tv Worldwide Exchange CNBC May 19, 2014 4:00am-6:01am EDT
you're watching "worldwide exchange." i'm ross westgate. the headlines from around the globe, the difficult pill to swallow. astrazeneca rejects pfizer's fourth offer. and deutsch shares are down after they take a major stake. and at&t seals its $48.5 meal deal with directv though they face a very long regulatory road. and an optimistic look for
ryanair with shares following suit. >> you're watching "worldwide exchange." bringing you business news from around the globe. hello and a warm welcome to the first worldwide exchange of a fresh week here on cnbc. and it's a lot of company news this morning. a lot of it is surrounding the activity of capital heights. we kickoff with astrazeneca who sped up their bid to pfizer. a fourth bid from pfizer rejected this morning. astra said they would take 58 pounds per share. pfizer's offer was 55 pounds a share. astrazeneca's stock was off 14%. there you can see it down 48
pounds. 38 pounds was where we were before we got pfizer on the table. katherine is here to cover this story. so this was their final bid. we went to 55 over the weekend. a stra supporters came out over the weekend. where is the idea of them taking 58 pounds? >> there's little wiggle room. ifs as a tra zeneca would take this, there could be a bid. there's a branch that one can relieve in the current statement and this is the point when they start considering this in itself fairly usual. so there's a slight bit of wrinkle room, but having said that, if you look at what's
happening with the share price this morning, i don't think they believe that pfizer is going to come back with quite a substantial offer because that would be nearly twice what it was before the bid came in. >> the other thing is you look at the statement from astrazeneca, it is not just the price, that's one of three key points. the other two points aren't going to change. it would be rather bizarre to say this isn't just about the price. astrazeneca shareholders are big in the company and are acting on behalf of their personal interests as well as their shareholders interest. >> they should be in line, theoretically. >> of course, that's the whole idea of share rewards, but there doesn't seem to be a lot in there ability having re-examined the strength of astrazeneca's pipeline since this happened, so a lot of people at the company are hoping they can keep some of
the bite given by the re-examination of what is going on and what drugs are likely to come to market over the next five to six years rather than the one to two years. >> let's bring in mick cooper at investment research. nick, good morning to you. >> good morning. >> it is interesting, investors have 4% supporting the board's decision to reject what is theoretically a final bid from pfizer, do you think that is the end of it? >> i think it's up likely that pfizer will come back or astra will enter into negotiations given the response froms a a zeneca, but i think that in the next six months astrazeneca will be crucial with a lot of pressure on the board to deliver on the promise that it's made in the last few weeks, and that if
things don't go to plan, i think pfizer could potentially come back when they are able to in an erratic point of time. >> if i was a shareholder, what would make me nervous is they upped the cash parts, but not many long-term investors and pension holders want to take pfizer paper. is that in consideration? >> definitely. i think if it would have been a straight cash offer, i think it is likely that it would have gone through. but i think the board is under a lot more shareholders' pressure to accept the offer. with the return dependent on the performance of the shares and potential disruption in the merger meant that it wasn't accepted. if it was cash, i think it probably would have been. >> what's the problem with holding pfizer pain her? the man who created astrazeneca
wrote that pfizer's soul is very different, the culture's very different, and you look to the purchase of warner lambert pharmacy and it's a slash and burn strategy. is that fair or not? >> i think it is fair. i think that there is a culture between the two, but one is more american and the other more european. i think he'll probably justify it and i think it is absolutely uncertainty that this is how he feels about holding pfizer paper. >> how much execution is there with the drugs in astrazeneca's pipe line at the moment? >> same as any older discovery. it's ris did busineky business.
they are proving the mechanism of action, so the recent data that was presented from a number of product does look very good, but there is always risk. and these are one of the key things that could determine whether or not pfizer comes back in six months' time. >> okay. mick, good to see you. thank you for that, mick cooper, health care analyst at investment research. thank you. katherine, thank you. your blog and report is up and running throughout the day on cnbc.com. thank you for now. in other news, at&t agreed to buy directv for $48.5 billion or $95 a share. at&t expects the takeover to deliver cost savings at and annual rate of $1.6 billion by the third year after closing.
closing is an issue. if it happens, it will create america's second biggest paid tv. both firm ceos told david faber that rising content costs and the growing mobile platforms were amongst the forces behind the talks. some answered a question why at&t would buy directv when u.s. satellite tv subscriptions have flattened. at&t in frankfurt is flat. there will be some regulatory rule casting over that proposed deal as well. now google's reportedly struck a deal to buy the gaming site twitch for more than $1 billion. this is according to a report in variety. twitch is a privately held video streaming service for gamers. this report suggests the old cash transaction will be announced imminently. twitch was founded with more than 45 million monthly users. shares for google are flat today as well. and siemens may make a deal
for the power business while the french government takes a stake in the rail business. he's already in talks with ge over a $17 billion bid for the four arm. they will decide on that in june. the french government has been openly critical of ge's bid. stephane is in paris with more on this. they are changing the rules on the ability to block deals, stephane, so what do we think is going to happen from siemens, is it certain they are going to come out with a bid? >> we are expecting them to make a bid according to reuters.
siemens could propose $14.5 billion in cash, which could be less than general electric. $6.9 billion for the american offer according to reuters. the french government could also step in and buy a stake in the remaining part of the transfer business. we are talking about a 10% stake in that unit. officially the french data has no preference, that's the position from the head of state, francois hollande. but we know he would prefer a deal with siemens. as you mentioned last week, the french government issued a dekreeg allowing it to block any foreign takeover of a french company in the strategy sector. it's an extension of a loose offer only the defense and nuclear sector roughly have plenty of other activities including transport or energy. that would be something that
they could use to block a deal with alstom. it is not clear if the french government wants to favor a deal with siemene but it will force general electric to sweeten its original bid and could transfer to alstom. >> we'll see what happens on that. deutsche bank is one of the biggest losers in germany this morning in the stock exchange. investigators react to raise 8 billion euros in fresh capital. the german launch a capital height over the weekend in a bid to put an end to questions about the capital strength. this after raising $10.2 euros in 2010 and a further 3 million in 2013. the katari family is taking measures to existing shareholders. in a statement the bank says we'll accelerate the growth by hiring leading bankers in the
state, investing in cash and technology improvements and taking up to 100 new advisers to support the biggest corporate clients. we'll speak to annetta about this later. also to come on today's show, facebook takes launch with slingshot which is like snapis that the. will this hit the bull's-eye? tus turbulence ahead for the airlines? and finally, "godzilla" is back and ripped its rivals apart at the box office. see how much the japanese moster is making this time around with its latest franchise. [ female announcer ] there's a gap out there.
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percent. the rest had a better day on friday as well. this is where we stand into this session. the ftse 100 up a half percent. the tax is down a quarter and as is the cac. we'll show you where we stand with some of the top stocks as well here in europe this morning. we'll take a look at the holdings up 5.7% today despite posting the drop in annual profit in five years. fair cuts with a weaker pound weighing on the earnings, but a full profit ahead of expectations. investors are working the news that ryanair sees a 4% rise in the 2014 traffic. they will be launching more roots. we'll hear what the cheo has to say coming up at 10:40 cet. and iag is up 2%. and thomas group is down. last year the ten-year yield hit
a six-month low. we had strong housing data on friday. housing stocks jumping, building permits up near six-year highs. that did drag the yield up just over 2.5%. look at the ten-year yields at 1.32. and on the currency markets, we saw the euro hit a two-and-a-half month low at 136.50. moving along, can we show where we are right now? can we do that? maybe we have a gremlin in the system this morning. thank you very much. 137.17. it's a little high. dollar/yen near 130. and we keep our eyes on continuing challenges facing india. now we have the moody government coming aboard. are they going to meet the expectations of investors?
south korea's president apologized for the ferry disaster last month that left 300 passengers dead. and she disbanded the coast guard for the slow response. the duties will be transferred to a national emergency safety agency. and the national police will take over the investigative function. the president's popularity has been hit hard by the government's response to the worst civilian maritime disaster in 20 years. polls show support for park has dropped since 20 points since the april 16th disaster. vietnamese authorities have quelled protests against chinese nationals and interests in the country. there's been a mass exodus of chinese from vietnam. beijing evacuated more than 3,000 people from the country amidst the anti-china protests and attacks two. chartered flights brought 300 home yesterday and five more ships are doing the same.
the official chinese agency says two nationals have been killed with more than 100 injured so far. vietnam apologized and vowed to protect investors. the protest against china's decision to build an oil rig spiraled into destruction of chinese-owned factories. and a big miss today in thailand's first quarter gdp numbers that have slunk by 2.4% from the first quarter. much weaker than the contraction forbes expressed by economists. this is weighing on tourism. the country's key driver of growth. we are seeing technical difficulties this morning affecting some of the market data. so keep your eyes on that if you are indeed impacted. and mr. carney is giving the latest threat to financial
stability with a shortage of housing at the crux of the issue. >> we are not going to build a single house at the bank of england. and we can't influence that. what we can influence and we will do this as appropriate is whether the banks are strong enough, do they have enough capital against risks in the housing market, are they under standards that are tough enough so people can get mortgages if they can afford them, but they can't if they won't, and by reinforcing both of those, we can reduce the risks that come from a housing market that has deep, deep structural problems. >> earlier the u.k. business editors said they have deep, deep, deep structural problems, which is not the bank of england's problem they can do something about. >> talk about bat it out of the park. very political comments there. we have had rising concern in the u.k. about these runaway prices that we have essentially had in the housing market. remember in the southeast in
london places saw house prices going up -- not entirely, southeast up 18% this year, but actually across the whole of the u.k. you have house prices going up 10%. so this is a massive problem. and not only house prices, what they are worried about is that some of those mortgages that we're seeing where it's four to five times your actual wages have actually increased. and that's a problem. that debt risk is a problem. we had measures brought in at the end of last month. the mortgage market review, which tests your affordability. so basically the problem is where these historically low interest rates, does that mean that people are going to borrow too much? and then as those rates go up, they are subtly going to be hit with a shock. >> we are told they are not going up hugely. there's an expectation that they might go up 2%. >> they will go up slowly but
not to the previous levels. but even so, compared to 0.5%, people are due for a shock. i think the question now for the bank of england, one is that he's battered it back to politicians saying that the issue is we don't have enough supply. and this isn't a bank of england problem. don't be complaining to us about the fact that we have these long-term low interest rates. remember, this is carney's desire to keep those rates low for the foreseeable future. >> he's going out of his way to use interest rates as the last in a line of defense against house prices. so when are they going to launch the box of tool sets? when are they going to change the values and say it's okay. >> this is the thing. we have june as the fpc meeting. and all eyes will be watching this. are they going to bring in a cap on the income? are they going to cap the kind of ratios here. i think that's the meeting
everyone will be looking at. and the warning you heard on the weekend from mark carney is not dissimilar to that flagship speech, that's the deputy government in charge of financial stability. he came in a couple of weeks ago and said, really, the biggest threat to financial stability in the u.k. is the housing market. and something needs to be done. so i think we are going to see actions, but what's interesting is that those macro prudential tools essentially mean to the every day buyer who wants a mortgage, they will face higher interest rates. even if base rates stays at 0.5%. it won't feel like 0.5% for very much longer. >> you can't borrow anyway because there's a guild yield. so as much would depend on the u.s. policy as it would on u.k. policy. >> indeed. >> which is the way these work. thank you very much, indeed, for that. and so, we want to know
where you think the buck stops for central banking? join us at the conversation at email@example.com. facebook is reportedly developing its own chat app like snapchat. it will allow you to send short chats. they have offered $3 billion for snapchat late last year but it was turned down. this comes as facebook just hit the two-year anniversary since going public in the u.s. sunday. google's also looking at another deal. it's apparently looking to buy the site twitch for $1 billion. these companies like to splash the cash. this is according to a report in variety. twitch is privately held video streaming service for gamers and suggests that your cash transaction would be announced imminently. twitch founded in 2011 has more
than 45 million monthly users. shares of google are fairly flat. and just to remind you about "godzilla" at the u.s. box office. the 3-d movie had the second biggest debut of the year pulling in $93.2 million. not bad for a weekend. it was also the biggest may opening ever for warmer bros. the film stars brian cranston, star of the u.s. hit series "breaking bad." all right. for movies to politics, we understand that russian president vladimir putin ordered troops back to bases after drills near the ukraine yap boa border. and we'll get the latest prices in the treasury yield
swallow with astrazeneca shares down as pfizer rejects its final offer of 55 pounds a share. deutsche trading lower following an 8 billion cash stake. and at&t has a $48.5 billion deal for buying directv. they face a long regulatory road. and an optimistic look for ryanair despite public falling. other airline shares are also following suit. we are an hour and a half into the trading day in europe and shares are just slipping down into a little bit of red this morning. the ftse 100 and the dax are lower by 3% this morning. it may have something to do with the financial sector. it may very well be financials
are low and they need to raise more money. we'll get into that. let's find out what's happening with the bond markets right now. and you can see ten-year treasury yields, 2.51%. we hit that six-month low in the yield last thursday. people were wondering when it could possibly go lower. it wrong-footed a lot of investors. on the currency markets, euro/dollar bounced off the low. the dollar/yen is down two-month lows to 101.30 or thereabouts. a lot of corporate news out today. the british pharmaceutical astrazeneca spelled out the minu minimum bid to pfizer. there's a third and a fourth swiftly rejected this morning with astra stating it will only consider bids of 58 pounds per share. pfizer's last and final offer equated to 55 pounds.
astrazeneca shares unsurprisingly are trading lower this morning down to 42 pounds. you have to remember that before all of this started, astrazeneca's stock was at 38 pounds a share. at&t is agreeing to buy satellite tv provider directv for $48.5 billion or $95 a share. at&t says it expects the takeover to deliver cost savings at an annual rate of $1.6 billion by the third year after closing. the company ceo has told or both the firms' ceos said the rising content cost and the rise of mobile platforms are amongst the driving forces for the discussions. some are questioning why at&t would buy directv after sales
have been slumping. and deutsche bank is down after investors reacted to the plans to raise an extra 8 billion in capital. the german lender raised 10.2 billion in 2010 and another 3 billion back in 2013. they launched a fresh capital hike over the weekend to put an end to questions about the bank's capital strength. the royal family takes a major stake as part of the measures. the rest of the cash is expected to come from a right to existing shareholders. they will accelerate their growth by hiring bankers in the u.s. taking on cash improvements and taking on 100 new advisers to support the corporate clad. we'll have a full wrap from annetta in frankfurt in the next 45 minutes. and india's mammoth election delivered a decisive victory to the opposition, the bjp. that hands the world to the next
prime minister modi. both the nifty and the sansex rallied. modi campaigned on economic revival finized his new cabinet. the new cabinet positions will be expected tomorrow when the bjp leaders meet again. joining us with his thoughts, martin young back at ing investment manager. good to see you. a lot of money has gone into india's stocks and bonds the last six months. some estimate around $16 billion worth. is it better to travel than arrive? >> it certainly has been good to travel. it showed that the markets have anticipated this victory. although the victory in the end was better than everybody expected. so there was a majority for the bjp alone and the alliance got a huge majority. so i think the market probably still has room to move, but yeah, as you said, the traveling has been excellent.
so a lot has been priced in. >> yes, as you say, you know, people didn't know whether it was going to get an absolute majority, so that's the good thing. there's still a lot of difficulty in them getting the state governments to implement the reforms that they have. the execution risks are going to be rather big here. >> for sure. it has to -- everything still has to be put on the table, so we know the reforms it needs. we still need to see the cabinet. we need to see explicit plans. so it's a long process. but i guess the chances of reforms being meaningful and reforms being successful have gone up. >> and also are investors going to have the patience? >> that's always the big question. normally when the market prices a political change, when it happens, there's some downside for the market. so we have to see how the next few weeks move, but i think modi is moving quickly.
if we can form his cabinet quickly and can announce some first policy steps, yeah, the market might still be us sustai. >> from a macro perspective, what's in his favor? >> well, there's a few things really good for him. and that's that the outgoing government has not made big mistakes on the fiscal side ahead of the elections. so the fiscal deficit is too high but is relatively stable. then the current account deficit may has been narrowed a lot. so it is looking better than 12 months ago. so his starting point is easier than they thought before. >> do you think india is still at risk at what happens with u.s. policy or have we negated that? >> i think india is better that last year because last year it
was one of the countries with rising inflation and widening current account deficits. now in a current account deficit, it is narrowing and is not so large anymore. at the same time, up nation is not rising quickly anymore. so india is not a country with huge imbalances like turkey or south africa anymore. so in that sense, it happens to the rest of the world but less than last year. >> good to see you. thank you so much for joining us. the bank of japan kicks off the two-day policy meeting but no major policy announcements are expected when that concludes on wednesday. reserve bank australia will also be in the spotlight as it releases its meeting's minutes. and trade ministers from 12 participating companies in the transpacific partnership conclude their talks in singapore. the latest round provides an opportunity for the countries to push forward since the talks to the u.s. and japan in tokyo last
month narrowed several bilateral differences. that's all coming up on the asian agenda. meanwhile, back to the leading corporate story, astrazeneca rejecting what pfizer describes as the final offer for the firm of 55 pounds a share. astrazeneca's stock is lower today. joining us is the pharmaceutical analyst in liverpool. thank you for joining us. do you think that pfizer now walk ace way to lick its wounds for six months? >> well, i think from the language today that the probability of any further moves is greatly reduced. i would say that the likelihood is this deal is probably off now. >> what's the key reason if that is the case? what's the key reason here, do you think? >> well, very clearly, there was
a difference of opinion between the two management teams as to the body of the pipeline. the defense commends thats a ths a tra zeneca included seven-pound earnings and that's based on the assumption they do generate those kind of revenue assumptions that they outlined on those kind of assumptions. and $45 billion or revenues largely from the pipeline but also the management thinks that the shares are probably worth upwards of 60 or 70 pounds, although in its rejection today, they note the prize of 58 pounds, which would have been adequate to recommend this deal.
>> okay. so that's where the sort of fig leaf is, i suppose, towards pfizer. if indeed pfizer is walking away from this particular moment, how much pressure is there then going to be -- remember this stock was at 38 before sort of bids from pfizer or interest from pfizer was registered. how much pressure is going to be on them to deliver? >> initially it was 30 pounds prior to the early initial approach. so obviously shareholders will have a strong view about this. and it's right and prorpt appro to have a view in this. and to shareholders it's about risk and being able to sort of price that risk. and i would imagine that at 55 pounds, there will be an increased amount of pressure on astrazeneca's board, although it should be noted that in the
takeover panel rules that it's absolutely made specific that if there's a divergence of opinion amongst the board of the company that has been bid for, it should be disclosed. so the rule of 25.2 of the takeover code, that would have been explicitly disclosed. and the fact that it wasn't tells you that the decision today was pretty much anonymous and that would imply that they are taking some very strong advice on what is fair value. otherwise they would be putting themselves up for litigation. >> we know the swedish investor which owns 4% is also backing the board's decision at this moment. so i suppose that's fairly key for them. thank you very much for joining
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we are getting some comments regarding alsom from the french president hollande. he and the prime minister will be meeting today to discuss what happens with alstom. of course, ge has a bid on the table at the moment for the power business. and for this meeting day comes that siemens may offer for alstom this week. we are told this will involve an asset swap. then the french government will take a stake in the spinoff rail business. the french government has openly criticized that particular $17 billion. stephane has more from us, what do you think they will discuss this morning, the prime minister and the president, stephane? >> probably, they will discuss
the new offer from siemens. the first official offer from the german group. at the end of last month, siemens sent a letter to the board of alstom but it was not a formal bid. siemens is going to offer its rail business plus cash in exchange for the activity of alstom. how much cash siemens will put on the table is the question, but according to what we know at the end of last month, siemens will probably offer $14.5 billion in cash, which indeed would be less than what general electric is offering, $16.9 billion. and still according to reuters, the french government is about to make the decision to buy a stake in the remaining part of alstom, we are talking 10% of the transport activity of the company. and that's one of the points that could be discussed at the meeting today. francois hollande and the prime
minister and several other ministers are meeting, the list has not been made public, but probably more with the economic minister as part of the meeting looking to discuss alstom's future. officially there's no preference hollande says that all offers will be treated the same way. it's also at what the ceo of alstom said recently, but it's no secret that the prime minister would like a deal with siemens. he would like to favor the european option rather than the american option. and last week you remember the french government voted to pass a decree allowing it to block any potential deal from a foreign company on the french group in some strategy sectors. it's basically the extension off an existing low so only the defense sector and the nuclear activities are where the government can put its veto on energy, water, transport and health care. so it's not clear if the government wants to use this new
low to block a potential deal with general electric or if it wants to put the pressure on general electric to sweet up the original offer by, for instance, proposing its own rail and transport unit to alstom to match the offer that we are expecting today or this week from siemens. >> stephane, thank you for wrapping it up for us. over in japan, machinery is growing at a record pace of 19% in march, which was triple what was forecast. makiko has more for us from tok tokyo. >> reporter: orders reached 9 billion with manufacturers as the largest spenders up 23%. the turbines, communication devices and aircraft components are among the items receiving increased orders. looking at the first quarter figure, it expanded 1.25% above
expectations and a fourth consecutive quarter of growth. figures for the april to june quarter are forecast to climb 0.4% indicating investments are likely to stay steady in the coming months, even with the consumer tax hike in place. the government revised its review of capital spending from saying growth was at a standstill to declaring it is on and upward trend. overall, the strong results are likely to push back expectations for additional monetary easing by the central bank. and that's all from nikkei central report. >> have a good evening there in tokyo. and malaysian airlines are down at a record low. the second day of sharp losses after reporting disappointing quarterly earnings last week. the airline will likely miss the target of returning to profit this year. it also says the disappearance of flight mh-370 had a dramatic impact on their first quarter earnings with a net loss of
$443.3 million. and ryanair has cuts to fares and a weaker pound weighing on its earnings, but the optimistic outlook is pushing the stock higher. they said grayer pasture numbers are going to get the profits back on track. >> we went through a bit of a sell patch last year, a very hot sum we are a lot of people staying home. we also had weaker sterling. 25% of our rev news are in sterling against the euro. overall for the summer we see average fare rising by 6%. growing passenger volumes and a very, very strong profitability in the first two quarters. >> is it possible for this business to grow significantly faster than it has been with the regional competition you have? it's interesting that easy jacks and norwegian are all moving to a long-distance flight model now
in addition to what they are doing with the local regional hub. i know michael has talked about potentially you doing that later on, but are you now speeding up the likelihood that you will adapt longer hold routes and put that into the business model as a way of trying to move the needle in current profitability? >> well, no, not in the near term. our plan is to grow from 80 million pounds a year to 110 million passengers by 2018. we see that exclusively in the eurozone, so we really have no immediate terms for a long haul operation. we think that's there's still huge opportunity witness the short-term. >> steven furlong at davies research is here with us today. good to see you, steven. thank you for coming in. michael o'leary today has said
in his speech effectively that trade will be tough going forward with no visibility on the second half of 2015. so why is the stock up on its fourth outlook? >> that's correct. i think, ross, he's saying it's going to be a good summer. they are saying the yield and average fares will be off 6%. factors up two points. that's a strong indication right now they will have a good summer to september. beyond that, you're right, very little visibility, but i mean there's a good trend there and that's what the market likes. >> and is that, is that what was driving all the other airline stocks higher? does it read automatically that there's a good market in place for the u.k. people flying out of britain? >> well, it should read that for the short market but not necessarily for the long-haul market. i think ryanair with limited capacity growth this year, they
are waiting beyond that to help them a bit more. and also they have been investing in product and enhancing their product and going to some bigger airports. and they are investing in those products. >> they have allocated seating aboard and tried to tweak the image a little bit. i.e. it isn't just the fact that you get a cheap seat. >> absolutely. i mean, their focus was the lower cost than everyone else, but now they have seen what has been done. and also they are -- it's an evolution in the product and the allocated seating, the investing in certain airports and all this, i think they feel this is what they need to do to compete. so it's not just about low fares, that's obviously a key component. >> are you -- forever evalweighing ryanair against easy jet, is it working out against each other where they
are? >> yeah, i would say we are on a good airline, too, just looking after the two best. there's still the rest, so it is about 15% of the addressable market. maybe slightly near 10%. so there's a lot of runway, if i use that phrase, for the airlines to grow in europe. and basically take marketshare from everyone else. >> is that -- you look at easy jet, and they have done well about securing loyalty from sort of the bargain hunters, and they have done quite well at getting the business patches. i guess part of that is using a lot more main hubs and premium hubs. is ryanair going to go more towards that? >> it certainly looks that way because they just announced, for example, the new bases they have announced, if you look at rome and warsaw and athens, lisbon as well as dublin, they are all kind of bigger primary airports. and also i see in the statement that they are looking at a business-type product launch in
the winter, which is going to include flexible fares and also a fast track to airports. so there's certainly cater for that market as well. >> they talked last summer about high fuel costs, so we'll see what happens with that. i just want to finish coming back to the final point with a fairly good summer. last summer was bad because they said the weather was so good, nobody got on a plane to travel anywhere, right? now it's a very nice day today. i'm not going to say that we'll have two really hot summers in a row, but if the weather was really good again, is there anything to certainly suggest that actually people decide not to get on a plane again over the course of the summer? >> yeah. >> if that was the reason why they suffered last summer, all i'm asking is, could it happen again? >> well, the comparable, you're right, is actually easy. i think when i look at their perception, they are talking about a lot of the four bookings
looking really good each month well ahead of last year and the low factors are up, so it would take a lot. and also, this summer because the delivery of boeing starts in september, so this summer they have no incremental capacity. so they are just allocating to certain airports like dublin, and they have to take back from everywhere else. >> this makes me think that the hot weather was an excuse last year. >> i think the yield environment, which was a bit weaker last year, i think some of the airlines included weren't exactly sure why. i mean, one thing was going on was hot weather. oh, it could be that. but last year being a bit tougher, it looks like incremental news is good. >> if you come out in may and say forward bookings are looking really good, when we have no idea where the weather is going to be, why would anybody have an idea where it would be last may, you know what i mean? it doesn't stack up. >> well, i think ryanair will
know broadly what the summer is like at this point in time. they have no clue what the winter is going to be like in terms of the revenue. >> i know what the winter is going to be like weatherwise. gray. steven, good to see you. thank you for coming in. >> thank you, ross. >> steven furlong, transport analyst at davie research. and michael o'leary will be speaking to us from new york at 7:30 a.m. e.t. nato sees no sign of russia's troops returning to bases after drills. that was a comment earlier from the russian president vladimir putin and indeed was the case. we'll keep our eyes on that. also still to come, astrazeneca has sped up the bid they will consider from the potential suitor pfizer, so is the deal dead? pfizer said it won't go hostile.
will they come back after announcing that the 55 pounds an offer share was the final bid to put on the table? we'll get onto that in the next hour of the program. as we do so, european shares are getting a little bit weaker. just about two hours into the session today. the ftse 100 is down three quarters of a percent. the ftse is down 2.8% as well. and the deutsche bank decision to come back to ask for more cash from shareholders. what implications does that have for the financial sector? the second half of "worldwide exchange" is coming up.
this is "worldwide exchange." i'm ross westgate. the headlines from around the world. the difficult pill to swallow as astrazeneca rejects pfizer's final offer of 55 pounds a share. and america's second biggest paid tv giant is born. at&t sealing a $48.5 billion deal for directv, but the tie-up could face a long regulatory road. and deutsch e bank's stock lower following a cash call. we'll see if the family takes a major stake.
and we'll bring you an interview with the deutsch's e bank ceo anshu jein in a few minutes. and facebook is developing its own chat app after offering to buy the start-up snapchat and was turned down. you're watching "worldwide exchange." bringing you business news from around the globe. hello and welcome to cnbc's "worldwide exchange." if you are joining us stateside, we are opening the trading day here on cnbc. we'll look at u.s. futures later after a mixed week. we start off with more news concerning astrazeneca and pfizer. astrazeneca rejecting what pfizer has described as its final offer for the firm. it was a busy weekend for pfizer. just over 53 pound bid and a final 55-pound bid last night.
but astra maintains that's still undervaluing the business. astra did offer a fig leaf to say it will only consider bids of around 58 pounds a share. now a lot of investors decided that may be it. the stock is down 11% today to 42 pounds. and the shares before all of this began are down around 30 pounds. theoretically, you could be seeing a drop down towards that mark. and if pfizer does go away, they won't do anything for six months. katherine ball is with us writing us up on cnbc.com and joins us now. what do we think, katherine? when pfizer says that's our final bid, the question is, do we believe them or not? >> well, ross, what is interesting here is there's certainly a little bit of wiggle room here as astrazeneca management is clear in indicating the unusual move that sort of leveled it to 58 pounds
a share is where they could consider discussions with pfizer management. if that did happen, then of course they would be able to do that under the takeover panel laws they would be able to request an extension. if not, if there isn't a resubmitted bid, which is agreeable to astrazeneca by monday, then pfizer has to go away for six months with tax regulators on both sides of the atlantic looking at this deal really closely. the tax environment may potentially change by the time the end of the year rolls around and might start looking like those particular advantages of buying astrazeneca may start looking less attractive. >> yes, and of course they want a higher price, but they leave some in the six months to sort of say the things that they will start delivering. >> it shows a level of confidence in their pipeline that they are prepared to hold out for a price, which is pretty much double what the share price was before this initial offer was made back in january. so there's obviously a lot of
confidence there within astra management. if you are a shareholder, it's a kind of burden because do you really continue to take a bet on something as potentially disappointing as a medical treatment. >> yes. you still have to take 50% of your pay in pfizer's stock. katherine, thank you. joining us is gustaf ander from ihs. good to see you. do you think this is all over? >> no, not necessarily. astrazeneca has definitely made their intentions pretty clear in their standing, pretty firm, but they have opened up that little avenue, that unusual avenue of actually highlighting pretty much how they value the company and if pfizer comes back with a new offer even if they said they won't, then certainly discussions can start again and perhaps in a more constructive
way between the two sides. >> how would you rate the chances of -- having said, look, we are at 53, then they went to 55 by the weekend, that's our final bid. do you think they will want to go to 58/59 to open the books? >> i think it's possible. pfizer has sort of belatedly launched this charm offensive really to try to convince astrazeneca and the wider public that it's intentions are good here. and i don't think that you make that kind of charm offensive unless you're in this for the long run, so i think there's certainly a good chance they come back with a new bid. >> if it was cash, a total cash bid, pension holders wouldn't have a problem here. thank you very much. good premium, we invested dividends. how much of an issue is pfizer's stock at a company that's regarded as somebody that manages to destroy shareholder value with the businesses it takes over?
>> i think there are certainly concerns that are highlighted in astrazeneca's statement already. and they are not all about the actual evaluation of the proposal here. they are also concerned after the explicit notables about the actual intentions of pfizer here that this is sort of a corporate financial benefit scheme more than anything else. and that there hasn't really been much in the way of strategic benefits that have been highlighted as part of this proposal. so i think there are certainly other concerns there. the cash component of the offer is one of them. the evaluation of the company is one of them, but also pfizer's underlying intentions is one of them as well. >> gustaf, thank you for joining us from ihs. there's plenty of other news around today. at&t has agreed to buy the satellite tv provider directv for $48.5 billion or $95 a share. at&t said it expectations the takeover to deliver cost savings
at an annual rate of $1.6 billion by the third year after closing. and if the deal does complete, it will create america's second biggest paid tv firm. both firm ceos told cnbc's david faber that rising content costs and the growing use of video and mobile platforms are amongst the driving forces, though some analysts are questioning why at&t would buy directv at a time when u.s. satellite tv subscriptions have flattened. at&t's stock up a margin in frankfurt up .20%. staying with the merger theme, french president francois hollande is going to host a meeting with other french ministers today to discuss the future of alstom after reports that siemens could make a competing offer for alstom as early as this week. this all according to reuters. it says the deal will involve an asset swap of alstom's power business while the french government takes a stake in the
runoff rail business. ge has its deal in at the moment with a $17 billion deal for the power arm. alstom has to decide on that by june. the french government has been openly critical of ge's bid. and google's also reportedly trying to strike a deal to buy the gaming site twitch for more than $1 billion. this according to a report in variety. twitch is the privately held video streaming service for gamers. this report suggests the old cash transaction would be announced imminently. twitch was founded in 2011 as more than 45 million monthly users. shares of google today are off 2% in frankfurt. another big story today is deuts deutsche bank with the plans to raise 8 billion euros in fresh capital. the jer mgerman lender launch p over the weekend in a bid to put an end to questions about the capital strength. you have to remember, it raised
$10.2 billion euros in a 2010 offer. 3 million in 2013. back then, they said they have come to the end of the long hunger march for capital. interesting about this deal, the qatari family is taking a part in the measures. in a statement, the bank says it will accelerate its growth by hiring top bankers in the u.s., investing cash in technology improvements and also taking on up to 100 new advisers to support its biggest corporate climbs. still to come, we'll bring you an interview with the deutsche bank co-ceo anshu jain. that's in five minutes and 30 seconds from now. before that, a quick check on u.s. futures after a mixed last week. the dow down half a percent.
the nasdaq up half a percent. we are indicated lower at the moment. the dow is some 60 points below fair value. the s&p 500 is on fair value. and the nasdaq is around 14 points below it. european equities also lower this morning off two-thirds. the ftse is down 2.5%. look at the sectors this morning, and you see health care is down dragged by astrazeneca. then banks are down 1.6%. deutsche bank down also spreading to financial weakness in italy as well. we will get into banks and hear from anshu jain after this break. cars are driven by people. they're why we innovate. they're who we protect. they're why we make life less complicated. it's about people.
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we'll take a pause from all the nonactivity this morning to look at deutsche bank. the stock is up 1.7% this morning as investors react to the banks plans to raise a fresh 8 billion euros in capital. in april last year, of course, the raise just under 3 billion and said the capital needs were being met. clearly that wasn't the case. annetta is in frankfurt, she's been speaking to the co-ceo anshu jain. we'll listen to that in a second, annetta, but it is interesting the path they have had to travel. >> a very interesting part to travel. we had the capital high back in april of last year when anshu jain famously said the hunger march is over. and also he was famously not willing to go down the path of t the capital hike before
insisting to get that money together in an organic fashion, but now they are doing a huge capital hike. it's the second biggest in the company's history with 8 billion euros. and they have a very reliable anchor. so take a listen at what he actually had to say when i asked him why now and why that much. >> we see shifts in european banking. the landscape for european banks is altering and changing in front of our very eyes. we are taking the step to increase capital reserves to position deutsche bank ahead and to take advantage of the very significant changes in the operating alinement that we see coming. >> so the big capital hike is to increase the capital buffer, which the way we are looking at the court here, one capital ratio is really falling behind its competitors. and the move is planning to increase to 11.8% to
recapitalize. and the other ecb stress test according to analysts and also to invest money mainly in the united states. and i also had the chance to ask him what his plans are for the u.s. because, of course, that is a very important market for the bank. >> our view in u.s. growth remains very optimistic, which of course means that the pool for wealth management and investment banking is going to be strong in the u.s. in the years to come. obviously, with the fbi rule coming, we have to be very focused in terms of the investments we make in the u.s., but part of the package of measures announced today are about addressing the capital in the u.s., and we have targeted plans in very specific areas to narrow the competitive gap between us and our u.s. peers. >> so the plan is clearly to actually jump into the other competitors leaving by exiting
some business areas like bond trading or also in the united states they want to be one of the biggest universal banks of the world and being very strong in investment banking. and they are planning on investing, so they are also planning on using the proceeds from the capital hike to invest in new stock and new technology in asset management as well as in investment banking. so that's good news here as that gives people a story to buy into those shares, which of course have been underperforming in the market tremendously. and this underperformance was mainly due according to analysts on those capital concerns. because nobody believed that deutsche bank could make it without a capital hike, looking at the capitalization and looking how revenue is going. and now also the ceo in a conference call was showing that investment banking in the second
quarter will most likely be lower than last year. and also that the u.s. litigation charges or the environment for the u.s. allegation settlement is getting more severe and more severe. so not really good news when it comes to that challenging environment, ross. >> yes, but at least right now the market knows as you say the capital hike is out there, they can lay concerns to capital hike. when do we get the pricing on that and the amount of shares issued? june 4th, is it? >> yeah, that's it. we get the pricing early june. we know what the qatari investment fund is paying for its stake, it's paying 29 euros, but the pricing for the right issue will probably be a lot lower. i mean, they are probably looking into a discount of 25% to 30%. so it will be somewhere in the area of 23 euro to 25 euro. and the qataris are also saying
they are exercising some of their rights. ross, with that, back to you. >> annetta, good stuff. thank you for that. we'll have more from annetta's interview with anshu jain and you can see it on cnbc.com. still to come, euros bounced off a two-and-a-half month low after two weeks of declines, so what happens this week for the currency markets as we get fed minutes on wednesday? we'll find out.
former chair president ben bernanke speaks today. and richard fisher in san francisco will also appear at the same conference this afternoon. and we get earnings from campbell soup. before the bell, we turn to our reports after the close. u.s. futures are indicating a lower start at the moment. the dow last week was down with the nasdaq up 1%. this morning, dow futures are about 59 points below fair value. the european equities are also lower ahead of the u.s. open. the ftse and the cac are down
2.6% today telling government yields a little bit higher. and financials are also off this morning. they may be impacted by the news of deutsche bank. on the currency markets, a quick check in on that. dollar/yen 101.30. we are matching the two-month low we hit thursday last week. the euro dollar bounced off its two-and-a-half month low hitting 136.50. last thursday, currently just above it at 137 cable at 168, about two figures away from the five-year highs we hit weeks ago. joining us from new york with his thoughts, the managing director of bk management. boris, good morning to you. and we have fed minutes from the april meeting coming out this week. and a lot of thought about whether the ecb will cut modern lending rates as well in the june meeting. how is that going to swing us around in euro dollar? >> i think the ecb data,
especially the eurozone flash pmi data that we get on thursday is going to be absolutely critical. and most specifically, it will be the german data. if we start to see the german economy begin to buckle, which we are seeing early signs of it already, the chances of the rate can escalate much higher than before. right now you just see weederman with the clenched teeth kind of agreeing, yes, okay, we are willing to cut the positive rate if necessary, but i think if the german economy begins to show some signs of weakness, that's going to force the general policymakers to be much more accommodating. >> yeah. when you say the germans are buckling, they had good gdp out last week, stronger than anybody thought. >> absolutely. as a matter of fact, if you look at german gdp growth, it is 3% on the year-two-year basis versus u.s. in the first quarter, which is almost negative, but the market is now looking to the second quart we are a considerable amount of
weak nbc german production. primarily because ukraine and higher euro and all the issues that everybody has been talking about, they need a lower euro. but they still are stubborn and convinced they can gut it out. at this point the economic data from germany is the dwooifing force behind how the ecb acts at this point. i think he is just trying to drag the germans along the convince them that they need to do this. if they do this, and i know it's been an incredibly surprising trade everywhere. because the key thing that shocked everybody as you noted earlier in the show, is u.s. bonds are at 2.5. u.s. bonds basically blew up everybody's idea of what was going to happen, the strong dollar trade going forward in 2013. that hasn't happened, and that's when a the dollar/yen is trading at 101.30. it is basically trading on a relative strength basis. but i do think if they go to the negative rate, that's going to inch everyone out of the euro toward the dollar.
and it will go to 135. >> yeah. it is fascinating, isn't it, that the breakdown in the long end of the curve. i mean, the ten-year yield down to 11-month lows last week. did we get a short squeeze going on there? and how much more flattening is going to happen? >> there definitely was a short squeeze, but a lot of that has been covered according to the latest ftc data. the whole bond story reminds me of the old stock market joke where the stock market has called the last eight of the last 40 sessions. the bond market is clearly communicating that it doesn't believe the u.s. growth story. and other markets are respecting their view for the time being. the question of whether they are right or wrong remains to be seen, but it is worth noting that the bonds are skeptical about the whole idea of uninterrupted sustainable u.s. growth. and that's what is weighing down all the u.s. assets. if we don't see a pickup in bond yields, it is very difficult to imagine any kind of sustainable dollar rally. the other thing that's kind of
in favor of dollar shorts at this point as far as bond yields go is that seasonally bond yields tend to go down rather than up. so there's a lot of pressure to the downside here, but i think two things will happen. if the euro goes negative on the deposit rates, that alone will push us down to 35. and if u.s. yields just begin to go up to 2.65, $2.70, dollar/yen will start to trade back up. >> thank you for joining us early this morning. we appreciate it. joining us from new york. there's a monstrous debut for "godzilla" this weekend. the second biggest debut of the year bringing in $93.2 million. the biggest may opening ever for warner bros. the film star's brian scanston, star of the u.s. hit series "breaking bad."
a difficult pill to swallow. astrazeneca shares down as the drugmaker rejects what pfizer said is its final offer of 55 pounds a share. and america's second biggest paid tv giant has been born. at&t sealing a $48.5 billion deal with directv but they could face a long regulatory road. deutsche bank's stock down after an 8 million cash call after they take a major stake. the co-ceo told this channel the bank needs to adapt to a new environment. >> we see a tonic glitches in european banking. the landscape for european banks is altering and changing in front of our very eyes. >> and facebook's reportedly developing its own video chat app to rival snapchat after its $3 billion offer to buy the start-up was turned down. >> you're watching "worldwide exchange."
bringing you business news from around the globe. a very good morning. if you are joining us stateside, this morning the u.s. equities are looking to numb down a little bit. this is a long way to go. of course, the dow is down after the nasdaq was up half a percent. record highs during the course of last week. this morning, the dow is 60 points below fair value. the s&p is on fair value and the nasdaq is 14 points below fair value. european equities are also off this morning. the ftse was up.60 last week and currently down .63% in the first few hours of trading this morning. the financials are weaker across the board today in italy. we have seen a ton of yields rising a little bit. the government bond yields rising a little bit, and maybe some read-through from deutsche bank saying they need to find
more capital with the asset quality review this year from the ecb and regulators. now, we call it monday with at&t agreeing to buy directv for $48.5 billion at $95 a share. at&t expects the takeover to deliver cost savings as an annual rate of $1.6 billion by the third year after closing. if the deal does complete, it will face regulatory scrutiny or create america's second biggest paid tv firm. both the firm ceos have been speaking to cnbc's david faber and suggest that rising content costs and the growing use of video mobile platforms are amongst the driving forces behind the talks. some analysts are questioning why at&t would buy directv at a time when u.s. satellite tv subscriptions have flattened. at&t's stock down around a quarter of 1% in frankfurt.
also, astrazeneca today has rejected what pfizer has described as its final offer. pfizer sweet ups its bid twice over the weekend with the final one at 55 pounds a share. but astra maintains that still undervalues it. astra may consider bids of around 58 pounds a share. sastrazeneca shares are down to 42 pounds this morning. before all this starts, we were trading near 30 pounds a share. this potential bids has an awful lot of chat from british politicians. joining us is the secretary of state for business innovation and skills, good morning to you. i presume you are a fairly happy man at the moment if pfizer doesn't come back. they said it's their final offer. and why did you need to get involved in this. shareholders surely can take their own decisions. >> well, i think this firm, in
particular, is the second largest farm suit cai pharmaceu. they are so important to innovation and how britain will pave the way in the future. i'm not one who wants to interve intervene and tell companies what to do, but i think as the head of the british chambers of commerce said at the end of last week, being in an open economy does not necessitate saying yes to every merger. there were people in the science community who had grave concerns that proposed takeover by pfizer, not least because of pfizer's track record on acquiring and doubling up
companies for lamb bettert in t u.s. and in 2003 they took on assets, intellectually asset stripped them, high jobs went and -- >> that may or may not be true. why can't you just let the shareholders decide what is in the best interest of the business themselves? particularly as they have been taking pfizer paper and seemed to have decided it is not the best in the business. why not just let the shareholders decide? that's what they are supposed to do? >> because i think in certain exceptional cases, and this is one, the largest corporate takeover in british corporate history. there is a clear public interest in what is happening. and we already intervene in exceptional cases where national security is at stake. media plurality, competition in financial stability are at stake. and we say you should do so also when you have a transaction to have a material impact on our rnd base. because ultimately it impacts the structure of your company.
and we know that we need to rebalance our economy in the u.k. we need to export more. we need more investment. and we need a greater variety of drivers of growth beyond private consumption and finance and house price up nation. and our pharmaceutical sector is a world beater. as i said, this is exceptional. the last takeover we had that was anything like this approaching the size, even then to be honest, it was the takeover of 02 in 2005, which i think was about 80 billion pounds. this is of another order altogether. and as i said, i mean, it's very exceptional. and i think in exceptional cases there is a ground of many arguing in the business community like mervin davis, the head of the bank, that said government should take a view on these things. >> yes. well, at the moment, they don't have to take a view on anything
because the shareholders decideds the not in their interest, so we'll see what happens. thank you for joining us. pleasure. nice to see you. joining us is german gottfried at brooks mcdonald. do you agree with him or not? at the end of the day, i have a feeling that pfizer upped the cash component, this deal, to just under 45% for the offer. if it was 100% cash, the investment would go, you know what? we were 30 pounds a couple months ago. thank you very much. i'll take that and find something better to invest in. >> it all comes down to evaluation. evaluation is when maybe when we heard issues about job protection or intellectual property, whether there's more benefit over tax. but fundamentally it comes down to the fact that the company doesn't think that pfizer is able, is paying enough for the increased in revenues. the company came out and said they are expecting to increase revenues by 75% in less than ten
years. and they have also said, very interesting in the headlines focusing on the pipeline products going forward. so we've got to focus on the pact they provide 2% of the exported goods. and there's a lot of weight behind this, but it comes down to valuation. >> both the companies have been through problems. i mean, i've questioned whether these companies are too big to sustain valuations. and actually, if you are talking about government policy, government policy should encourage innovation and researchers don't have to work for big pharmaceutical. a lot of the major drug discovery and innovations have done it at the small biotech level. >> that's the fact. the fact of what companies are doing is outsourcing. instead of pumping so much money into the rnd, they prefer to go out and purchase it elsewhere. >> so the government needs to create a playing field for innovation to happen, whether it is big or small.
do you think that's it? i mean, there's this fig leaf. >> there's a fig leaf of hope if they increase the valuation. because the ceo of astrazeneca came for two of the three reasons was dual to valuation, because they thought they could increase shareholders independently and the third biggest increase in dividends that goes away as well. but the window is closing. >> it is, indeed. a lot of pressure on the astra board, though, if they go away. they have to deliver on their own execution as well. stick around. more to come from you. other stories we are watching, deutsche bank shares are down. investors reacting to the plans to raise 8 billion euros. not off by a lot, bear in mind there's an issue coming down 2%. the qatari family taking a major stake in the measures. this comes as a right issue to existing shareholders, and the banks it will accelerate growth
by hiring bankers in the u.s. the technology improvements are taken up to 100 new advisers to talk about the corporate clients. the bank's co-ceo says the bank needs to prepare for a new environment. >> we see tatonic glitches in european banking. the landscape for european banks is altering and changing in front of our very eyes. we are taking the step to increase capital reserves to position deutsche bank ahead and to take advantage of the very significant changes in the operating company. >> when they raised money last year, they raised $3 billion last year, that suggests the long hunger march to cash is over and they come back for another $8 billion, investors thought they were gling oing to more. what do you make of this? >> we think the sector has been punished. and financials, especially the banks, are going to be much stronger.
they will be much more stable but less profitable going forward. but there are all the risks on the horizon with the company coming back and the asset quality review. we were interested in playing the sector, but from a different angle. >> i'm sure. fair enough. still to come, google has set its sights on gamers. that was reportedly ready to spend a billion dollars to get their attention. the details after this.
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the headlines, astra's board rejects a 55-pound sweetened deal from pfizer. the stock goes lower. more merger monday as well. at&t set to buy directv for $48 billion in a cash and stock combo. and facebook is looking to slingshot ahead of rival snapchat with its own video messaging app. yep, a potential billion dollar deal in the tech space on this merger monday. we'll get more details on that, but first facebook is also taking aim at rival snapchat. seema moody has more in the states. good morning, seema, what are they planning? >> we'll start with facebook. facebook is reportedly developing its own video chat
app to rival snapchat. the financial times says the app would allow users to send short video messages using a touchscreen. it may be launched as early as this month and be called slingshot. the financial times says facebook's ceo mark zuckerberg has been overseeing the top secret project after facebook offering $3 billion for the mobile messaging start-up snapchat late last year, but it was turned down. now all this chatter comes as facebook just hit its two-year anniversary since going public in the u.s. on sunday. now sticking with tech, google is reportedly striking a deal to buy the gaming site twitch for more than $1 billion. this according to a report in variety on sunday. twitch is a privately held video streaming service for gamers. it allows video game enthusiasts to watch and upload video. the report said the all-cash transaction would be announced imminently. twitch is based in san francisco and was founded in 2011. it has more than 45 million monthly users. shares of google trading flat
this morning. ross? all right. we'll see how that all works. seema, thank you for that. that's all fairly interesting. this guy can't stop spending money. >> but it's all about access to providing content and doing it across multiple platforms. that's why we heard about the at&t deal. they would pay a premium for content and for the customer base. we are hearing about tech companies reaching their target audience and also providing them a service for content that they are going to enjoy. >> what about the sell-off in the session of networks in tech guys since all the momentum stocks, is there more to go on that? >> where we think the market is overheating is in the ipo space. there's talk of tech being in a bubble, but we think you can't touch them with the same brush. there's a market still attractively valued. tech is in a sweet spot because you've got economic growth before a risk of rate rise comes
in. however, there are some stocks that have been overhyped and we have seen them pull back and that's been helping. >> the rest of the movers on friday, we are talking about the small caps and the big caps, how is this going to shake out? >> what we have seen is a rotation from small caps to large caps. and that's because of value. so all the sectors that performed very well last year, health and tech, is coming much more under pressure this year. and again, we think that's healthy. we think that we saw one of the broadest market rallies in a couple decades last year with bad quality coming up alongside good quality names and having a bit of a shakeout is what we want to see. >> and then you shakeout your fresh cash to work? always good to see you. thank you very much. have a good week. jen gottfried joining us from brooks mcdonald. still to co, how would the me mega merger monday translate?
to recap the news today, astrazeneca has rejected what pfizer described as its final offer for the firm. pfizer sweet anything its bid over the weekend to 55 pounds a share. astra is maintaining that is still undervaluing the business but left a fig leaf to say it will consider bids of at least 58 pounds a share. astrazeneca's stock is lower down 12% and 42 pounds a share. and pfizer is up a percent at 21 euros on the frankfurt quote. at&t agreed to buy directv for $48.5 billion around $95 a share. as it completes, it will create
america's second biggest paid tv firm, although it will face regulatory hurdles. both firm ceos talked to david fiber and talked about the rising content costs on the media platform being the driving costs behind the talks. european equities today have been soft across the board. the ftse is down two-thirds of a percent. on the agenda in the united states, lookout for former fed chair ben bernanke at a conference examining the central bank's perspective, more importantly, richard fisher and john williams are also appearing on a panel at the conference. and we also get earnings today from campbell's soup before the bell retailer urban outfitters coming out with a report card after the close. u.s. futures right now suggest a slightly lower start.
the dow is 70 points below fair value. the s&p 500 is a point or two below fair value and the nasdaq is 17 points below. ben is the president of the trade of reuters.com on the floor of the cme. good to see you. the major indices with the fed information out wednesday, but we hit record highs. treasury yields are down to six-month lows, how does it play out from here? >> well, what we're seeing is an interesting development as you mentioned. we have the s&p so far set for open right now to the downside, but really not below any major levels of support, if you will. we are still holding in range on friday, but the continuation of the weakness for the most part that we saw last week. the weakness is limited after an all-time new high last week. i think it was wednesday, which was unsustainable. we didn't see follow-through and saw cell-side activity on
thursday, but really what's playing out as i mentioned is very interesting in that you have the nasdaq unwilling to participate with the broader based market rally that we are seeing in the s&ps and the dow. so which way is this going to resolve? at this point, it is anyone's guess, but we have very light schedules in terms of economic data scheduled for release this week, but really, you know, if you look at the dollar, it is kind of sideways. if you look at the gold, it is mostly sideways. so we're just waiting to see the major divergence developing here as i mentioned between the s&ps, the dow to the upside and the nasdaq and the russell rolling over. russell is trading at levels it first saw in february, so again, really the upside the bid activity we saw in the s&ps with the new all-time high unsustainable without the majors participating. >> it is a fascinating tug of war. the russell is moving out and
then there are technical things, but it is a question on whether the big indices can pull it up. i don't know what his history tells us about the relationship between the two. >> well, i think that the chart shows you, for the most part, that all of the divergences from the past couple of years have been resolved to the upside. so while we're still giving the benefit of the doubt to the bulls right now considering the recent longer term trend in the market, there's definitely something that is concerning at this point. again, seeing the russell unable to get bid. the dow, i'm sorry, the nasdaq unable to sustain upper level activity. yeah, there's a little -- is this possibly the canary in the coal mine is anybody's guess really, but it definitely is changing the dynamic of the market, if you will. and that's where we are seeing the energy go to, just dissipate in terms of uncertainty and participation. and follow through in terms of price activity. >> you talk about the dollars, it is hard to see the dollar going anywhere while we still have declining treasury yields.
how much are you guys talking about the move that we got last week? >> oh, there's been a lot of talk of it. you know, again, the bid that we've seen come into the bonds has been strong. there's been a lot of energy associated with it. especially -- i can't remember exactly what day it was early last week, but what we look for is that follow through or the rejection at the upper levels and kind of poised right now in the bonds at the 30-year near the 137 level. so we'll look for that this week to see whether we continue on through the 138 or just reject back to the 135. >> ben, good to see you. we'll see how it all plays out. >> my pleasure. >> cnbc will be part of it down at the cme. that's it for the edition of "worldwide exchange." "squawk box" is coming up next. have a wonderful day.
good morning. welcome to "squawk box." at&t hooking up with directv in a nearly $50 billion deal. astrazeneca rejecting pfizer's take it or leave it offer of nearly $120 billion. and google is reportedly about to spend a billion dollars on video streaming service, twitch. it is monday, may 19, 2014. and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with
andrew ross sorkin and joe kernan. shares of astrazeneca are under pressure at this hour. the british drug giant rebuffed pfizer's offer saying that pfizer failed to make a compelling strategic case. pfizer says that it's new bid is final and that it won't go hosti hostile. take a look at the shares down 11.8%. nick terrell will be joining us onset with more news in a few minutes. and at&t is acquiring directv for $95 a share in combination for both cash and stock. that's a 10% premium over friday's closing price, but of course that price has been rapidly climbing as some news potentially or rumors of the deal got out. you can see right now directv is up $2. that's 1.80 increase to 87.98. andrew has been reporting on the detail with the full story of how this tie-up got done. andrew? >> thank you,
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