tv Worldwide Exchange CNBC May 1, 2014 4:00am-6:01am EDT
[ male announcer ] introducing xfinity my account. available on any device. it's not a robot. is me, you're watching "worldwide exchange." i'm ross westgate. headlines from around the globe. sony slashes its profit estimates by nearly 70% as it counts the costs of exiting the pc business. payday for lloyds bank investors. manufacturing data out of china, though, narrowly misses forecast, export orders slumping. numbers for british factory activity due in 30 minutes. and we are designing
reforms, not sanctions. the imf hints the approach towards the situation in ukraine needs to be re-addressed as it approves a $17 billion aid package. you're watching "worldwide exchange," bringing you business news from around the globe. all right. a warm welcome to today's edition of "worldwide exchange." protesters have taken to the streets around the world for the may day rallies. many are gathering to protect against harsh austerity measures. it does mean quite a few markets are closed. the nikkei was working today as far as asia is concerned. these are the individual markets today that have been trading in australia. the nikkei up 1.27%.
the all index dunn a third. the ftse, the irish market and the danish market as well. the ftse up 0.3%. up 10 points yesterday. a number of individual stocks we're looking at today, bskyb, up nearly 4% at the moment. it reported nine-month refs into up 7% to 5.7 billion pounds, the results in line with forecasts, though the group says it added 74,000 net new tv customers in the third quarter. lloyds today, also up nearly 4%, a 22% jump in first quarter profit bolstered its case to restart dividend payouts in the second half of the year, helped along by the british recovery net income. topping 2.7 billion pounds.
dansk bank is up as well. first quarter profit beat forecasts, coming in at 14.6 danish corona. >> we encourage results of 2.8 billion after tax. it shows many of the activities we've been doing over the last year are starting to work. we are putting the financial crisis behind us. our impairments are coming down. but we still have a lot of work to do on cost, also on our top line, the growth is sluggish. there's still a lot more work to do but we are encouraged by our first quarter results. >> that was danske bank kbroops. and novo nordisk, the pharmaceutical company lowered forecast by 1 percentage point.
xetra dax closing up last night. up 0.5% so far this week. that didn't tell us what happens in the month. maybe the nikkei chart tells us what has happened in the month. let's take a look. down 2.3% is where we stand. the dow yesterday was up from 45 points. the first record close of the year, the third straight positive month up 7 out of 8 of where we've been, up 45 points yesterday, up 0.25%. bond yields as well, a good increase in adp employment yesterday, 220,000 gdp, pretty much written off by the markets, 0.1%, estimated at 1.1%, much of that written away due to the bad
weather. there's a fairly good thought about what we might get nonfarm payrolls on friday. two-year treasury yields is where we stand at the moment. as far as currency markets are concerned, euro/dollar, 1.3. firm today at 1.3884. and alan greenspan told cnbc the fed can't be blamed for the financial crisis speaking yesterday on "closing bell." he said the moves weren't detrimental. >> the most important issue is despite the fact that we lowered rates, we did not have long-term rates moving down. we did not have money supply accelerating. there are no finger fingerprints of an easy money policy in the
marketplace. so while it could have been and we could have been very kul kulpaibkulpa -- culpable at that time, i don't think that that one was one, a mistake. i don't think we were as an organization significantly involved in what was happening in the global markets. >> joining us with his thoughts, heading amplified traying. mr. greenspan, we weren't significantly involved with what's happening in global markets. >> is anybody still listening to him? i'm not. but yeah, i think what you are saying, i'm quite optimistic now. i think from markets point of view, it's been a tricky four months. i think we came into the year so bullish, everyone. there was a lot of over -- the
optimism levels have gone too high. we've had four months of sideways action with surprising risks coming out. i think we're through that period now. i think actually optimism levels are have normalized. i actually think that now is the time after four months of sideways action where i've been actually very uncommittal, which isn't like me. i'm now committed. >> committed to what? >> to risk on for the next three months. >> it's may 1st. >> it is. i know. i think for the next couple -- >> buy in may. >> buy in may, go away. i think going into the summer we'll get a decent track higher. i think the gdp figures yesterday from the u.s. were quite telling. i think this whole story about the weather in the u.s. has dragged on for a long time. that was the final piece of the jigsaw for that story. the economy in the u.s. in
quarter one was heavily affected by the weather. if you look at the market reaction to that yesterday, virtually -- >> hardly any. amazing. >> a couple hours later we had chicago pmi data. this is important. the gdp data is old news. i know it's important but ultimately, that's looking back and saying january was really bad. but the chicago pmi data was for april. this is right now, current, evidence that those weather effects have gone and we're actually going to step up and see a decent -- >> consumer spending looked all right. >> yes. consumer spending was strong. >> gdp was strong. >> what it points toward, if quarter one was so bad, they still managed to produce 200,000 jobs in february and in march. if the economy can produce that number of jobs when it's not growing, well, what can we expect when it is growing?
i actually think -- we got forecasts for 240 for tomorrow's payrolls. >> a bill less than that. >> i forget the figure. >> around 200. >> yes. i think it can be a decent amount above 200,000. i think the good thing about the qe -- the gdp figure yesterday was, it was bad and proved quarter one was weather affected. the positive thing about that, i think, is on rate expectations. you know, the fed had an expected growth rate for this year as a whole of 2.9%. that's going to be a difficult target now, given the economy didn't grow in the first quarter. >> as you just said, the growth numbers don't actually matter. >> hang on. i think if you're worried about rate hikes, ultimately this will be the factor. i think we get another bull cycle in this two-year up trend. as we hit the second half of this year or certainly quarter four, you know, rate hike fears
are really going to ramp up. they've flirted with the market already. i think they're properly come into play. the good thing about yesterday's gdp today -- >> it's given us a summer window it you seem to be saying. >> yes. >> stay there. sony cut its profit outlook by almost 70%. they say its exit from the pc business cost nearly $300 million more than initially expected. they will also see a $244 million impairment loss from its disk production business this year. i don't know whether you have thoughts about sony? >> it's not a new story. i think they probably will continue to make the mistake of trying to revive earnings, right the way across all parts of their business rather than saying, you know, this electronics game we've been in, we're so far behind the curve, rather than just cutting that
part of the business and evolving, they're trying to revive something that is like flogging a dead horse. that story is not new. it's not going to affect the tech sector today in any effect, in any broad instance. the sony story is well known. they're struggling. >> you say you're going to go risk on. >> yes. >> risk on with what? financial is the worst sector, utilities have had five months of gains, energy stocks have had three months of gains in the united states. if you're going to decide may is not go away but a buying opportunity -- >> ironically, just having talked about sony, the tech sector has been oversold. that's the sector that's underperformed quite heavily. if you look at the nasdaq -- >> they were original valued. social media stocks in
particular. >> kbre, but what's happened is some individual stocks here and there have been hammered to are fair enough reasons, valuations got carried away. the whole sector got dragged down with that. i think actually that story has gone too far. i think we can expect a rebound. if you look at the nasdaq sort of net overall positioning, it's down to minus 1.1 standard deviation. this is right down at the bottom end of the long-term range. i think that story has been kbrofr play overplayed. we've had a decent story from some of the giants. i think that can drive a strong rebound in the tech sector which has been oversold in the last couple of months. >> stay there. i have some other corporate stories we're following. the firm was issued a profit warning late wednesday, says it's going to raise 170 million pounds in emergency cash after
slashing its operating profit forecast for the year. the new ceo has taken the helm. this news comes just days after that. the imf is approved a $17 billion aid program for ukraine, around 3.2 billion will be released to kiev immediately. imf managing director christine lagarde spoke to reporters in washington about the program. >> under the program, we are not designing sanctions. we are designing reforms. we are trying to improve the situation so that the stability is restored, so that the exchange rate is supportive of more sustainable growth. and we are encouraging transparency and new business practices in a country that's
badly needs those changes. >> neil shearing is with us for his views. we saw the imf slash their growth forecast 0.2%, actually effectively saying the country is in recession right now. do you agree with that? >> for russia, yes, i believe they are in a recession. >> for russia. >> we'll know more about the first quarter later this month. i wouldn't be surprised to see it fall again in the second quarter. we know it was about $750 million there. in the second quarter it will still be significant. >> how has this not gone back into ukraine, the funding they need, when russia clearly is at the moment trying to destabilize the economy and create a federal country? >> well, this is what's facing ukraine. on the one hand it's a brink of
crisis with macro economic problems. this is a huge program, $17 billion is massive, well over ukraine's quota at the imf and it should free up additional funding, too, from the world bank and eu and from bilateral governments, too, from the u.s. as well. but this has all gone on the economic side. there's a political angle to all of this, too. really. the center is now losing control. this is the worry in development over the past week or so, that these, the country is now clearly in the hands of separatists in parts of the east of the country. it's difficult to see much -- >> we're going toward the elections. one wonders if that changes anything. >> i think it may well do. it could be a flash point for
further trouble. it's difficult to see a way out of this, that we will see political stability. so, for example, if the pro-western lobby win the elections, that will clearly exacerbate tensions in the east. if it's indecisive, you'll end up with a period of prolonged instability and infighting. the key message here is that the end is not in sight. it's difficult to see how we get out of this. >> okay. neil within stay there. also on today's show, calls for celebration. cyprus and eight other countries are marking their ten-year anniversary of eu membership. will the warren buffett effect force coca-cola to rethink it's controversial executive compensation plan? find out why fresh reports say the drink giant's pay plan may be revised. and could the london rush for parking be about to hit the
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at&t has reportedly approached directv about a possible takeover. "the wall street journal" says the deal would be worth $40 billion. directv's current market cap would create a u.s. pay tv giant close in size to comcast if it completes its acquisition of time warner cable. directv has around 20 million customers. growth has slowed in recent years. at&t serves around 5.7 million. merck is reportedly considering the sale of a big portfolio of mature drugs that might fetch upwards of $15 billion. earlier this week, reports that merck was pursuing another sale. on wednesday, it was said they were no longer in the running to buy merck's consumer health care business. alibaba is reportedly in talks with its major shareholders about buying back a
stake in its fast growing online payment business, alipay. it estimates to handle half of china's online payments. even if a deal is reached, it's not likely to take effect until after alibaba's ipo. reports say the company could now file its ipo paperwork sometime next week. and box, is boxing up its ipo plans for now. the online storage company is delaying its planned offering until at least june, amidst weak demand. they are eligible to list as early as april. investors are soured on cloud companies, an undevbessemer has8 million in market cap in the last two months. protesters have taken to the streets around the world today.
for may day labor rallies. these pictures from athens, may day is now the biggest labor holiday in the world. many are gathering to protest against harsh austerity measures. now, may 1st might be a day for most but it also represents the tenth anniversary of eu membership for the likes of debt-stricken cyprus. a total of nine countries joined the european union in 2004, many of which are eastern european. the eu now boasts a total of 28 member states. but is this a cause for celebration and reflection? or anything else? let's get more from neil. what do we make of the eu today, particularly this time of the year? the eu is demanding massive reform. >> indeed. i think the expansion into the east of europe is perhaps one of the success stories the eu can point to over the past decade or so. it's been the anchor for strong and sustainable growth in
eastern europe. it's been the anchor for a rise in prosperity in places like poland, the czech republic and slovakia. there are one or two countries that joined in 2004 and they are in a single currency and experiencing problems with the single currency. the eu has been a runaway success for other countries. >> would you classify croatia that that bracket, in terms of it being a runaway success. >> croatia only recentlidowned. >> they've had five years of gdp. >> they've been in recession pretty much tonightiously since 2008 now. and that really reflects deep structural problems in its economy. which should have really been dealt with before as part of the succession to the eu. there was reform in places like
poland. it didn't go as far in croatia. >> when slovenia joined, the argument afterward was that perhaps they joined too quickly. the process of joining has been so elongated now. it took croatia eight years of negotiations to be allowed to join the club. since they've joined, it's had no positive effect on their economy whatsoever. in fact, it's probably had a negative effect. politically, they're pulling away from this idea of democracy and open markets. >> i think the key zengs distin is membership of the european union, places with single currency, places like slovenia with a single currency joined too soon. they have a relatively poor emerging market. very different in structures like germany and france. doesn't belong in the sing currency in my opinion. whether it joined the european
union is the question. there's plenty to game. membership in the single market, it's a huge positive, particularly when you open up markets with trade and investment. that's been the anchor for growth in places like poland and the czech republic. the institutional reforms that need to join the european union are important. these are countries that net beneficiaries in a fiscal sense. they have huge structural funds flowing to these countries in order to facilitate the catch up growth. >> the new members of the eu, how long before they join the euro? because it's implied that when you join the eu now, you also at some point will enter single currency. >> the uk has an appetite. the new members don't. so it is implicit within the terms of the succession that they will at some point -- yet to be determined -- join a single currency. that's the key point, the events
of the past two or three years has an appetite for entry into the single currency. czech, hungary, the same is true with the single currency. i'd be very surprised if we saw poland join single currency this decade. >> they can afford to sit and wait. >> sitting out has been a huge benefit to them. they have control over their monetary policies, they were able to cut interest rates rapidly when growth slowed. they have control over fiscal policy. the backdrop for recovery was provided. >> it would be interesting. piers, before we let you go, we have data coming up in a minute and a half. >> the uk pmi. >> where do you think -- what's your target for the likes of the s&p and the ftse?
>> i think for this cycle, higher. if i'm right, obviously. i think you'll get 1900 breached in the s&p. finally we could get a launch at 7,000 on the ftse 100. it's been a long time coming. the ftse 100 can make a new all-time high and test 7,000 in the next month. >> in the next -- >> in the next month. >> really? >> yes. the ukraine thing has been such a drag, and i think it's been going for two months now. as you pointed out, this story will be here probably this time next year. i think from a market sensitivity perspective, we got a bit exhausted on that. i think whilst it still runs will be less and less of a significant impact on market risk, generally, globally. if you add the m&a pickup, that's massive. >> in a lot of sectors now.
this week it's pharma. >> it's broad based and it's massive. i think that's a powerful message. it's saying the company has been on cash for years and now's the time. this is large cap m&a stuff. that's a powerful story. i think thirdly, the eurozone periphery has been able to benefit from this -- i mean, what is excessive funds flowing into the peripheral debt space but the yields are so low and they're cashing in on that. don't get me wrong, i think the yields are unnecessarily low. if you get portuguese junk rated debt lower than austria aaa rated debt, that's crazy. i think in the next few months this will be a positive. >> good to see you. we'll take a short break. we'll have the manufacturing pmi
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estimates by nearly 70% as it counts the cost of exiting the pc business. payday for lloyds bank investors. the british bank says it will pay its first dividend since its government bailout. we are designing reforms, not sanctions. the imf hints the situation in ukraine needs to be addressed. and u.s. equities close out april with a bang. the improving economy may force some investors. we think the idea of selling may go away. they're ignoring the weak first quarter gdp figure. celebrating 25 years of cnbc as well. sterling hit a five-year high against the dollar after strong manufacturing pmis come in at
54.5. sterling now above 1.6. other data out, march mortgage approvals coming in at 69,592. that's a little bit shy of the consensus as well, mortgage approvals, consumer credit, up 1.1 billion in march. versus february's 0.6 billion. that's stronger than the forecast 0.7 billion. the mortgage approvers, looking to be around 72,000. but anyway, stronger manufacturing data, consumer credit is stronger than expected as well. joining us with his thoughts, marcos welch, strategist. we saw the strongest gdp and the
manufacturing pmi suggests it continues. >> yes, it does. the manufacturing sector is one of the sectors doing particularly well. it's clearly benefitting from a less adverse growth environment in the eurozone. it's probably also benefiting given that the uk actually exports quite a lot to germany from that strong domestic demand beer seeing in germany whereby germany on the other hand was not doing so at the moment. noneurozone demand is tailoring off. it fits very well with the british chambers of commerce that we saw recently. you probably expected to sustain around -- to hold those sort of levels, nevertheless, one always has to come back to this point about manufacturing e ining sec the uk. it still represents a relatively small part. >> 20%? >> 12. >> 12. >> if you include the mining sector, you get up to 18%. it's still relatively small. what you need is basically a
rather broader base and obviously services in general, retail and financial services, you need strength. so it's interesting to see that mortgage approvals number. i think that really tells us something in terms of the bank of england's financial policy committee. it's not going to feel under any pressure at the moment. >> actually, with the mortgage -- new mortgage regulations coming in from the fca, that is an automatic cri crimper on the number of approvals we'll get. it will be harder to get a mortgage approved because the underwriting criteria are being changed which has nothing to do with the committee. >> exactly. you'd expect the mortgage approval numbers to decelerate further particularly in april when people are going to be coming across much longer lead times for actually getting a mortgage approved. it does tell us about how much
inequality there is in this economy. there is an enormous amount. we saw it with the number of contracts yesterday, identified at 1.4 million. we're seeing it with wages data, where you're getting quite a lot of substantial divergence. and it really tells you that, yes, those that are wealthy are doing well. those at the bottom of the food chain, not only is housing becoming very expensive, but it's also becoming less accessible for those at the bottom end, the first-time buyers and at the bottom end. >> yes. you've got mortgage questionnaires, they're going to ask you how much you spend on getting your nails done and pet food, god knows what other sort of stuff. this is all a bit of irrelevance. because you change your spending habits after you get a mortgage. >> there are ways of circumventing it, i'm sure.
on the other hand, we won't have the sort of housing boom that's driven by cheap credit. it doesn't mean we're not going to have a housing boom, it's just not one that's driven by cheap credit and irresponsible lending. >> all right. stay there, mark. we'll come back to you in a second. protesters have taken to the streets today. many markets are closed for the my day labor rallies. these are the latest pictures out of athens. may day, the largest labor holiday in the world, many gathering to protest against harsh austerity measures, particularly in athens. this is ahead of the all-important u.s. jobs data. let's get your views on that. the adp number, 220,000, for the month of april. how does that lead us to nonfarm payrolls tomorrow? >> it's never perfect by any manor of mema manner of means. there shouldn't be too hefty askew from the session.
the big misses come in months where there's a hefty seasonal adjustment applied. i think there are -- it's very positive that labor demand is picking up back towards those levels that we saw in october, november last year. but we're still probably going to be somewhere around the 220, 230 mark. it really fits with an economy which is growing at about 2, 2.5%, which is good. it's welcome. but it probably also means that the fed, in its current situation, is basically still not feeling any pressure whatsoever. so bring forward any -- the moment in which it tightens policy or to, on the other hand, to slow down or speed up its tapering. >> yes. we conclude in october. >> we conclude in october. >> the question is at what point do we start pricing in hikes?
that's going to be the big determinant. and i suppose the gdp numbers have given us a window where we can downplay this. they might get wrapped up quite viciously towards the end of the year. >> if you're looking at the consensus for q2 gdp, we have two months of the quarter to go, you are jumping the gun a bit, if you look at what could cover there, you're looking at something which would be 3, 3.5. obviously you should average out the two quarters. you're at that 2% number, which is a tri-fold doll. i think in terms of where people are looking in terms of pricing in rate hikes, the greatest vulnerability is obviously in the five-year area. we saw the five-year area benefit when the fed's tone was basically, you know, welcoming the recovery from the winter blip. but also suggesting there's not
a huge amount of momentum and, therefore, they can stay lower for longer. that leaves us in the situation where we're still being pressurized by zero interest rate policy. so markets actually probably will have to carry on reaching for yield in high yield. and also reaching for duration, simply because those 30-year yields are that much higher, until we get to a situation where people feel we're about three months away from a rate hike, then we could start getting into some trouble. i suspect as the year goes on and people refine, we converge on a timing, time frame, that's when the problems start. >> very briefly, your forecast for the uk rates, when does the bank move, smometime next year? >> june, after the election. >> fair enough. mark, thank you. the ftse is up at two-month
highs. another boost following that manufacturing number. there we go. up 25 points, 6,805. we just heard piers say we might get to 7,000. that was his target within the next couple of months. as far as bonds are concerned, germany and italy are closed today. ten-year treasury yields, 2.66%, gilt yields, 2.68. they're in lockstep together. the mover of the day is the pound, post that manufacturing number, sterling/dollar, back over 1.69. it is firmer against the euro as well. now, after 25 years at citi, islamic bank mahmoud had a change of heart. he's back to take care of the biggest islamic bank. in this exclusive with yousef, he's not pulling punches when it
comes to his critique of conventional banking. yousef joins us to introduce us to the discussion. yousef, what's his problem? >> well, good to see you, ross. it's a fascinating story. this is a man who worked for more than 20 years for citibank, then decides to join abu dhabi islamic bank in 2008. he says this is not just about muslim customers. he says the value proposition extends to all. and there are serious benefits to the business side. i sat down with mahmoud and asked him what those really are. >> islamic banks engage in real economy. we finance construction. we finance trade. we finance schools. we finance hospitals. we finance the acquisition of real assets. >> the derivatives add value, genuine value to the marketplace. >> it's a zero sum gain. >> if you're an airline you try
to -- >> we do not speculate. it's not magical. it's simple. we do take risk but we do not take that reckless risk. >> currently the bank operates in seven countries. earlier in april they bought the retail operations of barclays in the united arab emirates for $177 million as it continues to expand its footprint. that comes with a little bit over 100,000 accounts. i asked him as well, what's the strategy behind the acquisition was. >> we didn't buy barclays because we needed to grow. we are growing very fast. we have more than 600,000 clients. in 2008 we barely had 200,000 clients. but we are a bank that specializes in serving the eu nationals, the arab-speaking population. and we wanted to go into the expatriate segment.
instead of build it, we would acquire it. that would accelerate our entry into the expat market by three years. >> more than 100,000 accounts, we understand these will be converted to sharia compliant accou accounts. are you worried about customers leaving, taking their money out of the bang and going somewhere else? >> most acquisitions have a risk of clients that are not happy with the transaction, they would typically go somewhere else. they've had two similar transactions in the last four years. for us, this is our second experience. >> he is confident they will be able to retain those customers. the bank reported net profits. the stock is up over 40% so far
this year, outperforming the benchmark abu dhabi exchange. it's a great discussion. tune in tonight, 23.00 cet. you can watch the rest of the story on cnbc. we talk about what the drivers will be over the next few years. and this is a man that says the future is all about ethical bank. there's a broader fundamental shift under way. we'll get into that. make sure you tune in, ross. i know you've got the perfect setup at home. maybe an additional surround sound system can give you something additional to enjoy it. >> we get the bass out of your voice out with a subwoofer. which is very important. what he's saying, going back to the old-fashioned style of banks should be the enabler. they became the growth story themselves from the financial
crush. >> there's a lot of emerging literature that looks into that and discusses the merits of conventional versus islamic or ethical banking. of course that's a discussion for perhaps another time. >> conventional banking can be ethical, i think is what we're saying. yousef, look forward to that. it's on my electronic program guide, all ready to go. thank you. that's access middle east. also still to come, can't find a space? there's an app for that. of course there is. we'll be joined by the founder of a new startup who says your smartphone could help you park. ♪ [ banker ] sydney needed some financial guidance so she could take her dream to the next level. so we talked about her options. her valuable assets were staying. and selling her car wouldn't fly. we helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today...and tomorrow.
you're watching "worldwide exchange." sony slashes operating profit forecast by nearly 70% for the year ended march due to additional costs for exiting its pc business. we go to the nikkei. hi, makiko. >> pc sales had fallen short of expectations for 2013 and was likely to slay sluggish for the current year. that led to writing down the value of pc components on hand as well as compensating suppliers whose orders had been cut back. in addition, demand for disks in europe declined unexpectedly, forcing sony to book a $250
million impairment lost from its overseas production unit for fiscal 2013. all this added up to the firm sharply lowering operating profit forecast to $264 million from the previous $800 million. that's all from the nikkei business report. >> thanks for that. our guest is on the line from malaysia. what's your reaction to this, the profit estimate slashed by more than two-thirds, because of more costs associated with the pc division. >> you know, the good news is they're beginning to get out of this business. and there are good news coming out of its smartphone business as well as of its play station 4, which has done extremely
well. the tough part is, they continue to have the television part of the business which is also equally structured. so we have yet to see significant change which can change over the forecast that sony is on its way to a strong recovery. >> you talk about the electronics division. tvs have lost $7.8 billion over ten consecutive years. how are they beginning to turn that around? >> i think they were forced to take a position. they need to stay in that business. it's a lot harder. we cannot see that business innovation coming which will help it to be more effectively rid lower cost manufacturers be it from korea or china. they have to be able to take that position under intense pressure, take that position very soon now. >> they've been in focus ever since daniel put them under pressure last october to spin off the entertainment division. is he going to ramp up the activism? >> i think it seems like now,
you know, he has more ammunition. the reason people continue to support sony, to have that integrated play, there is value in being able to integrate the different pieces as we see convergence across the screens, the mobile phone, the gaming, et cetera. it's a lot harder to execute it. maybe they may have more time, integrating these disparate pieces together. >> look, what do you think, manoj, they've got to do something with entertainment, sort out the electronics division. when will we have a better idea of how they're coping? >> clearly they will not cope with it well. they haven't yet told us about when they'll see value coming.
in the absence of doing that, then they need to exit the television business which continues to struggle. if you look at it independently, the hollywood studios business is something that has its ups and downs, but it is a strong business. you know, it will be back doing well going forward. if they have a very good play in the smartphone business. they're share is growing there. they have potential to do well in the gaming business. the exit of the pc business, i think now they're a much more cleaner part of the business. when they're done with the television business, maybe they'll have a cleaner sony in the marketplace. >> head to cnbc.com to find out why some analysts are saying that sony needs to innovate more to stay relevant. from sony in japan to china,
concerns linger over the health of the economy. the manufacturing activity slowing more than expected. exports have fallen. the pmi was 50.4, coming in slightly higher than expected. meanwhile, china also says three people are dead and another 79 have been injured at a train station as attackers use knives and an explosive. the incident happened in the western region of as xi jinping was paying a visit. how much oil is there to play with? helia eastbound rahibrahim has
>> reporter: the fortunes of the city was changed forever. a pipeline was created to bring north sea oil from about 50 platforms offshore. that created a huge amount of work and an economic life line in the 1970s to a great britain that was struck by economic malaise. since then, politicians of all sides have used oil receipts to finance public spending. with the referendum approaching, the question still remains, how much oil is left? the problem is, there's a bit of a mismatch. the obr is forecasting that oil revenues will hit 3.2 in 2016. that's the first year of scottish independence. meanwhile, scottish government is saying that it could get as high as 7.9 billion. some major players situated in aberdeen have already stated their concern about the effect that scottish independence could have on their operations.
>> it is very important that the industry points out the risk and opportunities about the different businesses. here we're saying from a business point of view, we don't see that this makes sense. >> the problems of declining oil revenues in an aging population can't simply be wished away. the uk government claims. especially if scotland is independent. >> awful lot of myths with less evidence to back them up than the existence of the loch ness monster. oil, the huge gap that exists between the fantastical assumptions of how much we get from the oil and the reality of what we are actually getting today. >> i mean, there's still considerable amounts of oil, around 15 to 24 billion barrels of oil is a finite resource. the price can only go one way. >> reporter: from the s&p's perspective, scotland's economy will do well with or without
oil. what is clear is that oil town aberdeen will play a major role in whether voters in scotland choose independence come september 18th. >> it's worth pointing out, sterling is actually on the rise today, posting a very strong manufacturing amount. came in better than expected, up 57.3. that's pushed sterling up to fresh 4.5 year highs against the dollar. we'll take a short break. still to come on the show, from the uk to the u.s., gdp there almost comes to a halt in the first quarter. was it just the weather? the markets seemed to shrug it off. we'll have plenty of analysis coming up in the second hour of "worldwide exchange."
you're watchi ining "worldw exchange." sony slashes its full-year profit estimates by 70% as it counts the costs of exiting the pc business. we're designing reforms, not sanctions. the imf hints the approach to the situation in ukraine needs to be addressed as it approves a $17 billion aid package. another mega media merger might be in the works today. reports suggest at&t has
approached directv about a possible takeover. and u.s. equities close out april with a bang. the improving economy may force some investors to rethink the idea of sell in may. you're watching "worldwide exchange," bringing you business news from around the globe. hello. warm welcome to you. if you've just joined us state side, welcome to the start of your global trading day here on cnbc's "worldwide exchange." we closed out the month of april with the dow up at a record close, up seven out of the last eight months. the dow is up 45 points right now, called a little bit higher by around 7 points above ra fair value. the s&p was up five points yesterday, this morning 1.5 points above fair value and the nasdaq is currently around 9 points above fair value.
but we've had the second straight negative month both in the nasdaq and the russell 2000 as well. it's the first time we've seen two consecutive negative months for the nasdaq since the first -- may 2012. i recapped what the u.s. did yesterday. we just showed it on the board anyway. there we go. in percentage terms, down a quarter, up a quarter for the dow, the nasdaq down a third. the ftse is up at two-month highs. currently up another third of a percent at 6,805, helped along by british manufacturing data, pmi data coming in higher than expected in the month of april. 57.3, that boosted sterling. a number of individual stocks looking at today. plenty of markets are closed here in europe for the may day holiday. it's really only the ftse, the irish market and the danish market that are open. in terms of individual stocks, the bskyb up 3.8% today, the pay tv operator coming up with
nine-month revenues up 7% to 5.7 billion pounds. the results in line. the group did say it added 74,000 net new tv customers in the third quarter. lloyds bank up 4% today, a 22% jump in first quarter profits helping, bolstering its case to restart dividend payments for the second half of the year. also being helped by the net recovery in british net income. danske, up about a percent today in copenhagen, coming in at 3.6 billion danish crowns profit. novo nordisk posting first quarter sales of 23 billion danish crowns. sales growth forecast is lowered by 1 percentage point. on the bond marketing with gilt-year-olds, 2.67% on that.
over here in the u.s., 2.65% is the yield where we stand. of course, didn't get huge reaction from equity markets to that 1% first quarter estimate of growth. supposed to be 1.1%. a lot of bad weather put in. that market is much more encouraged by the adp number of 220,000, gains in private payroll. today we get figures on personal spending and the manufacturing equivalent as well. on the currency markets, the dollar crawling higher against the exchanges. y volume is fairly light. euro/dollar, steadily. ster leng/dollar as well. the federal reserve gave a generally updata assessment of the economy at its latest policy meeting whilst trimming the bond buying program. steve liesman has been breaking down the details. >> reporter: two reports ending
in dp today, adp and gdp and they couldn't be more different. gdp was a real shocker at a just barely positive 0.1%. that compares to wall street's estimate of 1.1%. consumer spending was up 3% but a good portion of that was increased spending on health care as a result of the affordable care act. housing was down nearly 6% for the second lousy quarter in a row. business equipment continues to disappoint. and government spending was down half a point, failing to bounce back from the depressed numbers resulting from the government shutdown. economists at bmo said the american economy virtually stalled early this year in the face of severe winter weather. one reason for optimism in the months ahead are numbers like adp, the payroll company whose data is used to forecast the governments jobs report this friday for the private sector. they continue to show good job growth in the economy. >> they saw private sector growth of 220,000 compared to an estimate of 210,000. and march was revised up by
almost 20,000. nonform payroll estimate for wall street, 215,000 for the government report on friday. late in the day, the fed seemed to take the gdp data in stride. blaming the slowdown at least in part on the weather and following through on wall street's expectation to reduce its bond purchases designed to drive down interest rates. the fed signaled more tapering ahead while at the same time promising to keep short-term interest rates low for what looks like well into 2015. we'll get more on that in just a second. before that, british police are investigating reports of a suspicious package in the canary wolf district, the major business district outside of the city. many financial firms and headquarters are there. reports the entire area currently on lockdown. we'll bring you more on that as we get it. let's head back it a discussion of the u.s. economy. marvin buff is the head of european fx at barclays.
good to see you. >> good to see you. >> when you take the data in the u.s., as we head towards the employment report on friday, what are the implications for the dollar? >> our view on the dollar remains fairly consistent, even after the gdp data. we continue to look for long-term dollar appreciation. in the near term, however, it's going to be challenged until we get some supportive inflation data that is going to push the federal reserve towards rate hikes. and that's likely to happen in the second half of this year. but in the near term, we see a little prospect of that. we do think we could get a significant boost to the dollar this week. as you highlighted in steve liesman's report, the jobs numbers looked quite good here. the gdp numbers should be taken with a pinch of salt and given the weather issues that affected them. we're looking for a 250,000 job gains in the payroll report. that's this friday. that should give the dollar some
firmer support in the near term. but ultimately it's going to have to wait better news on inflation to support u.s. rates and that's a trend of dollar appreciation. >> unfortunately it's never a zero sum gain for currencies, is it? >> no. >> when you say firmer support, against which cross rates in particular? >> we think it's going to get most of its support versus the euro. we think that should be an across the board move there with the u.s. rates moving higher towards the end of the year. and certainly the payroll report should support it across the board here. the places we certainly look to focus on in terms of trading are being long dollar swiss, being long dollar yen. those are the places that offer the most up side, probably this week, over the longer horizon we think there's more up side versus the euro and swiss in general.
>>st sterling's getting a nice boost. cable up to 169, marvin. how much further can it go? is 170 the top of the range? >> yes, the numbers here are fantastic. you're seeing it from all different dimensions, today we have the strong manufacturing numbers, strong consumption numbers in the past. housing has clearly been supporting consumption. one of the interesting things we've seen is the increase in investment activity or certainly intentions to invest and capex among the uk corporate sector. that adds some potential upside. i think sterling's going to start to face head winds in that there's a similar issue, perhaps even more so in the uk that inflation continues to be low and falling. that's ultimately going to cap expectations for rising rates in the uk. so we see sterling struggling to
get higher than current levels. i think you might get retracement versus the dollar here, we're officially forecasting three months out, 1.65 on the basis of inflation softening some more here in the uk. >> marvin, good to talk to you, head of fs europe at barclays. on the agenda in the states, weekless jobless claims are out at 8:30 eastern. the forecast is a drop by 9,000, total 320,000. at 8:30, we get april personal income and spending. income expected to rise 0.4%, spending by 0.6. and at 10:00, the april manufacturing index is out. we get march construction spending the fed chair janet yellen speaks at 8:30 a.m. on the earnings front, conoco phillips, exxonmobil, mastercard, clorox, t-mobile,
kellogg and viacom. we'll have more on that. after the close on earnings, we'll hear from kraft and lin d linkedin. dealers continue to shake off the effects of the winter weather. other stories we're following today, sony has cut its profit outlook by almost 70%. the japanese electronicsmaker says its exit from the pc business costs an extra $294 million than they initially thought. we'll also see a $244 million impairment loss from its disk production business. it's being put forward as a problem for sony. >> the biggest problem with sony in most of corporate japan remains completely unable to innovate or come up with new products. plus a stubborn belief that at
some point something like a tv business will turn into a profitable sector. they're hanging on in there based on what they sees aa long-term -- like 200, which isn't going to happen anytime soon. >> at&t apparently approached directv about a possible takeover. "the wall street journal" says any agreement would be worth at least $40 billion. directv's current market cap, a combination would create a u.s. pay tv giant close in size to what comcast would be if it completes its acquisition of time warner cable. directv has around 20 million customers. growth has slowed in recent years. at&t's land line business serves around 5.7 million. merck's reportedly considering the sale of a big portfolio of mature drugs that might fetch around $15 billion. earlier this week, reports that
sanofi were looking to buy merck. now, you don't have to get up off the couch. hulu will debut an ad that will let you order pizza hut pizza night within the ad. it combines pizza hut's online ordering system with hulu's interactive ads. once you place the order, the tv show you're watching will start back up again. hulu includes ads on both paid and free streaming services. and the nba's board of governors will hold a conference call today to determine when owners will vote on whether to remove the l.a. clippers owner donald sterling from the league. among the groups expressing interest in buying the clippers is david geffen, oracle ceo larry ellison and oprah winfrey.
oprah would be an investor. she says it's important to have an african-american own another sports franchise. we'd like to know, given the chance, which sports team would you lick to invest in, own or run? let us know. join the conversation on "worldwide exchange." get in touch with us, email@example.com, or directly to me, @rosswestgate. box is reportedly upping its ipo plans for now. we'll find out why the company has delayed its listing. sfx: bing. >>who's got two hooves and just got a claim status update from geico? this guy, that's who. sfx: bing.
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you're watching "worldwide exchange." recap of the headlines, sony slashes its profit estimate by almost 70%. on higher costs from its pc business exit. at&t is reportedly looking to snap up satellite broadcaster directv. and the imf approves a $17 billion bailout package for ukraine as pro-russian separatists seized more government offices in the east. meanwhile, british police have confirmed to cnbc they're investigating reports of a suspicious package in the canary wolf district which has resulted in an entire area currently being on lockdown.
cnbc just learned as well the staff of the kpm building have been told to remain in the office and stay away from windows and roads in the area have also been closed. we'll keep you up to date with developments on that. meanwhile, the imf approved a $17 billion aid program for ukraine. set to be rolled out over the next two years. around $3.2 billion will be released to kiev immediately as donors aim to stabilize ukraine's economy amidst continued political strife. christine lagarde spoke to reporters in washington about the program. >> under the program, we are not designing sanctions. we are designing reforms. we are trying to improve the situation so that the stability is restored, so that the exchange rate is supportive of more sustainable growth and we are encouraging transparency and new business practices in a
country that badly needs those changes. >> that's the latest from christine lagarde. joining us with his thoughts in donetsk is nbc's jim maceda. while we wait for more details on that aid package, what is happening with the separatists in the eastern part of the country? >> hi there, ross. let's start with just down below me. you can probably hear the chanting. we have several hundred pro-russian demonstrators walking by, past the hotel. we've seen a contingence of different political parties here. the loudest have been these pro-russian protesters chanting russia, russia. meanwhile, we've heard reports in the last hour or so that russian foreign minister sergey lavrov who is currently on a visit to peru has called for
kiev to sit down and have a dialogue, talk directly to each other under the osce, the same osce that currently has seven of its monitors being held hostage about an hour's drive or so from here in that rebel stronghold slovyansk. this could be another delaying tactic but it is the first time that moscow has laid out a plan for dialogue in such detail. i can tell you, talking to many pro-russian separatists and a number of occupied towns, these people have no desire at all to talk to kiev. they hate the government in kiev. they don't recognize it. they still call it an illegal pooch. it will be interesting to see if this peace balloon goes anywhere. if it does, it will speak volumes to the influence that russia has over the rebels. back to you, ross. >> okay. thanks very much for that. nbc's jim maceda. and a noisy donetsk.
after yesterday's move higher we'll get another day of gains, the first trading day of may, the dow up 45 points yesterday, currently high by 7 points this morning. the s&p up 5 points. both of those indices making a third straight positive month. the nasdaq was down for the second straight negative month in april. and today it is called higher by around 9 points at the moment. a long way to go, of course. meanwhile, box is boxing up its ipo plans for now. "the wall street journal" suggests the online storage company is delaying its planned offering until at least june because of weak demand recently for tech stocks. they filed in late march, but investors have soured on cloud companies. an undevil of 37 publicly traded firms tracked by bessemer venture partners has apparently lost $58 billion in market capitalization in the last two months.
meanwhile, ever wondered how many hours you waste on that frustrating search for a car park space? now, according to fresh data, motorists spend more than 8,300 hours in their lifetime looking for somewhere to park. but the end of that frustrating road might be in sight because there's a developer of a new app. london tech city startup park jockey claims to be first service that allows drivers to compare prices, book and pay all at the same place. we have the ceo and founder of park jockey. you're up and running today. >> yes. >> 8,325 hours, a lot of time looking for a space. how much are you going to cut that by. >> we'll cut that all the way to 800. we'll cut that by 90%. right now 8,000 minutes is actually one year out of
people's life. we're basically saving you a lot of time. also, we're basically giving you a good deal in parking as well. >> why? is it going to be cheaper on you? >> it is actually -- >> it is eventually cheaper because you'll be able to look through our app and find a nearby cheapest parking spot for your needs. if you're a price sensitive customer, you can just use our app to find the cheapest location you may the be aware of. >> how do you know -- i if there's an ncp, if there's a space free. how do you know if there's a free bay? parking bay? a metered bay? >> right now we're not actually focused on on-street parking. we're only working with the commercial operators and stuff offstreet. however, we have plans to get into the on-street space as well. we do guarantee spots. if you make a reservation on our platform, your spot is guaranteed in advance.
if you're running late for a meeting or if you have a time sensitive event, then it's very wise for you to use our app. >> car park can't let -- just explain how that works. >> sure. >> i drive up, spaces, i go in and take a space i want. how do they know to keep a space for some other guy that might be turning up 15 minutes later that's reserved through you? >> sure. our systems are fully integrated. so that we count how many spaces are available in car parks and that space number gets reported back to our platform. when we run out of spaces, we don't oversell. we just stop selling, basically. >> okay. okay. a nice service. how do you make your cut? >> we make our money off of taking a commission out of every transaction from the parking companies. it is completely free for the users. frueh downloads, free purchasing, no convenience charge.
>> you're going to roll this out in america? >> yes. we are up and running in miami. we're launching in chicago in the month of may and we're going to be in six other cities by the end of this year. >> okay. park jockey, coming to a city near you, too. thank you very much for coming and talking about it. >> thank you. british policemen have con femmed to cnbc they've been carrying out a controlled explosion of a suspicious package in the the canary wolf district. the area has been on lockdown but will re-open shortly. still to come, dow component exxon reports before the bell. will it hit another record close? we have a preview, after this. for our call center. s i'm spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast? go to ziprecruiter.com and post your job to over 30 of the web's leading job boards with a single click;
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this is wch bhp. i'm ross westgate. the headlines from around the globe. a dramatic revision. sony slashes its full-year profit estimates by nearly 70% as it counts the cost of exiting its pc business. we're designing reforms, not sanctions. the imf hints the situation in ukraine needs to be addressed as it approves a $17 billion aid package. another mega media merger could be under works in the u.s.
reports say at&t has approached directv about a possible takeover. and u.s. equities close out april with a bang. the improving economy may force some investors to rethink the idea of sell in may and go away. you're watching "worldwide exchange," bringing you business news from around the globe. and if you've just joined us state side, hello, welcome to you. we're showing you shots of athens. the reason for that is because it is may day, that means plenty of equity markets in europe and asia are closed today. may day is a labor holiday. it also means plenty of protests going on. this is the picture of athens. protests are just wrapping up. the biggest labor holiday in the world, may 1st. plenty of markets closed in europe. this is where we stand with u.s.
futures after the gains we saw yesterday. the nasdaq down for two consecutive months, the first time since 2012 when it closed out april. today, the first trading day of may, the s&p 500 about a point above fair value after being five points yesterday and the dow finishing at a fresh closing high on the last trading day of april, 16,520. we're currently called high today. the ftse, the irish market and the danish market are open today. the ftse 100 is a little bit higher this morning by around about a third of 1%. what are investors to do? as we head towards employment and post all this u.s. data we've had, here's a recap of some of the thoughts we've already had on the channel. >> u.s. corporate profits show gdp are only at a 60-year high, which isn't bad. it's worth noting the u.s. operates in a global economy, which is reasonably sluggish.
you lack at the second and third largest economies. domestic u.s. demand has been fairly robust. >> what we want to be is neutral. we want to be long volatilities, long the swiss franc. we think there's a safety aspect to that. we want to be starting to look at bonds, and especially with u.s. yields. yesterday's price action was quite telling. >> we say technology has taken a big hit but technology dividends are an excellent place to be right now. nasdaq 100, technology companies that pay good gfds, we're thinking apple, microsoft, ibm. that i think is an excellent idea right now. >> some of the thoughts we've already had. be ins out from bombardier.
slightly show on that. they received net orders in the first quarter, 19.1 versus 28. they say they're on track to meet full-year guidance. i'm trying to be reassuring with that. exxonmobil and conoco set to report earnings before the u.s. opening bell. we've seen shell and bp beat earlier this week. wall street's expecting exxon to post an earnings per share of $1.88 and conoco, $1.58 a share. daniel is a senior port foal kb -- portfolio manager. what's interesting, energy stocks have had three months of gain. >> finally. it's a very unloved sector. it's been posting pedestrian growth numbers and declining
return on capital employed. it's been disappointing in the last three to four years for investors. big oil is regaining its ground. it's starting to be more capital disciplined and we're starting to see a little bit of light at the end of the tunnel, however, it's the first quarter, first quarter results tend to be good. we need to see a little bit more to get earnings going up. >> as far as exxon and conoco phillips are concerned, how much is unconventional shale moving into the picture for them? >> well, for exxon it's going to be a big driver. gas prices have gone up quite substantially since the winter to $4.7 million btu. for conoco it's less important. for them it's more about the -- the oil basket that they get. we'll probably see an
improvement there in terms of both margins and return on capital employed. >> yes. as you've said, they've had to shrink their production really to match the situation. we now -- are we now getting that in balance for the exploration or whatever? >> one of the things they need to refocus is on expiration. so far it's been about these huge developments, the cash against, all these very, very large developments that have not returned the type of production growth that they were supposed to. they're extremely complex and expensive projects. they need to move more into a better combination of expiration and development, not just a large project driven. that's what has been causing all these disappointments in the last years. >> what do we expect with dividends now? >> dividends have been increased, both exron and chevron have increased their
dividend. they put their pay out closer to what european majors have in the past. in the past it's been more about growth for these companies. it's more about returning cash to shareholders. obviously oil prices are higher, gas prices are higher, refining margins are better. >> your favorites? >> i it into prefer bg group and the americans, chevron and exxon relative to the europeans. europeans keep dogged by refining margins and high taxation. and obviously, the challenges in libya and in major projects. continue to be more in the focus driven companies, conoco, chevron, xx and bg in europe. >> thanks for coming in. we have weekly jobless claims out today in the united states. forecasts have dropped by 9,000 to a total of 320. also at 8:30, april personal income and spending. income is expected to rise 0.4%,
spending by 0.6. at 10:00, the april ism manufacturing index is out. its forecast will rise half a point for march. we get march construction spending, plenty to chew through there. on top of that, fed chair janet yellen speaks at a community bankers conference at 8:30 a.m. as we just mentioned, conoco and exxon reporting today, also on the report card, mastercard, clor clorox, kellogg, t-mobile, viacom, kraft and linkedin. and automakers report april u.s. sales today. they're expected to rise 9% from last year. as dealers continue to shake off the effects of the winter weather. some of the other stories, alibaba is reportedly in talks with its major shareholders about buying back a stake in its
fast growing online payments business, alipay. one option would have alibaba buy a third of alipay. reports say the company could now file its ipo paperwork sometime next week. ahead of the float, kayla tausche has been taking a look at who is set to benefit most from the company going public. >> while alibaba group still looks to be on pace to be the biggest ipo to hit the u.s. market on record, it does appear to have hit a bit of a snag. we were expecting the f1 filing, detailing alibaba's financials ahead of that ipo to hit as soon as last monday but we still haven't seen it yet. now that i'm talking to sources, they say we still might not see it until next week. a few reasons are being cited for this delay. number one, the document could
be upwards of 400 pages. with various groups making up this business model, executives, underwriters, examiners, auditors, there are a lot of parties that need to give their sign off, krot the ts and dot the is. the second reason that's being cited is, of course, alibaba has recently been bemoaned for its rampant selling of counterfeit goods on some of its sister sites. others have not been happy about that. auditors will need how to figure out how to treat those proceeds as well. there's been a continued focus on deal making and alibaba both at the corporate level and by its founder and chairman, jack ma three deals have been struck, one most recently at the beginning of this week. as these companies and these stakes get folded into the company's financials, some of the information will need to be updated. you have to get the executive focus as well. i'm hearing that the executives and the underwriters and the
auditors, examiners, all various parties that are working on this are in the same room and they're going through it. but it still takes a lot of time. we still look not to be getting that document until early next week. though it could still happen this week, i'm told that's unlikely. that's the latest on the alibaba ipo for now. >> that's kayla tausche with that update. coca-cola may be rethinking its controversial executive pay plan following pressure from warren buffett. berkshire hathaway abstained from voting last week. "the wall street journal" reports buffett has privately expressed his reservations with the coke ceo mukta kent. there were no injuries but the accident did force the evacuation of part of the
downtown area. around 15 cars derailed, three of which caught fire, several ended up in the river. the incident has renewed concerns about oil and gas being transported by train through densely populated areas. coming up, at&t isn't sitting idley by while its rifles are striking deals and big acquisitions. find out which company ma bell has in its sights, next.
you're watching "worldwide exchange." the headlines, sony slashes its profit estimate by 70%. at&t reportedly may be looking to snap up satellite broadcaster directv. and the imf approves a $17 billion bailout for ukraine as pro-russian separatists seizes more government offices in the east. now, it's already been an incredible year for m & a activity. deal logic says global deal volume topped $1 trillion last week, the fastest pace since 2007. but there may be an awful lot more to come. bertha is at cnbc hq in the states with more. hey, bertha, good morning to you. >> hey, ross. let's make a deal seems to be
the theme these days in big boardrooms. already this week we've seen pfizer make a $100 billion play for astrazeneca and ge made a $17 billion bid for alstom's energy business. "the wall street journal" reports at&t has approached satellite tv operator directv about a possible takeover. a deal would be worth at least $40 billion. directv's current market cap, a combo would create a u.s. pay tv giant, close in size to what comcast will be if it is approved to complete its acquisition of time warner cable. directv has about 20 million customers. but growth has slowed in recent years. while at&t's land line tv business serves about 5.7 million. at&t already has a partnership with directv to provide satellite service in areas where it offers broad band but not its u-verse tv service.
sprint meantime is reportedly meeting with banks to work on funding for its planned bid for t-mobile. sprint which is majority owned by japan's softbank is hoping to fund the bulk of t-mobile's estimated $50 billion price tag with corporate bonds and the rest with convertible bonds and syndicated loans. sprint is facing some push back from u.s. regulators who oppose consolidation in the wireless industry and reports say the company is aware it may have to give up some spectrum in order to appease critics. and merck is reportedly considering the sale of a big portfolio of mature drugs that could fetch upwards of $15 billion. earlier this week, reports say sanofi was pursuing a similar sale that could bring an $8 billion price tag. merck's off-patent drugs are known as, quote, diversified brand and are mostly sold in emerging markets. it was said it was no longer in the running to buy the consumer
health care business of merck. lots of deals. you know what that means, ross, lots of work for the investment bankers. >> they'll be happy, won't they? good for them. >> they could use a lift. >> we like them to be happy. thanks for that, bertha. good to see you as always. bertha mentioned that at&t has reportedly approached directv about a takeover. on the back of that, you can see here in london, vodafone stock trading lower. at&t is interested in making a bid for vodafone. meanwhile, another british u.s. media interest. richard desmond reportedly looking to sell his channel five to viacom. this deal may be worth up to $60 million. viacom will announce its agreement when they report quarterly numbers. they are coming out before the open this morning. now, markets fed by yellen, we had the dow's first record close of 2014.
first day of trading for may. just to remind you, stocks closed out in the u.s. with a bit of a divergence between tech and the blue chips. the nasdaq declining in april by around 2%. in fact, down for two straight negative months. the first time since may 2012. a different story, of course, for the dow jones industrial average. we close at a record high at the end of the session yesterday. and up three-quarter percent for the month. up for three straight months in a row. seven out of eight months we've been up for the blue chip index as well. so where does that leave us with futures this morning? they are calling a little bit
higher. not by much, 6 points for the dow, the s&p, which is also up for the third straight positive month in april, up, and the nasdaq currently higher by 8 points. what happens now as we get into may? joining us is chief investment officer and portfolio manager at barrett gilyard advisers. >> thanks for having me. >> do we sell or decide this may be a time to get in after four flat months? >> certainly this is a seasonal time that historically, certainly in a congressional election year here in the u.s. that sell in may and go away has been traditionally the right thing to do. but this year, it might be a little different because the economy seems to be picking up steam, earnings are going ahead of estimations and so we think
investors should use this period, not so much as sell in may and go away but as a way to look at your portfolio and reposition yourself for what's coming next. >> when you look at the stocks that have done well over this last month, utilities, five months of gains, energy three month of gains. and a big washout in tech stocks. one wonders whether the value might be in some of the tech names that got sold out with the social network companies. >> the work that we've done, these social network stocks, the 3-d printers, some of the biotechs, they've had big corrections since the levels they reached in the first quarter. the levels that many of these companies reached in the first quarter, what was akin to the telecommunications and internet bubble back in 1999 and 2000. all we've seen is a correction from really bubble levels. so we don't think that's the
place to be. we'd much rather go where the cash flow is. the cash flow is with the mega cap techs. you can get free cash flow yields of 6% to 10%. the reason why that's good is because companies can only do a few things with their free cash flow. two of the things they can do is return it to shareholders in the form of dividends and share buy backs but also they can re-invest in the business and these big mega cap companies have a good history of having high return on invested capital. we think that's where investors should be looking, not so much with these fallen bubble stocks. >> okay. a little bit more comfortable for the next month or so. what happens when we get towards the autumn and the fed concludes qe and then people really do start thinking about when the rates go up. >> well, the futures unknowable. i think the fed has been very
clear that interest rates are going to stay lower than what one would normally associate with interest rates being at a normalized level. we think it's very likely that interest rates during this cycle, which still has a way to go, could peek out at less than 5%. certainly with a forehandle on it. we think really the question for investors looking at the stock market is that on the one hand, the long-term metrics for the u.s. market shows yellow light. you have the ratio that's high, you have the schiller p/e. if you look at current reality, the stock market is only about 10% higher than its historical level over the last 50 years. in fact, there was a period for around eight years, starting in 1958 where the market was as high as it is today.
good morning and welcome to "squawk box." the dow reaches a record high after the fed gave an upbeat view of the economy. coke may be rethinking its compensation plan after warren buffett's decision to abstain from voting on it and all his comments. and the imf approving a $17 billion loan for ukraine. it's thursday, may 1st, may day, 2014. "squawk box" begins right now. good morning and welcome to
"squawk box," right here on cnbc. i'm andrew ross sorkin, along with joe kernen. becky's out today. she'll be back tomorrow. a big close for the trading day on wednesday. we're still dusting off the confetti. it was not just a record day for the dow, cnbc celebrated its 25th anniversary. we were all here with our president, mark hoffman, bringing down the gavel remotely from our headquarters with more than 500 employees on hand to participate. it was a very, very cool moment. as for the markets, the dow as mentioned finished at new all-time high. that's incredible. the first record close of 2014. the dow adding 45 points to the close at 16,580. stocks moving higher after the fed's positive comments about the economy. and another $10 billion cut from bond purchases from 55 to $45 billion per month. i think, you know, investors might have been cheering on
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