hello, everybody. welcome. you're watching "worldwide exchange." i'm louisa bojesen and these are your headlines from around the world. japanese equities, they sell off once again on a stronger yen and investors piling back into bonds. the bank of japan responds with new moves aimed at reigning in jgb volatility. stocks in europe trying to hold on to small gains this morning with basic resources shares leading the way. the swiss economy reaching unexpected heights. gdp now rising to 0.6% in the first quarter boosted by a strong private consumption,

exports and a construction boom. and pass the pork, please. china's shuhui looks to united states regulators to approve its $7 billion deal for smithfield foods to grow the mainland's growing appetite for meat. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. hi, everybody. welcome to today's show. i'm very glad to be with you today. we've got a packed lineup for you. the hong kong retail sales are due rite around 30 memberships time. we'll get instant analysis of china consumption experts who says middle class consumer confidence is at its weakest point in five years. we'll also be taking a fresh look at research, showing us that most of the uk is looking like the most attractive country for infrastructure investment in the world.

find out what is hampering the bricks at 10:40 cet. and with the second reading of the u.s. gdp reading before the bell, we get larry hathaway's view on what the u.s. dollar's strength means for your investments. and we explore the commercial attention of drones. find out why its so-called unmanned aerial vehicles, they can go where no man has gone before. we've got a lot going on this morning. the nikkei stealing the headlines into the first hour of trade here in europe. the nikkei 225 closing lower by more than 5%. let's recap and go back a week, back in time. exactly a week ago, thursday of last week, that was when we saw the big correction on the nikkei 225 where it was lower by over

7% on the session alone, 7.3% lower. today we're once again seeing a similar move. we're below the 14,000 mark. we've seen extraordinary moves taking place in some of the treasuries, the bonds. treasuries are down somewhere in the region of 1.8% for the month of may alone, heading for the steepest monthly loss in a year. we're seeing yields and jgbs going lower in today's morning session at this time. all eyes now on what type of moves we can anticipate to see in the future coming out of japan both on bonds as well as on the equities. now, the bank of japan, though, is stepping up its effort to stabilize government bond markets. in its latest move, the bank of japan says it will buy long-term jgbs in 10 to 8 tranches in june. this after ten-year jgb yields hit more than a one-year high just last week.

chloe cho is following us out of singapore. >> huge volatility once again aside from the tepid handover from wall street, everybody is looking ahead to what's happening in japan. take a look at the volatility now, even ae we hear that the bank of japan is going to do 8 to 10 tranches in what it calls flexible operation to tame the long-term end of the curb, as well. the real problem is this. we've got some liquidity issues going on. a reuters poll indicated that they plan to reduce their jgb weighting to an 18-month low. so the odds are stacked up against what's happening. the interesting thing is the sell-off that we saw in the

japanese equity markets, 737-point sell-off over 5%. who is really selling? that is the big question. we might get a little bit of size, especially as we are learning that trust banks of japan were the biggest net sellers in all of last week. we're talking about to the tune of 465 billion yen. and to put more context into this, it is the biggest selling that they have seen since records were kept since late 1996, as well. going forward, what's going to be important is there's going to be a big announcement coming next week from mr. abe in what is called the third arrow. this is the final crux, the first being the fiscal side, second being the monetary side and the third being long-term structural reform. that is going to get growth back on the agenda. but the real issue is this, the market has come too quickly, too fast since late november. we're talking about a 70% to 80%

rally. people have expectations running high. even according to the bank of japan's calculation, a one percentage point rise on the yields on government bonds is going to translate into mark to market losses equivalent to roughly about 10% of tier one ratio for big banks, 20% for regional banks and even as we have been emotionally getting hyped up about the effects of abe-nomics, the data has been patchy. the jury has been out there as to whether abe-nomic sess working. we haven't seen that come through. return on equity, mizuho for one is still in the single digits and we are in a transitional environment. japan is still the world's fastest growing society, as well. so the jury is out there and how much abe-nomics will work, that's going to be interesting. very quickly, dollar/yen, we're getting close to 100.5. more downside coming from greater china.

the speculation is out there that the official china pmi released this saturday is skirting around the boom or bust level of 500. probably goes to show why we're seeing that rally in base metals. >> chloe, thank you for joining us. a lot going on. joining us now is nicholas smith from csa. nicholas, what do you think is going on? >> it's very easy to read too much into what's just happened. the truth is that the market was absolutely incandescent ahead of the wind down on the 23rd on thursday last week. ahead of that, the market was 244% above the 200-day moving average. we're still 26% up.

>> so what we had was an overheated market with come off with, what, 11% for topics. the valuations are not attractive. we've seen any piece of information that would call someone to sell off. it's merely that the market was overheated. do you think we're going to see more of a construction, though? we have seen significant buying on the nikkei since the beginning of the year, higher by more than 50% at its highest point. is there going to be more to come? >> the strange thing about all of this is that it actually wasn't the people you were expecting to panic in all of this. so the retail investor suddenly increased from 20% of the traded value last year up to 40%. and it was a temptation to think they were the people that were selling and they're not. what we're hearing is that the

movement is a huge movement in futures. what we're talking about is technicals. so the market is moving into fairly far into joef sold territory. i'm getting horrible feedback on this. >> do you know what, nicholas? let's leave it there. i know how difficult it can be talk when you're being spoken to, especially by your own voice. nicholas, we appreciate it a lot. thank you very much, nicholas smith joining us from clsa. coming back to our european equity markets, though, this is what we're looking at right now. we're flat to a little higher on the stoxx europe 600. red on the close we were looking at significant negativity. we had seen significant sell-off by the board. by the looks of things, a lot of people are questioning whether or not we're going to see fed tapering off in the near future.

let's move on and show you our main markets today. we're showing you higher levels across the board. buying from our european equities. the ftse 100 higher by 0.3% higher at the moment. the bond markets -- i'm just changing on, seeing a little selling taking place in jgbs and in treasury webs as well. the bund markets as well as the ten-year italian being bought out a bit, as well. the currencies, we've seen relatively stable rates being because in the euro/dollar, 1.2962. now, moving on, it turns out that shanghai international wasn't the only asian company looking to bring home the bacon. thailand foods are saying it's k6rd buying smithfield, as well. cp didn't say if it would offer a rival offer. we're expecting results out

from gome after a $96 million loss last year. it's been trying to adapt to new shopping trend by bolstering its online presence with some success this time around. record sales have hit a record high recently thanks to big ticket items like tvs, washing machines the. coming up o show, broken escalators, overflowing bathrooms and no wonder you'd want to buy online. that's wa our next guest is saying. stay tuned as we check on the consumers that have checked out. will there continue to be upward pressure on the swiss currency? stay tuned for that analysis, as well. 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. lets you talk face-to-face and share whatever's on your screen. blackberry z10 with bbm video. built to keep you moving. see it in action at blackberry.com/z10 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? ♪

hello, everybody. welcome. you're watching "worldwide exchange." i'm louisa bojesen. the swiss government says it will introduce legislation that will allow its banks to disclose information on american clients with hidden accounts.

if they do so, they will be safe from further prosecution from activities in the u.s., but they could still face substantial fines. speaking earlier, the ceo told cnbc that this is key to rebuilding switzerland as a prime financial center. frankly, we think we welcome this clarity finally coming on this topic by and large for the rest of industry. but as you know, for julius baer, we've been in dialogue with the u.s. counterparties for a while on to topic. so i think that's one further building stone in rebuilding switzerland as a prime financial center. well, carolyn joins us live out of zurich with more on this, carolyn. so it seems that we're taking another step in this, the story that's been running for quite some time. >> yes, absolutely. if you look at swiss media, they're saying this is another significant blow to swiss

banking secrecy. to be honest, many thought that swiss banking secrecy was dead since a long time. so the actual settlement now between the swiss banks and the u.s. authorities, though, that's still elusive and this is something that they've been discussing for years and years. yesterday, the swiss finance ministry made it very clear that they wouldn't want to bear any of the fines. now talk here in switzerland is the total fines for the swiss banking industry could be anywhere between $7 billion and $10 billion. julius baer, one of the banks that could be affected. morgan stanley writing a note yesterday that julius baer could be paying a fine of around 2dz 00 million, even if it were to pay $750 million and wouldn't have to pay new capital. credit suisse has set aside swiss francs in anticipation of this. ubs is exempt because it struck the agreement with the u.s.

authorities four years ago and paid $785 monthly and handed over more than 4,450 client names, louisa. >> that's a lot, carolin. swiss gdp has come in some 6%. >> zero percent for the fist quarter, versus a forecast of only 2.2%. and on top of that, we sea this upward revision for growth in the first quarter 0 to 0. %. this accounts for some 670% of the economy and that was a very important factor. on top of that, we saw

investment and construction very strong and export growth slightly positive. one of the few drags on growth was defense spending, but that was to be expected. wa does it mean for the s&b? not a lot according to a couple of economists i talked to this morning. they say it wouldn't change anything about rates and the exchange policy. it may only mean that they sleep better at night. >> carolin roth, thank you very much joining us from zurich. let's move on and talk about the impact or nonimpact we're having on our foreign exchange markets. from the big move that we've seen in asia overnight, not a lot of volatility. as one might have anticipated in currencies again. >> the setback in equity markets, the volatility

generally we're seeing is having an impact with regards to the broader currency markets. but it's just a correction we're starting to see unfold after the recent strong trend. i wouldn't be surprised to see the dollar coming under a bit more pressure as a result of broad positioning unwinding taking place. that is going to lead to some short-term corrective moves. many of the currencies have been under pressure recently. we could see a bit of a rebound in the commodity currency. the euro, even sterling as a result of this collective move. i think it is going to be a call with the dollar/yen recovery coming under place.

the yen could suffer setbacks. they'll be watching the crosses more carefully, the yen crosses. that will give us an indication of the sustainability of any yen correction at this point. >> do you think that we might be in for a reaction in the dollar story this afternoon if the u.s. data comes in stronger than anticipated? we have the april u.s. pending home sales and, again, reminding ourselves that the last bit of data states was was strong. >> certainly the dollar recovery trend we think is going to be sustainable over the medium term, in fact, is broadening out over the dollar rally. i think we are seeing that broadening despite this correction. that data will help the medium term dollar recovery be sustained. so we've been looking for any positive surprises to be feeding

through into bullish news for the dollar. so the overall good news from the u.s. will continue to support the dollar. >> how about the aussie dollar just shifting from the majors over to the commodity currencies, instead? by the looks of things, are we scaling back our expectations that the bank of australia is going to be cutting rates? >> well, i think the way the economic picture is unfolding now with australia particularly with regard to australia, the cap ex space we had overnight was quite interesting, as well. interestingly, it's the mining sector which is seeing some weakness coming through to cap ex. they have highlighted the risks on cap ex and the borders they have on the economy. that could well be the case.

it could be market expectations with further easing from the rba will continue. so i think any rebound in the australian dollar is part of this broader correction we're currently seeing today is likely to be limited and i continue to look for the australian dollar to come under pressure over the medium term. >> ian, thank you very much for your time this morning. official figures reveal spain's economy that long by 0.5% in the first quarter. yesterday was spain was granted a two-year extension to hit deficit targets. jon bon jovi is waefring hits appearance fee for a concert in madrid to make the

tickets more affordable. how nice is that? but with negative interest rates, will that be good or bad? we'll bring you the opinion of the european central bank's vice president. in the meantime, angela merkel will be meeting today with francois hollande. merkel and hollande will be joined by executives from leading corporations from their respective countries. now, the meeting comes a day after the eu granted france an extra two years to meet its target. brussels anchored president hollande by calling on him to cut labor costs and pension reforms to cut his deficit. hollande warned them not to deck

tate orders on how france runs its economy. at 7:30 tonight, the auction house in paris holds a special uk wipe auction from the wine cellar of france's presidential palace. they go on sale. tom mckenzie has the details. >> they come from vineyards across france and have fortified world leaders for 65 years. but beginning tonight, whines of the cellar will be up for grabs. the socialist president personally approved the wine auction on conditions the proceeds will be used to reinvest in new vintages.

>> the first of those producers is surely born to help those producers be known here in france. >> but that is not the only aim of the auction. any surplus of the 250,000 taking will be used to help bring down the state budget. >> i hope it will be much more. it's difficult to know what to expect, but it's difficult to know what to expect, indeed. >> the most expensive in the collection has been conservatively priced at 2,200 euros. wine experts say that and the cash of owning a vintage from the presidential collection should ramp up prices with buyers around the world. >> we are talking about producers and each one of these generations.

>> the auction isn't a first in france. the city of dijon held a similar auction in january raising 150,000 euros to help fund its social services and analysts predict we could see more austerity driven wine sales across europe in the future. now, unmanned aerial vehicles, better known as drones, are often associated with military operations. but some argue there's a great business opportunity behind the technology as drones capitalize on both national security and commercial needs. we speak to an expert at 10:50 cet about these opportunities. in the meantime, we want to know are drones threatening our privacy or do you think that this could turn into a big business opportunity to use drones in all kinds of other business areas? get in touch here on "worldwide exchange." find us on e-mail, worldwide@cnbc.com or find us

via twitter, @cnbcwex or find me directly on twitter, as well. @louisabojesen. blackberry z10 with time shift. built to keep you moving. see it in action at blackberry.com/z10 investors could lose tens of thousands of dollars on their 401(k) to hidden fees. is that what you're looking for, like a hidden fee in your giant mom bag? maybe i have them... oh that's right i don't because i rolled my account over to e-trade where... woah. okay... they don't have hidden fees... hey fern. the junk drawer? why would they... is that my gerbil? you said he moved to a tiny farm. that's it, i'm running away. no, no you can't come! [ male announcer ] e-trade. less for us. more for you.

no, no you can't come! the blisters were oozing, and painful to touch. i woke up to a blistering on my shoulder. i spent 23 years as a deputy united states marshal and i've been pretty well banged up but the worst pain i've experienced was when i had shingles. when i went to the clinic, the nurse told me that it was a result of having had chickenpox. i wouldn't wish it on my worst enemy. welcome back, everybody.

japanese equities sell off once again on a stronger yen with investors piling back into bonds. the bank of japan responds at new moves aimed at reigning in jgb volatility. stocks in europe try to hold with small gains this morning with basic resources leading the way. the swiss economy reaching unexpected heights. boosted by strong private consumption. exports and a construction boom. all right, everybody. a lot going on on the markets this morning. a lot going on overnight. we saw that huge correction once again in the nikkei. off by more than 5%. a week ago, we were off more than 7% on one day. it's a big daily correction that's coming through from japan. now, just shifting gears a little bit, staying in asia, but looking at hong kong, the hong

kong retail sales figures hitting the wires, up by 19.4 % by volume from a year earlier according to reuters data. retail sales data for april up by 20.7% by value. from a year earlier, as well. so that data just hitting our wires. the expected figure was mr in the region of 42.4%. the retail sales data, 189.4%, a lot better than expected. let's talk to shawn rein, managing director from china market research group who jones us on the phone from shanghai. shawn, thank you for being with us. the hong kong sales data a lot better than expected. >> it's great to be here, louisa. i was not surprised by how strong hong kong retail sales

growth is. when we interviewed chinese consumers, they're fairly optimistic. wages have increased about 12% so far in 2013 in first tier cities. what's happening is consumers are not shopping in mainland china as much. they are now shopping more in hong kong and going into europe. so i expect you're going to see a lot of analyst expectations were wrong on the negative side for continued consuminger confidence. >> and speaking of consumer confidence, you state that middle class consumer confidence is the weakest that you've seen for approximately five years. and you point out, interestingly, that it's especially men between the ages of 35 to 45 that lack in this consumer confidence. >> exactly. investorsny need to be cautious. middle class consumers, especially member between the ages of 35 and 45 are fairly negative. that's why you're going to see

real hits on the mid tier consumer brands traded in hong kong, like espirit, marks & spencer because chinese at this group, they're sort of facing wage stagnation. there is definitely a drop in fdi into china. they're feeling their personal careers are getting hit by the lack of new owned investments. so i would be cautious on investing in brands targeting the chinese middle class. the real growth is going to come from lower income chinese. >> what do you make for companies like gome, for example, the second largest retailer in chooil china? they've been struggling with regard to costs over the past couple of months. >> that's a great question. they're dealing with increased labor costs, increased real estate costs. so it's going to be very difficult for them to get better

margins. second, they're selling a lot of projects towards that middle class chinese consumer that i said is pessimistic. so gome is going to have some issues just on costs. but consumers are going towards e-commerce. so we expect gome's e-commerce arm to grow about 50%, 60% in 2013, but they're going to face real competition from 360 buy and other e-commerce plays. >> shaun rein, good talking to you. thank you for joining us. consumer spending is starting to get china's cash tills ringing again, not quickly enough according to experts saying consumers are still veering towards foreign brands. head to cnbc.com to find out why as we continue to focus on the growth story. moving to the middle east,

stanchart emea's ceo says africa's time has arrive. you hear it time and time again for companies that are looking at frontier markets that sth is the place to be now. >> absolutely, louisa. they're supposed to some 15 markets in sub-saharan africa. now they're looking to double that. what is interesting here is china's icbc, jpmorgan, that's not just because of the push factors. you also have your full factors in africa such as improved governance and rising political

stability. although we did have a setback in mali recently. i spoke to the ceo of standard charter. here is what he had to say about africa's potential. >> i think we intend to double our top line end profits in the next five years. we are planning to add a hundred new branches by 2015 and we've already added 27 last year. why am i confident about africa and why is standard chartered so bullish in africa? one, africa, as you know, is the second fastest growing continent in the world. seven of the ten fastest growing countries in the world are in africa. africa are the huge consumer potential. last year in the african consumer spent over $1 trillion which is more than the consumer spent in india. the agriculture potential in

africa is enormous. infrastructure is a challenge, but as i said, it's a huge opportunity and, of course, the resources story in africa. collectively, we believe that africa's time has arrived. >> no conversation on standard chartered's executive would be complete without going into iran. the u.s. government faced charges of violating actionses in iran after a back and forth, they eventually settled the suit, $667 million in fines were paid. standard chartered said it was down to clerical errors and they vently apologized. the reality of the situation is we got it wrong. we unequivocally apologize for what we did. we have learned or lesson and it's time to move forward and

make sure these sorts of things don't have happen again. regulations are tighter, they are getting more intrusive and more ip vasive and we as bankers stirchlly need to you again. that's the reality. >> how are you handling existing business? good we stopped business with iran in 2007. we are not taking on any new business at all. to the extent we have anything left, it is minuscule and is remnants done pre-2007 that is winding down. >> so it will be phased out in years to come? >> it will be phased out very shortly. >> they are phasing out business with iran and that's just a little bit of a preview of the conversation. catch the full interview tonight at 2300 cet. we'll talk about a lot more and a lot of different subjects will

look into dubai. he's quite upbeat about the health of the economy beyond the glitz and glam of what you see in downtown. dubai, a closer look at what the bank is doing in some riskier markets such as iraq. make sure you tune in, louisa. >> i will. a big fan of the show. >> gome, they're the second largest retailer in china and we're seeing them posting a first quarter net profit of 76.3 million yuan. that is just hitting our wires. they've had a huge amount of difficulty because a lot of the retailers say prices will be at least 10% below what the non-diop line retailers have. that's put a lot of pressure on

them. still to come, why so-called unmanned aerial vehicles can go where no man has done before and can do good. 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. ♪

you are indeed welcome back to "worldwide exchange." the uk is is the most attractive country for infrastructure development. that's according to a new study by an international law firm, the baro. however, the study warns that austerity could hurt the sector. now, meanwhile, the oecd joined calls for more uk infrastructure spending in its report released yesterday. the global think tank urged chancellor osbourn to shift his policies in favor of housing and construction to kick start the economy. matthew jones, partner and head of infrastructure at borrow. welcome, matthew. >> good morning. >> what makes the uk such an abstractive place for infrastructure? >> when we wanted to create the idea of an infrastructure index and rank country, we found that once we had the data,

infrastructure investment was attracted to long-term stability and so it's a future of the countries that have come in the upper kwaur tile of that index, that they all have those features of long-term stability. >> despite the fact that there might be a triple dip recession looming still? >> yeah. it's interesting. to be fair, we were intrigued and interested as to the uk coming out on top. and as part of the report, we do see that there are some risks in the short to medium term, particularly because there are index is related to factors such as credit rating and credit outlook and while the future of moodies have downgraded the aaa status by a notch, standard & poors has it on negative outlook, as well. so that's something to keep an eye out for.

>> it's interesting, though. you look at some of the uk companies out there and you look at the infrastructure spending that's taking place and then you wonder what's going to happen with austerity, as well, given that we're hearing that austerity measures will be hitting all sectors in some way, shape or form. whether or not that's going to have an impact especially on infrastructure. >> it's an interesting theme, the idea of infrastructure being a counter point to austerity. one of the features of the oecd report, as well as the imf report and indeed european commission yesterday, they've all been very supportive of the idea of fiscal consolidation. it's just that it's at the fringe of policy where perhaps imf are suggesting that 10 billion discretionary spend might help kick start the uk and other parts of the region were that to be invested in infrastructure. >> how much of the infrastructure spend is coming from the private versus the public sector? >> it's a very good point.

and take, for instance, the initiative that in the uk the uk counter fund is not to be pouring money into infrastructure. is and i think that the long-term benefits of new infrastructure where come where there's a combination of public sector support through regulation and it needs to be funded by private sector, as well. >> what kind of infrastructure are we looking at? are we looking at housing, are we looking at rebuilding things that already exist like bridges and getting rid of potholes and things like that or are we looking at putting in place completely new projects like soft speed rail operations and things like that? >> one needs to be relative about the sort of infrastructure

spend that we're seeing across the globe. it doesn't give ee nornlgus credit to what's happening in other parts of the world. brics and nations being another good example. but when we look at europe, it's taking infrastructure and enhancing it. sectors that we're seeing and do expect to continue to improve are things like renewable energy, whether that's offshore wind, new technologies, ways to power. these are things that are prevalent. we've already seen support for new housing initiatives as part of social infrastructure, if you like. and transport is being mentioned in press lately.

>> interesting. thank you very much. now, brazil's central bank has raised the country's interest rates by 50 basis points to 8%. the market was expecting an increase of 25 basis points in a very brief statement. the central bank said that the move was to help tackle rising inflation. earlier in the day, brazil's first quarter gdp came in at a lackluster 0.55%. and guess which asian country is growing at a faster pace than china? have you guessed? 2 philippines, the southeast asian nation blew past forecasts posting 7.8% gdp growth in the first quarter. that's way higher than the 6.1% growth that analysts have been looking for. the fill peaance economy grew by 2.4% quarter on quarter. the export dependent company still faces risks like high capital inflows and slowing global demands. exporters stumbling on the japanese market today, but the country is looking to work on

its competitive edge. how? ukakono has this story live the from tokyo. >> hi. the president will work with the private sector to stop technology being leaked to emerging companies. the government will call on more than 30 companies such as manufacturer and security firms and set up a forum in the intellectual property division in early june. the forum modelled after the overseas security advisory council will be set up as soon as july. under new guide lines, companies will find nondisclosure agreements with its employees, even after they leave the company. many of the technology leaks now are caused by those who have quit or retired. in 2012, nippon steel filed a lawsuit against companies such as south korea's postco, arguing

that its workers have snuck out high technology information. companies and the government are facing urgent needs to prevent the country's cutting edge technology. that's all from nikkei business report. back to you. >> thank you very much. start up madenets wants to leap frog roads in infrastructure by building a system using drones. in a fourth of the series looking at new companies, my colleague, ross westgate, caught up with the ceo and co-founder. and he asked him to explain this new business concept. >> we practically -- that is based on the ideas of the internet. so we want to use drones to transport medicine and other critical goods in place that's

don't have road infrastructure and that allows those place toes be connected to either medicine and the medical infrastructure and eventually, you know, markets, without having to invest millions or billions in building roads. >> how do you then turn that into a revenue model? >> which part of the idea are you talking about? >> well, okay, it's a great idea. who is going to pay you to do that? >> so initially, we think that we're seeing quite a lot of interest to put this into use in development well countries, transport them from the clinics where they've been collected to the labs where they're being analyzed. i think the people paying for those would be development banks or ngos whose missions depend on having that part of the chain working relike knowledgely or

the ministers of health of those country peps. >> and look, once you start rolling this out, what is the potential for setting up a network of automated systems? >> we don't want to be a service provider company. we want to be developing the technology, making it reliable now for people to be able to buy it, own it, operate it and use it as a domestic service themselves. >> so explain where that might go. >> we would hope people would buy stations, connect neighboring villages or connect to villages and be able to use this to take their goods to market. so it's like a very simple bottom up thinking on how can you connect something that is disconnected from their own

networks into that part of the economy. >> so if you were two villages nearby but you never did a lot of trade with each other because the connections were poor, the road was poor, you're building a modern railway, are you, between the two? is that one way of thinking about it? >> this is the big idea, yes. i think the problem, as we understand it, is that transportation links are not reliable enough. it's a huge part of the cost for people taking their gls to market in developing countries. how do you solve those problems? investing in roads is really, really difficult. in sub-saharan africa, it's estimated it will take up to 50 years to create infrastructure. 80% of the roads are not usable. the whole idea now is to see whether we can put together a

system using today's technologies that can allow those countries to leap frog exactly as they've done with mobile. >> and these drones, what sort of price are they? what sort of pay load can they take? >> currently, we're focusing on different pay loads. the target price is between $3,000 and $5,000. well, earlier this week, germany's railway operator deutsche ban announced plans to use drone technology in a bid to combat antisocial behavior on public transports. meanwhile, brazil will be deploying drones near football stadiums in the upcoming federations cup as testing grounds for the world cup which is taking place next year. some argue, though, that the widespread use of drones has a serious privacy concern. joining us now is sam smith from privacy international. hi, sam. >> good morning. >> first of all, explain to

everyone who is a drone and how it works. >> an unmanned vehicle. like an airplane, but there's no people on board. they generally require a runway, but he can get some similar to helicopters. >> and most require runways. >> yes. they're control by people on the ground. the tv program x-factor was using a small helicopter drone to take video and there was a problem with it and they crashed it into the thames. now, you can do that when there's somebody there watching

it and you have a crowd of several hundred people below it. >> so what are the big business opportunities that people are looking towards now with regard to -- regarding the use of drones? antisocial behavior? it's being tested on german railways. >> all new technologies seem to be seen as a way to end problems that you have. the idea of using drones on the railways is slightly curtailed because of your behavior. you can imagine what would go wrong when you hit the bridge. now, in reality what will probably happen is that they will be tried, found it doesn't particularly work that well and move on to something else. there is always some reason to use it. and if you're looking to deliver goods in africa, that is probably a good use. >> you are -- to fly these, you

generally have a -- now, a flying camera in the middle of a desert is probably not a problem. over a beach, that's a significant issue. there are clear benefits to using unmanned aerial vehicles for services that needs to be monitored. >> interesting. sam, thank you very much. sam smith, technology expert from privacy international. are you concerned about the widespread use of drones or do you think that it actually could turn into a positive business opportunity? sarom caps cans e-mailed in and said why are we asking the money questions first? what about remote control assassinations or using drones for the love of privacy? keep your responses coming through to "worldwide exchange." 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. ♪ [ 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 ] now a waiting room is just a room. lets you talk face-to-face and share whatever's on your screen. blackberry z10 with bbm video. built to keep you moving. see it in action at blackberry.com/z10

hi, everybody. welcome back. you're stim watching "worldwide exchange" and i'm louisa bojesen. investors are piling back into bonds. the bank of japan responds by raining in jgb volatility. stocks in europe trying to hold on to small gains basic resources leading the way. >> the swiss economy reaching unexpected heights, gdp rising by 0.6% in the first quarter.

and dish network fires the next shot in its ongoing battle with sprint nextel upping its bid for the wireless service provider called clear wire. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. well, asian stocks overnight had a rough session. let's face it. we were led by the nikkei once again, the nikkei 225 breaking through the 14,000 level, closing lower by more than 5%. exactly a week ago, we were talking about a very similar story. at that point, the nikkei had corrected to the tune of 7.3%. we've seen two very big daily corrections over the space of a week. it seems like a lot of repositioning, a lot of redigging is going on and much of it potentially has to do with fundamental changes that are happening. kaori enjoji joins us live from

tokyo with more details. kaori, talk viewers through it. what's taken place in the last 24 hours? >> well, what's taken place here in together dwroe is that the ekd markets saw a sharp sell-off yet again. exactly a week after that big tumble last thursday. what we are now seeing is a move by more than 5% on the down side to the equity markets here. i'm hearing from brokers that it was mostly a technical sell-off with some futures driven. there was a correlation between heavy selling. there has been a lot of nervousness about the yen bond market, as well. but the bank of japan governor kuroda going a step further and seeming to allay concerns of the market saying he's going to do everything he can to try and calm the volatility. that for a time seemed to be working. what i'm hearing today is that this is most lay technical sell-off. however, having said that, given that the market is trading at

its lowest point in four weeks, i think people are getting nervous as to what the government is going too nouns, louisa, next week, which is the so-called third arrow in this approach towards abe-nomics, which is the structural reform part. and i think people are starting to wonder and question how immediate some of these structural reforms are going to be. >> kaori, do you think that we now are going to see many more measures coming through from the bank of japan? what's the thinking? they need to keep the deflation mandate on track and at the same time make sure that the yen moves down get out of hand. >> absolutely. this is the dichotomy facing the central bank on hand. they have pledged to get inflation to 2% and to do whatever it takes to get there. i think that is on track. at the same time, you cannot expect that they're going to try and reflat the economy and keep interest rates on the japanese

government bond market at 073% as they were when they announced this program. so this is the difficulty faced by the bank of ya pan. at the same time, i mean, i think what people really want to know is whether there's fundamental change to the economy. for example, prices are starting to rise because the yen is weaker. you've got trade data out for the first ten days of the month and the deaf set is widening, despite the fact that the driven demand should be resulting in a rising place inflation. i think it is critical that sin show abe delivers on some of the regulations that have been promised when he makes this announcement next week. >> kaori, thank you very much for that. we appreciate it greatly. a lot is taking place in the overnight session. the u.s. futures, we're looking tt at the dow's implied

open to be called down by approximately 30 points or so. the nasdaq is looking at the negative open, as well. down some eight points or so, seven points in the s&p 500 being called lower by somewhere in the region of two points, 1 1/2 points or so. we're looking at a negative implied open across the board for our u.s. markets. we have a couple of hours to go before u.s. trade gets under way, but it's always nice to know what the market is looking at right now. the ftse 100, flat to a couple of points higher. so you would note that within the last hour, we've turned a little bit more positive here in europe, coming off the back of a negative close yesterday on the european equity markets. the xetra dax lower in this morning's trade still and the cac 40 and the ftse mib also just turning just a wee bit higher within the past hour or so. we're still a bit of selling in the ten-year italian treasury notes, the ten-year jgb is being sold by a bit. you have the ten-year bund and

the treasuries being bought up. there's an auction of $29 billion worth of seven-year securities stateside and that we still are heading for the steepest monthly loss for treasuries seeing in approximately three years or so. we've seen some awfully big moves in the bond markets. currency rates, well, here we've got the forex markets for you with the euro/dollar, flattish to a bit higher. yen is pretty stable, all these considered. we're right around that 100 mark right now, but pretty stable given the huge amount of money that left the nikkei 225 here in the overnight session, as mentioned. we need to check in on the markets in broader asia. chloe cho sends us this report from singapore. >> a down day here in asia. the tepid handover from wall street amid concerns about fed's if a tapering was one thing, but the huge fling we saw in japan

created another negative back drop despite comments from kuroda and amare that they will not tolerate jgb volatility. the nikkei slid more than five points or 737 points, especially as the yen strengthens now the shift focuses to next week. abe gets ready to outline long-term structural plan toes promote growth. take a look at where australia closed today. the down side shifted over to greater china, especially at speculation growth that the official china pmi number could be weak. so the bank of japan stepping up its effort to stabilize government bond markets. in the latest move, the bank of japan said it will buy long-term jgbs in 8 to 10 tranches in june. they've been calling on the central bank to fine tune its purchases to tame volatility in

the markets. this after jgb hits more than a one-week high last year. yields roughly doubled since the details of abe's new economic plans were released back in march. larry hathaway is our guest host here for this next hour. keep your e-mail questions coming in. find us on twitter, as usually, as louisa bojesen . we're on there. lar larry, good morning. why do you think this is? >> this is the shape of things to come. we've seep it over the last week or so. but in triekt, the japanese policy response to end deflation is throwing the proverbial cat amongst the pitches. but the fundamental problem here is actually fought technical. and while the boj can smooth things out in the short run, the reality is that they're trying to transform an economy from

deflation into inflation. it's a binary outcome. it's discontinuous. and assets that were priced firmly for deflation are going through essentially a fundamental revision in their pricing and that poses enormous challenges for policymakers in japan and indeed for global capital markets. >> i think one of the main questions that a lot of people want to know is whether you buy on the dips. and we were talking about that last week, last thursday when we had the big correction of mover than 7%. we have viewers writing in this morning finding us on twitter @louisabojesen. that will blow out earnings in the exports sector. >> yeah. i think pricing right now reflects a lower dollar/yen rate. and for every big figure move in dollar/yen, we see about a 1% upside revision to earnings. so it's possible we're going to get some upside lifted in the

exporters. that said, they're trading above global norms and there isn't really a compelling case there. i think japan is treading water now, albeit in volatile fashion and the real issue for me is not structural reform. it's whether this monetary easing is going to be joined by fiscal easing. i think that's the critical step in terms of either pushing japanese share prices higher or seeing them languish and underperform. >> when do you think we'll know? >> the date has not yet been set, but people are pegging perhaps the 21st of july. abe supporters are likely to win given hi standing in the polls. and the real question is whether to postpone the increase in consumption tax due next april. and he said he would make that decision in august or september. see how his supporters fair and see what determination he makes about the consumption tax. to me, that's the critical

issue. >> larry, you're with us for the full hour. a very good thing. keep those e-mails coming through or find us on twitter as mentioned. just looking at what's ahead on today's agenda in the united states, the revised estimate on first quarter gdb is out at 8:30 eastern. growth forecast revised slightly lower. also at 8:30, we get the weekly jobless claims, expected to rise by is,000 to a together of 341,000. at 10:00 a.m., april pending home sales are out, forecast to rise 1.5%. focusing a bit more on that u.s. gdp data and the recent strength of the u.s. dollar. larry, by and large, it really seems like the u.s. recovery story is now more intact than ever and everywhere else isn't. >> that is also true. and when we look at, for example, the global growth surprises, they've been led by the u.s. what has transformed is that bond yields are beginning to reflect that with expectations

shifting about when the fed may taper or conclude its qe program. and you mentioned, of course, dollar strength. those are all manifestations of growing confidence in the market that the u.s. is on a durable long lived expansion. and i would tend to agree. i see very few risks at this point in time to that story. >> okay. larry, we were talking about drones here in this last hour. in a nonmilitary capacity, tun manned aerial vehicles better known as drones, they're often associated with military operations. some argue, though, that there's a great business opportunity behind the technology as drones capitalize on commercial needs. however, the business of drones continues to raise serious privacy concerns among other things. in the meantime, we want to know are drones threatening our privacy or do you think that this could turn into a big business opportunity in various areas? get in touch here on "worldwide exchange." let us know. find us either on e-mail,

worldwide@cnbc.com or find us via twitter @cnbcwex or directly to me, @louisabojesen. still to come, rome is free from the deficit probably enforced years ago. will this make today's t-bill auction more attractive? we'll have those results after the break. i also want to mention, just looking at the italian auction results, italy's ten-year auction bond, the highest since march. we're looking at a bid to cover ratio 1.4 versus 1.36 on april the 29th. we'll have more details four after the break. ♪

[ 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 ]

hi, everybody. welcome back. we're looking at it hi selling 2.3 billion euros of 2018 btps. ings a planned, well within the targeted amount that they had hoped to sell. bid to cover ratio around 1.4 versus 1.36% the last time around. they sold 3 billion euros worth of 2023 btps. that's at the higher end of their targeted planned amount. the bid to cover ratio there

1.38 versus 1.4 that we saw back in april. so relatively unchanged on that front, as well. yields a little bit higher this time, a little bit higher, not by much, though. these are your headlines if you're just joining us. the bank of japan despite jgb volatility investors raise to bonds and the sell-off japanese equities. private consumption, exports and the construction boom all of these things were better than expected on the swiss gdp number. and the battle continues about who win tess war. dish network takes on sprint net tell by wiring up its bid called clear wire. still to come on the show, will interest rates imposed on at the cb good good or bad for europe? stay tuned on the central bank's investment. we'll have that interview. 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. lets you jump backwards and forwards in time to capture the perfect shot. blackberry z10 with time shift. built to keep you moving. see it in action at blackberry.com/z10

hi, everybody. welcome back. the swiss government bow toes u.s. pressure saying it will introduce legislation that will allow banks to disclose information on american clients with hidden accounts. swiss financial firms that do so will be safe from further prosecution from the activities in the u.s., but they could still face substantial fines.

there's also at the same time some good news for the swiss because the country's first quarter gdp came in higher than forecast with the economy growing 0.6%. staying with gdp, spain slashed estimates for the first quarter gdp figure has been confirmed this morning. the country's official figures shrank in the first quarter. yesterday, the european union granted spain the two-year extension to hit deficit targets. the ecb president mario draghi caused a bit of a follow in markets earlier this month when he claimed appear open mind about imposing negative interest rates. draghi said he believed the move into encourage rates to drop more. is it the case that negative profits could hurt rather than boost profitability? carolin has been talking to none other than draghi's right hand man at the ecb. carolin, what did you say? >> well, the point i made during

the interview was that theoretically, negative deposit rates could hurt banks' profitability because they're going to be charged for holding excess deposits with the ecb. here is mr. constancio's musings over the pros and cons of this negative deposit rate. >> there are many effects of such measure which we are far away from in deciding. but, of course, as our president has said, we have been examining. it's very difficult to d disentangle all of the effects. you mentioned one, but another effect is if the banks react to such a measure by becoming more active in using the liquidity they have to do something on the fx side, then these could increase their profitability, if indeed they embark in credit and lending. that would increase profitability as a result of the increase in volume.

so these are in difficult effect to sales and that's why it's a difficult measure, which has not been experimented very much around the world until now, although there are a few examples. >> that was mr. constancio speaking to me yesterday. by example, he means denmark where the effect of the negative deposit rates are pretty ambiguous. first of all, we did see a big drag on net interest income on danish banks. but on the other hand, officials there actually called it a success because their primary goal, really, was to deflect inflows into the corona and that was a success, yes. but that's really not the goal of the ecb. their primary goal would be to boost lending. louisa. >> make some good points, carolin. thank you for that. larry hathaway is still with us in the studio from ubs. i'm interested to get your thoughts on that point. >> yeah. i think negative deposit rates

which would be treated with some concerns by the banks themselves but would hurt their earnings. therefore, i think they would shift some money away from that tax. what would they do? probably put it in the front end of, say, treasury types occur as opposed to lending. although one would imagine they could pass along some of it to potential buy borrowers. but you can take horses to water but you can't make them drink, what's the problem with credit formation in europe? is it credit supply or credit demand? is it argue credit demand is a big part of this. sure, you can push them in that direction, but it's not panacea in terms of getting the credit mechanism working again. >> the oecd yesterday downgrading its forecast for growth but that it would like to see the ecb coming up with more u.s. style quantitative easing measures. do we need to be more aggressive in europe at the moment? >> i'm not sure if we'll need to be. my suspicion is that the as the

summer months roll on, we'll probably see some of the second derivatives turning positive. some of the pressure will be off i think at that point in time. but if the ecb is going to go nonstandard, it's possible they will look at interventions in particular countries where credit risk premium res high rather than a broad based approach. i think germany, the bundes bank would be very uncomfortable with the latter. and one has to republic that qe erodes the viability of omt. omt is supposed to be, well, i'll buy your bonds on a conditional basis if you promise to, for example, embark on fiscal austerity or structural reform. qe is open ended buying with no precommitments on the part of governments and even mario draghi would be himself fairly uncomfortable with the idea of qe insofar as he's the architect of o on mt. >> now it's been, what, five years since the initial beginning of the financial crisis started in full. and we were just speculating a

little bit. how are the markets going to look in ten years, in 20 years, in five years? you know, you look at all of this and you just say, well, what has to give? what will happen eventually? how will inflation look? how will quantitative easing be wrapped up? and what will the long-term impact be? and it's mind boggling to think about. >> it's hard enough to forecast a few quarters away. much less five or ten years and we're all sort of familiar with fan charts where the distribution of the forecast gets wider and wider the further out you look. and that would certainly apply to these big questions around things like inflation. but generally speaking, i think as a plausible base scenario, it's one of a slow gradual recovery story where the ones looking at europe, still the u.s., ee parts of the emerging complex without necessarily stories of excessive inflation or big problems like that. the exception i think is japan, which is really trying something absolutely novel and where i think the repercussions could be much greater. >> interesting.

larry, you're still staying with us for the next half hour. you can still get your e-mail questions or your comments through, as well. just to mention that we're just seeing some results still hitting our wires at the moment. i want to get you to cibc numbers. they're raising quarterly dividends. i see them declare ago dividend of 96 canadian dollars -- excuse me, 96 ka nadent cents to the dollar. and we're seeing a net figure second quarter of 876 million. they've announced the quarterly dividend increase of 2 cents to common share to 96 cents per share, total revenue of 3.$3.14 canadian billion. cibc has just announced second quarter 2013 results. according to pimco's bill gross, the 30-year bull market has come to an end. and also, if so, where does that leave fixed income investors? find out in a couple of moments.

i just want to leave you with a look at how the futures are trading here ahead of the u.s. open on wall street. the i plied open being negative across the board. europe has just gone more positive within the last hour or so.

hi, everybody. welcome back. i'm louisa bojesen. this is "worldwide exchange." japanese equity res selling off

once again on a stronger yen with investors piling back into bonds. the bank of japan responding with new moves aimed at reigning in jgb volatility. stocks in europe are waiting to hold on to small gains today with basic resources leading the way. the dish network fires the next shot in its ongoing battle with sprint nextel. and moody's has taken the shine off the metals sgient alcoa cutting to aluminum producer's crediting rating citing lower prices and tougher market conditions. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. hi, everyone. welcome back. we've got a couple of hours to go before our u.s. markets will start trading. looking ahead to then, we are being called lower across the board. s&p 500 being called down by

approximately a point or so. so we're seeing a flat open to the s&p 500. the nax dak, couple of points lower, down by some six points or so in terms of the early morning calls and the dow is being called to open down by somewhere in the region of, wa, 17 or 18 points or so. so we're looking at the negative open in the u.s. at this point in time. a lot of things, though, could change. we have quite a few big data points to look out for, the initial jobless claims coming through later on. the u.s. fist quarter gdp revision. the ftse cnbc global 300, flat right now. so we've managed to come back from early morning lows. and that really has been the type of morning that we've seen. a bit of rejigging given the huge drops that we saw in asia overnight. especially the nikkei falling by more than 5% as opposed to last week where it fell by 757% last thursday. so we're still looking at some very big corrections that have been taking place. but all of our european main markets now just holding on to some very slight gains. the cac 40 up by around 0.3%.

we're just starting to see a little bit more buying this morning. the ftse mib up by 0.6%. the xetra dax and the ftse flat to slightly higher. the asian markets, really, where we were taking our initial tune from as we came into trade, and it's all over here in the corner, the nikkei 225 closing off by approximately 5%. and we've been focusing a lot on why that is and whether or not this type of trading is going to continue or whether you're going to buy on the dip. we were talking about that exactly a week ago, as well. how do you make money, though, in these markets? here is what some of the experts have been telling us just this morning. >> they all have significant parts of their business in the u.s. and emerging markets. we think that's a favorable place to be, essential for the next 12 months. we think the european consumer is unlikely to show much of an improvement in the next 12 months. a slippinging amount of

exposable capacity in opec and that's what drives at the end of the day the supply and demand scenario for the european union. so i think that brent getting stronger relative to wpi is a likely picture in the next month. >> i wouldn't be surprised to see the dollar coming under a bit more corrective pressure as a result of some broader positioning, unwinding taking place. so that is going to lead to some short-term corrective moves for many of the currencies which have been under pressure recently. so we could see a bit of a rebound in the commodity currency, the euro, even sterling. >> so a couple of ideas from earlier on this morning. the yield on the u.s. treasuries, though, has stabilized, following a solid demand at a five-year sale. the auction sa prused concerns

that an improving u.s. picture would see the u.s. reserve slow its monetary stimulus. this week on the ten-year noeld hit its highest point since april 2012. joining us from new york is sharon stark, managing director and fixed income strategist at da davidson. sharon, since the beginning of may, really, we've seen yields heading in one direction and that's north. is this trend going to continue? >> i think we'll see a seesaw type of pattern with the ten-year perhaps getting up towards that 220, 223% which is where i traded earlier this week and then coming back down below slightly 2%. the markets are still uncertain about the strength of the u.s. recovery. they know that it's recovering. but the question is it rovring enough for the fed to begin pulling back its bond purchases? >> yeah. and beaking of the recovery, what do you expect for the gdp

data for the first quarter? we've got the revisions coming in today and also looking forward do you think that the recovery story is intact for the remainder of the year? >> well, i think the first quarter was a good quarter. we're probably looking at 2.5% growth rate fueled brimly l primarily by consumer spending which probably grew perhaps 3% or 3.2%. but going forward, i'm a little less optimistic because of the impact of the increase in the u.s. payroll taxes here and the impact of sequestration, which i don't feel we have felt fully so far in the economy. so going forward, maybe a 2% growth rate on average for the end -- toward the end of the year. >> yeah. larry hathaway here. a quick question. what do you make of the commentary from folks who are considered dovish at the fomc? voters are not, for example, the federal reserve president of boston's and san francisco as

well as chicago beginning to talk a little bit more about the tapering issue, about the ending of qe. is that something that you think is now gaining momentum at the fed? and what risk does that pose to the treasury market? >> well, there's certainly a faction that the fed would like to begin tapering the purchases. but i believe that the majority would like to continue doing what they're doing because it's not doing any harm. and some would argue that it's done some good. to pull back, i think, would ignite fears that the economy, you know, is losing some of its juice. and there will be questions about whether it can grow on its own. and i had just injects another element of uncertainty in a market that's already uncertain. so i think at this point it would be -- it would do more harm than good to pullback. >> sharon, what are your thoughts on the measures that

japan is taking at the moment, as well? do you think that there's going to be a big long-term impact to be felt on u.s. treasuries from this japanese move? >> i certainly believe there is a longer term impact. we were a little bit too optimistic when they announced their bond purchase programs. i think in the united states markets and the rally, i think got a bit ahead of itself. but certainly that long-term demand will keep interest rates in that range i described earlier. you noticed we couldn't get through that 223 on the ten-year and i believe it's because at those levels, u.s. treasuries look attractive against other sovereign debt out there. >> yeah. sharon, as you may have heard already, pimco's bill gross, he told us, he told cnbc that there's going to be a, quote, mild positive correlation between stocks and bonds going forward. that's after stating earlier

this month that the 30-year bull market in bonds had ended. pimco's cochief investment officer reiterated that the relationship between bonds and equities has changed since the financial crisis. >> the bond prices go down, stock prices should go down, as well. and that's simply because the global levered trade, you know, is dependent upon a stable japanese yen and a stable jgb yield and a stable, you know, treasury yield. and once you produce instability, then that leverage starts to unwind, the housing market gets affected and stocks come down do you agree with that, sharon? do you think that we have seen kind of a breakdown in the traditional stock equity relationship? >> essential in the near term we have. it's hard to argue with the numbers in the direction that we're moving. but i do believe that we will normalize as we gain more

confidence in -- over here in the united states that this recovery is going to be sustainable. i think there are still some out there, including myself, who wonder how strong is this recovery? how long can we continue to muddle along? and at what point do we start to break out and grow at a much faster pace given all the stimulus that's been injected in the market? >> sharon, thank you very much for your thoughts. sharon stark, managing director, fixed income strategist at da davidson. now, we need to take another look at some of the other top stories we've been following today. moody's cutting alcoa to junk status, citing weak aluminum prices and a tough metals market. they do note that cutting costs and improving efficiency is there. they say slower growth in china and the recession on europe will continue to weigh on demand. alcoa says it's disappoint bid the move saying it's a greater

reflection on economic conditions and not the company's operating strength. alcoa in german trade is lower by approximately 2% this morning. costco reporting third quarter results this morning, the discount warehouse club operator says profits roads by 20% beating forecast as its low prices for food and gasoline appeal to shoppers. revenues rose and same-store sales were up by 5%. costco plans to open nine new locations by september. and costco, again, in german trade off by some 3%. these are the stores where you go in and you don't really need anything and you come out and you've bought way too much stuff, right? who needs 200 bags of corn flakes at once? anyway, coming up, motorola launches a made in the usa campaign and find out why billionaire and big idea man elon musk says now may be a great time to book a trip to buy some prime real estate on mars. 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. ♪ riding the dog like it's a small horse is frowned upon in this establishment! luckily though, ya know, i conceal this bad boy underneath my blanket just so i can get on e-trade. check my investment portfolio, research stocks... wait, why are you taking... oh, i see...solitary. just a man and his thoughts. and a smartphone... with an e-trade app. ♪ nobody knows...

[ male announcer ] e-trade. investing unleashed.

[ 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 ] welcome back, everybody. i'm louisa bojesen. the annual all things digital tech is under way this week in southern california. it's yielded some interesting

news, including motorola's big move back into mobile and one man's plan to explore space, the final frontier. bertha coombs is at the cnbc headquarters with the latest news from the conference. i'm really interested in the space project especially, bertha. >> you're going to have to wait for that. we're going to start off with motorola. motorola looked like a mon shoot who they first came out with the razors some 10, 12 years ago. they're trying to get back into the market and compete with the likes of apple, samsung and others. the company, which was bought by google last year will launch a new high end smartphone called the motox later this year. last night, motorola's ceo says it's going to be made in the usa. at a plant near dallas that will employ 2,000 workers by august. dennis woodside wouldn't give away too many details, but he

says the moto x will power down certain features when they're not needed in order to save power. >> imagine when you're in the car, the device will know whether it's on or off, it's traveling at 6 of 0 miles per hour, it's going to act differently so you can interact with it safely. so those are the kinds of things that we're doing with fundamental technology. and we think it's actually quite exciting. >> quite exciting, indeed. a phone that knows where you are. also on stage last night, tesla motors ceo alon musk. always very exciting. the electric carmaker plans to make announcesments today saying it plan toes triple its network of ultra fast charging stations in the next month that will allow vehicles to travel from los angeles to new york using just the super charger network. >> when people buy a car, they're also buying a sense of freedom and the ability to go

anywhere they want and not feet feddered. so we had to make something that was really quick to charge. >> musk talked about his other ambition, his other worldly, i guess, we should say, including a day when commercial space flight will be a viable option. he thinks mars could eventually be a possible destination for humans to inhabit since the red planet's climate is just a bit cooler than the earth. >> mars is, you know, a fixer upper of a planet, but we could make it work. >> yeah. that's a pretty good fixer upper. he has a few hurdles to tackle before. the closest distance from what i see is maybe about 40 million miles between the earth and mars. apparently you can have just enough fuel to make it there. the problem is getting back. at least right now.

>> maybe you don't want to come back. maybe you go and it's just the most beautiful thing you've ever seen on either -- or not on earth. >> well, it becomes a problem. if you travel with a companion, it gets awfully lonely. you could get on one another's nerves. but if you go by yourself, you really need to enjoy solitude. >> you're absolutely right, bertha. it's still interesting, the whole sending someone to mars mission because we thought right after the man on the moon that somebody going to mars would happen quite quickly after and it didn't. >> a whole generation that has no idea about a man on the moon. >> yeah. i've been reading a lot about risk. it's a really, really interesting point where we spend our money and what comes out of it, as well. innovation and technology. bertha, thank you very much. very, very interesting. go online. find out the next big things also in wearable technology. do you want your sweater talking to you? i'm not sure wa mind would say. but, anyway, don't forget,

follow us on twitter,@cnbcworld or find me directly, @louisabojesen, as well. the bank of japan is to fight jgb volatility as investors race to bonds and sell off japanese equity peps. the battle continues, and who win tess war? dish network takes on sprint nextel again for wireless services provider clear wire. and a junk credit rating for alcoa as moody's is taking note of low prices and tough market conditions. and coming up, trading texas tea, there are several issues boiling around the credit markets including opec data this week. we try to make heads and tails of it all when we head into chicago next. ♪ 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. 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. lets you talk face-to-face and share whatever's on your screen. blackberry z10 with bbm video. built to keep you moving. see it in action at blackberry.com/z10

hi, everyone. welcome back. auto a bidding war within a bidding war. dish network has raised its offer for clearwire. that tops the rival bid by sprint nextel by almost 30%. sprint is already an owner of half of clearwire and it raised its offer last week. dish happens to be raised in a battle with japan's softbank to buy sprint. and warren buffett is taking a gamble on the las vegas strip. berkshire hathaway's mid american energy unit strikes a deal to buy nv energy a utility that powers las vegas and its power hungry casinos for $5.6

billion. mid american will pay for mb, a 23% premium to wednesday's closing price. this company is trading higher by more than 4 bers in germany today following that news. keeping you up to date with the u.s. futures, we're well ahead of the market open stateside. we're called a little lore, not by much. the s&p 500 just gone a little higher on this opening call. a flattish call, but they're becoming better and they have become better over the last hour. showing you the nikkei once again, we saw big correction in the overnight session, the nikkei 225 closing lower by more than 5%. joining us from the cme is the owner of the kenai capital management group. how do you trade in this environment? do we reposition ourselves given the big selling we're seeing in japanese equities? >> well, right now, the japanese

equity market is really sort of getting the beneficiary of hot money. the people who are buying those stocks, i don't think you're talking about real investors here. you're not talking about a big economic turn around, things like that. so it's not surprising to me to see that volatility and those massive swings back and forth. that's how hot money works. it's going to come in fast and it's going to leave fast. >> do you think that the bank of japan has other tools than the ones that we've seen in terms of stabilizing its market and coming to grips with deflation? >> well, this is a delicate situation here. and the reason i say that is we heard a finance minister just last week from japan come out and say we're going to stabilize the jgb market. however, when the bank of japan announced on april the 4th that they were going to start their program of buying $80 billion a month in quantitative easing and buying bonds, you saw the yen weakness and you saw bonds go down. in my mind, that is a big shift of sentiment as investors say,

listen, why would i lend money to the government of japan and be paid back in devalued currency? so it's not surprising that these bondholders are selling. keep in mind what he said last week. they want to stabilize the bond market. by doing wa exactly? they're buying bond. what are they going to do, buy more of them? what is what's called a feedback loop and i think that we are seeing only the jennings of a very sharp move lower in japanese government bonds. >> how much lower? >> bond -- the chance of the japanese government paying back the outstanding debt is zero. there will be a restructuring in japan and i can that investors need to be positioned for it. i see rates going into the teens or the 20s on the ten-year in japan and that is before you get some sort of a default or restructuring. >> stay with us for a second. shifting to the energy markets for a moment, traders are awaiting the fresh supply data from the u.s. situation late art

today. the opec meeting takes place auto friday. what do we do with oil at the moment? >> since the beginning of may, if you look at the carry spreads and what i mean by that, look at the spot month of crude, which is july. look at the months that are trading behind it and look at how that interacts. what i'm trying to say is that when you see the end users bidding up for storage, you're seeing the back month gaining on the front or the front gaining to the back. that is very negative. since the beginning of may, you have seen a steady decline on those spreads, i.e. putting premiums in the back and discounts in the front. that means the end users are saying, i don't want it, i'm going to pay and store it. right now, i think you have to be defensive crude. yesterday crude was down sharply. s&ps recovered some and crude oil made new lows.

the price action is dreadful. i like the idea of selling rallies, not buying breaks. >> that you can very much. that's it for today's show. thank you very much, larry, for being with us, as well. see you very soon. bye.

good morning. u.s. investors are waking up to another steep drop in japan overnight. japan's benchmark index falling 5%. it is thursday, may 30th, 2013 and "squawk box" begins right now. >> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we start things out with the global markets. as joe just mentioned, the nikkei dropping more than 5% in a steep afternoon sell-off

today. you'll remember last thursday, the benchmark index plummeted more than 7%. trading has been volatile ever since that. the nikkei is now down a total of 14% since last thursday's plunge. among the reasons that were cited for the sell-off this time around, a strengthening yen and the volatile japanese bond yields. we'll have more from kaori enjoji in just a moment. but this is key because this is what shook things up yesterday. there were concerns over the close in tokyo yesterday. as for the early trading in europe this morning, you're going to see right now at least there are some moderate advances. and i mean very moderate. you're talking up only about 5 points in london. a gain of 16 points in france and a gain of 15 points in germany. here at home, the dow industrials right now coming off their worst day in four weeks. it was the climb of triple digits yesterday for the dow and it was all sparked by concerns of what was going to happen today in tokyo because there re