hi everybody. good morning. welcome. you are now watching "street signs." i'm louiza. >> the nikkei drops after the boj has no policy change. governor corrokuroda saying he'e maximum force if necessary. >> and we speak sclusfully to the cfo later on cnbc. >> and margin pressure drives a 20% decline if first quarter

profits. >> electrolux beating expectations across europe and north america. ♪ so we've been waiting for volkswagen ceo to have a press conference at the first annual result meeting since the announcement of the diesel scandal. i can see the press conference has begun so let's listen in. >> translator: it is close to my heart for you to read -- under the motto moving people. you will find a host of information with many stories and impressions from the word of the volkswagen group and its brands. our navigator should be familiar to you. you will find the most important key financials data facts on the

group, the fact sheet now available as a small app. so that you are always abreast of developments. may i ask mr. moda for his contribution now. >> translator: good morning, ladies and gentlemen, a warm welcome. on behalf of the entire board of management to this annual media conference at volkswagen. for reasons which you are aware this conference is being held somewhat later in the year than you are accustomed to. however you may rest assured this will remain an exception. please sod many of y-- pleased many of you were able to join us here today although under such difficult circumstances. the questions about the diesel

issue. with the software manipulation of diesel engines at volkswagen, rules were broken and boundaries overstepped. that is very painful. and we apologize sincerely. because we know we have disappointed so many people who have placed their trust in volkswagen. we recognize our responsibility and we are doing everything in our power to regain trust. that is is main thing for us. that is the main thing for me. also today. we would like to take the opportunity of this annual media conference to demonstrate to you that in spite of everything volkswagen remains a strong and vibrant company. there is no better place to do that than here in wofgs burg, the heart of the group. wolfsburg.

and what better place is there in wolfsburg than here in the -- where volkswagen meets its customers every day in person. our brands and vehicles evoke in customers all over the world can be felt and experience edirectl. ladies and gentlemen let us begin with a brief overview of the past year. you are already familiar with the key figures. they demonstrate that the volkswagen groups operating business is in good shape despite all of the difficulties of recent months. in fiscal 2015 we again delivered some 10 million vehicles to customers worldwide. this was just short of the level of the previous year despite the head wind in some key markets.

and for the second time in a row, we recorded sales target that we had originally not expected to achieve until 2018. even though high volumes are not an end in themselves for us. the figures highlight the fact that we have the right products lined up in many countries and market segments. we once again succeeded in increasing group sales revenue with notable gains both in the -- sector with our brands and in financial services. now more than ever it is -- the ceo of volkswagen speaking. we'll continue to keep you updated. just recapping the past year of course when the company recorded

a record less. he said it is still going to be a demanding year. we have clarification. there is still class action suits and a number of elements that are still going to filter into this story. >> and the suits also in the u.s. speculation whether or not they are going to have to pay out people in europe as well. there is speculation they might be doing the same in europe. also the margin targets. they are very aggressive. very optimistic. will they be able to reach those. so a lot of issues. >> what about europe here. the interesting thing was the amount of money they are going to pay to the 12 current and former members of the board. 63 million euros. they are withholding a portion based on a number of elements including the recovery in the share price but given what said

yesterday, the workers and the unions how much they are going to be impacted and. contrast those two things. >> we'll hold flat lower on the european markets and of course we've got a ton of stuff going on with regard to the central banks and we'll be talking about more about the fed and bank of japan within the program. this is what we're seeing. the ftsi a little better than its counterparts. the xetra dax off by more than 1%. the same for the cac and the ftsi. deutsche? >> defined expectations of a loss in the first quarter. this despite a 58% drop in net income. we always knew this was going to be another challenging quarter for deutsche bank. they are in the process of restructuring. we've seen that. but obviously what we've heard as well from the banks is that the trading income thanks to the volatility in the first quarter was always going to be a

problem. trading revenue down 29%. just wading through the number this is morning and despite a boost that we've seen this morning, i still don't find anything really that positive here. they struggled with the investment banking. the -- was down in the first quarter. >> drop in the profit. 58% draft. revenue drop at 22%. look at the core business, precisely investment, corporate banking. 15% drop still. it looks pretty negative out there. the ceo saying financial markets remain challenging in the first quarter. talked about the global environment once again. the it platforms, if we have to look at any positive was one of the bright spots, as well as the separation of the deutsche -- bank as well. those are some things they highlight. jeff was going to be talking to the cfo later on. we'll be hearing more from jeff and from marcus schenck around

10:50 cet. stay tuned for more on deutsche. earnings at bbva have missed. blaming weak trading income and negative currency effects. caixa bank shy of expectations. this as the spanish lender contends with squeeze net interest rate margins. >> electrolux beating forecast. this thanks to a round in its north american business. the home appliance maker raise its outlook for the market and stood by guidance for europe. and profits at air bus exceeding

profits in the quarter. ceo said 2016 is turning out to be, quote, the challenging year we anticipated. well the nikkei logging its biggest percentage drop in more than two months as the yen rallied. after the boj surprised markets. no extra stimulus given. they pushed out examinations to hitting its inflation target to 2017 fujita in singapore with more. i like now how everybody is saying oh how we didn't expect it anyway. >> a pretty negative picture across asia today. looks like the markets were caught by surprise by the boj keeping the stimulus unchanged. especially looking at the nikkei 225 here. closing the day down 3.6%.

26 points and the damage was even greater for the currency here. the dollar down 108 there. keep in mind the japanese yen started the day about 111 against the dollar, and you can see it climbed about 3% on the day there. and governor kuroda just wrapped up a press conference where he defended his decision to keep rates unchanged today. to say the central bank simply needed more time to assess the impact of its monetary easing steps so far. maintaining the pledge to keep rate rates increasing the same. and hitting the target by six months and keep in mind this came on the same day that we got new numbers out that showed a further slowdown in japan. numbers were down in march.

household spending also down 5%. not a very pretty approximapict here this morning. >> thank you very much. i think that cough is also over here. >> ha ha. >> daniel morris is with us. good morning. >> good morning. >> how are you? >> very good thank you. >> what do you make of the boj? i like how analysts putting out notes we didn't expect anything after all. >> i've seen that before. i think part of the problem is the boj has become very unpredictable. will they? won't they? so there is less communication than you get from the fed. that said it also probably does make a bit of sense. we've become a bit too used to every meeting we want some new policy. this didn't work. that didn't work. what about the other? monetary policy works with a lag.

i think it is reasonable to say this is new. let's wait little bit. >> damned if they do and damned if they don't. look at the yen last name. they introduce rates the yen rallies. they don't introduce new policies t yen rallies. clearly we're at the limits or feels like it. what more can they do? and when? >> the two factor t. one, yes there is more that the bank of japan can to do. but it also plays into what the fed is not doing. more qe, more negative. i think you are right to be skeptical about the effects of it is what comes after that i think people are starting to think more about that you hear helicopter money, even though ben bernanke mentioned a long time ago and it's been -- >> we were at 110 before this. how much further are we going to

go? >> on a fundamental basis japan runs a current count surplus or argues for a stronger currency anyway. and with the fed not changing tone, what we got yesterday from the fed was more or less dovish, not expecting anything in june. it is going to be a struggle to get the currency much weaker. >> a opens up the downside. so worth watching. the federal reserve votes to keep rates on hold citing domestic slowdown. in one of the more hawkish points they removed a reference for quote international risks from its liszt of concerns. how does this impact possibility of the june rate hike? >> some changing language in the april policy statement that prompted a market debate about whether the fed could potentially hike rates in june or september. whether the u.s. central bank is on e course for one or two rate hikes this year.

it said growth appears to have slowed and that jobs have improved further. it also eliminated concern of recent inflation readings picking up. on bond expert said after the statement came out that the fed is likely to hike just once this year. >> i think in the balance of the year yes we're going to see one hike and probably not two. so if you are asking for over/under relative to two? i take the under. >> seems between june and september. >> i don't think the fed is going to be in any hurry. because they are never going to want to have to roll it back. once they go forward they are going to want to keep going forward. i don't see them racing into june. there is too much contradictory information coming out. nothing that's actually pushing them to have to react. >> the government is expected to

report gross domestic product at 0.7% for the first quarter. compared with 0.9% and actual first quarter reported growth of 1.4%. it is expected to be another weak first quarter after a string of weak first quarters and once again investors face the tough question on pondering the rebound. >> the fed's got really heavy lifting if they want to hike rates in june, haven't they? >> hard to come up with a scenario where that comes a likelihood. i imagine if you saw a real acceleration in wage inflation. but given the gdp number we're likely to see this week, such weakness you expect is an indicator you don't see that happening over the next couple months. >> they adjusted the inflation saying look, they have gone from acknowledgment to inflation or lack of inflation to being more cautious about it.

and yet the crb, the commodity price index is up 5%. if you look at others those are rising. so again there is a confusion of data dependency. >> you are right that expectations are rising. that is a good thing. although they are still quite low. so i think from that point of view until they get much higher, i don't think the fed is necessarily going to worry about that. >> >> are they behind the curve? because they already hiked in december. they are been going to opposite direction to everybody else. did they hike too soon? >> in retrospective it's easier to look at these things. given unexpected surprises that always occur, particularly around china -- >> but they are gone. you can't use that excuse

anymore. we're a couple of percentage pains of record highs in the s&p 500. europe's consolidate ted. so the convenient excuse has gone. >> they would like to get back to more normal monetary policy. we have negative rates in u.s., europe, japan. i don't think that is a good thing but without seeing real inflationary pressure it is quite difficult to justify a hike any time soon. >> what is the chance in june? >> probably one in four. >> cnbc.com, also on twitter. @"street signs" cnbc. and check out our world markets live. our blog which runs throughout the day bringing you all kinds

of market news. >> we're going take a quick break but coming up on the show facebook has proved why it's the only fan stock not in negative territory >> you're watching "street signs," good morning everybody.

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as the bank took a 790 million pound charge to buy -- along with a 115 million pound charge to cover retail conduct. profits were in line with expectations meanwhile. >> on track. the german exchange reported an 8% rise on the top line in the first quarter. this thanks to record revenue in it's derivatives business. >> upward trend in profits. sales inching 1% higher as well. >> boost in wpp's sales hit expectations. the advertising giant which counts ford and unilever as its clients said it remains on course for 3% growth this year.

>> if you are running a legacy business, you are challenged by disrupters. you have zero based cost budgeters. you have activist investors. it is a difficult and uncertain climate. and things like brexit, we have to see what happens in june, just add to that unserntd and unwillingness. and you may have noticed towards the end of the release we show this picture of the s&p 500 on a quarterly basis since '09. and the simple fact is the s&p 500 is shrinking. >> sony posted something. operating profits almost quadrupled to 294 billion. >> shares of samsung fell in seoul despite sales of its

latest hand set. the company says it expects to complete a share buyback program by the end of the fourth quarter and says it will aggressively seek to boost mobile profits in 2016. u.s. earnings season is if null swing. on average beat forecasts because of low expectations. daniel, that is no surprise is it? but you also say that u.s. markets are sending mixed signals. i'd argue that investors are sending mixed signals. the number i hearsay they are cautious here, that they are the out of consensus buyer and yet they are buying. >> so on the one hand in terms of the earnings season you had companies lower expectations so much, they have beaten them. but it is beating a negative number. however the flip side is couple of things. you need to look at guidance that companies are giving that is actually not that bad. it is above the average over the last couple of quarters so

perhaps a bit of stability in the dollar and the oil so on has made them feel a little better. not like they are predicting doom and gloom for their own profits. secondly looking at earnings profits for the whole year it still means --. you keep the multiples the same you don't do too badly. you can come up with a lot of reasons to be nervous about the u.s. market. but it could still wind up if the earnings come through. >> if we continue to see the optimism within corporates, does that shift the equation? >> you would expect in the short-term underperform in the u.s. versus europe. that's been the dynamic. it is always going to come down to why are they hiking? if it's because oh gosh, we're

getting back to normal, i think that would be a boom. >> we saw that in the first quarter this year and i think one thing that's consistent is they expect the challenging conditions to condition. and yet i look at the vix and it's incredibly low. what's going on there? >> i think that's probably the most disturbing thing around all this. it is very low. we know that fundamentally it is a no less uncertain world than it was in december. it is just is it going to be one of the things that we know. be it china or a middle east or other things or like such and such and this and that so it's all a reasonable possibility. >> what do i investor in at the moment? >> if you look at european

equities, despite all the concerns, they have better valuations than in the u.s. and better earnings potential and you can argue the same in other things. >> very quick on the european banks. >> certainly the argument is that compared to cyclosectors they look very attractive valuations, if you will. but that is relative to an earnings model that perhaps doesn't exist anymore. with negative interest rates i think to some degree all bets are off about how much profit they are really going to be generating to the future and what kind of multiple they are able to have around that. >> we have to take a quick break but up next grab your life jackets and head for exits. air bus shares nose dive. we're back in two.

welcome back to "street signs." i'm julia chatterly. >> your headlines this morning. >> the bank of japan shocks with no policy change. >> a diesel gate update from vw. but still no clarity when the european recall will continue. as they face a $9 million bill for car buy backs. [speaking foreign language] >> a surprise from deutsche bank. we speak to the cfo later on

cnbc. and facebook proves to be the only one not in negative territory. sending shares up by over 9% after hours. welcome back. a look at u.s. future this is morning. taking a negative picture that we've seen in europe already this morning. markets low by more than 1% in the uk. the french markets, also the german. that feeding into the u.s. markets implied open lower by some 16 points for the s&p 500. the dow lower and nasdaq as well. a choppy session yesterday. relatively unchanged after the fed no change decision. and apple was the key drag on

the nasdaq yesterday in particular. wait and see how that, see if we can get some kind of bounce back in the session today. >> let's talk about one of the bigger corporates we've had an update from. core profits in airbus slightly exceeded expectations. despite a slump in earnings. they warned of challenges facing production and delivery of a 400 and military aircraft. saying it is turning out to be, quote, the challenging year we anticipated. >> good morning. >> daniel still with us also. what do you make of the announcement coming from airbus and how challenging do you think 2016 is going to be for them? >> the first quarter they expected a lower quarter. and they would make that up as the year goes on.

they are now talking about the military transport plane, saying there could be a substantial financial impact from the delays and technical issues they have been having. and on the civil side, they are saying demand is still very good. the customers still want the planes but on the big new wide body, we knew it would be a slow first quarter, but they are talking about challenges still in the second half. so raising questions on the ambitious second half catch up. >> is it demand? or also ability to meet capacity at the same time? >> the message this morning is that on the demand side the things are looking nice and firm. the auto book is all still in place. people are not asking for deferrals. so the they are big, complex,

challenging programs and they are just at that ramp up point. >> capacity as well. in your note you talk about what's going on with the ipos and the leasing business of the chinese banks and belief among these aircraft carrier names that actually they are going to be able to increase. not even keeping it steady but managing to increase it. can we look at those ipos and say that is going to have a detrimental impact on the financing available? because it is not just about china. it is global, isn't it? >> terms of leasing industry you have go big chinese banks planning to ipo their businesses. the bank of china and cdb. which is a sign they think there is an appetite for these kind of assets. in terms of what the industry will do as the year goes on, will people be making a lot more financing available for aircraft. airbus says they will finance

more deliveries themselves this year because -- >> we are already seeing contraction to some extent or at least less financing available. >> from some sources in recent years there is a contraction. we're looking for the chinese banks to step into the breech and lending more or doing more leasing activity. so let's hope that stays on course. >> you mentioned chinese demand is still firm. everyone is wondering what's going on in china. have you heard signals they are revising down to their listeninger tomorrow forecast for demand out of china? is it short-term? are they worried about future demand? >> i think the chinese airlines haven't been overly aggressive in ordering planes. they have a mental from airbus and actually the chinese airlines can still do with taking more planes.

so there is still a demand there. a that is not really the issue. >> and pang -- >> still growing yes. >> how do they compare to boeing? is one stronger at the moment? or markedly stronger? >> actually both of them seem to be having some similar kind of issues in that boeing's talked about the 787 they have been delivering for a couple of years but the question now investors are asking, will this claw back earlier losses? and airbus is in the process of ramping up new planes and it is just the challenge of getting it done. >> impact to seating prices. do you expect that now to stabilize? because otherwise we're going to start talking about overcapacity issues for some of these and then i guess that could have an impact on the demand we've been talking about the order demand. >> so confident they have had these savings from the fuel

price. it's been a decent 12 months. but ticket prices have been declining. if they don't stop declining then it becomes a capacity problem. and we heard kwan tis and quantityis and other airlines. >> thank you. -- shares after hours. and online payment processer which spun off from ebay last year saw strong customer growth. >> facebook earnings came in ahead of expectations. julia boorstin breaks down the

numbers. >> facebook shares reporting a better than expected $5.4 billion of ren. up 52% from last year. eps coming in 15 cents better than promises. the company ended the quarter with 1.65 billion active monthly users and two-thirds of them visit facebook every single day. the company's highest engagement level yet. mark zuckerberg kicked off the earnings call talking about the company's success in the quarter. noting that facebook is seeing more than 1 billion people access facebook on mobile devices daily. he also explained facebook's proposed stock split and new class of shares which enabled him to keep control of the company while selling shares for philanthropy. he says it is all about re --. >> we're focused on long-term.

this structure has served our shareholders well. early on we received some generous offers from companies trying to buy facebook and our structure helped us resist that pressure. >> some of the big bets won't pay off for years. and talking how the company is working to help marketers easily make effective video ads and people are creating and sharing three times as much video on facebook as they did a year ago. the cfo noted some stuff. and noted full year capital expenditures will come in on the high end with a range in last quarter. facebook is investing to support the fast-growing business. >> expectations were already high. and they went past those. shares up as much as 9% after the announcement. >> long gone the days we were

questioning whether facebook could do stuff. it is not even just about volume. i was just looking at the numbers. the average price paid per ad was higher. >> good spending as well. and one of the good things also is mark zuckerberg is very much holding onto the top spot. remember after the birth of their child they said they donate 99% of shares to charity. so now they set up this system where you can donate shares to charity while still maintaining control of the company. on squawk they are talking about facebook, is it temporary or here or the longer term?

are they going change and continue to evolve? and mobile also, they are heading in the right direction, right? >> this is the opportunity. i think we can look back at history and see the companies that were dominate at one point and that were not. so i think you have to be a little cautious picking the outlook for these type of companies. >> we've now got facebook as the only fang that isn't in the negative here. >> we see opportunity around business services more than anywhere else because you think about the situations for u.s. corporate. margins are high. you are not going to buy for pcs

the way you might have in the past. any kind of company that can tell a ceo i can help you reduce cost they are going to see a lot of interest. >> ted cruz has chosen carly fiorina to be his running mate in a move the texas senator hopes will catch him up with donald trump. >> fresh of a stinging streak of humiliating lossing to donald trump, ted cruz tossing up a hail mary. cruz's only shot, to win indiana next week and hope for a contested convention. >> carly confronted donald trump. and every one of us remembers the grace, the class with which carly responded.

>> the first republican vp announcement by a non nominee in decades. the plan backfiring for ronald reagan in 1976. this time around fiorina alone on stage. >> i'm so happy i can -- >> with five more dominating wins trump already casting himself as the presumptive nominee. his son eric calling today's move an act of desperation. why fiorina? why now? today's announcement largely overshadowing trump's major foreign policy speech. >> america first will be the mainly and overriding theme of my administration. >> lacking specifics. >> isis will be gone if i'm

president and they will be gone quick. >> reading off a teleprompter repeatedly assaling the president and former secretary of state. >> the legacy of the obama/clinton interventions will be weakness, confusion and disarray. >> nbc's tracy potts is in washington. just explain the singing for us, please. >> yeah. so the singing. this is carly fiorina sort of serenading ted cruz's two daughters when they made that announcement. they have actually been traveling together. she's -- she endorsed them a while back. they have been involved, they have been traveling together. and that was just sort of her way of endearing herself to the family. the big question is, is she going make a path for ted cruz in indiana? something ted cruz needs to try to beat donald trump there. he's going one on one with

kasich out of the picture. and now with help from carly fiorina and the polls showing him only about 5 points behind. >> thank you very much tracy. great to chat to you as always. i thought ted cruz was going to say he was throwing in the towel and going to back trump. >> i thought it was a good move for him and carly. seems like together they might be able to garner some of the votes. hillary clinton's. >> yeah. less conservative, female vote. >> yeah. >> we have to to take a quick break. >> we'll be right back. you're watching "street signs."

>> going to -- that's been corrected from this point. seeing a significant rally at this point i think is more difficult to foresee. >> can we stabilize at these

commodity prices? as opposed to some of the steam coming back out of the market? >> two factors. one what happens with the dollar. expecting more stability out of the dollar. see what happens with ecb and bank of japan. supply and demand, we still have more supply. but that is starting to correct so that should give us more stability over the course of the year. >> given the fact that we've seen stabilization in some of the data points here but the same time the explosion in credit growth in china, how long can they sustain here? >> that is really the big question is how long can you keep the plate spinning? certainly what you have seen recently in terms of the credit growth. if you think about the problems, you have to remember the debt is primarily denominated in local

currency. number two, the debt is against the banks. the banks are owned by the government. so essentially it is a government problem. even though they will have problems at some point it is going to be much more manageable. not to trivialize it but manageable in ways that other credit booms and then busts, have caused more problems than -- >> do we really think -- have things really changed that much over the last couple of the months? not to be worried about china? >> not be worried about it until something happens and then -- it's just a reflection over the last months nothing particularly shocking has happened and other stuff. >> 18% of the largest underperform benchmarks in the first year. how does that play into the

sentiment that we're talking about. even if you just talk about one element that causes level of panic or instability, given the amount of cash that's still sitting on the sidelines, has been taken out, people have underperformed. >> the paradox of the market. on one hand i argue it is an active manager market. you can't buy an index and feel at all -- >> absolutely. >> -- need to be very active. but it is also a market of volatility so it is quite challenging to do. you need to identify the best opportunity is be active but it is quite difficult. >> and whatever the federal reserve decides to do for the dollar. they voted to keep rates on hold last night. however in one of the more hawkish points of the statement, they did remove international risk from its list of concerns.

>> -- they perceive a growing difference between janet yellen and the vice chair. here is where yellen and fisher were. fisher right in the middle. yellen about a 4 on a dovish side of it. in this survey now, they have moved further apart. yellen below 3 on the scale. fisher not much movement. so the gap has widened in the mind of the market. and mostly because yellen, especially coming from the speech she gave, economic club of new york perceived as being more dovish. so the gap is growing.

take a look at where the rest of the fomc comes in here. fisher is in the middle. bullard now. mester. slightly more hawkish than the voters in 2015. the governors more dovish than the presidents. the most hawkish is the kansas city fed president. most dovish yellen at 2.9. speeches and remarks since

desiccate a possible widening in the views on monetary policy. steve leisman, cnbc business news. >> there is a sense of urgency. deuceal bloom. after a summit originally planned for today was canceled due to lack of progress in talks with athens. the sticking point while the greek business legislation which would set out contingency measures should things get off track. you have trying to get talks together. so you don't have a sense of failure on the very last round. you have been covering this a long time. >> i have. i can tell you what we're seeing at this precise moment is an agreement on 3% worth of gdp of --. that is the package. they want an additional 2% leeway so if they get their budget offtrack they have these

additional measures they can then support and try and backstop what is going on in grea greece. the problem is such a slim majority, it is passing those measures back in parliament. and of course you know this is what the imf has pushed for and of course there is consternation of whether or not greece is going to fulfill what they promise in order to achieve that. so it's tough. >> i think we've been here before. the pattern seems to be we'll move towards the deadline and there will be anxiety. spreads on peripheral debt are low. and probably too low given risks ahead. we have greece. we have an election in spain. referendum in italy. we need to be more cautious

ahead of those events even though we'll get through them and be the typical euro zone agreement -- >> with the uk right. >> yeah. >> and even with the 80 billion euro purchase with the ecb on a month basis do we need to be more cautious? sorry to be a skeptic. but it doesn't seem to matter. >> significant move in boom -- >> how should investors be positioned? >> looking at preferable zone debt right now is i think people need to be a little nervous about. [ slow down ] in the meantime you don't get much income. so broadly speaking at least within the credit space we're more inclined towards things like high yield where you do get carry in the meantime and with

economic outlook still being okay -- >> do you think we need to price in more risk for the eu falling apart? >> at this point you wonder if the markets are really appreciating that. but you have to offset it from the pressure from the buying from the central bank so yes it is not priced in but it is a question of where you might see the effect. >> we had a guest on yesterday suggesting 6% move in sterling if we get -- >> all possible. daniel, thank you very much. we've got take a break. we'll be back with the cfco the pursuit of healthier.

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breaking overnight. the central bank shocker. bank of japan defying market expectations deciding to hold steady. >> and earnings alert. investors liking shares of facebook this morning. after the social network beats the street on strong mobile ad sales. >> and new this morning. a $9 billion bio tech deal. what drug sa