good morning and welcome to "street signs." i'm nancy hulgrave. and these are your headlines. stocks in banks leading european markets higher this morning, shrugging off lower crude prices. this as saudi arabia dashes hopes of an output cut at the producer meeting. overindebted down under. peabody falls victim to the commodity slump as it files for chapter 11 in the u.s. and a loss of appetite sending shares in premier foods lower after mccormick drops its

bid. and police raid the offices of mossack fonseca, the firm at the heart of the panama papers,ing to search for illegal activities. good morning and welcome to "street signs." we are an hour into trade here, and this rally across europe is holding on to its steam here. the overall stoxx europe 600 up about 1.6%. this the third straight day of gains here for the week. no surprise we're seeing basic resources lead the way higher. this as a bit of a commodities ov upturn overnight. also the positive china data really lifting optimism for those companies exposed to the china market. let's get a view on how this is translating into the markets one by one. we are seeing the ftse 100

higher by 1.4%. xetra dak pushing higher by 2%. the italian market also higher by about 2%. policymakers are trying to offset any concerns over the bank rescue plan after we did see a bit of a dip in those lenders just yesterday. let's get straight into the crude price picture here. once again, oil is trading lower. this after that dramatic uptick we saw in the u.s. session just yesterday. now we're hearing reports saying that saudi arabia's oil minister has ruled out a production cut, telling reporters to, quote, forget about the topic. this comes after wti yesterday closed at its highest level since november. that was on an interfax report that russia and iran had reached a consensus on a production freeze. but a spokesperson for the russian government has confirmed that energy minister held talks with his saudi counterpart but

did not reveal any details of those discussions. meanwhile, pain in the commodity complex is continuing to weigh on individual kompts here. now peabody has filed for chapter 11 bankruptcy protection. this comes as the slump in commodities is taking its toll. it is understood the company has assets and liabilities in the rake of around $10 billion to $50 billion, according to various reports. for more on this energy picture, we bring in the european head of global european markets research at bank of tokyo mitts busubish. yesterday wall street really cheered that dramatic upturn. we're talking about a 4.5% increakreecrease in wti. is anything really new here? we were never talking about a cut. essentially it's prospects for a freeze. >> exactly. that's what's been driving the market in part, although there's

other factors. the dollar weakness. i think there's the broader evidence of stability and improvement in general risk appetite, which is improving the outlook in terms of demand going forward as well as the supply story that's in focus. i think there's a number of factors. you know, clearly relative to a couple of months ago, at least the big players are talking. they realize that some action needs to be taken. i think the story of a cut was never really something that was seriously priced in the market. so i don't think that's going to have much of a damaging impact on the price over the short term. >> let's talk more than about the best-case scenario, which would be a freeze. a lot of people say that won't even dramatically change the supply picture. in many ways, you kind of need iran to get on board to make a big difference here. >> well, i think the supply add from iran has been a well-known factor in the market for some

period of time. i'm not so sure that has a major impact one way or the other. ultimately, it's about the supply-demand imbalance coming back in and meeting. ultimately, when you look forward, there is, i suppose, an improving probability that that supply-demand will become balanced at some point in 2017. and of course the markets respond to that much sooner. that's why we're seeing the move higher in price at the moment. >> all right, derek. stay with us. we want to look at one of the other huge drivers today, that being the data coming out of china with the shanghai composite now closing up 1.5%. this after the chinese trade data for march exceeded expectations. exports jumped 11.5% year on year. that compared to a reuters forecast of 2.5%. it's also the first increase since june 2015. let's check in on the market response in asia. sri is in singapore. really, the data out of china on

the exports blowing past expectations. but of course now investors are going to be looking to the gdp picture. >> yeah, that's right. that's the next big risk event. let's do a reality check on these numbers on the export side. yes, it is undeniable fact we saw 11% expansion in exports and exports did pick up in the developing world for china. but it's just one month's data. it doesn't make a trend. the message i'm getting is the export picture broadly still remains quite sluggish. we need more evidence of a solid recovery on the external side to really get excited and really have a takeaway that this is a meaningful recovery in exports. this is an economy that still needs broadly policy support when you look at china. the market perspective, they're not looking this gift horse in the mouth. there's also that solid rebound we saw in the price of oil that's being eroded now because of those saudi comments. that's helping sentiment as well. nikkei 225 benefitting from the

yen backing off from 17-month highs for a second straight session. that's helping the exports. big move higher, 452 points. big move in the hang seng. i'd be very cautious about these moves. the underlying stresses in this part of the world, especially the bad debt situation in china, still have not gone away, and they're probably not going to be resolved for quite some time. that's where we stand. back to you. >> all right. thanks for that, sri. meanwhile, let's get another view on what's happening with the fomc. dallas fed president robert kaplan saying he's not too concerned about slowing economic growth in the first quarter and actually sees u.s. gdp reaching almost 2% this year. but he has warned of the psychological impact of volatility, saying the market roller coaster in 2016 could have a longer lasting effect on

consumers than previously thought. speaking exclusively to cnbc, kaplan also emphasized the limits to what monetary policy can achieve. >> big issues that are going on in japan, in europe, and some of our big challenges in the united states cannot -- they can be helped by monetary policy, but they're structural. ageing demographics, high levels of debt to gdp, other issues that can primarily be addressed through structural changes, including fiscal policy. so i think these lower rates around the world and the actions of some of the central banks by these countries -- buy these countries team. they're going to have to address the structural issues. >> president kaplan also shared his view on the timing of the next rate hike. >> the move in december was the right move, i think, but we're going to have to be slow and patient. doesn't mean standing still. i think we'll make another move sometime in the not too distant

future if gdp recovers in the way i expect. >> well, still with us is derek, the european head of global markets research at bank of tokyo mitsubishi. we've heard several fed policymakers now saying, look, we're still on course to raise this year. some market movers not quite as convinced. where do you see the rate path? >> we're in the cap of two, june and december. but i wouldn't say i'm strongly sitting in it because after yellen's shift and the fomc's shift in march, it wouldn't take much to change the view. everything is now about the global economic situation and market volatility. they've more or less met their dual mandate. inflation at 1.7%, unemployment of 5%. we're more or less there, but they've decided to move away and focus elsewhere. any kind of volatility could quickly take them away from a june move. but the fundamentals are good and justify a move, certainly by june. >> so more attention perhaps on the global picture as the fed

has hinted recently, yet we've got this robust trade data coming out of china. do you think this export data is everyone coura encouraging? >> i would agree with sri. i think it's a little premature to be drawing too much conclusion. it's renowned for how unreliable the distortions are in terms of the data in february, march time. i think broader, bigger picture is that the china slowdown story is something that will persist. what is important for the broader markets is whether or not there's increased or reduced fears in regard to a hard landing. certainly the policy measures that beijing announced in march focusing more on supportive growth measures, is certainly reassuring over the short term that we're not going to get into a further lurch lower in growth that spreads volatility to the global markets. so going back to the fed, the global situation is also kind of fitting in place with certainly a move in june. >> and what is the bank of japan

to do in this environment? in some ways, if the fed stays dovish, as many expect, it's not doing the bank of japan any favors here. we continue to hear boj poli policymakers saying, look, we'll do whatever it takes to support the yen, to keep it lower against the dollar. however, what can they do? >> well, i think first of all, i wouldn't say a shift from the fed is completely bad news for japan. certainly from an fx perspective, we've had a big move to the downside, but you've got to look at the bigger picture as well. crude oil in yen terms, despite the surge in the japanese yen, crude oil in yen terms is higher as well. the inflationary impact from better conditions abroad, stable china, higher oil, that will have an influence on inflation expectations as well. that shouldn't be ignored. >> and you don't think the bank of japan gets to the point where they're actively intervening in markets, right? >> no, i think the imf's message and everything coming from tokyo tells you one thing.

only disorderly price action would justify intervention. it would probably have to be on the scale of the last time that took place, which was after the earthquake and tsunami on the 17th of march in 2011. we had a 4% one-day move in dollar-yen that day. >> all right. derek, stay with us. so much to talk about here today. we'll be back with you in just a minute. mean mi meanwhile, we want to bring you up to speed on the panama papers scandal. the offices of mossack fonseca have been raided to search for illegal activities. the law firm has been accused of tax evasion and fraud. the founding partner denied the company had broken any laws or destroyed any documents. we want to hear from you on this ongoing case. get in touch. the address is streetsignseurope@cnbc.com. or get in touch with us directly on twitter. our show handle i is @streetsignscnbc.

britain's biggest retailer tesco is returning to quarterly growth, but it's the gloomy outlook spooking investors this morning. we'll tell you more after the break.

good morning and welcome back to "street signs." just over an hour into trade in europe here. we're enjoying a rally across the board with miners leading the way higher. let's give you a closer look at the miners on the board. remember, they're getting a lot of strength after that chinese data, showing much stronger exports than anticipated. that is good news for the china-linked firms, basic resources among them. this is the second straight day of gains there. we also saw relief and a move in commodities higher overnight. we're now seeing some of those

gains pared back. we also want to bring you up to speed on some of the other individual stock movers this morning. premier foods among them, after mccormick foods announced it has withdrawn its bid for premier. this sending shares sharply lower. as you can see, the stock off some 20%. when we heard initial reports, we saw the stock gain. the maker of mr. kipling cakes has responded saying that it sees a, quote, strong future for an independent premier foods. well, tesco shares also in focus, trading sharply lower now after cautioning that, quote, challenging deflationary and uncertain market conditions could slow the pace of profit improvement this year. this comes despite the company notching up its first quarterly

underlying sales growth in over three years, which beat full-year profit expectations. joining us now for more reaction is the vice president and senior credit officer at moody's. great to have you here as we take a closer look not just into the tesco results but the guidance we're hearing from the ceo. investors clearly not happy with what they see. from where you sit, what does this mean? >> well, look, as i said, we are a credit agency and we look at the rating at the end of the day. today's results confirms that the company is on track in terms of getting their recovery going. surely there's management of expectations today by the ceo, but we have a stable outlook on the ba-1 rating for tesco and today's numbers confirm our view. >> and some traders you mentioned talking here about the ceo outlook are concerned about margins going forward in this very competitive, deflationary

environment. how concerned are you as it pertains to credit risk when it comes to decreasing margins going forward? >> our best case is that margins are going to go up. surely slowly and gradually. that is essentially what i think the ceo said today. we have to take a step back, need to think about what happened over the last couple years. today we've seen a 944 million profit operating number in line with last year. so we have seen the bottom. a couple years ago, the number was 3 billion. so the it is clear that there's still a lot of headwinds, but we're positive we see a gradual recovery. >> confident on the recovery, how does this factor into your view of tesco's market share? i understand that's one reason you've held a stable rating so far. but a lot of threats to the market share as well, not just from the discounters, but also when we talk about amazon making a bigger play in the online market. how do you view that?

>> well, market share is an important consideration but probably not the most important one. it is true that the expectation is that the market share could gradually decline further. at the end of the day, for us the most important part was that the lower profitability that the company has today is mirrored by measures to get, you know, the balance sheet stronger. that's confirmation we've seen today at a company sold. it's a south korean business. >> do you think tesco needs though go further with asset disposals? this morning so far, the ceo quite mum on that. >> no, i don't think so. surely we have a stable outlook on a ba-1 rating. positive rating pressure is not there yet, to be honest. and the view is that the company is more likely to trade itself overtime out of the situation rather than making any more transactions. >> what would it take to go positive? >> we have certain credit metrics that we guide for, but

surely in terms of operating performance, a consistent sales growth would be one indication, an increase in margins. we talk about a u.k. profit mar june of only 1.2% last year. something around 3% is something we would like to see for an upgrade. >> all right. thank you very much for that perspective. well, shifting focus here a bit, the imf has given a stark warning on brexit, saying severe damage would be caused if britain left the european union. both -- the campaign responded to the imf report saying the organization has been, quote, consistently wrong on the u.k. economy. still with us is the european head of global markets research at bank of tokyo mitsubishi. derek, we're getting ever closer

to the june referendum here. do you think investors are accurately pricing in the risk here? >> well, i think there's more to go on the downside before we get to the actual date. it's clear that i think there's been some reversal and some stability for the dollar. going back to the dollar story we spoke about and the stability in the markets, that helps. ultimately, the polls are beginning to shift. we had an icm poll yesterday with 45% versus 42% in favor of leave. that's the widest ever on that poll specifically. the poll of polls that we watch, whatukthinks.org, that shows 50/50. it shows 50/50 for the longest period of time since the poll began in september of last year. the bad week for cameron is not pl -- is that playing a role?

that's one of the problems the campaign has. its figurehead is the prime minister. anything damages, whether it relates to europe or not, like the panama papers t can still have an impact in terms of the polls on the referendum. the dutch vote in europe last week as well. maybe that's encouraging people to vote to leave as well. >> and it has the potential to be on a reputational side but also to the extent that it's taking time away from the brexit debate from the eu referendum remain camp. do you think that's a real concern? >> yeah. obviously there's going to be an awful lot of focus on this now. >> it's a sheer distraction, you could argue. >> absolutely. i would imagine the data will show there's been a pullback on economic activity in anticipation of the referendum taking place. >> what do you think the real economic consequences would be if the u.k. leaves the eu? >> well, you know, i think you can't doubt there's definitely a near-term cost. i think there would be a notable

plunge in activity. but it would be very rapid. don't forget, the pound would plunge in value. the bank of england would be immediately coming in to support activity. the idea that they would raise rates because of the inflationary impact on the pound devaluation, i think, is nonsense. it would be all levers, all pedals to the floor to support the economy. i think the pan devaluation would obviously have benefits. i think, yes, a lurch lower, but like all economies, there would be an adjustment. don't forget, for two years, nothing changes. >> the lower pound would have benefits for the u.k. exports firms, of course, but the sheer uncertainty of leaving the bloc, do you think it would outweigh that? >> over the near term, it would. but i think the way in which the markets would react, it would instigate that stimulus that should see a reversal further out. then the long-term benefits,

there's debates both ways. >> all right. well, derek, thank you so much for joining us this morning. pleasure to have you with us. meanwhile, german authorities must respect the total independence of the european central bank. this is according to the french finance minister. the warning comes just a day after german counterpart said the central bank's low interest rate policy was causing, quote, extraordinary problems for german banks. and the italian parliament has passed the prime minister's constitutional reform package, opening the door to a referendum later this year. this is aimed at increasing political stability. the prime minister says an overhaul would stop the continuous turnover of governments and make it easier to revive the country's struggling economy. renzi vowed he would quit if the referendum goes against him. italian banks are trading to the upside after the country's economy minister told a local

financial newspaper there is no risk the european authorities will block the bad bank plan. let's get to claudia in milan following the very latest. >> hi, nancy. good morning. as you said, these stocks are higher this morning after yesterday they took quite a hit after the approval came through of this fund which will reach the level of 5 billion euros in order to help the italian troubled banks. the beginning of the session yesterday, the stocks went up. in the afternoon, they ended up closing much lower on doubts of the feasibility, first of all, of this fund, as well as whether or not it would end up getting approval. it seems that the market has appreciated the prime minister's words, leading the market higher. the ones that suffered yesterday are the two banks that are

participating the most to this fund that is made up -- is gathering money from insurers, from banking foundations, and from banks. they're both participating with 1 billion euros. those are the banks that suffered the most. though today everyone is in positive territory once again. the structure of the fund is made up of insurers and banking foundations and has two objectives. the first is to participate in the capital hikes. two banks will be starting with their capital banks soon. the total they need to raise is 2.75 billion euros. the fund, 70% of the money will be dedicated to these capital hikes. 30% will be dedicated to working on the nonperforming loans. these nonperforming loans are weighing heavily on the aye te italian banks. instead of 1.3, we'll be

growing 1% this year. certainly the italian economy situation is also weighing on italian banks. but the government is working and moving on changing some banking regulations that will -- excuse me, bankruptcy regulations that should help the future of nonperforming loans. they will facilitate credit collection to avoid accruing more nonperforming loans. back to you for now, nancy. >> claudia, great to see you. thanks for walking us through. still to come on "street signs," from solar powered internet drones to messenger chat bots. find out what facebook has planned for the future. we'll be back after this short break.

welcome back to treat street. i'm nancy hulgrave, and these are your headlines. energy stocks and banks leading european markets higher, shrugging off lower crude prices as saudi arabia dashes hopes of an output cut at the producer meeting. overindebted down under. peabody falls victim to the commodities slump as the u.s. coal miners australian expansion leaves it filing for chapter 11. police raid the offices of mossack fonseca, the law firm at the heart of the panama paper scandal. we're opening up our live api. now you can build the ability to stream video to facebook live right into any device. for example, this drone flying in from the back of the room. come here. >> mark's new message. facebook looks to grow chatting and videos as ceo mark zuckerberg unveils so-called chat bots to expand its

messenger app. good morning and welcome to "street signs." well, european rally here is under way after the strong gains we saw on wall street, but let's give you a look at how u.s. markets are set to open today. we are looking at green arrows across the board. still, rather modest gains. s&p 500 called higher by about nine points. the dow called higher by about 72 points. it was the biggest gain for the dow, the biggest daily gain, in a month. a lot of optimism yesterday driven by gains in the oil price overnight. however, we are getting a pare back there. the nasdaq called higher by about 27 points. the big focus today will be jpmorgan getting the earnings ball rolling for the banks. really seen as the first crucial earnings company to report. we'll get a view on that in just a minute. let's get another check here on how european markets are trading just 90 minutes into the session. we're looking at strength across the board. the ftse 100 higher by about

1.2%. the xetra dax, the french cac 40 both up in the neighborhood of 2%. the ftse mib higher by 2.4%. the banks really leading the way higher in milan thanks to policymakers offsetting any concerns over implementation when it comes to the bank rescue plan. mean while, jpmorgan, as mentioned, is kicking off what some analysts are calling the worst quarter for banks since the financial crisis. trading revenues for wall street's six biggest names are expected to have fallen almost 30% with goldman sachs reportedly set to reveal the weakest set of earnings in a decade. this comes as one key pressure point has been fixed income. heavier capital requirements and restrictions have eaten away at profits in this business, which of course has suffered significant job cuts across the sector. joining us for a preview of the bank earnings season is patrick spencer.

pleasure to see you. thanks for joining us this morning. so much to talk about and finally we get a break from the central banks here. we can really get into the core of earnings season. there's so many expectations to the downside when it comes to what banks will report. got to wonder if they can only surprise to the upside here. >> well, first of all, you've got to look at the backdrop, what the banks have done in the first quarter. i looked this morning on a global basis. in dollar terms, the banks are down 16% in the quarter. they've had a horrid quarter. there's been worries about energy loans. there's been worry about negative interest rates and also capital, especially the nonperforming loans in the oil area. if there's going to be any contain on. having said that, we're in invest ourselves. the outlook will get better, certainly for jpmorgan. loans, i think, will be up 5% to 6%.

given the valuation, banks are trading less than one times tangible book. if you think a lot of people are hiding in consumer staples, they're trading at two times book. they really are on sale here. they're in the bargain bin, the banks. >> just to play devil's advocate, there are two crucial points you highlighted that really may not improve. still, you could say, questionable territory. that being the interest rate environment and the energy price. there's still a lot of debate over what the fomc will do, just how dovish they're going to be. we all know the u.s. banks are aching for them to raise rates. >> sure. the first point on the energy side and the nick they will take, i think this is nothing like the subprime when you had 60% of loans back in '08, '09 which were related to subprime.

you're talking about total energy loans to the world banking environment is only 6%. 94% of energy loans are taken in euro bonds, and bonds generally. so they're not going to hit the banks. that's one i'm not concerned about. >> then there's the commodities trading side when it comes to the investment banking performance. >> sure, but you've seen what's been happening. business is picking up in april. commodities have been picking up nicely. in fact, just in the last month. so that should show some improvement. with regard to interest rates, i know it's going to be lower longer now with what yellen's saying, but we're still looking for one to two increases this year. so i agree with you on your point about the yield curve. that's what's hurting the banks. the outlook for that in the states does look a little better. as i say, expectations are so low, i think certainly they can pick up from here. >> the one benefit of a dovish fed, of course, being the moves in the dollar we've seen to the downside. that's going to help some of the u.s. corporates outside the banks. do you think that will

contribute to a better earnings picture? >> i do, and i suspect the dollar isn't picking up because, you know, because of yellen being more dovish. i suspect the dollar is picking up because world pmis are picking up and the global economy is picking up. therefore, in fact, the export picture is picking up. so i think pmis are nicely picking up. i suspect, you know, you're going to see -- i think earnings are expected to be down 9% this quarter for the s&p. the skepticism is the earnings picture will most likely hit the market. given the world pmi and the growth, i suspect earnings get better in the second, third, and fourth quarter in the states and the market continues to rally higher. this skepticism about are they going to be scuffled by earnings, i think the outlook is better. >> and the china data on

exports. comforting there. >> yes, because you're seeing stabilization. there's been so much volatility. volumes are down. people want stability. i think that's what you're seeing in the china numbers. >> all right. of course we'll have to wait until the big gdp number on friday from china. patrick, pleasure to have you with us. well, one of credit suisse's biggest shareholder is saying the ceo made the right choice. speaking to a swiss newspaper, he added the bank's supervisory board needs strengthening. harris associates holds a 4.2% stake in credit suisse. house speaker paul ryan has poured cold water on suggestions he could become the republican party's presidential nominee. saying, quote, i do not want nor will i accept the nomination.

speculation has mounted over ryan emerging as a compromise candidate with the likelihood high that no current gop contender will secure the nomination before the convention in july. this comes as a new poll suggests that the top democratic and republican presidential candidates have roughly equal support from members of their parties. the reuters poll puts hillary clinton and bernie sanders each at 48% support in a democratic race. let's get out to tracie potts, who's standing by in washington with the latest. >> reporter: hi, nancy. back to ryan for just a moment. he's now made it very clear if there was any question at all that his name is not going to be in the hat. he says whoever is nominated from the party should be someone who actually ran for the office, but he isn't ruling out former candidates like possibly jeb bush or someone else, marco rubio, who could pop back up if this split convention happens and doesn't produce some sort of

consensus. donald trump still out there complaining that the system is stacked against him, especially in colorado, where he lost all those delegates. now we're hearing back from the rnc, the republican party, the head of the party tweet iing th everyone knew the rules, give me a break. that's exactly what reince priebus is saying to donald trump at this point. meantime, we are watching the democrats. they have a debate tomorrow. you just broke down the numbers. although, in new york, hillary clinton does have a 14-point lead. >> thanks for that update, tracie. we'll be watching that debate closely tomorrow. a renaldo hat trick secured real madrid's spot in the champions can league semifinals. they'll be joined by manchester

city. barcelona will travel to atletico madrid tonight. and it will be a historic night in the nba. kobe bryant gets set to end a stellar career. a ticket to watch the five-time champion's finale against the jazz will set you back, ready for this one, nearly $1,000. a regular season record for any american sport. elsewhere, stephen curry and the defending champion golden state warriors are gearing up to make some of their own history. a victory tonight against memphis will give them their 73rd regular season win, breaking an nba record set by michael jordan's chicago bulls. i don't know. $1,000 a ticket. i think i'm happy to watch that one on tv. still to come here, you'll never have to call 1-800-flowers ever again. that's the message from mark zuckerberg. find out what he's planning for facebook from the company's developer conference. stay with us. we'll be right back after this

short break.

welcome back to "street signs." let's bring you up to speed with some of the other top stories we're watching this morning. the syrian government is holding parliamentary elections, which opponents of president bashar al assad have called illegitimate. the syrian government has insisted on holding the elections in line with the normal schedule, despite ongoing violence. china has offered nigeria a $6 billion loan to fund infrastructure projects, according to the nigerian foreign minister. the minister added that there won't be an official agreement to be signed, saying, quote, it is a credit that is on the table as we identify the projects. brazilian president dilma rousseff said her vice president was organizing a conspiracy to oust her from the presidency. a congressional committee voted earlier in the week to recommend rousseff be impeached for

violating budget laws. and part of amsterdam's airport was evacuated tuesday night after a man was arrested following a report he exhibited, quote, suspicious behavior. the security measures were lifted after an investigation found that the suspect's luggage did not contain any dangerous substances. well, getting a shift back towards the tech world. almost 40,000 verizon workers will go on strike beginning at 6:00 a.m. eastern as negotiations over a new contract have stalled. the union representing the workers says verizon wants to make layoffs easier, freeze pensions, and rely more on contract workers. the last strike of the telecom's group lasted for two weeks back in 2011. shares in valeant slipped after the company received notice of default. "the wall street journal" first reported that center bridge partners intended to call a default after a delay in filing its annual report. center bridge holds about $250

million in valeant bonds. in its first ever transparency report, uber says it provided information on more than 12 million riders and drivers to u.s. regulators. the ride-sharing company said a large number of law enforcement requests were related to fraud investigations or the use of stolen cards. and facebook has unveiled a raft of new tools in the world of connectivity. that includes so-called chat bots. speaking at the company's annual f-8 global developer conference, mark zuckerberg said you'll never have to call 1-800-flowers ever again. julia boorstin has all those details. >> reporter: mark zuckerberg took the stage at f-8 to talk to the 2600 developers here about his five and ten-year vision for facebook's family of apps. his vision for connecting billions more people to the internet, and he also unveiled

new tools available right now, including the ability for more people to watch and share live video. >> we're opening up our live api, so now you can build the ability to stream video to facebook live right into any device. like, for example, this drone flying in from the back of the room. come here, come here. >> reporter: also in focus here is facebook's messaging power. mark zuckerberg announcing between his two messaging apps, messenger and whatsapp, people are sending about 60 billion messages each day. that's about three times the number of messages that are sent via sms. now, facebook is looking to grow that number and also enable businesses to interact with customers on messenger, which was the fastest growing app in the u.s. last year. facebook's messenger chief david marcus unveiling tools for partners to develop chat bots, artificial intelligence powered software that can provide everything from automated subscription content like weather and traffic updates, to customized communications, including receipts and shipping

notifications designed to keep consumers in facebook's family of apps as long as possible and to allow companies to engage with them without asking people to download new apps to their already crowded smartphones. >> what we believe is that the future is going to be an amazing future where you're going to be able to have much simplified interactions with all of the brands and services you care about in your life. >> reporter: facebook announcing a roing of partners from bank of america to expedia, to customer service messaging software customer zen desk. and facebook is already showing how it will make money from messenger, showcasing how partners can buy fast bike news feed ads that will take users directly to companies' chat bots. julia boorstin, cnbc business news, san francisco. >> joining us now is the head of themat thematic investing at merrill lynch. facebook really generating a lot of excitement there yesterday with this chat bot feature, which relies on ai technology.

we've heard so much chatter about ai, virtual reality even, but when it comes to investing in it, where do you see the real opportunity? >> we're really at the point that we're moving from trend to tipping point off the back of this issue. you take a look at robots themselves, the actual industrial machines, we're achieving all-time record sales around the world. 1.7 million units are now in operation. increasingly off the back of the cloud, off the back of the internet of things and off the back of the fact that the inputs for all of this are becoming cheaper, we're seeing increasing convergence between hardware, software, and services. i think the move on artificial intelligence, whether it's a company like ibm using watson to analyze x-rays, whether it's facebook recognizing a photo every time you post it on its website, is just the tip of the iceberg in terms of the potential usage of artificial intelligence. >> does that suggest you think there's a greater opportunity when you talk about ai that affects enterprise business companies rather than the

consumer facing items? >> i think at the end of the day, consumer will benefit off the back of a lot of this, particularly the younger consumer, which is much more prone to take up these types of technologies. they increasingly expect them to be part of their smartphone experience. but at the same time, it's going to create significant investment opportunities for a lot of the hardware companies, which are moving into the software space. secondly, a lot of the tech companies -- there's a small group of tech companies, but when you look at m&a activity, organic growth, patents, as well as research and development, which are significantly stepping up their involvement in this space. >> and they're stepping up their involvement in this space primarily to become kind of a one-stop shop, not just for your chat functions, as we're seeing with facebook, but they want to connect you to corporates as well. they want to be part of your every day life here. how is that playing into what you're seeing with millennial spending consumer habits? >> when you look at millennial spending habits, i think tech is very much at the heart of everything they do.

the number one factors they're looking for when they make a decision are clearly price. secondly, it's convenience and the way they devine convenience is via technology. they want the simplicity of being able to press a button on their smartphone and order a pizza, do their banking, or buy a plane ticket. so the sorts of moves we've seen, particularly in terms of the developments of chat bots, whether it's facebook or a number of its competitors, very much tie into this trend. just to put it in perspective, 73% of american millennials would rather give up their sense of smell than their technology. >> it's an unbelievable one that, stat. and you also touched on convenience with banking as well. i've been doing circles of the various tech conferences in europe here. app lot of chatter about how to appeal to millennials and their spending habits. we already know e-wallets payments is taking off. what about financial service when is it comes to managing your money? >> well, i think it's going to be absolutely key -- and they are doing this -- for the big

banks, the financial institutions and asset managers, to take fin tech on board. we've seen significant movements in this space. investment has more than tripled over the course of the last year. we're already seeing a move towards mobile wall wets as well as e-wallets. increasingly, the development of services like robo advisory are very much going to be a complement to the existing services that a number of asset managers and banks offer. again, why does it appeal to that younger generation? it's price. secondly, it's convenience as defined by technology. >> i think there's still a big question here over to what extent the big tech names want to become more full-fledged financial service providers. at the moment, apple pay and samsung pay still relies on the traditional credit card processers. will we get to a stage where they take them out and they can carry out these functions alone? >> all ed would indicate they'd like to work in partnership with the big financial institutions. as to whether they'd like to take on all of the compliance

burdens and regulatory burdens associated with being a full financial service provider, that's a big question i certainly wouldn't be able to answer. >> all right. thank you so much for joining us with that perspective. head of thematic investing at bank of america, merrill lynch. pleasure to have you with us. getting back to the u.s. politics race. let's talk about current gop front runner donald trump, because he is now taking aim at the republican party's process for choosing its nominee. speaking in new york state, trump said the system is, quote, rigged. also criticizing the democratic party's process. >> you turn on your television, sanders wins. sanders wins. again, sanders wins. like seven or eight or nine. he keeps winning. and then you listen to the people and the pundits, and they say he has no chance of winning. i say, what's going on? because you have super delegates -- by the way, i think the republicans have a worse system than the democrats, but they have super delegates. it makes it impossible for a guy

that wins to win. it's a crooked system, folks. it's a crooked system. >> meanwhile, the former first lady has found herself at the center of a fresh controversy for what some are calling a racially insensitive joke. clinton and new york mayor bill de blasio appeared at a black tie event in new york over the weekend, where clinton teased the mayor for delaying her endorsement for the white house. de blasio said, sorry, i was running ocp time, which apparently is a reference to colored people time. dallas fed president robertcap lain srobert kaplan says he's not too concerned about slowing economic growth in the first quarter and sees gdp reaching almost 2% this year. this comes in an exclusive interview with cnbc's steve liesman. steve filed this report. >> reporter: the new dallas reserve fed president robert kaplan took office in september, indicated he's going to be a patient policymaker, not

inclined to raise rates in april, but considering june as a possibility. he's aware that the first quarter data looks like it's going to be weak. he want which expects it to reb. >> the move in december i think was the right move, but i think we're going to have to be slow and patient. doesn't mean standing still. i think we'll make another move sometime in the not too distant future if gdp recovers in the way i expect. >> it was a wide ranging interview. we discussed a series of economic issues, especially those in the dallas district, principle among them, energy loans and the decline of the price of oil. kaplan said he expects there to be losses at the banks in his district but does not see systemic risk. on the issue of building a wall, he was diplomatic, said he wasn't getting involved in the political debate, but said there needs to be, quote, a sensible way to address immigration in the united states, and it is key to the u.s. economy. on the issue of too big to fail, he said it was not the biggest issue right now because he says

there has been progress made in deleveraging the banks. finally on the issue of inversions, he said he understood why they were doing that, particularly in an environment of low revenue growth, but he said it's pointed out the need for comprehensive tax reform. in fact, kaplan joined other federal reserve officials as well as central bankers around the world in calling for greater structural and fiscal reforms, saying there's too much reliance on monetary policy and that structural issues need to be addressed by the fiscal authority. kaplan represents a big change from the hawkish former dallas fed president richard fischer, who was more concerned about inflation down the road. kaplan seems ready to be patient and wants to see growth rebound before hiking rates. back to you. >> and there's still plenty of investors doubting whether or not the fomc will continue to hike this year. among them, double line capital

investor jeffrey gundlach. the widely followed investor said the fed should be cautious with any increases given the gentle downward path of nominal gdp, which we have been tracing. let's give you a check on how u.s. markets are set to open today after that strong rally yesterday. the dow had its biggest gain in a month. u.s. futures now pointing to a higher open once again with the dow called higher by nearly 80 points. the s&p called higher by ten points. a huge focus today will be on jpmorgan kicking off bank earnings before the bell. in just a few hours from now, a lot of investors are going to be looking at the guidance here. expectations for u.s. banks season are already so low. we did see the banks among the big win wers yesterday. that was helped by the uptick in commodity prices as well. let's give you a check on those commodities here with the energy sector still in focus when it comes to the direction of equities.

brent crude and wti off now more than 1%. again, oil continues to follow all the lines we're getting out about a potential agreement. today we're hearing reports the saudi minister is squashing any hopes that we could see an output cut. however, that is really nothing new there since the saudis have been reluctant to agree to any cut. still, others wondering whether we'll get a production freeze and whether that will really have an impact when it comes to the overall supply picture. let's give you a look at european markets before we go. this global rally is continuing, which started in the asia session after that strong china export data. continuing here with those firms linked to the chinese exports picture. good news globally. we'll see if it holds after we get those bank earnings state side. that's it for the show. "worldwide exchange" is next.

. good morning. market alert. china trade data sparking a rally around the world. earnings central. the nation's biggest banks ready to roll out quarterly results. and mark zuckerberg gets political. we'll tell you what the facebook ceo really thinks about donald trump and building walls. it's wednesday, april 13th, 2016. "worldwide exchange" begins right now. good morning and welcome to "worldwide exchange" on cnbc. i'm sara eisen. >> and i'm wilfr