you're now watching "worldwide exchange." i'm ross westgate. a recap of the headlines today. japan's better than expected .5% growth surpasses the u.s. as the abe-nomices kicks in. richemont's chairman says he's taking a year off. the joke, he might get bored soon. google is going to testify against british lawmakers today

about taxes. and investors cheer cisco's earnings. a sharp contrast to the negative comments from its bellwether rival. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> all right. welcome to this thursday edition of "worldwide exchange." i'm ross westgate. plenty to get through today. we'll kick in on japan. have you got any sorts of comments, e-mail us, worldwide@cnbc.com. japan surprised the market today with a better than expected first quarter print of gdp. partly the fact to prime minister shinzo abe's forecast. that means japan's growth outpaced the u.s. which grew 2.5% in the january to march period. there is one bleak spot.

japan's corporate investment was down for the fifth quarter in a row. but analysts expect the number to pick up as improved sentiment translates into more business spending. lucas phillipo from natixis joins us now. what's your own key take away from this number? >> good afternoon or good morning. i find you are very genius saying this is abe nomices that spurred the gdp data. because it is too early. monetary policy, lack of monetary policy and exchange rate policy have some economic effects with some legs. so we probably are going to wait the second half of year to see ababe effects on the economy. the second thing you mentioned is another weak spot about corporate investment is the

inflation. so the difference between real gdp and nominal gdp, which is very weak which is an indication of prices. actually, it's much weaker than last quarter, showing that the way to 2% inflation that was in the policy of mr. abe and the bank of japan is really very, very far target. well, i thought that -- look at the two things that were fairly good. exports did better than expected and the yen has weakened because of the introduction of abe-nomices, hasn't it? >> yes, but once again, expert contract res negotiated with three or four months in advance with respect to when the export takes place. so you cannot say that this export increase is a direct effect or is all a direct effect of the organization. probably a very good data in the

trade surplus of march, of course, triggered an increase for the whole quarter. so in this sense, and it probably march you start to see some effect of the yen depreciation, then in this sense, yes, it is abe-nomices. but in the short-term for -- >> what about personal consumption increasing? isn't that down to just confidence? i mean, couldn't you say, oh, maybe there's a change in government, we'll spend a bit more? >> definitely. so on confidence, of course, the effect is much more immediate and you're right. what i'm concerned is that once again, as also public expenditure, this might be a very, very short-term effect and some negative effect of the abe-nomices policies can kick in in the second half of the year or maybe next year. >> okay.

so, look, you're cautious. how long would you give it before we can definitively say whether it's working or not working? >> well, it's not a question of how long we have to wait. the reason why it will not work at all, in my opinion, is that the main problem for deflation in japan, the main problem of lack of consumption on this very good first quarter data, is the big government debt. and the administration in japan had started a process of fiscal consolidation that was interrupted by mr. abe and the new administration on monetary and fiscal policy. so that's a choice, you know? i mean, that's a bet. i don't think that the bet will pay off because a government debt will increase as a result of monetary and fiscal policy

and ultimately will dampen still consumption. but that's a bet. and they know japan pretty well so probably i'm wrong and they're right. let's see. >> luka, that's very much indeed for that. luka doesn't think that effectively it's going to work out. good to see you. anyway, thank you very much, indeed. mr. plosser says the fed has no t-bills in its portfolio. it should have some. this is at a q&a at a speech in mil milan. he's pleased that expectations are stable. he gives largely the same speech to reduce asset purchases as we know. meanwhile, in china, growth in its prime direct investment appears to be easing. the latest data shows the country attracted around $8.4 billion in fdi last mott month. just 0.4% higher compared to a year ago. way below the 5.7% growth it had in march because investments from asian countries which

contribute the biggest chunk of fdi barely grew last month. right. what can i say if the nikkei did on the asian markets. sixuan is with us. >> thanks, ross. a mixed day of trading here in asia. japan's first quarter gdp came in bert than expected, but the nikkei pulled back 0.4 had% after the recent rally. and the outperformer today was the shanghai composite ending higher by 1.2%. in terms of data, ross just mentioned the fdi into china rose marginally in april but continued to slow down from previous months. and in south korea, the kospi gained 0.8% on foreign buying, but australia's asx 200 underperformed today ending down by about 0.5%. as for the market movers, in japan, the a abe-nomices took a

beating. this as the aggressive bond buying program was the major revenue source given the sluggish corporate lending markets. shares of mufg, my zu hoe and smfg dumbled by about 3% today, but olympus was expected to triple its group profit in the current fiscal year and gained over 10%. zijin shares fell 1 is.34% under pressure due to the slump in global gold prices. shares down. meanwhile, weak commodity prices continued to weigh on australia miners. gold miner evolution mining and

kingsgate tumbled over 10% today. back to you. >> thanks for that, sixuan. we are even stevens here on the gainers on the stocxx 600. we had the record close yesterday, as well. with the ftse, another big day of earnings, as well. let flalt, up 0.03%. the xetra dax, down 0.25% and the cac 40 and ftse mib down 0.4%, as well. greek yields, 8.75%. we talked about this yesterday, fitch coming out rerating the grooep greek debt and we saw yields at the lowest level since around june 2010 for greek debt. we'll talk about this a little bit later. good moves compared to where we were before the inflation report yesterday, mervyn king's last. currency markets, plenty of

movement there. .9811 is where we stand this week. sterling around 1.52. it's a little weaker. the dollar index is near 10-month highs at the moment. dollar/yen, 102.43. that's near the recent five-year highs. and euro/dollar, 1.2851. just off that six-week low of 1.2843. corporate news, as well, richmont shares rallying. are diamonds forever? we'll get into it when we come back. we went out and asked people a simple question:

how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ to enjoy all of these years. the new blackberry z10 with time shift and blackberry balance. built to keep you moving. see it in action at blackberry.com/z10

shares of zurich insurance is lower 3.10%. a challenging economic environment was cited and kept its proper guidance for 2013 unchanged. let get more reaction from zurich with carolin. hi, carolin. >> good morning to you, ross. zurich insurance shares the worst decliners of the smi, down

more than 3%. with that, it's continuing its underperformance against the smip. it is up only 8% versus the smi, up by roughly 20%. numbered missed expectations with a decline in first kwrter net profit. analysts point out the job in the investment income. of course, this is an insurer and it suffers from the low interest rate environment. we spoke to the cfo earlier this morning and i asked him to what extent the weak economic data in zurich was impacting the business. >> a great strength of zurich is its diversification. a lot of our business is in the u.s., i'd say, about half. and the business derived from our activities in the eurozone are actually about 20% to 25%. that is why we're seeing, you know, a very good progress in the u.s., both on the general insurance and on the farmer's

side as where there is latin america where we are seeing strong growth as well as asia pacific. and that more than offsets the decline in europe. >> luxury group posting better than expected full year earnings. what's the detail there? >> shares are trading at a record high, 86.85, up by more than 5%. we knew the numbers were going to be good. net profit jumping by 30%. beyond that, the april forecast was much better than expected and the company's outlook for china was less than that expected. they say, yes, there is a slowdown in china, but we're not too concerned about that. on top of that, you've got richemont expecting a 1%

dividend. that was better than expected. the cfo says he wants to increase that on a regular basis, ross. >> carolin, thanks for that. joining us is allegra perry. carolin, you can stick around, actually, if you'd like. allegra, what's your own view? >> absolutely. the good news is already anticipated. i think we saw stronger says against the toughest compes from last year. a very good start to the financial year for that. we can't get too carried away. it does bid well for the rest of the euro. on top of that, they had margins which reached record levels, strong growth and the watchmaker division. we saw an increase in trends across each of the main regions in the first quarter relative to the third quarter.

so very good numbers on current trading and cash flow today. >> allegra, i'm curious what you think about china. even if the economy bounces back in china, we're still seeing this crackdown on giving gifts, so this crackdown on corruption. do you think the luxury watchmaker in switzerland will ever recover from that? >> no. i think we're just scratching the surface in china. particularly with watches we've seen the high segment end being impacted as we've seen the mid segment outperform. that's one of the reasons i have a watch on hold. but i think as we go towards the end of the year and start to annualize those numbers, i think we should start to see things stabilize a bit and return to growth. as a whole, i think the sector is just start to go penetrate and scratch the surface.

we have many years of growth ahead of us. i think a strong double digit growth is very likely for these segments going forward. >> and allegra, japan is quite interesting, too. richemont this morning talking about very strong growth in that particular country. is this a direct effect of abe-nomices? will abe nomices be a boom for the swiss watch industry or luxury goods industry in general? what we're seeing is year over year, the japanese are traveling less and buying more at home and there's a premium to buy those products at home. that's the reason we've seen such strong growth domestically for japan. i think japan remains a market which is close to maturity, very, very low levels of growth in that market, albeit some

growth coming from the japanese when they do travel abroad. >> just talk about china in relation to richemont. swatch is even more exposed to that market. what does that mean for swatch? >> it's one of the reasons i have swatch on top of my picks for today. it has greater than 10% from traveling abroad. it's been doing better that richemont, primarily because of its segment rather than in the high end. i think the mid segment has been outperforming, reflecting the growing middle class and not having as much of an impact from the government measures. >> and you've got a similar buy rating on. >> that's right. luxottica is dominant in its marketplace. i think double digit earnings growth, it's going to regenerate them. 200 million in sales in the next two years. there has some manufacturing down to retail and distribution, which i think is going to

continue to generate strong benefits from them, like attracting more licenses to the portfolio. >> all right. allegra, good to see you, allegra perry. thanks to carolin. we'll see her again shortly. cisco shares are up on the up. the network equipmentmaker posted a rise in quarterly profit revenue that beat expectations. the president of cisco told us the global order book is looking healthier. let's get more with michael genovaise that's coming up at 11:30 cet. and later we'll get more from car low bozotti.

the world gold council says global fell compared to a year ago. is gold oversold? e-mail us, worldwide@cnbc.com or tweet directly to me. a huge diamond has fetched $26.7 million. the 101 karat stone was bought from harry winston at the sale of geneva late last night. in total, 257 precious gems were auctioned fetching $102 million. what do you think of that region allegra? >> that's impressive. that's another driver of good for that company it's owned by swatch. >> is he doing this just for ego buy, is it? >> yeah. i think there is plenty of

demand out there for that level of diamond. >> really? >> there's a big part of diamonds that are purchased that are long-term investment potential. especially in emerging markets. >> someone wants to buy, that's what they bought it for. they have to put their margin in. >> that's right. i think it's a good move. i think there's a finite quantity of diamonds of that kind of level in the world. >> all right. the margin is normally -- they've got to sell it for 50, haven't they? christie's made history last night after an art sale of $500 million. i'm not sure how to say this. dustheads sold 48..8 million. while lichtenstein's woman with floured hat sold for $56.1 million. only four of the lot on offer went unsold.

so still to come on today's show, two asian companies raised a combined $3.8 billion today. some hedge fund investors are champing at the bit to invest in bonds. we'll talk to one investor who was pretty cautious. find out why. the french riviera was transported back to the roaring '20s last night as "the great gatsby" owned the film festival. and 11:50 cet we'll preview walmart earnings and speak to an analyst would says it's all about the comp number. find out why the whisper figure will be key. on programming note, as well, we'll be on the campaign trail

with beppe grillo. so still to come, hong kong, the top global destination in 2009 and then it all went quiet. making some noises, sinopec engineering, will it kick off or come back? we'll be in hong kong when we come back. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪

[growl] suddenly, faraway places dwe used to live with a bear. we'd always have to go everywhere with it. get in the front. we drive. it was so embarrasing that we just wanted to say, well, go away. shoo bear. but we can't really tell bears what to do. moooooommmmmm!!! then one day, it was just gone. mom! [announcer] you are how you sleep. tempur-pedic.

gentleman panel's better than expected 3.5% growth surpasses the u.s. in the first quarter as abe-nomics begins to kick in. richemont rallies to the top of the stoxx 600. it's heightened dividend. the chairman is taking a year off, but is joking he might be bored. google stock is on something of a tear. he's testifying against british lawmakers about the taxes they pay. and investors are cheering cisco's earnings and upbeat forecast. a sharp contrast to the negative comments from the tech bellwether's rivals.

european stocks are treading water. on the bond markets, kind of as you were, really. ten-year bund yield webs 1.37%. ten-year bond markets on that mark, as well. we don't have the aussie markets on there, but it's continue to go fall down to 97.38. yen is down 18% so far this year against the dollar. we could have the best or the weakest yen since 1979 when it rose 23%. as far as euro/dollar is concerned, we're currently at 1.2855. pretty much on the six-week low at the moment, as well. and we'll keep our eyes, as well, on the swiss franc. right. meanwhile, we'll get over to

talk about the hotel industry with yusef in a few moments' time. before that, we've got a big focus on hong kong's ipo. sinopec is in -- not sinopec itself, but sinopec engineering is reporting ways around $1.8 billion, making it the biggest public offering on the hong kong exchange this year. it's a unit of sinopec's group of the range. joining us for more, francis loome. thanks for joining us. what do you make of sinopec engineering as an investment? can you hear me, francis? can't hear me. let's find out what's coming on the next access middle east. thank goodness yusef is there. >> i am, ross. don't worry. always here to support you when you're in need. the hotel industry obviously has been an ongoing story in the

united arab emirates as a whole. the numbers tell a story of their own. if you look at the rival necessary dubai along last year, those were around 10 million, 9.3% year on year growth. it's a similar story in places like abu dhabi where they're spending a lot of money to make the a compelling destination. in saudi arabia, they're trying to change up the visa rules. so hotel revenues up and, really, a lot of excitement and mega projects coming up with billion dollar price taths. the questions is, where is this all going? i spoke to the ceo of ighg richard sullivan. here is his takes on what's happening. >> we look at the demand, we look at the infrastructure investment, we look at the focus the government has behind that and we look at the interest our owners have some building

assets. what we see is a lot of demand on top of the upscale luxury business. >> a lot of investors argue that it's what we see in china. you are not on the same page. or at least it's not as exciting as some investors would continue to claim, right? >> you know, we're down africa. i think it's -- we have to decide where we put our efrs and, you know, where the market is developing. there's no question that we have put a lot of resources behind china, behind india, behind the middle east and that's where we have them. i think with africa, maybe some of those people are a little behind and the markets are looking to africa to phase them in that front. i don't think it will in the

short-term. >> now, t recovering. we're still far off the numbers with 14 million or so, the rivals that they had in the year before the uprisings in 2011. i also sat down with the ceo of marriott international who have exposure to egypt and this is how they are handling the situation. >> we have seen business fall significantly, obviously. but it's coming back. even this year, it's performing better than i would have feared. you read the newspaper and you see the continuing uncertainty in that market and i would have expected that there would be no growth or nearly no growth this year compared to last year. but we're actually seeing good groeth compared to last year, but -- >> it's clearly still a trouble spot when you look at what's happening on the ground in cairo and some other parts of egypt. how do you deal with the

prolonged slump in traffic as a global brand like marriott? >> that has to be driven by the property level and the market level. for us, it's about making sure we're doing the best we can for the owners of the hotels. we manage hotels for third party and local owners and make sure we take care of our people in a way that makes sense. so for a temporary period of time, those issues are often easier. >> that was arne sorensen. it was a bit of a preview of what's coming up tonight. make sure you tune in. the conversation will continue with different ceos from the hospitality industry to really understand the possibilities that expand in this region and a closer look at how golf tourists are keeping some businesses in europe afloat. ross, i am certain you'll make it tonight. >> you know. you know i have -- will. and even if i haven't, i've got it permanently tagged. >> you've got it always

recording. >> i've got it permanently tagged, the whole thing. yus yusef, thanks very much indeed for that. looks like a good show. meanwhile, abe-nomics seems to have a magic touch when it comes to japan's institutions. more from tokyo. is that good? no. a little later. meanwhile, let's remind you of what's happening with car manufacturing. growing year on year 2016. uk car manufacturing in april up 116.6%. all right. british prime minister david cameron did survive the parliamentary vote looking to last week's speech to avoid a

clear mandate in europe. but those in his own party voted in favor of the motion. the prime minister speaking said he was profounsing relaxed about the vote. at the same time, the chancellors insist this is not for turning. he will not be able to reduce the deficit and that his way is the only viable option. >> we won't penalize that. we won't drive wealth creator away from our shores, but bring them here. we are traveling a hard road but we're making progress. and with your help, we will get there. $1.8 billion, that's how much sinopec engineering has reportedly raised in its ipo. the company sinopec is said to

have priced the deal at the bottom of the range. the group reportedly sold more than $1.3 billion at 10.50 hong kong dollars per piece. francis is back with us now. >> can you hear me now? >> great. good stuff. much better. what is the traction of this listing? >> the largest company necessary china are in the world and they still have a lot of engineering work to do. but you look at the ipo numbers, the public tranche is 28 times what was ascribed. and that will be a huge success, but they can only price at the lower end of the range that show the institutions are really not there. institution will not support the

share. in this top of the range. so that really shows the support on its debut. it will not be that great for -- >> why -- why do you think the institutions aren't supporting it so much? >> well, as we have all this government owned and state-owned enterprises, many of the chinese owned corporations are being coerced by the central government to subscribe to some shares. but, first, if the public is enthusiastic like this time, they will gladly withdraw from the ipo. so there is no guarantee that they can get money from this ipo. if they can do that, they will. >> as far as the hong kong ipo market is concerned, there's still quite a few companies

lining up. and if the demand isn't there, does that suggest that they need to raise the catch? >> well, aside from these two huge ipos, the other ip os are really what you call the reits. and they use high yield to attract investors, subscribers. they're offering you up to 6.5%. so in this low interest rate environment, there will always be high yield securities. but for higher risk ipos like galaxy securities, i think there is a chance that it may fall below the ipo price. but institutional investors are

very skeptical and is very careful about it. >> yeah. how much support would that be for the reits? presumably, they're offering a fairly steady yield and everybody is looking for yield. >> yeah, that's right. that's correct. and all the reits in hong kong, they're all reaching strong high. and especially this one from eagle and hopewell are offering something like 6% above yield. there is much, much more than you can get from corporate bonds or actually bank savings, which is off at all. so i think for these, i think the retail support and institutional support is there.

>> francis, just stay there. i want to read this other story. the assets of taiwan broadband communications is going to raise around 1.1 billion in a singapore ipo. the firm reported at the upper half of its range. the trust plans to start taking orders from retail investors tomorrow. on may 29th. if successful, it will be the second biggest listing in singapore this year. it is a -- as i say a taiwan based company. have you got any interest in that? >> i think you have to look very carefully at the tv market in taiwan. the small market is really a market of 22 million people. and no single tv station has more than 8% of the market.

don't forget the hong kong -- lost a fortune, they're trying to get the tv stations running in taiwan. so it is not all roses. so there is a lot of issues associated with this. >> all right. thanks for that, francis. chief economist at oriental finance group. boeing and ge are alerting airlines of another potential problem in the 777. in both cases, only one engine shut down and the plane was able to continue to flying safely. gearboxes which are found around 26 planes in service and another 44 in production. ge is sending replacement parts to the airlines. all right. meanwhile, there's the stock, up 0.5% for ge and boeing. abe-nomics seems to have something of a magic touch when

it comes to financial institutions. it's not doing an awful lot. japan's top three banks took a hit today. yukako has more on the story. >> hi, ross. japan's three mega banks tumbled after net profits are to fall by more than 10% in the current fiscal year. mtsby see ufj and mizuho financial fell by more than 3%. in fiscal 2012, the three banks posted a consolidated net profit of 2.2 trillion yen which is a seven-year high thanks largely on trading gains by bonds. long-term interest rates are on the rise. mufg projects that jgb trading gains will jump to 100 billion yen or one-third of the year earlier. meanwhile, mizuho estimates that a 1% rise in interest rates will

stave losses up to 200 billion yen. now, in order to hedge risks, banks are moving to reduce their jgb holdings and diversified earning forces. as of the end of march, the combined holdings of jgb's five largest banks fell by 3.7% on the year to around 118 trillion yen. they're basing up for the bank of japan's massive jgb buying measures which are to come. that's all from the nikkei business report. back to you, ross. >> okay. thanks for that. a reminder of what's on the agenda in asia tomorrow, markets in hong kong and south korea are closed in commemoration of the birthday and japan will report march machinery orders. we have numbers out of gazprom. it's down 18% on the year. adjusted to 2.76 billion rubles. still to come, some yield

hungry investors are now scrambling to get their hands on greek corporate bonds amid signs of the market calm. it's now time to get in or not. we'll weigh up the risks and the rewards.

a senior google executive is to answer questions before the british parliament this morning to answer questions about tax affairs. this has become something of a big issue. google's northern and central european boss will testify again following a grilling from the public accounts committee back in november about the company's apparently low tax bill. it paid just $16 million in tax between 2006 and 20121. amazon oo tracted negative attention which it was determined it paid 3.7 million taxes last year compared to an income of 6.5 billion pounds. switzerland has concluded trade talks with china. the swiss economic minister concluded there were no concessions made on sensitive

issues. although the specific deals are not yet known. the move is expected to boost top export concerns. who is going to benefit most, carolin? >> well, according to capital markets, it's the watchmakers richemont and swatch who are the main beneficiaries. and it's pretty clear why. it's because of their big exposure to mainland china. swatch derives 38% of its group revenues from mainland china, the number for richemont is only 30%. but capital markets says in a note that these two companies could grab market shares from other european luxury goods companies and to some extent it may offset the crackdown on corruption that we talked about before. other beneficiaries could be sgs and abb, set to benefit with an

exposure of 13%. ross. >> how big a deal is the overall for the country, carolin? they've been working on it for a while. >> they've been working on it for three years. it is a very, very big deal because china is already switzerland's sixth biggest export market. watches have been hugely popular. in the first quarter of this year, we've seen slowdown in terms of exports to china down over 26%. over the last three years, we saw growth rates of 30%, 40%, 50%. that is a bit of a fly in the ointment, but overall, the importance of china's export market will grow because this free trade agreement will significantly slash some of the tariffs for the manufacturing, agricultural and chemical sector. >> did deal for them. carolin, thanks very much for that. that's the late freft zurich.

prime minister anthony samaras will visit china. the visit comes after a rebound of the crisis. the exchange has clamd over 200% and bond yields have eased dramatically. also, further boosting bond prices, it sent ten-year borrowing costs down to a three-year low. ten-year greek debt yielding 8.77%, the lowest since june 2010. investors have been scramblebling to capitalize on the market. daniel loeb has been getting around this week is reportedly among those risk takers, setting up a special hedge fund focused on greek assets. so what are the risks?

what are the rewards? joining us is nicole marianelli. thanks very much, indeed. >> good morning. >> a lot of people picking up the greek mantle, it will would. you're not among them. why? >> well, we are not picking up greece as a general risk about the country. we prefer to do wliek a bottom up analogy and see if there is something in terms of a value between yield or our capital appreciation compared to the business. for example, the stock you're seeing are shipping because we think that given certain assumptions, shipping may be bottoming out. >> is shipping going to be

yielded -- shielded, i should say, from any changes in taxation? it's an obvious place for the government to go and try and raise money. >> yeah. it's difficult to go say which sector will be shielded. but shipping is trading, shipping companies are trading at their lowest levels in terms of this value and the value of the -- is very low. you were mentioning china and chinese -- going to china. one of the first investors to get back into greece was china, buying the -- and since then, traffic has gone up quite a lot, apparently.

so we think the call on shipping is global. >> petroleum and the figures -- >> as i said, it's more than widespread exposure to the country. to be honest, we don't know if these bonds have performed very well in a matter of days. we don't know if this is just because a lot of due diligence has gone into analyzing these companies because of their project expect and that's a good reason for the rally or just because they were yielding 8 plus percent. >> is it part -- there is a global hunt for the euro. has that spilled over now to greece? >> we feel that we prefer to deal with portfolios. so for every high yield bond that we buy, we sell two, for example. we update from investment grade, to longer bonds from shorter

bonds, from unsecured to secured. because we feel that there is a scrambling for yield and in use by the central banks. of course, that will not last forever. and as a general rule, if there is a repricing somewhere in the future of the high yield market, for example, also it is greek bonds with the price, as well. >> what do investors say about the banks? is it a short-term play there? >> again, if you look at the prices of some of the biggest banking, they've gone up exponentially in a matter of weeks. and there will be yields of hedge funds buying into this. and we think it's an optionality trade because probably they trade at discounted values.

it might be the one that's gain, all the other investors that get in now might not be rewarded. as a medium term trade, we do not trust -- because problems can arise in time. honestly, in an economy that has dissent grated, a leverage play on the economy cannot really be trusted. >> thank you very much, indeed. spanish banks, on the other side, could take a fresh hit from bad loans amid pressure from the bank of spain to write down restructured loans. this according to the ft. the central bank reportedly wants lenders to write down their 200 billion euro portfolios.

analysts warn the move could force some to sell-off to avoid a cash hike. quarterly sec filings are in some several management. berkshire hathway has sold its shares and raised shares in apple. george soros cut its stakes in apple and david kulpepper sold apple. but others still like the iphonemaker including david einhorn and here is how some of those stocks are faring today. chicago bridge is the one that's responding to mr. buffett's fresh investment of berkshire hathaway's fresh investment.

the world's gold council says total demand for gold fell first quarter 2013 compared to a year ago. so we're asking today, is gold oversold? let us know. get in touch. e-mail worldwide@krrchbz.com, tweel, @cnbcwex or direct to me. still to come, president obama's outrage over the targeting of consumer goods. why the white house is losing control over its own destiny after a triple whammy of scandals. second half of "worldwide exchange" after this. we went out and asked people a simple question:

how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪

a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪

the second half of "worldwide exchange," here are the headlines. japan's better than expected 3.5% growth surpasses expectations for the first quarter signs abe-nomics may be kicking in. swatch hiked its dividend. richemont's chairman is taking a year off. investors are cheering good earnings after a forecast with the sharp contrast even to negative comments in some of the

bellwether's rivals. and president obama fire tess acting head of the irs. but first, a role in the growing scandal over the agency's targeting in conservative political groups. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. another fresh record close to the s&p and the dow last night. the nasdaq closing at the lowest levels since november 200 0. right now where we start today, we see futures coming up. anyway, we are at the moment some 12 points below fair value for the dow. the nasdaq at the moment is just half a point below fair value. s&p 500 is a couple points below fair value. hasn't been anything over the last couple of sessions. ftse cnbc global 00 just down into negative territory, not by

much. five points, european stocks. the ftse is up 7 points. we were up, what, seven points yesterday, as well. just down 12 for the xetra dax, but pretty much near those all-time highs. cac 40 off 9 points and the ftse mib up about 0.3%. on the bond markets, just keep raising. italian realized, 3.9%. on the currency markets, the aussie/dollar continues to weaken once again. we just move that down. we've got a 9806, down to a fresh low this week, down over 5% for the week. dollar/yen, 102.52. pretty much on the 4 1/2 year high at the moment. and euro/dollar continues to weaken 1.2865 down near a six-week low, as well. the dollar index on a ten-month high at the moment. that's european trading, recap the asian session. sixuan will do that for ussous

of singapore. >> thank you, ross. asian bourses were a bit mixed despite japan's upbeat growth data. the nikkei 225 was the stand down winner these past few weeks, pulled back from its multi year high. china's shanghai xotit did very well today. it climbed 1.2% as investors slipped in to buy stocks on the cheap. plenty of earnings news moving equities today. china's internet company tencent shares just 6.5% after better-than-expected earnings. parkson slumped over 8% as results disappoint. in japan, olympus soared a whooping 18% after the company said it expects profits to triple this year, but that japan's top three banks lower today down by about 3% after forecasting leaner earnings ahead. and this as the government's aggressive bond buying program squeezed at their jgb trading

which is their major revenue source given weak corporate lending market. and in australia, mining stocks continued to slight by weaker metals prices. gold miners on the bottom here, they lost between 5% and 11% today. back to you. >> all right. thanks for that, sixuan. we've got a eurozone trade data, 22.9 billion euro surplus. it's mainly because imports have slumped. it's another indication of the economic weakness we've got as evidenced yesterday by the gdp numbers. meanwhile, japan surprised today with its own figure. qdp coming in better than expected. the economy up 0.9% quarter on quarter. an impressive 3.5% year on year. it actually means that japanese growth outpaced the u.s., which grew 2.5% in the january to

march period. there is one bleak spot. corporate investments down for the fifth quarter in a row. whether analysts expect the number so pick up has improved sentiment and should translate into more business spending. as far as the agenda in the u.s., 8:30 jobless claims are forecast to rise by 7,000 to a total of 330,000. also at 8:30, we get the april cpi. expected to rise by 0.2% and is by 0.1% when you exclude food and energy. april housing starts out at 8:30. they're expected to drop more than 6%. building permits are seen rising by 2.4%. and then at 10:00, you get the may philly fed survey, no less than five fed officials speaking throughout the day. if that's not enough for you, i don't know what is. walmart reports results before the open as does kohl's after the close. we'll hear from applied

materials, autodesk, dell, nordstrom and jcpenney. the head of the irs has been fired amid the scandal that the irs gave conservative groups more scrutiny. the penalty says he's angry about the behavior of irs executives and the misconduct was inexcusable. he said no laws need to be put in place and imposed in a fair and impartial way. >> i will not tolerate this behavior in any agency, but especially in the irs given the power that it has and the reach that it has in all of our lives. >> and there are now multiple congressional hearings scheduled next week on the irs scandal.

the house oversight committee has asked the irs to make five mid level employees available for transcribed interviews. joining us, mary jo. hello. nice to see you. >> good to be back. >> it's quite a good scandal for politicians. >> helping the poor taxpayer, defending our freedom against the tyranny of the irs. >> yeah. >> it could be a good play. it's a bad situation, though, because the irs is the one agency in the federal government that terrifies people more than anything else. and when you receive a letter from the irs about your tax return, it always includes a paragraph warning that -- about perjury, about the law, and it

frightens you. so for the public to find out that the irs has not been playing fair with assets of the tax codes, very technical aspects of the tax code is chilling. and it undermines particularly because this occurred in the run up to a presidential election. it really undermines the credibility of the irs, the treasury department, and the federal government of the united states. >> yes. long-term, are there any long-term fallout? >> potentially, yes, because the president, of course, is working on his legacy agenda. and this creates a diversion from that. this gives them a different election issue from the normal agenda that they might have been working at this stage. and so it does have broader ramifications. but more importantly, taken

together with the benghazi e-mails and the saga of what actually happened on september 11th, 2012 and the justice department sociologied press caverns of in essence wiretapping, the associated press phones of the reporters, both of their work and home phones and more importantly their phones in the united states capital. it's a triple whammy of really bad stuff converging on a very bad time. >> yeah. this is just what happened, though, isn't it? >> not usually. not usually all at once. >> all right. >> jpmorgan is seeking five years of data and wants

confirmation of new safeguards bloomberg has put in place to stop future privacy breaches. you're into reputational crisis management. bloomberg, have they dealt with this -- it's an interesting thing here because we knew about it in 2011 and then the head came out and said this is pretty much embedded from the -- he implied that we've been doing this from the start. how have they handled it? what's the fallout? >> i think since it became public, bloomberg has handled it well. it's almost a textbook case in crisis management. they came out with as much they could. they installed a chief information officer who is going to install chinese walls and take other actions reporting directly to the top of the company to ensure this sort of

thing doesn't happen again and also to find out exactly how what happened happens. so textbook case. but with all of these scandals, both the government in washington, bloomberg, jp morgan chase itself and the wales, i'm reminded of a quote where lady violet said the truth is neither here nor there. it's the look of the things that matters. >> that's a terrific nbc product, too. >> sorry about that. >>. >> still around. more to come from you. do you have more quotes for us? think of some. >> i probably do. a google executive is sitting before parliament today to answer questions about tax affairs.

google's northern and central european boss will testify again following a grilling from a public accounts committee back in november about the company's apparently low tax bill. it paid just $16 million in tax between 2006 and '11. amazon attracted negative attention yesterday when it was revealed that it paid only 3.7 million in, tease last year compared to an income of $6..5 billion. getting back to your quote, mary, it don't look good. >> it really doesn't look good. but on the other hand, you cannot blame a company or an individual for that matter to take full slang of the breaks that they're allowed under the tax code. tax codes in general are too complicated, they're too hashed to file. too hard to figure out. companies have the advantage of having highly paid tax lawyers who pursue their best interests. it looks awful, but it's legal. >> what they should be doing,

they would be coming out and saying, this is what we paid lawyers and insurers. this is how much people we employ and the tax altogether they pay. if i was going on the front with these guys, that is how i would handle it. >> i thought that amazon's statement was a bit wet. they could have been morrow bust in defending their business, defending the overall contributions they make not only of the uk, but of europe more broadly and the world. and talk about the employment at a time when employment is really important payroll, all of these things. >> meanwhile, on cnbc.com, forget about the brick bull run in russia. the country could be heading for anemic growth. find out why on our website. the stellar rally in global

equity markets appears to be far from over. some are suggesting they're doing something they haven't seen for a while. catch that on cnbc.com. don't forget, follow us on twitter, as well. @cnbcworld. still to come, all aboard the world watch tour. we'll take a look at what some of the world's biggest money managers have put into their companies and which have been taking it away. are you still sleeping? just wanted to check and make sure that we were on schedule. the first technology of its kind... mom and dad, i have great news. is now providing answers families need. siemens. answers.

ababe-nomics is getting in gear. the japanese economy rose be better than expected 3.5% for the first quarter. cisco shares are up. the company posted rising quarterly profits in revenue. and president obama fires the acting head of the irs over the agency's scrutiny of conservative political groups. as far as earnings out today, shares of zurich insurance are lower after the company posted a 7% drop in first quarter net profits to 1.60 billion euros, well below analyst estimates. the swiss insurer cited a challenging economic environment. carolin has more for us on this and other earnings from the

swiss capital. hi, carolin. >> and actually, ross, it's not that big of a miss. zurich is down by 3%. but some analysts say expectations were really high and this is really just a small miss in terms of the bottom ryan. we saw that 7% decline and first quarter net profit coming in at just over $1 billion. ubs, for example, points out that the capital position was very strong and says, look, this result is lower partly because of the lower reserve compared to a year ago. but on top of that, you've got to investment economic which was shortly lower than some had expected. but keep in mind that the lower interest rate environment is very difficult for the likes of zurich insurance and other life insurers. overall, zurich said it is confident it can reach those 2013 targets, ross. >> yeah. and look, on the other side, richemont shares trading higher. how good were their numbers? >> they were excellent, in fact. i mean, keep in mind that richemont previously, the

earnings results for the full year a couple weeks ago, and even those were much better than forecast with revenues up 14% in the full year, net profit jumping 30%. and this morning, it unveiled sales numbers. once again, beat expectations up 12% organically with japan very strong. that's quite interesting on the back of abe-nomics. it gave us an outlook which pleased investors. usually richemont is very cautious. this morning they said we know that the economy is slowing down, but it's not a big concern for us. last but not least, it said it was paying a higher dividend than expected. and the cfo said we want to increase dividends on a regular basis. finally, ross, you know that the chairman, john rupert, he says he's taking a 12-month sabbatical in september. he says he wants to raise monies and travel to antarctica. it begs the question, what would

you do with 12 months of sabbatical if you ever got it? >> aisle i'll join that wager right now. antarctica, how long sdupt to go there for? >> he wants to travel to antarctica and read 50 books. >> while traveling around antarctica or are those two separate things? >> i don't know. it could be separate. i don't know. >> he wants to read a book a week, roughly. okay. why not? if that's what he wants to do, who are we to say, yes, do it, mr. rupert. why not? yeah. okay. thanks for that. what do you think, mary? you probably already do read a book a week. >> i really don't. i watch dallas and abby. >> another marvelous thing to do with your time. >> be able to take a year off when you're the chairman of a company is a very good perk, i think. >> yeah. if you can't do that if you're

chairman, who can do it? >> precisely. >> absolutely. >> meanwhile, it's time to get your binoculars and go whale watching on wall street. berkshire hathaway sold its stakes in adm and general dynamics, raised stakes in wells fargo and ibm. here is stand out. took a new stake in chicago bridge and iron. that stock is outperforming. george soros sold apple. david tepper cut his apple stake by 40%. but others still like the iphonemaker, david einhorn raised his stake and dan loeb made a new holding in apple. here is a look at some of those stocks. i can tell you that i think it was british iron was up around 2% earlier on in frankfurt. meanwhile, an unwinding

position of gold etf has joust paced demand for the pressure metal. overall demand for gold was down 13% in the first quarter of 2013 compared to a year ago. so we've been asking viewers is gold oversold? let us know. get in touch, e-mail worldwide@cnbc.com. tweet @cnbcwex or direct to me. still to come, we've been talking about downtown abby. "the great gatsby" opened at the film festival last night. can revenue from placement become a major source of the area? ♪ bonjour

♪ je t'adore ♪ c'est aujourd'hui ♪ ♪ et toujours ♪ me amour ♪ how about me? [ male announcer ] here's to a life less routine. ♪ and it's un, deux, trois, quatre ♪ ♪ give me some more of that [ male announcer ] the more connected, athletic, seductive lexus rx. ♪ je t'adore, je t'adore, je t'adore ♪ ♪ ♪ s'il vous plait [ male announcer ] this is the pursuit of perfection.

♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ]

"the great gatsby" opened the cannes film festival last night. it brought old school hollywood glamour to the french riviera. the block bust's gowns, champagne and tiffany's jewelry with anything but out of fashion. the director is here to explain. it's an interesting year. you would think it's not much room for product placement, but

no, you would be wrong. >> well, yeah, because this is a great opportunity for brands to get involved. as well as the heritage of a brand. the roaring '20s was very extravaga extravagant. the same with tiffany jewelry. they've been around for many years and they have jewels. brooks brothers is getting involved with the suits of gatsby. >> how do they know that these plans are involved? how do they make that connection? >> without the obvious branding of the logos, whether it's the red crest or whatever, the association maximizes production on the back end of the film. >> so you go into brooks brothers, they've got a bigdy place. gatsby advertising in the window, telling people we made the suit. so they've got a great window display. so the really different brand

partnerships and how they make the awareness about their association. >> how much are they paying to be involved, right? how much funding is the film getting from these guys? >> that's interesting because they think a lot of people paid a lot of money to get involved. with a film looits like gatsby, for them, the film is financed. they're not looking for mopney. the big value for them is the marketing spin and the media that can bring. so, for example, if a brand can promote this through their channels on a global scale, that's worth a lot more. that's worth a lot more than -- >> they're actually promoting the film. >> so it's for a better brand and for the same company. >> how much more are we going to see? i mean, the question is how effective are brands measuring

the effectiveness of this? that's going to be key, i guess, to more -- >> definitely. and, obviously, in europe, we're talking about in europe in 2011, they've changed placement and more and more brands are getting involved in that. what's happening is as the brands are seeing this as a viable media or marketing tool and the platform that sometimes advertising doesn't live up to it. >> and some of the other films we've got, we saw liberachi. >> there's an old mercedes. that shows the heritage of the brand. champagne is involved in this. don't forget, these people, these lifestyles, it's very affluent. this is going to appeal to a certain audience.

so that sort of appeal, like with gatsby, it's going to be massive summer block burbuster. >> matt damon looked extraordinary. >> two more unlikely characters you couldn't find, but he looks remarkably like liberachi. >> i don't know whether the liberachi look is going to take off. >> that is the again, which look are you more likely to want to revive, this '70s look or the '20s? >> for me, it's the '20s. >> is it? all right. good to see you. thanks very much indeed for joining us. the big collars again. still to come on the show, cisco systems says its order books are filling up. is it all good news? we'll have more analysis when we come back. and another fresh record

close for the dow and the s&p last night. implied lower at the open, but we have been for a number of days now when we've got higher by the end.

welcome to "worldwide exchange." japan's better than expected 2.5% growth for part of the u.s. in the first quarter.

as babe-nomics appeared to kick in. president obama fires the acting head of the irs. the first of the role in a growing scandal over irs's targeted conservative groups. cisco rose on earnings. and richemont is at the top of the stoxx 600, a swiss luxury group posting sales and a hike in dividends. the chairman announces he's taking a year off. >> you're watching "worldwide exchange," bringing you business news from around the globe. >> welcome to the start of your global trading day. right now, we are trading below fair value. as you can see, we are implied weaker during the open, but it's

a long way to go until the close at the trading day. as far as the ftse cnbc global 300 is concerned, just off 5 points. it's been up around 7 points at stages. at the moment, up two points. dax down 17, pretty much near its all-time high and the ftse mib do you know up 0.3%. cisco's first quarter profits rose beating forecast as demand for services off weaker revenue from the flagship products. on the conference call, enterprise growth is on a good trend, it's solid, but nothing to write home about. revenue projection ones are above. michael is senior analyst at mkm partners and joins us now. micha michael, what do you make of the revenue side, first of all? >> good morning, ross.

cisco totally did better than lower expectations. you know, based on a lot of other tech company earnings and guidance out there. i think investors will brace for worse. this was pretty good. the mott most important thing is orders are getting better. orders are not great globally, but they're strong in the americas. we're seeing some of the strength start to go spread to emerging markets. even in europe, orders were flat and that compares to down 6% last quarter. so across the board, we're seeing an acceleration across aulthsall the geographies. valuation is very attractive. so we think this is a good story and a good stock to own. >> we got worried because we had ibm and sort of made us think about the environment. why is cisco bucking that trend? >> you know, it's a great question. and even if we just zero in on u.s. federal, where it's only down 3% year over year, it's

against a lot of competitors whose business was down 20% year over year. there is a lot of concern around cisco about longer term technology trends and things like software and wi-fi and these new issues are exceeding expectations and doing very well. again, controlling what it can control. i think they have their mojo back a bit. >> do you think they can keep that up? >> they're talking about 61, 62 long-term. they did 63 and this -- you know, in this quarter, nothing but great execution. guiding conservatively 61, 62 going forward, they're intending to beat their guidance.

i think it's a good sign they're keeping expectations low. under promising and overdelivering. >> and you mentioned sort of the fact that, you know, the public contracts. what is their expectations for public contracts? on tech? >> well, you know, there's a big debate out there. u.s. federal government spending in march .april, very weak across the board. but i think investors are looking on the bright side right now, especially with the market doing well, stocks going up, everyone is scouring for better news. i think there's a sense in there that the u.s. may have bottomed and will probably get better from here. cisco needs to see more than anything else the european enterprise market start to do better. and we have gotten that, again, back to flat year over year. it will be down year over year for several quarters previously and hopefully that trend will continue. if the americas recovery is kind of leading and europe is behind that, if things play out the way chambers is talking about, i

think the stock is going -- you know, going significantly higher. you know, possibly certainly into the high 20s, possibly to 30 a share later this year. >> michael, thanks for that. good to see you earlier this morning. we appreciate it. and as michael said, john chambers has his mojo back. has he? we've got an interview with him at 8:40 a.m. eastern. apple's ceo tim cook is going to appear before a panel hearing next tuesday. apple is one of several multi national companies that ought to give a majority of its profits from international sales parked outside the u.s. many of them complain taxes associated with repatrioting that money just too costly. this comes as a senior google executive is appearing in front of a british parliamentary committee to answer questions about tax fares over here. this is possibly tax avoidance.

matt pearson, google's northern and central european boss will testify again following a grilling from the public accounts committee back in november. then about the company's apparently low tax bill. it paid just $16 million in tax between 2006 and '11. amazon attracted negative attention yesterday. it revealed that it paid only $3.7 million in corporate taxes last year compared to an income of 6.5 billion pounds. so, yeah, keep your eyes on that. also on today on cnbc.com, forget about the brick, bull run in russia. the country could be heading for ten years of anemic growth. find out why on our website. cnbc.com. also, the stellar rally in global equity markets appears to be far from over, but some say they're trying to spot something they haven't seen for a while. catch it on the website. follow it, as well, on twitter, @cnbcworld. and still to come, what are

the whales watching? investors wait every quarter from filings for big investors such as warren buffett and george soros. we'll take a look in just a few moments.

♪ ♪ ♪ ♪ ♪ the new blackberry z10. with time shift and blackberry balance. built to keep you moving. see it in action at blackberry.com/z10

it's time to get your binoculars as hedge fund investment managers disclose what they've been buying and selling over the past few months. jackie has been taking a look at the portfolio moves and joins us with the details. hi, jackie. >> good morning, ross. i did forget my binoculars this morning, but the good thing is, i know exactly what's happening. it's like clockwork, we get a fresh view of what some of the world's top investors like or don't like. first up, berkshire hathaway, last month, warren buffett told investors the company had 9 6/billion in its portfolio. it sold adm, raised holdings of wells fargo and ibm and disclosed a new stake in chicago bridge and iron. the filings don't reveal who made the actual moves, whether it was buffett or his portfolio managers. meantime, checking shares of some of those companies, if we

could get them up, we could see that adm, general dynamics, wells fargo, ibm, they are loeg. and chicago bridge trading higher 2.2%. george sore yos cut stakes in apple and ibm. but johns paulson didn't make any changes. paulson took new positions in citigroup and oil and gas producer hess. apple features prominently in several quarterly filings. soros cutting his stake. david tepper cut his holdings by 40%. it had been his second biggest holding during the fourth quarter. on the flip side of that, david einhorn raised his stake buying both apple stack and options, while dan loeb of third point disclosed a new holding on apple options. taking a look at apple shares this morning, they are trading

slightly high, as well. >> jackie, thanks for that. interesting stuff. mary joe jocobi, what do you read into these guys finding sales? >> i think it's interesting just to see what they are doing because they are very successful investors. on the other hand, it's after the fact so it's not all that helpful other than in terms of trend watching. why are you buying banks now, for example? why is apple hot again? but what does it really mean? an analyst better than i needs to interpret -- >> i expect you've got a long-term buy and holder like warren buffett, if he believes in something, it's a fresh purchase, you didn't get in at the same time, but perhaps with warren it doesn't make a difference if you get in two months after he did. >> or get out two months after he did. i think chicago bridge and iron is interesting. there's a big push in the united states to start rebuilding

infrastructure and to make public works projects. this has been going on for a couple of years now. so maybe he knows that it is actually going to happen now. yeah. let's hope it does. let's get a recap of the headlines. sounds like a good thing. abe-nomics gets in gear. japan beat first quarter forecasts. cisco cheers solid earnings sending shares higher. and the acting irs chief is fired over the scrutiny of conservative groups. meanwhile, boeing and ge are alerting airlines about a potential engine problem on the long range 777 jet that caused them to shut down flights this user. in both cases, only one engine shut down and the plane was able to continue flying safely. the issue affects transfer gearboxes found on around 26 planes that are in service and another 44 in production. ge is sending replacement parts

to the heir lines. ge up around 0.25%. boeing up 0.4%. a federal judge has ordered dow chemical to pay $1.2 billion in price fixing case involving chemicals used to make foam products in cars and furniture. dow is one of several companies named in a class action lawsuit involving a conspiracy to fix chemical prices, but it was the only one that didn't settle. dow says it will appeal the verdict. still to come, walmart is set to report first quarter results in just around an hour. what will the retail earnings giant say about the health of the consumer? we'll preview those numbers in just a few moments. we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need

to enjoy all of these years. ♪ 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. [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines

while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] [ telephone ringing ] all stations come over tong room mithis is for real this time.m. 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. is connecting today's leading companies to places beyond it. siemens. answers. if you've just joined us this morning, in european

trading nearly three hours during the course of the day, pretty flat, really. the xetra dax not far from its autopsy-time high. down 18 points. the ftse mib is up 0.2%. another record close for u.s. markets last night. the dow up 60 points, the s&p off 8.5. we are called lower at the moment. not by much it must be said. the nasdaq up at the best levels since november 2000. the acting head of the irs has been fired amid the scandal of the u.s. tax agency security groups for extra juteny. at a news korns, president obama said he told jack lew to seek the resignation of the acting irs commissioner steven miller who was aware in 2012 of the agency's efforts to single out specific groups. the president says he's angry about the behavior by irs agents and the misconduct is inexcusable. he says new safeguards need to be put in place and laws

enforced in a fair and impartial way. >> i will not tolerate this kind of behavior in any agency, but especially in the irs. given the power that it has and the reach that it has in all of our lives. and there are now multiple congressional hearings scheduled next week on the irs scandal with the first steps tomorrow. the house oversight committee has asked the irs to make five mid level employees available for transcribed interviews. a reminder of what os agenda in the u.s. today, weekly jobless claims are out at 8:30 eastern. i'm thinking of you, kelly. at 8:30, we get the april cpi expected to raise by 0.1 mers when you exclude food and energy. april housing starts also out at 8:30. they're expected to rise 6%. at 10:00 a.m., we get the may philly fed survey, no less than five fed officials are speaking

throughout the day. walmart reports first quarter earnings at 7:00 eastern. they're expected to positive improved results. earlier this year, some held off on making pure chase as they dealt with higher payroll taxes and delayed tax refunds. retail analyst to jenny capital markets, he's in new york. david, thanks for joining us. do you think we are going to see the impact? what impact are we going to see in these numbers? >> i mean, i think the sales are going to be tough. the other thing you didn't mention is weather, too, which is something that in the northeast and the northern part of the u.s. in particular has been pretty tough. this time of year is seasonal. we'll have to see what they say. target said that the seasonal business had struggled in the early part of the quarter, as well. >> yeah. what are we looking for in terms of the confidence or, you know, for the year? >> they were guided to flattish,

but i would think people have readjusted models maybe down half a point or so where we are. i think if that happens, it becomes sort of a nonevent. what i think will be more interesting is commentary about the trends in the quarter, how they may be looking. once the weather got better. i hate to harp too much on weather, but there are a lot of moving parts between the tax increases and so on and so on. but i think the market may be willing to give a pass in the first quarter if it sounds like trends had improved late in the quarter and into may. >> specifically, what about the tax refund delays because the irs didn't get guidance from congress until very late on the budget deal? how big an impact do you think that has? >> over the course of the quarter, not tavp. but what they did say earlier in the quarter when they announced fourth quarter is that that did hurt them at the beginning of the quarter. but as that normalized, it should have reversed and helped.

so i think over the course of the quarter, it probably shouldn't have too big of an impact. but probably does -- did make it a more volatile quarter. >> let's talk about bangladesh and their new procedures. >> i think they may -- they'll probably touch on that. they tend to do a long prerecorded call. so my sense is that they'll probably touch on it and that they -- you know, and talk about sort of their feelings on it and, you know, talk a little bit about what this new process that they talked about yesterday. >> what do you think about? we looked at that story in bangladesh. there's a lot of reputational issues around that. >> for a lot of companies, not just walmart. target in all of these, the other big box retailers. it's a terrible situation and they have to clarify very quickly ongoing what they're doing about it. and are they moving manufacturing elsewhere? which is not good for bangladesh very poor countries.

but probably good for their customers in the developed west. >> that's a difficult one. david, just finally, what view do you think we'll get on china out of walmart? >> well, i mean, china has been a struggle for them. they've had difficulty getting it going in china and i feel a feeling we'll see more of the same there. anything positive about china would be pretty good for the stock here. you know, it is -- it's not a big country for them today, but it's a big growth opportunity for them. so i think any signs of life that i think would be a big positive. >> it's good to see you. thanks for that. have a good day, david extrasburg joining us from capital markets. mary jo, let's get a final thought from you. report highs on markets. talk about the impact of payroll tax hikes, as well. just get a final view here. at the moment, we don't seem to have anything to worry about, particularly on the political front. do you think that's going to change again? >> it always changes.

there's speculation now overnight that the president will replace the attorney general as the attorney general's bidding another change in the cabinet after he just shook up the cabinet is unsettling. we've got a couple of nominees having a really hard time at the environmental protection agency and the labor department. so, you know, the one thing about politics is you can never take anything for granted. it's always going to change. >> isn't that true? mary jo, good to see you again. earlier, it was asked is gold oversold? it was tweeted, maybe, but as long as choo inna is buying, the trend line should hold. capital shoeman twieted despite the indicators, gold can remain oversold. "squawk box" will interview b beppe grillo tomorrow at 7:00 cet. right now, the original vrgz

of "squawk box" is coming up next. it has a countdown to markets opening stateside. we hope you have a profitable day.

good morning. today's top stories, president obama announcing the irs head is out after the candle. cisco offered an upbeat outlook, which is probably contrariry to what people were thinking. it's a busy day, key reads on inflation and housing. it's thursday, may 16th, 2013, and "squawk box" begins right now.

good morning. and welcome to "squawk box" here on cnbc. i'm michelle caruso yeah brar ra along with joe kernen and steve liesman. steve and i are spending the morning with joe because becky and andrew are on assignment today. the acting irs commissioner is out following a scandal on the agency. president obama said the conduct that targeted conservative groups for extra tax scrutiny was, quote, inexcusable. >> i will not toll race this kind of behavior in any agency, but especially in the irs given the power that it has and the reach that it has in all of our lives. >> more on this unfolding story from john harwood and politico's ben white in just a knew minutes pb but fist, cisco posting better-than-expected earnings on current quarter revenue. ceo john chamber says his company is seeing good signs in the united states and other parts of the world are, quote, encouraging. shares rising