welcome to today's "worldwide exchange." >> these are your headlines from around the world. >> greece appears on course for a fresh election as the radical left rejects calls to return to the negotiating table to form a coalition government. >> heads are expected to roll at jpmorgan over its $2 billion trading loss. reports say up to three top executives could resign. >> and chinese media suggests more credit easing may be on the way after a 50 basis point cut fails on lift markets. >> and test of investor sentiment with the first major bond sale following voter backlash against austerity across europe.

>> you may notice something is a little bit different. >> it's great to be here. >> the other side of the pobd. the same show, but a whole new show. >> yes. >> and you're here for as long as we can make this work. >> exactly. hopefully through the end of the week, at least. so much going on. you really feel like in london there is so much going on in financial reform. huge headlines about jpmorgan. so plenty to cover. >> i'm thrilled you're with us. that's the new format, kelly and i for the rest the future. coming up, the first installment of our trade link series.

>> and in berlin, angela merkel's party suffers defeat. silvia will tell us what it can mean for the german leader. >> china releases billions of dollars in to the economy after delivering a 50 basis point cut in the bank of reserve requirement ratio. we'll have the details. gr and jpmorgan ceo says its $2 billion loss is not life threatening for the bank, but will the market agree. >> also greece's president will attempt to form a coalition government today, but chances of success look slim after the leader of the left part i said he would pot attend the talks. carolyn is in athens for more. where is this going to leave us? >> probably to new elections in june, ross. there's very little optimism left here that the president will actually be able to form a company a let government. remember he'll immediate with the may party leaders at his

mansion tonight, but as you mentioned, the leader of the radical left has already said he's not joining those talks just like he's not jouning a coalition government. the rejection of the pro bailout parties simply doesn't go far must have. and i should point out a coalition is not feasible because this is the most popular party at this point. so we're ikely heading for new election mis-june. but this country really doesn't have time to see another round of elections. we just got a warning from the current prime minister papade s papademos, he has warned the grooel greek political leaders that the government may are difficulty meeting cash obligations from the beginning of june. previously we thought that this country's only running out of cash at the end of june, not the beginning. so the clock is really ticking. and just want to give you an

update on where we are in the greek equity markets. stocks down by more than 7%. >> carolyn wi, thanks very much. >> talking 1992 level, maybe more than that now. the economy has shrunk by 20%. it's just incredible. >> clinging to the idea of getting the thumbs down and staying in europe. >> the euro itself is quite popular in greece. the concept for the measures is not obviously, but it's not as much they're eager to go back on the drachma anytime soon. >> so they're going to force the issue. if you have any questions or thoughts, please e-mail us, worldwide@cnbc.com. we have twitter accounts, as

well. so topping the agenda is the the political divide. they may give madrid more time to meet its deficit targets. karen, before we talk about spain, let's talk about greece. it looks likely, we at the time more elections, the ball will be firmly in the political court for the rest of the eurozone. >> this is a key issue why the greek meeting is so important today when the eurozone finance ministers arrive behind me. as you know, many corporate investment banks weighing exit plans if greece does decide on leave the eurozone. the feeling is there would be instability if this happens.

about is greece just a one off and special case or are we starting on get to the point where exsechingss need to be made for other countries in terms of meeting their deficit targets, as well. spain just several weeks ago was arguing as to why its target should be higher. but the latest assessments and forecasts by the european commission are that spain will get no where near the targets. and for next year, eurozone finance ministers immediate to decide whether that is acceptable, whether they decide that a structural deficit will be okay for spain, that they'll see what spain would be doing about it was operating at 100 trs capacity. so it will be a very key meeting today. >> karen, for now, thank you. and we're joined by mark

scofield at citigroup. you've just heard this report and yet you say you actually see some of these peripheral yields at a hiing opportunity. >> no, not in the case of the peripheral markets, we don't. we do think that spreads remain under a lot of pressure. what you're getting is a split. two different issues at stake. one is the shifting political landscape which is i think bad for peripheral spreads in general. it's not a question of folk looking for less austerity and more growth. it is looking for less austerity. and that's not approveded for high deficit countries. so we do think peripherals continue to see a lot of pressure. where we think some of the markets is potentially oversold is softer core, france, australia, netherlands and some of those spreads we think may

stabilize from here. >> so you see it there's three different things going on and it's the group in the middle where you think the bond market might have overreacted. >> yeah, we see four things going on. the markets that are already in troica programs, greece, portugal, ireland. and then you have the lower rated italy, spain. and then you have the soft core. and then of course the fourth grouping is now just germany which is the only remaining flight to quality market that rallies when everything else sells off. it's that second tier that a little oversold now. >> how much lower can we go on bond yields? it's extraordinary. >> it is, but i think it's dangerous to get too hung up on

absolute levels p rely rates have been negative for some time. what we're pricing is increased probability of a breakup so you can buy a german bond with almost no yield if you think that you can get a break up and the new deutsche mark you you get will appreciate. so we're providing a lot of different things rather than just the level of yields. >> all right, mark, stick with us. plenty more to cover on this story. >> italian auction, we have to review a key test. first test post the elections. >> and we'll get mark's thoughts on that, too. but first state run china securities journal saying beijing immediates to act about it wantses a stable rise in growth and an apple credit supply will this year. the pboc cut the bank's rrr by 0.5 percentage points over the

weekend. >> markets are underwhelmed after the pboc announced a 50 basis point rrr cut that will inject liquidity into the banking system. weeks of speculation about monetary easing. the delay shows vigilance on inflation, but easing was inevitable. new lending was the throughoutest this year. deposits fell. raid was poor. retail sales and fixed asset investment disappointed, as well. it should mean a shift to more rrr cuts. more open market operations on the fiscal front, beijing likely to improve more programs and free up more private investment, but analysts say it may be another few months before the cumulative effect of monetary and fiscal easing will filter lieu to the growth numbers. back to you.

>> more analysis on china coming up with our guest in the next half hour. >> we've got just 20 stocks in positive territory. deeply weighed down on the negative side. just hit the session low an hour into the trading day in europe. thisle follows losses last week of the ftse 100 down around 0.4%. banks have talked about how much capital they'll immediate on raise the response to more loan loss provisioning. the question with them is how are they going to raise the money. the government's talking about new five year loans with an interest rate double that that they would get on bonds.

take a look at the spanish banks. we talked about the record low interest rate yield for ten year bupds. 1.47. now below 1.48%. italy got a key auction coming out today. the three year will be the real focus. 3 aboutment 5 billion in the three year will be the focus. currency markets, euro 1.2880. fresh four month low. euro hasn't breached on the down side against the pound, but dollar-yen 80.10. and the aussie dollar a fresh five month lows. it has fallen below parity against the u.s. dollar. that's where we stand right now here in europe. what about the reaction to the

news over in china some seems to have been swamped really by events still in europe. tracey chang has all the latest in singapore. >> good morning. the planned rrr cut failed on provide much support to the markets. the nikkei inched higher about 0.2%, lifted by china related shares, but remember, it's still earnings season in japan and investors are being cautious. take a look at the greater china markets. we've had very choppy trading day today. major financials, as well, as property plays were briefly up on the planned rrr cut, with you have given back all the gains we had earlier came. the shanghai composite lost about 0.6%, while the shanghai index moved lower. and elsewhere, us a 2r5australi market is the outperformer

today. and over in india, the sensex trading down more than half a%. and this is your picture in asia. back over to you in london. >> well, roubini has laid out his notion the greek exit could take. he says it would be followed by capital controls, deposit freeze, depreciation and a return to growth and job creation. so did do you agree? if you want to join the conversation, get in touch with us by e-mail oir vor via twitte. >> don't miss out. we'll do what we can in 140 characters or less. still to come, italy set to test the waters once again morning. the treasury auctioning 13 year bonds for the first time since october. more importantly, the first peripheral test post those elections in greece and france. we'll talk about it when we come

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german voters have delivered a defeat in regional election it is to angela merkel's

conservative party. silvia, how much of a setback is this expected to be for the chancellor? >> the day after the fail in elections is not a big disaster. it's not unexpected. it's just a return of the government that was there before. confirmation of the coalition was slightly stronger voting base. and of course it's not been all bad news for merkel because the liberals actually made it back in to the regional parliament which is already a big surprise for them and withal%, they got this quite comfortably. and the other surprising thing that for matter how much her party loses in regional elections, angela merkel's personal popularity on the

federal and regional stage remains almost untouched. which is important as she meets hollande today here in better lip. >> i'm curious what the mood is on the ground there. we've seen a shift in the last week or so. is it resonating with the guy on the street that higher wages is something they're okay with? >> who doesn't want higher wages? when you ask people do you want higher wage, i find very truly including yours truly who would say, no, thank you very much, i don't, i want austerity. so, yes, that has always been the case, but what is more interesting, that the second biggest political power in germany in terms of the parties, the social democrats, they have

always carried angela merkel through one austerity program through the other grudgingly with gritting their teeth. but now they're saying before we sign up we need a growth compact inside. >> selling people higher wages is one way on make that go down a little easier. silvia, thank you. >> it's what's in the growth compact that is the key thing. you can't just ease up on the austerity. treasury aiming to raise up to 3 billion euros and selling 12 and 18 month t-bills. the result of the auction to around 10:40 cet. but the key test is going to be italy. it's offering up to 5.25 billion euros in mostly three year bonds. the first post those elections if will greece and france. results due after 11:00 cet. italian bond yields are trending

higher. mark scofield joins us for more. we had a good t-bill sale. does that mean this will be okay? >> i think last week is a difficult benchmark because the deteriorating backdrop has accelerated. so it's a tough and challenging backdrop to issue against. i do think this will probably be okay. i don't think it will be strong. >> what is the definition of okay in terms of yields and bit to cover? >> i think you'll see the auctions covered. as i said, the majority of the debt is shorter maturity. i don't think it will be a disaster. >> we flip-flopped quite a lot over this crisis between

worrying about spain, and then italy, and then spain more in the headlines right now. we're seeing spain as having to talk about lending money, five year loans for banks that need to raise the money for the extra provisions for the real estate announced last week. is that going to add more pressure, upward pressure, on their yields? >> probably means more government bond issuance to fund those loans. that this theory is more supply shoot put upward pressure on. spain has been very much in the spotlight and it is about this issue of dealing with the recapitalization of the banks. italy on the other hand has been a little under. so i think that is in the price now. >> spanish bond yields up near the 6.2% mark. is your view that the european

natural bank comes in and does more? what's the policy response here? >> i think at the current time this is no real sign that we'll see the ecb reactivate purchases yet. spain and italy have done a good job of selling their debt. and high yields are not something that will be viewed as destabilizing the market. >> mark, pifinal call for today. what's your trade today? >> right how seems like the only trade out there is buying bunds, treasuries and gilts. i don't think it's a trade for the long term, but i think on a one week view, the feeling in the market is one of increasing panic at the moment. >> all right.

mark scofield, thank you so much for sticking around with us this morning. you heard it, you can see it in the market, just the behavior in the bund yields. not even below 1.5% here and there, but decidedly on their ten year debt. incredible. return of your money as we like to say. >> increasing panic. >> and the fallout from jp more's trading loss claims its first victims. three executives are expected to resign. drew ran the bank's investment office where the losses took place. the financial times says jpmorgan is investigating whether its traders hid the extent of the losses. and speaking on "meet the press" sunday, jamie dimon defended his position on regulation. >> we have supported 70% or so of dodd frank. we supported resolution thourt. we support higher capital liquidity. that's partially to make up for mistakes and problems and obviously it's a tough economy.

we supported some of the new compensation rules. so we support a lot of it. >> why wouldn't the new regulation that's been -- changing the way banks can hedge their bets. why wouldn't that have stopped something like will ththis? >> hedge willing could make your bank less risky. in this case, we made a mistake. but our big exposure, loans. you're not going to make banks risk free, but we gr he with a lot of the standards that will make it safer. >> have you given regulators new am new mission? >> absolutely. this is unfortunate. >> if the best of the best can't manage the risks like will, does it not tell you that the banking system is still too risky? >> it's a question of size. it is not life threatening to jpmorgan. this is a stupid hinge that we

should never have done, but we'll still earn a lot of money in quarter. we hurt ourselves and our credibility, yes. a and. >> they can put this behind them. as you indicated on the conference call, it's a position they still can't fully exit from. >> and you get a suspicion here that people on the other side of the trade made it a whole lot worse when they got wind of what was going on. >> and not whether regulations should be tougher, but if regulations including the volcker rule would still have performed this kind of activity.

>> and he has a test tomorrow. shareholders vote. how much will stand up and say we want you to split. can he hang on to both roles. >> really tough timing. and the fall may end up be politically, personally for jamie dimon, for any kind of post jpmorgan career. they might be buying back stock. all right. more analysis on the fallout later on in the show. >> plus also still to come, local reports say beijing is ready to further slash its bank's rrr and it may come soon if china wants to ramp up growth in year, but what are the repercussions if they move too fast.

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this is "worldwide exchange." greece appears on court for a fresh election as the radical left rejects calls to return to the table to form a coalition government. >> heads are expected to roll at jpmorgan over its trading loss. three top executives are set to resign. chinese media suggests more credit easing may be on the way

after a 50 basis point cut. the rrr rate has failed to lift markets. >> and italy first major bond sale by a peripheral economy. >> an hour and a half will into the trading day here and it's a sea of red. less than 20 stocks on the stoxx 600 are up out of the 600 that we have. bank stocks and basic resources are the weakest today as we continue to see spreads. >> bond markets are again the story this morning and real headlines for you right off the balt here. ten year german bund has now sunk to a new low. as you can see, it's trading at 1.46%. the ten year u.s. treasure have i down to 1.8%. take a look at now where we're

seeing-investors fleeing into bunds and treasuries. going away from italy and spain. the spain germany ten year yield spread has now hit its widest level in euro area history at 477 basis points. so just shy of five percentage points between those two. just a remarkable day. >> amazing once we went through 1 1/2 on the bounds. currency markets, euro has gone below 1 .49. euro still link still holding the line on 80. and the aussie dollar below one. so no impact at all from that cut. >> you're not seeing a much market support as you might expect. >> shows they have on do an awful lot more. and greece's political divide

set to top the agenda. joining us for more is adviser to the eu council president. richard, thanks very much for joining us. everybody 00 talking about i hate this phrase grexit, the greek exit, but what plans are now being drawn up for a possible greek exit? >> we're some way from anything like that happening. there is a political process discussion you said way. we'll see what demands the greek government will put on the table. at this point, nothing is seriously planning a greek exit. >> i'm sure no one's seriously

planning, but there must be con in-against city plans. greece clearly would like no more austerity but stay in the euro. i'm not sure that's a enitable position. >> one can understand public pin union. most have no idea the situation until it has hit them the last couple of years. the measures being taken in greece are very tough, but we have it at the same time put in a huge level of support to gross oig. one of the biggest loans in history, the total of all the measures being taken those lending do not wish to lend larger sums. so there are two sides that have

to reach an agreement based on responsibility and solidarity. >> a story this morning says the electrical chain is drawing up plans shoot country pull out. so it's not just markets and speculators. it's real people on the ground running businesses jumping to this will conclusion. are you behind the ball here? >> there's a lot of speculation and stories in the media, politicians who wish to conjure up all kinds of images. but the practicalities of reintroducing a new national currency, which actually would not help them in terms of the debt has they have by the way, that is something which we don't think is a credible scenario. and people should not base their plans on that. >> one of the answers has always been of course to have a lot

more europe. the answer is we must complete the project really of the euro koen which is to create one state. is that how you you see it? >> no, and whether to go any further is up to the measure states themselves and i don't think anybody is seriously considering making one state, not at all. what is in place is regards the long term changes to make sure we don't repeat the mistakes of the past, make sure we have far greater economic governments in the eurozone. we've in many ways addressed the long term problems, but we still have a short term legacy from past mistakes that we still immediate to overcome. that is what is still overhanging, overshadowing things at present, not least in the case of greece. >> and how much more flexibility are we going to have to give spain in the european commission came out last week and talked

about how the deficit targets they thought were going to be higher than what spain is currently planning for this year and next. is there a three year plan that will be agreed? >> not just is for spain, but for the whole of the eurozone. we've got to get the right balance between fiscal console days and growth. we've put in place a number of measures and agreements regarding fiscal consolidation. the agenda is focusing to pay much more attention to the growth agenda, restoring economic growth in europe. two sides of the same coin. there will be an informal meeting of heads of state and government on may 23 to look at that, preparing a package of measures that would be agreed it at the following meeting in squun, all aimed at restoring

economic growth in europe and the eurozone which of course will help turn around a the situation that we face at the moment. >> richard, thanks so much for joining us. we appreciate your time today. elsewhere, the operator of japan's fukushima daiichi plant still struggling. shares plunged after tepco's company said it was extremely severe. >> tepco reported a group net loss close to $10 billion for the year ending in march. the company faces billions of dollars in compensation claims. even so, the red ink is much less than the $15 billion loss it posted a year ago. they've had help from the government which took over much of the disaster related liabilities.

tepco expects a third straight year of losses. it will forego dividend payments in the foreseeable future. back to you. >> and over in india, the central bank there may have a big problem on its hands. the country's latest inflation numbers show surprise increase in april. >> hi. the inflation figures for this month did not fall -- april rather didn't look too good for us. 7.23%. remember that the food inflation figure came in at 10.49% versus 8.5% -- or, rather, 9% in march. gold manufacturing inflation which is basically without food came in at 5.12% expectations of a lower sub 5% figure this time

around. there was an adverse reaction to the equity markets directly because on friday it says we had a contraction to deal with and this strengthen the case for the rbi to move on rates anytime soon despite growth slowing down. remember that the cpi data a few months ago so we don't have a lot of data or the rbi doesn't really have a lot of data to work with because with regards to the march ppi, that is the consumer price index racking what consumers spent in terms of inflation figures. and that, too, is contracted from the 8.3% in pen.

there could be concerns coming in for the inflation figures going forward and the rbi could be on a tight look going forward. >> thanks so much about. >> and chinese media suggests the central bank's easing measures are far from over. the state run security jen saying beijing needs to do more if it wants stable growth including tax breaks and investment deregulation. joining us is managing director and co-head of asian economics research at hsbc from hong kong. frederick, thanks so much. it's clear we had that rrr cut. no market reactions s to speak. but china electricity output slumping in april before highway construction down 7%. housing sales down a quarter of a percent in q1. have they got a slow down that might be running out of control?

>> the numbers certainly look very challenging in april. most of us had expected a slight pick up in activity and things have actually slowed down further. what's very critical is that the chinese deliver another one in the next couple months and couple it with fiscal stimulus. the numbers are looking quite challenging and so far, the chinese have not reacted rapidly enough. >> is there actually a demand for loans? there's a concern actually that you could free up money in the system, but no one's going to want to borrow it. >> and that's why we would argue for further miss cal measures, as well. the key to chi ensuring a soft landing in china rather than a hand landing will be to generate more demand are from the government, that is, additional infrastructure spending in some

of the underserved areas, but also tax cuts as well as redistribution to household s h there by creating a growth. not just pumping money into the system. >> frederick, i'm going to interrupt you because we have the spanish t-bill auction. they've sold 2.1912 month t-bills. the yield 3.099%. higher than april. >> spain is paying over 3% to borrow at 12 months. that's twice the level germany is paying. just incredible. and we'll have more on this, but we want to follow up with frederick more man while we still have him. you mentioned a couple times when we were talking about what

china could do to simulate growth, the fiscal side of this issue, but did they not sort of run out of all a the options a after the extensive physical stimulus back during 2008 financial crisis? >> broadly speaking, no. china still has a lot of fiscal power yet. reserves are quite considerable. right tli some concern of the build up in debt. that's been well-known. but central government still has fiscal reserves and they could be unleashed in order to generate the bounce in growth. but make no mistake, it will not be a resurgent economy. this will be a much more gently applied stimulus because there's still fear of inflation in china. >> all right, frederick, we'll reach it there. thanks so much for joining us

this morning. >> yields sharply higher. you made the report -- >> and we've already this morning had a pretty nasty start to the week while it's covered and while spain is able to at least borrow these kind of levels, not much encouragement. >> still to come, what ask it mean for companies doing business some we'll talk to head of the wto. ♪ ♪ i can do anything ♪ i can do anything today ♪ i can go anywhere

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we'll be looking at how money flows in our new series trade links. >> global trade has all but ground to a halt. in the wake of the 2008 financial crash, export volumes plunged. and remain far below pre-crisis levels. the world trade organization has warned the decell lags will

increase this year as developed countries slash spending and nations turn on protection. what does this mean for companies doing business abroad and how does it affect your portfolio? in this series, we look at the risks and the rewards in global trade and how these impact your wealth. policy maker, industry leaders and trade representatives give us their take on regulation, trade agreements and what can be done to help businesses grow in a globalized economy. >> leaders of major asian economies are teaming up in the trade arena to boost growth. they're promise to go start free trade negotiations within the year. the controversy issues include disputed territory, war time a compensation and did i low massey with north korea might still threaten and derail the process. joining us for more is the

director general of the wto. mr. lamy, thanks so much indeed for joining us. before we get into different areas, let's get your overall view. the world still suffering from a lack of growth particularly in the developed arena. there's this renewed focus on what people call growth, but are you actually seeing any measures in reality that will boost it other than saying we're going to ease up on austerity? >> the reality is that the debate is still going on in a large part of the developed world between those who push for miss cal authority in the maim of future credibility and those who point to the many growth flowing impact of this miss cal thourt. and i believe that notably in europe, the jury is still out

and we will see during the coming weeks whether this balance can be found between a necessary miss cal adjustment, there is no way such will level p that is sustainable, but of course while stimulating probably through more structural reform the gross potential of the european connie nent and we know that the u.s. also have to face this issue sometime ahead from now. >> are you of the view still that what we need is just much closer fiscal integration? >> i personally believe that the proper mix of structural reform in order to increase the growth potential in europe and its potential level of employment notably for young people and fiscal adjustment implies a more integrated overall economic and budgetary approach at european level.

i think that's what this crisis has shown. there is still an imbalance between the monetary union on the one side with one currency, one policy and divergent views on how the macroeconomic look should be in europe. and this discrepancy needs to be addressed. >> how concerned are you about trade pie nance? this is an area where europe's banks have traditionally been quite strong. they're retrenching quite sharply in many cases. is that leaving us vulnerable to trade slowing even more than the slowing of growth would otherwise imply? >> you're correct. this is an issue which we're watching carefully. i'll be meeting with a large group of commercial banks, international finance institutions, export credit to

get a sense of the market. my own sense is that while european banks have stepped out of the market for regulatory reasons, asian banks have largely taken their previous positions. so overall, the market is not in balance, but we have and i discuss that not -- the day before yesterday with the boss of the african development bank, we have an issue and that's something which the g-20 will probably have to focus on. >> and it's now impossible to get any global trade agreements without the likes of china and

brazil being part of that agreement. we introed this, china, japan, south korea trying to start free trade negotiations. what sort of hopes should we have? should we low ball our expectati expectations? >> it's a sign within the pacific region there is a competition between the various trade streams, one which is u.s. led with a transpacific partnership, and one which is sort of china, japan, korea. what will be the result of this ship race is still unclear. as far as tariff reductions are concerned, this would be good news for global trade. if these competing initiatives were to it result in different regulatory regimes, ee nontariff

barriers, that probably would be a problem because what we need globally is a level playing field and this sort of initiative is fine if it leads to a global level playing field. >> in-flows and outflows of foreign directed investments, we saw about a 60% pull back in the past year. is that something to concern you, is that just a symptom of some of the troubles we've seen going on across the globe or is this something more to be worried about there? >> you're correct there has been a low are level of foreign director investment and we know there is a relationship between that and trade in which many ways are the two sizes of the same coin. what's important is that nevertheless foreign direct

investment in developed countries keeps growing where there's been afternoon lower pattern in the past is where many investors are still sitting on the pile of cash because the uncertainties, mostly europe and to some extent u.s. the good news is that on the developing countryside, like africa, flows are in good shape and consistently improving. >> good to talk to you as always. thanks very much. let's give and you look at what's on the agenda in asia tomorrow. china set to post data. likely the six sixth monthly drop.

japan's top brokerages reporting earnings after the bell in tokyo. >> lots happening and if you want to join the conversation here on "worldwide exchange," get this touch with us. e-mail at worldwide@cnbc.com or via at this time twitter at cbs wex. and still on come, jpmorgan's huge trading loss calls in to question banking regulation yet again. we'll be joined by the man who heads up barclays corporate and investment banking business.

heads are expected it to roll at jpmorgan over its $2 billion trading loss. three top executives are set to resign. >> italian yields jump ahead of a key auction. >> and yahoo! ceo steps down amid the fewer error over mistakes on his resume and yet another twist added to his shorten you're at the company.

not a lot of great news to bring mu terms of the market. dow jones futures pointed down over 100 points. the nasdaq down about 25. the s&p down 13. this of course follows a nasty couple of weeks in the market. weighing on sentiment this morning, everything from bond auctions and spain and italy to concerns over greece and the future of the european union. take a look at how markets are trading more broadly. the global 300 town 0.8%. we started off okay today as you can see, we sort of held in this choppy range. we've sense started to sell off quite briskly as a level below 700. >> this is what we're handed over to the united states from europe. ftse 100 down 1.about 8. ibex down 3%. basic resources are the weaker

sector today, along with banks as we continue to see more numbers coming out of banks in terms of the extra capital they need to do for those provision has they need to put aside now for extra banking losses. and of course we're very focused on bond yields as a result. let's show you where we currently stand. fresh record lows this morning. now look at this, 1.455%. dropped another five basis points. italian yields getting back towards 6%. we're waiting for italy's auction. the key one would be the three year benchmark. but it's the first auction in the peripherals since the french and greek auctions. and spanish yields sharply higher, as well. high yields in both 12 and 18 month t-bill suction that we au. the key point is spreads.

euro era high. >> let's take a look now at what's going on in this week's agenda in the united states. quiet on the data front today, but groupon this report results after it the close. investors will get reports on retail sales, consumer prices, housing starts and minutes from last month's fed meeting. and the count down is on to facebook's ipo expected to fr p thursday evening and trade friday. and i know ross will be the first investor in line for that one. >> you bet. you know how i feel. i'm very pleased that warren buffett and i share the same view. >> you're both cautious about the value of facebook. >> and welcome to our side of the pond and welcome to our problems over here. >> the u.s. economy wasn't bad must have. >> you you needed to come over and really find out what's going on. >> it really is fascinating. sort of being in london and having it all happen on the doorstep and reading a lot of

the press coverage today about how much the uk involvement will be, what possibilities there are for a greek exit. >> let's recap what's going on with bond yields. we have fresh record lows on ten year bond yields of 1.45%, ten year spanish yields, 5.3. >> kept going down. >> and a they're going to hate me for this. welcome, let's pick up on this. we're getting increasing spreads right now. we have a total fear trade pushing bund yields down. where is this going to finish, what time frame? >> well, what's really fascinating is that it's taken the markets so long to work out that they're really the only option in the end for greece is that they must exit because to default isn't sufficient. you have to devalue, as well. but what's also interesting is the largest german union is asking for a 6.5% wage hk.

and we just heard the finance hin sister say maybe we could withstand a slightly higher inflation rate. so here you have the market buying bunds at a time when inflation may -- >> two ways of getting competitiveness. >> and that's an argument for the euro not falling much lower. pippa will stick around, but we want to bring you the latest on the paulout from jpmorgan's trading loss. reports say three executives including the ceo drew are expected to resign. on "meet the press," jamie dime on that sa dimon said the company reacted badly. >> we know we were stupid, we know there was bad judgment, we don't know about any of that is true yet. of course regulators should look at something like this. we're open to regulators.

but we intend on fix it, learn from it, and be a better company when it's done. >> jpmorgan shares were down 9% on friday and this morning in early frankfurt trading, down about another 1%. that of course may have more to do with the general risk off sentiment than jpmorgan in particular. >> outperforming everything else. >> a good point. joining us now as mentioned, pippa and david also. great to be here. an old colleague of mine. >> did we do that just for you you? >> it makes me feel at home. but unfortunately, the topic is kind of a depressing one this morning. we're talking about the future of the european union and will are questions about whether greece is really going to be able to exit the euro. people overlooking the impact that could have? >> i think it people are overlooking, it's their own fault. it's been on the table now for as long as i've been in london.

and i think people might be underestimating the damage this could cause to some of the european banks. and there aare certainly some that despite having two years to prepare are still massively exposed. crediting credit agrical, there is no clear he way out for a bank like that. but the scary thing is that no one really knows how these ripple effects will kind of expand if greece were to leave. the scary thing is the uncertainty. it's not that there's a cheer domino effect. >> and it's a question of what it will mean for greece. the greek economy, the people will. but again there's a question more broadly what it means for spain and italy. >> once you open that pandora's

box, it's very hard to close -- >> that's the key point. are they in better shape now? >> my view is no because the market has priced in the default of the sovereign debt, but not of the private debt. they have not priced in that every spaniard and italian will say if greece has defaulted, why are we paying 100 cents on the euro. and if they devalue, why do we have on pay ten years of recession when they don't. because what will happen once you leave and you do devalue is then you create a foundation for growth to happen again. >> let's it take a quick look now at today's other top

stories. scott thompson has resigned am any the controversy over his resume. yahoo!'s board found evidence he knew more about the errors than he previously admitted. it's hurting business. they continue to lose market share against other rivals. >> and considering the takeover and money beginning to talk. >> if you say no, you have to be able to justify that longer term. and you have to be able to say how you are going to help your share price. greece's president will attempt to form a coalition government today with the country's main parties. chances of success look shim after the leader said he would not attend the talks. >> they'll say we want to say in the euro, with you we don't want

austerity. some will say give them the money because we're not ready. >> and whether attitudes have changed on the street. and fuel and food prices have increased. how they will deal with that is of interest. but bigger interest is china. may cut its bank reserve requirements again. says it wants to act if it wants a stable i'ding growth. cut rrr by a half percentage point, but it had very little impact on aussie dollar. more details in this report. >> pboc announced a 50 baches point rrr cut to injectly quid i, but worries that the he'ding

is not enough clouded market sentiment. lending was low, deposits fell, production fell to a three year low, trade was poor, condition simple shon data did not provide comfort either. on the fiscal front, beijing is likely to speed up approvals, give tax breaks to smaller firms and free up more private investment. bank to you. >> if you want to join the conversation, get in touch with us. worldwide@cnbc.com or tweet at cnbc wex. >> and results of the auction, 3.91%, a new high since january. not much higher than from april

to be fair. probably is an okay result as we were talking about earlier. so we'll get more on that. the yields a little bit higher. bid to cover okay. we'll have the rest of that auction result as soon as we come back.

headlines we're watching this morning, jpmorgan expected to claim it first victims. at least three executives are set to resign. >> greece party president called on heads at the table to attempt to form another coalition government. >> and scott thompson resigns at yahoo! and we've also had results out from italy as far as the auction is concerned. the three year bond auction yield, 3.91%. new high since january, but not

an enormous jump. looking for results on the rest of the part. they're raise building 5 and a quarter this morning. bid to cover 1.5. still waiting for the results of the rest of the maturities. >> they don't all come out at once, so a lot of people may not be used to -- >> that's okay. >> everybody has benchmarks. so until someone makes a decision, we won't -- will they'll pay, but not on time. i think they're giving us every possible signal this is coming. as soon as the market gets that,

you'll see the yields goi up pup bi-it's around the corner it in my view. >> chances of success look slim after the leader said he would not attend the talks. speaking at a rally following the failed attempt, greece has shown it would not commit suicide by meeting the terms of its bailout. finance ministers this brussels topping the agenda. karen is in brussels for that meeting. do we have any sense yet how the european political elite are due to react if there are fresh elections in greece, how on earth they might react to it? >> that is the big question when eurozone finance ministers go across the road. find themselves having a crisis

conversation again because of the practicalities of this. greece immediates to find 11 billion euro in savings and they can't even decide who will run the country. but at the same time, this has been one of the issues. greece is not the only country unraveling here. spain is, too. and this will be on the agenda today as forecast thes recently suggest spain just won't meet it targets, as well. >> we've been talking about the future of the banking system.fourth i'm the government has tried to announce measures to help its economy. does it go far enough?

>> no. these governments don't have sufficient funds to make the debt payments on time and the public is saying there's a limit. and i think the market is going to price it, but just doesn't want to. and this is a question whether the losses at jpmorgan and other institutions where hair assumption is somebody will write a check and sort it out. >> sfwh they were expecting a worsening in credit conditions and the quarter was pretty strong instead about. >> and it seems they tried to flip the trade and tried to eventually exit it.thing that i think is still a little bit unclear is the role of the hedge funds that run the opposite side of the trade. it seems like that's where the heeks were first coming back last month. >> are you suggesting they leak stuff so they could make money

and improve their position? >> i'm not certain they were doing to improve their position. i think they might have just been really, really angry. >> and does jamie dimon hold on to to his dual position some? >> most of the votes are cast before, but there is a big question about some of the other seen kror people the stock was off 9% on friday. it's probably going to be off again today. but in terms of casting votes against reelecting people to the board or there's not really a vehicle or a porm for them to protest over complain loudly. the meeting is in florida, so it's actually a little more inconvenient. >> still that story will be driving the whole week. thanks so much for coming by.

coming up, what do you get for the man who has all the friends in the world? mark zuckerberg celebrates his birthday as he greears up for t most important week in facebook history. >> plus a shot of the heat map. you can see there are under 20 stocks right now on the stoxx 600 in group territory. [ male announcer ] this... is the at&t network. a living, breathing intelligence teaching data how to do more for business. [ beeping ] in here, data knows what to do. because the network finds it and tailors it across all the right points, automating all the right actions, to bring all the right results. [ whirring and beeping ] it's the at&t network -- doing more with data to help business do more for customers. ♪

600 in group territory. 

let's take a look at futures. s&p 500 pointed down about ten it points. dow jones would open lower by about 75 and the nasdaq down 19. a lot of that cuing off weakness. >> under 20 stocks on the stoxx 600 in positive territory. to be fair, we have bounced off the session lows. cac 40 down 2%, ibex down 3% a while ago. >> take a look at bonds. ten year german bund falls below 1.5% to 1.46% currently. the ten year u.s. treasury is at 1.#%.

yields are much higher climbing in italy and spain where their ten year debt is yielding 5.9% in the case of italy. and in spain now, almost 6.3%. record spread. and almost a record between italy and germany, as well. >> and pippa, if it goes as people now expect, fresh elections -- may not happen, but this is the assumption, fresh elections in greece, the results mean that whatever happens is they reject the terms of the current bailout. how then does the european political elite respond to that? >> i think we're going to hear a lot of disper rat views. you'll hear the better mgermans there might be consequences. maybe the lchttro gets extended

little further, but not enough to solve the problem. >> do you think there is more of a role for the the u.s. here? are they discussing ways in which they want to step up it to the plate and you influence this one way or the other? >> tim geithner has desperately tried to influence will this process, but the u.s. is going to write a check? i don't think so. not in our financial position. so words are worth less and less. the more you use them, the less value they have. >> so you think it will end messily as opposed to clean. >> when i first started talking about a greek exit three years ago now, i thought it would be neat and clean. now i'm worried it will be a messy exit p about and more concerned with what is the implication then for other southern european states. >> pip take, good to see you.

thanks for joining us. still to come, jpmorgan's $2 billion blunder has triggered regulation over the banking industry. ♪ ♪ why do you whisper, green grass? ♪

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welcome back to "worldwide

exchange" spp i'm kelly evans. >> and i'm ross west gate. headlines today, heads are expected to roll at jpmorgan. >> yields remain uncomfortably high. >> and yahoo! ceo steps down and yet another twist added to his shorten you're at the company. >> a sea of red behind me. let's tee a look at the dow jones industrial average. futures pointed down about 83 points. nasdaq down about 19, s&p 500 pointed down 10. a lot to do with weak sentiment coming from asia and europe about take a look at how the ftse global 300 is trading. we started off okay today.

holding in a choppy range, but we're now down about 0.7%. so we have bounced off those lows just a little bit. but sentiment remains pretty weak. here is a closer look at what's happening across europe. the ftse 100 is down 1.7%. we've got xetra dax down 2%, the cac 40 down 2.25%. and in spain, the weak performer as it has been for so many weeks now, 2.84%. >> as we continue to look at yields, italian auction this morning that has gone okay considering what's happening with prices. yield only slightly higher. we just got the rest of that. maximum of what they had planned. yields slightly higher.

5.9%. and the 20226% in january, 5.33 versus 3.9, so a jump up. but otherwise i think people are set with that auction. so what are investors doing? here's what some of our guests have already told us. >> you need to go being short markets like spain, one of the best tradeses is short spain, long germany. i would certainly reduce that trade. i think actually going into june short the spanish market is high risk. in terms of the long vision, i would argue it's too early to go into markets like spain. >> right how it seems like the only trade out there is buying treasuries and bunds and gilts.

i don't think it's a trade for the long term, but i think on a one week view, the feeling in the market is one of increasing panic at the moment. >> china still has a lot of fiscal buyer power yet if you look he central government miss cal reserves for example are quite considerable. >> so good comments there. as mark said, the trade this week is to be long of debt where yields are record level lows. >> if anything exacerbating the trends, new lows in the coordinations in terms of debt and new highs in some of the more difficult ones. so investors are playing in to the trade and not fighting it. all right. the fallout from jpmorgan's $2 billion trading loss has claimed its first victims.

three executives including the cio are expected to resign. drew ran the office where the losses too place. they're investigating whether the london traders hid the extent of the losses. jamie dimon said the company reacted badly to the warning flags. >> in hindsight, we took far too much risk. the strategy was badly monitored. it should never have happened. >> jpmorgan shares were down about 9% on friday. you can take a look at how they're doing. down about 0.8%. as ross pointed out earlier, compared with the rest of the market, that's outperforming. >> that is a big outperformance. >> joining us is rich ricci and we're so pleased to have you with us. the extent to which new focus on

regulatory measures may make it harder for investment banks to do business. >> i think first of all i don't know the specifics of the trade, but i know what type of trade it is and jpmorgan is a very big institution and jamie dimon is a capable leader and i'm sure they'll sort it out. the issue is the top he can of regulatory reform and i think what this tells us is there needs to continue to be constructive dialogue between regulators and banks. what i'd hate to see is the knee jerk reaction around the specifics of volcker. there's other things at play here, as well. while i don't know the specifics of the trade, that type of trade couldn't exist in the uk bank under the vol 2 or 3 rules. what we have here is we have different regulatory regimes being implemented at different speeds. >> so you're worried about regulators might crack down on a way that would hurt competitors that aren't doing the same kind of thick jpmorgan is doing? >> it's not that so much. we have to have unified regulation around the world so

we don't have the arbitrage around raids that are uneconomic, being able to be executed by banks in other places around the world. >> in the uk also the independent commission on banking, how he implements that in june, but the recommendations are ring fence commercial banking. we don't know where the fence will go, but what are you prepared for? >> as we've said, i don't think that the ring fencing would be our preferred know disof on that ren die, but we'll work with it. i think the real is you for banks is the resolution and recovery programs. because what needs to happen is that no one wants to ever spend taxpayer money again on solving a bank's issues. we want to be able to unwind a bank and wipe out shareholder equity in a way that's orderly for the market, that can continue the essential services being provided to customers and clients. and what we're trying to do is take the heed in trying to work out that the systems would work

and work closely with the regulators. >> whether it's volcker, or the ibc, we want to separate investment banking from commercial activities. if you were running barclays in the way as a partnership without that commercial operation today, how different would it be? >> i don't think our strategy or risk management would be different. we have a very robust risk management platform across our bank. we think our clients and the system benefits from diversification. with a look back at the failures in 2007 and 2008, they were either small retail banks or they were investment banks. i think the diversification of risk that we have actually helps the system rather than hurts it. >> all right, we'll get more thoughts from him. but first we want to check in on the top stories driving markets.

and first up we thompson resigning amid false claims on his resume. reports say he knew more than admitted. and new reports about his health, as well. >> and who would have known also who was responsible for printing it. a lot more questions. cody had given avon until the end of business day today to enter into talks. funny how these final deadlines, there's always a little movement. >> but they are opening the kimono and indicating willingness to go forward. >> and borrowing costs in auction of three year debt rose to their highest level since january. although a demand for the debt is still strong and treasury has managed to raise the top amount targeted in today's bond sales. meanwhile in spain, yields jumped even more. >> italy i think they will be

relieved, first major auction post the elections. the focus very much on spain. mark zuckerberg is turning the ripe old age of 28 and he'll be getting a big birthday present this year albeit a little late. listed on the stock exchange on friday. i can't wait for the valuation on this. whatever it is, it's too much. still to come, the political you are moil continues in greece, but will the country face a fresh round of elections? we're live in athens next. are you still sleeping? just wanted to check and make sure that we were on schedule.

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earlier we asked you for ideas on a greek exit plan. and germany needs euro for exports. greece, ireland and portugal spain need to lose the euro to survive. if you want the join the conversation, you can e-mail us a at worldwide@cnbc.com, via twitter @cnbcwex.

>> as we look ahead of the u.s. hope today, you'll see all the sectors today are weighted on the down side. even defensive end. food and beverage off 1%. construction material down. no surprise to see banks down again this morning as we see yields in spain rising. even more of a leverage play on their government's debt and of course we've started to detail the amount of extra capital that banks will have to put into meet the provisions for real estate. basic resources also down 2.25%. no impact at all for the china rrr cut. just show you where we stand with some of the bank stocks. 3% losses for the likes of socgen and bnp. >> these are your headlines this morning. jpmorgan's $2 billion wlun der expected to blame its first

victims. at least three executives are are set to resign. italian yields rise to the highest in five months at an auction of three year debt, demand still strong as top targeted amount was raised. and ceo at yahoo! resigns and more twists to his shorten you're at the company. >> and also something of a shareholder pay spring going on. in the uk, the chief at aviva has been forced to quit over reports of his pay. rich ricci still with us. if you work in investment bank, you attract ire over pay in the sector. what can you do to implicate that side of the discussion? >> i think some of the concerns

are justified particularly as it relates to the terms. i think the industry recognizes that the returns on the power front are what we need to get back to delivering. so if we can get returns back up to cover the cost of capital upwards of say 15% will be the target for barclay, i think that that takes a lot of the heat out of the discussion. certainly the reform of compensation has come a long way. a lot more in terms of deferrals and absolute value of amount that has come down. it will continue to be a lever that the industry has, but it's all in the context of returns. >> one of the problems that you have is costs have gone up because you have to pay higher base salaries to compensate for the loss of sort of related pay. so how do you deal with that? and also keep star traders in a team when they're performing great. >> i think the whole issue of fixed compensation is one that gets overplayed and misunder sood. while we did increase fixed pay across the board, most of that relates to the back office where

traditionally fixed pay has also been the largest part of the component rather than bonuses. the front office while we did raise fixed pay in barclays and in the industry for that matter, bow muss still drive a lot of the compensation equation. and i think in the context of the terms, the whole team of investment bankers need to understand that it's all about those returns and i think people get it and are will be to pull the levers they have across various cost levers including comp in order to deliver those returns. >> is there still excess capacity some even when you talk about a lot of the smaller player has we've seen going forward, how much more down sizing does the industry have? >> i think the downsizing we all expected at the end of 2008 never really materialized because as mar gets got buoyant, a lot of those companies kind of hung around the hoop hoping that

the good times will continue to roll. i think we did start to see some capitulation towards the end of last year around some of the european banks, had a more focused approach in terms of market. that has carried in to the first part of 2011. i think we'll continue to see some. there is over-kass in the system. it's gotten better. but i think we'll see some consolidation. >> and regarding barclay rngs one of hot spots have been social media ipos. we're on the facebook deal and most of the big deals. and i point to the fact that starting the business has had its challenges, but i think our results are pretty good. you look at m and after the being m&a being a siflt, we're number six globally. so we'll continue to build that out. we've got most of our build down

in asia. >> is a greek exit, are you actively risking that scenario out through everything you do? >> our exposure to greece is minimal. buttier we're looking at all scenarios. it's a part of the dialogue. >> love having you on the show. thank you so much for joining us. >> congrats on the new format. >> voters have delivered a stinging defeat to merkel's party. just 23.6% of the vote. its worse showing in the state since the the second world war. >> and carolyn is outside the presidential palace in athens.

is there any hope that they can succeed on this front today? >> the chances are very slim. this is the last ditch attempt to form the coalition government, but there is one very important development i want to share. the leader of the radical left party who has repeatedly said i won't even meet with the president tonight said maybe i'm going to join those talks. that is if all major leaders except for the extremist right will be part of the talks. but more likely than not, we'll see the talks unravel tonight and the consensus is that we'll see new elections in june, but this country does not have time for new elections. papademos has said this will country may have difficulties meeting cash obligations by the beginning of june. earlier than expected. . >> and still to come, the week ahead on the u.s. market.

and also that ipo that has everyone except ross excited. we head to chicago to check the pulse of traders. >> i'm excited, i just don't like the value.

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european stocks off the session lows but still heavy losses in spain. ftse down 1.67%. spanish five year cds a fresh record. >> the fallout from jachpmorgan trading loss is claiming its first victims. drew ran the bank's chief investment office where the losses too being place. and they're investigating

whether traders in london hid the extent of the losses. and scott thompson has resigned amid the controversy over pauls claims on his resume. yahoo!'s board found evidence thompson knew more about the errors than he publicly admitted. he also told the board last week he has thyroid cancer which may have influenced his decision to step down. yahoo! has settled its proxy battle with dan lobe. >> ross levinson will take over as interim ceo. and this week in the u.s., not much economic data out today, but groupon results first quarter results after the close. later this week, investors get reports on retail sales, housing starts and minutes from fed meeting. and of course the countdown is on to facebook's ipo, expected to price thursday evening and trade friday. take a look at how u.s. futures are doing. red across the board. dow jones futures pointed down 86 points. nasdaq pointed down 20.

s&p down 10. jack, good morning. do you expect this risk off mood to last today in the u.s. some is. >> no. we've been seeing a market in the morning and market in the afternoon. usually when europe closes, we see a turn in direction. we're seeing a big margin call. you see everybody piling into the dollar. but more importantly, what we're looking at in my opinion is more of a temporary measure and a bit of a buying opportunity for u.s. equities. if you you take that big step back and you look, u.s. quit is are only down about 5% and you have the rest of the word down 25%. that tells you something. >> or it could tell that you this is a time to be cautious. some of the data coming out of china and india, a quarter of global gdp combined and a

downward string of data surprises. is that a source of concern? >> it is, but what's optimistic is that you are seeing them do something about it. the chinese are loosening their reserve requirements. we hear the fed governors talking hawk issuing, but qe-3 could be right around the corner. and maybe not for us. it could be more of an indirect qe for europe more than it is for us. but right now, people are pricing in the exit of greece, they're looking at whether there will be a drachma with 5% inflation and it will probably be bullish for the euro. >> a lot of stress to get including fresh record low yields. what's that going to do with treasury yields? >> i think we'll see a run if for the done year, but a lot of

this is a timemporary measure. right now europe is in capital preservation mode. that money goes right back into it's treated best. and right now it's in the ten year yields here. >> is it possible to be bullish on both stocks and bonds on government debt here in the u.s. at this point. >> no. i think we'll have to start looking a the that inverse relationship, but every fund manager has been looking for it including the whale, by the way, and they're wrong. so i think what we have to do is just probably detach these two markets. these low yields might be here for the next two or three years, but i think that we could see a sustained move where we start to see a multiple expansion in equities. >> jack, thank you so much. and that's it for today's edition of "worldwide exchange." >> it's been fun. >> "squawk box" is up next.

a new week, a new round of worries out of europe. greece can't form a new government. plus key bond auction ms in spa and italy. yahoo! is replacing its c ochlc the third time in as many years. and jpmorgan three execs are set to leave. it's monday, may 14th, 2012, and "squawk box" begins right now. >> good morning. welcome to "squawk box." i'm becky quick along with joe kernen and andrew ross sorkin and the global markets are under pressure this morning. let's bring y