welcome to today's program. i'm ross westgate. >> and i'm kelly evans. these are your headlines from around the world. spanish stocks the lowest at more than a decade. >> they agree to disagree during their first meeting. plus they drop sharply. the shipping company is warned on its outlook. another day and another size in the size of facebook's ipo. the offering may be 25% bigger as investors can't seem to get

enough of facebook's social networking site. all right. two hours of good stuff still to come, but you can see investors are still very nervous this morning. this after falls of another half a percent yesterday. ftse down. a fresh 2,012. nasdaq still up. the cac 40 still fresh. down three-quarters. the ibex down 1.68%. as far as the bund markets are concerned, fresh lower this morning. the gild, we'll bring that up in a minute. we're back over 4% for italian

yields for first time and tenure bund yields back down to what we were. no surprise, that's drags the euro down to fresh four-month lows against the dollar. earlier this morning we hit 126.83. we're just above that a moment on the 127 mark. the dollar index is up at four-month highs. it's firm above the 80 mark. what we are seeing, of course, is a big pressure on commodities as well. we have copper down at four-month lows, gold down at four-month lows. bhp saying they lost confidence in the long-term health of the economy. it's reflected in the aussie dollar week against the u.s. dollar, .9893. euro blowing the mark, .7962. we're looking ahead to the uk inflation report coming out around 10:30 london time. they'll probably upgrade the london forecast.

down grade the o'forecast. unemployment data in uf half an hour. i don't know. i always figured gold was thelet mat in trade. it's down. oil is down as well. brent down to 111. that's where we stand one hour into the trading center in europe. tracey's got what happened today in singapore. hi, tracey. >> good morning, ross. investors are still digesting the poor economic numbers from china while nervously watching what eats unfolding in greece. take a look at this. they lost more than 1.2. dragged down by slow growth worries showing low grouktd was actually flattened in the first two weeks of may. major financials leading the hang sang down to a four-month low. now, take a look at the japan's

nikkei down to 1.1% on the company's declining capital expenditure and that's a 3 1/2-month low for them. else where the kospi was smacked down 3.4%. elsewhere in australia investors joined the selloff sending the market down on their biggest tumble in more than five months. lastly sensex trading to the down side, off more than 1.9% at the moment. overall, a pretty dismal picture here in asia. ross, back over to you. >> we only had a one-day reprieve. this reminds me so much of monday. if you look at the headlines we've got uk ten-years at fresh record lows i i'm loving this fact. they explain qe. it's got nothing to do with qe. >> it does take us back to last summer when you had so many saying when the feds back away, who's going to buy and the same thing happened. >> if there's anything more

incompetent than a greek government. >> that is -- >> no greek government. they face another coalition. they're withdrawing their money from banks. >> and we'll examine the ecosystem to see who's benefiting and who's hurting china. >> we'll talk gold stocks and research themes. companies are seeing a renaissance in u.s. manufacturing. >> and u.s. retailers are gearing up to report their first quarter. later we'll be in detroit to find out why target is a buy. the big event is she's been speaking to german chancellor angela merkel, the morning after her first meeting with france's new president. i particularly want to know when push comes to shove and greece

doesn't fulfill the terms of the bailout, will she be prepared to let greece go? >> perfect time. you can't miss that. political leaders are meeting again. how many times have we read this headline. lawmakers will now try to form a caretaker government to take the country into fresh elections next month. carolyn will join us. but everybody's wondering if a caretaker government will come together in a way. >> they're going to run the country until the elections. thing they're talking june 10th they might do this. in the meantime we have real concerns. $710 million -- >> these comments got so much attention. when he said this amount of money has fled the greek banking system just in a single day, people really started to worry. >> that's the point. how do you stop a bank run in greece that expends bank run s

elsewhere. no one's talked about how you leave bank runs. >> if people want to protect their euros, if you want to protect your money, you want to protect it from a 70% hit and it starts to happen in greece, suddenly if you're holding your money in other countries, why wouldn't you want to do the same thing to protect your own assets. i believe we have carolyn now. good morning. can you explain what prospect if any we may hope to see form a caretaker government today? >> reporter: last time i was here, that was in november. it took them about five days. so i think this is going to be quite a tedious lengthy process again. again, the prime minister will probably be one of the main judges in this country. and basically the main task for this caretaker government will be to take this country to new

elections. again, you mentioned one of the pop dates. june 10 or june 17. it hasn't been confirmed of yet. i do want to remind you recent polls are planning to scrap the package all toikt will likely merge as the when never the next round of elections taking more than 20% of the votes. some commentators have pointed out to me, look, voters now realize the next vote is going to be about greece's membership in the eurozone. what we could be doing is gravitating back toward the centrist parties because they know under his leadership, greece will not be saying in the eurozone because they will withhold some of the next payments. basically greece will go bankrupt and it may be ejected from the eurozone. so really the next elections are going to be about whether they're going to vote for greece and whether they're going to vote for zur reet za and whether they're going to vote for the

euro. >> all right, carolyn. thanks so much. we'll keep an eye on that in the morning. >> they admitted greece could leave the eurozone. christine talked with france. she said it would be messy but the imf had to be technically prepared. joining us now, david roche from hong kong. great to see you. one wonders how it's going to pan out. if the greeks don't fulfill the terms of the bailout lrks the -- will the imf say no more money? >> i don't know if it's going to be the imf or eurozone which will push the button. probably both together. i think they're in broad agreement. i think you'll hear from merkel. she mads nows about grease

always being welcome. the losers of that will be grease. you know, you're already seeing deposit flight. once you get into deposit flight, your banks run out of liquidity. at this point you're day fe fac out anyway. i don't think it matters if it's lagarde or merkel who pulls the trigger. if they don't get around to voting for their parties the austerity measure will be pulged by both. >> david, let's assume that -- the polls suggest that's not going to happen. are we in a position to be able to pull the trigger without causing normal damage to the rest of the block? >> no, we're not.

let's start with greece owed about $500 billion to the european institutions. still around $36 billion to european banks and if greece was ejected from the eurozone with a populous government at the helm, i think they've renounced those debts, which would blow a hole in the ecb balance sheet. it would leave merkel with more than egg all over her face because she would have lost approximately $76 billion worth of taxpayer money. one quarter of that would be german lielkt, which would have to be paid in to fund efs money which would not be paid back by greece and then you have the losses to the french banks about another $19 billion. another loss at $4.5 billion and that's before you have the risk of contagion which is the run on greece could be a run on other countries. then they would have to be ring fenced by unlimited amounts of sovereign bond buying by the ecb, by support for the banks,

and also by guarantees for the depositors so they wouldn't have take money out of places like portugal, ireland, italy, and spain. >> well, david, i'm going go buy -- >> are we going to buy -- no. >> i'm going to go buy canned meat. it's a pretty bleak scenario that you paint, but you did mention concerns about capital flight. >> no, no, no. it's not that bad. it's not that bad. >> at what point do you think -- >> we have the tools. i think capital controls become an inevitability if you get capital deposit flight out of a country because what that does is it drains the liquidity out of the banks. and the only way to stop that is for the ecb to fill the lid quity is fleeting.

de facto, monetary union is dead. so, look. we have the tools. the question is how we got the plan, are we ready, and i think, you know, we're flafing on about a growth plan coming out of the next summit. the issue is not really a growth plan coming out of the next summit, which is almost an oxymoron, but frankly a ring fence for the other peripheral country and a clear plan on how to absorb potential risks from greece. >> as far as we know, we don't have that ring fence from greece so very briefly they're not going to pull the trigger because we don't know how to deal with it. >> no, that doesn't follow at all. no, no, no, no, no. that doesn't follow at all. i thurng they are prepared to pull the trigger. i think they're going be very tough on the greek message and the plan is going to be put together but it hasn't been put together yet and we have to know about it in order to inspire

confidence. >> okay. great to have you with us, david. great to hear from you. angela merkel and france's president hollande are prepared to meechlt as david said wi don't need plans for growth but plans for a default. silvia is sitting down with angela merkel. a very important set of statements is going to come from the german chancellor. >> if you want to prepare a question for the chancellor or get in touch with david roche, get in touch with us at worldwide@cnbc.com or directly. our next guest says shifting

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cnbc is reporting that kate kelly is reporting that facebook is increasing. the height could value the deal with target range of $34 to $38 a share and facebook's ipo could be the third biggest u.s. offering. we'll look for that updated filing later today. you just can't stop it. >> and general motors, visa, facebook tells you a lot about the internet right there. >> the hype around facebook could be playing a role here. investors are betting once china's nation internet gets going, nay have the potential to rival the social media. >> the country has no shortage of home grown local social networking siting. ten cents. funny name making a profit.

that's 60% more than facebook. tencent boasts of a 700 million active accounts. it's the number one gaming online. it has a huge user base and comprehensive monitoring to monitor its sites. >> it enjoys a 50% market share but was pulled into a recent quarterly loss with its group buy business. huge market aside, these internet plays trade with a target because of market regulation and lack of sophistication. >> tlink probably have even weaker look in faisbocebook in theup. generally chinese advertising

market, especially the new digital media market is at d way early station. >> china may not have an exact version of facebook but does off alternatives that is offlimits to facebook. >> and we should point out ten krent will reportortts earnings. down another 4.5% in early trading. >> have you got any thoughts or comments, you can i'm us at worldwide@cnbc.com. >> the company said it's expecting earnings to fall this line. they said it's container shipping unit may post a negative to neutralral result. the company saw it rise unexpect italy to ore 6.5 danish crowns in a quarter. our next guest sayed it

would lead to a shift in the shipping industry. joining us is james leak. you say bulk shipping is going to lose out to crude shipping is. that the shift? >> seeing what's happening in the states in terms of the incredible increase in production domestic crude, j.r. ewing would be proud seeing what's happening in texas, for example. we're seeing a much greater increase in crude not just from the states and canada but brazil, west africa and the black sea. the indian markets which coun r counterintuitively they go down. in the longer term the expansion

of the longer haul trades, they're likely to be more. are rating taking a dip? >> all of the above. certainly last year owners of dangers wou tankers would have paid you. >> the lccs are? >> the largest crude carriers. >> just said large crude carriers. >> there's all kinds of akron nichls. certainly, again, back to the original question, i don't think it's necessarily negative for the dry markets. they move toward self-sufficiency in the states has meant that the whole power generation portfolio is changing. we see perhaps this year, 2012, nine gig a watts of new wind.

the natural gas fueled by the massive increase in shale gas supplies in the states. what this has meant that coal would have gone into quite dirty, old stations that are now shut for closure will potentially be avail snoobl we had neptune orient, one of the world's biggest container fleed. they had a huge loss. they seem as a pretty conservatively run shipping group. now they're posting losses. this must mean there's a lot of people hurting at the moment. >> there is a lot of hurting taking place under the drawer but i think in the next few months we'll see a lot more coming out in the public domain. i think some of the casualties we've seen so far, perhaps the tip of the iceberg. in the container sector, the lines have been fairly lucky and actually have been able to push through some general rate increases. >> if you don't mind, this underpinning, we've got fears

about global warnings at the moment. are the fierce justified, particularly out of china. >> i think in the long run, there's perhaps a more optimistic story. i i'm thinking over the next year, year and a half. >> you can't wait for ten years for returns on this investment. >> you're going to be relatively disappointed. but seattle prices in the shipping sector are relatively low by historical standards. we're unlikely to see cash flow pick up any time -- certainly the dry sector in the near term. but when we look at perhaps toward end of the 2013, we can perhaps see better prospects ahead, china and india in particular are just becoming increasingly unable to generate the output industrial and raw materials in their own economies. >> james, thanks very much for that. james leake from icap shipping.

i read they haven't had any orders for the first year. construction down heavily. housing sales down in the first quarter. what's your view of this slowdown on the way of china at the moment? >> well, it's definitely a slowdown. it's presently growing at about 7%, which, of course, if we were doing that in europe, we'd be incredibly happy, wouldn't we. but in china, nobody's happy with 7%. i think it's going go lower to around 6% and go to a growth rate of 10% but not back to the 10 or 11%. the reasons are first they're trying to export from growth to domestic-led demand. that involve as stepdown in productivity. the second is they're encumbered with enormous bad debts in the banks which are being hidden and that they have the -- what i call -- what you call and i call

a shadow banking system, which is a complete mess and is also being hidden, and they have a property bubble overhang, which is far from over. so the likelihood is that these things will continue to act as a break on growth. so it's not that dramatic of you. the days of double digit growth in china are eventually over. there are a lot of structural problems which need to be coped with, and therefore the outlook, thirpg, is rather gray but it's not grim. >> okay. david, good to have you on. come back and we'll get you views on what policy they need to implement. >> still to come on the show, uk is out with unemployment figures in april in just a few minutes. analysts claim the numbers climbs to numbers we haven't seen in several months.

here are the headlines from around the world. spanish equities at the lowest level in nearly a decade. >> they agree to disagree during their first meeting. we'll have an interview with german chancellor coming up later on this show.

another day and another hype. the offering may now be 25% bigger as investors can't seem to get enough of the social networking site. >> and warren buffett's berkshire hathaway reveals future stakes but keeps them guessing. viacom. that's the sort of mistake i should make. >> we have unemployment data out of the uk. the april adjusted jobless claimant, minus 13,7409% work force. that was a forecasted climb of around 13%. 13,000 people claims less benefit. the ilo three-month unemployment was down 45,000. the unemployment rate was at 8.2%. the unemployment rate has ticked down as well. the average earnings up 1.6%.

the claimant count is the largest in 2010. we had a rise in average earnings. the weakest since the three months to december 2009. so weak average earnings. well, it was forecasted at 1.5%. slightly stronger than the expectations. a much better forecasted moment than we might have thought. it had dipped below 130. >> i meant the pound, yes. i'm doings it now. the pound up against the dollar. david roche is still with us from independent strategy. david, a surprise unemployment. i know it's only one month day tarks but total unemployment dropping, and the claimant count dropping as well. >> yeah, it is quite a surprise really. i don't know if it is a one-month blip. i'm not close enough to the data, and i haven't seen the details, but it seems to me like, you know, the uk is an economy which is going to get the benefit of the doubt.

if anyone can give the benefit of the doubt, and this figure will give it the benefit of the doubt because it's seen to be at least slowly grinding its way, at least if not out of recession, not deeper into recession like the rest of europe. it will retain its safe haven status. what it's going do is make it less likely you're going to get more out of the bank of england. generally in a rather dark day, this is a glimmer of light. >> david, do you think this does empower the hawks on the bank of england who would prefer not to do more quantitative easing and is concerning the fragility of the economy overblown? >> well, i don't think concerns about the concerns about the fragility of the economy are overblown. i'm starting to do it. there are several reasons. numb beer one, the fiscal state of great britain is extremely

powerless. the economic austerity is far less than it, about a half to less than 7% of gdp a year which is pretty tame and you have an economy which is still hampered by enormous leverage in the household sector and the government sector. so i don't think you can stay it's out of the woods. on the other hand it has a government which appears to be more or less going to stay in awful and we're trying to do something about it. it has a free currency. and it is seen by any potential investor or any fleeing investor from europe as being a safe place to put money. now, does that mean -- so that's the picture. now, i don't think there's enough in one month's data to say that the hawks who want to put qe completely out of the picture or take it away from the policy tools, that's not a strong enough signal. >> okay. so i think the bank of england will retain the potential use of

it. >> david roche, we'll have more with him later in the show and coming up the bank of england will release the quarterly report. we'll bring the new as it hits the wire. 10:30 british time. >> london time. >> okay. it's 9:30 now. >> we won't even get to gmt. we're off the session lows. z t z xetra dax. >> german bonds down 1.7. still below the 1.5% level. 10-year gi 10-year gilts jumped down. italy is down to 6.06% and spain is at 6.38%. >> meanwhile greek political

leaders are meeting again after last-ditch talks faired. that the head of the international monetary fund has admit there's a chance greece could leave the eurozone. an exit could be in can cards. she said it would be messy but the imf had to be technically prepared. we're now joined by jury again michaels least economist for citigroup. jurgen, would you like to respond to the uk data and talk a little bit about the potential for stronger growth in that region despite everything that's happening in the eurozone? >> i think in the uk you always have some near-term disruptions there, but i think overall, the pressure of inflation is likely to come down over time as the appreciation comes through and the economy looks rather week. turning to europe, thing

yesterday we had a better day their the first quarter. i think later this year the euro could go into recession, given the events coming up in greece, plus also the pressure on the private and sovereign side in other countries including also spain and italy. >> yurgen, do you sense that they're really coming to terms with the idea of this growth pack going forward that there might be more eurowide -- eurobond measures? >> merkel yesterday sort of caved in a bit. she said she's willing to talk with him about growth issues and

there's increasing pressure to go in that direction but what we've seen so far that when she's talked about grouktd initiatives, she mainly talks about structural reforms. she's probably willing to give something more in terms of eob funding and other measures to support investment activity over time but there was little direction to move that she'll go into stimulus programs or something like this. i think so far there's still talk about the same label and the growth compact. but on the move there's still a huge difference. but after the huge meeting there's at least talk of moving together and moving in the same direction and i would expect that after the french election in mid-june that then the talks will intensify and we will have something at hand for the meeting at the heads of state at the end of june. >> we'll be with greece by then. david who's with us in hong

kong, look, the -- if the greeks don't meet the terms of the bailout, the burlington be pushed on them in terms of euro membership. is there any middle ground here? it was suggested that they could extend the timing of the program. is there any middle ground here, a chance that in the short term the troika, you may fudge it a little bit and give the greeks more time? i think the willingness of the europeans to make smaller changes is there, but evoveralli think they have one clear condition, is that the parties that run the government, greece, at later stage make their clear commitment that they stick to the austerity measures and the structural reform in principle, and think this is at stake in the moment, seeing the latest service coming up, it seems that the left wing parties are

getting really a huge amount of support, and with this it's going very, very difficult to implement this. so the room from the euro group and also the heads of states on the european level to give in a bit, i think, does not overlap with the room from the greek side to agree on the change. it's not just the europeans negotiating. it's the imf as well. and our base assumption now is that greece is going to leave the euro. it's up to 75 that it happens. >> all right. jurgen michels, thank you. david, just to bring you back, the key thing about this is timing, right? you think they'll push the button. they don't have plan in place. how do we bridge the gap between the times of that, getting plan in place so they can push the button? >> well, i think the critical period and the critical decision is a greek decision and the

pushing of the button is, in fact, a greek decision too. if the greeks want to sit on a ton of dynamite and push the button to blow themselves into the next world, that's their business. the timing of this is their election. they either produce, scare the hell out of themselves and say we want to be in the euro and we will have to pay the price and elect a government that will put in place the austerity or they say, we want to be in the euro but we don't want don anything. that's pushing the dynamite under their bottom. >> you think, jeff to be clear, post election, that's it. >> yeah. that's it. >> okay. >> at that moment in time they defau default. they can't borrow money from ecb. they can't fly out of the country. they can't ring fence the banks. it's over.

you don't have a treaty to throw them out. they undo themselves. >> okay. >> david roche. >> good stuff, yeah. >> thank you very much, sir. i want to remind you angela merkel and francois hollande. they're going to prevent joint proposals for growth. hollande told berlin all offers must be put on the table. >> translator: the method we agreed on is to bring all the ideas and proposals together and see how we can implement them legally. it's only once that this work is done they will be able to answer your questions. that our own silvia wadhwa will be sitting down with angela merkel, and we'll have that

interview coming up in the show. >> i can't wait to hear what she has to say about what david first said. they're prolonging greek credit growth is spiking cause for the eaa tracey challenge chang has said more. >> they issued for loans at all. it expends the country's growth and greece's concern over loan demand as well as a squeeze on deposits. some analysts say it's, quote, too little too late saying more powerful easing tools are needed but it doesn't look like the government is ready to play aggressive just yet. just today the vice chairman of the banking watchdog said there's no plan to challenge the loan-to-deposit ratio as of now but he did say regulators are

watching the volatility and they're playing as well as the newspaper is mulling over a research team to look over interest rate liberalization. back to you, ross. >> thanks, tracey. we want to bring david roche back into this conversation. david, you just heard tracey's comments. what do you think they can do? can they ultimately promote fiscal stimulus? >> it's very interesting really. for starter, i had the imprelgs drks of course, i am a foreigner and all the rest. there's this famous bowl affair which may have been much closer to an attempt to destabilize the state and then surely to ship for himself than we thought.

so i think there's more of a struggle going on, number one. number two, despite the banks there is the rrr, required reserve requirement or whatever it's called was diminished. the real con stralkt was the rule about the loan-to-deposit ratio and the banks are at the limit to the loan-to-deposit ratio. so if they want the banks to lend more, which i'm not sure they should be lending more, then they have to take off that limit. so the banks can actually lend more of their doeposits. that's what needs to be done. the third thing they could do is have a fixed seattle invest plnlt program which, of course would have to be funded by the banks and be directed by the top. now, i personally don't think that china needs most of these things because it has numerous excess in the system which need to be worked out rather than liquefied rather than turned into a qe. but, of course, if the growth rate come downs to 6%.

we'll get those measures anyway. >> all right. david roche from hong kong with us on that. thanks. stick with us because over in japan we're meanwhile taking a look at a gauge of business expansion there. >> it fell 2.8% from february. why? orders from the chemical sector declines sharply after a big rise in the month before. despite the fall in march, orders for the first quarter still managed to gain in the first three months and in the second quarter companies expect orders to pick up by more than 2.5%, the fattest pace in a year. what they suggest is the reconstruction after last year's quick are now starting to be felt. back to you. >> all right.

keat a die, thanks. >> japan is likely to rebound in the first quarter there. that figure will be out shortly. gdp data will be out at . last month we saw the first decline there. and also friday we'll watch the market reaction as the rrr, reserve ratio comes into effect. we'll take a look what the big managements are finding. berke sheer hathaway showing a new stake in general motors. buffett, by the way, drives a clakd. increased holdings. that was before the mexico bribery scandal broke. in frankfurt, gm and walmart

stocks. look at that. the market is down. they're all up. >> that's interesting. >> they just decided they weren't going do any more advertising on facebook. >> yeah. they're avanlt by being rewarded for that decision. >> metro bank is set to open today its 12th bank in london as the group says they have gained around 75,000 customers since opening in 2010. so they're facing more and more question about ring fencing how's the banking in the uk holding up. >> we're joined on set now. >> good morning. >> welcome. so your thoughts, please, as you look across markets here in about, you know, the soundless of the uk economy. >> we have -- first of all metro is the first retail bank in 100 plus years so, this is a new entry into the market. we're open about 18 months. it's been great run for us. the brits have really responded to our convenience and service

model. we find the market to be very strong. i think london is not necessarily relative of all brip but certainly from our view -- >> you're going to confine yourself to a london bank then. >> for the next few years our plan so to build several hundred location. so for the next fif you'rfew ye be in london. >> are you benefiting from those taking their money out of the eurozone and other parts of the world and coming to london? >> certainly there's a move. it seems the money comes to london. yes, that's part of it. but mainly we take market shares with people that are unhappen with the level service they're receiving. we even got the inpen department banker coming out.

we should -- well, we have george altman's response. it's supposed to come out in june. we don't know how high the ring fencing is going to be between commercial and investment activities. how does that play in. you're purely retail and commercial banking aet the moment, but how does that change the landscape for you? >> as you say, we're an old-fashionened banks. we take deposits, make loans, don't do these other products. i grew up in the american model where we were essentially ring fence before 2001. >> before they took -- >> before they removed the glass-steagall prohibitions and some would say that was the beginning of the root problems in america. i think they're going to find there are problems as they separate the parts. they're not going to be able to use customer deposits to finance their investment bank. it's probably not the worst thing that's happening.

>> it's interesting because they've been talking about banks not being profitable in recent years. this kind of fee-based income. why is that wrong? >> well, that's just not true. every study ever done in banking says that take deposits on the sme side is the high margin business. as you know, i ran major bank in america built on this model and we returned capital 18% to 20% for a long period of time. >> bank of england base rates becoming an irrelevance? >> they're certainly very low. >> in terms of the money -- in terms of the rate fwhafrms bank charging. the cost is higher than what the bank of england bank rates are. s is it what they're trying to do and what commercial banks are trying to charge customers?

>> i wouldn't say it quite the way you said it ross. i would say it a different way. the major banks are being shrunk in size by increase in capital requirements. we're seeing a reduksz in particularly the sme segment as they shrink back, and that's going to ripple through the british economy. we already read stories about sme credits hard to get. i wouldn't have be surprised to see the major british banks shrink by a third as capital requirements are increased and liquidity requirements are increased. >> that's the best plan you've about seen to deal with that because everybody talks about we need finance? what's the best plan to stop that from happening? >> i think the pendulum is swinging too far. if you make capital banks too high, you reduce credit. that reduces growth. some would say the pendulum swank too far before the crash in '07. you can make the argument

swinging the other way. >> thanking for that. vernon hill. still to come, greece may be living on a prayer but is the rock star who penned that still enjoying success? cnbc meeting bon jovi later in the show. 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... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. tions that matter.

dollar index up at four-month highs. multi-month lows. also giving the yen a reprieve. one trader says the tide on dollar/yen has turned. david roche is still with us. david, this is all obviously capital flight to some degree. what do you make of the dollar and the trend amongst those asian currencies where you are? >> well, talking about the asian currency, i think they're probably the most interesting and underdiscussed. i think there are two things to say here. one is i suspect that the emerging market growth is going to be disappointing. that means that the asian central banks which from a purely inflation air point of view won't be tightening. and as most of these economies

still require, they still require quite a lot of capital in flows to fund the private sector. my feeling is that we will see a funding gap because of risk aversion and the very reflex of money into the safe haven markets which i think will presence prince empl principlely that. this is a countries who fiscal arithmetic makes greece look like switzerland and whose politicians are entire land completely includeless, so the likelihood is they even going to have to do something which they have failed to do so far of a meaningful fashion to reduce the value of their currency to keep their economy growing. yes, you can get a nice growth figure out of japan for the first quarter but in the end this economy is not buoyant. it has many problems includes

the absence of nuclear power. it needs devaluation, and we will get it. >> david, very briefly, your safe haven trade right now? >> i have two safe haven trade right now. one is the u.s. dollar of the dxy. and the other is the singapore dollar versus asian currency. >> perfect. >> singapore dollar. david, so good to see you. global strategist at independent strategy in hong kong. coming up we're live in athaens as they try to leave the country. we'll have the details next. ♪

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"worldwide exchange." i'm kelly evans. >> and i'm ross westgate. >> spanish stocks are at their lowest level in nearly a decade. >> they agree to disagree during the first meeting. we'll have an interview with the german chancellor on this show. >> that's right. and another day, another hike in the size of facebook's ipo. that offering may now be 25% bigger as investors can't seem to get enough of the social networking site. >> it keeps growing. warren buffett has disclosed new stakes but it's kept investors

guessing about the position over the next few months. all right. if you're just tuning in, let's take a quick look at how markets are doing this morning. a risk off move. u.s. futures at this point have come off some of their lows. dow jones would open up 7% down. nasdaq futures are barely lower. s&p 500 barely lower. again, we'll see whether there's more pressure on those as we continue to look at strains coming out of the periphery. take a look at what the ftse global 100 is doing. we're down almost 0.8% on the day. we're a little bit low off the session. we've got spain cds five-year spreads at a new record high, 500 basis points. italy has hit 515. ross, that just gives you the sense of the kind of pressures that are coming out of these

places. >> things are better than they were. we've bounced off the session lows, but, remember we start the day, fresh 2012 lows for both the uk and the french markets. the ftse 100 down about a percent. cac 40 down a third. the ibex today hit levels we hadn't seen sense 2003. currently that half of one per sechblt the biggest losers, commodity stocks off a while. we'll come into that in a few moments' time. as far as kcurrency is concerne, aussie dollar is weak. four-month lows. bhp says quantity markets will go further because of loss of confidence in the strength of the global economy and the long-term health of it. dollar/yen up. up to four-month highs and we have a euro/dollar at 127.13 is

where we stand. we got down to 126.83 with that first four-month low. bund yields very low. not quite on the record lows but not far off. italian yields over 6% for the first time since the beginning of february. kelly was talking about spanish cds. those bund yields just below the 4.6 level. ten-year bund levels fresh. 1.8. 9%. unemployment data a half hour ago, real surprise in the uk. down 13,000. we expected a rise of plus 5,000. and the number of unemployed on the wide measure declining 45,000. that helped to bring the unemployment rate down. we'll hear from the bank of england with it quarterly inflation report coming in a half hour. a business day. we start out by taking a look at the housing markets. keep an eye on building permits.

this could drop by about 5%. at 9:15 we get april industrial products. st. louis fed pred james bull lard is in louisville, kentucky, and that's at 12:30 p.m. or so and he'll talk about the fed on pause. and at 2:00 we get minutes from last month's fed meeting. if you think they're a snoozer, last month's was a market mover. target, abercrombie, deere, staples, limited brands will also report. >> we're going to hear from the bank of england and the fed today. they may give us windows as to whether we have a chance. >> and that inflation report out of the uk -- i'm sorry -- or the unemployment report gives us a stronger sense. doesn't make it harder for the bank of england to do the kind of measures that some members want to do. >> we had them on last week.

they said they should be buying government bonds. they should be buying packaging of bad debts. >> you heard that about the fed as well that. will be very interesting. greek political leaders meanwhile are meeting after last-ditch talks with former government failed. lawmakers will now try to form a caretaker government to take the country into fresh elections next month. carolyn schober is in athens shef. she joins us now with the latest. what are the steps they can take toward meeting the austerity measures likely to get its next round of fund. >> reporter: well, the problem is over the next couple of weeks, kelly, we're going to see a power volume in greece, and with that power volume, do you believe that some of the important austerity measures are going to be implemented? probably not. on top of, that i should mention that i don't know how many times i've said this, probably a thousand times but i'll say it again, greece is running out of cash by the end of june, so this

country doesn't have time for new elections, let alone forming a caretaker gocht some of what this means, it's running oust cash. it's already behind a couple of of payments. just to ensure the state can actually pay civil wages and pensions. but, again, we're probably going to see the withdrawals of deposits accelerate rather than decelerate and this comes on top of the 700 million euros and deposits that have already been withdrawn over the last couple of days. it's really crunch time for the greek economy and greek politics, so we're just hoping that come election time we'll see -- >> yeah. the sound there -- >> -- will get funding. that's the only way greece will stay in the eurozone. >> we apologize for the connection there, trying to keep those lines of communication open with athens. but joining us as guest host for the next hour is hor race owe voe lars. and you heard from carolyn's

report there, everyone's focused on greece. you're seeing pressures across managements this morning. what's your take. >> our take is greece is really in a very tight spot at this poi point. as just said they're running out of money as withdrawals from baenks as people feel their savings are going to be wiped tout a new currency. so they really don't have a lot of choices. they either accept what the rest of europe wants or they go their own way chrk means that there people will likely seem to be poor, though in reality, with the large debt they have, they really need to take a step back in order to grow into the future. >> hor ratio, the fear is sending the dollar index up to four-year highs. record low yields in sweden and the uk and german bunds as well.

how much more can this trade be extended, i suppose? where are people going to be looking? >> well, thing that the bonds have largely discounted, i think, at this point, with the exception obviously of further default but have largely discounted that greece is going to exit the euro at some point in the not too disstand future. as i said they don't have a lot of choice. that's positioned them for growth as long as they take the economies that are needed to get back in shape. we think the markets have basically discounted this. the bigger fear is obviously are over spain and italy that. i're much larger. the euro -- the trillions of euros that are involved with spain and italy are significant

to the european banks. so we actually think we'd be better off if we -- if we could get a solution that included greece. it would be great. we're just having a hard time seeing how that's put together going forward. >> horatio, have you been -- can you sense that the u.s. can decouple or won't be affected as these problems continue to unravel? >> well, first of all, the european banks hold a lot more of these assets and that u.s. banks so the u.s. financial system, notwithstanding the jpmorgan loss last week are much more insulated. having said that, if you look at u.s. equities they're actually not very expensive on a historical basis. also earnings are still growing, our economy is still growing. doesn't seem to be getting impact from europe. you know, companies earnings --

companies are still able to post higher earnings. we believe the 10% earnings growth that's being projected for the u.s. is achievable. so we're not surprised by the strength of the u.s. -- the relative strength of the u.s. market. we also think that, you know, in this environment, all markets sell off. you're better off in being in some of the markets, whether it's the u.s. or some of the asian markets. >> all right. stick around. more to come from you. also cnbc's kate kelly reporting that facebook is expected to increase the size of its ip ooh by another 25%. in other words 85 million shares. that will make it a total of 412. it would make the deal $18.5 billion and if you combine that with the higher price and facebook's ipo could be the third biggest offering, trading only visa and general motors, that updated filing expected to be later today. it's a monster. it's out of control sniet is.

even as people worry it's going to be a fad, they still want in. >> let's take a look at the other top stories of the day if you're just joining us now. jpmorgan will be appearing before the house financial services committee, taking a look into its $2 billion trading loss. no date has been set yet. lawmakers want more time, though, to gather information. >> yeah. the pressure is on. we'll see what happens. maersk says the numbers should be lower. this after first quarter net profits surprised to the upside. we heard earlier from mr. leake that there's a big difference between what happened in boat carriers and other carriers. a greek bet has paid off. dart management has seened almost 90% of the $440 bill greece made yesterday. it bought it at a driesed price, now getting paid 100 cents on the dollar. >> a couple things about this.

how does it feed into political angst in greece? these guys got a 2 bill -- they're suing argentina $2 billion. but it's not a 400 million payout. tight 450 billion payout. >> of course. and other investors who got significantly less than that. not too happy. >> they sold it to them. didn't have to. and the leaders of france and greece say it should remain in the eurozone. we'll speak to the german chancellor fresh from her first ever meeting with the french president later in the show. there's one question above all others. >> did hollande speak in german? i still want to know. >> i was thinking actually are you going to kick greece out if they don't fulfill the terms of the bailout. that's it. that's the big one. sylvia if sill via is getting ready. she sent us this preview of what

to expect. >> reporter: how unshakeable is angela markel's desire to keep the eurozone inside the eurozone and eu and how much is there on integrating growth impacts and indeed how much is she under pressure now from the home front to change her strat skri for the eurozone for europe and indeed for germany. that's what we're going to be asking her in our sit-down interview in a little while. so watch it on "worldwide exchange." >> yep. that's coming up in just a few minutes. meanwhile one viewer has tweeted in with his view on their problems. he said they would be smart to be first to leave the euro. the euro is dead. by the way, that's a view that we've heard from some investment managers in new york as well. that it will ultimately be germany who promotes the disruption of the eurozone. you can contact us on twitter @cnbcwex. you can also contact us

directly.

you're watching "worldwide exchange," and if you're just joining us, these are your headlines. exit spain is now near a ten-year low. and afacebook's offering ma

25% bigger as investors can't seem to get enough of the social networking site. and it's that time of year again when investors take note of what the big money managers are buying and selling. an s.e.c. 13 filing shows warren buff earth was pretty business. he diggs closed a stake in general motors and viacom and increased its hoelgds in wall mark. that was before the mexico bribery scandal broke. a new warning from goldman sachs. the gdp could shrink wi as much as 4% in 2013 if the government does not address the so-called fiscal cliff. that refers to the $600 billion in tax breaks including the tax cuts and unemployment benefits at the end of the year. joining us as guest host for the next hour is horace owe va lars.

do you think that berkshire has made some bets that, you know, you would want to follow?io va . do you think that berkshire has made some bets that, you know, you would want to follow?leiras. do you think that berkshire has made some bets that, you know, you would want to follow? >> our time frame is about a year. to think in his terms is something that we don't normally do, but we always pay attention to what he's doing or what they're doing. it's always interesting. what will be more interesting is how and if the company changes as they transition to a new management over the next few years. >> horacio, let's talk about this fiscal cliff in the u.s. how concerned are you about this impacting the shares and performance over the next couple of months. >> you know, kelly, i think it's fascinating subject because we seem to have these cliff, you know, different cliffs coming up at different times, but our estimate is it's the entire

contract, spending cuts, somewhere around 3.5% of gdp, so not too far from the goldman calculation. however, we're going to have to take this hit at some point, whether we take it now or whether we try to postpone it as looj as possible. the longer we postpone, the bigger the hit. we do think baums of the nature of politics in the u.s. today with presidential elections, nothing's going to happen until after the election and even then there's probably going to fw delay. so the fiscal hit won't happen in the next nine months. but eventually, you know, this country needs to get its deficit under control. it needs to get its spending under control. whether it's a combination of tax increases and spending cuts or all spending cuts, you know, the hit to gdp's going to be there. we don't.

hopefully if it's a pro growth reform on the tax code, the individual tax code, then that hit to gdp will actually be ameliorated by a much more efficient tax structure. so that's what i'm hoping for. we'll see whether the politicians really understand what's going on. >> all right. horacio valeiras. we'll leave it there. chief investment officer at allia allianz. >> cnbc will be focusing on a brand-new career, bon jovi. he's a pretty complex machblt good to see you, by the way. >> good to see you too. >> what do we explore? >> he's a complex character. he's not what you expect. and actually the rock starks he's so much more than that. he took over the business of

running the group bon jovi. he fired all the machlkt he calls himself the quarterback of the corporation. a family man and a philanthropist. not what you would expect. >> what's going on here? >> well, i interviewed jon in philadelphia, also in his native new jersey, and he's basically talking about how he runs the corporation, which is his business, bon jovi. >> it almost trove me off the echlk because now you start to understand the term, the music business. there's a business to music and suddenly you went from being the fun-loving kid singer and rock band to the head of a corporation, to a boss. >> okay. there you go. that's airing tonight. tania, thanks very much for that. cnbc meets bon jovi tonight at

10:00 p.m. london time. >> i'll be singing along. >> john bon jovi fan? >> of course, of coursing, of course. >> who isn't. >> we'll get ideas from the robert baird growth conference next. ♪ why do you whisper, green grass? ♪ [ all ] shh! ♪ why tell the trees what ain't so? ♪ [ male announcer ] dow solutions use vibration reduction technology to help reduce track noise so trains move quieter through urban areas all over the world. together, the elements of science and the human element can solve anything. [ all ] shh! [ male announcer ] solutionism. the new optimism. 

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we are on the hunt for growth, stocks that is. presentations from more than 130 companies across a broad range of sectors. now, joining us is john langen held, co-director of research at robert w. baird. what were some of the best ideas? where's the growth in terms of what you see? >> it's interesting. they're definitely looking for growth. our attendance at conferences is up over 12%. there's a dearth of growth stories out there. when you find them, investors are willing the pay up. even the less pressing sides like the industrial and cyclical, we're seeing it there. >> this market is so correlated. there are areas that seem to trade at high beta for lack of a

better term. but is it fair? is it still easy to separate out stocks that have a better growth profile and bet on those? >> yeah. i think it is. you know, it's interesting. the definition of a growth company today is different than wait was five or even ten years ago. investors are having to come down that growth curve to find the growth they once had in the solid double-digit 20% top line growth. they may be willing to look at 7%, 8%, 9% top line growth as a growth story and they're out there. the companies that have that solid long-term growth prospects are getting bid up and the valuation of some of those names continue to go higher. yeah, certainly opportunities exist out there. >> jon, you said one thing. you said investors are prepared to pay up to retain growth stocks. that's the key question is whether you can get an entry point for any of these stocks' value. >> right. and, you know, you look at some of the trends out there. there are some significant mega trends out there, whether they

be on the technology side in terms of some of the proliferation of mobility or even on the industrial side where you have the manufacturing rehn saups occurring here in the u.s. i think what we're seeing is that investors, if they can get the stability of the economy, which tends to favor more u.s.-based operations than european based or asian-based operations at this point, that's where they're seeing those entry points and value points and it's created some opportunities. >> all right. jon langenfeld. thank you for that. some of the growth ideas include names you might expect. am, wells fargo, intel. there's company like sally beauty, polly port international. >> we have to -- we have to move on, though. there's plenty to come including bank of england's getting set to unveil its quarterly inflation report. we'll bring you that as soon as we come back.

welcome to "worldwide exchange." if you're just joining us, i'll kelly evans. >> and i'm ross westgate. spanish stocks are at their lowest in nearly a decade. >> we'll have an interview with the german chancellor in the next half hour.

>> and another day, a another hike in the size of facebook's ipo. that offering may now be 25% bigger as investors can't seem to get enough of the social networking site. >> we've got a lot coming out. what are they saying? they're saying that inflation will fall to the 2% target amid-2013. that is six months later than the previous forecast that they have certainly ramped up their inflation target. it will then stay at that rate around early 2015. they say the rising inflation forecast reflects higher energy prices and lower growth forecast as well. they sigh subdued expansion in the near term. mr. king is just talking. we'll listen to the first minute

of his address. >> that's been painful for everyone in our society. the challenge facing the mpc is to navigate a route back to nor malt. the outward growth presented in today's report is weaker than in february and the outlook for inflation is higher in the near term. rather than focusing on quarter-to-quarter movements in output or inflation, which are impossible to judge, the npc focuses on the bigger picture. that bigger picture is of a gradual recovery in output and of subdued cost pressures meaning inflation is likely to fall back as external influences fade. the labor market rates published the morning are consistent with the picture. it shrank a little this year and if t final quarter of last year. other the past year or so, two factors have hampered the

recovery and rebalancing by more than expected. first, higher than expected world commodity and energy prices have squeezed real ta take-home pay, dampening consumption growth. second, credit conditions far from easing have in some cases become tighter. the direct and indirect exposures of uk banks to the euro area periphery have affected funding costs. if the challenges of tackling the indebted necessary and lack of competitiveness in those countries have intensified. the economy will continue to face strong headwinds over the forecast period. underlying concerns about balance sheets, especially in the financial sector with its exposure to the euro area mean that the path of recovery is likely to be slow and uncertain. >> we'll get more of that on the web. just to remind you. this is to remind you what they

downgraded the forecast for for the uk. that's about 1.25% by the end of this year. it was previously 1.95% through 2014. it was previously 3%. that's why sterling is weakening particularly against the dollar. the dollar index up. >> and we're see 10g-yeing 10-y gilds. >> one-year. >> incredible. incredible. >> they've certainly lowered their growth forecasts. >> the market, i guess, is reacting to those growth forecasts mostly, and that is effect lively the bank of england this momtd says it's on hold but the market is taking the report to suggest that qe is not off the table, if you like. and so that's margin rally still in the negative.

marvin king is. struckially the uk inflows that we're now seeing in the gilt off. particularly against the euro and particularly considering what's happening in greece at the moment. >> and is this in light of the employment figures we had out this morning, which were surprisingly strong in the uk? how do you square that with this report? >> yeah. the economy is obviously soft. so we've had a double dip recession confirmed a couple of weeks ago. it's all relative these days. the inflation numbers continue to edge gradually lower, and so the bank of england have been stuck between a rock and a hard place for a while now in that inflation hasn't fallen fast enough, so they've had to stop qe. further if itakens it is possible. >> what's your market forstering? >> for cable, we're seeing it a lot lower.

euro/sterling we're think of changing the 23r569. if greece does exit we're thinking of taking the euro down to around 75. >> stick around. we'll talk with you. there's plenty more going on today. in particular, an zwrjen la mer has talked to cnbc. silvia joins us now. this is the key point, right? if greece cannot fulfill the terms of their bailout package, what would she do? >> she quite clearly didn't answer the question. she was asked by several people ser several times. she said i'm not going to say. i think what the eurozone governments need is a greek government or greek counterparty that says, look, we want to work with this plan, but can you give

us some help in making it easier for us. i think that's where it comes in. the piece offering saying, look. you have to say, yes, we want to fulfill our commitment. but only if you can help us make it easier. i think we're going to have real trouble. and the unthinkable, she didn't want to certainly not want to talk about. >> silvia, thanks for that. we're now bringing in the interview. the editors are going mad. that interview will be with us the next 15 minutes. kelly. >> in the meantime let's take a look at how the markets are

doing in the u.s. the futures apeer to be fairly flat at the open, we've got red arrows. the implied open here for the dow, the nasdaq, the s&p 500 is more or less flat. we receive a bit coming from europe. we can take a look at how the ftse cnbc global is trading. we're down about 0.7%, 0.8% of a percent. after a roller-costaster market not much happening there. we've seen gilts go down. ftse 100 is down almost 1%. mervyn king, the bank of england governor, is still speaking. his interview will happen later in the day. the xetra dax is down. in spain, same story as it has

been for several weeks. lower on the day, down to 66.37. ross? >> all right. how do you make money in these markets? this is what some of our guests have already been telling us this morning on cnbc. >> i have two save haven trades right now. one is the u.s. particular or the dsy versus short the euro and the other is actually the singapore dollar versus asian currencies. i think is extremely well placed and over50% of its sales now come from asia. it is a very concentrated play even within luxury goods into china and industry and remember that con speck yuf con supgs is a big deal. therefore the stock hasn't done as well as it should and therefore the valuation is a lot lower than it should be. in this world in the affect five to ten years with financial depression and slow growth and deleveraging, if you is can get

a 4%, 5% yield and potentially an option on capital appreciation when there is an up leg in the market we'll be dog pretty well. >> fascinating ideas. >> it's been a busy morning. a lot of news. people trying to think quickly through the implications that have been happening. and still to come on the show, target is first out with first quart err numbers in just a little bit. we'll find out why our next guest says new store initiatives could make stock a buy. that's next. optionsxpress, where you can trade your favorite products,

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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... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions.

fedex. solutions that matter. all right. you're watching "worldwide exchange" on this busy morning. these are your headlines. spain's ibex's nearly 10-year low. angela merkel tells cnbc she intens to keep greece in the eurozone. and facebook's offering may be 25% bigger as investors can't seem to get enough of the social networking site. >> a whole host of retailers are gearing up. we heard from jc penney last night. pretty negative number there. target will report and courtney reagan has a preview of what to expect. >> well, earning season is

firmly in the rear view mirror. retailers are just now in the thick of reporting. biks boggs target reports before the bell. will the april slowdown extend into may? following gasoline prices helping target shoppers though it continues to strain the middle income consumer. anner come by & fitch with decent exposure to europe and after fossil's concern and comments the street will be listening for anner come by's take. they're understood performing but a handful of analysts have made some recent bullish calls and investors can expect strength out of special retai r retailers limited. victoria's secret sails continuing boost the rest of the company. and economists will take a look from retailer staples. sometimes seen as an indicator for small business hiring.

>> coming up just after this, find out why our next guest says new store initiatives are going to make target a buy. plus, germany's angela merkel is determined to keep greece in the eurozone. we'll bring you that interview next. ♪ i can do anything ♪ i can do anything today ♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la [ male announcer ] dow solutions help millions of people by helping to make gluten free bread that doesn't taste gluten free. together, the elements of science and the human element can solve anything. solutionism. the new optimism.

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and main street found its might again. and main street found its fight again. and we, the locals, found delight again. that's the power of all of us. that's the power of all of us. that's the membership effect of american express. okay. so we had the meeting last night between angela merkel and francois. they agree to disagree on some matters but angela merkel is absolutely determined to keep greece in the eurozone. silvia has been speaking to her this morning. take a listen. >> translator: i have the determination to keep greece in the eurozone. i think it will be good for greece. it will be food for all of us.

we have to say then we also have to rely on each other. that is to say the commitments we have entered on one side and on the other hand, the fulfillments of the commitments of the referendum, they're on two sides of the same coin and they belong together and think needs to be said very clearly but also coupled with the political determination and the will to keep greece within the eurozone. we want greece to stay in the eurozone. if greece believes that there are certain stimulus to be pursued for growth in the eurozone which we could pursue in the interest of grease, we're open to this. germany is open to this. >> all right. angela merkel talking to silvia. we're going to have the full interview for you late ore. silvia joins us from berlin. we have heard. we have heard talks. they won't go into detail to fan the flames.

any suggestion that germany in this interview with angela merkel has also looked at c contingency plans? >> when you talk about contingency planning, everybody has to have contingency plans, but we've also talked with a number of people, the finance ministry of the ecb who has said contingency plans for a eurozone break-up, forget it. there are no con tin jebcy plans. nobody knows what's going to happen. the bottom line of this interview with angela merkel was there was a peace offering. you heard it in the sub sentence. you heard it in the sentence if greece feels it needs more stimulus to get its economy going and get back on its feet, then we can talk about it. i think that's the peace offering. that's the lower reef. but the condition for that and that was said and made quite clear first you, the greeks, have to decide we have treatees, we have to agree on them, and in principle we stick by them but you have to guarantee some help. that's the tit for tat that has

to be in there. >> after this interview and the time you spent, silvia, what happens if we get a greek election that seems likely in early june with a party elected majority party that doesn't want to fulfill the terms of the bailout? what happens in your view? what is the german position on that? >> i think the german or eurozone position is very clear. it's going to be who blinks first at the end of the day. i think the greeks and the greek opposition are, sorry to say dilutional. if they can say whatever we sign, we don't care, you need us and have to bail us out anyway even if we don't fulfill any of our commitments. once that kind of basic trust is gone, then no new treaties can be signed either. so if the greek -- the present greek opposition actually wants to risk having to leave the euro because they're out of money, i think there's going to be mayhem and i wonder whether the greek opposition is going to play that

card to the end. i think everybody's wondering about that. >> all right, silvia. we'll be back with you. for now, thank you. >> we want to do a quick check of retail in the u.s. we've got a bunch of retailers joining us this week. and joining us is managing director and senior equity interest. you like it. explain. >> certainly i like the stock. the company rolled out a new merchandising initiative about a week ago. it's called the shops at market. it's boutiquey is probably the best word to describe it. merchandise at target prices. they're working with five retailers across the country, bringing the merchandise into the store. some sells for hundreds of dollars and selling it for great prices, great values.

so it's one of the reasons why i like the stock snopa trick, this is a strategy that other retailers, including jc penney have pursued. and their numbers that you saw were really, really weak. are we putting too much faith in this initiative? >> it's very different from what penney's is going to pursue and pursue in the future. it's not really shops. i would. call it a store within a store as some other retailers, as you know, do. it's very different. it's one of the different merchandising initiatives that target is employs. then they also have something called 5% rew where if you use your target red card, your target visa card, you get 5% off everything every day. so it's one of a number of

initiatives. it's not the major story here really but it's part of it snopa trick, can you talk a little bit about the retail sector broadly? this is a time that householding inning growth is lagging, worried about the impact of a eurozone crisis and are you still bullish, though, broadly on the sector? >> well, i'm not bullish broadly on the sector. i do think you have to pick your spots, and what we receive more recently and what we'll see more of in the future here is a little bit of a bar bell. so strength at the high end, saks and nordstrom and coach and tiffany, that sort of thing and strength at the low end with the dollar stores, dollar general, family dollar, dollar tree. one of those will given us their report tomorrow. i do cover it. the stock has been fantastic. i think that's what you'll continue to see. the middle kind of getting squeezed. >> all right. target hopefully bucking that trend just a little bit. its first quarter earnings out. patrick mckiever from mkm

partners. >> how determined is angela merkel determined to keep greece inside the eurozone. that's what i asked her. >> reporter: i have the will, the determination to keep greece in the eurozone. i think it would be good for greece. it will be good for all of us. we have to say that then we also have to be able to rely on each other. that is to say, the commitments that we have entered into on both sides. that is to say on the one hand, the solidarity we've shown toward grease and on the other hand the fulfillments of the commitments of the memorandum. they're on two sides of the same coin and they belong together, and i think that this needs to be said very clearly but also coupled with the political determination and the will to keep greece within the eurozone. we want grease to stay in the eurozone. if greece believes that there are certain stimulus to be

pursued in -- for growth in the eurozone, which we could pursue in the interest of greece, we're open to this. germany is open to this. >> reporter: you've always said, chancellor, and this is something that your colleagues have always held that the fiscal comeback will not be renegotiated but could it be complemented to growth component? >> translator: the fiscal contract have been signed. signed by 20 countries. it's been ratified. so what is of the essence now is that in -- during the counsel meetings also already in june and in march we dealt as a second one already with growth and we're going to continue this during our june council meeting. france with its newly elected president francois hollande will table her ideas and make proposals. so this complement this image on

the one hand. we have the pillar of sound fiscal policy. as is the fiscal compact. and the second pimm lar will then be growth components, this is what we're going to discuss also on the 23rd of may, in only a few days' time when we meet for the formal council meeting. >> angela merkel talking to sylvsill vee virginia -- silvia this morning. it's going to be on the internet as well you. can find there's plenty more to talk about. >> i know. i'm going to watch it as soon as we're done here. let's take a quick look at how the futures are doing. we're about flaet on the day. dow jones would open loweren 13%s, nasdaq, 4.5%. >> sometimes there's not enough time to get in everything you want. we're done. >> there's always tomorrow. >> stay tuned for "squawk box." >> bye.

good morning. another day, another round of worries about greece but germany's merkel tells cnbc she wants the country to stay in the euro. plus, the social offering. facebook is increasing the size of its ipo. and market-moving releases this morning. economic stats on housing and production along with quarterly results from retail giant target. it's wednesday, may 16th, 2012, and "squawk box" begins right now. good morning.