hello. welcome to "street signs." i'm carolin roth. these are your headlines. european car sales hit reverse in april in the first monthly drop this year, derailed by a 20% slump in the uk market. vodafone posts a 6 billion euro loss for the full-year, weighed down by its indian unit, but the mobile operator says it's confident in its outlook, raising its dividend. easyjet shares fall to the bottom of the stoxx 600 as the airline posts a bigger than expected first half loss, the company's ceo dismisses reports of shareholder tension.

>> we're not at war with any shareholder. we believe in constructive dialogue with all our shareholders. we'll be seeing all of them for the road show in the next couple weeks after these results. the dollar index falling to the lowest level since early november as the euro inches higher ahead of eurozone gdp data. good morning. welcome to "street signs." glad you're with us once again. we have a lot to get through. let's kick things off with the monthly iea report extending the oil production cuts last year by major global producers may not help trim stockpiles to the required five-year average, that's according to the iea this morning. that's a cautious note for the market it also says the oil market rebalanced during the first quarter of the year and this trend will accelerate in

the short-term. let's get out to neil atkinson at the iea. always a pleasure speaking with you. want to talk about the point i mentioned first, you basically say that extending this oil output agreement will not make a major difference. why? >> no, we don't actually say that. first of all, we don't know what opec will decide. it's a matter for them. though it's clear that saudi arabia and russia have said they would like it extended what we've said is that if as a scenario, not a forecast, the current output cuts were to be extended for the rest of 2017, oil stocks would start to fall sharply. they're already falling. they will start to fall by more as the second half progresses. because they're falling from such a great height, they won't get down to the five-year average which is regarded as some sort of benchmark until much later in the year, possibly

not then. but a lot of things can change on the -- to the other components of the supply demand balance. >> how much support do you think russia and saudi arabia will get from the other 12 opec countries on may 25th for this output cut extension, even if they themselves know the impact so far since january 1st hasn't really had a major impact or hasn't been that great. >> i think what people should realize is that we shouldn't have expected that as soon as dawn broke on january 1st that the oil market would suddenly change. the market had to absorb in the early months of 2017 a large volume of oil which was produced in the last few months of 2016. it takes time for that oil to move to markets and it appears in stocks and refineries. we still work through that surplus production from the latter part of last year. now that production has been cut back, we're seeing, as we say in our report that in march stocks

in the oecd countries fell by 11 million barrels a day. we think the rebalancing is here and will continue. it's a matter of judgment from the other opec country as to whether they believe they should continue with the cuts or not. we don't have a view on that. we'll have to wait and see what opec decides next week. >> you say the market has already rebalanced. at what point are we going to go into a deficit? q3? q4? will that happen this year? >> we're moving into a deficit as we move through the second quarter of this year, ie right now. our projections in the report show that if for the sake of argument the opec agreement carries on until the end of june this year which it's scheduled to do, and opec produces for the rest of this period what it produced in april, we believe the gap between demand and supply will be 0.7 million barrels per day there will be a deficit of 0.7 million barrels per day projected for the second

quarter of this year. that deficit should grow on the assumption but not a forecast that opec continues with the production cuts. >> neil, in your report you talk about supply. you also mention demand. that's very interesting point that i want to highlight for viewers. you talk about weakness when it comes to demand in places like india, the u.s. and germany. do you think that's just temporary? do we really worry about this as long as the key consumer, china, is still going strong? >> you mentioned china. china seems to be doing well so far this year, slightly better than we originally thought. the indian demand situation is slightly unusual, it's a direct consequence of the demonetization policy brought in at the end of last year. we think india will return to a higher growth trend as 2017 progresses. the other numbers we've seen in germany, the u.s., turkey, we're not sure at the moment if that's really a major thing or just a

temporary pullback. for the time being, though demand was -- demand growth was slower in the first quarter, we have revise td slightly upwards the demand numbers for later in the year, so the overall view that demand will grow by 1.3 million barrels per day in 2017 remains in place. >> neil, appreciate that. thank you very much. let's take you to the european equity markets. taking a look at the stoxx 600, we are just slightly under pressure off by 0.1%. not a huge amount of movement this morning. we're seeing we're no longer able to hold on to the intraday record highs we saw for the dax and cac in yesterday's trading session. yesterday the stoxx 600 was up 0.1 after the glows.

wh close. the xetra dax is up by 0.1% today. what's driving us today is once again earnings. we had earnings from the airlines, easyjet was a bit of a disappointment. moving on to the sectors, you'll see a better picture of that. airlines are under pressure. basic resources. autos also down. 0.2%. the reason being eu car sales down 6% in april. we'll talk much more about that story in a short while with a lot of weakness coming from the uk. japanese prime minister shinzo abe has told cnbc that he hopes the united states will return to the tpp trade table as he pushes ahead to strike a deal. speaking to akiko, prime minister abe said it was vital the u.s. and japan maintained free and fair trade regime.

>> translator: we have finally come to an agreement on the rules of free and fair trade. we hope to utilize that agreed framework. unfortunately the u.s. has declared withdrawal from the tpp. since we have come thus far, japan must take on a leadership role and bring the talks forward. we would like to capitalize on the result of our long years of efforts. i think the important point is to ensure a fair and free trading regime in the asia pacific region between japan and the united states. we have agreed that it is very important to create a trading framework which will enable the development of this region as a whole for free and fair trading activities so momentum should not be lost. in the upcoming tpp ministerial meeting in vietnam, i wish to seek the solidarity and unity of the 11 countries so we can come up with a clear directionality of where we want to go from this point forward.

[ speaking japanese ] >> translator: 11 countries made their judgment on the assumption that the u.s. will be in tpp. we need to consider what is best and the 11 countries must be united. since the united states understands the importance of free and fair rules in the trading world, it's our strong wish that the u.s. will return to the tpp. [ speaking japanese ]

>> translator: the unemployment has come down to 2. 8%. the ratio of job numbers versus job seekers is above 1 for the first time in japan. jobs have increased by more than 800,000. so in this situation, if you want to recruit good human resources you have to improve your conditions of higher. for the last four years consecutively we were able to increase the wage levels. basically the momentum for wage increases is being sustained. considering the tightness in the labor market, i think there will be a gradual increase of wages as demanded by market pressures demanding further wage increases. that was the japanese prime minister defending abenomics. do e-mail the show,

streetsignseurope@cnbc.com. you can tweet me directly @carolincnbc. i love reading your tweets. coming up, european car sales hit the brakes in april is it more than a bump the road? we'll discuss next. [vo] when it comes to investing, looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock.

vote da phone posted a full year net loss of 1.6 billion euros, however the world's second largest mobile operator says it expects earnings and cash flow to improve with lower spending and increased customer revenue. gic is reducing its stake in

ubs due to changes in the bank's strategy. gic has nearly halved its holding in the swiss bank after becoming a main shareholder at the height of the financial crisis almost a decade ago. the fund which manages more than 1$100 billion placed shares at 16.1 swiss francs taking a sizable loss. ubs shares continuing yesterday's under performance off by 2% this morning. the dollar index hit the lowest level since november while the euro hit a one-week high against the dollar. it is back above the 1.10 handle for the first time since the french elections. later today we get the gdp data in under an hour's time. we expect a confirmation of the flash estimate, 1. 7% on the year. we are joined by andrea yanelli director of fixed income at fidelity. when we look at the gdp numbers

coming out today, what is likely to be confirmed is that europe is growing faster than the u.s. shouldn't monetary policy in europe also be normalized a bit faster than the u.s.? doesn't seem like this is happening at all at this point. >> the latest messaging from the ecb and expectations from market participants are that the hawks will have the upper hand in june, especially now that the macr macron's election that taken some political risk off the table. the main argument there is that inflation reached level that warrants some reduction in monetary policy. we think that whilst there is a case for some reduction, we think the ecb will take it slowly because inflation in the eurozone is at these levels mainly due to base effects. we expect that to fade in the second half of the year, and because wages in the eurozone,

one barometer that the ecb watches closely, has not risen. >> in the u.s. we're not seeing convincing wage and inflation picture, maybe unemployment at the lowest level in ten years, if we look at the inflation for march and april, they underwhelmed. people said march was an aberration then last week for april it confirmed a trend. should the fed be liking as much as it is planning to this year. >> we think the fed will continue on its hiking path of a couple hikes this year. if you look at what's been going on both in the macro data and markets, it's fair to say the reflation trade and the trump trade have taken a breather. the markets are becoming more skeptical of the capability and the possibility that the white house may get through congress, especially on issues such as healthcare and the fiscal

reform. treasury yields have fallen on the back of it. we still think there is a case to be long u.s. treasuries given there's still lingering geopolitical risk. the fact that other risky asset classes are at high levels. it's a nice way to play defense in this environment. >> if we look at positioning, i had a recent look at bank of america, merrill lynch piece saying ten-year positioning in the u.s. is the aat a nine-year. yields have popped up to roughly 2.3%. are we going to be seeing more unwinding of this heavy positioning? >> we've seen the unwinding from the opposite side if anything over the last couple of months. speculative positioning was record shorts, just over a month ago. so, that has come off. so evaluations and positioning are less supportive along

treasury trade, but we still think there is a case. also don't forget any meaningful rise in yields in the u.s. will have a pretty fast impact on the real economy in the form of higher interest costs, mortgages, things that do have an impact on the consumption patterns that we see there. >> are you worried about the recent retail numbers given that 7 0% of the economy is based on the consumer? >> not mparticularly at the moment. we are watching a few sectors in the united states that -- we'll see how these evolve. but, you know, the u.s. economy is doing relatively well. and the labor market continues to plow through some of the uncertainties that markets seem to throw at it. we expect wage pressures to continue rising. and as wage pressures continue and people earn more money, consumption should be relatively

supported. we are at the late stage of the economic cycle, so every data release has to be watched carefully. >> let's continue with your trading strategies. you still like being long treasuries. what about european paper? we've seen that nice spread tightening as a result of the macron trade. do you think that will continue or is it time to take profit here? >> we've taken some profit on exposures because valuations have reached levels that warrant a bit more of a cautious stance. we wouldn't go outright underweight in european assets, purely because we think, as we discussed at the ecb, we'll remain active in the market. we'll do any tapering n reduction in monetary policy carefully. that leaves few bonds around for investors, to buy and keep technical support very much there. >> doesn't that also mean that with the lack of liquidity maybe in the european bond markets --

i know the ecb has been trying to deal with that headache for a long time, does that mean when tapering begins we'll see a lot of volatility? does that go and in hand? >> volatility is something that we need to be aware of, that can happen. and we think that the ecb also knows that. that's another reason why they're going to take it very slowly because what they don't want to do is have cyclical kovry thkov recovery that continues to take place in the eurozone. >> at what point do we worry about or care about italy? we know elections will happen at some point in 2018. we know renzi is trying to make a comeback. do you think he can make grounds or win some ground back against five star movement? >> it's a difficult one. the italian political scenario is one where the markets quickly shift their focus to more than the german elections that we

have in the second part of the year. given the fact that the italian recovery is still relatively gradual, and the -- as long as based on what polls tell us, the support for what will be considered populist parties are still relatively high. so, it's one to watch. we are watching it carefully. on that basis, given volatility that can be expected on peripheral debt, we have taken some profit on some of our positions. >> finally, before we let you go, valuations for gilt remains stretched on an absolute and relative basis. steer clear of that? >> it's fair to say that's the case, especially versus other areas of the market, like the united states. while an evaluation basis can be very tentative to take the other side of the trade, it's unlikely that valuations will adjust meaningfully in the near-term, given that consumption in the uk

is starting to fall on the back of falling real incomes. and the fact that the bank of england will not remove or will not hike rates any time soon despite rising inflation. >> andrea, thank you very much for that round up of the global fx income markets. let's turn our attention to auto news. ford motor will release plans to cut its corporate headcount by 10%. the cuts will help ford meet its $3 billion cost cutting target this year in an effort to boost profitabilities as auto sales stagnate. ford responded telling cnbc we have not announced any new people efficiency actions nor do we comment on speculation. european car sales fell nearly 7% in the month of april, dragged down by weaker demand for vw vehicles. volkswagen's april sales were down 14%.

renault saw a 3.3% drop. nearly every brand saw a decline in april sales with the xep slun exception of toyota and kia. german registrations fell 8%. let's dig deeper into the numbers with nancy who just joined me around the desk. should we be happy about the great run we've had over the last five years when it comes to european car sales and now we understand, hey this is a bit of plateauing? >> there's a normalization underway, if you will. keep in mind that april was unique because of the easter holiday. when you look at the adjusted figure, it increased the sales 4.2% on the month if you take out the fewer sales days which were roughly 2.5 fewer sales days due to the easter holiday falling in april. that puts the full-year number slightly above what we saw last year in some ways, if you look at the adjustment that would be

good news relative to the more bearish forecast we were look at. but you can't explain all of the numbers down to the easter holiday, especially looking at the uk market, a near 20% decline. that should concern some about the uk performance. we've been talking about how it was resilient post brexit. if this is the uk market showing cracks that could be a concern and the vw brand you pointed out. overall the vw group not among the worst performers, but the namesake brand they've been trying to turn around was off about 14%. so i think over at wolfsburg they would like to see that number higher. >> i also wonder to what extent this is down to people actually leasing cars or using uber, ridesharing apps. i don't own a car, do you? >> i don't. i use a lot of the ride hailing apps, but living in london that's a different story. outside the metropolitan areas, car ownership is essential. you mentioned the leasing.

we talk about those who may now be buying used cars, used car sales have come down, that's raised concerns for finance arms of the carmakers. i don't think it's an immediate turn when you talk about those going to ridesharing, car sharing. the autonomous cars, it is coming. it's just when it will impact the sales. >> thank you very much for that. we will go for a quick break. do check out world markets live, our blog which runs throughout the european trading day. we'll be back in two with uk inflation data.

hello and welcome. european car sales hit reverse in april, suffering the first monthly drop this year, derailed bay 20% slump in the uk market. vodafone posts a 6 billion euro loss for the full-year, weighed down by its indian unit, but the mobile operator says it's confident in its outlook, raising its dividend. easyjet shares fall to the bottom of the stoxx 600 as the airline posts a bigger than expected first half loss, the company's ceo dismisses reports of shareholder tension. >> we're not at war with any shareholder. we believe in constructive dialogue with all our shareholders. we'll be seeing all of them for the road show in the next couple weeks after these results. the dollar index falling to the lowest level since early november as the euro inches higher ahead of eurozone gdp

data. we've got more data for you now. let's talk about the april inflation numbers for the uk. those came in higher than expected. cpi for april up by 0.5% month on month. up 2.7% year on year, the highest since september of 2013. that's higher than what the reuters poll was looking for which was a print of 2.6%. it wasn't the higher import prices based on the depreciation of the pound/sterling which contributed to this but also in the month we saw higher council tax bills, heighter dental charges. the cost of stamps and vehicle

excise use went up, too we have a whole host of factors driving up inflation in the uk. 2.7% should give food for thoughtt for mr. carney. president trump reportedly shared highly classified material with russian foreign minister sergey lavrov and ambassador sergei kislyak at the white house last week. first reported by the "washington post," the information had been obtained through a secret intelligence sharing arrangement from an ally with close knowledge of the islamic state. national security adviser mcmaster denied the report saying no military operations were disclosed that were not already known publicly. blaine alexander has more. >> reporter: tonight the white house forcefully denying a new report from the "washington post" that claims president trump shared highly classified

information with top russian diplomats during an oval office meeting last week. >> i was in the room. it didn't happen. >> reporter: the meeting was closed to u.s. media and included sergei kislyak, one of the people at the center of the russia/trump campaign investigation. according to the post the president's disclosures jeopardized a critical source of intelligence on the islamic state. the post citing current and former u.s. officials reports the information is considered so sensitive the details had been withheld from allies and tightly restricted within the u.s. government. the president can really declassify any information he deems necessary, but the ally that provided this information warned that u.s. officials would be cut off if this information was ever revealed according to the "new york times." >> the story that came out tonight as reported is false. the president and the foreign minister reviewed a range of common threats to our two countries including threats to civil aviation.

two other senior officials who were present, including the secretary of state, remember the meeting the same way and have said so. they're on the record accounts should outweigh those of anonymous sources. >> tonight on capitol hill, concern from both sides. >> it's disturbing. let's find out what the details are whether it actually happened or not. we just have an initial report. >> reporter: in a statement, chuck schumer demanded an explanation from the president. despite strong white house push back. the "washington post" is standing by its story and says it withheld ovther information t the request of government officials who warned releasing if it could be could damaging. let's show you u.s. futures at this hour. looking somewhat mixed. the s&p 500 off by 1 point. the dow jones seen off by 1 point. the nasdaq set to open higher, 0.7 points. this after another record close by the s&p 500 and the nasdaq last week. the dow snapping a four-day

losing streak. here in europe, we are seeing another record high for the ftse 100 and the xetra dax. these markets have been hitting record highs after record highs. the actual underlying moves are small with the dax up by 6 points. the ftse 100 is given a boast by vodafone shares. the market up by 0.3%. do keep an eye on the euro/dollar pair, now that we're back above the 1.10 handle for the first time since the french elections, this is down to some dollar weakness we have seen, with the dollar index at the lowest since november. dollar positioning is the lowest since october. we saw that surprisingly soft u.s. manufacturing report yesterday. and that comes on the back of the poor cpi and retail numbers late last week. i should also tell you, of course, that the pound sterling is at a one-week high against the u.s. dollar, given the stronger than expected inflation numbers. angela merkel and emanuel

macron agreed to draw up a road map for deeper european union integration. but meeting in berlin, the two leaders also said they were open to changing eu treaties. annette is in frankfurt, claire is in paris. annette, reading some of the coverage from the german media, seems like macron brought a bit of the obama atmosphere back to berlin. >> there was a little bit of glamour coming with macron to berlin, that's for sure. i think macron also stands for morality for france. angela merkel was warmer with him, meeting him for the first time in his capacity as with obama. on the ground people here say she's just relieved, after brexit, problems with putin, trump being elected, and her problems with the president of the united states, this is a

very welcomed new leader for france. they are getting along with each other very well. you can see that from the bond language, friendly terms, and also that she's moving steps in his direction. when we talk about treaty change, this was not possible before emanuel macron actually moved on stage here, because, of course, merkel was always saying treaty change now and that environment is nothing which is very realistic. this has changed. just take a listen to what she said yesterday during the press conference with macron. >> translator: from germany's point of view, it would be possibility to change eu treaties if it makes sense, we need to strengthen the eurozone, not only to agree to them intergovernmentally but to legitimate them. as part of the eu structure, changes like that are needed but first we will work on what we

want to reform, if it requires changes, we, at least i, would be ready to do this. th . >> this meeting went well with macron. i guess they are now pushing also for an agenda to actually also see some material changes when it comes to the european project. having said that, of courkourco that to keep in mind this year is the big election year in germany as well. i think nothing really will happen before september 24th when angela merkel is facing a re-election or most likely a re-election as chancellor for four term in office. bottom line this meeting went very well with them. and angela merkel also moves in his direction. she was actually almost a little bit carried away when meeting him and saying -- quoting him

and his well-known author and elsewhere there is always magic in the beginning, but she went on to saying the reality test will come afterwards, whether there is readable credible refog with the new government. >> maybe it was the german schnitzel or french or german wines, thank you very much on that. the new french president has been busy assembling his government. he named a prime minister and seconds pektded tis expected to announce cabinet picks later today. claire what do you think the cabinet will look like? >> it will be a disruption to what we're accustomed to in french politics. emanuel macron wants to reach out to the right, left and center. so his cabinet should be limited to 15 ministers, plus junior

ministers and there should be equal number of seats, four men and women, and a third of his team should also be nonprofessional politicians. that means people that are, for example, ceos in companies or people that are heads of associations. so we'll see what it looks like. there's also a great big certainty that the cabinet will be very much pro european. the defense minister under francois hollande could carry on his job. he's in favor of a european defense policy. you have also a european member of praarliament that could be t finance and economy minister, she could also be at foreign affairs. you had francois bacrud who

would be in european justice. so people from different backgrounds symbolizing the willingness of emanuel macron to reshuffle politically the landscape here in france. >> claire and annette, thank you. all european union states must ratified block's trade deal with singapore. they finished negotiations on a deal in 2014. the ruling comes as an eu/canada deal will be provisionally entered into in the coming weeks. an anger voter confronted theresa may on the campaign trail yesterday. the woman who suffers from a learning disability berated the prime minister for cuts to benefits which she said left her with only 100 pounds a month to live on. may attempted to defend her record while the voter urged the pm to do more to help people with disabilities. take a listen.

>> anybody who has disabilities, i don't want their money taken away from them and be crippled. the fat cats keep the money. >> we'll do a number of things. let me just tell you one thing. >> you know what i want? i want my prior disabilities income to come back, not to get nothing. i can't live on 100 pound a month. you took it all away from me. this is what it means being on the campaign trail in the uk. britain's opposition labor party will release its manifesto today. measures will require big businesses and banks to pay a levee for every employee who earns a high pay package. the proposal would ask companies to pay a 2.5% levee for workers that earn more than 330,000 pounds, rising to 5% for those earning more than half a million pounds. easyjet shares are trading

lower as investors give the earnings thumbs down. we'll bring you more of our interview with the airline's ceo after this short break. cdw brought i.t. orchestration to printing, dramatically increasing print security with enterprise printers by hp. which is great, unless you're a corporate spy. unsecured printing makes your network vulnerable. enterprise printers by hp help prevent costly security breaches that can compromise your network and reputation. so i'm stuck spying the old fashioned way. hey. i'm not spying. secure printing by hp. i.t. orchestration by cdw.

welcome back. hackers claim to have stolen a disney film for ransom. bob iger reportedly told employees that the perpetrators of the cyberattack are demanding a payoff in bitcoin in order not to release the upcoming film. iger said disney will not pay and is working with federal investigators. the name of the film or how much the hackers have asked for what not been disclosed. elliott management called for an independent review of bhp's petroleum business. elliott, which owns 4.1% of the

uk listed brand said in a letter there is deeply broad listed support for active steps taken by management to achieve a valuable outcome for the petroleum business. bhp cho and drew mackenzie said he rejected the claim that he has not been open to suggestions and will respond as appropriate. warren buffett is betting on air travel. berkshire hathaway has been buying shares of southwest airlines according to the s.e.c. filing of its first quarter holdings. buffett's investment firm reported increasing holdings in american. shares of easyjet are sliding after the low-cost carrier posted a pretax loss of 212 million pounds. unfavorability currency movements and fierce competition within the european airline sector weighed on the numbers. but easyjet said it was on course to meet full-year targets

as pricing pressures begin to ease. speaking to cnbc earlier, carolin mccall said she expects the operating environment to improve in the second half of 2017. >> the whole europe will be serviced by low-cost carriers. the legacy carriers are losing a lot of lon on short-haul. they're making their money on transatlantic and long-haul. we make our money doing short-haul. we are one of the few consistently profitable airlines in europe. so we are taking advantage of opportunity. if you look at what we've done, we have done 35 flights virtually a day from london to amsterdam. gone from two aircraft to nine aircraft in 2 1/2 years. the airport is now really full. you can't really get slots there anymore. that's the kind of opportunity we've taken advantage of with growth. in the uk, we're continuing to grow. we're number one in every single airport we operate in in the uk

where we have based aircraft except manchester where we've gone from 3 to 2. it's very rational, very disciplin disciplined, we're taking advantage of opportunities where weaker airlines are getting weaker, you can see that with air italia, airline berlin's problems. the strong get stronger, the weak get weaker. actually that is what we're doing. >> let's get more analysis on the sector with mark simpson, aviation analyst at goodbody. what do you make of the numbers and the company expects to meet guidance for the full-year. is that too optimistic? >> no, for the full-year, given the improving yield trends into the summer with eu traffic, that's entirely deliverable. i think the issue in the second half, where there could be risk is not so much on the revenue line but on the cost line where they indicated the target for

the year of 1% ex-fuel cost inflation remains in place. having delivered flat year on year in the first half, that implies cost inflation of 1.7% in the second half period. that's where the risk lies over the fy'17 fiscal year. >> do we worry about the fx moves, because it's just an accounting issue. but we also know in the second half of this year, fx will be another headwind. what do you make of it from an analyst point of view? >> easyjet gives us numbers on both a reported and constant currency base. really looking forward that should, you know, run itself neutral base in the sense of fx changes. you know, ryanair says it is what it is. here are our numbers. at the end of the day, if we think about fy '18 fy '19,

hopefully fx is not an effect. >> this company bought 30 a320 aircraft under the existing agreement with airbus. going into the numbers you were curious about this issue. why do you think it's so significant for this company? >> i think it's a major plus for easyjet. i still remain negative on valuations. i think they run ahead of themselves, despite the fact my number is circumstanque du sol k at the current a320 aircraft they have, that would deliver a 15% unit cost win on the a320 near. it is significant in terms of the proportion of the fleet, it will reach about 9% of the total

fleet by 2020. 1% next year, 3% in 2019. the effect will build but become more significant three years down the road. it is an important shift, gives them greater ability to compete against ryanair, who clearly delivers the lowest cost within the marketplace. >> mark, you say the stock is mispriced. you think valuation is running ahead of itself. where do you think the stock should be trading currently at 1226? >> my view is if you look at multiples, pes, ebitas, returns on capital, bear in mind that on our fy '17 forecast, they have effectively halved their return on capitol since 2015. the peak at 22%. this year it's going to be just 11%. on that return base, that's an indication that we should be around the 10 pound 30.

you really have to go out to the 2019 forecast to justify the current share price. >> mark, thank you very much for that. appreciate it mark simpson from goodbody. let's change tact and look at what's happening in asia. toshiba's plan to sell off its memory chip business is facing a road block as western digital fired for arbitration which could halt the sale. >> selling the memory unit is absolutely essential for toshiba's turn around since it wracked up losses of 18$18.5 billion for the year ending march. its partner western digital is opposing the sale of the jointly operated unit saying selling to a third party violates their agreement. efforts to resolve the matter have been unsuccessful and western digital has taken the matter to court filing for arbitration last sunday. arbitration can be time

consuming, but both sides are showing no signs of backing down and it could take up to a rear to reach a final decision even if it were to be expedited in nb americ emergency case. toshiba does not have that much time. the ceo spoke at a press conference yesterday saying selling a majority stake of the memory business poses no conflicts with the agreement and that western digital has no grounds for blocking the procedure. toshiba warned that it may even block western digital employees from accessing the production plant. toshiba needs additional funding of $9 billions this year for capital spending and loan repayment and the main banks extended 70% of that in new credit and is considering whether to offer more. toshiba will become cash strapped unless the memory unit can be sold. toshiba has gone forward with the bid process for the memory

unit setting a friday deadline for the second round of bidding among six chipmakers and investors including western digital. that's all from the nikkei. back to you. >> thank you very much. before we wrap up this show, here's another quick look at how u.s. futures are shaping up. a few hours away from the opening of the u.s. markets. looking at a bit of a negative print. s&p 500 seen off by less than 1 point. the dow jones seen off by 2 points. no major moves expected at the open. the nasdaq seen flat. this is after we notched another record close for the s&p 500 and the nasdaq in yesterday's trading session, given the oil and the tech rally, the dow snapped a four-day losing streak. let's have a look at what's happening on this side of the pond. you'll see the ftse 100 is up by a third of a percent. that's another record high for this particular market given the gains in vodafone. the dax hit another record high, just slipped back into the red

at 12,799 points. a lot of earnings to get through today. airlines under pressure given easyjet's more or less disappointing results. cars also falling on the back of disappointing eu car sales down 6% in april. even 7% is that number. let's look at currency markets. the dollar is under pressure. that's helping euro/dollar go above the 1.10 handle for the first time since the french elections. that's a six-month high up by 0.2%. pound sterling making inroads on the back of better than expected inflation numbers. that's it for today's show. i'm carolin roth. "worldwide exchange" is up next. busch. as crisp and cold as a mountain stream. it has the same great taste it's always had. even the same sound. [sfx: buschhhhh]

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good morning. a developing story. the white house denying a bombshell report that the president revealed classified information to russia. live report from washington straight ahead. historic highs. u.s. equity futures are flat after a rally in tech and oil sent the nasdaq to new records. and disney held hostage. the details of that on its way. it's tuesday, may 16, 2017, "worldwide exchange" begins right now. ♪