this is "worldwide exchange." >> and these are your headlines from around the world. >> spanish bond yields rise after confirming the country is back in recession. jpmorgan's trading losses have grown sizebly in the past four days. >> and they say waiting is the hardest part. investors are watching the clock and counting down the hours until facebook prices its ipo.

>> i have no watch on. >> does anybody wear a watch these days? i guess if you travel a lot, it's helpful. >> i keep the rolex in the safe, is that what we did? more than must have clocks to keep us up-to-date. and we're one minute into today's program, so let's tell what you is coming up. japanese consumers spend their way to growth in the first quarter. we talk to former currency czar at 11:00 cet. >> and we'll be live in athens. voters heading to the polls next month. >> and we'll talk with portfolio manager scott richard in cleveland. he's bullish on bouillon.

>> and we're live in madrid ahead of the key bond auction. that economy remains mired if recession. >> plus we'll talk to roman scott who says that all that matters right now is you how the u.s. economy will perform over the next few months. that will be an interesting conversation. he'll join us fairly shortly. first the spanish economy has been confirmed in recession for the first three months of the year. gdp falling 0.3% quarter on quarter. that follows a report writing clients have withdrawn over a billion euros from the lender which was nationalized last w k week. ahead of the world bank has warned that a greek exit from the eurozone would also have significant impact. spanish expected to rise. stefane is in madrid and joins

us for more. how much is expected to be auctioned here and what sort of yields may we look at? >> around 5% for the longest maturity. this morning the spanish treasury will issue some three and four year notes. we are of course expecting the yields to -- the price to raise sharply. the cost of borrowing. spain could pay as much as 5%. if you look he secondary market, the bonds maturing in april 2016 were trading yesterday at around 5%. that's to compare with 3.37% two months ago on the 15th of march. the spread with germany on the ten year paper yesterday was the highest ever since the creation of the euro. we were well above 500 basis points. and even the prime minister is worried about the situation. he told the congress yesterday that spain could face a risk that investors would not lend money to spain anymore or at an

astronomical rate if spain fails to reduce its deficit, so let's wait for the market reaction. in less than 40 minutes now. also there is still a lot of pressure, a lot of confidence crisis in the banking sector on the bank, postponing the release of its earnings for the first quarter. clients withdrew more than 1 billion euros from the accounts, so clearly facing a bank run. back to you. >> that's the underlying fear. the first of a lot of people pulling money out. >> people are worried about this bank. in greece, the value of the euro broadly. but as people begin to question the safety of their money, we'll see what happens. greece has pointed a caretaker government that will lead the

country until next month's general election. the head will of the supreme administrative court has been put it in charge after political leaders failed to reach consensus to form a government. the next elections will be held on june 17th. the news does the to dispel fears about greece. >> you you you can see weighted it to the down side. 7:3 on the stoxx 600. and we're at the bottom of the session. so european stocks, ftse 100, he lows we haven't seen since december 21st. down 3% this week and another little bit this morning. xetra dax down half a percent.

here the spanish market down another near half percent. we'll be focusing on the bond auctio auctions. fed minutes kept the door open for more qe. ten year italian yields just below 6.5% that we also breached during yesterday. as far as the currency markets are concerned, the fed statement in the minutes just helping the euro up off its lows. so euro-dollar still above 2723. dollar-yen pretty steady. we'll be talking to mr. yen later in the program bank of england inflation report suggested will may be more qe in

that. also helped sterling lose ground against the euro. >> joining us for more is roman scott. your comments earlier caught me by surprise. you say that you couldn't careless about the eurozone right now, you're encouraged way what's happening and what you see in the u.s. explain. >> global growth can deal with even recession. it knocks a little off export, but it that's good for us because that's pushing the asian consumption story which is the one i've always been backing. it's reduced inflation which is the biggest problem in asiand at rest of worldwide growth. and will this has been unfolding how for two years ever since merkel started the austerity tank rolling through europe. we've lived with virtually zero

contribution. everything depends on the he will pant in the global room which is the u.s. and the u.s. consumer getting out of bed. and i see signs of that starting on to do that. >> it seems predicated on the fact that you you we don't repeat 2008. so you could make the same argument about u.s. why do you think will ithis tim be different? >> i still believe that the ecb will not be dumb enough to let the greek crisis get to the point where the whole eurozone unravels. if that hatches, and certainly protects of that have gone up to now say 30%, but i still believe this is a political situation. it's not about fundamentals.

it's being made to matter by mismanagement. germany and the eflt cb could step in at any point and i believe that will happen. so as far as actual global growth goes and certainly asia, what is important is the u.s. and i think the u.s. will do at least 2% growth this year, possibly more. >> let's talk more about the ecb stepping in here. this is something that they've done in the past. conducted the last round of three year loans didn't do much but kick the can down the road. at this point what kind of bazooka i'm beingtime activity y come forward with to keep the financial concerns off the table? >> i like your phrase kicking the can down the road. there's always been three options on the table. and they've been there for two years. it's appaerrent that greece absolutely can pay back all that is due on any met riric that yo you you use. everybody knew there would have

to be further rescue. there were three options. one is continue to kick the can down the road and keep muddling through. one is a complete default, an exit from the eurozone, and the third is further rescue money to effectively have sufficient levels of transfer from the eurozone and that really means from germany and the ecb on keep greece going for a longer period to get through the austerity demands. we should be stretched out another five to eight years. >> all right, roman, we'll have more with you in a little bit. >> if you have any thoughts or e-mails, send them into worldwide@cnbc.c worldwide@cnbc.com. japan's economy has expanded horn expected, but analysts wonder about it can sustain the 4.1% annualized growth rate. auto incentives will expire in

august and reconstruction spending likely will by year's end. the strong yen and europe's debt crisis likely to be drags on the economy. let's check in with tracey chang from singapore. >> thank you very much. good morning. well, we're seeing some recovery for the markets in the region. as you can see here. but further up side was limited of course by concerns in greece. take a look at the nikkei 225. gained about 0.9% on the better than expected gdp data. however analysts do not think the upbeat data will alter the central bank's monetary stance. it is widely expected that the boj won't keep its policy unchanged at its meeting next week. and it's trading pretty much flat at the moment after the dollar strengthened about the 80 handle against the yen yesterday. and take a look at the rest of the market. we're showing a pretty much mixed picture.

the shanghai composite is another outperformer gaining 1.4%, however the hang seng index and the aussie market slipping a bit on european concerns. so some recovery, but still a lot of caution. >> okay. thanks for that. we'll talk about japan, as well. japan is the las t of the safe haven trade. roman, what's your own thoughts here on what japan is offering investors? >> some of this is a base effect bounce from last year. you've got a lot of destruction of demand. consumers close their wall lets. there was a lot of fear that the earthquake was accompanied by what could have been a nuclear melt down. what you're seeing here is the boost effect of consumers

returning and buying up stuff that they delayed purchases from last yeerz coupled with the reconstruction spend and quite a bit of state spending in other infrastructure areas where the accident happened. i don't think unfortunately that this will be more than a one or two quarter blip. >> your fund looks a lot at singapore or a lot of the asian nations. how looking forward are you looking at opportunities, what if might go has been created would i everything that's happened coming out of europe and just other concerns at the moment? >> for me the thing i look most closely is the u.s. that is what exporting asia, propt tear market asia, the rest of the economy really depends on. i'm backing the asian consumption story. everything is on track. if you look at the numbers coming out of china continuing

out of india, looking at the rest of southeast asia, indonesia in particular, consumers are spending. the fact that growth is going to be off by a percent or so is good. things were getting heated. that's calmed inflation and interest rates and allowed central banks in asia to east a little bit after a lot of the tightening. that's great the for the consumer. so broadly i'm fairly happy. but for me the key turning point is one single metric i've been watching for five year which is has been absolutely dire which signals the health of the u.s. consumer. it has bottomed out about six months ago and for the first time it's turned around. you've seen the start of a tick up. and i think that is the beginning of genuine u.s. consumer recovery which is great for asia. >> all right.

p more to come from you. and the countdown is on one of the most anticipated event pos ever. we've heard the arguments about facebook evaluation, but what are the fundamentals of the business some about time we talk about that. >> more on that 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. i would not say i'm into it, but let's see where this goes.

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. you you can contact us by e-mail or twitter. cnbc wex or contact us directly. >> plenty of thoughts as well on facebook today. facebook has stopped taking orders ahead of the pricing today and the highly anticipated public demand tomorrow. depending how only goes, could be the biggest public offering in history. some are balking at the price. latest figures show facebook revenue actually falling. these are the revenues that

we've got here. by the end of december 31, 2011, 108 build in fees. average revenue declining. and we also had the poll which suggested over 57% of facebook users never click on an ad and another 26% suggesting only some types click on an ad and we've heard about gm, as well. so how does the site make money and is facebook's business model one that you should invest in? julia boorstin has this report. >> facebook wants to keep its nearly 1 billion users connecting, sharing and playing because more time on the site means more ads can be delivered. whether users are checking in at starbucks, liking coca-cola, or sharing their latest amazon

purchase, facebook can capitalize on. as like the ads like these are valuable because they uniquely target each individual user. so the the ads that i see are determined by what i like and share and the links i which i can on. so how valuable is that? % take the 41 million plus fans who like coca-cola. coke can pay facebook to make sure that fans see its messages and updates. even more valuable to a brand is reaching the friends of its fans. in coke's case, that's hundreds of millions of people. facebook's real value is delivering social context on a large scale. for instance, if i'm a fan of

coca-cola, the company can pay facebook to post an ad with my name and the brand's logo on some of my friend's news feeds. it lemps tverages the informati. extending it in a personalized way to hundreds of millions of new eyeballs. tonight miss facebook, the social offering, thursday at 1:00 p.m. eastern only on cnbc. >> roman scott is with us for this hour. he owns pike crow somicrosoft. would you invest in facebook? >> identifiable revenue stream, dividends, which is why we would pick a microsoft rather than a facebook. i understand companies can now go in to the social media spags. i'm not convinced that it's worth 100 billion or that it's going to be as successful as the

click model. >> i tend to agree. 3.1 billion in revenue last year and we're going to value over 100 billion. 35 times revenues let alone whatever the profits hmight be. but is there anything in the space mathat you you do like so. >> i like what are called the old world tech which i find quite amusing. the microsofts, the oracles, those are real identifiable competitive interests. you can understand real cash. they're all starting to pay dividends now. and they have one advantage that i love which is that they're cheap. i'd rather buy something cheap than something that i think is priced to the moon when you're not quite sure how that market, that value proposition, is actually going to work.

>> you own a stake in microsoft, right, just to be clear? >> not me personally, no. the company has a small long term portfolio and a it's in there. >> okay. fair enough. does this mean anything, the froth, excitement surrounding facebook? what does it tell us about the wider investment climate? >> what i like is the fact that from what i've heard, u.s. ordinary households and consumers appear to have spare change knocking around and they are using some of this to subscribe to this offering. that is disposable income. and for me that's positive sign as much as seeing good auto sales and a turn in housing. >> okay. stick around. more from you. we just have to snap out of the italian bank association saying bank debt coming in 2012 and they are -- want to talk with

the regulator to try and give them some help on that. they say funding is very weak, although it was positive in the early part of the year. >> and speaking of bank, we're also getting headlines out from fitch which has a study saying the world's 29 biggest banks will need another 566 billion in capital or they'll have to shred over 5 trillion in assets to meet the new tougher basel iii standards. so again underscoring the degree to which tougher regulatory measures coming at a time when the financial system and some of the banks are raweak pi ways. and speaking of banks, jpmorgan trading losses have risen by at least 50% withis week sur passi the initial estimates. hedge funds are taking advantage of their troubles. the "wall street journal" meanwhile says the white house is stepping up talks with the treasury department to toughen rules on banks.

records shoe treasury secretary tim geithner met with jamie dimon in march on discuss the so-called volcker rule. in frankfurt, take a look at their shares. down about 2% there. we'll see how that carries over to the u.s. trading session. and we want to get back to roman scott, our guest how. >> the huge liquidity crunch and capital rising requirements of banks, which is a theme that will continue to dolt the sector for the next two or three years. this is a segment that has had its time. i used to work in it. i think that the go-go years are over. banks are shrinking.

having to dramatically raise levels of capital to meet the new regulatory requirements. eurozone banks for example are really being kept alive by the ecb's long term refinancing offering, the ltro. without that, they would never have been able to meet the capital requirements they have. so this is a business that's focused pot on growing, but paying down debt, shrinking and getting themselves stronger. the second issue here is can they really manage themselves properly, do they know what's going on in their books and do they have complete understanding of the risks that they carry in large propriety books. there was a good article talking about our baare banks 00 big to but also too big to manage. jamie dimon is one of the smart guys in the room on wall street. if he doesn't know what's going on, i personally would be wary of having any exposure to the

banking sector a this stage of shrinkage and continued larm ri large risk on their books. >> meanwhile bonus checks may be bigger for banks. despite all of that. johnson associates predicting bonuses will rise 5% to 15%. i'm wondering if that's a u.s. survey rather than a global or u.s. and european survey. >> look at the extend to which london, new york, financial centers benefit will not do anything to allay concerns from shareholders more broadly. you can e-mail us your own thoughts on this topic. worldwide@cnbc.com. and still to come, we'll speak to the ceo of c-span as they see first quarter profit come in

higher than expected.

spanish bond yields rice

ahead of a key bond auction due within the next ten minutes. >> japan's economy grows faster than expected, but analysts warn the strength might not last. >> reports suggest jp more pcm trading losses have grown sizebly. >> and investors are focused on that facebook pricing of its icht po. >> what time are they doing the pricing? >> later on in the evening u.s. time. so hours and hours from how. >> ahead of all of that, european stocks are down again today. we're down a fresh lows 2012 lows, the ftse and cac, ftse 100 down two-thirds. ibex is flat he moment despite

concerns about bankia. >> take a look at bond yields. the ten year at 1.47%. gilts 1.87. both of those are a little bit higher than their record lows. in italy and spain, you see more pressure. italy yields just before the 6% mark and the u.s. treasury benefitting from that flight on safety move, 1.78%. that's only about ten basis points off the record lows. >> spanish bond yields 6.3%. euro dr-dollar just off the pou month low we hit yesterday. euro sterling back below the 80 mark. getting hit post the bank of england inflation report. kept qe effectively open, as well. sea span has reported a rise in its profits in the first quarter as demand for its vessels rose. joining us is the ceo.

jerry, great to see you. did you fly in or come by ship? look, we've done a lot on container shipping and we know that what's going on with the number of ships currently being built is down. container rates are down. but you're in the leasing business. so i'm actually wondering whether any of that impacts you if you've got long term contracts. >> we're in probably the most boring part of the shipping busine business. but generally speaking the business model is such as long term stable sustainable cash flow derived from long term contracts. >> you have 72 ships that are on

long term contracts. but all of the time leases will be coming up for remulnewalrene. shipping rates are low. what are you doing with the leases? presumably shows prices go down. >> the market is low, we go short. the market is good, we go long. it's important to have a good portfolio. you look at our maturity, we have a very, very nice distribution. so we don't have any concentration say this year or next year, you know, 20 ship, 30 ships come out for renewal. so every year we have a nice four to six ships. so just ride with the waves and shipping has always been cyclical. you look at '08, '09, terrible because of the financial crisis for the year 2010. wonderful times. and then spine didn't last very

long, last year was bad. >> that's exactly what i was going to ask. could you put it this year what you're seeing in to per spec i have? >> i think will year will be probably moderation. q1 was tough. q2 will probably be a the lot of break evens. reasonable profits. i think q3 will be very good. i think q4 will be okay. so overall, performance for the year will be it fairly be linig. some operators will make money, some will lose. >> is there certain areas whose strength is offsetting what is the weakness in europe? >> funny enough, container shipping is part of the globalization, part of the infrastructure.

the ocean highway. but there are more and more cheaper goods being shipped. and our business is all about volume. if you talk about volume, i totally agree there's a correlation. but you see christmas gift this year will be probably $100 versus $200 last year. but the volume of your gift may be larger. >> i imagine then some companies will try to save on the air freight costs may also look to shipping as a -- >> and also they're looking at lower costs of production. so more producing low end products. it's all about volume. >> what's happening with ship building and ordering ships at the moment? we have reports out some of the ship yards haven't had any orders at all for this first quarter. so is now a first time to order a ship because you get one built cheaper? >> we're actually very busy obviously negotiating and talking and i totally agree with

you, ross, it's always nice to enter low especially for our business model long term and very good time. the biggest challenge right now is really capital which is related to the financial markets. european banks which have been the primary source of capital. they're not there anymore. so that is the number one concern right now. good credit is always good money, so we have a strong balance sheet with 60 percentage leverage. >> roman has a question for you. >> i was curious about the u.s. west coast sports. are you seeing any right in shipping to the u.s. from the asian export markets?

>> u.s. west coast is recovering very nicely. we're seeing on average 5% to 6% increase quarter for quarter. our ships carrying 90%, 95% on average which is very healthy. so at the end of the day, the correlation between the global economy and the volume we carry is just not there. to be honest, the best estimate of the volume is gdp multiplied by 2.8 times. >> i love that. >> that's the percentage. by experience, that's been correct all the time. >> good to have you on. good you find out if any of your clients have kelly's trunk with her clothes in it? >> i desperately need my wardrobe shipment. >> you shipped it over and it hasn't arrived. so maybe you can track that down for us. >> i hope i would be able to

help. hopefully not through my ships. >> might have got off the ship and it may be in customs. >> jerry, thank you so much for coming by. ceo of sea span. >> the sprproblem is you're bor my clothes. >> he'll be wearing a suit before the end of the week. concerns are not dispelled about the solvency of greek banks after the ecb has confirmed it has stopped providing funding to some greek banks. louisa is in athens and joins us with more. what's happening on the ground there shall when you talk to people, are he's rumors bouncing around the market making hair way to the man on the street? >> i was watching people taking out cash and everyone seems to be operating as normal. there's an atm machine down the

street. last night we talk a walk, we were asking people whether they had had issues withdrawing cash. they haven't. we saw people drawing up to 300 euros. doesn't seem to be an issue where we are. some greek banks may be experiencing dektity, but we can't confirm it here. on top of that, it's important to clarify the shift that's really taken place in the rhetoric here over the past couple of days. it has become a lot are more serious, a lot more hard talking the tones that have come out of the various european leaders. you were talking about brussels and the ecb. mario draghi has shifted his stance to move away from just talking about the ecb's mandate to saying that they very much would prefer to see greece remaining a eurozone member. so breaking his traditional silence potentially that has on do with what we heard out of the central banks of ireland and belgium. they were saying it wouldn't be a big deal if greece were to

leave the eurozone, but draghi very much holding on to we want greece to remain. >> louisa, thanks so much. angela merkel is due to hold a video conference call today hoping it will go some way to helping the leaders form a common line ahead of the weekend's g-8 meeting at camp david. apparently they'll discuss positions ahead of the g-8 meeting. this is due afternoon 1500, 4:00 london time. which eastern would make it -- >> noon? >> 11:00. >> if you want to offer your suggestions on what this call might look like, what they might say, tweet us, e-mail us. spanish economy meanwhile is confirmed in recession in the first three months of the year. stefane is in paris and joins

us -- i think he's in madrid. >> yeah, definitely in madrid. >> stefane is in madrid. and the spanish economy being in recession, how is that affecting the mood there where you are? >> the mood was pot positive even before this announcement, but the confirmation this morning that the country is in recession again didn't help the market. we're waiting for the result of the bond auction in spain any minute from how. of course we are expecting a sharp increase of the borrowing costs for spain. the country could pay as much as 5% for its four year note. yesterday on the secondary market, the bonds maturing in april 2016, so the four year mote trading at around 5% to compare with 3.37% two months ago on the 15th of march.

yesterday the spread higher than 500 basis points. high he is level since the creation of the euro. prime minister expressed concerns before the congress saying that spain could pace a lockout from the market if it fails to reduce its public deficit. >> all right, thanks. and we'll keep an eye on the two year borrowing rates. goldman sachs says the funding strains are what triggered ecb action last time around and could this time, as well. taiwanese report claiming apple could be buying its chips elsewhere has cost samsung roughly $11 billion in market value. >> samsung says a report by taiwan's is untrue. it claims apple has placed large memory chip orders from elpida investors sold off on fears that

apple wants elpida to become a much bigger supplier. but analysts say the market reaction was overdone. unnamed source says elpida providing roughly 1% of samsung revenue. samsung's president and coo says there is a clear discrepancy in terms of the sophistication. back every to you. >> spanish sold 372 of the january 2015 bond. the yield 4.24. the july 2015 bond they sold one billion of that yield 4.97. 4.917. so january a little bit higher than what we might have

expected. so is the july bond, as well. they've sold plus one billion. so about 2.4. nearly the amount they wanted, right? >> reasonably strong bid to cover ratio, all things covered. they're down of course from what we saw during thes in january, looks like bid to cover was 2.4 and 4.5. and that's actually up significantly. >> and the most pofrpts thing is the strong bid to covers. pretty solid bid to cover. >> we'll have more on that.

decent spanish bond auction based on the headlines.

demand was quite strong, but of course cost of borrowing increased very sharply for the spanish bond auction. government was asked to pay 5.1%, that was the average yield. sharply higher from the last time, 3.37 the last auction. if you look at the july 15345 churity, up from 4.03 and shortest maturitmaturity, sharp higher. so there is increasing pressure on spain on its weborrowing cos. spain must reduce its public deficit or it could face -- country could have to borrow at an astronomical rate.

peen while here we can see still very big negative reaction on bank here. it decided to delay release of earnings for the first quarter and also now facing a bank run. over the last week, its clients withdrew more than 1 billion euros from their accounts which obviously is very pad nbad news for the lender. >> let's get more. lynn, they sold the near 2.5 billion that they were targeting here. yields were higher, but bid on cover has been fairly good. what's your reaction? >> it's not a surprise that bid to covers were high given these particular bonds were probably reopened due dealer demand. yields are what we're really interested in and in terms of

spread over bunds, we're now seeing the highest spread we've seen since the euro project began. >> do you expect another round of ltros or what? >>. >> purpose is to provide banks with liquidity. most banks seem to have got sufficiently liquidity for at least the next one or two years and with regards to the s [ p which has to be sterilized in its current form, the i said impact is largely being recredited. >> if investors see through the prospect for three year loans, what are the options for spain going forward? >> it's largely out of the hands of spain. in terms of what the ecb can do, there's one potential auction,

some form of blanket guarantee. any deposit in the eurozone bank will be repaid in euros. that's one step they could take and it's already been slight talk on moving towards that. >> how is this going to play out? we sort of have been worried whether there would be any kind of strike here on spanish bonds rather than the high yields. that doesn't appear to be happening. are we any threat of that at any point in the mere future? >> we're still a long way away from the spread that italy was over german bunds when the ecb announced the ltro in november and december. there's going to be a lot of boo boo buyers out there. and spanish yields offer an attractive entry level. >> are they looking at ireland,

are they still trying to figure out what's going to happen in greece? is there any game plan for an italy or spain, any involvement ultimately for a group like the international monetary fund to step up where maybe policymakers can otherwise pot? >> i think the international monetary fund would have to see much more concrete firm measures especially given the make july of its members. the main issue is what's going to happen in the run up to the greek election and how it will deal with the deposit flight from greece and the potential contagion effects. one measure is some sort of g deposit guarantee. >> if you had to look at the ten year across the board, what do you think is going to happen?

>> i think something major will happen before the greek elections take place. they have to do something to prevent the run on greek banks and contagion spreading. sky's the limit potentially. >> thanks for that. got any thoutds, keep e-mailing us. >> let's get a final thought from roman scott. having heard what we were discussing and going back to your earlier point with how you're not worried as much as everyone else is, have we changed your mind at all? sf. >> no, surprisingly not at all. there's a lot of noise in the market and i think what's going on is the political game of brinks man ship. you have the extreme left part i coming up strongly, you have a june 17th election that the

failure to have a sustainable government and backlash against the german driven us a terry measures sweeping through europe. it's not just greece. sarkozy lost an election on the back of it. does that mean -- as i keep saying, greece is irrelevant. total sovereign obligations could be covered tomorrow. half of them have already been covered. so firely about the contagion effect on spain on the rest of the pigs and on italy and i do not believe and this is whatten investors have to make a calculation on that the ecb and eurozone will allow that contagion effect to be triggered. so the second question is could the world survive a european recession. and i think can. anything up to minus 1% from this year we can eat. it lowers growth everywhere

else. but so long as it comes in at at least 2%, which i'm convinced it will because u.s. consumer is recovering, will have an okay year with harry moments in the middle. and we could end up with global growth of 3%, probably closer to 4. >> roman still has faith in the policymakers. >> jon corzine did, and he was right, but hard to trade the timing. they have to be staring into the abyss. so we'll see. good to see you today. >> this is mess. >> okay. roman scott joining us in singapore. >> a quick look at tomorrow. more clues on the chinese economy. we'll also watch china's market reacti reaction. we'll want to see what happens

with consumer prices. >> and still to come, the countdown continues to one of the moths st anticipated ipos. >> plus japan's economy powered ahead. gdp surprisingly strong. but is the growth spurt sustainable. we'll ask japan's mr. yen 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. 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. soluatter.

welcome back to "worldwide exchange." headlines from around the world, spain sees medium term borrowing costs rise at a bond auction after final figures confirm the country is back in recession. >> japan's economy grows faster tan expected in the march quarter boosted by reconstruction efforts and consumer spending. >> red ink getting ever bigger at jpmorgan. trading losses have grown sizebly. >> and they say waiting is the hardest part. investors are counting down the hours until facebook prices its ipo.

hardest par dow would open up about 30, nasdaq about 3, s&p 500 about 4. of course we'll want to see the impact of facebook on nasdaq. global 300, down a little on the day. we're building trout throughout morning, but we've since given up those gains. >> you you never know how it will finish in the u.s., but he's are the cards we're dealing with here in europe. we closed at lows we haven't seen since december the 21st. currently down another three quarters of a percent. off 24 points.

cac 40 down a third of a percent. ibex actually tlat at the moment. as far as the bond markets are concerned, a lot of focus on the reaction to that spanish debt auction. you can see yields haven't moved a lot. they raised the 2.5 billion that her looking to across the three issues. yields were substantially higher. bid to cover ratios were already. but one of the key points is that the spread in the auction over spain and german bunds the highest that we've seen in the euro era. a long way it to go until we got the spreads for italy when be berlusconi lost his job. as far as the euro is concerned, off the four month low that we hit yesterday. dollar-yen pretty flat.

sterling just back below the 80 mark that we went back lithroug yesterday. suggesting growth will be much weaker than they thought and there is still room for quantitative easing. >> let's take a look at the united states other than facebook's ipo. weekly jobless claims out at 8:30 a.m. the may philly fed survey out at 10:00. james bullard will speak at noon. and walmart reports first quarter results at 7:00 a.m. a lot of focus there given all the headlines about walmart's bribery problems. but of course for the consumer, walmart such a huge employer in the u.s. >> a bill bellwether. not a big reaction to the spanish auction this morning, but the spanish economy confirmed in recession in the first three months falling 0.3% quarter on quarter.

it's further depressed spanish stocks. leading it is banco. at the same time, greeces has appointed a caretaker government that will lead the country until next month's general election. ahead of the supreme administrative court has been put in charge. the news does little to dispel concerns about greece and the solvency of its banks after the ecb has confirmed it has stopped providing punding to some greek banks. joining us is david bloom at hsbc. >> thank you very much. >> david, welcome. your initial thoughts given the headlines from the ecb yesterday. spanish bond auctions this morning. what does it mean for the euro? >> obviously the eurozone is down, but people are talking about greece leaving, but we'll still have a euro. so is that's the basic tenant that has changed for the good.

it's a binary event. so we get to a point at which either it's going to happen or not and if it happens, we have to see how it works. so i think we'll get to a point in the markets where we'll be paralyzed because there's nothing more you you can do. you have to wait for the election, you have to wait for the outcome. >> you're saying the odds of a breakup have diminished? >> i think for the kind of armageddon scenario, the euro won't exist scenario, have disappeared from the market. people are talking about greece leaving, but i don't think they're talking about the discindy grace of the euro. we're weaker, but not a million miles away from current value.

analysts are unsure if japan can sustain the growth rate. auto incentives will expire in august and reconstruction spend which go was a boost will ebb by year's end. >> the yen has been very strong. and speaking on "worldwide exchange" yesterday, david roche says he doesn't think the yen is a safe haven. >> the idea that the yen is a safe haven is about the most unsafe safe haven i've ever heard of. >> and on that note, let's bring in former vice finance hin ser minister of japan, used to be known as dr. yen. you heard his assessment there. figures make the greece numbers hook like high school.

>> it is true japan has a very high debt ratio. however, you have to look at the value sheets. household financial assets is about 240% of the gdp which far exceed government debt. so we don't have the financial crisis and we will pot have the financial crisis for several yea years. >> never or just not for a while? >> pardon? we'll not have a financial crisis for four, five years. >> either you have a debt problem or you're going to have a bigger currency problem. so how do you stop the xwryen f

strengthening? >> 1.80 is not a problem for the japanese exporting companies. most of the japanese companies like toyota can survive at $1.80. >> you've got serial devalue, dollar, euros, sterling, indebted nations. and we think dollar-yen will go back to 72 or so and test the resolve of the japanese. >> what would that mean, mr. yen, for the yen? >> well, i don't think it would go down to 72, but it is likely that the yen dollar rate will go into the 70s and probably it

will whoever around 78, 79 for a while. and that would be a major blow as i said. >> what chance would japan have of saying here's the line in the sand and well not go any further? >> japan is much bigger country than switzerland and we cannot do what swiz switzerland has done. i think we'll let the market decide and intervention will not co come. if it comes down to 72, then authorities might intervene. >> we had a guest on earlier who said as long as there's sort of no major bank run coming out of europe, he was pretty happy about what's happening and he was happy because he believes growth in the u.s. is finally on

a sustainable path. do you share that view? >> i don't. banking problem, financial crisis, could happen in europe. balance sheet is very bad because of the decline of the processes of all those. so there may not be immediate risk of bank failure, i think european banks would have lots of problems and i'm worried about it. and u.s. economy, there are good data or bad data. it's mixed. so i wouldn't be two optimistic about the recovery either. >> do you think that as time is marching forward and technology is becoming more advanced that actually yen korea has become a more important trade for japan and the value of the yen versus the korean currency rather than

just the dollar? >> that's true. very volatile and that affect the japanese entries. at the moment, it is benefiting those korean companies. it this is a problem for the japanese companies. >> okay. thank you so much for joining us. former vice minister of finance. if you want to get in touch with us, join the conversation, e-mail us. you can tweet us. that's my favorite. >> send all your comments. particularly about this facebook may be the ipo everyone is talking about, but there is

another internet stock listing brewing in the market. we'll keep you guessing until wi come back.

if you're just joining us, these are your headlines. the count down is on assen ve investors a wait the pricing of

the u.s. close. countdown is on. the company expected to price shares after the closing bell in the u.s. with the range somewhere between $34 and $38 a share. wall street journal says for pace would be to be the biggest ever, shares with a have to price at $41 or more. if you you think will facebook took will close, head to cnbc and you could win a cnbc prize. oh, boy. this competition is only open to

residents of the u.s. anyoned 18 or older. the prize is visit to our set. >> well worth winning. >> travel website kayak.com is eyeing 150 million dollar offering in the coming weeks. filed its ipo papers more than a year ago but has held off because of market conditions. >> jpmorgan in focus. trading losses have reportedly risen by 50% this week alone, surpassing the bank's initial offerings pie about a billion offers.

>> you have to wonder at what point do they come back and splan themselves. >> bonus checks may be bigger this year. predicting bonuses will rise 5% to 15% with fixed income in particular expecting to see a big increase. >> pot such a fixed income. >> exactly. variable. >> the other thing they said this morning that was interesting, the first chunk of the real estate they start to put it up later in the year. does that suggest the state has bottomed? >> but analysts worried they're not showing the loan growth. so even hsbc is struggling on the demand side. >> and ecb has stopped providing funding to some greek banks.

>> a technicality. not encouraging one. greek banks can still go to the greek central banks themselves. our next guest says hes has the answers. so stay with us. >> we'll leave you with a shot of the heat map. we're weighted to the down side. advances being outpaced by decliners by a little lesses than 73. ♪ 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

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facebook's mission is to make the world more open and connected. >> facebook. it's everywhere. spurring revolution half a world away. it changed the way we speak and keep in touch. it turned a small group of college friends in to billion mayors. >> for the first time ever in a single day, we have half a billion people use facebook. >> in this cnbc special, we're asking the key questions behind what may be the most important initial public offering of the decade, including is facebook something you should invest in. see how much the facebook founders will be worth tomorrow and see how corporate america is

cashing in now. >> the story of your life. >> facebook, the social offering, today at 1:00 p.m. eastern only on cnbc. >> s&p would open up about 3, dow 17, nasdaq just a hair. it's a great day to have you here. what does an investor who doesn't want to be exposed to facebook do to protect himself? >> well, first thing is he can buy the s&p 500 among other things. the one place facebook is not now and won't be right away is the s&p 500.

>> it's an ipo that's not seasoned and we look for socks on have more than half in -- >> 50% float. >> and i don't know the numbers off hand, but it's well below 50%. >> so we'll leave it to people who trade the nasdaq. what's your thought on -- i mean, them's have a big weighting on that. in terms of just etfs at the moment, people got very worried about how dangerous etfs have become. and they've got leveraged plays.

>> etfs all looked very much the same. they were half a dozen way back 20 years ago. they're now well over 1,000 and they come in every conceivable flavor. there are some that are reasonably conservative play, but any broad based etf. at the other end, the markets up, goes down. all those things can get very complex. >> the cost of storing the metal, commodity, storing oil, storing gold, here you have exchange credit fund, it's much cheaper and you get exposed to the underlying price. whereas if you wanted to buy the physical, it's much more expensive. does it work well for that category?

>> for the small investor who wants to have a position in gold, an etf who owns the metal has fantastic advantages. his experience fees will probably be far less. >> so you can get into situations where those indexes start to trade well above their net asset value. so how do investors protect themselves against people skewing the value of what they're exposed to? >> you you can't. but this is a problem that's been true forever. when the underlying is restricted and not readily available. you go back before korea was opened

opened. >> suggesting they're going to leave the door open for more qep how does it pan out? >> i think i am moderately optimistic, probably more optimistic than mr. or dr. yen. if one looks at employment trends, things like the employment report rgts they show some growth. we had industrial production out. we'll get the weekly employment numbers. i believe we get housing starts later today. not a booming recovery, but i think we'll stay in the black and continue to be positive. and we're doing it all not only without housing, but with housing being a huge drain. so about we improve the housing situation, which will not be tomorrow, we'll get a long delayed pick up on that. and gasoline is now incredibly cheap in the united states.

>> all right. we'll take it as good news i suppose. >> we'll get david's view, as well, so what the the fed minute wills mean for the dollar. also still to come, face back going up to change its status to listed, but how does the social networking site actually make its money. >

welcome to "worldwide exchange." headlines today from around the globe, they say the hardest part is waiting. investors are watching the clock and counting the hours until facebook prices the ipo. >> pool of red i mchnk getting bigger at jpmorgan. trading losses have grown. >> final pig figures confirm spain back in recession. slightly positive start. pretty 234r59 on the nasdaq and the dow is about 20 points above fair value. this is the hand you've got from european stocks. we are down but not out.

a foot city 1200 down a fresh low. we had an auction today in spain. three maturities. key thing here is bid to covers were pretty healthy, but yields substantially higher. in fact the spread on those auctions, biggest we've seen in the euro era. worth point being out they've already raised 50% required issuance. >> you have to give them credit for trying to get ahead. we'll see how the yields still affect their situation. and the big sorry out of the u.s., facebook. s has stopped taking orders for its ipo, this after aer there was huge demand. face back has boosted the size of the ipo bay a quarter already. depending on how it goes this, could be the biggest public offering in u.s. history.

many potential investors bulking at the price that came value facebook at more than $100 billion. revenue in the first quarter was actually declining. facebook did see straight growth throughout 2011, but after peaking at $943 million in the last quarter of 201 1rks revenue actually stepped back to just $872 million at least for izing revenue. >> face back expected to be valued at as much as $100 million when it starts trading. but what's behind the valuation? facebook has nearly 1 billion monthly users. the more time they spend on the site, the more facebook can show

them ads. 85 respe 85% of revenue came from advertising. and whether users are checking in at starbucks or sharing what they read on "washington post".com, facebook uses that information to deliver more effective advertising. it uses social context of what friends are doing to make ads more effective. the rest of facebook's revenue comes from its cut of payments for virtual goods and games like zynga's farmville. years by virtual goods and facebook takes 30%. zynga is hugely important to facebook's bottom line. it generated 12% of face back's revenue. another key is mobile ads. facebook just started putting ads on its mobile platform in march and mobile is where a lot

of its growth is coming from. >> joining us for more is max wolf and david bloom is still here with us onset. so max, you like facebook. would you be a buyer? >> we think it's a compelling story. it's difficult to value. it's a one of a kind asset here. and i think somewhere about two weeks ago, it became a media and cultural if a nphenomenon and dangerous to chase it. so we like the company, with you as you see the growing offering, we have to figure out about we believe it can grow as fast as its offering. >> could the retail investor who maybe looks at facebook and piles in when shareholders are looking to get rid of their earnings, could that retail investor get burned given what

you've described? >> absolutely. we think it's an important business model. we think it's here to stay and charts its own put course for at least the next 18 to 24 months. what that also means is you don't have to race an ipo offering. anyone chasing any hype, any big ipo is aing a significant race and to some extent buying a lottery tickle. and while it's a good decision for some people sometimes, there's a certainment a of risk. >> even at the bottom of the range it would trade at 16 times this year's revenues. google trading around six times. i have an issue with that. >> yeah, this is not a basic

valuation story. we've been telling stories not too dissimilar from yours. we're seeing the company look for between 16 to really plus 25 times revenue. google's kind of stuck in a range of about 5 1/2 to 6 times revenue. facebook looking for the multiple to revenue that people are debating the worthiness as a multiple to earnings apple gets. apple gets about 16 times earnings at the very bottom of the range, face book looking at about 16 times total revenue. is it cheap? no way. could it go higher fast? absolutely. do we like the business model? yes. but the value issue has to do with asset and price. >> let's pick up on the business model here. >> 26% say they only occasionally vehicle on an ad. so the question is the model actually sustainable particularly when you pick up

the point that julia made would mobile? >> everybody has trouble in mobile. mobile is 45 and fast rising. the two problems everybody has on mobile, facebook will, too. you get less per ad because the real estate is simply much smaller. it's harder to sell out your inventory. facebook won't be magical in its ability to side step an issue that's afflicted everyone in mobile space. if you don't believe this a big issue, ask the folks over at pandora. so you're right it will put pressure on revenue. we see facebook's growth and their ability to grow into their valuation resting mostly on their ability to massively scale up p credit books credit model. they need to have four other zyngas in place generating vast revenue with high margin for

them. in onned to justify the middle of the range we're talking about today 24 hours before they start their first public trading. >> good to talk to you this morning. thanks so much for joining us. >> and a nice shot of the new york sunrise. >> we need to get david's view on that. >> i have a high euro-dollar forecast, so i think i'll keep quiet with what i don't even know about. >> a quick look on today's other top stories. jpmorgan's trading losses have rechb by 50% will this week along and that's surpassing the initial estimate by about a billion dollars. >> they said we can sit on this position for a while. i wonder how painful that will be. >> down about 2% in frankfurt raiding. >> bonus checks may be bigger

for bankers this year. closely watched survey is predicting bonuses rise 5% to 15%. >> not many people are making 5% to 15% go fusses this year. hsbc has made significant progress on its turn around plan. >> and some people want more, but they also talk about they'll start selling off their real estate this year in the u.s. so maybe that's an indication that that market has turned around. and the ecb confirmed last night has stopped providing funding to some greek banks because it conditions accept collateral from financial institutions rated junk. not because they're shunning it, they just technically can't do it. >> and those banks can go to the greek central bank, can post collateral there and still turn

around and do business with the ecb. still to come, the fed is more wary on the economy than previous months. so is the prospect of further quantitative easing definitely off the table? our next guest says qucht eche- unlikely. unlikely. you do a lot of no.aking? look i'm going through the rapids. okay... i'll take it. sync your card with facebook, foursquare and twitter for savings. that's the membership effect of american express.

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join the conversation. we have a couple questions from our viewers and we'll put them to david shortly. contact us via e-mail or twitter. you have to keep the underscore in there. >> and we had aen spaish bond auction this morning which has gone okay in terms of market reaction. three pa churities. the key point is spain raised the amount they were looking for just under 2.5 billion. not a huge amount. and bid to covers were pretty good ranging between four to just under two. so good amount of demand. yields substantially higher we sxirnsed back in april and

march. three year yield 4.9%, five year 5.4. didn't react an awful lot. key thing was the spreads were the widest we've seen in the euro area in auction between spain and german bunds. so you can see spanish ten year, not far away on the spread. >> if you're just tuning in, these are the headlines. investors a wait the pricing of facebook's ipo. spanish yields rise after economy is confirmed in recession. and reports suggest jpmorgan's losses have grown by about 15% just in the past week. >> so pretty challenging markets. but here is some thoughts of the

guests that have already been on cnbc today. >> we still continue to like high yield particularly in the u.s. because we think the economy will continue to grow and therefore the risk of recession and not getting paid on high yield corporates makes a lot of sense. >> i understand companies can now go into the social media space. i've not convinced that it's worth 100 billion. >> $1.80 is not a problem for japanese exporting companies. most of the japanese companies like toyota could survive at $1.80. >> meanwhile u.s. markets failed to hold on to early gains.

the dow closing near a four month low. joining us scott richter and david bloom still with us, as well. we heard from the fed minister, they kept the door open on the possibility of more qe. do you think it will come? >> no, we don't think qe-3 is likely and i'll tell you why. we think the u.s. economy is really on a slow but steady glide path. gdp has been moving up. housing for the first time in several quarters is contributing. confidence is up. jobs are better. so when we put all that together, we think the borrower is very high for his ped to get backed -- >> i hate to have to shock you, but there's this thing called greece out there and it does affect the united states. so what you talked about is

purely domestic issues. i can't see why you wouldn't being if there's a situation that the greece leaves the euro, that the fed won't come in, every will be at it. so i understand your point of view from a domestic point of view, but that's really not what matters. >> we think it is what matters in the sense that we're trying to look out over multiple years. we'll take the volatility as an opportunity to invest in stocks. we think expected returns will be attractive versus cash and bonds and we'll take take dislocation as an opportunity to move forward. >> i'm saying that dislocation you can't cut rates any more like a lehman situation. what you have to do, i agree that the ecb will have to accept in, but the question is attitudely yesterday we saw the

bank of england also being more dovish in leaving the door open. so i wonder if there is a coordinated effort that would include the fed. i understand your point, but it's broader than that now. >> if there was a dislocation, they clearly would act in concert as they have before. and when i take a step back on the macro, i look at the global easing that's been going on and i look at the inflation that's receding and i think net-net that that's an attractive longer term situation for equities, for high high quality corporate debt and once again, we'll take the noise and opportunity that this would present and establish positions and move forward having a longer term view. >> are people underappreciates

the swap lines trying to alleviate the crisis and secondly, i want to talk about the euro's value. >> there will be a dollar shortage. so you would have the cross currency swap operations opening up. the problem is take you start thinking about the markets not what you believe the markets are do, but you start thinking what is the central bank going to do. that's a different way of looking at markets. it's not about supply and demand. that's about the worst it gets, the better gets. >> why is the euro at 127 or wherever we stand this morning? >> because the other thing on the other side is the dollar. we heard it was a 14.2 debt ceiling. they'll be dividing the 16.4 trillion dollar debt ceiling. that's another two trillion. >> do you think higher rates in

the eurozone if they go the growth and inflation route will ultimately support the euro and not actually make it -- >> that won't happen. >> gold hasn't performed very well in the risk off environment. do you like it here or not? >> we're not gold bulls we suggested it was likely to have weak fast, which that has. i think it's a hedge. if you want to put it in as a hedge, you can. sentiment is horrible right now. so i wouldn't bet the farm on it. just look at it as a hedge for tail. >> good to see you came. thanks so much for joining us. david, always a pleasure. thank you. >> still to come, more on

facebook. we'll tell you what's been happening in terms of public offerings this whole year. ♪ 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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mom and dad, i have great news. is now providing answers families need. siemens. answers. die kayak.com held off going public because of market conditions and just three days after you pulling its takeover office, coty is also considering testing the float waters. >> countdown is on to the the most anticipated offering in history. the range could be between $34 and $38 a share.

joining us is the aforementioned kayla tausche getting up in morning. great to see you. you've been doing great work on this epo. do you think we'll hit that $41 mark? >> you'd think that we'll be able to get smoke signals early today since the book did metaphorically close on tuesday. it they did take some orders yesterday. remember they raise to the range early tuesday morning to $34 to $38. so if you consider that, what we're looking at is up to $18.5 billion in proceeds. that would make it among the top three, but if they want that number one title, they will have to get to the $41 mark. some investors are saying it could well price above $38. they would buy it at that price.

>> so what's interesting is the backdrop seems to actually be activity haven't been that robust. valuations are down and facebook would be a big fish in small waters. would that spur more activity going forward if it goes well? >> i think it will for some sectors. the kayak story is an interesting one because it's been a file for nearly a year and a half and ynd writers are saying if takes book stays above its issue price for a week, that will show maybe it's not as volatile and maybe it will stay afloat. kayak did have some pretty good earnings compared to its quarters past so that's why that would be a good ipo in the wake of facebook that money is going toward tech deals and the market is actually receiving them well. the coty story is an interesting one because it's viewing that as an alternative at least for the moment to the avon deal.

that would value coty at about $7 billion. what's unclear is where that deal will it actually trade because it's headquartered here in the u.s., but it has significant revenues enter magsly. so if it went public abroad, that would be a huge sign for the international ipo market. >> kayla, do you prefer getting up at like 3:00 in the more than or standing under an umbrella in london in the rain? which is the better option? >> that's quite the toss up. i don't know. they would are to be equal. but it's nice being here. the calm before the storm very early. you get a lot done. >> and it's raining oefrl hever. but it that's okay. plenty more on facebook throughout the day. we'll be back tomorrow morning to talk about other things. >> and meanwhile "squawk box" is up next. have a profitable day.

facebook is finally going public. the ipo expected to price tonight. more euro stress, key bond auction in spain highlighting broader worries about greece. spain and the possible spillover effect. plus thes losses keep getting bigger. a report that jpmorgan's troubles are taking a turn for the worse. it's thursday, may 17th, 2012. "squawk box" begins right now.