spots. do you degree with that? >> it would be a mix willed bag. they're changing lat formplatfo definitely expect to see an increase in sales. but there is going to be a bit of a lull. so a bit of both, but every reason to be optimistic. >> i know we've had a chart made up that you've produced to show the relationship between heavy truck sales and the underlying

situation for the u.s. economy. >> we found that the auto cycle and truck cycle has been very important to general economic activity in the states. and what we have is a strong relationship between truck sales and unemployment. and as you can see from this, when you do actually invest in trucks, you need new driver, as well. we're noft forecasting u.s. unemployment down to 6%, but certainly we'd expect this chart to indicate that you'll be looking at something much closer to unemployment rates down in the 7% area. >> how does that thesis look when you set it against what you see going on for gm and the sector as a whole is it. >> certainly in terms of a sector as the whole, the economy is certainly picking up. consumer spending is increasing certainly. so there is that drive. however the relationship that

you point out between unemployment and truck sales is also something that is very common phenomenon within more the commercial side of the requirement of fleets of vehicles and therefore of course that's where your commercial vehicle sales come from. >> we found is the truck heed the employment side, but i think what we're trying to getting a credits here is that the u.s. is enjoying a pretty standard cyclical recovery in areas like autos and trucks. the demand is there and our expectation is that that will be one of the big drivers in the second half of the year. so still positive about the u.s. economic activity. >> provided that the economic activity can continue and of course it's still early days to an september. but what we'll see is a pick up

which is why even though the april figures there has been perhaps a disappointment with general motors and ford. you have to look at the greater scheme of thing, we have every reason to stale remain positive. >> bringing up ford, let's talk about the competent tags within the sector. specifically when we look at gm and ford for example against some of their asian counterparts. >> it's an interesting situation. certainly with regards to the japanese manufacturers, what we're certainly starting to see is getting back in to their stride again. and so to that extent, will is a certain amount of deterioration of market share for nord and general motors. as the japanese makers are being

aggressive with regards to getting back into the market, offering incentive, trying to reclaim some of that lost market share due to the lack of supply. and so therefore we're seeing a bit of a fight back. >> all right, we'll have to leave it there, andrew. thank you so much for coming on the program. and in terms of our programming, gm cfo will be on "squawk box" at 7:40 a.m. eastern time. and coming up next on the show, it was a lackluster session as private hiring figures came in worse than expected. so are the job jitters taking hold of the market ahead of the key nonfarm payrolls report? we'll discuss next. [ male announcer ] this is the at&t network...

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while we all wait for the ipo of the year, that's the takes book ipo, an old world come is coming to the market today, the carlyle group. and priced its ipo at $22 a share, slightly below the expected range of $23 to $25. that value's the private equity firm at $6.7 billion. investors have complained it's hard to value the balance sheets of pe firms. shares of other companies have dropped sharply since their ipos.

blackstone is down 56% since 2007. and apollo has lost 32% since last year. meantime the head of six major u.s. banks air their concerns with the top fed official on wednesday, about several new years in the works. the meeting with dan tarullo lasted more than an area and we saw jamie dimon and blankfein arguing they should ease up on rules and trading restrictions. also visa second quarter profits beat forecast as people spent more on their credit cards. the company raising its full year earnings guidance. these also disclose that the justice department is probing its response to new rules limiting so-called swipe fees or what it charges retailers for processing debit card transactions. we saw visa follow falling 2% in the after hours session. also lower by 2% at 90.73. meantime the u.s. markets ended mixed on wednesday shaking off

an early define as worries about the weaker than expected adp numbers was making some investors a little bit jittery about the nonfarm payroll report. joining us is the president of kinsale trading. let's talk about that adp report yesterday. we have weekly jobless claims today. what are you expecting to see? >> well,ic we' i think we'll sek number. adp came in a little under what was expected. but everybody's expecting such a weak number in this monthly payrolls report that we'll get on friday that i think unless we see a print below 100,000, the market may be okay with it. there's something called the weather pay back that a lot of traders are looking at right now. and we're seeing it in employment data. and what then means is because of the very warm winter, the numbers from january, february and march were a bit about inflated and we're seeing a

statistical pay back. so there could be weakness in these number, but unless it's below 100,000 on friday, i think the market can hang on. >> so some weakness, but potentially priced in to the markets. if we do see a weak number on friday, how does that bode for the rest of the year? obviously things will slow down a bit more during the summer. >> yes, i think so. but again, i think it's a the degree of weakness. for instance, i think the average expectation is around 170,000. the whisper number is around 120,000 and again there is wiggle room. so unless you see the nonfarm payrolls mum go below 100,000 and you see weekly jobless claim which is have been ticking up get above 400,000, right now they're around 375,000, 380,000, then i think people will be okay with the loss of a little bit of positive momentum in the jobs market and they'll dismiss it more as a statistical anomaly.

>> i'm interested to see that you have an eye on nat gas. everyone is talking about extraordinarily low prices for natural gas right now, but you see to think that's an stunt there. sla an opportunity there. explain that to us. >> a lot of people are talking about natural gas because it's gotten hammered this year. i think the opportunity is on the demand side. most strategists like at expiration and production companies. they're involved with supply. the problem isn't supply. we have much fooch supply right now. the problem is lack of demand. and in the future, i think the way you can make money off of natural gas is by a switch and an increase in that demand. so you don't necessarily want to look just towards the e and ps. you want to look towards infrastructure companies, companies that transport natural gas, things like e and p abouts that have pipelines like an

better price products partners. l this. g tankers. lng tankers and final year end lng companies. so play the increase in demand, not necessarily the supply in natural gas. >> and tom, just taking a look at your notes on currency, we're talking about euro earlier. a lot of analysts expecting to come down a little bit from the levels that we're seeing it now which is your view, as well. >> against hard asset rn, gold, oil, things that can't be devalued, you could see a decline in the dollar. but against other currencies, i don't see it rallying significantly because the world is in a global currency

devaluation race. so nobody's going to want their currency to appreciate significantly against any of their major trading partners. >> tom, we'll have to leave it there. thank you so much for joining us. meantime coming up next on the show, we're talking costco. it misses expectations in april. so will other u.s. retailers follow suit as they release hair figures later today?

it was a record price for one of the world's most famous pieces of art. munch's painting the scream was

auctioned off last night. final price $107 million, but including commission, the tab came to $109.9 million. the previous record was $106.5 million in 2010. >> it was an amazing night. to see the world record smashed, but i don't think minute wanyon surprised. when you add up the quality and rarity, adds up to a masterpiece. >> the buy erma the winning bid by phone and sotheby's hasn't revealed the person's name. there are only four versions of the scream in existence and this was the only one in private hands. it was sold by a norwegian olson whose father was a friend of munch's. meantime, looking ahead, 10:00, april ism will be out. and san francisco fed president john williams and atlanta fed

president dennis lockhart taking part in a panel on the economy and honest taker policy in santa barbara at 11:00 a.m. general motors and viacom reporting results before the opening bell. after the close, we'll hear from aig, kraft, as well as linked in oig. and also u.s. retailers reporting april same store sales today, expected to slow down mostly due to the early easter holiday which pushed holiday sales in to march. and that's pretty much it for today's show. want to thank our guest host for joining us. i' jackie deanxious husband deanxious husband in the united states and ask

global markets focused on europe. ecb set to make a policy announcement. yields jump in spanish bond auctions. a high profile ipo falling a little bit flat. carlisle prices below expected range. and the talker of the morning, a painting fetches a record $120 million at auction. the scream. it's thursday, may 3rd, 2012. "squawk box" begins right now. good morning and welcome to "squawk box" here