hsbc duz to report earnings in the next 15 minutes. investors watching for any updates to relocate from the u.k. to hong kong. >> saudi arabia's oil minister tells cnbc he isn't blaming

anybody about the cost of the price of oil and has no fear about future fluctuates. >> i'm not worried about crude nor would i try to predict what the price is. >> this is just the beginning. india's finance minister tells cnbc the country will grow faster than china as long as it continues to reform. >> i believe india has a 9 or 10% growth potential and 9 or 10% growth potential, we have to invest a lot into rural infrastructure. this driven by the strongest performance since 2008.

let's get to carolyn with more on that story. >> good morning to you seema. it wasn't driven by the wealth management business but also by the investment bank. we know that traditionally the first quarter seasonally is the strongest of the year. it's tough to extrapolate that to the rest of the year. we did see a beat on the underlying basis in capital. that was better than expected but let's hear from the bank's cfo himself. >> it was a really good start for us. solid start. strong quarter. we're pleased to see all of our businesses performing well in the quarter. this really highlights the advantages of defining your strategy early, having a clear strategy. >> we saw that the investment bank was very very strong and in a quarter like this are you thinking, man, i wish we wouldn't have pulled back as much as we had to in the investment bank? >> absolutely not. if you look at the result of the

investment bank this quarter very strong results but more importantly return on attributed equity of 49%. well above our target of greater than 15%. that showed through because they handled our clients business without extending their risk limits and risk position. we were pleased. >> very few banking executives that we speak to want to extrapolate from a strong first quarter to the rest of the year. tell me how you feel about the momentum going into the second quarter. >> there's good momentum for us coming out of the first quarter. i share my peers views which is not annualize the first quarter but it's a good start. >> what client confidence levels are you seeing? we saw good inflows into the wealth management business but you have repeatedly said don't put too much emphasis on that number. in a broader sense is confidence

picking up as well and is it helping you in wealth management. >> it's a little spotty in terms of client confidence. if we look at the u.s. client confidence is the strongest and picked up a bit. the rest of the world, the world still is a dangerous place and we see clienltts hesitant. the volatility we saw, 10 basis points swing from top to bottom highlights how clients feel. >> what are those clients worried about? in the last one or two weeks we've seen a reversal in the equity and bond market rally since the start of the year. is this something that could unsettle investors, your clients going forward? >> in term of the market as a whole what clients are really concerned about is what happens when you have divergent monetary policies. that can create a certain amount

of uneasy for clients. that's why we talk to our clients about the long-term and not the short-term movements and why we think they're well positioned. >> going into these numbers there's a lot of focus on whether we'd get any updates on the talks. and a potential settlement on the fx manipulation front. we have no deal yet but they're in advanced talks with the d.o.j. i spoke to the ceo about that. we'll bring you that part of the interview in one hour's time. >> the stock up better than 6%. carolyn, thank you so much. from banks to bonds a ten year treasury yield ending yesterday's session at a 7 week high so we're still seeing the sell off in the bond market and take a look at the german bund. that's also been garnering the attention of investors. also moving higher. but many experts say don't fight the ecb. at the end of the day further

quantitative easing could push yields lower. right now we're at 0.42%. influential bund investor says he believes rates have bottomed. speaking to cnbc on monday the ceo warns high yield bonds don't perform as well as u.s. treasuries when the fed hikes rates but he also says he's not worried about high yield in the near term. >> every single time the fed goes on a tightening sickcycle the yield curve goes flat. sometimes it takes a few years but it always happens. the fed already started tightening as eliminating qe. so the curve is steepening. >> all right. he has no concerns about recent fluctuates in market interest rates.

let's discuss more with the fixed income portfolio manager. pleasure to have you on the show. thank you for joining us here. >> thank you. >> in this low rate environment we're living in is that the best strategy? >> i think diversification is a good strategy to have. significant dislocations we have seen. high yield is quite attractive but i'm more concerned about the component off of it and we remain short u.s. treasuries in the u.s. >> you're short u.s. treasuries right now. has it just become a crowded trade? is that why? >> if you look at yields you cannot justify current levels. they helped push yields down but

overall i think if you look at inflation wages are going up. employment cost index is ticking up. you look at inflation and growth you could not justify yields at those levels. >> what happened ifs that april jobs report we're getting on friday comes in disappointing? could that result in investors buying treasuries and yields moving lower? >> the key thing is to have flexibility in your approach. what we like to do is take short positions and long positions and create a basket of trade. we have gone into markets more priced in fundamentals like new zealand, australia has been a market we have been long and markets like mexico but selling overvalued markets in more developed markets like germany where we put on shorts.

we started shorting in december. >> so right now you're actively short; is that correct? >> yes. >> at what point will we see yields come to a point where value investors say this looks attractive i'm going to get in? >> technicals in europe aren't going to limit the amount of sell off in all of those markets and therefore i think that having a basket of countries where you can too have long positions against your shorts is quite critical and the flexibility i mentioned is also critical and when you buy a bond you get a currency risk. you get duration risk and credit risk and with flexibility you can separate that and you can pick which come -- component you would prefer. we can go in and buy the credit. so the flexibility is quite important. >> absolutely.

because we still don't know when the fed will in fact raise rates. stick with us. more coming up. fixed income portfolio manager. coming up on worldwide exchange we bring you hsbc's latest earnings report amid expectations the bank's asian unit will continue to drive profits. what will this mean for its relocation plan? we discuss. shopping online... ...is as easy as it gets. wouldn't it be great... ...if hiring plumbers, carpenters and even piano tuners were just as simple? thanks to angie's list now it is. we've made hiring anyone from a handyman to a dog-walker as simple as a few clicks. buy their services directly at angieslist.com. no more calling around. no more hassles. and you don't even have to be a member to start shopping today. angie's list is revolutionizing local service again. visit angieslist.com today.

>> welcome to worldwide exchange. let's get a check on european markets. the heat map indicating more green than red on the screen. if you look at the stoxx europe 600 index we're close to session highs. of course this week a lot of factors in place for investors with a u.k. election. the latest reading on the u.s. labor market plus on going negotiations between greece and international creditors. taking a look at european markets where we're seeing the gains, mostly the u.k. market right now. yesterday we should point out a triple digit move to the upside for the xetra dax despite the manufacturing activity in the month of april. trading at 11,631. the french markets at 5,088 holding on to a gain of 7 points. now in the currently market

interestingly enough the euro is trading in a narrow range against the dollar this week. that nfp report on friday could change the market direction of the currency. a strong report could push the dollar higher while a weak report could result in the opposite. now of course jeff yesterday says he still likes a dollar. he says i do believe the dollar is going to get stronger for a couple of years so perhaps dollar is keen now. right now usd holding on to a gain of 120.13. that's a look at currencies. now we are awaiting hsbc's q-1 results. they'll be coming out any second now and we'll get you the numbers as soon as they do. given the challenges that hsbc has been engulfed in there will be a lot of questions not only on profitability but also controversies including money laundering among others. let's bring in catherine that's going to join us in this discussion around hsbc. what are analysts expecting? >> there's going to be a lot of

focus on where they will be headquatered and whether there's a spin off of the u.k. retail bank too but there's also going to be a lot of focus on just what the tax of operational effectiveness are as well and a lot of analysts are expecting to see not a great performance in global banking markets and the commercial end of the operation and potentially questions whether u.s. retail operation seems to be that good of an idea seeming it is performing better at the minute. >> the last conference call after ternings report a lot of it has to do with the tax evasion scandal versus the profitability. operating profit at $6.48 billion.

they're reporting an adjusted profit before tax of $349 million or 5% in the first quarter of 2015. a couple of other numbers to keep in mind now, $7.06 billion. you can see the stock responding favorably at this moment. just now trading up about .7%. operating profit at $6.48 billion. is that higher than what the analysts were expecting? >> just a little bit. probably higher than some of the analysts expectations. i'm taking a little look at what's been said here. >> pretax profit we should point out $6.89 billion. of course ne any commentary around it's controversy and tax evasion scandal will be digested by investors. last quarterly earnings did disappoint the street as it saw a sharp fall in annual profits

and interestingly enough it's global banking division which includes the investment bank faired the worst. profits falling about 40%. we'll also want to get the break down of how the investment bank is fairing and wealth management too will be in focus. you can see hsbc shares responding positively to earnings up by around .8%. currently at session highs. let's get out to an expert who follows this stock from sidney. it's martin smith. head of market analysis. number versus come in for hsbc. first quarter operating profit of 6.48 billion. what are your thoughts. >> we did favorable results in line with some of the other bank result wes have had last week. the surprise to the upside with a 21% improvement to 2.2 billion pounds there compared to rbc who did perform to the down side

there. so generally quite a resilient outcome given that they dropped last year to $6.8 billion and the year before in 2013 was a favorable result given it was boosted by asset shares there. >> hsbc also surprising the street by declaring a dividend of 10 cents. were you expecting that announcement in come in today, martin? >> absolutely. a lot of the focus is on the transfer of the headquaters to hong kong but aside from that the hsbc global franchise is very strong and placed well given the challenging market conditions there. one of the main focuses was operating expenses which have been moving up over the last few reporting periods there but generally the way they managed the portfolio there by dievesting

those factors has been a positive for the bank. >> i'm just wondering, we have gotten as part of this statement them saying they are issued a request for information in relation to the swiss private bank that shows how much these legacy issues are still continuing to drive down the bank. how important do you think this it for analysts right now? >> absolutely. obviously stewart described it as a shameful event for the bank and he's been hideingunderlying performance of the bank against some of the other banks in the market there, hsbc is well placed to resolve that given the upcoming election which is an important factor in the u.k. but also some of the broader market

factors there. >> hsbc is saying global banking and markets had a strong start to the year and the commercial banking continues to perform well but when you look at the legal issues facing hsbc money laundering and tax evasion why would you want to own the bank verses the other banks that have less baggage? >> definitely i guess it is the view on the street there that hsbc can overcome some of the cig any kanlt hurdle significant hurdles. it's a real concern for the bank and the way that it goes about managing that. but looking at the core business itself generally well played given that he's keeping a cap on some of those that are causing issues for the bank but certainly an important factor to concentrate on as we see more result there is with the

presentation. >> of course it will be interesting to see what questions analysts pose to stewart gulliver on the conference call which will be getting underway after hsbc reported results. a dividend of 10 cents per share. earnings per share of 10 cents higher. you're seeing the stock up about 1%. thank you for joining us here on cnbc and catherine thanks for breaking down the numbers for us. to greece it's a busy day for greek negotiators. the deputy prime minister and deputy foreign minister are to meet with mario draghi. this as he travelled to paris for talk with his counter part before heading into brussels. taking a look at the greek yield curve the two year now at 20%. the 10-year at the psychologically important level for traders at 10.6%. greece is so far off course it faces losing imf support unless

european lenders write off significant amounts of its sovereign debt. the newspaper says paul thompson delivered the warning to euro zone finance ministers last month. leaders are also talking about greece over there. isn't that right, susan? >> that's right. everybody knows greece is running out of time and running out of money but that's not going to stop the optimistic outlook from the italian finance minister. he says we're going to get some sort of greek deal. there is no plan b if greece exits the euro zone but he's been a little bit too overly optimistic. now he is predicting just a few weeks a head because the clock is ticking. greece knows it. the world knows it. take a listen. >> it's not a question of what i

expect. it's the fact that liquidity is running out in greece. it's a matter of maybe a couple of weeks and the greek authorities have to come up with concrete structural reform proposals that the euro group will have to volume date and i'm confident that the next meeting of the euro group on may 11th we will obtain tangible results so that the temporary program that's -- temporary extension of a program granltted to greece would be finalized. >> you said before that there is no plan b in the event that greece does leave the euro. do you think you should start thinking about a plan b now? >> no i continue to be moderately optimistic. >> what makes you moderately optimistic? i think there's a higher probability now that they see of

grexit than a few months ago. >> i think that the greek authorities very recently have appreciated differently the situation and there's an element underestimated. the same citizens that elected the current government do not want to leave the euro and they know that this requires some pain and this pain is to be short live first degree there is agreement and then greece can embark in an immediate term growth program. >> now i also asked his thoughts on the greek and finance minister being sidelined. he didn't want to directly go there but he said it's strengthening to bring in a new team and hopefully because of the new team leading these new talks, hopefully we'll get concrete plans coming through. so you read between the lines. back to you in london. >> susan lee thank you so much. you might think it takes a super

hero to solve the euro zones problems. head to cnbc.com to see how super mario draghi is shaping up to his task compared to the members of avengers age of ultron. now they have been making statements, a couple on the greek bank situation. there's a risk that greek banks may run out of collateral to obtain emergency ecb liquidity if the situation continues. so worries continue ahead of that. let's talk more about greece. is there enough capital from your point of view? enough support to aid the economy and the banks if greece does, in fact default? >> i agree with what's been said. running into a liquidity crisis.

they introduce some form of controls and headed down a very dangerous path and much closer to the exit plan so there is a very sensitive situation that can only be solved. greece needs to earn more euros an we need to figure out a plan to do that. >> is it in everyone's interest to ensure that greece doesn't exist the euro zone. >> certainly for the rest of europe for italy and spain and other countries, if greece were to exit you would have to assume that you would price a risk premium of that happening to other countries and that would be negative to financial conditions across europe. >> what do you make of the moves in the greek bond market? investors are less fearful of a potential greek exit but that's not the case this week as much. we're seeing a little bit of movement on the short end of the curve. >> bond markets tend to

overreact. you price greece at 5% only nine months ago and now you're over 20%. i would say t you know certainly not an attractive investment to me yet. >> not attractive? >> no. >> but we have negative yields and 30% of sovereign bonds. >> to me much more attractive invest is shorting bunds rather than trying to chase this. >> that's one way to approach the situation, shorting the german bund? >> yes. >> thank you. always a pleasure to have you on. now an impressive set of numbers from glass maker so how are investors eyeing the numbers? we're going to discuss that next.

first quarter profit jumps nearly 90% sending shares to the top of the swiss market. hsbc moving higher after reports of 4% rise in first quarter profits and declares a dividend of 10 cents a share. saudi arabia's oil minister saying he's not blaming anybody for the collapse in the price of oil and he has no fears about future fluctuates. >> i'm not worried about crude nor will i try to predict what the price is. if i was to predict i would be

somewhere else gambling. >> this is just the beginning. india's finance minister tells cnbc the country can grow faster than china as long as it continues to perform. >> india has a 9 or 10% growth potential and to achieve that we have to invest a lot into rural structure. >> you're watching worldwide exchange. construction data out of the u.k. catching the attention of investors. u.k. april construction pmi falling to 54.2. the lowest in two years and you're seeing the sterling pound trade react weakening by .2%. last week was the biggest weekly loss for the pound against the single currency in almost four years. a lot of that in response to the u.k. gdp miss.

manufacturing activity also cooling a bit. right now we're looking at sterling at 15 against the u.s. dollar. construction in the month of april falling to the lowest level in nearly two years. let's look at the european markets on that note. right now we're in the green. green across the screen let's take a look right now. first quarter results slightly above expectations with adjusted profit at $6.89 billion both operations enjoyed a good start to the year. they declared a dividend of ten cents per share and that stock is higher by .2%. let's look at the other stocks on the move. adidas in then green thanks to an upbeat by performance by it's brands. this after they denied rumors they could be looking to sell

off reebok. another stock was infineon. it hiked proftd andit and revenue expectations. switching focus to aberdeen. they saw profits rise by 25% but the british asset manager said short-term operating conditions are set to remain challenging and luxottica is reporting better than expected first quarter operating profit. this boosted by sales in north america. shares basically flat on the day let's talk more about the trade in today's session. thank you for joining us. >> good morning. >> i want to talk about what we were discussing.

the move we saw in the euro. that captivated the attention of investors last week. it's coming off it's highs. is this move in the euro short lived or does it continue to strengthen from here? >> it's more of a correction so i would be viewing this as something that would peter out very quickly and we'll start to move back down toward the lows. it's very understandable a move to the lows of 105 and that's what this is. this is a bit of an unwind. short euro, long equities and long fixed income. >> do you want to fight the ecb and bet it is further from here. >> against the dollar it's going to be very very tough to see substantial gains further from

here. the story on the u.s. side is compelling. 2 percentage points was personal consumption slow down but all the conditions are set for a pick up again in personal spending and i think that's going to bring back the idea of the fed moving this year. there's a lot of upside for short-term rates in the united states. so the spread story is still very compelling for euro dollar to move lower. >> when looking at the story here in europe if the economic metrics continue to surprise to the upside which many have many of the metrics including the jobs number as well as manufacturing does that suggest that qe is feeding through to the real economy and that in itself is a reason to buy the euro? >> well you could argue there has been some evidence that there's been some feed through

in qe. the improvement in bank lending, you could go back to the asset quality review last year and the stress test is far more important for improving the balance sheets of the banks which resulted in this pick up rather than quantitative easing but if things continue to improve at some point there's going to be more serious speculation about whether or not qe continues until september 2016. >> that's the other question will they scale back if the data continues to surprise on the upside and show the euro zone is rebounding. >> the point i make there is you're going to have to see the data improving for a sustained period of time before the ecb would consider it. in the medium term or shorter term what's happening is you're seeing this portfolio rebalancing flow because of the sharp drop in yields. they're still low despite the move last week. there's much greater appetite to shift capital abroad.

that's happening and we can see it in the data very clearly. >> stick with us. it's also a busy day in the euro zone. the german finance minister is scheduled to meet international press in berlin today. what can we expect? annetta is there with a preview. >> of course we can have all sorts of questions on top of the list i would say, above all it will be greece. looking at that report they now call for debt forgiveness from the eu creditors because they judge the level of debt in greece to be too high to be sustainable. that will be a serious standoff between the imf and also the german government. remember the german government was lobbying for months that the greek get their level is sustainable. if they stick to their program f they cut expenses. if they cut costs. do reforms. then by 2022 they will reach

that level in line with the eu treaties. that's the line they have been sticking to all over the years. it will be super interesting to see what he will answer to questions regarding that imf call which was reported by the financial times. that meeting had been taking place just last week. that will be one major topic. another question will be what he thinks the next meeting will yield in terms of progress for the greek reforms and the payment. because here at least in germany if the imf does not pay the german government can't pay either because the parliament here will not say yes to any

further payment to greece. so i think that press conference will be dominated by questions on greece but also perhaps also a little bit on what happens in germany in terms of economic outlook but i think the predominant factor will be greece. >> as you say it will be super interesting. thank you so much. still to come on the show, saudi's oil minister tells cnbc he's not worried about iran crude returning to the market. but where does he think the price of oil is heading? more after this break.

saudi arabia revealed specific rules and regulations which will govern direct foreign investment in it's stock markets. they'll be able to invest on those listed from the 15th of june. the market regulator also confirmed investors from abroad will be limited to holding no more than 10% of the value of the stock market. fund managers estimate the move could attract $50 billion over the coming years that includes

the world's biggest oil company. hadley looks at how key areas are being reshaped. >> one of the most closed societies in the world is undergoing a massive shake up. a generational shift many hope will propel saudi arabia into the future. the kingdom issued 60 royal decrees over the last three months alone consolidating multiple committees and councils and updating the line of succession and launching a military campaign in yemen. it's a shift to a youngier and savvier generation. the new crowned prince is 55 and the deputy crowned prince is in his early 30s. the kingdom's newly appointed foreign minister the first nonroyal to hold the position is already a familiar face in washington and a regular on the u.s. morning show circuit articulating the kingdom's position on yemen.

>> we're there to protect the people of yemen by an occupation on a radical group. >> touted as 100 days of achievement it puts a clear emphasis on the kingdom's economy and security. >> you have to remember these changes come against the backdrop of heightened tensions here at home. they arrested 93 people on terror related charges. there's threats against malls and public spaces and the on going crisis in yemen and halting of a vessel in the persian gulf. >> another sign of the king's confidence in the younger generation his son will also lead the restructuring of

aramco. it fuels rumors that the retirement of the oil minister may be imminent. >> hadley gamble now joins us live. over to you. >> we got the chance to speak to the oil minister on the way to a major one happening today. they have been dipping quite deeply. about 90% come from energy and at this point i asked the oil minister are we going to see a cut in production and i also asked him are you worried about iranian crude. >> i'm not worried about iran crude, nor will i try to predict what the price is. if i were to predict i would be somewhere else gambling. >> i have one more question apex said on monday that speculators were responsible for much of the price drop. what do you do to expand on

that? do you have a message for the oil speculators. >> speculators influence the short-term changes in price. long-term supply and demand control the price. >> are they at fault for the oil price. >> don't try to incriminate anybody. >> saudi arabia's oil minister there basically saying nothing is going to change in the short-term in terms of saudi arabia's oil policy. that will be retiring in the future. of course at the same time there's also rumors one of the kings other sons might take over the oil ministry. we have seen the restructuring in recent days. heavy things happening inside the kingdom right now. the opening of the region. the rules will take effect june 1st.

seema. >> gamble live for us. thank you so much. now indian prime minister is set to visit china to drum up infrastructure and trade between the two countries. india will overtake china to be the fastest growing major economy this year. it's down about 4.6% over the last three months despite a rise of over 22% since the prime minister came into power. cnbc's susan lee spoke to the indiana state indian finance minister. the recent share price movements don't tell the whole story of india's reforms. >> i think it's completely unfounded. it has its own logic and sensex is dependent on a large number of factors. including whether the investors want to sell or buy.

that has nothing to do with reforms in india. never in india has been a government which in it's first year has undertaken such a large speed of reforms. we have opened up almost every sector. foreign investment. because there's an additionalty of investment. >> how does it feel to grow faster than china? >> well, you see, i am certain will the not -- i will not say that i'm unusually excited because i know what china has already achieved. china grew at 9% plus for 30 years, therefore i do believe that india has a 9 or a 10% growth potential and a 9 or 10% growth potential, to achieve that we have to invest a lot into rural infrastructure and irrigation. that's one area we can move up.

our services sector is doing well. the third area we have to do a lot of investment to make is infrastructure and the impact of that on the manufacturing sector. it's only then we achieve the 9% and 10% growth rate and once we're able to do it for a decade or so we can lower poverty rates. it's only then i'll feel excited about it. >> the marginal cost of funding has gone down thanks to these interest rate cuts from the rbi. shouldn't they be passing that on to the average consumer? >> i believe the banks will pass on. we have been trying to do our best and i'm sure the process of passing on has begun and if the present inflation control remains in india i have not the least doubt that interest rates will come down even more. >> yeah. >> and that's when the competitiveness starts. >> derrick, of course we saw

this massive run in the bombay sensex post modhi becoming prime minister. the market cooled substantially but the indian ruby held up when you compare it to the other emerging market currencies. >> yeah when you look at funding risks and you go back to what happened in the taper tantrum in 2013 there's been a big improvement in terms of analyzing those risks and i think probably the biggest change for the currency is not modhi but the credibility brought to the central bank while tackling inflation and there has been still good demand in fixed income and there's this new confidence about inflation remaining under control going forward. the history for the rupee is double digit inflation and an adjustment on the currency

because of that and it's a new horizon with lower inflation. >> when we do get the fed rate rise given that analysts are expecting it to be slow and gradual could that minimize a negative reaction from emerging markets. >> if the communication goes well from the fed for sure but that's going to be such a major event all emerging markets are going to suffer in some way. but the rupee out performed this year. perhaps that would continue after the first fed rate increase. >> stick with us. another market mover could be the u.k. election. fewer than 46 hours before the polls open in the u.k. general election and the campaign rhetoric shifted up a gear. george osborne is warning the country will wake up to fall out friday if the opposition wins. the opinion polls show no signs of shifting in either party's favor with some forecasters now

putting the probability of a hung parliament near 100%. wilfred frost is on the campaign trail. over to you. >> the prime minister david cameron was here just moments ago. he didn't have time to stop inside he was talking about the fact that he is the choice for stability in the u.k. government and saying you do not want labor propped up. that's the story over the last week or so. interesting to see him with his jacket and tie off. shirt sleeves rolled up. energized. people started to say he was showing the passion he lacked for months on the campaign trail. he has about 36 hours left before he retreats to his own

constituentcy. ed miliband campaigning hard today. the democrat leader earlier saying he felt his party would do better than people are currently expecting. 1.5 days left of campaigning until the polls open. as you said at the top, the polls still close to call. >> the uncertainty rises as we head to may 7th. thank you for that report. let's talk about the trade and u.k. elections and uncertainty. what it means for u.k. markets and the pound. derrick is still with us. we saw the digest weekly loss against the pond in almost four years last week. a lot of that attributed to the disappointing read. do you think this type of weakening could continue given the type of construction number we got out today.

>> i'm not so concerned. the u.k. consumer is in a good place of what's going to happen in terms of good incomes. there's a good chance for spending to be a big driver of growth through the year. the unemployment rate is falling fast and the story is quite positive for the u.k. consumer and when you look at confidence levels of consumer confidence are at levels we haven't seen since 2002 to relative to elsewhere, the consumer here is feeling good. >> maybe they're not moving enough. they're probably saying this is impossible to price. we have to assess it in the aftermath. if there's a left leaning alliance there's no brexit. there's no referendum. that's good.

if there's a left leaning alliance that could mean concerns about the fiscal situation going forward but also brings forward the potential to be moving rates sooner rather than later but it does signal there's a very messy outcome that could transpire on thursday. >> when it comes to the brexit do you think joining the eu should be an irreversable decision? >> no, i don't think so. i think it's easily reversible. a singular currency that's different. but in terms of trade deals there's an awful lot of work that's gone before but it's reversible and it should be. >> i want to switch the focus to the bond market. we talked about it briefly at the top of the conversation but could rising yield bss be a problem

if they continue to move higher to encourage market participants to begin shifting capital to growth sectors. >> certainly from a european perspective what they don't want is extreme volatility in fixed income markets and the move last week was a big move but the ecb would be standing back and not being too concerned at this point in time. when you look at inflation expectations, despite what's happening in the oil market inflation expectations remained relatively stable at 20 basis points above the low we saw in january and still 40 or 50 basis points below where we have been in europe. so the inflation eck peckation story hanlt changed dramatically. >> but it could change now that we're seeing a big rally. a rebound in the price of oil up about 27% in the month of april. does that effect wear off? >> if you were continuing to see a trend going higher.

>> it's just going to take time before they get there. >> perhaps 10 or $30 was speculative but the rest was a fundamental explainable move. >> and the key level is $60 barrel. we're still waiting to see if they can come above that threshold. thank you for joining us here on worldwide exchange. the european head at bank of tokyo mitsubishi. what can we expect after the rebound on wall street yesterday? well a mixed session when looking at premarket trade. dow jones between positive and negative territory. still to come pimco loses it's title as the world's largest bond fund. find out who stole the crown. that's coming up next on worldwide exchange.

a warm welcome to all of you joining us. you're watching worldwide exchange and here are your headlines from around the world. a stellar start to the year for ubs. first quarter profit jumps near nearly 90% after a strong performance. pimco loses it's crown as the world's biggest bond fund. they pulled $9.6 billion last month. a break down for mcdonald's. but credit suisse with a higher

target price. >> saudi arabia's oil minister isn't blaming anybody in the collapse in the price of oil and has no fear about future fluctuates. >> i'm not worried about crude. nor will i try to predict what the price is. if i was to predict i would be somewhere else gambling. despite that move to the upside in yesterday's trade following the big gain on friday we're looking at a muted session on wall street. at least at this hour the s&p 500 down fractionally. we're in negative territory for the dow and nasdaq when looking at premarket trade. we also got some dovish commentary from fed president charles evans last night. he says it's not appropriate to raise rates until sometime in early 2016 citing weak q-1 data. also known as being a strong

dove. yesterday interestingly enough we did see a rebound in the small cap sector as well as bio tech which had a rough ride in the month of april. taking a look at european markets interestingly enough a lot of focus will be on greece. we had the greek deputy prime minister meeting mario draghi today and we have markets in japan and thailand closed for public holidays. right now the ftse 100 holding on to a gain despite the disappointing read on construction in the month of april. dax picking up a little bit of speed and the french marks at 5,116 and of course the athens ase, the greek public equity market in focus. $200 million interest payment to the imf due on may 6th. let's take a look at bonds because that's getting more

attention than the equity markets and the moves in the bond market. yesterday many bond investors and investors in general talked about how bonds are overvalued at these levels. that's the word from warren buffet as well as other top investors. he says if that jobs report comes in weaker than expected it could lead to a further sell off in the u.s. treasury markets. so keep an eye on the u.s. ten year which is above 2% at 2.12%. despite the move to the upside and the yields on the u.s. ten year. we did see a big move in the you till -- utility sector. the 10 year german bund also in focus. we had a guest earlier that said it's time to short the bund and that it's becoming a crowded trade echoed by other investors including bill gross holding on to a yield of 0.42%.

the euro gaining about 4% against the u.s. dollar in the month of april and here in may it's been trading in a narrow range against the u.s. dollar. digesting a mixed economic reports reports. the euro holding on to 111. some saying this is also becoming a crowded trade but others saying do you really want to fight the ecb? mario draghi a big part of his economic recovery strategy has been keeping the euro lower which can help export growth. asia continues to be a big story given that cut from the australian central bank. let's get out to sri with more on that. >> before i get on to australia i want to talk about the sharp underperformance in mainland china equities. that represents the sharpest

percentage one day drop since january 19th and there's two big negatives here. the first one was reports suggesting that the big brokerages on the mainland are imposing tighter margin rules so that could cool off inflows into the market. the ipo pipeline is looking quite healthy. yes they did cuts by 25 basis points to sure up the broader economy but there's a big question mark hanging on exactly where we are in the interest rate cycling, where we are in the easing cycle. the market was undecided on this so we saw volatility in the aussie dollar and also some volatility and choppy moves. so that's where we stand right now. back to you now seema.

>> sri, thank you so much. banks in focus. ubs trading higher after first quarter net profits increased by 88% on the year beating estimates. this driven by the strongest performance in the wealth management division since 2008 and investors like what they see. the stock up better than 7%. let's get out to carolyn getting us all the details. carolyn. >> good morning. the first quarter report blowing past many expectations and obviously pleasing investors. they already out performed by almost 11% verses the smi which is flat. what were the main drivers in the first quarter? well of course you had the very strong first quarter for the investment bank so yes ubs even though it's been scaling back it's investment banking exposure benefitted from that seasonality like many peers in the u.s. and

europe. secondly, the wealth management business which it wants to put more focus on going forward that saw strong inflows of 19 billion swiss francs combined and we'll have a strong capital ratio of 13.7% and that puts more pressure on credit suisse. it's number is lagging at around 10%. one of that is the investigation into fx manipulation. it settled with a number of regulators around the world but one institution is the department of justice in the u.s. i wanted to know from the ceo when that settlement could come. >> we don't control the timing of these discussions. we're working very hard to settle the open litigation issues that we have as quickly as we can. and we'd hoped to see a resolution as soon as possible. >> as soon as possible. before the end of the year?

>> we would hope so. >> would that be enough to cover that and other issues in france. >> obviously provision in line with the accounting standards and as we noted we think what we have set aside for the foreign exchange matter is adequate. >> so the first quarter, that started with a bang. let's see if they can carry over that momentum into the rest of the year. in the second quarter it had been quite positive but as we know with all the banking results, first quarter, seasonally that's always the strongest so we may see more choppiness throughout the rest of the year. seema. >> carolyn, thank you so much. sticking with the banks, hsbc reported first quarter results slightly above expectations with

adjusted profit coming in at $6.89 billion. catherine joins us around the desk. shares were higher and now we're down by around 2%. what's the reason for that? >> well seema, i think the initial is there's a number of positive surprises here. you the h the profits higher than expected and common equity tier 1 capital ratio which is key here in europe which is higher than expected and you had better than expected cutting of costs but shares are still sinking. for example they're under investigation by french magistrates and received request for information from the financial contact authority here in london. so that's a real sort of reminder of some of the issues that hsbc is still facing.

>> hsbc ceo says the swiss private banking scandal damaged the bank's reputation but hasn't impacted business. will we get more details around that case? >> a lot of it is in the hands of the regulators. we'll have to wait and see how much action they take but for management they're going to have to watch out for that as a potential negative surprise. they'll also be keen to stress just where the buck stopped with this and this chief executive and the chairman have always said they had no knowledge of any of these activities so they'll be wary of how that could negatively impact the business. >> thank you so much. let's take a look at the other top stories at this hour. pimco loses it's crown as the world's biggest bond fund to rival vanguard. they pulled $5.6 billion from the fund in april bringing the

total assets to $110.4 billion. in comparison the total bond market index had 117.3 billion in assets. they've seen investors pull $130 billion from the total return funds since bill gross re-signed last september although the pace has slowed. influential bond investor says he believes rates have bottomed. speaking to cnbc at the investment conference in new york city yesterday, the ceo warns high yield bonds do not perform as well as u.s. treasuries when the fed hikes rates. he's also not worried about high yield in the near term. >> the yield curve goes left every time. sometimes it's a bunch of tightening and a few years but it always happens and they have already started tightening we limb nating qe and now the curve

has been steepening. >> they also recommend investors buy puerto rican municipal bonds for their yield. john chambers will step down in july after 20 years at the head of the company. he'll explain the move at 9:35 a.m. eastern time. you won't want to miss it. are mcdonald's in a pickle? we'll find out if they'll relish the fast food giant's turn around plan. that's coming up.

first quarter profit jumping nearly 90%. pimco loses it's crown as the world's biggest bond fund to rival van guard and saudi arabia juan oil minister says he doesn't know where the price is headed. >> snp has downgraded mcdonald's by a notch. that's after the burger giant sufsh served up the new turn around plan. courtney reagan has more.

>> the golden arches have been a little tarnished in recent quarters. it's going to take a lot to turn around the world's largest restaurant chain but today mcdonald's ceo steve easterbrook is detailing at least the initial strategy. two months after taking over the top job. >> our recent performance has been poor. the numbers don't lie. which is why i will not shy away from the urgent need to reset this business. >> mcdonald's will sell 3500 restaurants to franchisees taking global franchisee ownership to 90% from 81% which easterbrook says will generate more stable and predictable revenue and cash flow streams. the fast food chain will cut layers and bureaucracy. finding $300 million in annual cost savings by the end of 2017.

mcdonald's will reorganize it's business units into four segments. further mcdonald's will return 8 to $9 billion to shareholders this year. less defined but improved food quality bringing the customer voice back into the business and being bolder and faster with innovation. easter brook said the company is amping up consumer choices from how you order to what you order. they're testing new menu items like taste crafted sandwiches where customers can choose beef or chicken. three roll types and four different flavors. >> from here we would expect to see sales improve gently through the year. second half recovery in sales. perhaps not a powerful one but we see this story being an improvement story in the second half and that continuing into 17 as they get restructuring done.

>> competition in the fast food and fast casual dining space is as intense as it's ever been. winning the consumer will come down to taste, value and experience. courtney reagan cnbc. >> turn around strategy be a recipe for success? let's discuss with steven anderson. thank you for joining us. mcdonald's announcing a $300 million annual cost savings plan that it plans to deliver by 2017. still it seemed leaving investors hungry for more. the stock closed down by 1.5%. >> i understand that. what happened yesterday is i think the plan was long on

context. it is the key to unlocking the increasing restaurant sales and shareholder value. >> what else needs to be done to improve mcdonald's relationship with franchisees? that's also one of the points that the ceo made yesterday. >> i think it's not a new point that's been addressed. the entire quick service universe. one thing they did not understand yesterday was that the companies still pressing forward with the create your taste personalization form. they are not on board with this one. at least in the u.s. in our view it's something that really adds additional layers of complexity which is something coming that the restaurants don't need right now. they need to be reducing the layers of complexity and the

actual numbers and items in the menu. right now they have 140 items compared with nine years. so about ten years ago. it slows down the speed at service at restaurants. >> consumer analysts i speak to say mcdonald's is losing it's millennial audience. a lot of that has to do with the complicated menu and lack of fresh ingredients. when do you see a change in that? >> that's going to take time. with the global supply chain mcdonald's has it will take a matter of months if not longer but we saw this morning panera in the fast-casual segment announcing plans to get rid of 150 artificial ingredients. chipotle announcing plans to get rid of gmo ingredients as well. the trend is toward more

transparency in ingredients. mcdonald's will head down that road and mcdonald's has a much larger supply chain to deal with. >> we'll leave it there. steven anderson thank you for joining us. still to come on the show brent and wti creeping higher in today's trade but can the oil price hold on to these gains? . stay tuned as the saudi oil minister gives us his view after this break. the network that monitors her health. the secure cloud services that store her genetic data. the servers and software on a mission to find the perfect match. and the mom who gets to hear her daughter's heart beat once again. we're helping organizations transform the way they work so they can transform the lives of the people they serve.

oil prices continue to move to the upside. oil prices have gained better than 20%. today another great day. brent crude up about .5%. $60 continues to act as a key resistant loefl for wti. the last time it traded above the threshold was december 11th. now hadley gamble is live where she has been speaking to the saudi oil minister. over the you. >> it's a big day here. there's a big crowd here as you can see behind me. a lot of buzz surrounding the opening to saudi and that has major implications for investors coming into saudi arabia. that's the first time for the foreign direct investment and they're dipping quite deeply into the foreign reserves and

that has implications for a country with 90% of their revenues based on energy of prices. and i asked is there a price in which they'll have to cut production and i asked him about iranian crude and how worried he is about the crude coming on to the market. take a listen. >> i'm not worried about iran crude nor will i try to predict what the price is. if i was to predict i would be somewhere else gambling. thank you. >> one more question. in terms of speculators apex said on monday that speculators were responsible for much of the price drop. what can you do to expand on that? do you have a message for the oil speculators. >> speculators influence the short-term changes in price. long-term supply and demand control the price. >> so are they at fault for the oil prices. >> don't try to incriminate

anybody. >> so the message is don't expect saudi oil policy to change any time soon. he also mentioned that no one can set the price of oil. he said only god knows about that but we were also hearing rumors about who is going to be sufficienteled next. we see a major amount of shuffling in terms of that. also being asked to restructure. so a lot of changes happening here. >> thank you. now sticking with oil, david slammed fracking companies and their return on capital during a speech at the investment conference in new york city. shares drop affidavit the founder of green line capital strongly criticized the company and attacked it's business model. >> the higher oil price lead to greater cash burn. last year the group burned $20

billion. the frakckers insist they're investing for growth. >> still to come, it's a brick battle. we speak to the indiana state yand -- indian finance minister. >> yesterday financials and utilities providing leadership to the market. today could be a down day. dow jones indicating a lower open by 10 points. we're back in two. rock you anthem ♪ ♪ ♪ ♪ ♪ call 1-800-royal caribbean or your travel agent today

5:30 in new york. 10:30 a.m. here in london. you're watching worldwide exchange. i'm seema mody. here are your headlines. a stellar start to the year for ubs. first quarter profit drops nearly 90%. pimco loses it's crown. investors pulling out $5.6 billion from the fund last month. a downgrade for mcdonald's after revealing it's turn around plan. s&p takes the fast food giant down a notch but credit suisse serves up a higher target price. saudi arabia's oil minister telling cnbc he's not blaming anybody about the price of oil and has no fears about future

expectations. >> if i was to predict i would be somewhere else gambling. >> thank you for joining us here on the show. here's how markets are fairing ahead of the wall street open at 9:30 a.m. eastern. the dow indicating a lower move but we did see a strong rebound sending stocks higher in yesterday's trade. the s&p 500 now in record high territory at one point yesterday, in fact the s&p traded above it's record close. utilities and financials were the leading sectors and in terms of earnings keep in mind about 3-fourths of the companies have reported earnings. 68% have beat estimates. 10% of the earnings reports have come in line while 22% of earning reports have come in below forecasts. i also want to point out we did see a rebound in the russell 2000 and bio tech index which

had a rough month in april. turning our attention to european markets trading mostly higher. positive earnings being cheered by investors. we're also keeping an eye on the situation in greece. of course 200 million euro interest payment to the imf is due on may 6th. there's reports that the greek deputy prime minister will be meeting with the european central bank president mario draghi today. the greek equity index down about 3% in today's trade. the xetra dax also rebounding up 56 points. cac 40 seeing a gain of 21. let's turn our attention to asia. india is on track to overtake china as the fastest growing market today. asia's third largest economy is forecasted to expand by 7.5% using the new method to calculate gdp.

susan lee is at the meeting where she has been speaking to the indian finance minister. >> that's right. we had a good conversation yesterday. if you put money into chinese markets or indian markets you made out like bandits. a phenomenon happened in the last quarter last year we had india overtaking china as the fastest growing major economy and that's to take place for the next two years or so. so i asked how does it feel to grow faster now than china? >> i won't say i'm unusually excited because i know what china already achieved. china grew at 9% plus for 30 years so i do believe that india has a 9 or 10% growth potential and a 9 or 10% growth potential, to achieve that we have to invest into rural infrastructure

and irrigation. that's one area we can move up. our services sector is doing well. we have a lot of investment to make in our infrastructure and the impact on that in our manufacturing sector. it's only then that we achieve the 9% or 10% growth rate. once we're able to do it for a decade or so we can lower poverty rates. >> wow, so 9 to 10 expansion rate. a lot of things have to happen and you should also throw in tax reform because right now in parliament and also in the upper house in india they're debating the introduction of a gst and if it does go through it would be the greatest change in the tax code in india. that's something we'll be watching for the next few days. >> a big challenge for india. they need to simplify their tax

structure. thank you so much. you can read more about the race for growth between india and china on our website. head to cnbc.com but let's stick with india and talk more about the trade there with jeff dennis joining us from boston. pleasure to have you on the show. you and i have actively debated the rally in india if it's supported by fundamentals or hype. it's actually down about 2% year to date. what's driving the move. is it simply profit taking? >> i think it is basically profit taking. it had such a good run and i think there was a lot of rotation particularly into china. we don't think there's anything going wrong in china. it takes time for these reforms to work through the economy. we just think it's a pause.

a profit taking pause and we still like the long-term story. >> let's talk about the metrics here. urbanization still in it's early stages. we're looking at a young talent pool when looking at india. 50% of its population is under the age of 25. but help me understand will these demographics actually help or hurt india's growth story going forward? >> they'll definitely help. it's always better to focus on an economy where it's low and there's not a consumer credit cycle and a number of emerging markets where you have the potential for increased urbanization and productivity. those are the sorts of long-term stories that investors like to look at assuming the conditions for equity investing are good. they happen to be a large example of that so for us in your earlier segment it's no surprise whatsoever that india

is going to grow more strongly than china but although we have to get india heading toward the numbers that china achieved 9 or 10% growth the potential is there but it's a question of dplifr delivering on the potential. >> from the people i speak to on the ground in india politics is still a big head wind. india is still highly decentralized with a lot of state power. do you think politics could stop modhi from achieving his economic reform plan? >> it could slow it down. we've seen that with getting one or two of these bills in easing the foreign investment rules. the difficulty they had in getting that through the upper house of parliament. as you implied we're at a situation where the state

government played an important role in delivering reforms at the state level will require political cooperation. this is why we think one of the keynote reforms that india is going to put in place next year beginning of april 2016 which is the goods and services tax reform introduction of goods and services tax to harmonize indirect taxes across india. that's why that's such an important reform because what that does is it should overcome if you like these potential challenges at the political level state by state. so it slows it down but i'd be surprised if you take mr. modhi's five year term as a whole. i'd be surprised at the end if we feel that politics derailed this process. it's just a question it takes time. >> briefly, a look at what it means. when the feds does raise rates and which emerging markets are

most vulnerable to a potential taper tantrum. your thoughts there. >> it's hard to be brief on this one. we're not all that bothered about the impact on em if the fed raises rates this time. we're not looking for a big dollar rally so we think it will be certain that we'll provide a bit of a head wind but probably no more than that. we think our overweights in asia china and india will be the more defensive areas. all you wauldould want to do is be more cautious in these higher risky markets with like a brazil or south africa or turkey. but we don't think it's going to be such a big deal given that we don't know when the fed will raise rates anyway and by the time it comes the dollar isn't going to go through the roof.

so we try to be calm about it. >> fed president of chicago saying he doesn't expect rates to rise until 2016 given the weak economic data out of the u.s. of course charles evans one of the stronger doves out there. but let's see if we get it this year. head of gem equity strategy at ubs. >> also the other top stories at this hour spending on cancer drugs hit $100 billion for the first time last year up 10% from 2013. a new report out today from ims health says that largely because of rising drug prices and a higher number of cases. the data comes as the industry is set to launch a new generation of treatments. they are among those developing therapies that use the body's immune system to fight tumors. starboard value disclosed a more than 8% stake in brinks saying the shares are undervalued.

it makes them one of the largest shareholders. in a filing starboard may talk with management about possible transactions and make investments about improving the board. brink's rose nearly 3 nkt after% in after hours trade. jeff smith will be on squawk on the street. >> coming up pimpo loses it's crown as the world's top bond fund. find out who's the number one. we're getting you that story after this break.

>> landon has more on the story from cnbc headquaters. >> that's right. there's a changing of the guard as pimco's total return fund loses it's long held title. they pulled $9.6 billion from the fund in april. that's the 24th straight month of withdrawals. that brings assets to $110.4 billion. compared to 117 billion for the total market index fund. a year ago the two funds were more than $100 billion apart. the total return first became

the industry's largest by assets in 1997 and peaked in 2013. pimco's total return fund was managed by bill gross until he left in last september. customers began pulling money as the fed began talking about tightening monetary policy and that picked up as he quit last january. he quit as they were moving to oust him from the company. he runs a smaller fund at janice capital. he has also been hurt by a shift from active to passive funds. while they're number one in terms of assets they're still seeing higher returns. they have returned more than 1.3% this year versus less than 1% for van guard. over the past three years they've seen an average annual return of 3.2% compared to 2.4%. it's amazing what a difference a

year makes. >> absolutely. landon sticking with bonds, jeff gunlock believes rates has bottomed. the ceo warns they don't perform as well as treasuries. but he's also not worried about high yield in the near term. >> every time the fed goes on a tightening cycle historically the yield curve goes flat. every time. sometimes it takes a bunch of tightenings and a few years but it always happens and the fed has already started tightening we limb nating qe and what happened as qe was being eliminated once again rates fell. now the curve has been steepening and that's indicating that the fed isn't going to raise interest rates this year. >> switching focus, more details on the death of silicon valley executive dave goldberg. a statement from the family says goldberg collapsed while

exercising at a resort in mexico. he was 47. friends and family will hold a memorial service today at stanford university. disney is moving it's earnings report up so employees can attend the service. sandberg is on disney's board. before we go to break, here's other headlines at the hour. first quarter profit jumps nearly 90%. mike huckabee is expected to be the 6th republican to enter the presidential race declaring later today and the saudi arabia prime minister doesn't know where the oil price is headed. we're back in two minutes.

also lifting sentiment.

usb trading higher at first quarter net profits increased by 88% on the year beating forecasts. this driven by the strongest performance in it's wealth management division since 2008. carolyn roth brings us the details. what was the big take away. >> i think despite the fact that they scaled back quite significantly over the last few years it was still able to benefit from the seasonality and that was positive. second of all, the wealth management business as well. that is a very impressive number and the wealth management margin ie that's an indicator for client activity that also rose a little bit. thirdly we're seeing that capital levels compared to many of its rivals they are best in

class so off to a strong start. remains to be seen whether that momentum can be carried forward given that they're seasonally some what weaker than the first quarter but there's still some legacy issues that ubs has to contend with and one is the investigation into it's fx manipulation: they have already settled with many around the world but one they haven't settled with is department of justice. i asked when that settlement could be coming and he said we are in advanced talks but we do not know when exactly it would come but they're adequately provisioned for it. >> the stock up better than 6%. carolyn thank you so much. let's get you a run down of what to watch this trading day. march trade deficit numbers are out at 8:30 a.m. the gap is expected to widen significantly on the back of the stronger dollar. at 10:00 a.m. the april services

index. disney reports before the opening bell and we get results from adm estee lauder herbal life and solarcity. wall street and stocks have been trading at record high territory but with the recent run up in stocks some are questions whether u.s. equities can continue their bull run. our next guest is underweight equities. let's bring in chad from cnbc headquaters. a pleasure to have you on. help us understand why you are underweight equities right now? >> we had a run here in the united states but we do believe valuations are stretched. when you look at a forward looking pe multiple you're looking at 17 times. total market cap to gdp it's elevated on a historical basis

and when you look at profit margins you had a tremendous run within the united states. we're two standard deviations from the form. you're not going to get that earnings growth to fill in the valuation gap. so we would be more pragmatic at this point. we would be moving up the quality spectrum. we're moving away from the high flyers at this point. >> how do you deploy defensive strategies in a rising rate environment? >> you can look at companies that have been raising their dividend over the course of the last several years. a couple of names we would choose on the consumer staples side would be budweiser, on the health care side aetna or abbott.

valuations make sense and you have tremendous growth potential and dividend growth over the course of the next several years. so roughly about 10 to 15%. >> i see that you're overweight health care but does the volatility in the biotech sector give you pause? >> all health care is not equal. like i mentioned before you want to stay away from the multiple -- companies that have multiples that are high. so we would be more underweight bio techs. you want to be with companies consistently grown and profitable. again another company i can throw out is baxter for example. we own that and we think you can get a good 5, 10 15% return. >> i want to pivot the discussion to bonds. bonds are overvalued. the u.s. ten year at 2.17. do you think we'll see value

investors step in and say hey this is starting to look attractive? >> well i don't think value investors would be stepping in at this point. but then again all asset classes curtesy of the federal reserve and global and central banks look frothey at this point. we would tell retail investors to lather their bond portfolio and just keep rolling their bonds trying to take advantage of this volatile interest rate environment if it does come to fruition but when we look at the short end of the yield curve and ultimately that's the real story. the federal reserve. we believe the federal reserve will raise rates perhaps one time in 2015. the story is there won't be a systematic race increase for 2016 or 2017. in fact we believe that the terminal rate where the federal

reserve will stop is far less than general consensus. >> so you think the rotation out of bonds will continue. but where does the money go? does it go into ultimately equities? >> well it has for the time being, for the short period of time. i don't think that the bond market is going to sell off interest rates are going to spike on the long end of the yield curve in a massive way. i would be surprised to see 2.5% on the ten year considering where interest rates are across the global. >> all right. >> so we think you have to spread between 1.75 and 2.5. >> pleasure to have you on the show. be sure to tune in to squawk on the street. john chambers will explain his decision to step down from sis

cisco. that does it for us. squawk box is next. [ male announcer ] whether it takes 200,000 parts ♪ ♪ 800,000 hours of supercomputing time 3 million lines of code, 40,000 sets of eyes, or a million sleepless nights. whether it's building the world's most advanced satellite, the space station, or the next leap in unmanned systems. at boeing, one thing never changes. our passion to make it real. ♪ ♪

good morning, a record run. stocks logging their best two day gains in more than a month. plus it's your money, your vote. a new wall street journal poll finds hillary clinton leading her gop rivals but not by as much as she did before all the controversy over fund-raising and her own private server. and change the world. we'll bring you a far reaching conversation with philanthropists bill and melinda gates and how they're trying to improve the health and welfare of millions around the globe. it's tuesday may 5th. squawk box begins right now.

♪ >> live from new york where business never sleeps, this is squawk box. >> good morning and welcome back to squawk box. becky is off today. she is on her way back from omaha. he'll be back in the morning. in the meantime new york rolling out the red carpet last night for the annual met gala. it has become one of the biggest nights of the year for high fashion. beyonce and jay-z, rihanna, george and amal clooney, lady gaga cher madonna, kim kardashian kanye west. it's a fund-raiser for the metropolitan museum constitute institute. this year's show was called china through the looking glass. there you have it.