all right. you're now watching cnbc's "worldwide exchange." i'm ross westgate. a recap of the headlines, do you have ya up. the numbers also beat. >> the cash balances of our clients. i would say they -- many of the issues. >> spanish gdp contracts 0.5%

quarter on quarter showing the country's special easing. but it has now been contracted for seven consecutive quarters. and bp's first quarter profits are nearly $1 billion higher than forecast. high margin production and strong profits. there's some disappointed investors in terms of adm as far as the world cutting the outlook for the key earnings market. all right. welcome to the program today. in an hour's time. we're going to get a print of eurozone unemployment. could be a record high over 12%. feeding into that, of course, is the german unemployment data. we've just seen that, as well. steve was talking about that.

the unadjust the jobless total, 3.098 million in march. the german adjusted rate at 6.9%. and the adjusted jobs rate was indeed 6.9% as expected. now we've also got italian jobless rate coming in. youth up to 38.4% in march. we'll talk about italy and what the new government is going to try and do. are they going to try and renegotiate some of the agreements? still to come on today's show, first half results were hit by the slowdown in europe. >> plus, the spanish market is clearly the biggest and most profitable for us. and there it's about keeping focusing on the total tobacco portfolio, cigarettes, ashes and

cigars are very big for us. we have to keep the photo right for the conassumeser. softbank posted a nearly 8% drop in earnings earlier today. and after last week's fake tweet sent stocks tumbling renewing fears about high frequency trading, we'll discuss the power of speed versus the merit of liquidity. and the fed begins a two-day meeting today. we'll take the pulse of the u.s. economy. he says bernanke won't pull the plug on qe3 any more soon. find out why. and pfizer releases its first quarter earnings before the bell. analysts are optimistic. we're going to preview those numbers by the end of the show today at 11:50 cet.

first, plenty of focus on the banks today. ubs up 6%. deutsche up over 8%. lloyds up 5%. all of these banks today beat forecasts. we'll go through the numbers in ten minutes. we'll hear from the ubs ceo sergio monte. we'll speak with the european banking editor david enrich. we're going to be talking about softbank a little bit today, as well. the ceo says the sprint deal value is wrong, incomplete and illusory. both countries gdp shrunk. gdp fell by 0.8%. stephane is in madrid and joins us for more.

stephane, it's what the bank of spain was telling us it was going to be. so the bank of spain is perhaps the more economy to here. this is an economy that was now 7% below what it was in 2008. unemployment is getting worse. where is the stabilization. >> that is no final xwromp yet. not only do we have the 0.5% decline quarter on quarter, but we have the 2% contraction of the spanish gdp year on year. the spanish economy will not go out of recession by tend of this year. there is no growth wider. consumer spending has been declining for 33 consecutive months hit, of course, by the austerity policy and also by the rising unmromt.

more than 6.2 million people are out of work. on a gain, there is no sign of improvement on the labor markets, either. the government hopes to reserve the trade at the end of the year. if you remember, at the end of the last week, it said that the gdp would be flat in the third quarter. for the time being, there is no reason to believe that scenario. in order to boost the economy, the finance minister said a few days ago that the government would need to find a better balance between austerity and between growth stimulus measures. but at the end of the last week, he was expecting to implement some stimulus measures. so for the time being, honestho, we don't see where the improvement will come from. >> s&p is saying spanish house prices will fall also 13% by the end of the year. we're now, of course, starting

to get banks being forced to liquidate that holding. now that seems to have gathered pace, as well, which means there will be no let up in the falls of property prices. how is that all going to feed in? >> yeah. we thought when it was created last year, we thought that it would really give a price to the real estate market because the banks have a guarantee of properties. taken from people labeled to repay their mortgage or those that were unable to finish them. they have a huge property portfolio, but just no buyer on the market. we needed to find a price for these assets. when the bad bank was created last year, they were talking about a 50% -- on the expected price. but as you say, the price continues to -- prices are declining in spain and we don't see where it's going to stop to

be honest. >> some forecasts fall another 30% in madrid, barcelona and other big cities. hard to find the light at the end of the rainbow at the moment. stephane, for now, thank you. a big earnings day in focus. bp jumped higher than expected boosted by proceeds from the sale of its russian joint venture. excludeing that $15.5 billion sale, profit up 39% last year. that still beat the average forecast and the oil giant declared a quarterly dividend from 9 cen8 cents up to 9 cents. they're doing well on the trading division and margin output was better than expected. good to see you, jason. santander's analyst this morning

has proved these results stunning. are they? >> the big thing is that aus mentioned earlier, the margin in the upstream division is starting to improve. that's the sign that we're looking for from bp. you need to see a better profit margin and that's start to go show up. >> they had said we were going to get a better profit margin and no one quite thought this amount this early. >> the problem is they said that 18 months ago and it didn't materialize. this is the first quarter where we had seen that profit margin materialize in a meaningful way. >> and what does it mean? how do we carry this forward? what are expectations for how this might change -- >> i think looking immediately forward to the second quarter, there's some maintenance issues that probably mean that you don't get a lot of follow through. but over the course of this year, i think returning to a more normal level is achievable for bp. if they do that, then the stock should perform well. >> and how would that change your view? if they start delivering that,

how does that go and change the relative attraction of the stock versus, you know, the current valuation? >> we think they're both attractive stocks. they've both been trading sideways for probably the last year. i think there's more upside to the outlook for bp than there is for shell. shell has a better cash flow overall and maybe more ability to raise the dividend. >> they've got a new stake, as well. when does that kick in? that's pretty new. when do we see an impact? >> it's only ten days counted in the first quarter of $85 million. if you extrapolate that forward, that's about $85 million a quarter. a full year of earnings is just coming from that position. >> what's the key for these guys now? the oil prices sort of dropped a bit, but now steady around 00. >> there's a couple of things. we need follow through on this profit margin that we keep

talking about. the share repurchase program started to kick in. it was only about $840 million in the quarter. there's 8 billion in total that's been allocated to that. i think that's an important driver next time up. >> in terms of some of the stocks you're talking about, though, the stocks that you highlight, chevron in particular, why those two? >> we think chevron can go 5% per year through the end of the decade. when it comes back to this profit margin issue we keep talking about, shannon is by far one 1/2. i think shareholders eventually get a handle on it. >> i like that you called it eni. >> i think either one is acceptable. >> good to see. thanks very much, jason gimmel from macquarie securities.

okay. let's bring you up to speed with the latest on the equitier here. just over an hour into the trading day, an hour and 11 minutes and we're at the session low. a lot better on the start. boosted by bp, boosted by the banks. right now, advancers outpaced decliners. yesterday, up 31 points. it's up three at the moment. lloyd's, xetra dax up 0.5%. the ibex is down slightly. and the ftse mib after the rally yesterday is off 0.2%. we'll show you the gainers and losers right now in terms of the sectors. deutsche and ubs, those are the banks performing pretty well. lloyd's also up, as well. so the banks really taking the top spot right now. as far as bonds are concerned, we saw italian yields down 2.9%. not far off for 3.89 low we hit.

3.9% and heading lower once again this morning. spanish yields going lower, too, despite the fact that we've got that. maybe the gdp number was as expected. that contraction up 0.5%. you get more focus on borrowing numbers from the consumer and see whether there's any appetite for that in around 20 minutes or so. as far as currency markets are concerned, sterling, just below 1.55 at the moment. not much movement today. dollar/yen, 97.77. 1.3083 euro/dollar. we'll be waiting, of course, for the fed and the ecb, as well. let's bring in li sixuan. she'll give us the wrap on the asian session. >> most asian markets wrapped up april on a positive note. but mixed economic data weighed on the japanese markets.

while household spending and jobs data was upbeat. retail sales and industrial output undershot expectations. the nikkei 225 eased at 0.2% y.t it still managed to post its best april in 20 years thanks to the boj's earnings steps. earnings news was very much in place. shares slumped over 5% after predicting a weaker earnings guidance. nomura shares jumped 4% after reporting its highest quarterly profit in seven years thanks to a one-time gain sale of a property affiliate stock. elsewhere, the hang seng and hong kong gained for the fifth straight session ending higher by 0.7%. the outperform er, shares rallid

after ubs upgraded the stock to buy. elsewhere, south korea's kospi closed with a near two-year high with samsung electronics lending support for its galaxy smartphone. in australia, the asx the 200 ended at a two-year high, up 1.28%. anz rallied 5.78% today. other banks rallied from 2% to 3% today. after the break, find out why ubs's ceo is so pleased with himself. >> it's a confirmation that our strategy works. clearly we have a better client from the first quarter. generally, it would start to sell gate.

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banks very much in focus today in europe. they're the leading stocks. ubs's business model is working. that's what the bank ceo told cnbc following a surprisingly

strong first quarter. net profit just over $1 billion benefitting from a trading income boost. since the financial crisis, ubs has shifted its focus to its wealth management. that's paid off, as well, with a rise in fees. carolin has more on the breakdown and joins us right now. hi, carolin. >> hey there, ross. these numbers, they're really smash all analyst estimates. we've got net profit in the fist quarter of around $1 billion. that was much, much better than expected and largely driven by the investment banking revenues, which were up 74% quarter on inte decent terms were driven b the equities trade chg is one of the strong points over at ubs. but even fixed income trading, that was strong even though ubs is winding down that business, at least partially. i spoke to sergio amarti, the ceo of ubs and here is how he feels about how this new business model is paying off.

>> first of all, i think it is a confirmation that our strategy works. clearly, we had better client sentiment in the first quarter. it's a seasonal factor. but we saw good inflows and of our clients which was pleasing across the board in wealth management, 24 billion. i think that overall, i would say the strategy is working and we're starting to see the benefits. >> but as you point out, the first quarter is one of the strongest ones in the year. to what extent can you extrapolate that result for the rest of the year? >> it would be good to extrapolate for the rest of the year. but i would say the situation out there, investor sentiment is very fragile. if i look at the cash balances of our clients, improvement in turnover, trading, but essentially, i would say very cautious and realistic about the

facts that many of the issues out there are still unresolved. >> your investment banking result was very strong with revenues up 74%. do you regret that you exited some of the businesses? >> not really. i think that if you look at our business model, it's the one that was ubs. we are using in this model two-thirds less capital than we had a year ago. we are very good with attributed equities. so i think that there is no regret for us. so we do what is best for our shareholders and our clients and it works. >> let's talk about the wealth management business. we saw strong inflows across the board. and i'm wondering whether you believe that the weakness in europe is now finally over. >> not finally over. there is a process going through. i think that gdp and the economy is not really going. difficult to see a wealth creation in europe. we are pleased to see that the migration of clients in europe has stood a positive at 1.5 billion of inflows in europe.

i would say this is stabilizing and it's our expected ranges of outflows in europe. >> where are you in terms of transforming the business? why are you in terms of reducing risk rated assets. i saw that increased slightly. why is that? >> the investment bank operated within its limits up 70 billion. so up 69 billion. it was an increase during the quarterch wasue to technical factors. some diversification benefits that we add hold within the investment bank were fast into corporate sentiment. but i think we deployed the risk assets to facilitate clients' business. >> ross, analysts and investors are pleased by the fact that inflows into its core wealth management business were the highest since 2007. 15 billion swiss francs.

so we are back at precrisis levels and according to analysts, this shows that client confidence has returned in all regions. >> all right. car carolin, stay there. joining us in studio, from the "wall street journal," clearly big outflows during the crisis. . in fact, they're starting to get clients back in. what does that tell you? >> two things. one, it is a vote of confidence in their business model. but i think the second thing, maybe it's more important, is that you're seeing shifting funds from south to north within europe. and switzerland for many reasons, including the fact that not just the eurozone is a huge beneficiary of that. switzerland is a natural winner. >> to me, the bigger picture here is that this shows -- and

ubs is obviously refocused away from investment banking back. you see this with other banks, too. they had no expertise and now they're refocusing back on the core areas. lloyd's is a really strong example this morning. they were expanding all over the world. it caused huge catastrophic losses for them. now they're refocusing on the core uk retail market and the results are very strong. >> well, they would have been all right if they had never had to integrate hboss. carolyin carolin, just come in. >> the core t1 equity ratio is best if cloud. credit suisse is at 8.6%, actually, barclay's, 8.4%. and deutsche bank is only at

9.5%. do you believe this will translate to a best in class dividend at ubs? >> it's probably too soon to say. and we've seen he enormous amounts of pressure on all european banks to boost capital and regulars are going to be very reluctant until there's a lot of confidence. not only have the banks raised enough capital, but also that the worst of the crisis has passed. as zermotti told you earlier, people are optimistic, but i don't think there is an enormous amount of confidence that this crisis is over yet. >> let's look at deutsche bank. it released some 30 earlier than expected. net income of $2.2 billion beat estimates. they also announced a surprised cash call. that comes amid pressure from regulators from the bank to bolster its balance sheet.

they reckon after this capital raising, can core tier 1 will be around 9.5%. that's more than barclay's, credit suisse, jpmorgan, goldman sachs. investors are reckoning that will help with their ability to pay dividends. is that what is pleasing? >> no. i think what's pleasing is that a lot of investors have been worried that deutsche bank has on paper probably the worst capital ratios of any major european bank. there's been a real overhang on the stock with people fearing they need to do a massive rate extension maybe up to 10 million euros. the hope here is that this will relieve a lot of that pressure. people will stop worrying about a massive capital hike. i think the question is whether this is enough. there's a lot of bankers we were talking to last night saying deutsche bank was going to need to raise maybe floor oh four times as much and there's a big

capital investment they're facing in the u.s. >> how much depends on the future of bank regulation and -- >> an enormous amount, in particular in the u.s. where deutsche bank's u.s. operations, the fed is pushing them to recapitalize their u.s. unit which by deutsche bank's own internal estimates, albeit a couple of years ago, that was on hold svms nearly $20 billion. there were many ways to mitigate that. i would be very surprised if this resolve all of the questions about whether or not they have enough capital. >> david, one of the things that has weighed on deutsche bank stock performance is legal costs. do you think that the bank has done enough in terms of kitchen sinking or do you think that there's still significant litigation risk out there? >> there's definitely significant litigation risk out there. the question is there hasn't been enough transparency or maybe there hasn't been very much transparency in terms of how they're -- what exactly the settings of the past.

deutsche bank faces a huge amount of regulatory litigation stuff where now libor is top of mind, carbon trading and things like that. certainly that's where the major uncertainties facing the banks going forward. i think it allows confusion about whether they've set aside money specifically for various -- it feels like libor or whether there's a big pot that's generally going for everything. >> yeah, okay. and carolin, thanks. we'll let you go. we'll see you a little later during the show. dave, before we let you go, i want to talk about lloyd's. is it maybe the government will try and off-load some of the shares next year? is that a feasible target? >> yeah. the results were much better than anyone expected.

we've talked to some bankers and they think that the government sales will be going on by the end of this year, actually. that might be optimistic there. >> much would depend on the stock prices, presumably. >> gm, general motors, yes. >> david, thanks. good to see you. other things that are in focus in corporate news, shares in ab inbev, it's one big disappointment today for investors. the world's biggest brewer announced q1 profits lower than expectations. the dutch beveragemaker is down 2.4% because of the earlier timing of the carnival. bad weather and food inflation. sales have declined in the u.s. where the belgium based firm has a grip on half the market. monetary policy meanwhile is being focused on in the next two days, to talk about who could replace ben bernanke as chairman

of the fwed has captured wall street's attention. bernanke's second term ends in january next year. vice chair janet yellen is believed to be the top pick to succeed him. we want to know how will history judge mr. bernanke? was he is the savior of the 2008 financial crisis? has he gone too far? still to come on the show, austerity is killing italy. the new prime minister, will his growth management put him on a collision course with brussels in berlin? we'll talk to jonathan hopkins of the london school of economics.

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these are the headlines from around the globe. financial stocks are higher in europe. deutsche bank up more than 5% after the surprising the markets with a 3 billion euro capital hike. the numbers beat on all funds. >> investor sentiment is -- the cash balance of our clients are still the same. i would stay very cautious about many of the issues out are

unresolved. >> spanish gdp contracts 0.5% showing that the country's recession is a little less worse. but that has been contracting for seven consecutive quarters. and bp brought in a strong performance. plus, austerity will kill us. the new i'll tallan prime minister canceled a controversial housing tax as he takes his show on the road. first stop? berlin. we'll talk about italy in just a few moments. first, we've had some lending data out for the uk. net consumer lending up 0.9 billion in february it was up 0.3 billion. it was forecast up 0.8, so slightly better than we thought. march mortgage approval was 53,a

504. up from 51,000 in february. consumer credit was up 0.5 billion. for more on peripherals or consumer buying, march loans to nonfinancial businesses contracting 0.6 billion for the month, minus 0.36% on the year. so that's the one negative there. the others look better than we might have expected. and sterling up at the high point for the session. meanwhile, as far as european stocks are concerned, we're down near the lows of the session. but they focus so much on earnings. the ftse flat. the xetra dax up 0.6%. weaker in france, the ftse mib down, as well. on the bond side, italian yields are still grinding lower, 3.89%

is where we stand. pretty much on that 2 1/2 year low that we hit last week. and spanish yields have been pulled down with them, as well. we're steady elsewhere on the gilt and treasuries. on the currency markets, very much in the ranges. not big moves today. the currency players taking a bit of a day off. not literally, but they haven't got anything to stimulate big moves right away. this is the spanish economy that has contracted for the fifth straight quarter. spanish gdp shrinking during the opening three months of the year. this marks a slight grompt at the end of 2012. that's when gdp fell by 0.8%. joining us for more, john hopkins is with the london school of economics and political science. good to see you. >> hi. >> spanish economy is now 7% below the size that it was in 2008. i've got forecasts and surprises are still going to contract

another 13% this year. where is the good news in spain at the moment? >> there isn't any except maybe coming from italy. i think spain will be waiting to see what happens sarls of the new italian government mark ago bit of a policy shift and sending out a challenge to european policymakers. >> let's pick up on that. that headline that i wrote is saying enough is enough. what chances have you got of changing the sort of the euro-crat inspired plan? >> everything is hanging on the german election. merkel doesn't want to make any big moves before that. they'll be trying to, you know, button down on the austerity discourse. i think after the german election then maybe beginning some kind of policy shift. italy is in a powerful pol position, ironically. the ability to form a cohesive government is precisely what gives it a lot of bargaining

power in europe. now they can no longer give any additional austerity. brussels and berlin have to start rethinking their strategy. >> it's interesting. you wrote a piece after the election result when we had no government saying this may be the best thing that's happened for europe. just explain that thought process. >> well, that was on the assumption that the broad strategy for dealing with the recession, in other words, austerity reacting to declines in gdp and subsequent increases in deficits by asking government toes make cuts, increase taxes leading to further declines in gdp, if you think that is the wrong strategy, then the best thing that could happen would be that a government committed to -- or a coalition committed to austerity in italy was defooit feet in theed election on the polls. that meant that the fund in italy could not be a government that was going to promise more austerity. and if you think it's a bad thing for europe to be following that strategy, then the italian results throwing out a challenge

to the european union is a good thing. >> is it -- is austerity, though, too simplistic of a term? actually what we do need is a huge amount of restructuring, supply side reforms, being up with labor markets. there's a lot more than just cutting spending or raising taxes that needs to be done. >> absolutely. i think there are two separate problems. here, obviously, there are a lot of voices on the other side of the atlantic making these kind of arguments. and one thing it has to do with the immediate credit crunch and aggregate demand across europe which is dragging the economy down. they're off of financial pressure, too. then after you've dealt with the immediate crisis, start thinking about structural reform. they don't want to help out. they don't want to inflate or offer further help to pull the periphery out of the gloom at the moment unless they have commitments for structural reform. >> the structural reform, this

coalition we now have, it's clearly what the election schedule was that people in italy are fed up with the old guard of politicians, right, who have delivered nothing for ten or 20 years. will there now be an -- is there now an appetite for major reform, structural reforms? >> i don't think that's what the election is saying. if it's a credible force for long blinds advocated, it's monte's coalition which had a disastrous election, really. berlusconi's coalition did better than expected. no promise of central reform there. the democratic party offered structural reforms. supported by trade unions and its support for pension and public sector workers. so, really, the only party offering for central reform was defeated and, therefore, it's hard to see that italians have been arguing for voting for

greater reform. >> how does this play out? you mentioned the german elections. how do we play out? how long does this italian government last? >> the government is good for a few months. we'll see what happens after september. from the point of view of domestic eye tall kwan politics, a lot depends on when berlusconi who of course has a veto over this government now, he can pull the government down whenever it suits him. if he feels he could win an election, he would have a good incentive to -- >> yeah, but beppe grillo is now the only opposition. this satisfaction with government, is this going to -- >> well, we'll see. for the moment, actually, the initial movement is actually no more austerity. for a while, that's going to be popular especially with the local tax on houses which is very unpopular and if this promises relief for consumers. if the beginning, there could be some popularity for this

government. in the long run, it's hard to imagine things improving rapidly. >> jonathan, good to see you. thanks very much indeed for joining us. from italian politics and economics to abe-nomics. the jobless rate fell to 4.1% in march. household spending did shoot up which reflects strong consumer confidence. retail sales took something surprising. industrial output missed the mark set by economist and even exports benefiting from a weak yen fell 10% on the year. and at the same time, we've had some interesting comments out from the softbank ceo today. he's saying that dish have done absolutely no due diligence on sprint whatsoever. they try to put that deal together. let's get the latest on this

spectrum love dry angle. fushiko has more for us on the nikkei. >> hi, ross. the race or sprint of the bank ceo have said the japanese wire giant will not raise its bid, remaining confident in the offer. he said it still stands superior. acquiring sprint is crucial to becoming a global company which is a long time dream for the ceo. net profit fell 7.8% to $2.9 billion for the fiscal year-ended in march. sales of iphone 5 were solid, but failed to make up from the profits it earned from its sales of yahoo! sales two years ago. the wireless giant posted an operating profit of $7.6 billion. if softbank successfully closes the deal to buy 70% of sprint on july 1st, it is likely that its

profit could put it ahead of japan's biggest wireless carrier. back to you was ross. we'll take a short break. still to come, the european slowdown is imperative. the company's eo told cnbc exclusively that she's focusing her attention. >> ross, the spanish market is clearly the biggest and most profitable for us. and there it's about keeping focused on tobacco portfolios. they are keeping the portfolio right for the consumer. ♪ [ agent smith ] i've found software that intrigues me.

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imperial tobacco has been blaming the down fall in europe for a fall in profit. it speblths full year earnings this year to be at the lower end of its target range. jules has been speaking to the ceo. you've been sharing a game of darts and a packet of ten? >> we're going to say that. yeah, you know, these we've got an interesting case of expectation management. it was the first half profit and they came in bang in line with estimates. they had managed down in the first half. 6.5% fall in adjusting operating profit down to 1 .4 billion. adjusted eps, 90.2 pence.

tobacco led alcohol down 2%. given the views we're seeing in the news in the u.s., that isn't unexpected. how do they manage to see a pick up in the second half inspect this is one of the things analysts have been questioning since we got the first quarter results. two-thirds of their earnings come from the eu and that's the big problem. and i asked them. obviously, they've talked about spain being a real problem. but what other countries are a problem. >> plus, the spanish market is clearly the biggest and most profitable for us. and there, it's about keeping focusing on the total tobacco portfolio, cigars in spain, as well, is very big for us. we have to keep getting the portfolio right for the consumer. the uk is also tough. very high prices in the uk, and increasing realistic trade in the uk. one in every four cigarette

smoked in the uk is now the product. which is now not good news for our legal market, but clearly not good news for the government revenues, either. so we have to keep working on that, working on our portfolio, working on the fine cut, as well, for the consumer. are you seeing people smoking it less or is it just that they've moved to lower price products? that's a great question because actually we don't see people smoking much less at all. conassumption is very resilient. maybe 11%, maybe 2% in some markets. but actually, it's consumers making a choice around what they're smoking. that's one reason for the trade across europe, as well. >> can you give us any sense of when you see a demand pick up finally in the -- >> i think if i had a crystal ball on the environment, i think i could get a lot moeven doing something else, entirely.

the eu environment, we continue to see it being tough for at least another year, 18 months, i would say. i think important in this environment and continuing to get the environment to get them to do the sensible things in this environment. also, not to do, you know, irrational regulation. so i think it's a cocktail of things we need to do in this environment. i don't think trade will keep dproeg. i think the penetration will have some sort of ceiling on it at some point in time. together, we feed to work with government toes tackle that. >> if you have significant strength in germany, what's going on there? >> well, we have a great portfolio in that market. we're growing fine cut share, we're growing profit. this is growing at the value end of the market. so i think it's an explanation

performance from the portfolio. >> what's going on with the slowdown in growth? we saw the latest spanish numbers. what's going on with austerity, people smoking less or more? >> it's a great question. i asked her that, too, is it about about people smoking less? we see some reports that people smoke more in recessions because they're more stressed. she said we're not seeing a decline, but they trade down for cheaper grets and obviously regulation is another huge issue for them. >> do they have a portfolio -- do they have the cheaper cigarettes? >> one of the things quite unique about them is that they do do the full spread, they do have this option. the market share might be declining, but the market size might be declining, but gaining share. >> good. thanks for that, jules.

you're off the to the ecb. >> yep. >> you can't smoke any more in the airports or anything. >> such a shame. >> it's a big deal. >> real problem for me. despite the grounding of boeing 787, japan's top two carriers still managed to post healthy results in the fiscal year. na holdings said its net profit jumped 53%. japan airlines beat forecasts in its first year with profit up to 1.7 billion. the impact of the dreamliner's was still limited. jal said its dream liners will begin taking passengers on june 1st. lisa, thanks for joining us. are you surprised at the limited impact of the dreamliner outage? >> i am surprised. i think these results from a&a

and jal are fantastic result. in light of what's happening with 787 as well as what's been happening with fuel prices, fuel prices have remained quite high and fuel, of course, accounts for about 40% of airlines total cost so it's a fantastic result. >> how did they manage to do it? >> well, the economies in asia are growing. this is xhg growth out here. if you look at their figures, they're experienced an increase in domestic passenger traffic. so the market is growing. i think domestic is growth partly through the introduction of low-cost carriers into japan that's helping to stimulate the market tremendously. >> yeah, okay. and with that growth, what happened to the asian airline bit in general? are we going to see -- are we going to see m&a? are we going to see mergers? >> i think it's getting increasingly difficult for smaller ir lines in asia to survive.

at the need to gain access to cheap financing, to skilled engineers. so i do predict that we are going to see consolidation in the aviation industry in asia in the next year or two. i think if you're looking at a&a and jal, they're huge airlines which will remain strong. i'm thinking more of the smaller carriers existing in asia. >> and as the yen -- the yen has weakened from its big strategy because of the bank of japan. how does that affect the airlines? are they hedged on that? >> they are hedged. lion like the airlines will say they've hedged. you can't hedge forever. and once again, you know, the fact that jal and a & a have come out with strong profits is a phenomenal result in light of the fact that the yen is so weak. because a weak yen increases their fuel costs, anything that

they buy from overseas, it increases both costs, as well. but i think the yen has bottomed out and you will see some strengthening of the yen. >> there's a call. all right. open sky in a couple of years, is that going to change the nature of the airline business in asia or not and are we seeing people thinking about their strategy now? >> yeah. we're seeing basically all the airlines in asia thinking about the strategy how to deal with open skies, particularly the carrier necessary southeast asia because that will affect them the most. but i think there is a bit of skepticism that's coming in from the markets. we're seeing some countries dragging their heels in terms of liberalizing their markets. indonesia has made it pretty clear that they're not going to open their markets that much

come 2015. they're going to select, say, six cities which they'll allow unlimited traffic rights to. countries like cambodia, they're trying to protect their local carriers. >> good to see you. thanks very much for joining us. some other earnings stories today, shares of aus trail sxa and new zealand banking group are up to a record high. a 10% gain in first half profits compares to a year earlier. but it was the 11% hike to its dividend has that has investors most excited. solid returns from its overseas banking units and its australian retail business helped the bottom line. and a recap of what's on the agenda tomorrow, it will be a pretty quiet trading day. most markets are closed for the may labor day trading holiday. japan and aus trail why are

open. we'll be watching for major april pmi releases for several countries, including china. south korea's inflation reading is also on tap. still to come on "worldwide exchange," investors are looking for shines from chairman bernanke with his term set to expire next year. when he goes, who will fill big ben's shoes inspect we'll discuss that come up in the show. how would you judge ben bernanke? get in touch with us, e-mail, worldwide@cnbc.com or tweet @cnbcwex. welcome to the new new york state, where cutting taxes for families and businesses is our business. we've reduced taxes and lowered costs to save businesses more than two billion dollars to grow jobs, cut middle class income taxes to the lowest rate in sixty years,

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you're watching cnbc's "worldwide exchange." auto recap of the headlines, financial stocks are higher in europe. deutsche bank up more than 5%. surprising the market with a 3 billion euro capital hike. ubs's first quarter numbers on all fronts. >> investor sentiment is still very fragile. the cash bells of our clients are -- i would say very cautious about aback that many of the issues out there are still unresolved. spanish gdp declines 0.5% in

the first quarter now seven quarters in a row. but that figure is slightly better than the 0.7% contraction we got in the last quarter. first quarter profits come in nearly $1 billion higher than forecast. all major crediting new high margin production and stronger trading profits. there's still appointment for investors in ab inbev. the world's biggest brewer cuts the outlook for markets. first quarter earns he lower than expected. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. all right. we're in the second hour here of "worldwide exchange." kelly is away today. we're looking at the latest unemployment rate for the eurozone. and we have hit 12.1%. the eurozone march jobless rate, that is the highest rate since records began. we've also got cpi estimate up

1.2% for april. it was 1.7% in march. it was forecast at 1.6%. that is the lowest annual ratings inflation since february 2010. so takes the highest jobless rate since records began in 1995 and this lower than expected inflation rate and there will be those who presume the ecb might well cut rates on thursday with those two factors coming into play. so we'll keep our eyes on that and the euro hitting the session low against the dollar, 1.3064. although it is still very much in the range. and that latest eurozone data comes on the back of numbers out of spain today which showed the economy contracting for the seventh straight quarter, gdp shrinking by 0.5%.

it fell 0.8%. stephane has the reaction for us. >> it looks like the first quarter was not as bad as the fourth quarter last year. but if you look year on year, the spanish gdp contracted by 2% in the first quarter and that's the worse since the country dipped into recession nearly two years ago. there's new growth driver, which makes -- thinking that the recession will probably last until next year in spain. growth driver because first of all, the consumer spending has been declining in space for 53 consecutive months and because of the unemployment rate, 6.2 million people are out of work in spain. that's 27.2% of the working population that's the highest level ever in spain. the government still believes that it could reverse the trend by the end of the your. it's at least what the government explained in its new budget last friday. it believes that the spanish gdp

will be flat in the first quarter and that spain will grow in the fourth quarter. as i was saying, plenty of private economics -- >> stephane, thanks very much, indeed, for that. global markets right now, as far as the u.s. futures are concerned, remember, we have to close higher for the dow. the s&p closing up at another record high. the fass dak up at a high 12 1/2 years. right now, pretty glass for the dow. pretty much on fair value for the nasdaq and a little below fair value for the s&p. right now, earlications are for a fairly flat opening. european markets had a strong start this morning boosted by earnings from the banking sector and bp major, as well. the numbers came in much better than expected. the ftse 1 00 is flat. xetra dax is up 0.8%. the ibex is flat and the ftse

mib is flat, as well. lloyd's bank in the uk, investments up not too badly. and ubs and deutsche beating all these banks beating expectations today with their numbers. ubs particularly sent pretty good flows back into the wealth management arm which suggests confidence is running to ubs to manage your money. and as far as bull markets are concerned, the key thing here, 3.88%. we are now below those 2 1/2 year lows that we hit last week. and we're only around 50 basis points now away from the all-time lows on ten-year spanish debt. and it's dragging spanish yields down with them, as well. 4.11%. the new prime minister in italy saying we're not going to take austerity any more. they thought maybe italy was the one company that had the power to change policy as far as germany and the eu was concerned. if they do so, it would benefit

spain, as well. you see there's lower inflation rates also in germany as well as the eurozone. on the currency markets, fairly flat day this morning. one move recently, euro/dollar, but it's still very much in the range of 1.3071. the currency markets are pretty steady today. a sixuan. >> thank you, ross. hong kong shares are enjoying its first shares since january. the h-share index gained 1.3% today. but the nikkei 225 under a bit of pressure today as we got mixed economic numbers from japan. while household spending and jobs data was upbeat. retail sales and industrial output undershot expectations. the earnings weighed on sentiment.

disappointing results from honda helped push lookmakers lower. honda shares reversed more than 3%. and machinery toolmaker fanuc slumped over 5% today after projecting a big drop in its first half profit. shipments for wakasaki spgs kisen were in the red following the announcement. nomura shares bucked the down trend after posting its highest quart ily profit in seven years. in australia, shares jumped nearly 6% to an all-time high after the lender beat earnings forecast and announced a higher than expected dividend. other banking shares went along for the ride all ending well in the green today. back to you. >> sixuan, thanks for that. plenty of earnings focus on here in europe. bp beat first quart profit

forecasts. bp's profit was down around 9 the% over last year, but that figure still beat forecasts and the stock up 3.6% was particularly pleasing to analysts to hear that they're start to go improve their margins again. they've been talking about it for a while. here is a recap from some of the analysts that are pretty optimistic about this latest report. they're concern that volatility in all prices might pose risks. >> the margin in the upstream division is starting to improve. that's the sign we're looking for in bp. we need to see a better profit margin and that's start to go show up. >> it's going to give them a change in the arctic. it doesn't show anything like the stream that tnk used to. they're going to have to find somewhere else in the group to pay that substantial dividend. this is their problem. they have a lot of outgoings. if the oil stays above $100, that's okay. but if the oil price was to

fall, they have a bit of a problem. >> meanwhile, just focusing on tui, as well, has come out with a number of statement saying thompson airways with news the boeing dreamliner on the -- to florida and cancun services on july the 8th. there we go. there's a -- another business ta is going to re-enter the dreamliner into service. meanwhile, what's on the agenda in the united states today? the first employment quarter index is out at 8:30 eastern. it's forecast to rise 0.5%. at 9:00 a.m., we get the monthly case-shiller home price index. prices are expected to rise 9% in february. at 10:00, the april chicago pmi is out as is the april consumer confidence figures. we've got pfizer reporting results before the opening bell. we get numbers today from etna, adm, avon, starwood hotels and dreamworks animation.

we were talking about pfizer, as well, towards tend of the program today. first, banks have been leading european stocks higher after better than expected results from the key players. carolin roth will join us with more.

deutsche bank released earnings earlier than expected. cash call is going to raise 3.7 billion from the sale of shares. that comes amid pressure from regulators to deutsche to bolster its balance sheet. at the same time, ubs business model is working following a surprisingly strong fist quarter. net profit just over a billion. and they're getting income into management arm, as well. joining us this morning, carolin roth is with us. hi, carolin. >> hi there, ross. the analyst community agrees on one point. these numbers are better than expected. it is a quality beat. not just studies with better results. it is a pretty good result. that was in large part driven by the investment banking unit where revenues increase by 74% quarter on quarter.

specifically in the equities trading business which did very well. but you know what's quite interesting, ross, is the fact that even the businesses that ubs in october said it was going to be exiting, those showed a very strong performance, as well. so it doesn't regret pulling out of some of these units. that's the question i put to ubs's ceo. >> i think that if you look at our business models, the one that was ubs, we are using in this model two-thirds less capital than we had a year ago. we had very good returns on equities. i think there is no regret for us. we do what is best for our shareholders and our clients and it works. >> let's talk about the wealth management business. we saw strong inflows across the board. and i'm wondering whether you believe that the weakness in europe is now finally over. >> no, it's not finally over. there is a process going through. i think the gdp and the economy is not really good. so difficult to see a wealth

creation in europe. we are pleased to see that the migration of clients in europe as to the positive and 1.5 billion of net inflows in europe. i would say that this is staeblizing and it's -- our ranges of outflows for europe. >> and inflows into the quarter wealth management unit were actually 50 billion swiss francs in the first quarter, twice the amount that was expected by analysts and barclay's calling this an excellent result. now, these are the highest inflows since before the crisis since 2007. and that really shows thaw client confidence is fully back for all regions. we'll speak more with ubs about the results because our colleagues are going to be talking to the company's cfo coming out at 8:00 eastern. you don't want to miss it. >> no, we don't. thanks for that, carolin.

meanwhile, shares in ab inbev are lower. one disappointment in earnings today. this as the world's biggest brewer announced numbers below expect actions. the beermaker says volumes are down by over 4%. but that figure doubles to 8.2% when you take into account the latin american company. this is due to karnval, poor weather and foot food inflation. the belgium based firm has a grip on half the market, of course, with budweiser. and uk cigarettemaker imperial tobacco has blamed the downturn in europe for its profits. it says it expects full year earnings to be at the lower end of its target range. the company's ceo says the important of europe on the business. >> we do say it continues to be tough for at least another year, 18 months, i would say.

for us, i think it's around how we position our portfolio with fine cut again. it is important in this environment. we're continuing to let the government, to get them to do the sensible things in this government and not to push too hard, also not to do irrational regulation around things like packs and those sort of regulations which help cancer figures rather than deter them. we don't see people smoking less at all. but actually, it's consumers making a choice around what they're smoking. >> okay. as we head into the break, just a recap of the headlines today. european bank give stock markets in europe something of a boost. bp shares rallying. the oil giant has seen third quarter profits up more than three fold which outpace its forecast. but ab inbev has left investors with a bit of a sour taste after earnings falling short.

the brewing giant cutting its outlook for the quarter. could investors put the brakes on high frequency trading? who wants a kill is switch? find out why when we come back. , where cutting taxes for families and businesses is our business. we've reduced taxes and lowered costs to save businesses more than two billion dollars to grow jobs, cut middle class income taxes to the lowest rate in sixty years, and we're creating tax free zones for business startups. the new new york is working creating tens of thousands of new businesses, and we're just getting started. to grow or start your business visit thenewny.com ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves.

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ahead of the bell today, u.s. markets are implied down a point, but it did close another record high yesterday. the dow implied down 1.7 points. the nasdaq implied flat, as well, up at 12 1/2 year highs. at the same time, nyc net has reported first net income at $126 million. the focus of regulators is turning elsewhere. high froektsy trade sg attracting more attention amid claims that it fuels more market volatility leaving some to call for tighter controls. james, thanks for joining us. are the machines in charge? >> they have been for quite some

time. our markets look a whole lot better than they've ever done before. >> explain that. how are you working that out? >> well, if you look at things like transaction costs, they've evaporated. by the that additional measures, we're doing okay. however, we definitely have glitches when machines break down, so we definitely need to be worried about the stability of our markets. >> undoubtedly, we've got more volatility. how much of that is attributed to high frequently trading? >> very little. most of the volatility is driven by macroeconomic factors. but if you look at things like the vix index, it was very high during the financial meltdown, as it should have been when things were melting down. now it's down at much more normal levels.

so we're not really seeing the accuracy in volatility, but what we are worried about is the big glitch. is there a possibility that when the next tsunami and market data hits the market, the machines will break inspect and history tells us that they will. >> yeah. we had the cboe above last thursday in that trading outage. the problem is that the computers react differently to human beings. >> that's right. and to paraphrase the old bumper sticker, i.t. happens. so we need containment to make sure that when the machines fail, that they don't damage the economy. >> okay. what would you -- >> we've been working and putting those containments in place. >> what would you recommend? >> we need to refine what we've already done. so, for example, we've put in circuit breakers of various types. right now, they're still in testing, they're still fairly

crude, and we don't really know how they're going to react when the next big stress hits. we got a little taste of that during a hash crash last week when, you know, a hacker put out a fake teet. but what's going to happen when some real news event hits and we don't really know? >> one of the things that's been vexing people here is things have gotten worse since the stock exchange listed and became not for profit organizations. they're interested in boosting a volume. let's listen to the answer to this from the owner of the stock exchange. >> we're doing bigger in terms of service to the traders who noou need high speed. at the end of the year, we also opened several locations in the

stock exchange. so we always welcome people who trade in different ways. >> he's talking about we need to boost our speed. but it's a problem. it's a conflict his exchange for their profits are looking to generate higher volumes. is that in conflict with some safety aspects? >> well, it can be if they cut corners to boost speed. one of the easiest ways to speed up a system is to take out redundancy checkes and safety checks. however, the exchanges have a very strong incentive to make sure their machines don't fail and to make sure their machines work properly. if you think about problems like the facebook ipo or capital group, all of these participants understand that if their systems break, they can be out of business in a moment. >> and is that -- at the end of

the day, james, is that actually -- everybody knows if they can get out of business, they will make sure that the safety measure res in place. >> that's right. james, good to speak with you this morning from philadelphia. james angel from georgetown university. as i said earlier, the ceo blaming last thursday's trading issue on a software bug. the issue cropped up when it was preparing for a trading day with futures contract. the market open approached, it became clear that the software issue hadn't been resolved.

they ended up delaying the open as a result for half a day. we'll take a short break. still to come on the show, the federal reserve kicks off its two-day policy meeting. we'll ask what the era of money is here to stay. we'll also ask, who might replace the fed chairman next year when he sits down? and how will history judge ben bernanke? join the conversation here on "worldwide exchange." e-mail us, worldwide@cnbc.com, tweet@cnbcwex.

financial stock hes are higher in europe. ubs's first quarter numbers beating on all fronts. >> investor sentiment is still very fragile. if we look at the cash balances of our clients are the same, i would stay cautious about the fact that many of the issues out there are still unresolved. and first quarter profits nearly $1 billion higher than

forecast for bp. new high margin production as well as strong trading profit is credited. the fed begins its two-day meeting today. it's widely expected to stand pat on its low rates and easing money policy. and spanish gdp declines half a percent in the first quarter. it has been in contraction now for seven consecutive quarters. 23 you're just joining us, welcome to the trading day. we're basically pretty flat on the start. the ftse cnbc global 300 upuniversity 0.1%. ubs has declined from their first initial gains. banks coming in with better than expected numbers and bp.

ftse 100 fairly flat today. it was up around 31 points at the close yesterday. xetra dax up 0.75%. we're flat for the ibex. we've got seven consecutive quarters of contraction in spain. but it was as expected that 0.5% decline. the economy now 7% smaller than it was in 2008. and a quick look at the yields, as well, in spain and italy. we should just move those on very quickly. we're now down at fresh lows, lower than the lows we hit lak last week. we hit the italian yields around 0.8%. saying that he wants to take on austerity it's killing his country. rest asheers, they have gone lower. how are you supposed to make money in these markets?

here is a recap of what some analysts have told us. >> february was down towards the levels. i think the consumers in the uk have talked down the pound and that exacerbated inflation over the next 18 months. and i think recently policymakers have realized that a weak pound would not help the economy. >> the banks got steading earnings, a good focus in emerging markets. it doesn't matter for the time being. there's still the growth regions. i think if you want a global, well capitalized bank, hedge.

>> just in case the ecb doesn't cut rates on thursday, regardless of that result, the markets will cut back. that's a buying opportunity. if they do, all well and good. you've managed your work. and it's generally going higher. >> all right. as i said, banks very much helping european stocks. deutsche bank up 7.3%. ubs up to 5.7%. lloyd's up 4.4%. they've beaten expectations of those banks on all their earnings. deutsche in particular raising more money than we thought. ubs getting inflows as we heard from carolin, as well, into wealth management suggesting confidence is back at ubs as a wealth manager.

this as the u.s. economy continues to remain low. margins continue to taper off their bond buying program if the job market and economy kept improving. that was the weaker than expected jobs report. now many economists believe the fed will maintain its easing policies through to the enof the year. greg is joining us, u.s. economic editor at "the economist." what do you think? are we going to be 85 billion every month until december? >> yn about through december, but certainly through for the next few months. a few weeks ago, a lot of people had expected a few signals at this meeting that folks at the fed were start to go look towards that time when they would begin to ease back from that 85 billion dollar a month

pace. the numbers have been awfully mushy lately. that kicked off a whole series of bad prints for march. i'm going to be very interested to see what that adp report will be on friday. between now .then, the fed has to make a decision. steady as she goes. >> the last three years, is this a seasonal factor or is there something else going on? >> you know, i almost kind of wish it was seasonal, you know? because then i would be able to say it's fine, just weights wait a little longer and it will get better. a lot of people looks into this closely and they say even if you take away the fact that there were seasonal influences, you

still get a weird pattern of strong winters and weak springtimes. i'm afraid the truth is we have an underlying economy that's growing out around 2% a year. if you look at the pattern of growth, march was a mushy month. nothing in this data to suggest we're going to spring back and do anything more like a vigorous recovery. >> so the discussion over the next two days, what do you think the minutes are going to tell us what happened about these two days of discussions? >> i'm certainly looking forward to those talks. i think it caught them off guard because people like janet yellen, eric rosengrend, dovish,

that you would have expected looes least likely to be talking about pulling back, they had been talking about tapering off. everybody went silent in the last few weeks and they made their rhetoric a bit more neutral. we'll see signs of that in the minutes a few weeks from now. i suspect a hawkish and semi hawkish contingent turning up the volume saying, look, we need to taper off. this balance sheet is getting very big. and some of the dovish people say, no, not yet. we have to hang on a while longer to see if this turns out to be something more pronounced than just a march or april hiccup. >> okay. greg, stay there. we'll come back to you in just a second. we expect swelling over who might be leading the central bank this time next year. ben bernanke's second term as chairman ends in january. looking like he won't be back for a third time. kayla touchy joins us for more on this. kayla, how is the betting topping up right now?

>> ben bernanke said he may be dropping plans that he's expecting to step away. earlier this bhob it was announced ben bernanke wouldn't be attending the annual symposium in august. bernanke telegraphed the move to easing. the fed will only say that bernanke has a personal conflict. during the press conference after last month's meeting, he spoke on president obama, but wouldn't be specific on whether he wants to stay at the fed saying, i don't think i'm the only person in the world who can manage the exit from qvc. most experts say janet yellen is the most likely successor. the former president joined the

bank in 1994. she's seen as the dovish wing along with person unanimousky. yellen has helped push the effort to make the fed communication more transparent. the film critics say she might be too willing to let inflation rise while focusing more on the other part of the dual man dale date employment. tim geithner, of course, who is not expected to take the job, he's said to be more keen. among former fed officials, allen blinder and roger ferguson has come up. two current policymakers may be in the running, dudley and jeremy stein. that's what we're seeing as far as the playing field right now. serm going to be an interesting situation. >> yeah. and we start talking about it now and we're not even in may yet. so we have a whole at least half a year, haven't we? to go through that play book. >> it's true, but when the fed

goes ahead and tells you that bernanke won't be at jackson hole, which is a seminole meeting for the federal reserve, of course the parlor game starts going. >> yeah. okay. kayla, thanks for that. let's bring back greg. what's your view? who would you like to see? i think you have a federal reserve right now where the process and the format are so systemized, you do not have the flexible for a new chairman to turn things around 180 degrees as soon as she takes over. let's look at the economic outlook. what if they put a dovish chairman in there who is going to take her time about tightening if there's an

inflation problem? yesterday we got the month of march using the pce index. it came in at 1.1%. which is the lowest in years. what that tep tells you is that even if you're a hawkish chairman, you would still not see any good reason in those inflation numbers to tighten. you might start to worry that the threat of deflation is arising again. it's hard to imagine a different procedure ben bernanke is assuming now. assuming ben bernanke is not there for a third term, maybe the economic outlook looks different and the choice will make a difference to the policy that's pursued. but where we sit right now, i don't see it. >> greg, all of which, does that help explain the s&p up to rord highs, the fact that the at the time fed is going to keep the taps open or is it at record highs when the economy isn't performing as we think it

should? >> those are my two choices, bizarre, not bizarre? i think i find it a bit strange. i know a lot of people say it's the fed feeding them this monetary medicine. you know, after three years of this very aggressive policy and we still have an economy growing to sluggishly, i don't know what the rationale is for thinking that we should just keep driving this higher because the fed has opened. there's a part of me that hopes that the market sees something that we don't, that it has through its process it's filtering what the company is saying seeing signs that the soft ps we've seen is temporary. the companies that are reporting are beating margins at least on the profit side, but i'm worried that they're not doing it on the revenue side. when you look at this market and i look at the fundamental drivers, i worry that it's

getting ahead of itself. >> commodities have come up a long way. why would you buy government bonds? the investment market is -- it could be what else do you get? >> smure. and appear 8 is yielding 3% which is a lot more than you're getting out of ten-year treasury bonds in the iunited states. so maybe the s&p 500 is the conservative investment choice for somebody who just wants income. >> if a fair enough. so has the u.s. finally put its house in order? we'll get details after the first debt repayment. we have a debt repayment for the first time in five years. more after this. we went out and asked people a simple question:

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european banks give stock markets a boost. the euro giant sees first quarter profits rise more than three-fold outpacing forecasts. and investors expect the federal reserve to stay the course on qe as the central bank kicks off its two-day policy meeting.

all right. let's take a look at some of the other stories today. the u.s. treasury expects to pay down a small portion of the national debt this quarter. it's the first time that's happened in six years. the treasury sites higher revenues, which have likely come from income tax receipts, higher payroll taxes and low government spending. once it's assigned the are improving, the debt reduction is only temporary. the treasury expects to buy more than 200 billion in the fist quarter and the budget deficit will likely hit $845 billion this year. first quarter profits are up 10% which beat forecasts. the maker of nutritional supplements as a result is raising its full year outlook. but the company's are below estimates. hedge fund manager bill ackman has alleged the company is running a pyramid scheme.

er herbalife is flat. in a letter to the scc, the wireless network is compelling. sprint says it's on track to close its 20.1 deal by july. it's considering the 25 billion bid from dish. softbank's ceo came out earlier this morning and he slammed dish for not doing proper due diligence and saying their offer is incomplete and illusionary. the softbank stock is up 1%. dish network up around about 1%. fuses and merck report first quarter figures. we'll preview what to expect from those pharma giants.

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let's just redo some comments out from italy. the prime minister says you cannot be only a monetary union in european meetings. he's going to introduce himself. the situation is very difficult. this is about the comments this morning saying that austerity is killing them. and this is now this idea ta maybe italy is one country with this new government. they went to the polls and rejected the status that maybe they'll try to renegotiate what's going with the eu in terms of austerity. so pulling out and taking a look at europe this morning in italy, they have continued to fall. we're now below the 3.89% we hit last week. we hit 3.88%. we've got the boards. there we go. we'll show you on the wall, 3.887% is where we currently stand at the moment.

and that is dragging spain down, as well. if italy can get any persuasive discussions about easing off on austerity policies, it will benefit spain to a large degree, too. now, european markets have turned a little bit more negative. it is worth putting out this morning that spanish gdp was up 0.5% -- i'm sorry, contracted a expected. the seventh straight consecutive quarters of decline. spanish economy now 7% smaller than it was. at the same time, we saw eurozone unemployment the pick up to record high 12.1% since records began in 1995 and we saw april inflation for the euro zone down to 1.2%. it was 1 is.7% in march with expectations of 1.6%. so now there's a real expectation perhaps the ecb -- certainly the ecb has more than enough cover to cut rates if it wants on thursday or perhaps to

launch something for small businesses, something an ecb version of what we've got in the uk, funding for lenning schemes. so our expectations are that we will get one or the other. not many people think we will get both. but they're covered for the ecb to take some kind of action on thursday. and how is that all playing into u.s. futures? we were called flat earlier on. and we are just below. four points lower on the dow. the nasdaq is implied 0.75% lower. we're up at record highs on the s&p. once again, a record high close. nasdaq up at 12 1/2 year highs and i don't think we've had a three-day down session now for the dow this year which i think is the first time that's ever happened. we've got that period without three consecutive down days. other things to look out for stateside today, first quarter employment cost index is out at 8:30 eastern. it's forecast to rise 0.5%. and at 9:00 a.m., we get the

monthly case-shiller home price index. prices are expected to have risen 9% in february. at 10:00, the april pmi is out as is april consumer confidence. numbers out later include reports from pfizer, aetna, adm and dreamwork animation. net income of $2.2 billion beat estimates. the german bank announced a surprise cash call. it's going to raise 3.7 billion from the sale of shares. the capital raising exercise comes amid pressure from deutsche to bolster its balance sheet. at the same time, ubs's business model is working. that's the message from the ceo today to cnbc following a surprisingly strong first quarter. net profit came in at just over a billion dollars.

u.p.s. has shifted to its more traditional wealth arm and that's paid off with a rise in fees from wealthy clients. bp reported a better than expected first quarter profits, excludeing a gain from the tnk/bp sale were bp's profits fell around 9% over last year. but that figure still beat the dow jones forecast. the british oil giant declared a quarterly dividend of 9 cents. that's up from 8 cents a share. and the stock up 3.65%. one analyst called those numbers stunning. shares in ab inbev are lower, cutting its growth outlook for the second biggest market brazil. that's a wrap of the earnings. plenty more to come on cnbc.

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good morning. stock levels never seen before. today's test, more earnings hasn't hurt so far, has it? but we'll get some economic data .talk about the fed. it's temperatures, april 30th. yeah, that's it for april, 2013 and "squawk box" is begins right now.

good morning, everybody. i'm becky quick along with joe kernen and andrew ross sorkin. stocks are rallying to records. the major average is closing higher in six of the last seven sessions. the s&p finishing yesterday at a record high and the nasdaq ended the day at its best close in 12 1/2 years. as for the dow, it has yet to have a three-day losing streak in 2013. that's kind of unbelievable. it's the first time in history that the index has gone so far into the year without those things. today, the blue chip index will shoot for its 16th straight tuesday gain. wow, 16 in a row. the two biggest gains this month have both happened to have come on tuesdays and the dow rising more than 1% on each of the last two tuesdays. by the way, the market has recovered all of the ground that it lost during the previous two weeks. u.s. equity futures this morning on top of all this are indicated just barely lower. dow futures down by less than five points. s&p futures down by 1.25 points. th