. you're watching "worldwide exchange". i'm ross westgate. the headlines from around the globe. 40% shrub in its fixed income unit sends barclays shares in to the red. sets the scene for a structure shakeup on thursday. ubs trades higher. credit suisse shares take a hit after reports it would pay a bigger than expected pine for the u.s. tax probe. as ttrazeneca announces u.s. approval of a key heart disease drug.

and hollande calls the bid for alston unacceptable and focusing on getting better offers if the firm. a warm welcome to today's program. plenty to get through in the corporate news front. we'll be focusing on the bank sectors. but before that, we have the final print of the eurozone pmis. and they have come in at 53.1. they were forecast at 53.1. but it's the highest since june 2011. com miss composite 54, german 53, forecast at 55. italian april surface pmi, 51.1, and that was forecast at 50.2.

french services pmi, 50.4. so again the two economies most concerned about coming into the beginning of the year showing continue rebound. euro-dollar up to 139.20. up to the best levels of the session. in fact we're up to nearly the highest in three weeks. joining us with his you views and for the first part of the show today, tim hayward, head of fixed income. another sign of increasing activity in the economies we've been most worried about. spanish yields now below 3% for the first i'm time in minnine y. >> i think a lot of the economic data is coming through quite

positively. what is showing is the rate of change of credit provision is really having an effect on those countries which had seen contractions, now either contracting lessor expanding. to economies like italy and spain are doing quite well. >> is this farm flows or is this will domestic money buying spanish and italian debt? >> i'm not sure who it's buying. we're getting to be rather concerned the spanish five year yields are below the u.s. five year yields. german ten are blow u.s. five year yields. >> is that why one of the reasons the euro still maintains its levels against the dollar, do you think? >> there are very few people who seem to forecast 140 and higher. doesn't the market seem to move

to try to hurt as many people as possible? it seems even the weakness of the dollar is somewhat surprising xwigiven the payroll data. >> yes. good to have you on. stay with us. if you have any thoughts, you can e-mail us, worldwide@cnbc.c worldwide@cnbc.com. plenty of news out of the banks. barclays suffered a big drop in fixed income. i mean, so does jpmorgan, so does the whole sector. are they doing worse? >> in a word, yes. much worse than the rest of the industry. you have some numbers i'll just show you. j morgan in fixed income current cities, commodities down 11% prks credit suisse 21%, citigroup down 7.5%.

sorry, deutsche bank down 7.t3% jpmorgan down 21%. they're down 41%. this is not pretty reading however you slice it. barclays finance director on the line this morning talking about the fact that because they are geared towards macro products, these are things like interest rates, currencies, the lack of volatility has actually september the flow of client trades has slowed down, especially when you compare it to 2013. so massive problems that the weakness will continue in q2 and it already has in april. obviously barclays are about to unveil a major strategy review in their eneinvestment bank. investment bank profits down 49%. we're going to probably get a

whole series of the european business especially in fic moved into the bad bank. you have decisiivisions that if could sell, they would sell. there are a lot of people this hindsight who say why weren't they more proactive in selling these divisions. but the question is who would buy. >> all right. for now thank you. plenty more online, as well. we'll get more into the banks. we have swiss bank ubs, bring you details on that. meanwhile japanese prime minister is holding his keynote address in paris. all keen to see how they react to the consumption tax hike. let's listen in a bit. >> merely by owning an asset, its value increases. inflation is a terrible demon

against people's desire for change. seven years ago on, the economy was better than now, and yet the head way was made. that was because we were upable to banish the demon of inflation. but the japanese economy has been reborn. compared to seven years ago, the fund state has changed completely. the ratio of job offers to job seekers have rich f s have ri6 consecutive months. a large number of companies took the decision to raise wages. mofr

monthly wages will rise by more than 2%. we'll aim at further economic recovery. according to an analyst by bank of japan, all of japan's nine regions are in the midst of economic recovery. business sentiment among small and medium sized enterprises turned positive at the end of 2013 an accomplishment not seen in an astonishing 21 years and ten months among nonmanufacturers. i believe it will be fair to say that japan is now truly on the verge of pulling out of deflation. the future also looks encouraging. one economist points out that the waves of four economic cycles espoused by distinguished economists are new on the upswing in japan. beginning this autumn, construction will begin in japan

on the super conducting magnetic technology. the other day i had the opportunity to experience that speed. ten years ago when i first had a test ride, there was a substantial a vibration and noise. that month that had been transformed in to an extremely comfortable ride. after more than 40 years since the first success during testing, the technology has at long last evolved to the stage of practical use and eninvestment of 90 million u.s. dollars just about to xhecommen. in the field of medicine, in years to come we can expect to receive capital investment on enormous scale.

they have hit their cyclical bottom. the other day secretary general visited downtown tokyo. wonder he might have gotten a bit fed up at the shear number of signs they're announcing construction and progress. now half a century later, development is taking place in every part of tokyo. and in 2020, tokyo will once again host olympic and paralympic games, preparations for the games will take place in earnest. large scale construction projects are you causing the cyclical swings to make their way upwards. that is today's japan. while i do not have enough time to expound on all four of these economic cycles, i trust that you have come to understand what is now happening. japan economy is back.

engine of work growth has returned once again. >> you're listening to the japanese prime minister in paris. on the verge of moving out of deflation and looking for expansion of consumption. do you fully go along with his assertion? >> he talks a good game. the problem is that the consumers aren't really on board as much. confidence is not as high. earnings have not risen for the individual. so i think they talk a better game than the consumers are feeling. >> what happens to spanish -- sorry, japanese debt yields? >> future is trading well below 0.5%. it's not very exciting.

we don't think it will be a huge rise, but clearly a funding currency. >> also there in paris is steve sedgwick, as well. >> i'm going to speak to trade investment minister quite soon. i'm holding the economic outlook panel which comes out within the hour. a 326 page report and it makes interesting reading on japan, as well. key challenges for japan of course are basically they need to get economics up and running with degrees of success pretty quickly because they're racing against time. they have a demographic time bomb. and they also have the small matter of a debt to gdp, which is over 230%. need to get it done before the demographic becomes a huge

problem. they have stimulus, but in three we either succeed or fail. this is the growth bit and the structural form bit. and here in lies the issue. we have a story online which follows an interview i did yesterday with the head of the japanese trade unions where he turned around and said structural reform in the labor market could be absolutely disastrous for the labor market itself, for employees, for their wages. and if we're getting consumption tax increases and another one to come in 2015, we need a wage increase. but if we get a destructing in the situation, you see the two don't necessarily saltally. so all potential problems. the other thing is trade. he needs to push forward the japanese export story because the corporates have surging profits at the moment, but we're not seeing necessarily the follow-through into broader tax seasons. so the next leg is let's get the

ttp up and running, improve relationships with our pacific rim partners. except he hasn't been to south korea and china and those are two key partners. so it's all to play for. >> absolutely. steve, thank you. staying in paris, hollande says alston deal is not is acceptabls it stance. in a letter, he's called for a balanced partnership between the two firms. joining us with his thought, stefane from the other bit of paris steve isn't in. so when they talk about balanced partnership, what does it mean? >> they want a similar offer to the one we're expecting from

siemens. basically without asking for it precisely would like ge to bring transport activities to alston or to a joint venture in order to make sure tyi tiny part of its business. if fwchg.e. is to buy the whole business, it will only be one third of its previous size which they say sun acceptable and for the first time the french economy minister is threatening to block the deal for strategic reasons because alston is producing some nuclear power in france. but also it skpt want tdoesn't company to disappear. the deal will be similar to the one we're expecting from siemens. in response, ge says the deal

was good for alston and france, but the u.s. company says it is open to further negotiations with alston or with the french government changing the original deal would be for the government a way to escape from that story in a positive way in terms of communication in france. not sure that it would be the best option for ge for alston and even for french employees. >> staying with a and h, m and astrazeneca has received approval for a new drug. >> and this is the kind of medicine that they will rely on to fight off the bid from pfizer. i think it will be a little disappointing and you see this in the share price. this is an interesting treatment for a particular condition.

but it's only really going to be analysts think maybe a $200 million a year seller. that's not really a blockbuster, that won't restore the lost sales astrazeneca's pipeline. so what we hear is the new cancer drugs which will probably come on stream 2017, 2018, expecting more of those later this month. >> this month we'll hear about that. got to have something, otherwise pfizer wouldn't be bother to buying. >> it can't all be about tax. >> fair enough. plenty more on cnbc with that. also still to korgscome, ubs be the street. we'll have the numbers breakdown. breakdown. ♪ ♪

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we're 20 minutes in to the trading day in europe. weighted to the done side.s out. we're down at session lows.

uk down a third. cac 40 down about a tenth of 1%, as well. a stock worth looking at says 2014 numbers will be significantly lower than expected. ceo also departs with immediate effect. in a traeding update, saying pretax profits were significantly lower. talking a range of 145 to 160 million. the problem, the uk construction business. stock town nearly 20% at the moment. on the bond markets, a little higher than yesterday. yield on the ten year 2.62% a where we stand at the moment. 2.577 yesterday. three hospital low. we did have good ism services

activity up to an eight month high. not far away from the august number which was a seven year high. we'll keep our eyes on the yields. currency markets, sterling still not far away from the 1.70 mark on the cable. can we get any higher. we'll see what happens. aussie got a little lift this morning after rba talked about it being historically fairly high. euro-dollar 1.3960, we talked about this at the top of the show. that's where we stand in europe. what about asia. let's know to sipping pore. >> we got a strong lead there wall street and ism services number was upbeat, as well. so really some consolidation. there were pockets of

resilience, when you also some negative aspects here. probably related i suspect to the political background here. you have to remember thai constitutional court will rule on abuse of power charges against the prime minister tomorrow. and if that ruling does go ahead, it could see her removed from power. so chances of political instability affecting the market there. rba kept rates unchanged. so a pop and then a drop for the aussie dollar. >> a pop and then a drop. like that. sri, catch you later. ubs has posted a net profit of 1.1 billion swiss francs which beat expectations. caroline has more details.

>> good morning. three things you need to know about ubs this morning. first of all, numbers for the first quarter were actually a mixed bag. you have the headline number which looks to be better than expected, but if you look at the divisional profit before tax, especially for the investment back, that's where we saw a big miss. according to citigroup, fixed income down 38% year on year. 22% below consensus. and if you look at what jpmorgan said over the weekend, they say that going into the second quarter, fixed income unit will still be very challenging. so we're not expecting a major improvement on that front. secondly, the company is going to set up a new legal structure. a holding company. and that will hopefully allow help to pay a special dividend. so that is quite positive for shareholders. thirdly, the outlook is still pretty murky. take a listen. >> unfortunately, our outlook

has approach to be correct. i would have preferred to have a better environment. it's still challenging out there and every quarter we see each other, there is something new popping up. thousand we have russia and ukraine and the sanctions and how those sanctions will potentially have repercussions on the economies. i think there is a level of com pl complacency in the financial markets. >> that was the ceo of ubs speaking to me earlier. shares up around 0.8%, trimming shall gains this morning, but still seems as though investors clearly focusing on the capital return story, not so much on the miss in the investment bank. back over to you. >> thanks for that. credit suisse to pay $1.6 billion to resolve the probe. prosecution also pushing for the

company to plead guilty. >> there is no such thing as too big to jail. some have used that phrase to describe the theory that certain financial institutions even if they engage in criminal misconduct should be considered immune from prosecution due to their shear size and their influence on the economy. that view is mistaken. >> u.s. attorney general eric holder met with the minister friday to discuss the investigation of swiss banks. credit suisse right now down three quarters of a percent. still to come, head of the bank of england had a meeting this week. we'll look at the services economy. pmi number coming out. mber comi.

40% slump in fixed income send barclays shares into the red and sets the seen for a structure shakeup thursday. mixed picture for swiss banks. ubs higher. credit suisse down after they will pay a bigger fine for the u.s. tax probe.

>> and alston's bid unensl and focusing on getting better offers for the pirm. and japan's prime minister says the nation is now truly on the verge of moving out of deflation. >> for nearly 20 years, japan has suffered under deflation. deflation is a terrible demon. f >> services sector expanded at the fastest pace this year. services pmi up 058.7, strongest since december. it was 57.6 in march. and better than expected number of 57.6 p. so grown fastest annual pace in

more than six years in the first quarter of this year. let's get some rouks to that. joining us is bill o'neal, ubs. and tim hayward still with us, as well. 13wi8, the uk has the fastest g 10 economy at the moment. how long will it last? >> we see it sustaining current rate of growth. i think the period of acceleration is behind us, but it looks as if we'll sustain this pace certainly into the middle of the year. second half i think you will begin to see some of the effect from a softening growth in manufacturing. but as you can see from the numbers, it does look as if the uk is getting improvement in the eurozone which i. and clearly in the imt employment domestically and particularly improvement in the

prospects for disposable income. p. >> are you treating uk assets differently from others? >> we're still underweight in uk equities. and that is ris reasoning for t fact we feel market may be less than elsewhere to a degree affected by the currency. we did like the currency. we anticipate sterling continuing to appreciate. you've already seen a dramatic rally against the u.s. dollar. we think that may top out with a recovery in the dollar and the uk tracking the value against the dollar. >> do you think 1.70 is about as high as we can go. >> i think the important thing to emphasize here is that the uk and u.s. monetary cycles are very much al al lined for 2015.

we anticipate a rate hike to be followed in q3. >> tim, you just heard the forecast for rate rises. what happens to gilt yields. bond markets have been quite well beat despite the fact the economy is improving. >> well, i think the monetary policy experiment will probably be the shortest in the uk. these sort of numbers are far stronger it seems than even in the u.s.. and as a consequence -- >> economy is still a lot smaller than it was. p. >> more open, too. but sterling is a popular trade. quite interesting how cable has worked so well.

1.695. pound is proving to be taking -- position we're likely to see the pound rise against the euro down to about 0.8 the figure. that's a forecast would he hae' saying for some time. we think the euro should be underperforming a bit from here at 1.39. >> if we continue to get data like this, will we get for guidance three? >> officially we would have had to -- we've got inflation report coming out next week, as well, and officially we have to have given up to forward guidance. you're right, the pace of growth that we have seen is huge. we are the most advanced out of the developed world. the growth is really good. and importantly in the case of the uk, the growth looks like it might be more balanced. services is an area we normally do well on. but other areas have already ben pitted. manufacturing has been up. and if you look at the gdp

figures that we saw last week and the different areas, actually across the economy has done much better than, say, for example financial services. which has recovered far slower in comparison to its 2007 peak. so it's been good news for the uk economy, but i don't think you'll get a rate rise quite yet. >> from your point of view, bill, u.s. assets at the moment, if you had to choose between uk or u.s. equities, where would you go? >> we like euro zone because unlike the prospects for the uk 2015, we think the ecb will remain highly accommodative and there is still risk of further accommodation by the ecb later in the rear. and think clearly as well you should see a recovery coming

through. if you don't get it, there is something seriously wrong. against what is happening in the u.s. and in terms of improvement business confidence and activity in europe, you should see a recovery of some degree coming throu through. and clearly we want to be part of it because this is very much a year where the market wants to see evidence of an earnings revival. and we think the inflection point is the most marked in europe relative to expectations. >> if bill thinks that we'll be buying eurozone over u.s. equities, what we will do euro zone debt versus u.s. debt. >> in the context of these numbers, recovery is building quite steadily. so all bond markets look expensive. so you have to choose the lesser of two evils. i think the u.s. actually does look quite cheap. cheap relative to german ten year bonds, spanish five year, exceeds the u.s. five year exceeds that in yield terms. and against the uk, it looks

like the uk could be out of this program first and therefore i'd buy treasuries over yields. >> thank you, tim, nice to see you. and thank you bill o'neal. european equities, let's show you where we stand with those. just an hour and 36 minutes in to the trading day here in europe. and you can see we're down a third of a%, kind of where we were before that number for the ftse 100. cac 40 off 0.2. on the bond market, we think gilt yields are higher and they are. 2.6. 8% treasury yields not far away from the three month low. currency market, sterling the one to watch this hour. sterling-dollar you now to 1.6950. so not far away from that big round figure of 1.70. we'll get a sister link chart,

expect euro sterling to be down, as well. plenty of earnings out in europe today. barclays shares closer. investment revenues down 28% due partly to the slump in fixed income revenue. barclays set to announce it will shrink it investment bank. balfour bay deatty the biggest losers today. says 2014 numbers will be significantly lower than expected. the firm ceo announced he'll be departing. balfour says the weakness comes from its british construction business which has been hit by operational problems and major project delays. it is now conducting a strategic

review. elsewhere, glencore boosted by expansion in its african operations. and dsm saw its earnings drop though in line with expectations. dsm did reassure investors with higher earnings the rest of the year and headwinds appear to have peaked. adidas off slightly. profit down 34% in the first quarter. blaming it on weak emerging market currencies as well as a big fall in its golf franchise. and bmw posted a rise in the first quarter. stock off a little bit. anita has more on that. >> bmw shares right after the market opened were up, but now more news floe w is factoring i

and came in shy of expectation. the margin of how profitable the car unit is came in at 9.5% which brings them in a better place than mercedes-benz which only had an even margin of 7%, but actually less than the premium brand of volkswagen audi which came in at the last quarter of 11%. but looking at the shear numbers, bmw actually was meeting expectation. only the revenue segment was a little shy of that. but nevertheless looking at profitability and outlook, that was pretty much in line with what markets had expected for 2014, they expect to sell more than 2 million cars which would be a new record. and that is mainly also on the fact that they have invested

heavily in new models. only this year, they're planning on introducing 12 either enhanced or new models to the market which should enable them actually to meet their profit goal. and also looking at their pretax profit goal for 2014, will is a rise of 10%. makes bmw one of the most ambitious car makers in the world. back toanita, thank you. let's stay with cars. the italian brand will unveil their plan out of michigan. and reserve bank of australia has kept rates at record low of 2.5% just a week before the government is expected to unveil a budget that could be a drag on the economy over the next few

years. the aussie dollar edged higher. said the aussie was at a historical high. german retailer metro planning to step up its expansion in india. it will have 50 wholesale stores in the country by 2020. that is up from just 16 now. europe's fourth biggest retailer wants india to become one of its main expansion companies along with russia, china and turkey. and the thai minister is at a hearing trying to defend herself against charges of abuse of power. if she fails, she could be removed from office this month. protests both for and against her are planned in bangkok next week. and they say a picture a worth a thousand words, but this is allegedly worth 200,000

australian dollars. they traded punches outside a beach. news corp won bidding for the pictures and said their network trying to pay, as well. some reports say the fight was over the alleged involvement with a model. we may never know the actual cause of the fight. the two saying they have been friends for 35 years and still are. f just a wee tiff. tomorrow we get retail sales. in japan, minds from the last bank of japan meeting. and we also have earnings from nintendo and softbank. and eu japan summit taking place in brussels wednesday. indonesia, we finally get the parliamentary election results. shares of twitter slipped a

touch. employees will be getting their first chance to cash out with concerns rising about slowing user growth. is it a good time to hold or fold? morgan brennan has this report. >> on tuesday in some 480 million more twitter shares are becoming eligible for sale. that is over four times the number currently trading on the nyse. but twitter has been vocal about its biggest shareholders have no plans to sell, holding at least 50% of outstanding shares. among them, the ceo and co-founders, bench mark capital, skrchlt p morgan asset management. so we looked at 1 # 1 other social stocks big lockup expirations since 2011. on. >> prices have finished up 2% the day before an expiration, down just under 2% the day of. down again just under a percent the day after. take facebook's first big lockup expiration august 2012, the stock jumped over 6% the day

before, then fell 6% the day of. and another 4% the day after. and a similar pattern for linkedin in november 2011, which saw a number of insiders sell. but when many insiders stay put, it can be a different story. so yelp for example fell over 4% on expiration, but jumped over 22% the next day. so analysts telling me insiders staying put could help ease the pressure on twitter stock tomorrow at least as far as the expiration is concerned. on monday shares closed down 0.7%. back to you. still to come, ukranian authorities suspend flights in and out of donetsk. we'll have the latest. l have th.

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there is fierce fighting in eastern ukraine. four ukranian service men have been killed and more than 20 wounded after rebel forces shot down a military helicopter.

meanwhile all flights in and out of donetsk have been temporarily suspended as tensions rise. all this as foreign ministers have arrived for a key set of talks. joining us on the line from odessa is a correspondent with the "wall street journal". phillip, what is the latest from where you are? >> a couple days ago we had mild slashes that ended with over 45 people dead. and since then the situation has been calm, but people here worry it's a calm before a storm because both sides remain very angry at each other and are bracing for possible attacks.

calm here for now, but the city has already canceled may 9 celebrations, the anniversary of the russian victory. people expect slashes on that day not just here, but ukraine. so calm for now, but people worry something else might be coming. >> all right. phillip, thank you. joining me is chris weaver from macro advisory. chris, every few weeks we say this is the most dangerous period since it started. >> i think we're getting right into it. as phillip mentioned it, friday is the may 9 victory day celebration, hugely symbolic. president putin plans first visual visit to crimea also directly after the red square parade. so a lot of emotion this

weekend. and of course also the separatists are planning or have been planning to hold a referendum on sunday to ask people to vote independent. so i think it's clear that the key he have government is trying to make sure that doesn't happen and that they have a greater degree of control in the region before this very tense important weekend. >> interesting comments from general breed accoulove saying now thinks putin can achieve his aims without having on send in official troops across the border, ie what is going on at the moment serving his purposes perfectly. >> this has always been our position. we never thought and hearing from talking to people in russian government, et cetera, in moscow, we never believed russia had any intention of putting troops across the border. i think the whole objective has been as the general says to keep maximum pressure on the situation, on key he have, ultimately looking for kiev to

agree to some sort of a referendum which can create an autonomous district. crimea was always a different situation. this weekend kicks off the important two week period right up to may 25th, ukranian presidential elections. that is an important event because right now -- >> will they take place? >> constitutionally they can take place so long as there is any voting in the country. clearly it will take place on the we were side of the country. the question is whether or not it will be recognized as a legitimate election by people in the east. so that's where the negotiations will start. >> whether you can even have an election. >> exactly. but again, constitutionally, it doesn't matter. if there is no voting in certain parts of the country, that doesn't invalidate the overall result. but the important thing about the election is that kiev will have an elected president whereas right now moscow has

been consistent in the view that it views the current government in kiev as not representative. so once the election is over, that at least creates the opportunity for some high level negotiations to reach some settlement. >> what is the ultimate -- what russia wants is an autonomous eastern ukraine. >> i think that's right. it does i'm inevitable. when you look at everything that has happened, it looks as if the only way the situation will get involved is some separatist actions in the east. >> where will that leave ukraine with the aid it needs and everything else? >> right now i think the fact that there is so much uncertainty and volatility in the country, it certainly has a huge question over the economy. without the extra commitments on top of the imf, then ukraine is still facing a default.

>> if it was autonomous, russia would help that out? >> i think practicing matticly, we'll see greater economic cooperation between east yukraie and russia for sure. but not everybody in eastern ukraine wants to be close to russia. miners have publicly said they do not want to see the region becoming part of russia. but clearly would support some autonomy. i guess you look at almost like a uk situation. that's the sort of solution that it seems that politicians and analysts are talking about as the thing likely to be workable. >> chris weaver, thank you. joining us from macro adviser. columbia is a country key to reinvent itself. in paris, steve caught up with the columbian finance minister.

>> we're not just the fastest y growing economy, wee're the thid largest. so very relevant for investors. we have vast a capital waiting from abroad. at times where other emerging markets are contracting, columbia is grcolombia is receiving more capital. so we can give more benefits to the population, health, education. so it's a virtual circle. >> it's more than just about coffee. >> it's a diversified country. we're the 20th largest oil producer in the word and we have a lively manufacturing sector, as well. >> so is the drive now to draw upon those strengths as an export sector, export country, or actually just develop like a lot of exporting nations develop the domestic demand, the

domestic invest the side of things a lot more? >> the fastest growing sector in cl colombia is infrastructure and housing. domestic demand is the engine of growth. >> a lot of the issues you spoke about very positive. one big negative perception is still around drugs and this ongoing conflict we've had for many, many years. with a progress on that front? >> president santos has launched a big initiative, negotiations taking place in havana. i think we've reached the point of no return. i think the peace process will t continue and hopefully we'll achieve a negotiated solution. colombia with the peace process and negotiation will grow not

just at 5% which is the current growth rate. it could grow one to two percentage points more. we're now successful economy. imagine how successful well be with peace. >> still to come, we'll be back at the oecd as it's revealing its general as is sessment of t global situation. meanwhile, a quick recap of where u.s. futures are trading at the moment. just a little bit below fair value. so call it flat. so call it flat.

a 40% slump in fixed income unit sends barclays shares in to the red and sets the scene for a structure all shakeup thursday. mixed picture for swiss banks. ubs beats first quarter, but are will pay a bigger than expected fine to resolve u.s. tax probe. hollande focused on getting better offers for alston.

and japan prime minister says they are on the verge of moving out of deflation. >> for nearly 20 years, japan has suffered under deflation. merely by owning an asset, its value increases. deflation is a terrible demon. welcome to "worldwide exchange". if you're just joining us in the united states, welcome to the start of your global trading day. we kick off with the latest outlook and forecast from the oecd. organization of economic corporation development. backing away from its call for canadian central bank to pull the rate trigger. so they say canada gdp growth forecast of 2.5% in 2014 and

says uk should do more to curb rising house prices, as well. they have cut gdp forecast for china to 7.#% from 8.2% in november they have lowered their raft for italy, trimmed the french gdp draft, butted the uk to 3.2%. so bigupgrade for the uk. they have lowered 2014 to 2.6% there 2.9% in november. so major highlights. lowering of the u.s. gdp

forecast. substantial upgrade to the uk and trimming of china growth numbers, as well. world forecast by the way 3.4% from 3.6% in the november outlook. so global forecast has been trimmed, as well. february retail sales meanwhile for the eurozone revised to point 1% month to month, previously 0.4. so even eurozone, retail sales not doing quite as well as we had thought. overarching theme has been pre-did i telling a slight improvement for all regions with a strong performance for 2015. risk of sloeing inflat slowing been highlighted. he was asked if they were too complacent.

>> that has been massive structural change in europe, but it's interesting that those that have done their homework are the ones who were in team trouble. and that means the ones who have done more change, more structural change, more in the labor market, fixing up their financial sectors, bank, et cetera, they' are italy, spain, portugal, ireland. what we need is if everybody else sdw this including the largest economies in europe, that they also -- there isn't this sense of urgency that they don't have the market pressures that the other had. the market is now huang with a done like spain. but the question is how the largest economies have been reaching with with example. no, they are --

>> are you talking about france? >> i'm talking about all the large economies in europe. it means france but also germany. also maybe switcher land, us a tree, a some of the nor dick countries. structural change in countries like finland which have been going very well so far. so i think it's high time for everybody to look at theps in the here or and say have we really done what we needed to do. >> are they relying on draghi too much? >> the fed was so critically important in not falling in to a deeper hole than we would have. the european -- the uk central bank, bank of england, so important by their loose monetary policy, by saying interest rates will be low for a

long time so come and get it. and that gave confidence that people reacted or acted upon those signals. in the case of the ecb, it's 18 different countries. 18 different situations, 18 different bond issues out there. some have more liquidity than others. and then the instructions of mr. draghi are not whatever it takes but under the mandate. >> it's had inaction. it's inaction at the ecb and the structural issues. >> frankly, it's the countries that have to do their homework, not the central bank. the central bank of europe should be better prepared to flex its muscles and be very

credible. so far they have done a good job because they have kept things under control. if you see what dramatic decompression of the spreads in most of these problem countries, it's been very successful. the only question is the ecb ready to go in there, dive in there head first were are it necessary. and the question is are they ready, is the board of one mind. but in the end, who has to to their homework. the different countries. >> the prime minister also speaking at the meeting. his key note said that on the demon of deflation, and outlined how his policies have turned the economy around. >> seven years ago when i previously served as prime minister, the japanese economy

was better than it is now. and yet little head way was made. this is because we were unable to banish the kedemon of deflation. but the japanese economy has been reborn. >> meanwhile the focus in the u.s. this week is on the fed chair janet yellen will testify twice. she will speak to the joint economic committee tomorrow first. any hint on the time line as well for tightening policy will be closely watched. joining us with her thoughts, chief economist and managing director in chicago.

lindsay, good morning. always good to see you. >> thank you for having me. >> highest reading in ism nonmanufacturing since august. so shaping up to be a pretty good second quarter. what reaction if any do we get from the fed. >> i think what we'll see is similar to what we saw in the april statement which is the acknowledge of the recent improvement. but they say that the relative improvement to the start of the year is a welcomed reprieve. but when we take a step back and we take longer term view, we're still seeing a declining trend in several key variables in terms of consumption, investment and even employment has been very uneven when we look at that from a six month average. so the fed won't be too quick to start over painting a positive picture of the u.s. economy. f

>> i was talking to a trader from chicago and he says we ignore the bad q1 gdp and we've sort of in a way not believing the strong jobs number either. it's a bit ho hum. >> that's right, there is a lot of juxtaposition as we did see all of the key variables save cop suf consumption fall into net negative. but saying the u.s. consumer is still out there spending. but remember, even when we look at that con sumpg shon number, it wasn't as if the consumer was out there spending across all cat bettegories evenly. we were shifting the goods in our basket away from durable purchases in order to pay for services. but as far as the employment number, we're seeing juxtaposition in headline growth improved, but the decline in the unemployment rate was the result of 800,000 americans dropping

out of the labor force saying conditions are so bad, i'm not going to bother looking for a job. >> when is the bond market going to no longer be bid? clearly demand still for return. but 80% of the world's bond markets are returning less than 4%. >> well, you know, the uts ri.s still a flight to quality. when you i think the down side risk is much greater than the up side risk in terms of yield movement at least in the short term as the u.s. economy is still struggling to get over some of the large barriers. and i think that is part of the motivation behind the fed to continue to reiterate the fact that they are very comfortable on this accommodative path and we don't expect any upward pressure in terms of a change in the fed funds rate within the next 12, 24, even 48 months at this point.

>> behind lindsay, always good you. thanks very much for joining us. some of the other key stories we're following, slump in investment banking septembnt bas shares lower. due partly to more than 40% sump in fixed income revenue. this ahead of a strategic plan due to be unveiled thursday. the firm set to announce it will shrink its investment bank. ubs surpassed last quarter's numbers, but ceo says there are new hurdles to face. >> unfortunately your outlook was approach to be correct. i would prefer a better environment. it's still challenging out there. now we have russia and ukraine and the sanctions and now how

those sanctions will have repercussions on the economies. i think there is a level of com play accepts city in financial markets. clients are still risk averse. >> credit suisse meanwhile reportedly in talks with the justice department. as much as $1.6 billion to resolve the probe in helping americans evade paying u.s. taxes. the fine would exceed the 1 billion credit suisse had set aside and double what ubs paid for a similar settlement back in 2009. ubs also had the charges later dropped. f >> there is no such thing as too big to jail. some have used that phrase to describe the theory that certain financial institutions even if they engage this criminal misconduct should be considered immune from prosecution due to

their shear size and influence on the economy. that view is mistaken. prosecutors talking tough. ahead of the u.s. open, we're fairly flat. dow up 17 points yesterday. we were helped along at the end by the ism numbers. s&p just up three points, nasdaq up 0.3%. right now the dow just a few points above fair value. pretty much on fair value for the s&p 500 and nasdaq around about five points above fair value. european equities have been down this morning. ftse 100 over a quarter of a percent before strong services pmi number out today. the uk economy growing at it fastest pace in six years. beating expectation 57.6. xetra dax down around 10th of

1%. we saw the pmi in europe coming in as expected, 54. a little bit better numbers in italy and france. and there is one stock very much worth checking on. balfour off 18%. 2014 profits will be significantly lower. the ceo now leaving, as well, with a need to look at a new restructuring plan. big mover is sterling. we've been up to 1.6954 this morning. that is the near a five year high. so the back of that strong services pmi. elsewhere the dollar always more subdued. dollar-yen just back to below 1.02. and euro-dollar up to 1.39124. a seven week high. treasury yields, 2.62% is the yield at the moment. still to come on "worldwide exchange," bolstering the

defense. astrazeneca won fda approval for a new heart drug. will it be enough to fight off pfizer. we'll talk about it. ♪ (man speaking chinese)

barclay shares fall after tipped weakness in fixed income.

krps cit currencies and commodities. ubs warns of a challenging environment. and abe says the inflation demon is done. france's president hollande says general electric's current bid for alston is not sufficient echoing the president's sentiment, the french industry minister also wrote a letter to the ge chief executive jeff immelt calling for a balanced partnership saying the government was concerned that the trail transport business would be isolated. we asked if take that as a signal of deindustrialization. >> i don't think we're witnessing the reindustrialization. if today ge is interested in

alston, it's not because alston has disappeared, it's because alston represents a capacity to do development for innovation and for manufacturing. and manufacturing in france. if ge says it's interested in alston because it wants to strengthen its hubs in france, it's rather a sign of confidence towards france, towards its policies, towards its labor force and towards its capacity to bounce back. beyond a couple things being quoted repetitively here and there, i don't see it as a danger for france. on the contrary, i want foreign investors to be interested in france as a platform and place of creation, a place of the capacity to bounce back and of conquest of markets. including markets outside france. >> interesting comments, stefane. do you think it reflects the rest of the french government? >> it's hard to know if the trench governme french government wants to put

pressure on general electric for a better offer or if they're waiting if siemens to make a proper offer for alston. nevertheless, hollande say this morning what the economic minister said yesterday in the letter sent to jeff immelt. they want the government would reject a deal that would see the ge sewing up the energy business for have a teestrategic reasons energy business accounts for 70% of the total revenue. al stop without that significant part of its business would be only 30% of the original size of the company. he's calling for more balanced partnership, suggesting that ge could bring its transport activities to alston or in a joint venture with french companies basically what siemens could offer after its due dill against. in response, ge says that the deal would be good for alston, good for france, but also says

that it's ready to negotiate further with french authorities. >> stefane, thank you. we'll see where that one goes. astrazeneca and pfizer, astrazeneca apparently received new approval for a heart disease drug. it's a fish oil based drug for cardiovascular disease. it continues to fight off the bid from pfizer. cnbc understands astrazeneca will also try to bring forth key clinical trial data on even more important cancer drugs to try to get early approval to them, too, as it fen dwchlt ds off pfizer. still to come, tensions in ukraine remain high. we're all set to bundle your home and auto insurance together.

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all flights out of donetsk will p temp regabe temporarily suspe tensions rise. foreign ministers have arrived in vienna for a key set of talks. kyra seir simmons is in donetsk joins. how much control can they wield in the eastern part of the country where you are. >> reporter: it is a pretty fluid situation, chaotic at times. we just got back from the regional airport in done everything a everythi done he have and a donetsk and all international flights have been canceled. passengers there telling us that they understand it if it is if

their safety. it is the third helicopter to be shut down in a week. so it raises the question of how they have the technology ability to fire a mess sil at a helicopter. so to your question who is controlling this, well, clearly pro russian militia are being backed by russia. we have been at the city hall near here where they are barricaded in, military uniforms carrying guns, walking the corridors, effectively running this city. but what they are saying is they declare this is an independent republic and fly their own flag along side russian flags is that they want to be separate and in that sense i don't think anyone necessarily has control over what they're doing because they are saying if the ukranian military come here as they are already, we will fight them. so it's hard to imagine how this can he said without some kind of

more battles or separation televisi division of ukraine. >> thank you for that. keir simmons, nbc news correspondent in ukraine. still to come, the ipo lock up period comes to it p a he sait . futures with a flattish start. at delta we're investing billions of dollars,

improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we'll raise it yet again.

40% slump of fixed income sends barclays into the red. mixed picture for swiss banks. ubs trades hire. credit suisse shares take a hit after reports it will pay a big p perger than expected to fine to resolve the tax proeb. and hollande trying to get better offers for alston. and japan's prime minister says the nation is truly on the verge of moving out of deflation. >> for nearly 20 years, japan has suffered under deflation.

merely by owning an asset, its value increases, deflation is a terrible demon. good morning. ism helping markets to a positive close last night. slim gains in dow, 17 points. this morning we have slim gains at the start. nasdaq currently just around five points above fair value but pretty much on fair value for the s&p 500 and only some 11 points or so higher above fair value for the dow futures. as far as european equities are concerned, good data today out of the uk. services pmi coming in stronger than expected. annual rate of growth in the first quarter for britain running at the fastest for six years. 58.7 that pmi number.

ftse 100 down ten points. we have gone into green territory. we did see a tick up of pmi services numbers. mean while the oecd has cut its forecast for global growth to 3.4%. but it does see improvements for all regions with a stronger performance for 2015. it says the u.s. will rebound strong in the second quarter after the harsh freeze that we saw in the first. while growth in large emerging countries are also tipped to remain positive but modest. japanese prime minister abe speaking at the conference, his key note speech centered on the demon of deflation and outlining how his policies have turned e

japanese economy away. >> 7 years ago when i previously served as prime minister, the japanese economy was better than it is now. and yet little head way was made. this is because we were unable to banish the demon of deflation. with wages stagnant, the public was unable to reach the reap the benefits. but the japanese economy has been reborn. >> shares of twitter slipped a touch just before stock lockup period ended last night. employees will be getting their first chance to cash out and with concerns rising about about slowing user growth, is it a good time to hold or fold. morgan brennan filed this report. >> on tuesday more shares are eligible for share, over four times the number currently

trading on the nyse. but twitter has beaeeen vocal t biggest shareholders have no plan to sell. mopping them, the ceo, and co-founders, benchmark capital, jpmorgan asset management. so we looked at 11 other social stocks big lockup expiration. on mpg a, prices finished up 2% the day before, down you just p der 2% the day of, and down again just under a percent the day after. take facebook's first big lockup expiration in august 2012. the stock jumped over 6% the day before, then fell 6% the day of. and another 4% the day after. and a similar pattern for linkedin in november 2011, which saw a number of insiders sell. but when many stay put, it can be a different story. on yelp for example fell over 4% on expiration, but then jumped

over 22% the next day. so analysts telling the insiders staying put could help ease the pressure at least as far as the expiration is concerned. on monday shares closed down 0.7% back to you. >> joining us with his thoughts, founder of ipox. joseph, good to see you this morning. >> good morning. >> will some of the key names staying put help the stock? >> i think not so much is going to happen other than in the short terp the mm the market is relieved there won't be much insider selling. but obviously a lot of more shares are free to trade. cost of borrowing will go down. tll be more short selling. and people will go and take money off the table. there are substantial gains some insiders have in the stock and should basically have a new pick on the momentum which has been

negative lately. >> clearly there has been a big selloff since march in the tech names. so the whole sector has been sold off. what are the problems particular to twitter do you think? >> well, twitter specifically the market didn't like the growth numbers. they liked the fundamentals in terms of earnings and sales. but growth numbers were not quite as good which definitely forced a negative momentum. here we deal with the stock which still trades 18 times 2014 revenues. very expensive stock. and more market related, as well, with a we have se what we send strags in strength yet on the periphery a lot of weakness which is indicated by the

performing s&p to date which is a big move. obviously insiders had apimpact on company like yelp and link linkedin and splunk. >> so what will it do for further tech ipo appetite? >> i think the window is still open, but not open to companies basically which seek excessive valuations. i think ipo need to look for initial revenues estimates between 8 and 15. >> what are you looking for, what is the key. >> obviously we look at the

financials. i think the key is how much they are selling, how much they will raise. the more they want to raise, the biggest initial valuation of the firm. as i mentioned last time, we don't believe ali baba is worth $100 billion given what has been going on in the market. we believe initial have a valuation is 12 to 13 times 2014 revenues. >> joseph, good to speak to you. thanks for that. meanwhile, nice pay for a week's work. apple granting its new retail chief $68 million in restricted stock. she was named to the job in october but only started on may 1st. she's the highest ranking woman

at apple and the first to join the executive team in nearly a decade. she'll be overseeing retail stores and online networks. apple stock back over 600 for the first time since 2012. "wall street journal" reports for the first time in a decade, walmart's web sales grew faster than amazon's. 30% versus 20%. amazon's total sales are still six times bigger. walmart spent heavily to boost online presence opening three new web fulfillment center, testing same day delivery and expanding offerings such as car insurance. and still to come, there is another high level departure in the engineering rapping ranks al

motors. motors.

barclay shares fall after reporting weakness in fixed income and commodities business. ubs warns of a challenging

environment. and abe says deflation demon is over. . lut shares are trading higher on the back of figures. joining us is cto at luthanza. you talk about your you're working hard in a weak market. how would you describe the environment? >> well, we see in the aviation industry an increase in capacity in some areas. we see a lot of competition wlo cost carriers. and in this environment, lut tan

sa made a comparison to first quarter last yeear. >> can you recoup from the strikes? >> we had strike first quarter around about $10 million to $15 million. and then the pilot strike in april where we have seen three days of strike and also some impact on our bookings. so all together, all strikes account for $70 million. >> are those strikes going to continue, will they be resolved? what is the long term forecast on negotiations? >> we are in constructive discussions with the pilots. it's a tomorrow pldom complex te it's not just salary but pension. but we are in constructive talks and are confident to solve that matter. >> does that mean you can rule out more strikes or are we still at risk of further cancellations? >> i cannot rule out further strikes. but we do our utmost to take

further pressure on our customers and passengers so we are very confident to do that constructively. >> of course first quarter is the weakest for airlines. f what sort of yields do you expect and routes where you'll make more homoney. >> well, you're right, first quarter is out of season normally the weakest. although we have seen quite good january and february, we had an impact on pricing in march. and we have to monitor that. in areas which we were weak last year, we are stabilizing. so asia is stabilizing. but we have pressure in euro and in america. america there is a lot of capacity in the market.

we is to monitor how others are behaving. in europe, we react with our local company. >> thanks for joining us. on the line there frankfurt. a first on cnbc. another high level departure from general motors. courtney reagan has the details. good morning, court. who is on their way? >> good morning, ross. well, gm says the engineer who oversaw an internal probe into the defective ignition switches at the center of the automaker's recall of 2 i.6 million cars is retiring. he was the executive director of global vehicle performance. before that he was chief engineer for compact small and mini and electric vehicles, reporting directly to now ceo

mary barra. documents show in 2012 frederico led an investigation into why some cobalts were stalling while newer models weren't. gm didn't recall the affected vehicles until this year. the decision is not related to the recall, but comes two weeks after other engineers involved in changing the stein of the switch were suspended. separately, "usa today" reports gm is quietly offering own he openers discounted pricing. the new incentive which isn't being advertised could save people up to $1500 off a 2014 chevypickup truck.

older models are often in the hands of second or third owners. we take a look at shares and how they're trading in europe, you see them down slightly. about a third of a percent. cnbc knows in-depth on the gm recall crisis in an upcoming documentary, a failure to recall. premiering sunday, may 18, at 10:00 p.m. eastern time. ross, back to you. >> didn't want to miss that one. court, good to see you. thank you. have a good day. the oecd is predicting steady global growth, but could concerns over workers rights derail progress. we'll talk to the international trade up cnion confederation. on.

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growth to 3.4%. but it is it sdoes see growth t regions. joining us, general secretary at the international trade union confederation. thachk thanks to joining us. what is your view five, six years on from the financial crisis. how happy are you that we actually have a broad based recovery? >> well, i wouldn't call it a broad based recovery because they're talking up the figures. but look at the fine print. unemployment and inp equality is set to rise again this year. that means more people out of work, less money in the economy, less demand, and growth will simply keep floating along at those low figures. we know that when the world's imbalances are now so great that workers in cambodia are being shot in jail for struggling for

a minimum wage of $160 a month, then something's just not right. whether it's cambodia, bangladesh, indonesia, philippines, right around the world, if this is the best the global economy can do, impoverished workers and indeed continue with the austerity program to smashing collective bargaining, wages general and social protection, the future is not very bright for workers at all. >> we did see a tick down in the unemployment rate. 12% at the moment. and clearly the cost of keeping the euro has been an increase in youth unemployment. do you see any strategies coming out of eurozone countries that will enable growth which will in turn lead to better employment? >> we see a lot talk about investment in jobs, but the g-20 test this year is will they talk about it or will they generally put up targets for investment in

infrastructure. in the green economy. we're 15 months out from another global agreement attempt on climate change. we know he there are jobs in transition. but do we see go. s with the courage to put plans on the table. unfor li, pot. and when you look at that very tiny tick in unemployment in the u.s. or more employment, let me tell you that the historic levels of over 200 million people unemployed in the formal sector are now at risk of becoming structural. and we're hearing governments talk about 10% or more being the new normal. well, that's not going to happen. we will fight for jobs, jobs are the fundamentals of a decent economy, one that works for people. but frankly if the demand is not there, then the growth is not there either. and we continue with the sick model of an economic future that is about profits for the one percent and p balanced global

economy, supply chains impoverishing workers. i just came from canada, andup economy, supply chains impoverishing workers. i just came from canada, andnp economy, supply chains impoverishing workers. i just came from canada, and ba economy, supply chains impoverishing workers. i just came from canada, andbal economy, supply chains impoverishing workers. i just came from canada, and average income for 30 years has been $57. that's not going to do anything to lift living standards in the middle income ranks or to drive growth. we have to look at wages. the world needs a pay rise. >> most jobs will be created by the private sector and smaller part of the private sector, so we don't need policies that promote creation of new businesses and encourage entrepreneurialism and a tax base that rewards success? >> well, you just are postulating the same failed policies. the power of corporations has been proposing these now for 30 years and in the last six years, we've seen big business and big finance simply dominate governments. so those are the policies they are following and nothing's

changed. why don't we look at what the japanese prime minister is doing, full participation of women, equal numbers in the workforce, require jobs in child care and age care. it isn't just the private sector. of course they create jobs and we want to see investment. but what about the care industry. are is the r&d to gets out of broad spectrum impact of climate change within 15 years,ville transformation that will drive those jobs. that's what we want to see. jobs centered plans. >> i was actually focusing more on the smaller business community. we have to go. i'm sorry. we're out of time. but good to speak to you. futures in the united states are indicating that we are going to get a very small bounce. let's call it flat frankly. despite relatively good data.

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good morning. welcome to "squawk box". the french president saying general must improve its bid for alston. and the u.s. government may be about to reach a billion dollar settlement with credit suisse. and david einhorn naming its short target. we'll tell you about it. "squawk box" begins right now. . good morning. welcome to "squawk box". i'm michelle caruso-cabrera along with andrew ross sorkin and steve liesman. becky and joe are off today. we have a big lineup ahead

including martin franken, tenant health care and sir richard branson on a new hub deal. but let's start off with the markets. futures are suggesting positive open. take a look. nasdaq futures suggest we'd see a gain of a quarter of a percent. dow would open higher by a little more than two. s&p would be flat. the dollar at this hour is lower across the board. a buck 69 for the pound. 131 jen for every dollar. ten year 2.61% going below 2.6. we were talking about 2.5 at one point yesterday. now back to 2.6. still lots of mystery about what is going on with the long end of the curve. >> breaking news on big phrma. let's get out to meg. >> yeah, the deal frenzy