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tv   Worldwide Exchange  CNBC  April 30, 2015 4:00am-6:01am EDT

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happy wednesday everyone. welcome to worldwide exchange. i'm seema mody. here are your headlines from around the world. a sell off in technology stocks pushing european markets in the red. nokia way down and criticism about an alcatel lucent shareholder. >> and posting it's worst day in four months as the doj holds back on stimulus. rbs continues to set aside money
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for misconduct while the retail banking arm disappoints. oil stocks cling on to the green. surprising analysts with some positive earnings. welcome to the show. we have been getting unemployment data. we just got the number out of italy. the march unemployment rate rising to 13.0% from 12.7% in the month of february. at least march youth unemployment which has been a big concern for investors rising to 43.1%. to give you context on italy's labor market the seasonally adjusted unemployment rate rose to 12.7% in the month of february up from 12.6% in january. as i said youth unemployment has been particularly a challenge
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for the country of italy measuring job seekers between 15 and 24 years. also increased to 22.6% in the month of february. this is a set back to the labor market reforms which aim to make it easier for countries to hire and fire employees. you can see the euro dollar which has been moving to the upside over the past couple of days. right now at session highs at 112. the adjusted jobless rate came in at 6.4%. adjusted unemployment falling by 8,000 in the month of april. better than expected numbers out of germany and that's why you're seeing it sending the euro higher at session highs at 112. there's recent data on jobs from germany. let's bring in henry. welcome to worldwide exchange. >> good morning. >> thank you for joining us.
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a big topic for investors today has been the striking move in the euro. what do you make of it? so far this year the winning trade has been going long european equities and short the euro. that trade is getting unwound here. >> definitely. we have something new to think about now, i think we have had better employment figures. that's definitely raising the speck to of inflation expectations and something new has been entered into the debate within the financial markets and this very definitely has the side effect of challenging the most consensus and the most crowded trades and that's clearly been long dollar short euro. we're starting to see that reverse and with regards to improving fundamentals this is very important when you look at the government bond market with regards to what that's telling us about risk assets as well and
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right valuations for bonds and also into equities. >> but because the weakness in the euro has been one of the main catalysts and reasons investors have been buying european equities, are investors going to question if they should go long european stocks this year? >> absolutely they're slightly over 20%. the big driver has been the fx and perceived positive risk that presents to european companies and their earnings. the moment you get a change in trend like this it's completely threatened. with european markets anl yulizing over 100% it's appropriate that we see it. >> and the euro at a two month high against the dollar. you can see the chart right there. it continues to be the export sectors like autos primarily because they benefit from the weaker euro. would you be cautious of these exporters if we continue to see
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the euro rise. >> absolutely. i would be cautious on many grounds and cautious on the crowding and the valuation of these names as well. >> we'll leave it there and get everyone a look at european markets at this moment. you can take a look at the heat map and more red on the screen and then green if you rear to the right. the stoxx europe 600 index down about three points or .75%. this follows the sell off we saw in european equities yesterday given the strong rise in the euro. the euro in fact tracking for its first positive month against the dollar in ten months. the last negative month was in june 2014. now the resurgence in the euro is what traders are talk about today. euro back at 112. the first time in 8 weeks. when you take a look at european markets trading in negative territory. unemployment figures in focus
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plus the move we're seeing in the currency market. also want to draw your attention to the move in asia particularly in japanese stocks. interestingly enough we were talking about the nikkei trading at a new 15 year high. some traders perhaps though taking the recent rise as a reason to book profits. also investors in japan and asia reacting to that disappointing u.s. gdp number that came in yesterday. we heard from the fed, still no indication as to whether rates will rise in the near term although given the disappointing data coming out of the u.s. many say that tempers the expectation for a rate rise in the near future but let's talk about that. that was one of the big focuses yesterday but more importantly that gdp number of 0.1%. much lower than what the market
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was expecting. we talk about a slow down in china and emerging markets and how that will temper global growth going forward but maybe the bigger concern should be about the slow down in the u.s. economic recovery. >> it was so telling i always thought it was an incredibly telling mechanism and that was probably all the ingredients you would have felt to take comfort and rally but i sold off aggressively. that's interesting. >> what does that tell us? >> the key reason is what we're starting to look at is five year break even rate which is the best forecast we can find for inflation in the short and medium term is starting to pick up and also what we have is the mathematical inflation and that will start to hit the data by november and december and we should start to brace ourselves. and that's going to challenge government bond yields at 1.7%
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and with regards to government bond yields that has been the asset that's kept every other asset higher because of the relative attractions of equities and we must not underestimate the moves to be seen in government bond yields. i think it's clearly fascinating. i have no doubt it's had a lot of air time on this show historical factors that always feed through positive wealth effect. china is on the top of everyone's list but we can see the stock market almost doubling as being positive. >> but your point on the bond market because of the record low yields we have been seeing relatively many investors say that's one of the reasons they're bullish on european equities because there's no other place to put money and get income. given the spike in yields and we continue to see that in today's trade, what does that mean going forward? >> they cannot be unskaifed.
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too much of equity land looks like a bond. consumer staples, utilitities, these will come under pressure and that's very important and what probably the moment i think is the best recent historical example was the taper tantrum of 2013 and i encourage investors to look at the trends after that. it's the staples that trade on 25 or 30 times earnings that would come under pressure so it's going to be a fascinating rotation in the next six months. >> we're seeing a rise in yields now but at the end of the day quantitative easing fully in effect. that's expected to drive yields lower but maybe it's a short-term blip. >> it is. it's about another 1.2 trillion with regards to buying. the only problem for bond investors is the amount of money is now yielding negative.
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it's approaching $10 trillion. so the people praying that someone will come along and pay a higher even more lower valued price is called into question because there isn't enough chairs to sit on at the end of the day. so from that perspective we can start to see a realization that fundamentals are improving because of employment feeding through into inflation and just the grim reality that $10 trillion of negative yielding assets there isn't enough money. >> and maybe this was being seen as a crowded trade. we were pointing out the german ten year at its highest. you can see the ten year bund at 0.63%. many calling for it to perhaps dip into negative territory. henry dixon sticks with us. and why the chinese tech apology yanlt is hoping it will be on
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the ears for their investor. and the swedish app maker is setting up in the big apple. more on that story. we're back in two minutes.
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we have been getting flashes from commerce bank. the ceo making some statements.
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commerce bank ceo saying that it aims to pay a dividend in 2015. the ceo also says that 2016 targets are getting ambitious and that a first dividend since 2007 in sight. more on this story, annetta perhaps good news for investors down the road for commerzbank. >> yes, it's actually good news for those investors because obviously commerzbank hasn't paid a dividend since 2007 and just remember it just had a capital increase again of $1.4 billion further eluding the shares. normally those are quite entertaining. you have an awful lot of angry shareholders screaming at the board. yeah calling for the dismissal of other board members but perhaps that's a little teaser that they might like the board members a little bit more and makes them also believe in the turn around of the company but
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there is also sentence they have to wait until the end of the year but they're saying their target is becoming more challenging looking at the low interest rate environment so my good guess is better wait and see what happens until the end of the year before believing they're really paying a dividend. that's actually really positive story bucking the market trend which is a generally negative territory. of course here in germany. we have them lifting their 2015 earnings and revenue forecast talking about revenues the new target is 2.4 billion euros and adjusted target is lifted to 975 million to 1.175 euros and they're benefitting from the
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high volatility. explicitly they're saying the weak euro dollar exchange rate. the european central bank bond buying program and also the swiss national bank's decision to discontinue the cap on the swiss frank is helping their business. so they're also expecting kind of the volatility here to stay and are quite bullish on the new year. by the way it was the last quarter for the long serving ceo. it will be a new one from may. back to you. >> it's one of the outperformers up 1.6% in today's trade. thank you so much. >> speaking with the banks, first quarter net profit beat expectations thanks to a strong performance from its investment banking business and weaker euro. let's get more on this story with stefen live in paris with more. >> good morning. net profit was higher than expected. the forecast was close to
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1.5 billion euros. the two main drivers, the weaker euro and the very strong performance of the investment banking division. i caught up with the cfo of the bank to discuss the different businesses. up 18% versus last year and this is despite the first time contribution to the single resolution fund. it stems from good performance in the businesses and specialized businesses as well. operating costs had positive choice so basically saying they increased a lot slower than what we had in the revenues. cost of risk is low and basically all of this leads to an roe of 9.6% excluding exceptionals but including the new contribution. >> it's up 24% in the first quarter. is it only because of the strong performance of the financial markets? >> no, actually if you look at
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it the 24%, if you look through the effect of the revaluation of the currencies it's basically a 13% increase which stems from 15% in global markets, 50% in security services and 7% in corporate bairnging so a well balanced growth. in global markets good growth demand from nking so a well balanced growth. in global markets good growth demand from clients. and in europe and asia and topped off in u.s. >> you reported almost 15% increase in operating expenses. what's the reason for this? >> if you look at the main thing you have to look at operating leverage so our cost basically are growing a lot slower than our revenues. the total amount let's not forget this quarter there are effects of the acquisitions that we have done last year.
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out paced by the growth and the revenues. >> after a small gain at the start of trading, shares are now losing 1.7%. two reasons for this the main one being the operating expenses which increase by 15% on the quarter despite the cost production. the second reason is the french retail banking activities still weaker in the first quarter. that was really the case at the end of last year and that explains why we are in the red. back to you. >> stefen, thank you so much. let's stick with the banks. banco popular trading lower. this despite first quarter net profit coming ahead of forecasts boosted by a strengthening spanish economy. rbs in negative territory after reporting a loss of 446 million pounds in the first quarter. they set aside 856 million pounds to cover legal and restructuring costs.
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henry dixon is still with us. are you a buying of bank of scotland despite the wave of restructuring charges? >> absolutely. the hope is that the restructuring charges and fines cannot continue indefinitely. it's a combination of a very interesting starting point. we're starting to see the problem loans in the crisis which i think is a very, very valuable source of cash and while we're not saying they can go back to the three times tangible book value they traded at precrisis we think it's a very very sensible aspiration on one year views. you transfer to slight premium. i think a very attractive return at 20 to 30% is definitely achievable and we welcome the strategy of rbs returning to its retail roots and the slight disappointment today with the shares is the performance from the investment bank maybe slightly underwellhel munderwhelmed
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people. >> but we haven't seen a meaningful rise in loan growth. lending money is at the end of the day a comoditized business. wouldn't you want more exposure to banks that have exposure to emerging markets versus just lending. >> yeah, what i would say is very cyclical and yes margins have undoubtedly come down in classic retail banking and they should. what it is a much more utilitarian type return. we can look at a safer type of business going forward. yes lower valued than precrisis but from the starting point there's still an attractive return to be made. >> do you have a top pick? >> i think it probably would be royal bank of scotland. >> stick with us. it's one week to go until the u.k. general election and the uncertainty generated by the
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campaign is being blamed for a slow down in the housing market. perspective home buyers are helping drive down the first quarter revenue more than 3%. conservatives are campaigning on a ticket to allow tenants of housing associations to buy their homes. labor wants to bring in a mansion task and rent controls. a key member of the u.k. treasury attack made an outspoken attack on his partners. he is a liberal democrat and conserved the conservatives of having secret pounds for 8 billion pounds in welfare cuts. wilf is in birmingham where labour will be campaigning on the economy today. over to you. >> thank you very much. i'm here in birmingham which is the u.k.'s second largest city and the heart of the very important industrial hub for the uk. why am i here? right here in birmingham's airport, the shadow chance that ed will be campaigning later
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today. the national polls are incredibly close still. very hard to decide a winner but it is the key marginal seats that will decide the election and not the national polls overall and that's why he's coming to birmingham today. i want to touch a little bit on the national polls being so close because it lead to very odd tactics from both the major parties pouring out new policies which have been criticized for being too short-term in nature. it highlights the desperation for the lack of traction their campaigns have gotten so far. not just the policy is odd but the way he said it. it's like he's trying to convince people with extra commitments that he will do what he promises and he currently feels that people aren't believing him. on the slip side we saw desperation from labour by ed miliband deciding to do the interview with russell brand.
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it hasn't done him a lot of faye vors -- favors and highlights that level of uncertainty. you know seven days left to go. nationals polls still incredibly close and a few key marginal seats will decide this election. >> i wanted to ask you, a recent poll shows that the scottish national party is on course for a clean sweep of scotland. what do you make of that? >> that poll came out yesterday and suggested the s&p have 54% of the vote in scotland and that will be enough for them to potentially win every single seat. that's very bad for labour who won more seats than the conservatives in scotland but overall it will be a party similar to labour will be against the conservatives. that's why we look at them having the most seats but ed miliband being the prime minister. there's one other point in the
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poll most headlines haven't picked up on that's interesting. they asked voters in scotland something along the lines of will you definitely vote yes or no over 80% of voters said yes. we saw last year how these can really galvanize support and lead to high turn out. it's certainly doing that in scotland. conservatives hope to increase turn out of their supporters in england. when the polls are this close turn out can be a massive swing factor. plus or minus 10% either way could make the polls that we look at at the moment totally meaningless. >> scotts playing a decisive role in this election. thank you so much. henry dixon is still with us. what do you make of the election one week to go. how are you positioning yourself? >> it's absolutely fascinating. you have two events it is the mayweather fight and the general
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election and i think it will be such a fascinating outcome. i wouldn't want to go against the polls and probably the poll i would encourage for you to look at is the panorama website and look at nate silva that wrote a fantastic book but he agrees if we're going to go coalition bound it will be labour and snp with the biggest number of seats. from an economic standpoint. concentrating on economics we can look at probably slightly more inflationary policies. >> you say that because why? why does a labour lead party lead to inflationary pressures? is there certain sectors? >> it will be more spending. probably international markets.
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look at the u.k. and they probably feel the incumbent party has done a good job. european politicians would say they've done a good job so they'll be surprised by the outcome so with that perspective the inflation hedges you can get into your portfolio to benefit from this energy mining and banks are all cheap and you have to avoid the higher area of the markets because those will be the shares that come under pressure as if you like the cost of capital rises as interest rates rise. >> the winners and losers of the u.k. election. pleasure to have you. thank you for joining us. that's henry dixon of glg partners. still to come, problems with the apple watch. we'll tell you about why it might not be working as well as the tech giant hopes. more on that story coming up.
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>> stocks wallow in the red. in asia markets have heavy losses. the nikkei with it's worst day in month as the doj holds back on stimulus. they report a loss as they
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continue to set aside money while the retail banking arm disappoints. stat oil surprising analysts with positive earnings. >> take a look at european markets and how they're fairing this morning. an improving labor market in germany while italy's unemployment continues to rise. we were in negative territory. a gain of .09%. below that psychological level of 2000. cac 40 down by around 10 points on the day but it's the bond market that we're really seeing some interesting moves. we're seeing yields strike in
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the german bund at a 7 week high in the u.s. the ten year yield crossing 2% as the fed statement did not signal that rates will rise in the near future so a lot of interesting moves that we're seeing in the bond market. i want to point your attention to what's happening in currencies. keep an eye on the euro. it's moving sharply to the upside. it's actually at a -- i believe a two month high right now given the encouraging data we have been getting out of the euro zone. that in focus. also the weak data out of the u.s. economists across the world, that of course are being seen as a reason to sell the dollar and buy the euro. in the oil markets we've been seeing a recent rise or rebound in the oil price. in the month of april oil prices up about 27% and it's another day of green. brent crude up by about a half a
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percent. it is a key support level or key resistance level for the oil complex. right now around 1%. now we've seen a number of oil companies report today. shell reacting positively thanks to a positive performance in it's oil refinery and trading positions. cost of sales were in line with expectations. the london listed oil explorer says it's planning a $500 million cost saving program over the next three years as it grapples with global commodity slump. investors bullish on shares today after first quarter operating profits beat forecasts they'll make oil exploration a high priority despite the oil sell off. >> it means solid q-1 earnings
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after reporting a 150 million euro loss. they posted operating profit of 25 million euros as investors continue to eye it's attempted takeover of the irish carrier. they narrowed losses in the first quarter to 417 million euros. the airline remains under pressure from currency effects offsetting the benefit from the lower oil price airbus confirmed in the first quarter. mainly do to a sale in aviation. what can you tell us? >> airbus posted an 80% increase of its net profit for the first quarter and it may need you more relevant the operating profit down 7% in the quarter. it's broadly in line with the expectations. revenue was down 5% on the
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quarter because of lower commercial delivery however this was partly upset by the weaker euro against the dollar. in a statement it's pushing ahead to ramp up the production of its new model 350 which was launched at the end of last year. it also confirmed that 320 program remains on schedule and the company also confirmed that the super jumbo 380 will break this year as expected in the first quarter. airbus also returned to positive free cash flow. 452 million euros market reaction. negative on the stock. it's outperforming the french market. now you also mention the stock posted a loss of 417 million jurors rows and euros. the company wasn't able to benefit in full from the weaker oil price. this is because of the weaker euro. it has to be paid in dollars and last but not least the cfo says
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discussions on the staff on increasing the productivity should end in september or october but it is not going to be easy and that explains why the stock is down 4.5% right now. >> stefen thank you so much. let's talk more about air lines and the opportunity in the space. we had john strickland. a lot of reports today. what do you make about what's happening with airbus. >> this is a week when they celebrated the tenth anniversary of their first flight and that is the perhaps weak point in their portfolio. it's been a successful aircraft from the point of view of the passengers and airlines that operate it but ten years on is moving to break even territory. orders apart from those it received from the gulf carrier have been relatively light. with no intention to add more
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orders. they would like more plains but we would like to see them with new engines and new wing and given that it's breaking even they're reluctant to do that. they're doing very well. >> it's interesting because we talk about airlines and how they're the big winners in the drop in oil prices but that's not the case as they have already hedged the price of oil in the coming months. isn't that right? >> that's the case for many airlines. they're seeing limited benefits of the recent weakness in oil price falls because they are hedged. most big airline groups are edged extensively this year. so it's more likely we're going to see in the following financial year bigger benefits from what they have done now with the hedging as compared to past price levels. >> so limited upside then for some of the airlines based on the hedging contracts in place for the price of oil but are there some that have been strategic in how they hedged their contracts and perhaps benefit more from the drop in prices. >> there's always a right and
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wrong way to do it. norwegian reported their figures. they were benefitting because they were not particularly hedged. there's an example of the airline that wasn't in the hedging contract and got a benefit short-term but it's a bit of a loss to be honest. >> also air france under pressure from currency effects. that's offsetting the benefit from the lower oil price. >> that's the other side. the fuel price has been dollar denominated and maybe falling but given the strength of the dollar and airlines trading in euros it's effective in a negative way and other aspects of costs as well. because many the dollar is denominated too. that's a challenge we have to face. >> absolutely. when looking at the basket of european airlines which airline do you think has done a good job of cutting costs, investing in growth and improving customer experience? >> the one we have seen today is iag. they are ahead in terms of the legacy carrier bracket they have massively reduced costs.
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we've seen air france's results pretty well as expected as a loss in the first quarter but they just changed from one cost cutting campaign and a new one up to 2020. they don't bother with campaign names. they just have it. so they have done well in cost reduction. customer service is regarded as good in a carrier group like british airways and iag. >> thank you for joining us here on worldwide exchange. strategist at jls consulting with a trade on airlines. nokia with weaker than expected first quarter numbers with lower software shares and higher costs. they down played reports from a key shareholder that criticized
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it. nokia down better than 9.5%. alcatel lucent down 8.5%. sony posting a loss of 125 billion yen for 2014 but says it expects operating profits to surge. that as it hopes to sell 30 million smartphones this year. now the bank of japan held it's latest monetary policy meeting today. >> the bank of japan decided to maintain the status quo by an 8-1 vote. this was in line with market consensus but the focus was the bank of japan's outlook report because it incorporates forecasts for fiscal 2017. first there's the cpi. it was already revised down this january to year on year 1% from 1.7% reflecting a drop in energy
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prices and earlier the boj reported a further downward revision to 0.8%. however the governor said that with solid corporate earnings and boosts in wages the boj remains positive that the cpi is on an upward trend from its current 0%. they expect to accelerate gradually and remain stable tloult the year. but keep in mind another sales tax hike is expected to be implemented in spring 2017 and this could again weaken domestic demand. the gdp outlook for fiscal 2015 and 2016 is 2% and 1.5% respectively but this drops to 0.2% for fiscal 2017. now will the boj conduct further easing soon? well the market consensus is that the boj will hold for the time being. this is because the boj is concerned any further qe could
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trigger weakening of the currency as well as volatility from interest rates. back to you. >> thank you. i want to point out the move we're seeing did post it's biggest loss in four months in today's trade. a big move to the down side for japanese stocks. some of that having to do with profit taking. reaction to the boj also disappointing results from honda. you can see the nikkei losing about 2.7% in today's trade. sticking with japan, meanwhile, prime minister shinzo abe became the first ever japanese leader to address a joint section of congress. in a symbolic gesture much of his speech focused on the efforts to strengthen ties between the u.s. and japan. >> history is harsh. what is done cannot be undone. with deep repentance in my heart
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i stood in silent prayers for sometime. my dear friends on behalf of japan and the japanese people i offer with profound respect my eternal condolences to the souls of all american people that were lost during world war ii. >> shinzo abe addressing u.s. congress. brazil's central bank voted to hike interest rates in a bid to tackle inflation. the nine members voted to raise the rate by 50 basis points for a fourth straight time. rates are now at the highest
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level since december 2008. the currency is where you're seeing the movement. slightly weaker in today's trade but as you can see it is this year up about 11%. and coming up why chinese tech giant ten cent is hoping that britney spears will be music to the ears of its investors. stay tuned for that story.
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welcome back. trouble for apple. according to wall street journal the company has forced to scrap an undisclosed amount of completed apple watches due to a malfunction in the engines, the part of the apple watch which produces the sensation of being tapped on the wrists so you know when you're getting e-mails and texts. the engines broke down overtime. aac trades in hong kong and as you can see it did lose around 5.4% in today's trade. apple shares fell .5% after trade. >> now a small respite for twitter closing slightly up nearly 1% in after hours trade.
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overall shares slid further on wednesday at the bell down nearly 9% below $40 a share. this as investors digested news of the poor first quarter results published on tuesday before they were expected to be published. twit areas boss conceding the last 48 hours had been quote, not particularly pleasant. >> with a combination of t of course the third party who managing our i.r. site leaking the results before market close as you're getting ready to go into an earnings call. that wasn't a particularly pleasant experience. but we had a slight miss on revenue. anthony and i talked about that on the call. we have a great revenue engine. it was due to our direct response business. the products are new and less than a year old. we know what we need to do there and we'll see improvement. >> what do you need to do? >> it was a combination of measurement, creative and
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targeting around our d.r. products. that need to get better for direct response advertisers. we have the biggest brand advertisers in the world. we're ramping spend from them quite well quite nicely across the world. we just need to keep grinding away and we'll get there. >> you heard this from analysts on the call and we heard it from investors all day. we had this discussion of maus and disappointing results. for over a year almost two years. >> yeah. >> and you made changes. why has it taken so long to kick in? >> you want these things to work the moment you roll them out and the first iterations of them. we mentioned we launched instant time line so that when new users come to twitter we always talked about the gap between awareness of twitter and engagement on twitter. we want new users to get it right away and we think instant time line is a great innovation there and we would have loved it if version one of it worked right out of the box. the new users are engaging a lot
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more tweets and faifvoriteing them. we'll reiterate quickly. >> you said that visibility into april in terms of maus is low. why? >> we're not seeing the trends we saw around organic growth. we wanted to be forth right with everybody and we were that we're not seeing the same visibility. >> does it seem like that past quarter where we did start to expect maybe a real acceleration in maus was that on outlier. >> but that's people's concern. that was a one off. >> i understand that. that's why we wanted to be very clear about what we're seeing in q-2. with instant time line and the experience we think addressed the why should i use twitter when you first come to twitter and can see what you now
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experience and how to use twitter with the instant time line. i'm confident that we'll bring the same earnings and iterations to those like we did add targeting. we did a lot of work on what that looks like in version one and what it looks like today. >> moving on apology these internet giant tencent has taken a stake in glu mobile sending shares up 22% in after hours. the san francisco based app maker says the deal will help glu expand it's business in china. the company best known for its hit ad featuring kim kardashian also announcing it's planning to sign britney spears to help develop a new game allowing fans to interact with the singer and enjoy the glitz and glamour of her life. how about that? sticking with tech and gaming swedish app maker is looking to expand as it announces it's
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setting up in new york. it's game apps aimed at children have been downloaded more than 75 million times since the company launched four years ago but it says online video for kids has huge potential. we're now joined by the founder of tocaboca. thank you for joining us on worldwide exchange. >> thank you. >> you've seen a lot of interest in your toys and games. what sets your products apart from what's on the market right now? >> we try to make digital toys as opposed to games. products that you can play with the difference is you can't win or lose. there's no rules. it's things kids can play with in an open end ed way. >> isn't it healthy to check children how to compete? that's one of the skills that kids learn. it gives them a certain level of drive, if you will. >> it's true although there's no chance growing up in society not
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having any competition anyway. this is more to develop creativity and sort of the open endedness of play basically. it's a balance to a lot of other competitions competitions. a key selling part is gender neutrality. >> the toy and tech industry has been very skewed in male directions. it's very blue for boys and pink for girls and in our case we don't really need to comply with the normal rules of the toy industry since we're going straight through the app stores of the world. i'd rather make products that kids can choose from themselves. sort of whatever they're into. if you're into cooking, if you're into building there should be an app for you regardless of your gender. >> you have been able to get big partnerships with names like apple, google amazon tell us about those partnerships. how did this company get the attention of big players.
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>> we decided early on to set up an office in san francisco and get closer to the big companies and then it's about listening a lot and learning from them what's important for them on their platforms and how can we develop our apps that are in line with where the platforms are going. >> and the apple ecosystem for one if we want to point out that, has that given you the platform to bring your products to the masses? >> we're selling in 215 markets with the click of a button which for a small company like us would have been impossible a few years ago. >> 85 million downloads since launched in 2011. you have offices in san francisco and stockholm. would you make your gaming company public? >> we have been privileged so have the same owner from conception until now. so it's unlikely but never completely off the table. >> was opening up an office in
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san francisco critical to your success? we have been following this story about finding the silicon valley in europe. amsterdam is trying to position themselves as a destination for tech companies. stockholm is also trying to do the same. >> they have a strong ecosystem at the moment and also there's a balance of maybe having product design in european space and marketing sales and this balance and not relocating your entire company but setting up a small subsidiary instead. that's the balance they have to get through in the coming few years. >> but in order to achieve further growth you think having the presence in san francisco and silicon valley where you have all the large tech players that's an important part for your future going forward? >> both relationships are the platforms and the relationship to the american consumer market which is difficult to have. >> absolutely. we're going to leave it there. founder of toca boca.
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congratulations and look forward to hearing more. any plans to go public? >> no plans as of now. i'll let you know as soon as we think about it. >> thank you for joining us. we're also going to get you a look at markets right now because us. futures, let's take a look what can we expect on this thursday? yesterday was a down day because of the disappointing u.s.gdp read. much lower than what the market was expecting. also the fed statement nothing to read into as to whether janet yellen will raise rates in june. nasdaq down 20 points. s&p seeing a loss of around five points. apple shares were down in yesterday's trade. european markets, a lot of focus on what we're seeing today after that sell off yesterday. xetra dax holding on to the green up about .3%. better than expected employment numbers perhaps keeping investors in german stocks. euro we are seeing a move there. that sharp rise in the euro for the fifth consecutive day. it's come off session highs but
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still seeing a gain of around around .75%. right now holding on to 112 against the u.s. dollar. >> still to come goldman sachs, chief equity strategist tells us why he is bullish on european equities. stay tuned for that. you're not going to want to miss it. we're back in two minutes.
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>> welcome everyone to the second hour of worldwide exchange. here are your headlines from around the world. the euro hit a two month high against the u.s. dollar after a slew of positive european data. this as fears over european growth weighs on the green back. the negative sentiment hitting stocks with futures indicating a lower open. markets in asia selling off on the weak gdp print. apple slowing down the roll out of its smart watch after finding a defect in a key component. yelp shares tumble after hours
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after reporting revenue well below wall street expectations and another slow down in quarterly users. a key read on inflation has come out. the inflation number that we're looking for is expected to show 0.0% and it did come in line with expectations. euro zone april flash inflation as 0.0% versus march at negative 0.1%. core inflation at a record low. interestingly enough we should point out the euro zone has been trying to climb out of deflation. core inflation 0.6% euro area inflation we should point out was at negative 0.1% in the month of march. up from negative 0.3% in february. so signs that the euro zone is exiting deflation, we should point out that german
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preliminary inflation numbers are increasingly positive. a combination of factors pushing it up in germany. ' rebound in patrol prices. on going improvement in food inflation in focus here as well. we have been keeping an eye on currencies. the euro at 112. it's come off the highs of the day up by three quarters of a percent. european markets, what does this mean for equities? we did see a sell off in yaesd trade -- yesterday's trade in europe. we did see it rebound ever so slightly up by 14 points. the cac 40 trading by around 8 points. ftse mib at 23,009. we did see a rise in youth unemployment in italy. ftse unemployment holding on to the flat line. what should we make of this move in european equities? thank you for joining us. >> good morning, seema.
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>> this recent data suggests perhaps the euro zone inflation inching out of deflation. perhaps a good sign. would you agree? >> i would. our view is economic activity would be picking up today and with the impact of qe you get deflation deflationary expectations and with some improvement in growth and prospects in the pick up in earnings is good for stock markets i think. >> could we also perhaps if we con to see a meaningful rise in inflation get to a headline number of 1% by october and if that's the case how do you position yourself as an investor and especially if we continue to see the euro rise. one of the winning trades is going long european equities and short the euro but it's getting unwound here. >> temporarily yes, largely because of the slow down in the
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u.s. and shifting expexctations about the rate increase there but it's still likely that rates are going to rise in the u.s. well before they do in europe and those interest rate differentials will move the currency still quite a long way. we would still expect over the next 12 months the euro to move to around 95 cents against the dollar. but set aside from that i think that if you're get a situation where finally europe is m coing out from this deflationary fear which kept the risk premium in equities very high. obviously in a deflationary stagnant environment, the reverse of that has to be quite positive. i would expect to see bond yields continue to edge up through the course of the next 6 to 12 months but in an environment where that seemed to be reasonably positive for equity markets. >> but the recent rise in the euro which was at a two month high against the u.s. dollar could that stop the bull run in
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european equities? >> i don't think so. if you look at the long-term relationships often european marks outperform other markets when the euro is strong. the key factor is what's happening to growth. growth trumps the exchange rate. if you have growth picking up with a weak currency that's the most supportive environment but i think that growth is really the most important factor here. that's what is really going to drive profits and dividends and that's really ultimately what equity investors are looking for. the effects on the currency mainly via profits, the translation effects, they're relatively moderate. it's helpful to see the euro weakening but i don't think it's essential. >> peter stick with us. we want to get your thoughts on the fed. a quick look at u.s. markets. we did see markets move lower in yesterday's trade on wall street. the dow holding on to 18,000 but it did see a loss of around 74 points. the nasdaq moving lower but holding on to 5,000.
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a key level for the tech heavy index. what do futures point to this thursday morning? >> right now another move to the downside. we're looking at the dow down 70 points in premarket trade. the dow transports index many times seen as a leading indicator, better than 2% yesterday. some traders i speak to say that in itself is a worrying sign. bonds as we were speaking about with peter, a big move we're seeing in yield. specifically the german ten year coming off those record low yields. we're seeing a spike now. some of that having to do with disappoint dag at a out of the u.s. also the stronger euro is something that investors are are also factoring in. of course the fed another focus for investors. the report following it's april meeting. the board of the federal reserve not only offered no changes to interest rate policy it removed all references to calendar dates. some analysts believe this was a reaction to weakness in first quarter gdp which came out wednesday at a lower than expected point and that will
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continue to be in focus peter given that u.s. gdp number missed expectations across the board. i don't think people were expecting it to be this low at 0.1%. is this a short-term blip or can we blame weather for this? >> our feeling is that it's distorted by weather effects and tactics and other input but our belief is that growth is going to pick up to around 23% in the second quarter and around 3% the rest of the year. our feeling is that the slow down in the u.s. is quite temporary and we will see a reacceleration and coupled with the improvements in european growth overall i think they're pretty supportive. >> it's interesting because federal reserve policy makers also emphasized that they believe growth will also pick up in the coming months but can growth actually pick up if the dollar continues to weigh on profits and export growth?
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>> well the counter balance to that is the improvements we're seeing in the labor market and in consumption and the data yesterday was quite positive on consumption. clearly the stronger dollar is also improving purchasing power. you're seeing some increase in wages and some areas and a lot of the head winds for consumption are moderating. disposable income will be improving and consumption is a very big part of the economy. that should be the counter balancing positive i think. >> have you changed your view when the fed will raise rates given what we heard from janet yellen yesterday? >> u.s. economists believed september was the most likely time for a rate increase. the market's view has shifted very much earlier than that and our belief is that that is still the most likely time. the risk of course are being shifted out further because of the slow down and the impact of t what was the stronger dollar and because inflation is still
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very very low but we think that september is the most likely time. >> it's interesting because we look at the stronger dollar and the negative impact that's having on us. profitability, specifically those multinationals that make a lot of money overseas. on the flip side in europe it's the exporters really benefitting from the weaker euro and also that's helping euro zone growth as well. is europe though in a way growing at the expense of the u.s.? >> i don't think so. of course exchange rate is one part of it. you're right to say we're seeing an improvement in the sentiment bool for european profits. if you look at upgrades versus downgrades that ratio is improving a lot more quickly in europe just as it's deteriorating in the u.s. and that reflects currency factors. but you're seeing other improvements coming through in europe because of the lagged effect of the euro's weakness last year and the lower oil price. financial conditions broadly easing.
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you're seeing some improvements in the credit markets, bank lending is picking up moderately. so i think you're seeing some other reasons why the economy is moving up and i don't think this is all at the expense of the stronger dollar and weaker euro. >> stick with us. we want your insight more on equities and in the meantime let's look at the top stories at this hour. according to the wall street journal apple was forced to scrap an undisclosed amount of completing apple watches due to a malfunction in the engines, the part of the apple watch which produce the sensation of being tapped on the wrist. the report also disclosed that they broke down overtime. aac traded lower in hong kong. apple shares by the way fell half a percent in after hours trade and we'll take a look at apple. there it is. apple shares trading down by around 1.8%. now chinese internet apology juan has-- giant agreed to take a
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stake in glu, mobile. this san francisco based app maker says the deal will help glu expand business in chinagiant agreed to take a stake in glu, mobile. this san francisco based app maker says the deal will help glu expand business in china. and it signed on britney spears to help users interact with the singer and enjoy the glitz and glamour of her life. a report from bloomberg that the company was working with financial advisors to help with a potential takeover offer. no potential buyers for the firm were named but with $49 billion there's only a hand full of companies that would be able to afford the sales stock surging by around 11% to an all time high and as you can see in frankfurt the stock is up about 12.4%. and it's one week to go until the u.k. general election and
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the race has never been closer. we'll get an update after this break. new york state is reinventing how we do business by leading the way on tax cuts. we cut the rates on personal income taxes. we enacted the lowest corporate tax rate since 1968. we eliminated the income tax on manufacturers altogether. with startup-ny, qualified businesses that start, expand or relocate to new york state pay no taxes for 10 years. all to grow our economy and create jobs.
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see how new york can give your business the opportunity to grow at
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welcome back. you're watching worldwide exchange and here are your headlines. the euro hit ace two month high versus the dollar.
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apple slows down the roll out of the smart watch after finding a defect in a key component and another night of curfew in baltimore. protestors marching across the u.s. and it's one week to go until the u.k. general election and the polls are too close to call. there's been little significant movement in the main parties ratings since the campaign has begun. wilf is in birmingham where labour will be campaigning on the economy today. what can we expect? >> absolutely seema. as you say, seven days to go. no major movement in the national pols national polls. it's the closest election since 1992. the national polls are close as we just said around 33% for each of the main parties it will be the individual seats, the
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individual constituentcies that will decide this election. he's inside birmingham airport as we speak and he'll be traveling around the midlands which contains a lot of key marginal seats. no national poll here in the u.k. 650 individual votes needing 326 for a majority but at the moment the polls suggesting both labour and the tories will get 270 seats each. the betting parties are pointing toward the tories. yet ed miliband is favorite to be prime minister. we need to see coalition and alliances and the rise of the scottish national party is why it's likely that he'll be able to form an alliance before david cameron is. what does all of this mean? we're going to see lots more campaigning. probably more policies which both parties have been criticized for being too
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short-term in the nature and highlighting the desperation at the moment to try to get votes to get them over the line. it is the closest election since 1992 in the u.k. seven days to go and incredibly exciting it is too. >> for now, thank you so much. still to come on the show a second night of curfew in baltimore and marches against police violence in several u.s. cities. we'll have the latest, next.
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welcome back. a video has emerged of the greek finance minister involved in an altercation at an athens restaurant. a footage shows a bystander telling him to leave. a statement says his wife hugged him to shield him from the group. this is the video that we have from sky tv. now the bad news piles up for greece as another ratings agency slashes it's credit rating. moody's downgraded the greek government bond rating with a negative outlook. this after s&p cut it's rating to just above junk earlier this month. greek stocks have been outperforming their counter parts in other countries. the athens index left it's neighbors trailing in recent weeks.
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let's also take a look at the european bond market. big moves in the german ten year and german bund yield. in fact highest in seven weeks. it continues to move. just about two weeks ago saying it's time to short the german bund and it's a crowded trade. let's take a look at the greek bond market. record high yields over the past two weeks but that fear is subsided over a potential greek exit. we've seen yields come down. the greek three year at 18.2%. the yield on the ten year at 11.2%. more on the greek story with the chief global equity strategist at goldman sacks is still with us. what we're seeing in the bond markets suggests that investors are not as worried about a potential greek default as they were two weeks back. is that how you feel as well? >> our view is that ultimately a deal will be done and greece will stay in. i think there are legitimate reasons to be concerned.
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there's some very big payments due in the not too distant future. so we are running out of time but there's been a change in the negotiating team and that's lead to some greater confidence that a deal could be struck as we move toward those important deadlines. >> there's been talk that the finance minister is being sidelined given his combative approach that he's been using with international creditors but some say that will help further the negotiations and discussions around greece's debt situation. would you agree? >> i think as i said there's a new negotiating team so they're trying to break this deadlock which has been going on for sometime. but i don't think that we're necessarily that close to an imminent deal. it could be that we're stuck in some halfway house for some
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period of time where there's some blocks from with draws from banks and so on until there's a position negotiated on both sides that works but i think that our view is that we're moving in that direction and that ultimately a deal will be struck so that greece can stay in the euro. >> it's interesting because when you look at some of the polls in greece according to a research poll published 72% of respondents said the country must strike a deal with it's creditors versus 23% in favor of a clash. so clearly greek citizens are pushing or would like their leaders to come together for a deal despite what they have been promising and whether they can deliver on those reforms. >> yes it's interesting, isn't it? the mandate was to negotiate the existing program to tackle or
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fight against austerity but to stay in the euro and most of the polls suggest the vast majority of people want to stay in the euro and increasingly people are looking to have a deal struck as well. so i think things are moving in that direction. >> going forward do you see the greek drama and the play out of these negotiations being a headwind for european equities? >> it's our view following a very strong rise in equities in the first quarter or so as they start to price out the inflation and get more optimistic about qe and growth that you would see a flattening out of returns or modest correction reflecting the heating up of the situation as we discussed but also more focused on the possibility of u.s. rate rises. we haven't had a rate rise in the u.s. for over a decade and that in itself does create
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indigestion from markets which we reflected in our forecasts. the medium term prospects for europe are still very good though given that the valuations are attractive and you are getting this fundamental improvement in activity coming through. >> peter, a pleasure to have you on. thank you for joining us. chief global equity strategist at global man sacksoldman sachs. >> a curfew remains in effect after vandalism. many marched to a rally in front of baltimore city hall and for the first time in history of major league baseball the baltimore orioles played the chicago white sox in front of a home crowd of zero. no spectators were allowed after a precautionary pressure. baltimore fans could take a solace in one thing, the orioles won beating the white sox 8-2. let's get out to tracie potts in washington with more.
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hi, tracy. >> let's talk about what happened overnight because after the protest during the day that you saw, it looks like the streets were fairly quite for a second day in a row. this was the second night of that curfew. while there were people on the streets as the curfew began it didn't look like there were any conflicts with police or any problems there at all. but those protests started to spread across the country. we saw protests in denver boston minneapolis, houston, the day before in ferguson missouri where of course last summer the michael brown case made so much news. here in the nation's capital they protested in front of the white house and in new york where we learned this morning more than 100 people were arrested. the investigation into freddie grey's gray's death is supposed to wind up in baltimore tomorrow. it will not be made public. they don't want to jeopardize the case and the new attorney
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general here is now commenting on this case saying we need to have a wider discussion about how police interact with the communities they serve. >> tracie potts from nbc news thank you so much. coming up on the show russia's central bank is widely expected to cut rates. we bring you the decision and get immediate reaction coming up next. a quick look at futures. it could be another day of red on wall street. the dow down about 74 points in five minutes we will be back.
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welcome everyone. you're watching worldwide exchange. here are your headlines from around the world. the euro hits a two-month high after a slew of european data. this as fears weigh on the green back. >> the negative sentiment hitting stocks with futures indicating a lower open. markets in asia also selling off on the weak gdp print. apple slows down the roll out of its smart watch after reportedly finding a defect in a key component of the watch. yelp shares tumble after reporting revenue well below wall street expectations as well as another slow down in quarterly users.
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>> welcome everyone. you're watching worldwide exchange. a lot of movement in the currency market. we're expecting a russia central bank policy statement in the next couple of minutes. rates will be cut by 100 basis points from the current 14%. this year we have been seeing a rebound in the russian equity market as well as a ruble which is highly correlated to the move in oil. the russian rouble is weaker than 1.4%. oil prices we should point out are back above $60 barrel which is a boom for the russian economy. one of the reasons we're seeing the equity market move to the upside this year. but remember last year was a very tough year for russian businesses due to lower oil prices. western sanctions which included a food import band. that sent growth lower. inflation higher. in response the central bank tried to play a more pivotal role in raising rates drastically in the month of december but since then we have
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been seeing the central bank lowering rates. let's get out to simon who is part of em research at commerce bank. what type of rate cut are you expecting today from the russian central bank? >> i wouldn't be surprised to see them cut by 250 basis points or more today. we're clearly much stronger than consensus. looking for 100 basis points. on a forward looking basis they have 8% interest rates. so they don't need to have such high real interest rates in russia and tleshere's plenty of leeway to cut rates. >> why are you expecting a big rate cut? is it because we've seen encouraging numbers out of russia over the past couple of months? particularly when it comes to the rebound in oil prices and what that means for the economy going forward? >> the markets reflected it. rates on bonds have come down and preempted 30 basis point
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cuts from the central bank. because of oil prices but also because we have seen a port of peace recovery in eastern jurors ukraine. there's still a lot of noise and it's very clear but since mid february it's been calming down on the backdrop. a number of different ones combined. >> the economic factor doesn't seem to be improving. they predicted russian gdp would contract by 4.1% in the year of 2014. that's more optimistic than prior predictions of 4.3%. so you look at the equity market and you think the economy is on the mend but consensus is is that growth is not going to pick up any time soon. >> definitely. we'll have negative growth this year just like in brazil. possibly also south africa at some stage. so looking to russia specifically, still minus 3.5%
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for this year but i would revise the growth to maybe 2.5 instead of minus 3.5. we have seen the improvement in the backdrop in eastern ukraine. we've seen russian consumer sentiment on the upside. we've seen the drop in dollar rouble. rouble strengthening which is very important and we start to see inflation impulses. so i would start to get a little bit more optimistic on the growth outlook but again we need peace in eastern ukraine to sustain and keep that. >> i was going to say, another big head wind or on going risk for investors when looking at russia is the ceasefire deal was reached in february between ukraine forces and pro-russian separatists but that deal remains fragile and the relationships remain fragile. >> absolutely. it is fragile. it's a shame there's no international peace keeping force in place. some form of force in order to keep both sides apart.
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without that peace keeping force in place you're bound to have fighting continue in different areas. so let's see what happens on that front but definitely all sides see this is a lose lose situation if this were to escalate again and definitely if we'd see an escalation in eastern ukraine i wouldn't be surprised to see u.s. u.k. sanctions against russia rachet up in that case. >> always a pleasure to have you. thank you so much. simon, head of em research at commerce bank. now brent crude has lost almost a quarter of its value over the past six months. this has oil dependent russia has seen a depreciation of close to 20% in it's currency but both assets have both managed to claw back some significant gains over the past 30 days. our next guest is forecasting a further rebound in the price of oil. let's talk to michael, research analyst joining us live from denver. michael thanks for getting up early with us. what time is it over there in
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denver? >> about 3:30 a.m. it's very early. >> a lot of coffee in the morning. that's the key. let's get your thoughts on oil. we have been seeing this dramatic rebound in the price of ill. it's up about 28% so far this month. can the bull run continue in oil prices or do you think given the volatility that we have been seeing on an intraday basis suggests that prices could perhaps move to the downside? >> we think generally that oil is going to con to climb. a lot of the downturn was due to a combination of supply growth in the u.s. and demand worldwide. at least on the supply side we're seeing signs that that is coming to a halt. the growth there in the u.s. is starting to rollover and we think that will give demand a chance to catch back up and things will come back into balance. that should push oil prices higher toward next year. >> you write that bloated inventories, a stubbornly strong dollar and saudi arabia's market share and easing of sanctions
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against iran all pose significant risks to the price of oil but one of those factors has changed. that's a stubbornly strong dollar. it weakened significantly over the past couple of days. how does that change your consensus? >> well, our macro strategist felt like the dollar would rollover this year. that is helping oil prices right now. he continues to believe that would be the case throughout this year. should support oil as well. >> for awhile the concern has been a slow down in emerging markets, particularly china, michael but recent u.s. gdp number suggests investors should be worried about a slow down in the u.s. what does that mean going forward? >> we need some demand. we thought lower oil prices would stimulate demand growth in the emerging markets and in the u.s. we think overtime that will still be the case but the bigger issue was really the supply growth in the u.s. which, like i
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said, has shown some signs that it is finally starting to slow down and will halt this year. >> thanks to the reboun ind in oil prices energy is a top performer this month. >> there was an initial real flight to quality so the companies with the best balance sheets an assets out performed the market. we think it's time to step down a little bit and reach a little bit more. take on a little bit more risk. either in terms of asset quality or balance sheet. we like noble energy perks etroleum. and there's a good 30% upside in all of those stocks. >> i have been watching the oil rig count numbers that declined by 54% since october of 2013 in general emphasis has been on cost savings and efficiencies overgrowth.
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when do we actually see a return to the latter? oil companies actually focussing on growth over cost savings? >> there's a few exceptions that plan to grow this year. i think in general it's probably going to be early 2016 before the focus shifts back from capital efficiency more toward the growth mode: we need to see oil rebound. we need to see the companies continue to lower their costs. their service providers have been cutting their prices to the companies on the order of 15 to 20%. we need to see a continuation of that plus the rebound in oil if that all falls into place i think by the enof this year and early next year the companies will return to a growth mode at that point. >> yeah, we're looking at brent crude right now above $65 barrel. michael thank you for joining us this morning.
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research analyst. let's take a look at the other top stories at this hour. yelp shares falling sharply after the customer review site reported slowing growth. unique visitors rose 8% to 143 million in the first quarter as opposed to 30% growth a year earlier. yelp shares check it out, lost about 15% in after hours trade. in frankfurt the stock down about 16%. marriott is reporting high demand in several markets. first quarter earnings for the hotel operator showed first quarter earnings up 20% however shares slumped in after hours trade due to the fact that the company's total revenue missed analyst expectations. shares slumped in extended hours trade falling by around 2%. and coming up on the show before most of us are even able to get our hans on an apple watch reports of a defect and key component of the smart watch. will it effect sales? we'll tell you about it coming up on the show.
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new york state is reinventing how we do business by leading the way on tax cuts. we cut the rates on personal income taxes. we enacted the lowest corporate tax rate since 1968. we eliminated the income tax on manufacturers altogether. with startup-ny, qualified businesses that start, expand or relocate to new york state pay no taxes for 10 years. all to grow our economy and create jobs. see how new york can give your business the opportunity to grow at
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welcome back. apple has been forced to slow down the roll out of its smart watches after finding a defect. kate rogers joins us with more on that story. hi, kate. >> good morning to you. apple fell .5% after the wall street journal reported the tech
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giant found defects in a key come poenlt of the new apple watch. the decision by the company to scrap completed watches lead to limited availability upon release. the key component is the part of the apple watch that produces the sensation of being tapped on the wrist. it's designed to give notifications to users without buzzing or ringing. the report also stated some broke down overtime. aac which is traded in hong kong is holding steady today. apple on the other hand fell .5% in after hours trading. sells were not included after the fact that it was for sale after the quarter ended. aapples earnings exceeded analyst expectations in earnings and revenue. they sold over 61 million of the iphone 6 and 6 plus models. now they were not aware of am shipping any watches with that come poenlt and when reached out to the company had no comment.
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we'll have to wait until next quarter to see if it has effect on watch sales. >> patrick, i want to kick the discussion off with what's happening in the tech world. particularly shares of am beating expectations on the top line and bottom line but some concerns around the smart watch. a potential or possible defect. how concerned are you about this? >> first of all my son was talking about apple at the weekend and he loves it. and his peers and friends call it wearable technology so they're on to a winner there despite old folks like me perhaps not thinking it's profound but technology company is all about earnings revisions and they have recently come out with fantastic numbers selling more mobile phones in china than
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they have done in the u.s. the outlook for the company is extremely rosey. the valuation isn't particularly high. we remain buyers of apple here. >> you don't think the valuation is a concern even though the stock is in record high territory? >> no, in terms of what drives technology companies is earnings revisions and those are going higher. >> but of course when you look at the tech sector patrick out of all the ten s&p sectors this is the one sector that has the most exposure to fx head winds because it makes 40% of its revenue overseas. isn't that going to be an on going head wind for tech stocks going forward? and one reason investors should be cautious. >> i was on this program at the beginning of this month and everybody with was talking about a stronger dollar and the impact that was going to have on earnings and the dollar is now down 3% in just a month and people were concerned about earnings being down 2.5% as you go into the quarter because of
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worries about the dollar. looks like earnings will be up for the quarter and the markets continue to actually hold up and take some of the technology earnings numbers, you know google apple, you know we have just mentioned facebook they have been fantastic. and a lot of people do look through the fx issue. >> and you think this run that we have been seeing in tech stocks over the past couple of months can continue despite fx head winds and valuation concerns? >> you have to take a bit of a bar bell approach with technology. you have value tech and you have expensive tech. sales force just last night and you have to pick your spots but we like some cheap tech and we like some expensive tech. it depends where your enthusiasm lies. >> just perhaps stock picking needed in the technology sector. patrick sticks with us. thank you so much. more tech news to get you. shares of salesforce got a major
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boost today after a report from bloomberg that a company was working with financial advisors to help with a potential takeover offer. no buyers were named but with stock market capitalization of $49 billion there's only a hand full of companies that would be able to afford the sale. the stock surged over 11% to hit an all time high right now we're looking at sales up better than 12%. now chinese internet giant tencent agreed to take a 14.6% stake in glu mobile sending shares up more than 22% after hours. the san francisco based app maker says the deal will help glu expand it's business in china. the company best known for the hit app featuring kim kardashian also saying it signed on britney spears to allow fans to interact with the singer and enjoy the glitz and glamour of her life. >> u.s. futures pointing lower
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as the euro hits a two month high versus the dollar. yelp shares tumble after reporting revenue well below expectations and another night of curfew in baltimore. protestors against violence in cities across the u.s.
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why innovate for a future without accidents? why do any of it? why do all of it? because if it matters to you it's everything to us. the xc60 crossover. from volvo. lease the well equiped volvo xc60 today. visit your local volvo showroom for details. welcome. you're watching worldwide exchange. we want to point your attention to what we're seeing in the currency market. the euro is back above 112. that's the first time in 8 weeks. slightly off the highs that we saw about an hour ago rallying for the fifth straight day. a major reversal in the euro as the dollar weakens on the back of the disappointing gdp report we got yesterday. what does this all mean for european markets? the strengthening euro is adding
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pressure to equities. especially german markets that yesterday lost better than 2%. a little bit of a rebound today but not a big move to the upside. we're looking at the dax up by three points. the ftse 100 one week away from the may 7th central election. it's still too close to call. we're looking at the equity index up about 10 points. the ftse mib. the italian market with a gain of around 20 points. youth unemployment did rise once again in the month of april. cac 40 the loser down around two points. u.s. futures, let's point your attention to what's happening in today's trade. we could see another day of red. dow jones down by 60 points in premarket. nasdaq down. keep in mind nasdaq shares were down. s&p 500 off about 8. let's give you a run down of what to watch this trading day. weekly jobless claims out at 8:30 a.m. eastern. economists looking to see if the
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number of americans filing for benefits rises for the fourth straight week. head winds include the stronger dollar's drop on exports and hurt gas and oil related jobs. also we get march reports for personal income and consumer spending. earnings bonanza continues. exxon mobil reports earnings before thethe opening bell and keep an eye on those companies. let's talk more about u.s. markets. patrick patrick spencer is still with us. the big move yesterday was the u.s. gdp report and not the fed statement because we didn't get an indication of if rates will rise in the near term but that newest number is much below what economists were expecting. what do you think of the u.s. gdp number? sign of economic weakness or just weather-related upheaval?
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>> well even yellen eluded to them being temporary. the problems in gdp and i did look actually just before i came this morning and gdp last quarter and last year the same quarter in 2014 was down 2% which was more than expected and that was weather related so it's almost a play book but i think you've got some additional worries this year headwinds. you've had the port strike in the u.s. you've had the strong dollar which we just eluded to. the boil has come off the shale business and the easing isn't there anymore. so you have a few more headwinds but you have one of those two problems which are temporary. the last time i was here we talked about the u.s. consumer having the highest free cash flow it's had for five years and we talked about oil prices being the lowest in five years and it's the consumer lead economy so i think things will recover in the second half. we eluded to the earnings picture just earlier.
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it's temporary. we're still very aggressive buyers of the u.s. market and any further weakness we would use as a buying opportunity. >> but if there is a transitory issue happening every quarter it was weather this time. port closure perhaps this time as well as into the next quarter. will we ever get the u.s. recovery so many have been betting on. >> sure, the earnings are up 100% since 2008 so you have solid evidence bottom line driven. you have strong evidence that there has a recovery been there admittedly the market troubled. so you've had some multiple expansion on the price side but not the earnings side but you have got justification there and the valuations are not high. they're not cheap but they're not excessive in the u.s. >> what about sector specific action? where would you put money to work? consumer discretionary if you were expecting the us. consumer to spend more? >> yes, consumer discretionary for sure.
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technology and it does remain health care which has been one of the best performing areas this year. >> health care driven by mna or more positive earnings? >> i think just the long-term trends of obamacare. you're putting 50 million extra americans into the health care environment and that's driving huge change and big earnings change. obamacare and the demographics of people aging is going to be with us for a long time and i saw a survey the other day that talked about 20% of gdp by 2020 is going to be represented by health care spending in the u.s. >> absolutely. it's a story we'll continue to watch the health care run and the signs of obamacare what that means for stocks. a pleasure to have you on. director of international institution equity sales. that does it for us on worldwide exchange. next up is squawk box. have a great day.
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inches good morning, an alarm on the apple watch. a component from china slowing the device's roll out. a bad review for yelp. shares dropping sharply on weak revenue forecast and walking the tightrope, the legendary daredevil just finishing his last high wire act walking the 400 foot orlando eye observation wheel. it's thursday april 30th 2015 and squawk box begins right now. ♪
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>> live from new york where business never sleeps, this is squawk box. >> good morning and welcome to squawk box on cnbc. we are looking forward to the visit from nik wallenda coming later this hour. but first other fun media news this morning, rolling stone is out with it's list of 50 greatest live albums of all time. the magazine says that it tried to focus on ground breaking moments, career making albums and epic jams. coming out at the top of the heat, james brown live at the apollo from 1963. we'll bring you the rest of the top five and other notables later this hour. let's get you up to speed. check this out, right now the u.s. equity futures are indicated quite a bit lower. this is down by 66 points for the dow futures. s&p futures off by 7 and the nasdaq are down by 22. >> a couple of


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