all right. you are now watching "worldwide exchange." i'm ross westgate. >> and i'm kelly evans. >> we have lots of ways to interpret this. of course, there's always some kind of a discussion about this, but there is no specific plan in that direction. >> it's payroll friday. u.s. job growth likely picked up

a bit in april, but not enough to offset other weakening signs that the economy is still lagging. and don't get used to this. the ecb cuts rates by 25 basis points. >> and bnp paribas seeing its first quarter earnings drop, but the ceo said he's satisfied with the numbers given the environment. >> in that context, those are the results. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> welcome to the final day of the trading week.

the ecb is a rather quiet affair. there's a lot of swinging arp on the whole deposit rate discussion. interest rate cut. we've got more data coming out of the uk. >> there is a lot going on. >> europe, spain and italy. >> this is the interesting development of the morning. the spanish ten-year, is short end of the curve, as well. if you look at what is happening, it's compression across the board. you want it to steepen on the belief that it goes both ways. at the same time, it's a long-term rate and policymakers are targeting. in this weird environment, even taking the right signals. ecb board member nowotny

saying markets may have overinterpreted the cut in interest rates. also, malaysia heading to the polls for what could be the most contested general election in decades. a position hoping to end the national fund's dominance after 56 years in power. we'll be live for the latest at 10:20 cet. and we'll be out at mumbai. india's cut of interest rates for the third time this year. that's at 10:45 cett. >> and we will preview today's jobs report with julia and dan live from new york. tweet us your predictions @cnbcwex. #nailthenumber. >> louisa will be out. >> if you're from louisville, it's more louisville, kentucky. >> it's for the kentucky derby.

that's what you call it. >> what would you call it? >> derby. >> oh, oh, oh. the first leg in the triple crown series. >> yep. >> we'll go inside churchill downs to preview the legendary run of the roses. >> i think it's like 30 years or something. >> it was over-shadowed by the olympics. do you remember his name? it started with an "f" i think. we'll look it up. >> anyway, the euro is rebounding against the dollar this morning. mario draghi suggested the central bank cut deposit rates sending the euro/dollar lower. we were down 1.3072 this morning.

. other markets suggested the markets may have overreacted by saying additional measures would not be announced anytime soon. we saw the euro getting back up to 1.3143 on wednesday. jeff and julia are from bratislava where they've been speaking to those members. i'm wondering whether this suggests quite a bit of division on the governing council. what do you think? >> yeah, ross, i think that was very clear where there is division on the governing council. once we had the press conference yesterday in the meeting, then you start to get the leaks. some question as to whether one board member voted for no move at all and a number of board members may have voted for a 50 basis point cut rather than 25 basis points. but i just wanted to borrow your

horse racing analogy for a moment here, ross. because if the hope was that we got the lower euro on the broad announcement that we got yesterday alongside the 25 basis point cut, then i think what happened this morning is the horse pulled up lame. once we had mr. nowotny with us and we started to talk a little bit about whether there was really preparation being made for some cut in that deposit rate, the story changed somewhat, didn't it? the euro has been fascinating here. >> yesterday the markets were pricing in the possibility of seeing a rate cut. that's what draghi alluded to. mr. nowotny saying today it's not something that we consider in the immediate future, so the markets start to price out the down that it took yesterday. >> let's replay you that clip

because i think it's important to take note of how he tries to play down the market's growing expectation that there would be a move in the deposit rate. let's listen in. >> i think the markets interpret this point. of course, there's always some kind of technical discussion about this. there's no specific plan in that direction. this is something that one really has to analyze very carefully. what the effect, side effect, psychological effect. so this is not something in the immediate future. >> what would be the immediate effects, do you think, within the banking system if that were to happen? >> quite a lot, it would have an effect on the interbank's market.

also the psychological effect. this is something that has never been done before, major central banks. so i would say see this as something not happening in the immediate future. >> we saw that move in the opposite direction for euro/dollar here. the message is taking place. they have been considering the consequences of a negative rate for some time. let's listen. >> we have thought about that for some time already.

of course, we have negative deficit trade. it has been the line before. there was nothing different yesterday. >> so cause and effect, how cynical do we need to be about yesterday's press conference and what we thought would happen. >> he didn't elaborate on just how or when it would be used. he would have known the implications of talking about that. so i think the point he made to you earlier, the cost on interbank markets, etcetera, the risks of seeing a deposit rate cut are, you know, far greater. what i'd like to know is will we

exhaust that? what's the benchmark to improve the sector before we start looking at that? >> and let's just take this in the round. i think the governing council minutes are going to leave bratislava feeling pretty happy with themselves and the job that they've done here. we see sovereign yields continue to fall. we had a little bit of weakness in the euro. we've told the market the door is still open. we have not exhausted conventional. we still have the possibility of more nonconventional programs. >> absolutely. this is in the works. it's not something that's going to happen in the immediate future that they have suggested, but they're coordinating with other people to try and organize this. so job well done, i'd have to say. >> sounds like it. and that's what the commentaries are telling us. as far as most of the economists that we're reading at the moment and their interpretation of

what's gone on here in bratislava, ecb accommodative. back to you guys in london. >> there is another personal sis which is that the communication strategy is a bit in tatters this morning. great stuff. thanks very much. >> we want to know what impact that might have, would it be supportive, let's get out to stephane on this point. he's joining me from paris. we caught up with the ceo of bnp paribas. stephane, what did he have to say, if anything, about the potential impact of a cut in interest rates?

>> they're not very keen to comment what the ecb is doing, what the rate cut, the rel vantd decision today they welcomed rate cuts from the ecb, but declined to tell cnbc whether or not the central bank should consider nonconventional monetary policy. >> you're mentioning the ecb. but do you think that conventional monetary policy is still relevant in this context? >> to some extent they are relevant. they cannot keep an answer to all the situations. so this is one part. cannot be a full answer to the global situation of the economy.

>> no, i don't think this was a relevant way to move. >> that was the answer. no comment on unconventional policy. >> bnp reported a 45% decline in the first quarter net profit. the bank was first of all impacted by an unfavorable comparison basis last year. the earnings were affected. traditionally it's a big growth drivers and, of course, the cib activated from the deleveraging process. bnp paribas reduced significantly the size of its corporate and investment banking unit over the last two years and that's the reason why the

revenue from that division was 20% lower on the first quarter. kelly. >> stephane, thank you very much. great interview, as well. >> it was amazing saying no comment. >> i think they were kicking around whether they were going to have lending in this country. they don't introduce the scheme. we'll look at it, try and work. >> two very different things. funding for lending, if you want to give us cheaper borrowing rates, we'll go out and lend to the economy. totally different ball game. >> i guess be clear about what kind of unconventionals. >> about the credit side, not the rates. >> duncan, what's your take on all this? >> i think obviously a lot of conflicting views and opinions and confusion, as well.

obviously, they're all market -- a bumpy volatile. the regulatory climate is equally as bad, and the politics around it likewise will be in different directions. i think they're trying to get some consistency. speak to a lot of bankers at the moment. ceos. they find a very hard environment in which to transport their course forward in terms of what capital requirements are going to be forced upon them, interest rates they have to contend with. the implications of qe, classes that are involved, as well. likewise in terms of the economy, i think we expect the

contraction. i think from an investor's perspective, people find it a very tricky environment. if you turn back over the past month, april was one of those characteric months for the seconder. you have a week where the markets are particularly weak and trades very well. then you get two weeks where the news flow changes dramatically and there's a human amount of volatility. and it's a very demanding situation. >> if the ecb were to pursue this route because out feels the interest rates would spur activity across the eurozone. is that fundamentally a game changer from your point of view? >> yeah. and there's one inconsistent and that's what happens at the top line.

if you look at what happens last week, you see some very sharp declines. the key revenue for these banks, you're still going through a long period of deaf leveraging. we're talking about ways to stimulate demand for credit. but you can't always make it drink. trying to reduce the transition is ultimate, trying to get credit to the economies is the ultimate parity. the banks, of course, benefit. we've seen the numbers from spain last week. we're going to see some tough revenue numbers coming through as a consequence of this environment.

>> where does that leave them, duncan? uncertain regulatory environment, net income going down, you know, what -- is it just a long, slow grind? >> i think there is a genuine and two-speed factor. we see that on the traces that investors are making. it's derisk, capital and a position to start to reconsider distributions. and the earnings that they produced over the last week or so. the other banks in southern europe, the times when several banks will make a return equity of 2%, 3%, 4% is rocky.

by virtue of that, they're going to tread massive recounts for value. >> we just learned that intangible equity is in the range of something like 5% for 2013. can they ever get back to 10%? >> that's the big question. they were down to 12 and now down to 10 as the best case scenario. and i think it's a long hall for these big banks. but that is reflected in the discount in which these stocks still have. >> duncan, real quickly, as well, where we saw deutsche bank rally, do you think this is a

sign that elsewhere across the banking sector raising capital can actually help performance? >> yes, absolutely. that is the one key legacy for the deutsche bank and the last two or three years has seen capital. that was a fantastic decision by them. they will receive a massive transaction. and i'd reference you back to the u.s. last year where you have stocks that are constrai d constrained. the performance in stocks caught up. it's a rally compared ta what you're seeing in deutsche bank right now. >> all right. we'll leave it there. ross. >> thanks for that. meanwhile, we are now 20 minutes into the trading day here in europe. you can see we waited to the up side and down is he session lows. 6 to 4 outpacing decliners.

the ftse 100 flat. the xetra dax is flat, the ibex up a third, down around a tenth of a percent on the ftse. we are waiting for the employment report, as well. we will be talking about that in depth. and as far as euro/dollar is concerns, 1.4243 on wednesday. the uk economy in services and if that comes in again, better than expected daes you can see that pick up, as well. let's bring you up to speed with the asian session, the last one of the week. sixuan is with us in singapore.

>> the shanghai and shenzhen markets let gains bolster by further suggestions that more foreigners will be able to invest in china's stock markets. in hong kong, the hang seng paired back from early gains ending higher by a modest 0.1%. japan is out of action today. aussie markets closed flat direct to some utility place. south korea's kospi ended higher by 0.4%. india's sensex under pressure today because there is little room to ease further after cutting interest rates for the third time since january. take a look at chinese property plays. analysts expect the average q1 profit of mainland property developers to jump 32% from a year ago. although many are forecasting a slower growth for the rest of the year, mainland property majors rallied between one to

over 3% today. hong kong developer new world development also outperformed on the hang seng, ending higher by 3.3% after getting approval to send off and list its hotel assets. moving on to some other movers in the region, south korean automakers and telcos made strong gains after solid numbers in earnings. australia miners as you can see on the bottom row here, they're mostly traded to the upside. metals rebounded 2.4% after yesterday's sell-off. back to you. >> all right, sixuan, catch you a little later. still to come, malaysia's ruling commission has dominated the political landscape since the late 1950. does the weekend election bring change? we'll prepreview it after this.

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malaysians will be at the country's polling sectors. a close race is predicted as the ruling coalition tries to stave off a challenge from an war ibrahim.

we're joined now by adam. just how close is this race? >> to be honest, it's a very, very close race, in fact, one of the closest races in malaysian political history. bear in mind the ruling coleg had been in the driving seat with the administration for more than five decades. according to the latest opinion polls, the support has slipped down to about 49% and approval for the opposition up to about 43%. so we've got a swing of about 9% out there and it makes it very, very uncertain. the stakes in this particular election are particularly high for the incumbent party because of the last election in 2008 that lost its two-thirds majority in parliament.

why that is particularly important is because the ruling coalition has always had that ruling majority and with that has been able to change the constitution several time. they've lost that ability and as a result of that, the previous prime minister had to make way for the current prime minister. that means najib is going to be in this hot seat because the pressure is on for him to improve on that 2008 result and potentially the hope is from them that they're going to be able to recapture that two-thirds majority. this is in and among the swell of the rising opposition that's winning a lot of heart. the electrics out there are looking for -- across the board. by the way, he is also the political secretary of its 2011

the prime minister najib rasad. talk to us. you were once the political secretary to the prime minister. what do you think is going through his mind at this point in time and how critical is this general election to his political survival? >> it's very important in the sense that he retain the results as good as before in 2008. then probably there will be a push in his own party to try and topple him. for him, it's not only winning this election, delivering it for his administration, but winning above and beyond the results of last election.

>> how effective do you think the administration has been in dealing with these issues? >> i think they try with a lot of transformation problems. i think they do not yet see -- sometimes it's up close and personal in terms of crimes, in terms of rising fuel prices and so on. i think the gap is widening and that widening gap i think has a lot to do with the dissatisfaction. >> one of the things that could be at stake is malaysia is trying to transform its from a middle income economy to a high income economy. let's talk about the what ifs. if the ruling coalition lose power this general election and

the opposition come in, do you think that's going to be at risk? >> i think the priorities will be different. i think the priorities, for example, will be tackling waves and corruption and misuse and abuse of powers and so on. >> if you look at what people want in the urban areas, a lot of people are looking for change. in your opinion, are they ready for change? and would this change be a bumpy one for the southeastern malaysian nation? >> it would certainly be a bumpy one. i think this is a worldwide yearning for change. and although it did not hit

malaysia -- >> you make a very good point. this is something the politicians in malaysia are sort of dealing with. how big of a game changer is this for both sides? >> i think it's a huge mobilizati mobilization. i think this is the kind of economic conditions as prevailing in a lot of corrupt countries. so i don't think that will be an issue. >> it will be a very close one on sunday. ross, sunday, we'll get the election results out towards probably 11:00, 1 is 12:00 p.m.

asian time. in the meantime, markets are down in malaysia today. if you're wondering why they've been one of the biggest underperformers, suggesting that there's a lot of uncertainty on the grown, not just with the election, but also with the investment community. back to you in london. >> adam, good stuff. thank you for that. you can catch as adam says all the follow-up to that election on cnbc. services pmi in april, 52.9. it was forecast 52.4. the biggest rise in the orders since may. sterling is popping up a little bit on the back of that.

>> are people sending in their guesses? yeah. keep sending them in. and tell cnbc the notion of central banks will positive negative rates anytime soon, not happening. and he says the impact needs to be properly examined. >> the market didn't interpret this point. of course, there is always some kind of a technical discussion about it, but there is no specific plan in that direction. >> there are also unintended consequences which must be properly assessed. >> and it's payrolls friday. the u.s. jobs report expected to show a decent pace of growth, but not enough to shake concerns that the u.s. economy still doesn't have quite enough momentum. >> plus, don't get used to this. india's central bank cuts its

lending rates for the first time this year. it has warned it's running out of room to act further. >> rbs shares falling. corporate profit came in lower than expected. bnp paribas saw its first quarter earnings drop satisfied with the numbers given the environment. >> the situation for europe and capital markets. in that context we have saef results. >> shares are trading higher after the company resumed guidance for 2013. the company anticipates a 5% rise in sales for the year as car production stabilizes. wolfgang shaifer joins us now.

we know how hard the european car market is at the moment, as well. how is that market being felt by you? >> we had three working days left which impacted our tire sales and we had akwiefrd a long period of cold weather in the wintertime markets and 70% less people changed their tires at the end of the first quarter and this made the environment more difficult. so we think we are quite okay with the development which was overall minus 3% compared to the first quarter of 2012. >> how do you balance out what's going on in europe with the rest of the world?

>> of course, there is potentially and a good chaps for us to balance it. china is still on a growth path, 8el% to so% th10% was our expec. >> we have seen that, as well. so this balances out for some of the weakness which we see in europe and which we see for the rest of the year. >> is that market going to get worse, do you think, or stabilize? >> this is where we get the message from our customers. >> we expect some growth now after markets. normally people finally change their tires to new tires and

this should give the market some help as well in europe in the second half of the year. so what is happening now on your costs? what can you do with margins? >> we expect the raw material price less increase in the fourth quarter. on the pricing side, we manage continental to balance out the price reduction we had to give with mixed improvement. so selling tires, bigger tires, compensated the price reduction.

>> over all in the year, we had 10% car production. this is more interesting for us. we would expect the second half of the year still 5% to 6% down compared to the first half of the year. so meaning that 600,000 cars would be less produced in the second half of the year to the first half of the year. so we are not optimistic about the change in europe to the stronger car production during the year. >> wolfgang, thanks so much for joining us, the cfo of continental. india's central bank has cut interest rates for the third time this year. we'll look at india's economic slowdown. stay with us.

on the currency markets, euro/dollar, 1.3121. we were down at 1.3070 before the comments out from mr.

nowotny talking with jeff saying we're a long way from cutting deposit rates, essentially. and sterling/dollar, coming in again better than expected, and we hit 52.9% as opposed to 52.4. >> perhaps posting out the odds of a rate cut from new england. take a look at what is happening in the sovereign bond space. i love looking at these bubbles. 11.18% on the ten-year german bund. 3.98% for the spanish ten-year. the u.s. and u.s. are sitting roughly on top of each other, 1.64% and 1.634% respectively. but some of the levels we're taking out here for peripheral debt continue to be new lows at least prior to the expiration of the eurozone crisis. >> a lot later, absolutely flat for the uk, german and french markets. the ftse mib down 0.3%.

if you're going to trade and sell italian services, the extraordinary underperformance of italian stocks such pass outperformance of italian debt. >> bug back to january, yeah. >> posting its highest growth margin ever, adee dad jumped 550% in the fist quarter helping to offset a 2% drop in sales. glencore xstrata is moving higher in their first day of trading as a merged company. carolin roth joins us now from zurich. we're hearing more from the company saying they'll consider buybacks and a boost of shares. >> definitely. but what's boosting shares this morning is the fact that a couple of the analysts have

started the stock at a very favorable rating. jpmorgan starts at an overweight rating credit suisse starting with an outperform. take a look at where it's trading now, 337. credit suisse, interesting, he also sees the synergy potential substantially above management guidance. this is not yet priced in by the markets. now, the synergy potential is around $500 million. the target will be comfortably met, this is what it told us this morning. in that same presentation it says it would be reducing management concerns. he said that they're going to be big cards in terms of the middle management layer at xstrata. he simply doesn't see the need for these, sessively big units.

in terms of what the pointed out before, glencore says there will away normal dividend supplemented by special returns and they'll be looking at share buybacks. back over to you, kelly. >> carolin, thank you very much. this wall street interview is fascinating stuff. and i love this quote. people said are you going to pop champagne? this deal is finally over. he said i've never opened a glass of champagne on any acquisition. banksers do that. he also is indicating he knows there will be pleasure on him saying if commodity prices stay low, someone will say he got it wrong and saying effectively, this whole deal is a play on coal. so, anyway, i would encourage you to read the whole thing. >> what are they talking about? commodities are a lot different. >> completely different.

>> and we'll take a short break. india has cut interest ratsdz for a third time this year. is it going to make the company wake up a little more? we'll look at india's economic slowdown.

welcome back to the program this morning. india's central bank has eased rates by another quarter of a point as expected. it's warned there's little more than trimming ahead. hi, esta. >> hi. thanks for that. it was a big bang following what was expected today. it's pretty much flat on its face in terms of the market reaction. the good things, the markets lacked either gunning for a 50 basis points or a 25 basis cut which is accompanied by a possible cut of around 25 basis points and the trr or the ratio which would allow the transmission into this system which hasn't really happened since the start of 2013. but what the rbi did come out

with was just the 25 basis cut which brought it down to around 75 basis points in terms of total easing in 2013. maybe the rate of transmission wouldn't be that big for the consumer. the other is that the rbi stands extremely hawkish in terms of going forward. they might actually reverse the policy stance going forward. so that was a big indicator in terms of the hawkish stand that the rba came out with. with that, it's back to you.

>> and we're hearing from the central bank's chief saying there's no need to cut the interest rate as of now. on the back of that, let's speak to rahoul. what happens now with india's central bank? how much pressure is on them and what is it going to mean for an actual pick up in lending? >> well, the lending group has been pretty thorough, but at the same time deposit growth has remained quite heat. that's why the transmission of these monetary policy easing has not really been seen. i think the targets that the rbi has set for the upcoming fiscal year are actually quite conservative and they can be met. however, you need to see some sort of an improvement in the industrial sentiment which can drive lending growth in the next couple of months.

>> how tricky is that to balance right now? it has been indicated the rising growth remains its key priority. it wants to do that in a way that inflationary pressures remain benign. and we do think inflation does look pretty benign at this point and we are going to see inflation coming up further. so i think there is a little bit of room for further easing in the coming months. >> what would have to happen to the economy for them to go further? >> if you look at the growth indicators, they are mixed. government spending has come off. this is start to go rub off

inflation, core inflation is around 3.5%. i think given this mix of macro conditions, there is room for another 25 basis point cut in the next policy meeting. >> it's actually more about what happens with commodities here, then, as opposed to india's domestic development. >> well, i think commodities is something that still has an impact. just looking at the domestic sector, domestic demand has been contracting quite a bit. consumption has fallen to two and three-year lows in terms of the rates. so i think overall, the demand conditions are pointing to fairly benign pressures in the coming months which opens up room for monetary easing.

>> and looking for more cuts. thank you, sir, for your time today. on the agenda in asia over the weekend, aus mentioned, a historic election vote set for malaysia on sunday. monday, we'll get first quarter gdp figures after that country's central bank trimmed its forecast last month. over in taiwan, it's april cpi and first quarter werings from tablet and pcmaker asustek. morgan stanley is its new head of corporate investment. gayla has experienced taking companies public. speculation over this ipo, of course, has been going on for quite some time. >> yes. they're wording whether it should be fined. >> it is an interesting question. >> driving that social commerce. it will be kind of interesting.

meanwhile, the oracle of omaha has been tweeting. he's already amassed 200,000 followers. >> do you know what? i forgot. i haven't followed him yet. >> he's not following anyway. >> buffett joining social media he claims he doesn't have a computer in his office. presumably, he's got a smartphone that he could put it on. he has sent two tweets so far. you can find him. how did he manage? he's just joined twitter and@warrenbust was still free? >> i know. >> that's kind of interesting. you're not allowed to buy -- >> a transaction could happen between to people, i'm sure. >> setting up an exchange for

trading names. >> just an update, warren has 255,59 -- let me follow him -- 7 followers. >> that's another 50,000. >> amazing. >> we're going to have to update that every five minutes. >> now it's 631. >> meanwhile, berkshire hathway's meeting take place in omaha, nebraska. it remains unknown whether buffett will tweet the event. all three hours of "squawk box" on monday, becky will be with him, as well. >> and still ahead on this program, ecb's nowotny is playing down interest rates. the euro rallying this morning, but can't sustain its gains. we'll discuss when we come back. ♪ ♪

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welcome back to "worldwide exchange." if you're just tuning in, i'm kelly evans. and i'm ross westgate. here are your headlines today. >> the euro spiking after ecb member nowotny saying the ecb won't use negative interest rates anytime soon. >> the markets further interpret this. of course, there's always some kind of a technical discussion about this. but there is no specific plan in that direction.

>> technically, we are ready but there are also unintended consequences which must be properly assessed. >> and u.s. job growth picks up in april, but not enough to bring our signs. >> plus don't get used to it. india's centralback cuts 25 basis points, but warnings it's running out of room to act further. bnp paribas sees its numbers drop, but is ceo is very satisfied with its environment. >> in that context, we have the sector -- >> you're watching "worldwide exchange," bringing you business news from around the globe.

>> all right. we've got lots of forecast come out from the eu. this is what they're saying about italy at the moment. they're saying it's italian 2013 budget deficit, 2.9% of gdp. this is interesting of public debt rising, though, for italy to 132.2% of gdp. they see french gdp contracting 0.1 is%, as well. it's a matter of looking at what's going on with the french and italian economies. it's certainly in focus. current account surplus for italy's 2013 and '14. the public debt will rise and keeping our eyes on that, as well. euro/dollar meanwhile is up at a session high.

>> u.s. futures pointing lower this morning. the dow shedding at the open. this follows weaker gdp data but jobless claims were much better than expected yesterday. all of this ahead of the jobs report we're going to get out of the u.s. in a couple months time. cnbc ftse global 300 is barely higher this morning. it's a choppy session, but ended roughly flat. we're headed into a holiday weekend here in the uk. again, as i said, we're wait to go hear more about the pace of the u.s. labor market recovery when we come to that figure in a couple hours time. european markets meanwhile guy guesting earnings news. the ftse is higher this morning. the ftse mib is underperforming even though we've seen this massive compression in sovereign bond yields. the ibex 35 looking a little better. but on that note, let's flip over and take a look at what is happening across the debt markets. we're seeing some impressive markets. i'm sorry, here is forex first. forex, up about 0.4%. we've been following that one this morning.

the sterling/dollar, higher. i'm sick, this is my last day here on cnbc wex. i don't think i should have to stand up here and do the walls. charlie, you've had, what, a couple of decades of experience, do you think you can maybe handle it at this point if i hand it off to you? >> i'll do my best. >> let's see it. tell us what's happening. >> good morning, everybody. we clearly have something of a bearish reaction to yesterday's strong gains in corporate income markets. they're correcting somewhat, but that's really just a positional adjustment ahead of the payroll numbers. the difference here obviously is that we have italian and spanish bonds still rallying. the yield graph that you're seeing in response to the draghi put has effectively underwritten all of italian and spanish debt and you can expect probably a continued euro grab in these markets. particularly having seen the front end rally so much you can probably see longer maturity bonds for the five and the ten-year sector continue to perform from here. now, clearly, spain is doing a

little better at this point in time and i think that from here we need to think about what other markets are going to start to perform well. in this particular case, i think gilt in line this morning. do off some value at this point in time. the reason being is particularly on the back end of the curve, there's still a lot of value embedded and we could see this euro/grab move out of europe and into the coal market. >> he was not supposed to be that good at it, actually. charlie, you're not helping. >> charlie, just stay there and you can come join us. i'm happy. i can go now. i'm very happy about that. >> very well. thank you very much, charlie. >> charlie, come and join us on the show. that was really good, charlie. >> it was too good. >> it was too good. come on over here .is join us. >> we should have done this ages ago. if i only knew six or 12 months ago, i would never have to do

another wall again. and he's pulling up a chair. look at this. what a guy. what a guy. >> thank you, charlie. >> welcome, sir. >> i enjoyed that. >> you did? >> i did. it was fun. let's let sixuan finish it up and then we'll come back and have a proper chat. >> very impressive there. asian markets mostly in the green today, but india under a bit of pressure, down 0.5%. the rbi did cut interest rates as expected. there's little room for more easing. japan is set for constitution so it's china's turn to shine. the shanghai composite climbed nearly 1.4%. this follows a report that approval for qualified foreign institutional investors may resume soon.

in the auto space, byd jumped 3.6%. dongfang electric and shanghai electric also went for the race jumping 4% to 5.5%. macquarie jumped 10% after better-than-expected earnings. westpac failed to hold on to its gains and ended the day in the red. back to you guys. >> sish win, thank you for that. we're looking at euro/dollar gaining. remember on wednesday we were trading at 1.3243. we thent went sharmly below 1.30. you can see this morning, back up at 1.3132. this is after the ecb bond member suggested markets may have overreacted and overinterpreted what mr. draghi said. >> i think the markets further

interpret this point. of course, there's always some kind of a technical discussion about it, but there is no specific plan in that direction. i think this is something one has to analyze very carefully. so this is something of relevance in the immediate future. >> what would be the immediate effects, do you think? within the banking system if that were to happen? >> well, it would have effects on the interbank market. also seriously the psychological effect. this is something that has never been done before by a major central bank. so i would say one should not see this as something ttht

become realistic in the foreseeable future. >> so when he gave the answer to the question, and it was discussed in a press conference, the market shouldn't think that he was preparing the ground for a cut. that's an overinterpretation. >> that is clearly an overinterpretation. >> it's more about if it happens, we are prepared for that. >> yes. >> because we're thinking about what we would do -- >> i think a well functioning central bank has to be prepared for more or less everything and so it is, of course, among the many options that we have in our discussion. but this doesn't mean that this is something that will come into action. >> and it sounds to me from what you're saying that actually there was quite a bit of resistance on the governing council, so the very idea that you would do that. >> yes. and, of course, this is a very sensitive issue and it needs really much more information,

much more analysis than we have available at this moment. >> and given what you've said already about how you think this may effect the interbank market, could it then -- i mean, is it your assessment that it could have the per verse effect of drying up the flow of credit? >> yeah, sure. this is one of the typical outcomes. again, it has to be discussed and analyzed in a -- way, but at least my personal thoughts are that this perspective would be on the fly. >> let's pick up on this with charles now seated with us. here to opine about the ecb, as well? >> something like that. >> the jack-of-all-trades. >> the draghi miscommunique, are they just clarifying?

>> i think draghi is trying to play the game. if you remember, the omt has never been enacted and yet he talks about it as if it's done its job and it's been enacted and what a wonderful thing it was when nothing has actually happened. and i think one of the things that they're worried about is the euro getting too strong, the prospect of negative rates is a good way of undermining. >> i get that. why do these guys come out this morning and then going, ain't going to happen to spend a year higher. which strategy do we play? >> you are talking about slightly divergent opinions on the ecb council. that is that certain elements, perhaps the more core countries we would suggest -- >> well, this is we've heard from today. >> we're more inclined not to see the rates and there by having a higher currency on the purpose of an anti-inflationary bust. so i think what you're seeing is the slightly divergent opinion,

yes, within the council that some of them clearly need lower rates and draghi's number one purpose is to lower this fragmentation issue and, thereby help the peripherals. >> which would suggest today mario draghi, this morning you'll listen to those interviewes and be rather frustrated. >> i would have thought so, yes. that would be my take on that. i think he quite clearly -- well, clearly the eurozone doesn't need a strong euro. it needs a weaker euro. particularly for the peripheral countries. it doesn't make a difference whether it's 1.30 or 1.35, we're still very competitive. >> and germany can take a much higher euro, but ultimately, it's almost better if it's growth continues to underperform. >> but we have the recent softening of the data in

germany, as well, so maybe they want more insurance looking at the q2 data phase and everything else. but yeah, i mean, he didn't say it was unanimous if you remember yesterday. he said there was a clear consensus. >> yeah. >> what are they trying to do? they're trying to sit there and say we don't want to mess up the banking system. we don't want to have the potential issues that surround negative deposit rates, which makes sense. it's not something that they would do lightly. but i think draghi was trying to stick to his guns of whatever it takes. if we need negative deposit rates, that's what we'll do. >> we're not saying it's going to happen tomorrow. >> absolutely. and i don't think he does want it to happen. but i think he's trying to sit there and say, we rule nothing out, you know? the age old we never really commit. >> and they don't act in a vacuum, either. the u.s. jobs report is coming out today at 8:30 eastern.

forecasts calling for an increase of about 150,000, 148,000 i think on the dow jones forecast. that comes after the disappointing 88,000 in march. anyway, some economists are setting the bar lower. the range includes as low as 1211 -- 110,000 jobs. government payrolls are seen dipping 15,000. a lot of that coming from the u.s. postal service. fed expectations are expected to remain at 7.6%. charlie, what's interesting about this, if you want to know the direction of the job market, you have the adp report wednesday that looks weak and you have strong jobless claims numbers on thursday. >> last week was the survey week which were obviously higher. if you were based on that number yesterday, that's not a

particularly good guide. the overall employment measures were pretty mixed. there has been a bigger softening. there's a lot of variance. you do get downside surprise. what does it matter for trading today, do you think? >> i think you're going into a payrolls report with yields at very low levels. is your risk/reward is to be short particularly in the wake of what happened with the ecb yesterday and the general phase that we have seen. i think that is a short-term trade. i think you have seen

policymakers continue to underwrite. >> the fed did it themselves a couple days earlier, so they've already set in motion the reaction that we're likely to see today. >> and the positioning of the bond market is short, as well. people look at the levels of europe and say they're too low. buy into that. that doesn't mean they'll reverse now. >> and a reallily does not a trend necessarily make. you can have a 20 basis point backup without that doing anything to suggest the start of a major move. but people are looking at those trading ranges. >> i mean, on that, what's your own view of the pricing of u.s. equities? >> within this discussion. >> i mean, by any sort of standard measure, they're cheap still. you know, the dividend ratios and, you know, returns are all at cheap levels. so, you know, you can make an argument for them to go higher. if you look at the bigger macro

story, you go, well, that's invading the market. it's hard to get too carried away. i personally can't get away from this concept that most of the companies are doing buybacks. most of them are trying to give money back to investors rather than investing in development and growth. that, to me, is not a terribly -- that doesn't smack positivity. that smacks to me the short-term. >> long-term, questions remain. leave it there? >> yeah. good job, charlie, earlier. >> thank you very much. >> annoyingly good job. >> i was going to say. head of market strategy. >> next week, neither kelly or i will be here. charlie diebel will be here with "worldwide exchange," the new man on cnbc. >> let's give you a quick look at what's on the agenda next week, as well, besides the april jobs report today. investors will get the april ism services index and factory orders out at 10:00. in terms of numbers, adp, cboe,

duke energy, msg and moody's. after the close, berkshire hathway. go and follow buffett on twitter.

ecb boards member nowotny saying investors have

overinterpreted the moving euro rates. and rbs takes a hit after earnings. straight ahead of the program, the run for the triple crown begins this weekend in the states. the ladies, fancy hats and we head to churchill downs, the site of the kentucky derby. s kee on the right track. the power tools introduce themselves. all the bits and bulbs keep themselves stocked. and the doors even handle the checkout so we can work on that thing that's stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy.

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welcome back to the program. ollie rehn is delivering comments from brussels. he's saying the april euro inflation rate was unexpectedly large in terms of its decline. also drawing attention to the growing spread between loan rates for smes calling it worrisome and saying you can expect the 2013 eu fiscal consolidation efforts to be half that have of 2012. >> meanwhile, it's called the fastest two minutes in sports. the 139th running of the kentucky derby is this weekend. the first leg in the annual quest for horse racing's triple crown. it hasn't been won since 1978. brian shactman has been down to see the sights and the sounds of

the derby. right. clearly, we have the sight, but we don't have the sound. so i don't know that we can make recrew that. >> what a tough gig, by the way, having to go and cover the kentucky derby. can i raise my han for that next time around? do we think we have the sight as well as the sound? brian, try one more time. >> the derby is about big money. this place is called the mansion. all the food, drink and amenities you can imagine. six stories above the track, plus some a-list celebrities will be on hand. the cost to get in? anywhere from $7,000 to $12,000. now, if that's too rich for your blood, i want to point out a few things about the 139th run of this race. a female jockey has never won

it. 25-year-old rosy m innaprivk ha never won it. she has a great win. i have no idea how to pick the horses, guys, but i do know how to make this. sugar, mint, ice and bourbon. it's a mint julip. i'll have an extra one for you. it's a little strong. back to you guys. >> the event, good question. >> i don't think they have on-course betting. >> it's pretty difficult to figure out. it's completely different from being over here. the more and more you're seeing states open up to gambling, the more likely it's going to be a part -- >> they should do what we do, which is have sort of a government-run bookie and all of the investments get invested

back into raceracing. >> by the way, we were talking earlier about the race horse who had a great year in britain last year. it was frankel. >> watching him run was like watching you sing broadway. brian also has an interview with the ceo of churchill downs, robert evans. race coverage begins at 4:00 p.m. eastern tomorrow on nbc. >> yes. and straight ahead after adisappointing march jobs report, what's going to happen next? we'll put our question to the jobs panel. here is a look at how futures are trading ahead of the open on wall street. we'll be right back.

welcome back to "worldwide exchange." i'm kelly evans. and i'm ross westgate. here are your headlines today from around the world. >> the euro spiking after ecb board member nowotny pouring cold water on the notion that the ecb will look at negative interest rates anytime soon. >> the markets overinterpreted this point. of course, there's always some kind of a technical discussion about this. but there is no specific plan in

this direction. >> technically, they are also unintended consequences which must be properly assessed. >> u.s. jobs growth likely picked up from april. other signs in the economy are still lagging. and don't get used to it, india's central bank cuts its lending rate for the third time this year, but warns it's running out of room to fall further. >> bnp paribas with its first quarter earnings drop, but the ceo says he's pretty satisfied, given the environment. >> the situation in europe, in that context, we had -- >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe.

>> it's payroll friday. >> it is. >> i still get more excited about jobless claims on thursday, but it's just that it gets so revised and there's so much anticipation and i worry that it's overbrpgz. the u.s. jobs numbers are out at 8:30 eastern, likely not enough to jump start the economy. calling for 148,000 in nonfarm payrolls. the range is pretty wide, though. some economists are expected as few as 110,000. government payroll res seen dropping by about 15,000, a lot of that coming from the u.s. postal service. the unemployment rate is expected to remaybe at 7.6%. joining us for a preview day, btig, julia coronado, chief knowist at north america.

dan, first to you, what's your expectation? >> we're at 150,000. that was at one point below consensus. now it's above consensus. our main concern is how badly sequestration affected the payroll report in the month. there's a big variable, something new for us. and i think there's a real risk that the loss of the government sector could be much larger than expected. >> julia, is that where your attention is, as well? >> yeah. i mean, we're at 120,000 partly because we do expect to see sequestration in effect not just government hiring, but also private sector contractors. we've seen defense orders just plunge over the last couple of months. and so we're seeing those industry seeing some weaker job numbers, as well. so we're a little below consensus. the unemployment rate will pop up a bit. the economy just isn't that strong and so we're looking for a little bit of back up there.

>> and we want to pick up, too, on the difference between private sector and public sector job trends. julia, dan, stay there. we'll bring you some news out of the ecb. >> the u.s./sterling rebounding against the dollar this morning. initially, we howard mario draghi was open to additional stimulus. but then two ecb members speak to cnbc this morning suggested markets may have overreacted. we saw euro/dollar down to 70 around there with 1.43 on wednesday. those reactions and comments at seeing the euro/dollar back to 1.31 1.3123. geoff and julia are in bratislava. they've been speaking to mr. nowotny and mr. lukanin, as well. earlier it was suggested mr. draghi would be disappointed with the comments he heard in your interview and those comments from yesterday put a

spike in that. >> yeah, well, of course, central bank governors rarely say that their actions have anything to do with currency peps quite frankly, it's not their job. but i know the interpretation yesterday was that the governing council and mr. draghi were very happy to see the price action that unfolded after he basically gave the markets what they want. that 25-basis point cut in the key policy rate and also apparently the suggestion that there was some consideration about a negative deposit rate. so let's just dwell, julia, for a moment that price actions. quite remarkable how quickly the euro moved yesterday. >> i think when you look at what mario draghi said, i think you have to understand that he knows exactly how the markets were going to interpret what he said. he knows the sensitivity around this. but all he really did was suggest that there was a possibility there and yes, it is a possibility.

so i think perhaps the interpretation was that he's opened a door. and perhaps what we've heard today as the governing california member that you've spoken to, there don't seem to be any further falls. >> no. it's very interesting. the comments that we got from nowotny, effectively it appeared he clarified there is still a differencing of opinion on the public council, even though the public message is we are all on the same page on the decisions, we know there is disagreement as they talk about the announcement they're going to make. and it seems to me that when we spoke with nowotny from the austrian central bank this morning, he wanted to scale back some of the expectations the market was baking in. let's listen to what he had to say. >> i think the markets overinterpreted this point. of course, there's always some

kind of a technical discussion about this, but there is no specific plan in that direction. i certainly think this is something one really has to analyze very carefully. what was the effect, side effect, psychological effect. so this is not something that is in the immediate future. >> what would be the immediate effect, do you think, if that were to happen? >> well, it would happen, quite a lot would happen. it would have an effect in the interbank market. i've also taken another seriously the psychological effect. this is something that has never been done before by a major central bank. so i would say one should not see this as something that becomes realistic in the foreseeable future.

>> so there is no plan, says novotny. the plan or no plan is psychologically prepare the market. that point reconfirmed by likerman, the finish central bank governor who said, yes, we are talking about it and the consequences. let's play you the clip. >> we have that for some time already. of course, we have assessed these negative deficit trade. they are also unintended consequences, which must be properly assessed before any actions are taken. there was a line before. there was nothing different yesterday. >> so we leave britislava with more awareness of the policy. the door is effectively open

here. but as far as that issue of negative rates on the deposit rate is concerned, a work in progress and the market will have to make its own judgments here. kelly, ross, let us send it back to you from bratislava. >> all right. that's a wrap. thanks very much, julia and geoff there for us. let's take a look at markets and see how they're balancing what's happening with the can he cb ahead of the jobs report today. u.s. futures point a little lower. we're about to shed about 18 points at the open. nasdaq and s&p pointed a little bit of a lower start i should say. we had an ugly day yesterday. urman equity markets, up slightly except the ftse mib down slightly. >> u.s. markets did manage to beat the streets with suggested

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"the wall street journal" and the new york fed says ceo jamie dimon, the board and some

members of the operating committee didn't trust management. they presented a report card giving the board 30 days to make changes. and the "new york times" reports the federal energy commission manipulated prices in electricity markets in california and michigan resulting in overpayment. it's unclear if they will take action against the company. looking for the reaction in jpmorgan shares, down about 0.9%. to underperforming the xetra dax this morning. aig's first quarter profit fell 35%, so results easily beating forecasts. the insurance property cash busies more premiums at higher prices. and suffers ceo losses. the ceo said the number showed strength across the board. our apologies. there's no audio there.

wa he was saying is next issue a dividend and look at potential stock buybacks. aig up 2% in after hours. and profits soared as the professional networking site launched several new options to keep people signed in longer. linkedin warned its advertising business has seen more growth that its other shares of businesses. >> now, the population of omaha, nebraska, will swell this weekend because some 30,000 people are expected to fill the convention center to hear from war b buffett. kayla touchy joins us with more from cnbc headquarters where kayla we've been watching warren. he's picking up in the ranges of dozens of followers on twitter here. >> yeah. i would say probably thousands, kelly. and i would call the population

a seasonal adjustment. a difference is made in the last year ahead of berkshire hathaway. recent acquisitions and staff buybacks should brighten the move this year. berkshire shares are on the rebound. a shares are up 32% in the last year even as the company's book value underperformed the blue chips in 2012. investors will be in several overflow rooms on saturday to hear the 82-year-old buffett and his 89-year-old vice chairman answer questions for more than six hours. when asked what plans they have, berkshire had $47 billion on hand last year. berkshire bought heinz for $23

million. just this week they bought iscar. buffett is also just joined the digital area, signing up for twitter on thursday. @warrenbu @warrenbuffett. his first official tweet, he wrote, warren is in the house. and by mid day yesterday, kelly, he had more than 119,000 followers. they retweeted that first message more than 20,000 times. becky quick is in omaha for the meeting and she'll have live coverage today on "squawk box." warren buffett will be on squawk for all three hours on monday. must-see tv. >> and you can't miss those twitter gems, as well, like warren is in the house. it looks as though he's at the about 3,5,000 followers in the

last hour or so. >> we actually asked twitter yesterday if this is the fastest twitter takeup that they had seen. they said no, charlie sheen during his downward spiral a couple years ago was the single fastest twitter follower. >> that's when charlie sheen launched, right? okay. kayla, thanks for that. >> thanks, kayla. if you're just joining us on the program, these are your headlines. investors counting down to u.s. farm jobs report amid sign tess recovery is still lagging. >> and the markets have overinterpreted the possibility of negative interest rates. the comments have shifted the euro higher after the sell-off. and better than expected results from french lend er ee

pa paribas. >> and our very own kelly evans is saying good-bye to "worldwide exchange" today. you don't want to miss this. >> yes, you do. >> when we come back. [ driver ] today, my ambulance knew all about a bike accident, just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never be.

pick up in job growth. but not on the nonfarm payrolls sector. julia, you said you actually expected the unemployment rate to rise here. the decline has been impressive, but you're saying it can't sustain at this point. >> right the. and in the last couple of months, it's been driven by a decline in labor force participation. and that's just something that we tend to see some volatility. and when we see participation rates drop that far that fast,

typically we get a rebound. and it's a powerful influence on the up employment rate. so if we see people coming back into the labor force, that should put some upward pressure on the rates. >> if we could see unemployment rates higher, jobs report down by layoffs on the public side, is it obvious here that that is going to leave the federal reserve in play? >> absolutely. i mean, i think the federal reserve, the bar for them to taper their current pace of qe purchases is substantial improvement in the labor market outlook. right now, we're going in the wrong direction. it's not just in the labor market, it's a broad range of indicators that has just shown a lack of momentum.momentum has stalled out here going into q2 and that's certainly going to keep them on the cautious side. >> dan, so is it a bad news versus good news kind of day .vice versa. >> good news in the sense that it keeps the federal reserve involved. in a perfect world, the federal

reserve is not buying 85 billion worth of assets. that's of us that focus on equity investments are not more concerned than we were with earni earnings. as far as we're concerned, that's anything but good news. >> yeah, so look, the last three years, we've had a sort of spring swoon here. so is it -- how different is it this time? or not? >> it's not very different. it's happening again. >> yeah, dan, go ahead. >> listen, it's not very different this time. this economic data is not union he normally terrible, but neither is it uniformly awesome. but what i will say what is different this time is in asset returns. the last couple of years, the quarter has seen flat to negative equity returns. this year, despite the weakness in economic data and tangentily,

the weakness in reports, the stock prices in the united states have continued to drift higher. >> julia, briefly, why is that? >> well, that's qe at work. it's not just the federal reserve, now we have the bank of japan in the game .that is exactly wa it's designed to do is to smooth through these spring swoons and other eventes and keep investors taking ricks and keep companies taking advantage of those accommodative financial conditions and hopefully hiring and investing more than they otherwise would. this is why the fed put something in place. something else that is far more important today is it is kelly's last day in london on this desk. you're going back home to the states. but it did give me an interview to catch one kelly underscore

evans. ask ask her what a change since she had arrived and what are the things she got off the plane from the states compared to when she stepped back on. >> when i came over here, i was may 2012. the lobbed olympics were happening in august. when i came, a lot of people at the time were envious to some extent. they were like, oh, you're going toland, that sounds fantastic. but that's not the way americans traditionally would have thought. a lot of cynicism people had going into the olympics, they wound up changing their minds. >> i like the way you say we did a good job. >> i've acclimated. >> do you think it's changed since then? >> yes. so what's been really interesting to me is in just one short year how different attitudes seem. it felt like i came at the right time and i'm leaving at the

right time, unintentionally. >> i don't like how you say that. you've experienced some cultural changes, right? >> yes. pronunciati pronunciations. >> i've noticed that on air. >> i still can't understand half of what's being said. and walking on one side of the street versus the other, as well. i've finally gotten used to walking on the left to avoid collide, people. now i'm going to have to get used to walking on the right. >> that's the first time i've ever heard we walk on one side of the street. there's no side of the street on pavement. >> yes, there is. i'm a fast walker. i pay close attention to pedestrian patterns. in london, it's all on the left just like you drive on the left. >> one of the good things going back, you foomly get a decent on-air person to work with. >> you know how nerdy i am about some things. >> i've worked that out. >> it's economic indicators, that kind of thing. >> so that happen to come --

>> it's quite apparent? >> yeah. i'm going to miss you. >> i'm going to miss you very much. i mean, this is a big adventure and i made a lot of mistakes and you've smoothed a lot of them over for me. thank you for bearing with me and not just you, but the whole team because this is coming in the first day and having never seen a foot pedal or a teleprompter before, it did take some getting used to. >> we can cut there and put this woman on a plane because i can't stand her. >> i figured that was a nice chat. >> i'm going to miss you. thank you so much for bearing with me and thank you to the whole crew, to everyone, really. >> it's legion an absolute pleasure to have you. i spent hours collecting these. as you know, the producers do everything on the show. i haven't done anything. >> thank you, guys. thank you. that's so nice. thank you. >> so for the last time on this

day, tell who is coming up next. >> now it's time for "squawk box" in the u.s. have a great weekend, everyone. thank you for tuning in. ♪ [ male announcer ] this is a reason to look twice. this is a stunning work of technology. the 2013 lexus es and the first-ever es hybrid. this is the pursuit of perfection.

good morning. it's jobs friday. stocks rallied to record highs. today's report will be a key test to the economy. plus tens of thousands of warren buffett faithful are gathering in omaha for the annual berkshire hathaway meeting. it's often called wood stock for capitalists. it's friday, may 3rd, 2013 and "squawk box" begins right now. good morning, everybody.

i'm becky quick reporting live from omaha, nebraska, the site of this weekend's berkshire hathaway meeting. joe kernen and andrew ross sorkin are back in headquarters on the east coast. this is the central link center and right now it's empty and it's dark. but if you can get a grand scope for this area, right now we're sitting on stage. this is where warren buffett and charlie munger will be sitting on stage in front of 40,000 shareholders. this is a massive arena. this place will be packed to the primary tomorrow. it's the expectation. it's what's happened the last several years. this is a really big deal. i know this is officially starting tomorrow. but guys, i want to tept you, the hotel res already crowded. the airports are very crowded. the flight was full yesterday. there's the festivities that have begun every year. warren buffett goes on thursday night and plays bridge with his bridge club.