all right, you're now watching "worldwide exchange." the headlines today. france slips into recession, detracting 0.2% for the quarter. germany's economy picks up, but not as much as the cold weather bites. and $27 billion into the money markets with spikes in longtime jgb yields. the nikkei, though, rides the weaker yen to a fresh 5 1/2-year high. and commerce bank shares rally up 10%. the german fund's rescue fund rests a big part of its stake in the lender. plus, hsbc eyes up to 14,000 more job cuts, looks to save

another $3 billion a year as part of its cost-cutting drive. all right. very good morning to you. it's all about growth or the lack of it, as far as most of you are concerned. q-1 gdp in italy has slumped again. it's extended the recession out to the longest on record. we fell 0.5%, another figure that is weaker than expected. we're looking for 0.3% contraction. it follows 0.9% contraction the fourth quarter of last year, and it's now contracted 2.3% on an annual basis. as i say, the expectation was 0.3%, so that's another figure that's disappointed this morning. germany disappointed. it grew, but only 0.1%, all of which means when we put all the

numbers together for the eurozone composite number in an hour's time, that will be worse than expected. could look for a figure now of minus 0.3%, minus 0.4%, somewhere around there. the italian number is lower than expected. euro/dollar is the lowest in six weeks at 1.2807. we'll see whether we reverse the italian number once again. so, more weaker-than-expected growth out of the eurozone. we'll have more on this and those numbers with morgan stanley economist daniele antonucci in a few moments time. we have the german gdp number. they missed recession in the first quarter by 0.1%. that figure was below expectations. there was also a downward revision to the fourth-quarter number to minus 0.7% from the previous 0.6% negative number. we'll have reaction to those numbers as well from the ceo of deutsch post frank appel.

>> nobody expected very strong growth for the first quarter anyway, and you know, these are marginal changes to what has been forecasted. the rescission, that's what happens on a regular basis as well, and germany can't, you know, disconnect from the world either. the world is in particularly good shape and the growth is limited, and therefore it's not a surprise that germany didn't have strong growth either. meanwhile, france is back in recession, reporting a 0.2% negative number for first quarter of the year, follows a similar decline in the final months of 2012. stefan is in paris with more of that breakdown. stefan? >> yeah, ross, it's the first time in four years that the french economy's in recession, but let's face it, it's been on the verge of the recession for a year and a half at least, so it's more like a symbol, but in practical terms, it can't change anything on the ground. according to the national office of statistics, investment in france declined by 0.9% on the

quarter. exports contracted by 0.5%. and most importantly, consumer spending dropped for the first time in a year, minus 0.1% on the quarter. we know that consumer spending is usually the main driver for the french economy. the outlook, because this is important, is not really bright for france. the european commission believes that the gdp will shrink by 0.1% this year. the government is a little bit more optimistic but not that much with a 0.1% growth this year. there's not so much difference between the two forecasts. and of course, the unemployment rate in france is now at a record level with nearly 3.2 million people out of work at the end of march. so, this report is not very bright. >> yes, stefan, for some reason, there are certain news agencies that are saying this is a triple-dip recession for france. we're not quite sure why they would do that because we haven't had two other negative quarters of growth since the great recession of 2009, have we?

>> yeah, that's what i was saying, four years without recession in france. but if you look at the gdp over the previous quarters, we were minus 0.1%, plus 0.1%, so really, the country was on the verge of a recession. so, now it's official, but it won't really change anything on the ground, apart than it's going to increase the pressure on the french government. this morning the president of the european commission, jose manuel barroso called for france to present a credible program of structural reform, and this time it's going to be difficult for the government to avoid this pressure, because so far, if you remember, the french finance minister, pierre moscovici, rejected calls for an austerity program because it didn't want to drive the french economy into recession. now that it is in recession, there is no other option for the french government to implement some austerity measures some structural reforms, and perhaps it will also have -- this is even backed from the finance minister because you know france is working on the government

reshuffle, the president, and there are some ongoing speculations that the finance minister could be replaced. >> okay, stefan. for now, thank you. the bank of japan has thrown more than $27 billion into the money market in the response of the japanese government bond yields. ten-year jgb yields jumped more than 10% this week to the highest of the year, off of the gains in stock markets and falling yen, but the former deputy finance minister, also known as mr. yen, told cnbc he's not overly concerned about the moves in the jgb market. >> they have not been accustomed to this kind of aggressive move on the part of the bank of japan, and you know, it will eventually settle down. they get used to the new regime in the japanese monetary policy. >> sakakibara said he's not worried about the pace of the yen's decline and expects the

japanese currency to stabilize between 95 and 105 versus the dollar. meanwhile, the kind of day we've had for the japanese equity markets, sixuan is here to tell us more. >> asian markets higher following another record-breaking close on wall street. the out-performer, the nikkei 225 jumped over 2%, hitting a fresh multiyear high. the upbeat u.s. data helping the dollar trade $1.02 against the yen, stealing a rally in next quarter's stocks. and the standout winner here, sony. tempers sent after the u.s. hedge funds were sending off its entertainment arm. isuzu motor accelerated over 20% thanks to strong annual results, but sharp shares have dropped like a stone, down nearly 13% today after posting a record annual loss. but do note that the stock had gained over 17% over the past two sessions, so we could be seeing some profit-taking here.

and meanwhile, snapping the top spot as the biggest gainer on the hang seng, shares of the supply chain company jumped over 8% after its chairman said earnings would rebound to 2011 levels this year. u.p.s. also upgraded the stock from sell to neutral. the top loser in hong kong today was china coal. the stock lost over 5% today as the commodities sell-off continues. all the miners were under pressure as well on weaker iron ore prices and a cut in spending plans. the ex 200 pulled back from the five-year high as the australian government delayed its promise to return the country to a budget surplus, and that's all from me. back to you. >> all right, sixuan, thanks for that. catch you later. 6-3 advances outpace declines. the ftse up 54 points yesterday, the ninth straight day of gains, and we're a little bit firm again today. quite a large number of

companies' earnings and announcements for the uk market. we'll look at some of those as well. let's show you where we stand with those prices. there we have the ftse at the moment down seven points, the xetra dax down four. there are a number of individual stocks worth looking at. let's recap some of those. mediaset reported a 7.9% decline in q-1 profit on poor advertising sales in italy and income down from 10 million euros last year. nevertheless, the stock up 4%. and a 7% rise in full-year revenue. the company saying most of its sales growth driven by information services. easyjet stock also up 6.3%, roughly halving its losses in first half, helped by easter falling earlier than last year and strong bookings from customers wanting to escape the cold weather bout that we had as

well. just back here, lonmin down this morning. platinum producer workers are on strike in africa, looking to continue for a second day today. shares of h&m down 0.6%. the swedish fashion retailer reporting comparable sales growth of 1%. that's well below forecast for a 5.6% rise. and finally, we smoke about commerce bank, up 15%. they had been down on worries about a capital increase, surging today on the softened placement. let's check in on bond rates. we'll keep our eyes on guilds today. employment is coming out of the uk in 20 minutes and then the mervyn king's last quarter inflationary report should report inflation a little lower and maybe what she ayhe says abe tick-up in data.

spanish yields a little high. italian yields on the 4% mark as well. look at forex? euro/dollar 1.2906, just off the low. dollar/yen 1.0239. 4 1/2-year high today. and the aussie 0.9875, an 11-month low, pretty much, for the australian currency as well. still to come on today's program, india is rolling out the red carpet for multinational firms and global retailers. it's seeking to boost fdi. we'll hear from the government's commerce secretary in a first on cnbc interview. plus, new york's macy's gearing up to report earnings ahead of the open. we'll hear from one analyst who says the iconic department store is winning the retail war, particularly with e-commerce integrati integrati integration. german's allianz posted a profit

and we'll be joined by the ceo in 45 minutes. and the battle of tech titans heating up, google preparing to launch new products at its conference in san francisco today. we'll hear from a man who says google's android could soon overtake apple's ios in importance to developers. and if that's not all enough, sony shares rallying on speculation of spain-oa spinoff entertainment unit. more on the experts' view on that story, the stock up 10% in trading last night. don't forget, any comments or e-ma e-mail. ♪

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all right, let's just remind you where we stand with the euro/dollar. we've been down to 1.2897 a short while ago. we're just above that level at the moment. it was on the back of weaker gdp numbers out of germany. just to recap, german gdp up 0.1%. we were looking for 0.3%, and the italian numbers are coming in weaker than expected. joining us is darren from hsbc. the dlafollar is down to a six-k low at the moment on the back of that gdp number.

where's this leave us looking at the composite? >> still soft. we were expecting, if anybody's going to deliver, it might be germany. and as it is, they have underdelivered, so for the composite, we think the market is expected to be a negative, but the question is how negative is that eurozone gdp number? when we tip back to the glass half full, glass half empty, it's negative, but less negative than the fourth quarter of last year, suggesting things are getting less bad, but i'm not sure that's enough to help the euro this morning, to say it's already been on the defensive after those german numbers. >> so much focus at the moment on yield spreads driving cross rates. the interesting thing is whether we've hit the top of the range on spread between treasuries and bund yields. >> i find it to be premature, this sudden fascination with carry, if you like, because that's what we're essentially talking about, because the differentials are not that big. okay, there are some moves, we tried it in dollar/yen, but we're so far away from any of

the central banks doing anything remarkable in terms of the fed tightening, if you want to think of it in that context. how relevant is that carry situation? it's relative to the dollar because we're wondering about qe being removed maybe a little bit to euro because of negative interest rates, but broadly, i don't get as caught up in the two-year differential as others. >> but i'm thinking of particularly on euro/dollar, this idea that the fed will finish maybe the end of this year and the ecb may be going in the other direction. >> negative. >> yeah. >> it may be negative and that's what's playing and that's why levels like 1.2880 is what the market's looking at very short term as being the next test for euro/dollar. beyond that, 1.2750. the mood broadly is dollar bullishness. >> even though they're not substantial, they're very small moves, and actually, one could argue the euro's still strong, very strong, actually, considering everything. >> considering everything we've had so far this year, it's been remarkable, isn't it? still trading, i'd say broadly 1.30, but you know, i don't see we've had such big moves

elsewhere, and now increasingly in aussie. yeah, euro's been remarkably resilient, but still lower than it has been. >> let's focus in on the number we had 15 minutes ago, extending the longest run on record of a recession. gdp numbers show a 0.5% contraction for the first three months of the year, consensus for 0.3%, following a 0.9% contraction in the fourth quarter. the only good thing about this number is that 0.5% is less than 0.9%. >> well, the pace of economic recession is easing, but surely, that marks the longest period of economic contraction since records began in the early '80s. actually, the number is in line with our forecast, which was more pessimistic than the consensus. clearly, that is a poor reading. >> good for you for getting the right number. look, the thing is, at the

moment, as far as asset investors are concerned, these growth numbers don't appear to matter a huge amount. i mean, how long can we have that sort of disconnect? >> i think we have two dynamics at play. one is that there is the perception of a policy backstop. it is first and foremost the ecb actions, but also more broadly the european policies. and number two, because there is this policy backstop, there is a surge for yield, and so economics are investing in these cases would suggest they push away from possibly risk-free assets into riskier assets, and that might have supported italian bond market as an example. >> what is the greatest risk? from this longest recession on record for italy. >> for italy specifically, there are several risks. one risk is that the economic

fabric doesn't get strengthened because the reforms don't happen. and so, they invest more on a medium-term perspective worried about the income generation ability of this country. another one is that italy seems to have entered, for now, a somewhat lower phase when it comes to political volatility, but if the economy doesn't turn relatively quickly, that may make things all the more difficult also on the political front once again. >> mind you, one might also argue that the weaker the economy is, actually, the more support there might be for major structural reforms. people might say, okay, finally, we get it, we've got to do more. >> and that depends on the willingness to implement those reforms. the parliament still is fragmented. it is, of course, good news that italy has a new cabinet and there is a program that will have to be implemented over the next several months. i think there is an inherent

fragility in italian politics still, even though less than before. >> daniele, always good to talk to you. thanks for that. daniele antonucci, senior economist at morgan stanley. still to come, before the bank of england called the inflation report the last of mervyn king's governorship, we'll get a check on the british economy with the latest unemployment numbers. i want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪

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these are the headlines from around the globe. france is in recession, contracting 0.2% in the first quarter. germany's economy picks up a little bit but nowhere near as much as forecast. and italy's recession is now the longest on record. the bank of japan pours more than $27 billion into the money market, trying to ease a spike in long-term jgb yields. the nikkei continues to ride the weak yen, up at fresh 5 1/2-year highs. commerzbank shares up. the fund softened, a big part of its stake. and hsbc is eyeing up to 14,000 more job cuts as the lender looks to save up to another $3 billion, all part of its cost-cutting drive.

i was looking at dehren as we talked about the job cuts. you're safe, i'm sure. >> sure. absolutely. >> don't worry. you're here. you're here. nothing bad can happen. the ftse 100 down 0.2%. xetra dax is flat along with the cac 40 and ftse mib. as far as bond markets are concerned, italian yields just above that mark. ten-year gilt yields. we'll turn to the uk in ten minutes, latest employment report. and on the currency markets, that's what you're looking at. euro/dollar 1.2936. we just posted a one-week low based on the gdp data. sterling/dollar has been weaker over the last week down to 1.5240. it will get a steer from the unemployment data and mervyn

king's last quarterly inflation report, which is taking place in just over an hour. in corporate news, allianz has reported a 24% jump in first-quarter net profit, boosted by performance in its asset management unit and lower costs tied to insurance claims. the results were largely in line with a preliminary report released last week. europe's biggest primary insurer said total revenue jumped to mark the highest quarterly revenue on record. the stock up about 0.33%. later, we'll be joined by allianz ceo dieter wemmer, a first on cnbc interview, just after 11:00. also in germany, posting an unexpected second-quarter loss, the company suffered a net outflow of 650 million euros after booking a write-down on its steel americas business.

they had reported 25 million euros. for a year, they have attempted to sell off two steel plants in brazil and united states. the stock in frankfurt, though, is still up 4%. also in germany, rwe met forecasts for first-quarter figures. ebitda across the period just topped $3 billion. core profit was down slightly, hit by sluggish wholesale energy prices. rwe has maintained its outlook for if the full year and investors say that's okay, the stock up 0.5%. shares of h&m are lower. the retailer reporting sales growth of 1%, well below forecast. so far this year, h&m has struggled to keep up sales momentum with the retailer blaming unseasonably cold weather in its core european market. meanwhile, the fashion giant is speeding up expansion across emerging markets. and shares on the london exchange have followed upwards

following the full-year figures, reporting a 7% rise. most of the sales growth they say was driven by its information services division. earlier, we asked the ceo if this was now more important for the business than trading activity. >> as we called the low in the eurozone in january 2012, i'm pretty close to calling the low in terms of volume in equity markets. there's an economic recovery gathering steam in the united states. we've seen better-than-expected numbers here in the uk. i think asia is also pointing the way towards the recovery. you know, of course, we are in a fairly depressed environment in equity markets in terms of volume. this is not helped by self-inflicted wounds, as we've seen, for example, with the financial transaction tax project on the continent. >> xavier rolet calling the low in stock market volumes. and recovering from its 1.6 billion euro loss in fourth

quarter of last year, the world's oldest bank has been marred in scandal as the trades also posted a 100 million euro net loss, mainly to the write-downs of bad loans. the ceo says these results are sustainable. there we go. and monte dei paschi's stock down. and hsbc has found $4 billion in annualized savings, looking to cut another $2 billion to $3 billion after next year. that would translate into 14,000 more jobs as the bank's head count continues to fall. stewart gulliver talked about this. we'll see them switch out of unprofitable areas to growth markets. the stock up marginally. and looks like mervyn king will deliver good news in the final inflationary report. economists polled by reuters expect the central bank to

forecast that inflation will peak at 3% later this year, below the 3.2% predicted three months ago. most economists also expect the bank of england to bring forward the date when it expects inflation to return to its 2% target. that is due at 11:30 cet. but right now, more importantly, we're about to get the unemployment data out of the uk. average weekly earnings up 0.8% in the three months to march, pretty much as expected. the claimant count has fallen more than forecast. the claimant count in april, minus 7,300. it was forecast to fall minus 3,000. the rate, unemployment rate 4.5%, a dip down from 4.6% in march. the ilo unemployment 7.8%, the rate of unemployment there in january to march. the change on the quarter up

15,000. the total in employment, 29,708,000 in january to march. that's down 43,000 on the quarter. so, we have seen the total unemployment rate go in the opposite direction. it used to be the other way around. we had the claimant count getting worse and total unemployment levels getting better. sterling, nevertheless, responding to the count, up 1.5242. what do you think about that? >> not bad. not a big outlier on any of the numbers i have seen. the fact that the claimant count has dropped will be encouraging because last month we had a bit of a wobble. one of the strange things about the european economy is how resilient the labor market has been. in a way, it's saved the politics of plan "a" and plan "b" on the fiscal situation because we haven't had the big queues at the unemployment offices. so, there will be some relief and you see it in the spike in

sterling, some relief that the wobble last month hasn't extended. >> all right. we'll come back to you for more on this. shares of sony have jumped 12% after billion hedge fund investor dan loeb called for a spinoff of the entertainment business. concerns also that some traders may have had early warning of the news. there was a surge in auction bets just before loeb's announcement. richard windsor is with radio free mobile and joins us now. >> hi. >> richard, how much of a stir has this caused? >> i think it's caused quite a lot of a stir, because obviously this is a question people have been asking for many, many years. sony has been a conglomeration of assets, some good and some not so good, and argue, you could make a strong case for great shareholder value being realized by spinning off the not-so-valuable assets. >> yeah. i mean, is it going to have an impact in terms of -- do you think this is going to attract more investors in to sony over the course of the next year and

we'll see something happening at the agm in a year's time? >> well, to be honest with you, i think the kind of investor it's going to attract are more the vulture-type investors, not the proper investors. so the interesting thing, when you look at sony, there is an argument of spinning it off, which is value one, which people are talking about. there is also an argument to keep it together. if you look forward to where digital media, the internet, electronics is all going, it's all about ecosystem and keeping users on your devices, like tvs, mobile phones, et cetera, et cetera. and if you look at sony, sony's got the right spread of assets in order to make an ecosystem. the problem they've got so far has been really management strategy and management execution. >> just a quick one on blackberry as well. you know, we've got the new q-10 coming out, but they're now looking at the q-5 and rolling out sort of blackberry messenger

service. how much of a risk is that? >> well, i would actually categorize it as a fairly big roll of the dice for blackberry, because bbm is the one big draw that they have left, is you know, it's a very popular service, and today it's only been available on blackberry devices. now, by making bbm available on ios, on android, you take the sudden risk of, hang on a minute, i don't need to buy a blackberry device anymore, so maybe i won't. so, what could happen is they could see the number of users on bbm go up nicely, but actually, volumes of blackberry devices could theoretically collapse, and that would actually be a disaster for the company. >> yes, a big roll of the device. richard, dubai seems to be suiting you, so i hope everything's good for you over there. thank you very much for joining us. >> life is good for start-up. >> good, great. >> thank you very much. >> richard windsor, founder of radio-free mobile, longtime part of the "mirror" tech team. in japan, good news and bad

news for the major banks. in one way, they are busting fund sales but the drop in jgbs has hurt bond trading returns. now we have more on the nikkei from tokyo. >> hi, ross. japanese banks' bottom lines of fiscal 2012 were lifted by rallies in domestic stocks and hefty trading gains from jgbs, but profits are expected to come down to earth in the current fiscal year. for the year ended march, these financial groups saw net profit increase 16% to around $5.5 billion, leading projections of $4.9 billion. the mega bank enjoyed high sales commissions on mutual funds and smaller write-downs on share holdings. brokerage subsidiary meso securities also helped by swinging to a net profit from a year-earlier loss, but the bank expects net profit to fall nearly 11% in the year ahead as it earns less from japanese

government bond trading and rivals mitsubishi financial group are in the same boat as the boj's aggressive monetary policy's putting downward pressure on interest margins. smfg expects profit to fall in the coming year, down from $7.8 billion in fiscal 2012, so it's taking its toll. back to you, ross. >> thank you very much for that. more david marshall, senior analyst of asia-pacific financials at credit sites. david, good to see you. thanks again for joining us. we've got to put up a share price that will show bank share prices in relation to the nikkei. but basically, we've seen a big jump in both of them. here the question is, is actually the rise in bank share prices justified by the fundamentals? >> well, the answer is not yet. i think the share price rises have really been a question of hope for the future.

you know, the euphoria surrounding abenomics has benefited the bank because the expectation that japan's economy would recover, there would be stronger growth, nominal gdp growth, real gdp growth, that would lead to more loan demand and business for the banks in due course. if abenomics is successful, that may, in fact, happen over the medium to longer term, but as we are seeing -- and you know, your reporter pointed out -- that in the short term, abenomics is actually rather negative, you know, for the core earnings of the japanese bank, because you know, the boj's efforts to, you know, further lower japan's already low interest rates is going to further reduce the already rather thin interest margins that the japanese banks report. so, that's going to hold them back in the near term. i mean, there were some positives, as was mentioned. fee income is up quite strongly, which is good news. we're seeing loan growth for the first time for many years from the japanese banks, but it has to be said, it's not yet from the domestic business. i think that's still to come if the economy picks up, but we are

seeing overseas loans expanding quite rapidly, partly through real volume growth but also because of the currency effects. so, those are the positive factors that will be helpful this year, but as was mentioned, offset partly by narrowing interest margins on the economic business. and the really key issue is what happens to the jgbs. that's a big factor for the japanese banks. >> yeah, i mean, it is amazing. we just got a share price, nikkei up 6.9% and mizzou hue up. there's an awful lot of hope, as you say, baked in. just coming to this point in jgbs, what happens now with that? >> well, one of the big components of the japanese banks' income statements has been their huge bond portfolios they've had. for many years in a falling interest rate environment, they've been able to book billions of dollars of profits, you know, and that's supported their operating profits and net income every year. and that was still true in the

most recent financial year, more so for mitsubishi ufj, also mizuho. but if the jgb and the yields come down further, or so the bond prices go up in the current year, that would give him the potential for at least to book some more capital gains from those bond portfolios. and if that kind of interest rate scenario plays out. but recently, we've actually seen a spike or some increase in rates on jgb yields in japan, somewhat surprisingly, given that the bank of japan is in the market buying on a massive scale. and so, if this continues, you know, higher jgb yields will hit the value of their huge japanese government bond portfolios. so, from being a positive factor in the income statements, that could potentially turn into a negative factor. and so, it could actually hit the earnings to an even greater extent in the current year if, you know, this trend of high yields in the bond market continues. >> yeah, kind of interesting

stuff, david. just briefly, david, what's happening with the loan impairment side, asset quality of loans? >> yeah, that actually -- the loan impairment charge has been very low for the japanese banks. it is one of the things that supported their profitability. i mean, in the most recent year, you know, the returns were quite good. mitsubishi ufj is making like an 8% return on equities, mizuho also. it's helped by low impairment charges, but they are coming back up from the low levels, so that will be something of a headwind today. if i look at the numbers correctly, mizuho i think reported an increase in impaired loans, bad debts in japan, which is a little bit of a surprise given that we've seen pretty benign credit quality conditions, so the impairment charge is definitely something to keep an eye on. >> david marshall from credit sites, thank you. jgb yields, it's been a driver as well for the yen. so, look, dollar/yen up today. another 4 1/2-year high, 1.0246.

what's with top of the range? >> make up your own number in terms of top of the range. momentum is so strong in dollar/yen at the moment, but i think the jgb yield aspect of it is a wonderful law of unintended consequences. if you asked people where the yields were going, i anticipate they would say they would go lower and that is not what is happening. i don't know if it's the market -- >> what happened is the yields went higher with other bouts of qe elsewhere. i mean, it's not -- >> yeah in japan, does this mean we believe them? does this mean we believe they're going to get inflation higher and it's going to be a success story? because ultimately, if this is a successful project -- >> you mean for the yen -- >> yorks should be buying the yen. you have a strong economy, exports, consumption, all of those elements, but for now, all we've got is this kind of wall of money scenario in the market, so dollar/yen keeps going up. it's a little simplistic, but that's how it's playing. >> we'll get a final comment from you. meanwhile, india's finance minister says the eu trade pact now in the last lap of

discussions could set a positive tone for investment. in a first on cnbc interview, he also defended their progress in attracting foreign investment. he thinks improvements to infrastructure and faster approvals will make a difference, as evidence by a single brand retailer's now entering the country. i asked him how india was addressing foreign investor concerns. >> we have been sensitive to these concerns. and every possible effort has been made to simplification and rationalization of fdi regulations, also about the regulatory environment, faster approval mechanism. it's true that transaction costs are high because of infrastructure bottlenecks. infrastructure is a priority for the country, and we are investing a lot in building

world-class infrastructure in new airports, when you look at the new highways which are coming up. it will still take time. >> india has recently opened up its retail space to foreign investors, and recently, you've been into discussions with the ceo of tesco to clarify some of the decisions attached to the investment, but the big concern for foreigners in the indian market is about product continuity. what insurances can you give investors that policy will be cast in stone when you could see a state government in power today out of government tomorrow? >> very good question. first thing, single brand, there are no issues. there's neither any opposition. single brand, all the leading brands of the world have come in. ikea is the biggest by far that has been cleared. it is close to $2 billion u.s., a little less than that. and h&m is coming in. many of the brands from louis

vuittons, they all have come, za zara, and they all are there and all have been approved. so, they are setting their own establishments. when it comes to multibrand, in the policy framework, we are a union of states. and it has been left to the states who want to have it. now, mind you, those states will all right come in, 12 to be precise. many of them are big enough, that is in numbers, in size, both population and geographical area, than the biggest countries in europe. now, these decisions have been taken by the elected governments of those states. >> india and the eu have been in discussions on a free trade agreement. i wonder what progress has been made in overcoming some of the

road blocks and contentious issues. where exactly is the middle ground here? >> you see, most of the issues have been addressed. when we look at the offers which india has made, it's the most ambitious offer india's ever made. and once this is concluded, from the eu side, this should be the biggest that they would enter into on site. there has to be a fairly real balance in these agreements, becau we have tried to take it forward in a spirit of accommodation and understanding, because every specific which whether for oversight or for eu, it cannot be fully met. that's why the middle ground, which makes it balanced and fair to both. >> all right. that was an interview. on the agenda in asia

tomorrow, it's new zealand's turn to land its budget. it expects to stay on track for a return to surplus by 2015. we'll get a report card on abenomics as well. we have preliminary gdp for japan, plus, major corporate earning reports include singapore airlines, chinese intern internet firm and bajaj. china narrowly misses recession. we'll hear from one of germany's leading economists who says europe's crisis is far from over and is in danger of spreading to the core. ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients

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all right, we've seen a fall in greek yields this morning, actually down to lowest levels since 2010. ten-year yield the lowest since june 2010. so, greek bonds rising more. as you can see the yield now 8.29%. this comes as fitch is upgraded greece's sovereign credit rating by one notch from ccc to b-minus. the ratings agency said the upgrade reflected the progress made towards eliminating fiscal and current account deficits. fitch added that it doesn't interpret the treatment of

neighboring cyprus as implying any diminution of support for greece. and a meeting of european finance ministers ended yesterday with an agreement on just one step to combat tax evasion. this was due to the reluctance of luxembourg to share banking information and also agreed to a 17 billion euro increase to the bloc's 2013 budget as part of a deal to unblock talks on long-term spending. and an online video apparently showing the czech president drunk at a public event has prompted a series of online gags. mila's office says a virus explains why the president was swaying and struggling to walk. since then, czechs have posting pictures of themselves online with the captions such as "here i am getting a virus" or "just heading out for a virus." but i said to my producers, how about at the end of the day we go get a pint of virus? there you go. germany narrowly avoided e

recession in the first quarter with a performance shy of forecast. consensus was for 0.3% growth. that has fueled even more fears that the recovery has lost momentum. carolyn has been speaking to one of germany's top economists. she joins us in frankfurt, makes a change for you, carolyn. hi. >> absolutely, change of scenery for me. i spoke to peta bolfinga at the school of finance and management. he's one of the so-called wise men in germany. they advise angela merkel on economic matters. i asked him just how concerned he was about the german growth engine sputtering. >> the gdp data of today confirm the data on production and sales that we had already, and i am concerned about these data since we have to take account of what's happened in the fourth quarter of last year, a decline of 0.7% and the widespread expectation had been that after

this very weak fourth quarter, we will have a rebound effect, and this has not happened, de facto instagnation. what we see now in germany and what is also concerning is that in france we see a similar development. they have their third consecutive quarter where gdp is falling. but in my view, this shows that the worst of the euro crisis is not yet over. we are in the middle of the crisis, and the crisis is spreading, spreading from the weak peripheral countries now to the core of the area, and i think it should make us very much concerned about this development. >> but what about the political ramifications, given that we are in an election year here in germany? to what extend would the softer data weaken angela merkel's re-election bid, her leadership within europe? >> well, i think the elections in germany will only be concerned if these data will have an impact on the labor market, and the anomaly is it

will take time until we see stronger effects on the labor market. and so, i think angela merkel will go into the elections with a very strong labor market, relatively strong labor market. so, i don't think this will have an effect. but what i think is more important is that the whole debate on austerity is to be reopened. is it really a good idea if you are in recession in the euro area that the overall fiscal policy stance is restricted instead of expansionary? is it really a good idea to do the opposite of what is required? we see that the stance of the commission on the consolidation programs is softening, but still most of the countries are applying fiscal policies in the environment which is dominated by recession. >> do you think if angela merkel is re-elected in september, she will have to bow to the pressure and replace some of the austerity with more growth? >> well, i think a paradigm

change will be inevitable. i think the longer the reception la recession lasts, the more it spreads in the euro area, one has to rethink the paradigm and we need more time with consolidation. otherwise, it's contracted. and at the same time, we have to think about measures how to boost growth and also measures, strong measures to do something against unemployment, especially youth unemployment. >> good interview, carolin. this is also one of the wise men who suggested we should have a wealth tax across the eurozone. just explain more on why he was proposing that or how it would work. >> well, he said that to finance future bailouts because there has been so much discussion as to who should be paying for it, whether depositors should pay for it or taxpayers should be on the hook. he said we need to levy a wealth tax. but whether that would actually find a lot of appeal in the german public, i don't think so. we also talked about the role of the ecb and how it would react

to the weaker-than-expected data. he said he was surprised by the ecb's lack of cutting rates to begin with. he said even two weeks ago, the data was so weak, he was surprised that the ecb wouldn't be cutting its refi rate by even more than just the 25 basis points, but in terms of the deposit tax, he doesn't think cutting that or pushing that into negative territory would be a good idea. you can find out why on "closing bell." they will play you the full interview. back over to you. >> thank you very much for that. time for a couple final thoughts. dollar/yen's been kind of exciting. aussie/dollar has been a big trade lower, too. playing this out, we keep trading the aussie/dollar. what's your trade? >> we've been shorting it for five years, so it's good at last. >> if you hold a position long enough. >> it's interesting, there has been a mood change in aussie, partly related to the u.s. dollar bullishness environment.

they have been cutting rates, china slowed down, commodity prices lower and now we're through parity, so even the technical picture looks less pleasant, but that's been a big mover. short term wise, people talked about kiwi needs to play catch-up, needs to do more. aussie's leading the charge. >> you mentioned we've had this broad dollar strength. what would -- i presume -- does that continue until the next jobs number that isn't as good -- >> two of the next bad number. a month ago, we were talking about u.s. inflation, how low it was and how wonderful that would be because you could extend qe-3 for the next 10 to 20 years and then we get good payroll number and it's hold on, the u.s. is responding, the fed will stop qe next month. we're getting this flip-flopping in u.s. sent manet and the risk to the dollar bull story is a weak dollar. i don't know that we get one, but that's the risk at this point. >> yeah. but yeah, so, we have to watch and wait. >> yeah. >> so you say you think barring

that dollar strength incrementally should continue? >> i think the easy thing is to go with the trend, and that is to go with dollar strength. i mean, perhaps what has changed is the market might be able to tolerate one soft payrolls number because we got one a couple months back and it was shown to be an aberration because of the subsequent revision, so maybe they'll tolerate one slightly more readily this time. >> daragh maher from hsbc, thank you. still to come, we'll find out whether the german gdp miss will mean we have lower eurozone gdp figure. we'll have that data after this. "worldwide exchange" continues in just a moment. we went out and asked people a simple question:

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you're watching "worldwide exchange." i'm ross westgate. a recap of the headlines. france is back in recession. germany's economy has picked up but not as much as forecast. and italy's recession is now the longest on record. the bank of japan pours more than $27 billion into the money market to ease a spike in long-term jgb yield, but the nikkei is at a fresh 5 1/2-year high. and british unemployment rises in march, prompting further questions about the recovery, although the claimant count drops, this ahead of the bank of england governor mervyn king, who should provide some insight. he delivers his final inflation report in 30 minutes.

we're just getting the first print of gdp out in the eurozone. we expect it to be a little weaker than expected. it is, indeed, minus 0.2%, the forecast minus 0.1%. we had the lower print of german gdp. the contraction now for six consecutive quarters on eurozone gdp. we also saw italian gdp weaker than expected, 0.5% versus 0.3%, so those figures meant that the composite number is weaker than we thought as well. also getting greek gdp numbers out as well, and if we've got the -- that's the eurozone number. if we look to the greek number

flash estimate minus 5.3% year on year, minus 5.7% on fourth quarter. i think that is 5.7% as opposed to 5/7. joining success david owen and daniel morris, jpmorgan asset management. welcome to you both. italy weaker. is the german number the more disappointing here, david? >> actually, putting this into context, going into this week, i had assumed gdp would be down overall for the eurozone around 0.3%, came in 0.2%, so it's a tad better than my forecast, obviously slightly worse than the markets expected. i think the key thing here is people really are going to have to have a look at their 2013 forecast overall. eurozone gdp this year is probably going to be down close to 1% year on year. and the italian number's obviously pretty dreadful and we have the spanish number as well. these recessions simply continue. >> both 0.5% contractions for both economies. >> absolutely, without any form of recovery, obviously, the risk of debt forgiveness in some form

rises, so we need to have something happen to get this commerce going. >> meanwhile, for an investor, daniel, looking at gdp numbers, who cares? >> yeah. >> who cares? >> to some degree. you have to also keep in mind that europe's a lot of small, open economies so the equity markets for the stocks that trade, large-cap stocks, won't be so directly influenced by them. i think that is the perspective to have. all these companies that are based in europe are going to be looking for growth elsewhere, just like the ones in the u.s., and they're going to be able to keep increasing earnings. because of that, they'll have the base of support within europe, but clearly it's not going to provide a big boost in the near term. >> plenty more from david and daniel. let's bring in stefan and carolin's in frankfurt. take a closer look, first of all, at the french data. we're back in recession in france. >> for the first time in four years, although the french economy has been on the verge of the recession for at least 1 1/2 years. so in practical terms, it won't change anything. the question is about the outlook. the bank of france believes that

the french gdp will increase by 0.1% in the second quarter, which means that france could soon go out of recession. that's not the view from the european commission, which believes that on the full year, the french economy will shrink by 0.1%. the government wants to believe that will have a very small growth this year, 0.1%. that is going to increase the pressure on the french government. so far, it rejected calls from europe to implement an austerity policy because the finance minister, pierre moscovici, didn't want to drive the french economy into recession now it's done. this increases also the pressure on moscovici himself. we know that the french president is working on a government reshuffle. he could replace the finance minister. there are already some names in the french newspapers about who could replace very soon pierre moscovici. now, let's have a look also at the german gdp, which was out this morning, with carolin in frankfurt. >> and stefan, that was

definitely disappointing, only growing by 0.1% quarter on quarter, while we're looking for a print of around 0.3%. now, some of it we know was down to the weather, but hey, you can't blame it all on the weather, can you? because only private consumption gave gdp numbers a boost. apart from that, we saw investments in exports falling, like in the fourth quarter. speaking of the fourth quarter, the other big disappointment this morning was the fact that even quarterly growth in the fourth quarter was revised down to 0.7%, and that is pretty dire, because many had hoped that the fourth quarter would really just be an aberration or just temporary, and that leads a lot of economists to believe that we'll see significant downgrades for the 2013 growth outlook, which currently is at 0.5%. so, all in all, the message is pretty clear, we're nowhere out of the woods in terms of the eurozone debt crisis. this is what peter bofinger from the german economic council just

told me. and it's clear, the crisis is still spreading from the periphery to the core. >> and we'll pick up on that point. stefan, carolin, thank you. david, let's pick up on that because holland is still in recession, they had 0.1% retraction. that's the fifth biggest economy. france in recession, germany growing 0.1%. this is a core problem. >> it is a core problem. one thing i'd also highlight, the dramatic move in the euro against the japanese yen. so, the yen so far is down over 30% against the euro since november of last year, and we need to look at germany in particular. it competes head to head with japan in many capital goods sectors. so, this is particularly bad news for germany and just highlighted german exports were down again in the first quarter. >> that's an interesting point. equity players going to take any notice of that if you're investing in german companies? >> i think at this point it is something where we're thinking about trading away from germany looking more at the peripheral countries and looking more at higher yielding stocks in the periphery. germany's had a very good run

and out-performed for the most part for over a year, so it may be part of a general rotation away from germany into other markets in europe. >> why into the periphery? >> i think it's a combination now of certainly much less anxiety about europe in general that's weighing on the market off and on, and the phenomenon you've seen in the u.s., where it's investors looking for yield, for stable dividends that's led to growth in what we think are defensive sectors but are actually income sectors, if you will. that hasn't happened as much in europe, and particularly, again, for the periphery, because there's been the currenty risk overhang and that's going away. >> david, finally, what is the next -- i mean, if this core problem continues, what's the next step from the ecb? >> next thing, they'll be dragged to cut the deposit rate and take it negative. the interesting issue -- >> won't do anything for banks. >> well, the interesting dynamic is who has money overnight on deposit. it's not the italian banks and it's not the spanish banks. it is german and austrian banks, banks in lex yum bourg. they are not going to take that money after deposit in their

central banks and put it into the periphery. but the interesting dynamic is furs a german investor and they take the overnight bond rate negative, bunds go lower and you're searching for yields so you'll be pushed more into the peripheral space. so it will have some impact on asset classes. >> david owen, chief economist, thank you. daniel sticks around for little bit more. meanwhile, allianz has reported a 24% jump in first-quarter net profit, boosted by pretty performance in asset management units as well as lower costs with influensura claims. it has its highly quarterly revenue on report, numbers largely in line with a preliminary report released last week. let's just check on the stock price, barely moved because we had that preliminary report. anyway, joining us for more, first on cnbc, is the cfo of allianz, dieter wemmer. thanks for joining us. how could you categorize this?

>> good morning. doing swell. i did listen to the last five minutes of your program. certainly, europe's focus is not great, but i think allianz has adjusted its business model very well to deal and to actually succeed in such an environment, and it's our asset management business which offers to many desperate investors a great alternative where to put some money and how to deal with the challenges of the current environment. but also, our other two segments in the life business and the property casualty business are doing quite well, and i think we are firing on all cylinders. >> yeah, it's just worth reminding everyone, you own the pimco asset management unit. a big inflow of funds there. i mean, is that -- and we've seen a big rally, of course -- and we actually, you know, income's done fairly well,

equities have done fairly well, as we know. is that a sort of an unrepeatable performance? >> well, i think the performance continued what we have seen in the previous quarter, so this is quarter 42 billion euros net inflows, so that's in dollars close to $55 billion net inflows. and yes, we see sector rotations, how investors, where investors put their money, but i think we saw more out-flows from the money market funds going to equity but also still to fixed income. and i think pimco offers a great alternative and many families outside the total return fund, so that attracts more and more investors and we trust our money to our team in newport beach. >> just on the insurance side,

what do you expect to happen to rates now? >> well, i think rates certainly continue to rise, in particular in the relevant sectors in the commercial business in the u.s. and australia, but also still in france and maybe in uk. it's a bit less pronounced at the moment. and the retail segment, germany still had backlog in rates, needed rate increases, and also france. so, there we still see that rate increase is coming through. and other market, it's now much more our own performance in service and underwriting and with selection to get to better numbers, which we did very well in recent quarters. >> thank you very much for joining us. dieter wemmer, ceo of allianz,

joining us first here on cnbc. all right, we had another record day for u.s. markets yesterday. let's bring you up to speed with where we stand with futures right now. we are called lower at the open. we were at this time yesterday, but it changed as you can see. we're currently some, what, 80 points below fair value for the nasdaq. we are some two points below fair value for the s&p 500 at the moment, around three points indicated lower than fair value. european markets are pretty fat. ftse mib flat, cac flat. a lot of individual corporate results, and that's where the moves really are. bond markets, italian yields 0.4% at the moment. yields are back. the unemployment data a half hour ago rather disappointing, a fall in the claimant count but total employment less than expected, and we also saw the unemployment rate not particularly great and a squeeze on earnings as well. and as far as currency markets

are concerned, pound is just trying to tick up against the dollar, but the dollar not doing too badly. we've been down at 11-month lows for the aussie, 0.9875. dollar/yen at 1.0246, falling at the moment, and euro/dollar at six-month lows at the moment, 1.2896. that's where we stand with european assets. how about asian markets? hi, sichuan. >> hi, ross. another record day for asia following a record-breaking close in the u.s. no surprises for guessing which market out-performed. the nikkei 225 jumped another 2%, breaking above the 15,000 level for the first time in more than five years. a lot of focus was on sony. it soared more than 10% today after the u.s. hedge fund thurpoint proposed a spinoff of its entertainment arm, suggesting that could unlock

more value. isuzu motor soared down more than 20% thanks to strong annual results, but sharp plunged nearly 13% after posting a record annual loss. but do note that this is after the stock gained 17% over the past two sessions. so, investors could be booking some profit here. meanwhile, blue chip out-performed on the hang seng in hong kong as shares of the supply chain company jumped to over 8% today after its chairman said earnings would rebound to 2011 levels this year. and the tough loser today was china coal. the stock lost nearly 6% after the commodities sell-off continues. and all these resource plays were under pressure as well. the big miners lost between 2% and 4% today on weaker iron ore prices, and a cut in spending plants. and a slowdown in the mining boom also took a toll on the country's deficit budget. that eased 0.6% from a five-year

high. back to you. >> sichuan, thanks for that. that's the wrap from asia. still to come on "worldwide exchange," washington welcomes good news on the budget, but official estimates suggesting the deficit is shrinking more than expected. we'll talk about that when we come back. i want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art.

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if you've just tuned in a recap of the headlines. eurozone economy shrinks more than expected in the first quarter. it's now the longest recession on record. the nikkei rolls to a fresh 5 1/2-year high as the bank of japan scrambles to stem a rise in long-term bond yields. and as uk jobs growth instituters, mervyn king gets set to deliver his final quarterly inflation report kicking off in around 28 minutes' time. u.s. stocks close at another record high, but does this rally have even more legs? we'll talk about that in just a moment. l go. this is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured.

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all right, u.s. futures are pointing slightly down at the moment. we're implied lower on the s&p by 2.7 points, the nasdaq down 2.25. we started like this yesterday and ended up with a record high, so it doesn't mean much. still with us, daniel morris from jpmorgan asset management. danny, what do you do, just stick with it at the moment, enjoy the ride? >> yes. you have to look, what is going to be the catalyst for major correction? it's very hard to find. valuations -- >> that's what worries me, i can't think of a catalyst at the moment. >> there is always the known and unknown, but it seems a reasonably benign environment and compared to bonds, probably

the place you want to be for equities. there's not dramatic appreciation, but it should be net positive for the rest of this year. >> it's been sort of since january since we've had these kinds of gains. in the s&p by now, that would do me for the year. >> yeah. you don't want to get too greedy. >> yeah. the other outstanding performance is the nikkei continues. it's through, as we heard from sixuan, 15,000 for the first time in five years. you take a look at what we've done since -- this is the key point -- november 1st is when they all started making noises. here we go, up nearly 70% since november 1st. >> right. and you don't get the sense of how dramatic that is unless you compare it against to the rest of equity markets, which are not up as sharply. but -- >> i think we know 70% is dramatic. >> i think the thing to keep in mind is where it is since march '09, where it's actually still underperformed developed market equities, ex-japan. so, a lot of this really is just catch-up. we've had a good catalyst for

the catch-up with what's gone on with abe, but they're still lagging the rest of the world and probably another 15% to go. >> when you overlay the stories, sharp restructuring, dan loeb and sony, is that going to provide another leg of sort of foreign investors getting in on this market? >> well, i think it has to happen ultimately. i mean, most of the appreciation that we've seen in the market has been very correlated with the depreciation in the yen, and that can only go on so long, and what's going to drive what will hopefully be the next leg is going to be real improvements in underlying corporate profitability, and we have these efforts on the side with some of the companies, but we really haven't seen yet a change in mentality. and if that doesn't happen, you have to worry about the longer-term potential. >> right. so, we're looking for follow-through. it stays with it for now, as with everything else. >> yep. it's good momentum, but -- >> okay. let's look at this story as well because this may be fairly important. the congressional budget office says the u.s. deficit is shrinking more quickly than previously thought. the nonpartisan budget watchdog says revenue growth will out-pace spending over the next two years. the cbo is slashing its deficit

forecast for fiscal 2014 to $642 billion. it's the smallest shortfall since 2008. they're citing rising personal income tax revenues and higher dividend payments by the likes of fannie mae and freddie mac. dan, how important is their assessment? >> well, it's very important for treasury yields. in the first part of the year, we had them go above 2% as economic growth looked strong, a bit down, but now we're moving in that direction again. but what may be a limit on them is exactly this -- the treasury isn't going to be issuing as much debt because the budget deficit's falling. the fed in the meantime is still buying a lot of treasuries, so you're starting to run into a demand and supply imbalance, where there's maybe not quite enough debt out there, if you will. we talk about having too much debt. maybe we don't have enough, and that will probably keep a bit of pressure on the yields and keep them from going above 2%. >> which is another support for equities, presumably, isn't it? >> yes, and in general, before you can look to the periphery for income, you can't now, so

it's an incentive for people to move into equities, which is still positive. >> i suppose the other key driver is still what happens in the relationship between income, you know. i remember looking at bp, they were raising a large amount of money, and you got 2% on those bonds, and their stock yield is around 5%. >> really. i mean, if you're even not looking for growth but you are just looking for income, again, it's the same type of decision. you want to go for the dividend payers in the stable and growing dividend, but be careful in the u.s. where that's happened to a great degree, the valuations actually look a lit expena litt expensive, so look at europe and emerging markets. >> does the share buyback story keep going? >> definitely out of the u.s. the u.s. corporations still have a lot of cash. it's going to go into the buybacks and dividends the way it has. we haven't really seen it in capex yet, but if we see the u.s. growth continue to improve, we might see that change in sentiment and the companies really finally start spending an investing. >> daniel morris from jpmorgan

asset management. thank you for joining us. coming up in the last half hour of the show today, bank of england governor mervyn king is due to strike a high note in his final assessment of the uk economy today. we'll bring you his last quarterly inflation report. it breaks after this break. ♪ the new blackberry z10 with time shift and blackberry balance. built to keep you moving. see it in action at blackberry.com/z10

"worldwide exchange." heez will the headlines.

eurozone gdp shrinks more than expected in the first quarter, the longest retraction on record. france is back in recession. germany's growth weaker than expected. the bank of japan pours more than $27 billion into the money markets. it wants to ease the spike in long-term bond yields. the nikkei, though, is riding the weaker yen to a fresh 5 1/2-year high. and british unemployment rises in march. it's prompting further questions about the recovery, although the bank of england governor mervyn king could provide some cheer. he's about to deliver his final quarterly inflation report. yeah, and these are pictures, as you can see, of the bank of england's press report. it will be governor mervyn king's last quarterly inflation report. he's expected to lower down his forecast for inflation. what he says about growth will be fairly fascinating. recent reports suggested growth

a little bit better than expected. we didn't have a triple-dip recession. in fact, there's even some data suggesting that we didn't even have a second recession. we're waiting for the final revision tease that data, slightly set for conversation. but we'll have to wait to see what he says. we will go to that, dip minto i when it starts and uk viewers will stay with that for the entire entirety. meanwhile, we're wondering if we'll get another update for u.s. markets after the fresh record close. currently we are called lower for the dow by around 18 points. we're currently called five points on the nasdaq -- sorry, three points below fair value, s&p about two points below fair value. the ftse global 400 is off just seven points. european markets did fairly well yesterday, the ftse up nine straight days, currently down 0.2%. pretty flat elsewhere, despite the weaker-than-expected gdp numbers. we do have the quarterly

inflation report released. as mervyn comes in, they moderately raised the growth forecast, stress recovery will be weak, gdp now growing 2.2% this year. they say they see the inflation rate above 3% in june and above 2% target for the coming two years, but the inflationary rate before back to target from the first quarter. it would be below target for the third quarter 2015. they say growth in the inflation forecast indicate more stimulus is still possible. so, there we go, slightly better growth and inflation still -- trying to see what it says necessarily about inflation, but it's going to come down in a longer time rate. let's listen in. >> all about stability, but the past 20 years or so have been a time of almost continuous revolution, more in the style of that most famous of all central bank governors, shea gavarra,

but in the traditions of the bank of england. collapse of the erm, introduction of inflation targeting, central bank independence, a banking crisis at home and crises galore abroad, new responsibilities for the bank all reflect an extraordinary period of change, and the change continues. of most significance today is that there is a welcome change in the economic outlook. today's projections are for growth to be a little stronger and inflation a little weaker than we expected three months ago. that's the first time i have been able to say that since before the financial crisis. but this is no time to be complacent. we must press on to insure a recovery and to bring down unemployment. since we last met in february, there have been two important developments that bear on

today's report. one is that in response to the stockton review of the mpc's forecasting capability, we've implemented a number of changes to the report, some of which i will describe later. the second is that in the march budget, the monetary policy committee was given a new remit. that reaffirms the mpc's primary objective of a target for cpi inflation of 2% a year. and the committee welcomes the end to any uncertainty about the objective of monetary policy. the remit also requires us to explain more fully our thinking when exercising our constrained discretion over the short-run trade-off between growth and inflation. at present, such a trade-off arises because inflation remains stubbornly above the target while there remains a significant margin of spare capacity, especially as we saw in today's data release in the

labor market. that combination of above-target inflation and depressed output has characterized the economic landscape since 2008, reflecting the lingering impact of the banking crisis, the subsequent fall in sterling and increases in commodity prices. our economy still faces the challenge of a substantial rebalancing following the bankrupt reassessment of future incomes and spending opportunities triggered by the crisis. this hasn't been a typical recession and it won't be a typical recovery. nevertheless, a recovery is in sight. output grew in the third quarter and growth is likely to strengthen over the course of the year. the committee's overall judgment about the outlook for four-quarter gdp growth is

summarized on chart 1 on page 6 of the report. you'll notice there are fewer bands in the fan chart than in previous reports. each pair of bands now covers 30% of the probability distribution rather than 10%. that change prompted by the stockton review helps us to convey the broad shape of the distribution, rather than its precise contours. but the more detailed, underlying distribution can be found on our website and in the chart pack you've been given today. >> all right, uk viewers will stay with that quarterly inflation report, the last one for governor mervyn king, but the important thing is he summed up there, it's the first time since the financial crisis he's been able to say that growth is higher than previously, in the last report, going to be higher than he previously forecasted, and inflation is going to be lower, and that's a pretty good thing to be able to say in your last report as governor. sterling is higher on the session in response to that,

1.5265. he's saying that quarterly gdp will now be up 0.5%, and in 2015, it will be up 2%, year on year previously a 2% target. they say the growth and inflation forecast doesn't mean that more stimulus isn't possible either. so, a fairly supportive tone, i would think, for investors. and look at the rest of the foreign exchange markets . the key is euro/dollar. six-week lows today, dollar/yen is pretty much near a 4 1/2-year high. and euro/yen slightly weaker. so, we've been asking our regular guests, what are investors to do? and here's a recap of what they've already said this morning. >> i would be looking at a 0.2% going forward, but initially going over the period of the

second quarter, while we're relatively soft, you know, it could be a point at which ten-year yields are finding reasonable support on the up side here. >> the second trend is increased demand, particularly from long-term investors, pension funds, life insurance companies, sovereign wealth funds, for less liquid product, and i'm thinking particularly real estate, private equity. that's trend number two. >> our strategy is to continue to update equities on potential weakness, if any, because i think that investors have been looking for a correction for a while but we haven't seen a significant one. all right, those on investors. meanwhile, google is reportedly set to launch a paid subscription streaming music

service, similar to spotify, as soon as this week. this comes as they signed deals with the major record labels to sign content. it is unclear how much google will charge per month or whether there will be ads. google play lets users buy individual songs or albums like itunes. google is hosting a conference today, expected to show off its latest wares, including a new nexus 7 tablet. google stock in frankfurt up around 0.2%. joining us is adam leech, principal analyst. good to see you. >> good to see you. >> of course, last year we got the glasses. >> google glasses. >> yes, everyone seemed to be wearing in various places, looking a bit odd, but. >> yes. >> is this going to be less exciting? >> yes. i think this is more of an evolutionary step in terms of their services that they want to roll out. as you said, they already have a music service, and then to move into the subscription model is no massive change.

it will put a bit of pressure on apple because they've been long rumored to come up with a similar subscription model themselves. meanwhile, spotify has been sort of taking market share in this area, so it adds a bit of weight to that until we see how apple will respond to that. but yeah, it's kind of google firming up its digital services agenda, really. >> how important is sort of the nexus going to be? >> so, i think this is shaping up to be quite important for them. you know, in terms of the tablet market, the nexus has proved popular with consumers. the fact that the price points to google is being able to achieve with this hardware are shaking up the market and are really putting pressure on people in the market in the tablet market. so, yeah, we're seeing how they can kind of move that forward through the next phase. >> yeah, when you look at that, obviously, you've got samsung and apple are the two big competitors here. >> yes, absolutely. >> who's going to -- who's winning? >> well, tabletwise, it's really just apple that have led and

continue to lead, unlike smartphones with apple and samsung, where samsung really is starting to move ahead. whereas with tablets, we've got apple still really in command and shipping most volume there. it's really companies like google and amazon with the kindle fire that are really shaking the market up and putting that kind of competitive pressure on to apple. >> you mentioned smartphones there. i just want to get your thoughts on what blackberry have been talking about. they're launching the new q-5. >> yeah. >> but the fascinating thing here is, is they're now say iin that the blackberry messenger service, they will now make this available to users of android and ios as well. how big of a risk is this and how much of a big roll of the dice is this? because that's been one of the reasons for having a blackberry and buying their phones. >> yeah, going back a couple years, it really attracted consumers to blackberry as one of the differentiating features of blackberry, being able to

message over wi-fi and do these kind of greet messaging. it's a real differentiator for them, but now time has moved on and we have other companies, apple with imessage. and so, really the time for them to do this would have been a number of years ago. now i think it's going to have less impact in the market and really, whether it's really going to have the impact of driving more people to blackberry 10, which is really what they need to happen. i think the q-5 is an interesting product. you know, they had great success with the curb, which was kind of a low-end smartphone. really as the whole smartphone market shifts to emerging markets and lower-cost smartphones, this is where it could be a strong play for them to establish. it could be really important for them. >> thanks for joining us. >> thank you. coming up, jamie dimon faces a contentious shareholders meeting as investors vote on whether to split his role as chairman and ceo of jpmorgan, but he's apparently leaning on someone who's no stranger to

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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. [ driver ] 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 before. and a recap of the headlines. the eurozone economy shrinks more than expected in the first quarter. it's marked the longest recession on record for the bloc. the nikkei rolls to a fresh 5 1/2-year high as the bank of japan scrambles to stem a rise

in long-term bond yields. and bank of england governor mervyn king has delivered what he calls his first positive inflation report since the economic crisis. he's upgraded growth forecasts, downgraded inflation targets. all right, meanwhile, place your bets! there may be a horse race this weekend, but investors are instead focused on jpmorgan's annual meeting next tuesday. handicapping the odds of whether shareholders will vote for or against their proposal to split jamie dimon's role as chairman and ceo. jackie deangelis joins us now with the odds. hi, jackie. >> hey. good morning, ross. well, the resolution, of course, is in question, and the question is whether to separate the chairman and ceo role at jpmorgan. reportedly getting support from more than 40% of shareholders, slightly ahead of last year. now, the "wall street journal" says that if the current count holds through next tuesday's meeting, jamie dimon would win the vote, although support to split his job would be at the highest level in eight years. now, it's still too early to

know how the vote is going to actually go, as many big institutional investors have yet to cast their ballots, ross, but dimon has been in charge of jpmorgan since 2005, making him the longest serving ceo at any of the largest six u.s. banks. but his star has also been tarnished by last year's london wael losses and the company facing a slew of regulatory problems as well. last friday, two outside directors sent shareholders a letter saying it would be a mistake to change the bank's management structure, but they didn't rule out anything like that in the future, noting that the chairman and ceo roles were separate when dimon took the company over. meantime, despite all the issues hanging over dimon and jpmorgan, shares have performed well in the past year, up nearly 50%. dimon is reportedly getting advice from a fellow ceo who knows a thing or two about being under fire. this is goldman's lloyd blankfein. "the new york times" says the two have spoken privately several times in recent months. blankfein has told dimon the storm will eventually pass, just

as it did for goldman in the wake of the financial crisis. the "times" says that while these conversations may be recent, both men, of course, have a longtime friendship. dimon and blankfein are members of the financial services roundtable and often cross paths at various fund-raisers, like this week's annual dinner of the robin hood foundation. ross, back to you. >> thanks for that, jackie. that story going to rumble. meanwhile, some of the other stories we're following today. china's central bank has reportedly begun looking into potential data confidentiality issues involving bloomberg. joining the fed, u.s. treasury, ecb and others, reports are particularly concerned to the pboc as to whether any trading data was leaked about the more than $3 trillion in foreign exchanges as managed by one of its units. bloomberg's website has been blocked in china since last year following its news reporting on the family wealth of the new president xi jinping. president obama is calling the findings on a government report on the irs targeting conservative groups for extra scrutiny intolerable.

the report says inappropriate criteria was used by the irs for 18 months, including targeting groups with tea party or patriots in their name. the president is directing treasury secretary jack lew to hold those responsible for the agency's actions accountable. in a statement, lew says the report didn't find any evidence outside individual or groups influenced the institution to use such criteria. the fbi has opened a criminal probe into the matter. >> i have ordered an investigation to be begun. the fbi is coordinating with the justice department to see if any laws were broken in connection with those matters related to the irs. those were, i think as everyone can agree, if not criminal, they were certainly outrageous and acceptable, but we are examining the facts to see if there were criminal violations. >> the irs is coming under heavy criticism from congress with both democrats and republicans calling for the resignation of acting commissioner steven miller. still to come in the last

part of "worldwide exchange", macy's motto is be everywhere, do everything and never fail to astonish the customer. we'll find out whether customers were wowed by the yearly and shopped until they dropped when the department store giant reports earnings later this morning. i want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪

all right, plenty of gdp data. euro/dollar down at fresh six-week lows at 1.2882, the first reading of gdp showed a q-1 contraction of 0.2% on a quarterly basis, weaker than forecast, now means the bloc's contractions extended for a record six straight quarters. not helping that number out was germany's gdp data. it narrowly missed a recession. grew by just 0.1%. analysts looked for a 0.3% figure. there was also a downward revision to the fourth-quarter

number, down minus 0.7% as well. in france, we're in recession now. first-quarter gdp contracting 0.2%. we also got reaction from xavier rolet. >> fundamentally, we look at the euro crisis as a competitiveness crisis, obviously compounded by the accumulation of debt on the public balance sheet as well as the bank's balance sheet. but as we've seen in the last 18 months, we are working through these debt issues, and governments are now looking at greater discipline in the managements of their budget. >> and italy on recession, meanwhile, has now become the longest on its record after gdp flash numbers revealed a 0.5% contraction, again worse than the forecast. the u.s. agenda today, ppi

is out at 8:30 eastern. producer prices are forecast to drop by 0.4%, but rise 4.1% stripping out energy. and then we get the industrial production and homebuilders survey. tractor deere reports after the open and then we'll hear from cisco systems, fast food chain jack in the box and skechers. walmart says it won't sign on to the bangladesh fire and safety pact because it believes it will get fast results from its own safety plans. the deadline for retailers to sign the legally binding agreement created by labor groups is today. it comes in the wake of a collapse of a garment factory last month that killed more than 1,000 people. walmart says it will conduct in-depth safety inspections at all 279 bangladesh factories with which it works. macy's kicks off this week's quarterly results from the big u.s. retailers. analysts expect the company to report first-quarter earnings of 53 cents a share on revenue of

around $6.4 billion. rick snyder is retail specialist at maxim group, joins us now. rick, good to see you. thanks indeed for joining us. if they deliver that, what kind of performance will it be? >> i think it's going to be a very good performance. macy's is executing everything very well, training their sales force, localizing inventories and making big investments in their online sales. so, i expect -- i'm a little ahead of the street -- i expect a 58-cent quarter. >> yeah, how important is the online investment, bearing in mind the impact it's having generally across the consumer space? >> i think it's very important. the internet is changing the game. department stores have traditionally been brand compilers. and what the internet has allowed the brands to do is go directly to the consumer. so, to put it in context, what we've had in the u.s. here for decades is something similar to the round robin portion of the

world cup, where if you won, you lose, you got to keep playing, but the internet has changed the game such that we've moved to the elimination phase. so, if you win, you will get to keep playing, but if you lose, you're going to have to stop. >> yeah, so, is macy's winning? are they going to get through to the final in this, then, using your world cup analogy? >> macy's is the odds on favorite to win the cup, yes. they're in the process of becoming the amazon of apparel. >> what's the key here, is to make sure that it's the same brand in store, online. i mean, is that the key? >> i think that is the key. and what macy's is doing is they are essentially using stores as distribution centers for some of their online sales. by the end of this year, they are going to have 500 stores that are going to be filling online orders in addition to the

distribution center for online sales. that should help them with full-price sales. it's actually even helping some of the smaller stores that can now have more inventory because there's less risk because they can ship them online in a transition seamless to the consumer. so, they're executing on everything they should be doing. and as i say, i think they are the odds on favorite to win the cup. >> okay, and you've increased your price target to $56 from $50. thanks, rick snyder, retail specialist at maxim group. just to remind you where we are falling right now, just below fair value is where futures stand, but not by much and there is plenty to play for. gdp in the eurozone has come in weaker than expected. hasn't really upset equity investors yet, though. coming up next, "squawk box," the countdown of opening of markets stateside.

i'm ross westgate hoping you have a very profitable day. good-bye for now.

good morning. today's top stories, global markets, u.s. stocks soaring again, closing at session highs for the eighth time in nine tries, another record. and you know why, if you were watching yesterday. overnight, asia followed suit as the nikkei breached 15,000. and in europe this morning, the picture looks a little mixed in early trading. new figures show that france slipped into recession in the first quarter. meantime, data highlighted that germany is not immune to the euro crisis. it's wednesday, may 15th, 2013, and "squawk box" begins right now. ♪ i've got a hunger twisting my

stomach into knots ♪ ♪ >> good morning and welcome to "squawk box" here on cnbc. i'm joe kernen. becky and andrew are both on assignment, so check this out. i am joined by kayla. i don't say her last name anymore because it's not necessary. julia boorstin is to my left, camera right. and man of steel, robert frank is here, has a movie coming out a little bit later. you know what? i wish -- to me, man of steel, that that's taken, that nickname. that is a good nickname. >> it is a good nickname. >> could be referred to in many ways as the man of steel, but that's yours, right? i can't -- >> i prefer mild-mannered. >> mild-mannered? i don't know if people can see your "v" torso. >> i try to keep it under wraps. >> but it's hard. >> we actually have a phone