tv Worldwide Exchange CNBC April 23, 2014 4:00am-6:01am EDT
welcome to "worldwide exchange," i'm karen cho. these are your headlines. germany bounces back. data shows activity accelerating in april while france disappoints. a strong first half performance at primark gives a big boost to ap foods. the firm says it will launch the discount store in the united states. ericsson disappoints with a
big miss. we'll speak to the cnbc. ukraine's government says it will act to eliminate militant groups in the east of the country in the coming days. you're watching "worldwide exchange," bringing you business news from around the globe. thanks for joining us today. let me just dive in to some eurozone flash pmi numbers just crossing currently. the flash number is at 53.3 in the month of april. this is slightly higher than forecast. the markets expectation about 53.1. this is also slightly firmer than the march reading back at 53. we are seeing a slight improvement in the right direction. the instant reaction in euro/dollar has been a dip and then positive again, up 0.2% on session. 138.29 the current level.
diving into the numbers on the services side, the flash number at 53.1. this is better than forecast at 52.5 was the level the market had expected. also just on the manufacturing print, 53.1 was forecast but that number coming in at 53.3 as i mentioned in april. numbers better than expected. this come on the back of what was a mixed read when you take a lack at how the april numbers were for france, the flash number 50.5 showing expansion but it was worse than the market anticipated. the weaker numbers coming through on two sides, both manufacturing and services. completely different story in the german numbers where the flash estimate was very strong, 5 .3. it was higher than expected, also up from march. the level we saw in manufacturing and services exceeding expectations. divide again -- germany showing improvement, france still lagging behind. elsewhere, china's manufacturing activity contracted for a fourth straight
month according to hsbc. the flash market hsbc china pmi came in at 48.3 but the rating showed a slight improvement. let's go out to sri jegarajah. let's talk about the pmis. they did hint at some stability. there was modest improvement on the headline in april, 48.3 as you mentioned versus 48 in the prior month. it looks as though the greater china market simply on buying these numbers, especially when you look at the devil is in the details. you consider that. because a lot of the subindices, especially the employment numbers, well, they were quite negative or truth be told. shanghai composite in negative territory with the hang seng even worse, down by almost 1%. this is stark market in terms of the disparities. nikkei 225 powering ahead, despite the fact that, arguably,
there's caution in these markets with the onset of japanese corporate enings. we're yet to hit the full stride. this is going to be a big test for abonomics. they'll be analyzing those corporate numbers. nikkei 225 seems comfortable with the level chance 14,500. it seems to be comfortable with the dollar/yen. back to china quickly, these are the flash hsbc pmi estimates we got for the month of april. next week willing critical. we get the official number. we'll be looking for confirm agency as to whether we continue to see this self-induced slowdown or whether it is more material or whether it's more significant than that. and whether those pundits who are warning of the hard landing are vindicated. let's set that aside for now, very quickly talking about the
s&p/asx 200. this was somewhat of a surprise. it undershot expectations. the market was looking for quite a hot figure. we got one that's significantly underwhelmed. price pressure seemed to be, relatively speaking, under control in q1. the the aussie dollar got absolutely hammered. we saw a drop, a quite precipitous one in fact, of 1% against the green back which took the aussie well below 93. that was a driver on the broader mark he as well, what the currency was doing. that's how we stack up in a fairly mixed day, all things considered. still watching that pmi next week could be quite important. that's when we get the official numbers. >> thanks very much. sri jegarajah joining us out of sng pore. joining us now to discuss the chinese numbers are frazier howie. frazier, great to have you with us.
48.3. in april, this number still below the key 50 handle. what is this telling us about the chinese economy. >> any sensible investor knows china is in a bit of a rut and things are not improving fast. even when you have a good couple months, it's short lived. china has structural problems it's working through. >> some commentators felt the pace of decline started to abate and these numbers showed a hint of stabilization. did you see that in the figures today? >> i'm not entirely sure. the danger is with china. we have the world's second largest economy, $1.3 billion people we're looking at the decimal point move on 420 manufacturers. we simply cannot get enough of clarity, i think maybe too much into a 0.1 or 0.2 difference. it's precipitously falling which
is great. we're in a bit of a rut. trust products are up 8% in t m terms of fishing. chinese government are trying to do everything to get it going. >> that's a good point, whether it's down to monetary or fiscal policy. the market is looking for a stimulus. we had the moves to catch the triple r, for some of the rural banks. there's been some hope that rrr can be extended to other banks. you have to wonder whether there's more room or stimulus on the credit front for china. >> they have a horrible problem. i would hate to be the chinese leadership. the problem is very much one of their own making. but they have a horrible problem that they can't bring out too much stimulus for fear of basically propping up bubbles. and yet, at the same time, they do worry a lot about growth
slowing too much. i think one of the comments that sri made, of course, the employment indices within the pmi are very weak. that's always a worry. certainly the chinese government's always very weary of mass unemployment and rising unemployment. >> some reflect in the new orders as well as the output moderating. the unusual equation is they've already cleared the decks from the wild weather state side. if you're looking at the global recovery story, this should be helping out the chinese figures. it's not playing out that way if you take a look at the data today. is this rebalancing in china that's stopping the normal bounce back in the picture. >> i think it's people are not prepared for how severe the slowdown has been. obviously stronger developed markets do help china but as you can see, the chinese economy still isn't responding that much. that's because it's telling you the domestic economy isn't
necessarily that strong in china, which many people have talked about for a while. when you talk about growth being 7.4, 7.2 or 7.3%. ultimately that's a political figure. the chinese government will not announce growth under 7% for political reasons. the real economy is probably much harder. you ask if there's a hard landing. i think that's already happened for small businesses in china. >> thanks for talking to us. let's get you up to speed with the european markets trading this morning. a bit of a softer picture across the board. the ftse holing on to slim gains. selling for the german stock market and the cac which has been led lower. seeing green, trying to make it on to the board, the italian stock market, a fairly weak picture this morning. this comes on back of what was a strong session for european stocks yesterday. some of the top movers out there, let's move on to the earnings picture.
because ab foods at the top of the stocks 600. they met with a 1% rise in first half profit and major fall in its sugar business was offset by progress in its grocery business. primark, it now plans to take state side. meantime, investors expressing disappointment in ericsson's q1 earnings. the mobile telecom equipmentmaker blamed a fall in sales but insisted new contracts will lift profits in the second quarter. and don't forget, we'll be joined by the ceo of ericsson, hans vestberg. we are seeing a sell-off in s n scania stock. the decision leaves the deal in
doubt. finally, you can see shares on the arm are initially trading to downside as well, this despite the chip designer posting a rise in first quarter profits. it says it sees a pickup in the smartphone market in the second half of the year. and on bond markets, quick check on how european yields are performing. we have easily 3.1%. we've got bunds softening up the yield 1.5%, cles to that. treasuries, a bit of a tick higher, 3.72%. we'll see whether that moves around on some of the dialogue from the mpc. we've seen stable dollar action today, the australian dollar has been the exception after the big drop in the cpi numbers today, changing expectations for an interest rate hike in australia
later this year. 9278. euro bouncing a bit on the back of the numbers out this morning. joining us now, nick nelson, head of global equity strategy at ubs. nick, welcome, nice to see you. earnings have been interesting. ab foods, let's start out with a positive one. big spike in the stock price. the u.s. market getting the brown bags with the blue primark. >> it's that part of the business rather than the sugar business that seems to drive the price. we've moved to the stage in the cycle where it will separate the winners and the losers. it's about delivering the earnings now. companies that deliver the earnings, like we've seen with ab foods will get the share price response. those that mitt will get penalized by investors. you have to show investors of the companies that they can
generate earnings growth. >> is this where the growth is in thine earnings or do we have europe supporting the numbers. >> france is weaker, germany a bit stronger. if you look at europe, we think it will grow for the first time in four years. the u.s. is driving the global economy. we think the u.s. grows at 3% this year, above consensus. emerging markets will continue to be quite weak. we were hearing about the chinese pmis there. it's developed markets, the u.s., uk and europe. >> the light is on for activity in the pharma seconder. as we mentioned with ab foods and this expansion state side, whether it is organic growth or through an acquisition, ceos are going after growth. this tells you that the stock market has to trade higher from here, doesn't it? >> i think so. historically, companies have been getting share buy backs.
a lot of that is because they are not convinced a recovery is coming through. now would be a good time to do m & a, capex and to expand overseas. it shows confidence coming through. >> you talk about the brutal sector stock, the rotation out there which we'll come to in just a little bit. you're staying with us for the show. ericsson disappoints investors with first quarter numbers, suffering from weak demand in north america and japan. we'll cross over to stockholm to speak to the ceo on a first on cnbc. we'll cross out to japan later on. plus, could the bank of england's policymakers be moving closer to an interest rate hike? we'll have the minutes from their last meeting in around 15 minutes time. and yum brands beats the street thanks to a new add campaign and menu in china.
will investors eat up the stock when the investment opens state side? we'll ask a market analyst. ♪ [ 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,
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offensive against pro-russian separatists. this after a politician from his own party was found dead with apparent signs of torture. the president said the politician had been abducted by terrorists. meanwhile, russian prime minister dmitry medvedev said the kremlin is prepared for wider sanctions, this as the u.s. warns that russia could face further sanctions if tensions are not deescalated in ukraine. nbc's jim maceda joins us from donetsk in europe ukraine. there's been a lot of confusion after this so-called weekend truce. what's the latest? >> reporter: well, it could well be the latest. vice president biden's plane barely departed when they clearly signaled they have no intention of backing down. the kiev government came out and
said the easter truce is over. you mentioned ukraine's acting president calling on his security forces to restart its military offensive to start taking back towns and buildings occupied by the pro-russian militia after one of two bodies was identified, at least preliminarily identified as being a politician from the president's own party. and while the militants haven't xpantded their occupation into other towns, they have been tightening up their grip on the towns they control. yesterday taking the ukrainian security service building near slovyansk. a stronghold for pro-russian separatists and detaining that town's police chief. meanwhile, foreign journalists continue to be harassed and sometimes detained at checkpoints, including an american investigative journalist who works for vice news and online outlet, the
pro-russian mayor of slovyansk yesterday confirmed the detention and vice has issued a statement saying its in touch with the state department to secure his safety. instead, karen, of seeing steps taken to deescalate the situation, we're seeing the opposite, a re-escalation of the conflict here. >> jim maceda, thanks very much for the up. facebook reports first quarter numbers after the close today. analysts are looking for earnings of 24 cents a share on $2.63 billion in revenue. that would be slightly higher than the fourth quarter, thanks to strong revenue growth. investors will be listening for comments on the positions. there are questions about sustaining revenue growth as facebook refuses to increase the number of ads in news feeds. apple posted second quarter earnings after the bell today.
the tech joint was under pressure from carl icahn who wanted the company to return some of its large cash horde to shareholders. icahn has more targets in his sights. david farber asked him about his tactics. >> i think i did. >> why? >> apple did a bigger buy back. i got to meet, talk for long periods of time with donahoe at ebay. the reason i think it came out of hand, we did get dave on the board. >> right. >> i can talk to them. i get involved. within i get involved, it's very helpful. >> you think even though -- you were not going to win a shareholder vote there. >> i think you're right but i might have won a seat. they gave me a seat anyway with a good guy. >> a guy they like and you like
with this guy dorman. >> i actually suggested him. >> you did? >> he was on motorola and did a great job there. >> you think they came out ahead there. they're not going to split out paypal. you can continue to have confidential conversations with the board. >> i can't buy or sell unless the window is open. that's okay with me. i want to understand what happened. that's what i do with all these companies. >> in terms of apple, you still own the stock. >> i think it's very under-val you'd. it's a long-term hold. they spent billions and billions in research development. that's going to come to fruition. and when it does, i think apple is a great company, great ecosystem. >> right. >> and hopefully it will work out. >> i wanted to follow up on a couple of things you talked about in your presentation. you may have said this before but i haven't heard it. you seed you're going to seed activist funds. >> you haven't heard it because i haven't said it before.
i'm looking to do that. >> you're looking to seed activist funds. >> i think activism is very important in this country. i think we have some problems with the poison pill now and the ten-day -- >> ten-day window in terms of the 13-day -- >> i think activism is so important. there are bright young guys around that need backing for that. and i'm going to start looking to get a few of those guys in. you know, seed them and see how they do, maybe give them advice on it, maybe not. and let them do the work. >> we could see icahn cubs, so to speak. >> we have some now, actually. i mean, so it's not even the issue. it's just -- but yes. i would like to see more of this done. and done by the real good guys. i think it's very hard to break
into the business of activism. you have to have staying power. you have to have a fairly good bank roll. i think it's very important to do it. >> nick nelson staying with us from ubs. doesn't seem to be a shortage of activist investors, especially when it comes to the technology sector. you've noted the brutal sell-off in this space. do you think there's wrong with the sector. >> i think it's connected to this massive move in price momentum. you saw this brutal rotation, out of stocks, very strong price. here in europe, outside of tech, we saw sectors that had a great run started to reverse and started to come off in the last six or eight weeks. we've had a complete reversal of the winners turning into losers and losers turning into winners. >> were they overpriced? >> i think it was the fact of positioning. they've been long developed markets, underweight emerging markets.
the shakeout with the geopolitics we've been hearing about from ukraine, maybe rates going up earlier than people thought from yellen and a couple of other things shook out some of the investor positioning. >> people looking for a reason to sell apple and facebook, it will be interesting. thanks for joining us. david einhorn is sending up a red flag warning that a tech bubble is brewing. in a letter to investors, the green light capital founder says there's a clear consensus we're witnessing our second tech bubble in 15 years. what's uncertain is how much further the bubble can expand and what might pop it. einhorn points to several signs of overexuberance. the green light says it's shorting a group of unnamed, high-flying momentum stocks. we're asking today do you think einhorn is right? tell us what tech stocks you think are overvalued. maybe there are some that will provide safety. what are you willing to buy?
jone the conversation on "worldwide exchange." get in touch with us at email@example.com or tweet m @ me @wexkaren. the two advertising groups have filed to get fiscal residence in the netherlands, something analysts believe could be a deal breaker. let's get out to stephan in paris. publicist stock sharing the concerns in the market today. is it likely the deal will indeed be knocked on the head? >> yes, that's the risk. the deal was organized, so that's neither the shareholders of the company nor the company themselves would pay any tax related to the merger. but authorities in some european countries, including france, the netherlands and united kingdom are reluctant to approve such a
deal. the financial time claims that the fiscal issue could delay or even jeopardize the deal. that's the view also from analysts. failure to get a tax-free merger could break the deal. yesterday afternoon, the ceo from the united states say the timing of the merger was impossible to predict and that there was no "b" plan. he clearly announced it. they wanted to seal the merger by the end of last year. but it would probably be the third quarter. >> stephan, thank you very much for that. still to come on this show, should investors be prepared for an early uk interest rate hike? we get an insight into policymakers inclinations when we break the minutes and take full reaction on the markets, straight after this.
you're watching "worldwide exchange," bringing you business news from around the globe. eurozone pmi data shows activity accelerating in april with the help of germany 'bounce back while france disappoints. factory activity in china shrinks for the fourth straight month but the pace of the decline slows. shares of ab foods soar in
london. no cheer for tech xrfts, trades lower despite beating forecasts. ericsson disappoints with a big miss. we'll speak to the ceo with a first on cnbc. and the easter truce is over. ukraine's government says it will act to eliminate militant groups in the east of the country in the coming days. the latest crossing from the boe minutes, let's dive into the detail, in particular, first up on how the mpc voted 9-0 to keep interest rates at 0.5%. and also to keep qe on hold at 375 billion pounds. the latest on growth, we've got growth expectations staying at 1% quarter on quarter, in the first three months. the minutes also saying the uk recovery showing modest rebalancing towards investment. this has been one of the
concerns with the consumption that's been taking place just on whether this is on balanced recovery. the minutes suggesting there's considerable uncertainty on the debate of the economic slack. this is where the real pointers have been as they look towards the likely triggers for interest rate hikes down the track. product activity has begun rising in recent months. so alluding to some of the tightening in spreads and high credit spreads are likely to limit the need for rate hikes. on that note, let me bring in helia. also, david tinsley. the comments on interest rate hikes, is this the mpc ranging in the market ahead of expectations? >> i think we have a unanimous vote there. your point on productivity was interesting. of course that's the $64,000 question, you know.
how much slack do we have in the economy? and i think even on the mpc it's very hard for them to determine, which is why they haven't given a specific forecast. and the kind of forecast from external economists varies very widely and has a huge impact on when they raise rates. >> there's a lot of data on this, isn't there? in particular they're talking about the range of views, the mpc members have about the extent to which self-employment is represented. david, weigh in here. what's your view on what the minutes are suggesting today? >> well, i mean, i think for you we're on hold, period. the minutes don't really add to that. what's interesting, i think, is that of course the mpc at the time of the meeting we're looking at labor market that looked like it had caught a bit and productivity growth had indeed picked up or shown some
positive growth. and since then we've had the whopper of a markette print last week where it showed the unemployment rate below the 7% threshold and the old style guidance no longer applies. i really think from here on in these mpc minutes get more interesting and there's a lot more potential for the vote, the consensus to fracture. >> i'll bring up one other upon, they are sustaining a possible rise. we know braj growth has caught up with the rate of inflation. >> that was a massive threshold to get to, wage inflation, in kind of real terms. you saw that last week. the same, you know, the same week we saw unemployment dip below 7% for the first time you actually saw wagers outpace inflation. and that's the first time in four years.
so massive difference. because of course the problem of the uk economy has been, is it fueled all this growth in the last year? by asset bubbles, by consumer spending, by house price rises. the end of this week we get the mortgage market review from the bank of england. that's to try and temper some of the heat in the housing market. but the uk is clearly doing very well. and i think rates will be on hold. remember we have a strong pound as well at the moment, which has kind of taken the pressure off the mpc to raise rates. but i think to your point about productivity, that's the question. we have ons data out as well about public sector boroughing coming in. it's positive news for the uk economy. >> david, on the wagers, the interesting point is there's a flexible economy in the uk, clearly employers must be seeing some sign of confidence out
there if they're willing to increase wages and the investment side is going up. two different sides companies are re-investing on. >> to a large extent it's all good news at the moment. i think we need to distinguish between wage growth that's a result of a tightening in the labor market and a wage growth that's driven off the back of productivity increases. still not entirely clear we're getting the second of those. if that develops, particularly over the march/april pay round, come the summer you could have a markedly different turnout in the bank of england. that kind of wage growth with zero productivity or modest productivity would look more threatening. >> thanks for joining us today. david tinsley. british foods got a boost from primark in the first half which offset a disappointing set
of number in its sugar and grocery businesses. they are launching primex stores in the united states. a low-cost offering heading your way. the uk supermarket price wars getting under way. tesco has launched a fresh round of price cuts on basic food products in an effort to take back market share from discou discounters like aldi and lidle. tesco is slashing the cost of its online delivery services as well. basically scrambled eggs are looking cheaper. >> it's interesting. we had the news earlier this month about tesco's pushing f & f, their clothing brand in the u.s. remember, tesco is the poster child for uk failures in terms of retail in the u.s. market. british companies haven't traditionally done well in
america. i think what abf are going to pry with primark is possibly interesting, primark has been not just the driver of growth in abf. the entire jewel in the crown. >> it fits with the u.s. consumption model, this stuff is cheap. you can take out bags and bags of clothing and other apparel and it's just basic consumerism, which appeals to the states. they different i thought to f & f, which i didn't think was cheap enough when converted to u.s. dollars. >> both of them we're seeing, as we've talked about before, the high street is dislocating in terms of really value and where primark sits, where h & m sits, where f & f should sit. you also have the high end. the people in the middle of the likes of m and f are winling to win over consumers. in the u.s., i think they're even more competitive in terms of the middle market.
primark, yes, they have potential for growth but a lot of uk companies have failed even when they're successful here in europe. >> primark has a lot more traction, get in touch. do you know primark and f & f? a lot of people in the uk don't know f & f. the chances for success for both of these markets state side. let meio, @cnbc karen is my handle. chin in's huiyuan juice. >> we believe working with the suntory shanghai group, we can learn from their manufacturing and technology to provide high quality tea. >> given the political
environment and the heightened tensions between japan and china, is it a hard sell for a chinese company to be buying up a japanese one right now? >> translator: i believe from the company's perspective, as long as the product is good for the market and the consumers and that it is safe, this is part of our responsibilities. we did not consider the political factors. i believe china and japan's relationship will develop better. also, japan's suntory make an annual purchase of 5,000 tons from china. this helps to provide income and this is a huge help for the tea farmers. >> back in 2009, we all know that coca-cola tried to buy up huiyuan juice. that was blocked. is it still up for sale? >> translator: we don't have plans to sell at this time. in the future we will have the same plans like we have had with
suntory. >> are you currently in talks with any other big beveragemakers? >> translator: right now we don't have any plans to sell any of our shares but we have acquisition plans. china with 1.3 billion people is a huge market. the fruit juice market in china is growing very fast. >> hot topic right now in china is about food safety. given that huiyuan is one of the largest juicemakers in the country, what's happening in that regard, is it getting better or worse? >> translator: of course the whole situation of food safety is developing much better. in this era of the internet you can't hide anything from the public. i believe the development of food safety is heading in the right direction. firstly, how can we improve self-discipline of the public and make them realize how important it is? secondly, we need to ensure the rules of law to make it more serious. and thirdly, the supervision and monitoring from the media and
lastly, it is about deepening reforms in china. >> let's moven to a big story out of france today. the socialist government will present its deficit reduction plans to the national assembly today. stephan joins us out of paris. stephan, a big story for the prime minister, he recently hinted at less austerity which suggested a push back against some of the targets from brussels. is that what we're going to hear today? >> we're going to see different targets in terms of deficit. the top stories that france will stick to the plan to lower its public deficit to 3% of gdp by the end of next year, the new targets that will be presented this morning are, according to them, 3.8% of gdp for the public deficit this year on just a 3% next year. both targets have been raised by 0.2% but still would be within the frame set by brussels. the new road map is based on a growth assumption of 1% this
year instead of 0.9%. and 1.7% next year. according to a private economist, it's an ambitious plan. it's not out of reach as long as there are no major economic issues. in the new stability plan, the prime minister will also explain where the 50 billion euros in savings will come from. they say three weeks ago that most of it, 20 billion, would come from the central state. it still has to outline the details of the social subsidies that would be probably reduced and how he hopes to convince the french union unions. the deficit plan will be submitted for vote next week and submitted to the european commission. >> there was a feeling out there, stephan, that the european partners will cut france a little bit of slack because it wouldn't want to derail the recovery phase. do you think that's true? there is leeway now for france.
>> i think that the government, the new one, tried to three weeks ago, to test some european partners, including germany to see if france could get a delay to reduce its public deficit. right after they've been appointed, the new finance minister and the economy minister travelled to berlin to speak to their german counterparts and right after they came back from germany, they gave up the plan to ask for another delay to reduce the public deficit. so basically, if it was not announced officially, france got no from germany and decided, therefore, to stick to the original plan, the deficit target had been raised slightly. the official announcement will come by lunch time here from paris. over to you. >> stephan, we're looking forward to the update. thank you very much. mann time on markets we've got the french market, the cac and the dax both in negative territory. lifting off some of the lows
we've just experienced in the past half an hour or so. still gains for the uk market, the ftse holding in the green. selling now for the ftse mib down 0.1% in italy. and on bond markets, we saw a mixed picture earlier. that remains the case. a push higher for some of the safe havens, german bunds and gilts rising higher. a pull back there on treasuries, 2.7% and flat lining. a little below 3.14, the italian market. we've been seeing auction on the aussie in particular, that remains the case, 0.9% lower. suggesting interest rates wouldn't rise as some analysts have been starting to price into the trade. elsewhere, the big mover out there is euro, the pmi numbers are out today, france, germ in i, a bit of a mixed picture. the currency though, getting a
bit of a lift, 0.33%. consumer inflation in japan make exceed the boj's official projection this fiscal year. that's according to the bank of japan governor, kuroda. kuroda's remarks suggest the boj will revise up the previous fiscal year's price forecast and maintain its bullish projections for subsequent years in its twice yearly outlook report due out next week. wh group, the world's biggest pork company is slashing its proposed hong kong ipo in delaying the pricing to next week. this is due to the tepid response as investors shy away from big deals on a flagging hong kong stock market. the firm is planning to reduce the size of its hong kong ipo to slightly less than $2 billion. well below the 5.3 billion that many were expecting. the chinese company made an
ambitious takeover of smithfield foods eight months ago and is hoping to use the money raised to reduce debt. and let's give you a look at what's on the agenda asia tomorrow. expectations are for a 25 basis point rate hike. bringing the interest rate to 3%. we'll also get results from cannon, fuji electric, and mitsubishi motors. meantime, byd will also report results. this is the car company that warren buffett owns a 10% stake in. we get advanced q1 gdp from south korea as long as earnings from posco and mumbai motor. plenty to watch out for. still ahead on this show, as air force one speeds towards japan, can trade talks in asia also accelerate? we find out what's on obama's agenda, up next.
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of south korea, malaysia and the philippines. security and trade will be high on the agenda as u.s. re-affirms its commitments to allies in the region. martin short at few -- what stands out as key? >> absolutely economic relations and the tpp. this visit has been slow in preparation and low key in terms of the agenda at first. the president in thes u.s. and the prime minister in japan under pressure to show something. >> let me ask you about relations with china. there's been a lot of agitating before this trip has begun. how does it balance relations with china and convince the rest of its allies that it's committed to the region? >> yes.
this is the very, very important point during all these visits. that's why the meeting with japan and prime minister abe is important. the u.s. is seen partly at least in terms of economic influence in asia being in decline. anybody talking in asia has to consider how china thinks about it and how the relations will develop. this means that japan and the u.s. need now very strong economic relations at best based on a contract, a wider agreement along the lines of a tpp agreement that can produce farther partnerships and not totally alienate the chinese. >> the chinese have been less than stoked about this. what are the implications that this trade pact could progress? it has been a long time in the making? >> exactly. now basically anything is on the table or off the table. there have been long talks and with the preparation of the
visit of president obama this time, all the negotiators under extreme pressure to show what's possible, what is negotiable and what not. basically, the talks are stuck here and now require int intervention from the leaders, meaning they either say, well, go ahead, push forward, we are basically getting this going. as a basis for further talks in malaysia and the philippines as well or they don't. >> regional watches have been very concerned about the increased rhetoric between chin in, japan of late. particularly around a set of islands, the senkaku islands. if you look at what's happened in ukraine, it seems as though the u.s. has no credibility about enforcing its dominance in the region. are asian allies going to feel
this is the same case, if china wants to act like russia in asia, the u.s. will not be standing ready to back it up. >> well, this is clearly not a case for a strongmanship, that would be very much doubted and president will almost certainly not go down this route. china, on the other hand has been taking on basically all its allies in asia. it's not just japan, it's the south china sea with the most important economic interest. this is the philippines, vietnam. the major economies in asia. there is a strong basis for economic cooperation and the u.s. could be the partner, getting all the diverse economies, the diverse interest going and wrap them up in one strategy. basically a partnership agreement that gets almost anybody on board outside china. >> correct. thanks for joining us today,
senior economist at fujitsu research. the tesla model s has made its way to china but there's a long road ahead to get the infrastructure to cope with the car's technology. eunice yoon reports. >> reporter: whether elan musk goes, so do the crowds. >> what's the reception been from the chinese to support you in your effort here? >> i'm blown away by how much support we're getting. i wasn't sure what to expect. it's been really great. >> reporter: founder of tesla motors is in china, handing out keys to the california companies first customer here for its electric car. the first step of its plans for this country. >> i'm real excited about the future of tesla in china. in addition to handing over the cars, you will see the first super charger, the first tesla super charger location in china. >> this is one of tesla's solar
powered battery charging stations. >> my instructions to the team are to spend money as fast as they can spend it without wasting it. we'll probably end up investing hundreds of millions of dollars in charging infrastructure in china. >> reporter: china wants to ease its pollution problems. its attempts have gained little traction. some see musk as a man who can help lead the charge. as much as his ambitions are big, some critics say his plans here are unclear. >> make some room, guys. >> reporter: some customers have been frustrated with delivery delays, with one showing up to vent at the beijing launch. >> i want to complain to you. i'm really disappointed! >> sorry. >> reporter: musk wants to improve the experience for chinese drivers who are shelling out $120,000 for their s models, two-thirds pricier than in the u.s., due to import duties and
taxes. his plans to manufacture here in the next few years could help bring prices down, either way, tesla car buyer lee chong doesn't seem to mind. i'd like to get the feel of it now, he says. musk expects another 5,000 chinese drivers this year will feel the same way. eunice yoon, cnbc, beijing. still to come, could the s&p 500 test its all-time high today in stay tuned as we hear why the index is set to scrape record levels.
welcome to "worldwide exchange." i'm karen cho. these are your headlines. eurozone pmi data shows acceleration in april. factory activity in china shrinks for the fourth straight month. the pace of the decline slows. no cheer for tech investors, arm trades lower despite beating forecasts. ericsson disappoints with a big miss. we'll be speaking to the ceo in a first on cnbc in the next hour. and the easter truce is over. ukraine's government says it will act to eliminate militant groups in the eastern country in
coming days. meantime, fast food translates to fast money for yum brands, as the operator of kfc, pizza hut and taco bell reports better-than-expected results thanks to strong sales in china. you're watching "worldwide exchange," bringing you business news from around the globe. if you're just tuning in, thanks for joining us here on this show. here's how markets are faring. coming up to the u.s. open this morning, futures suggesting green across on these boards. this is after the six straight day of gains for both the s&p 500 and the nasdaq. both in positive territory. big focus after hours today, though, on a whole bunch of earnings including apple and facebook after that tech sell-off. investors looking for devil in the detail of those two big reports today. elsewhere on the ftse cnbc gl e
global 300, slightly positive, about 0.1%. we've had green on the charts for the ftse here in the uk that's given way to drift lower. the dax and the cac have both been weak today. the french market is low by the likes of publicists around fears about its merger with omnicom falling over. we have bunds 1.5%, firmer across the board on italying with gilts and ten-year treasuries. a lot of movement lower on the curve has been twos and fives on gilt prices today. this is suggesting there is still a range of views about the slack in the economy here in the uk. what that will mean for interest rate hikes, they are suggesting that productivity has likely begun recovering or rising. that's the latest there.
the pound weaker. today we have the aussie drifting off 0.9%, a weak cpi read, doing nothing for the fortunes of the currency. lower to the yen. the firming up we're seeing on the euro on the back of the pmi numbers today, france was disappointing weaker numbers on the manufacturing services side but the german numbers are bolstering confidence. let's get out to sri jegarajah in singapore for more on the asian markets today. sri? >> karen, the trading was dominated by two things, the aussie cpi which i'll talk about in a few moments time. the main area of interest was coming from china where the hsbc flashed pmi estimates for april. 48.3 was the headline versus 48 in the prior month. it signals, perhaps, some stability in the embattled economy. but on balance, if you look at
some of the components of the index, especially employment numbers, they don't look weaker. that tells me when you take a step back and take a close look at the figures, it does suggest that the down trend and the slowdown in the chinese economy will continue. we'll get confirmation from these -- of these numbers in about a week's time when we get the official pmi from beijing. shanghai composite on the defensive. the hang seng dragged down by the telecom stocks after china mobile, the biggest carrier on the mainland reported its third straight quarterly decline in profits. however, this is a mixed session. nikkei 225 having a fairly good day, up by well over 1%. holding the line around 14,500 seems to be quite comfortable with the yen at 102.5 as well. having said that, we are ent entering the full stride of japanese corporate earnings. they will be a big test as to
whether abonomics is succeeding or not. s& s&p/asx 200. it was the aussie dollar that tack it on the chin today. you got clobbered by that cpi figure. the weaker print as i said. it cracked below that 93 cent mark. tough day for the aussie. karen, back to you. >> sri, thanks for setting the scene there. meantime, let me recap on some of the news we've had in europe today. the eurozone composite pmi hit its highest level since may 2011 this month, largely held up by strength in germany. meantime, france disappointed, suffering a fall in activity. let's get out to mcneil currie. he joins us now from new york. mcneil, great to have you on board with us. i want to get to your forecasts
around the s&p 500. we're get close to some of the highs we've had on the market. you've noticed that it's broken key resistance. where to from here? are we going to test the highs? >> i think we are going to test the highs. we might be able to see an overshoot of those highs, push up into the low 1900 area. the strength of rally, just reaching the lows of 1800 last week or so, suggests we should see further gains continue, at least in the s&p, which should break to new highs. marginal, 1900 area. certainly for time being you have to maintain a bullish focus. >> the curious part about this push higher, the rally is not all that encompassing. what's been behind the gains? >> sure, certainly i think part of it has been the fact that we've seen a decent amount of rotation out of some of the high flyers, momentum-type stocks. we've seen a move out of small caps and nasdaq and tech stocks and into some of larger safe
havens, like the s&p 100. that will favor the bigger index like the s&p 500 at some of the expense of the smaller stocks and indexes. >> what's the relevance around china at the moment? we saw the pmi numbers suggesting weakness. people are hoping it's starting to stabilize. many corporates, u.s. corpses look to china for strength in earnings. do you think there's question marks over the hard landing taking place there and whether we see improvement because of fiscal stimulus? >> i think there's concerns. look at the fact that aussie dollar has come under decent pressure over night. this is over the course of q1 this year, you saw concerns about the biggest risks to financial markets. certainly chinas with one of them. that would get bandied about. we've heard less about china. the market seems to have been
focused on the concerns surrounding the ukraine. certainly china is going to be a concern as it will be about whether or not we move in a hard landing. if you look at chinese equities, despite what we've seen overnight, they've held in pretty well over the course of this year. >> you mentioned ukraine. but at the same time we have markets set to reach for fresh records. do you think a lot of the concerns around ukraine, russia, have been largely put to one side by u.s. investors? >> i would say that the market has focused maybe a bit less on it when it comes as a potential risk off environment than what you hear from a lip service perspective. equity markets have done very, very well in the u.s. if you look at traditional safe haven assets such as gold, gold has been under pressure, usually in times of geopolitical uncertainty, that's one of at set classes that investors tend to flock to. and the fact that gold has not traded well at all dae spite all
the concerns, supposed concerns emanating from the ukraine, i think suggests that the market, while it's paying lip service to it, isn't voting that it is going to be a real significant concern going forward. >> explains why you're bearish and short gold.neil currie, hea technical strategy of b of a. let's take a look at what's coming up on the agenda in the united states. march new home sales are out at 10:00 eastern. forecast rose 2%. it's another busy day for earnings with results from boeing, p & g, delta, dow chemical, general dynamics and northrop grumman. out of the close, we'll hear from the likes of apple, facebook, qualcomm, texas
instruments and zynga. bill ackman reportedly promised to pay a former herbalife whistle-blower up to $3.6 million. ackman has paid him $80,000 since he left the company in 2011. he lost his job with the u.s. dry cleaning chain last year. ackman tells abc news it was the right thing to do. ackman unveiled a $1 billion short position against he herbalife, accusing the company of running a pyramid speed. allergan is adopting a defense in the wake of the $46 billion hostile takeover bid by rival drugmaker valeant and ackman. ackman currently owns a 9.7% stake in allergan.
they are currently looking like this on the stock market. allergan in france trading lower to the tune of about 0.9%. valeant pharma bouncing 1.5%. on a programming note, bill ackman willing on u.s. xb can be this morni -- "squawk box" this morning at 7:45 eastern. carl icahn may be one of the most recognizable activist investors. he wants the practice to continue well into the future. in an interview with cnbc's david farber, he plans to seed activist funds by backing new investors. >> i would like to see more of this done, done by the real good guys. i think it's hard to break into the business of activism. you have to have staying power. you have to have a fairly good bank roll. >> icon talked about butting heads with bill ackman in the past year over herbalife. while they've had their
differences, he believes the new tactics of teaming up with valenat is a good idea and wishes him well. dived einhorn is sending up a red flag warning that a tech bubble is brewing. the green light capital founder says there's a clear consensus. what is uncertain is how much further the bubble can expand and what might pop it. einhorn points to several signs of overexuberance, including short sellers forced to cover their positions. green light says it's shorting a group of unnamed, high-flying momentum stocks. apple and facebook both report after the bell today. we'll preview those numbers, next. stay tuned.
you're watching "worldwide exchange." your headlines today, pmi data picks up in the eurozone while factory activity in china slows. a fallen sales hits ericsson's earnings sending shares lower while yum brands helps with improving chinese sales. big focus on the tech sector today. facebook reports first quarter numbers after the close.
analysts are looking for earnings of 24 cents a share on $2.36 billion in revenue. that would be slightly higher than the fourth quarter, thanks to strong ad revenue growth. investors will be listening for comments on the oculus. facebook refuses to increase the number of ads in users news feeds. apple reports second quarter results after bell. analysts expect the iphonemaker to earn $10.19 a share on revenue of $43.7 billion, slightly higher than the year ago numbers. apple stock has been stuck in a tight trading range for months and is down about 5% so far this year. there's been some concerns the company's third quarter guidance could disappoint as it's facing pressure from the china mobile deal and on subsidies from its u.s. and wireless partners. ahead of the earnings, this is
how the stock is trading in frankfurt. perhaps a sign of confidence mcneil currie is staying with us. joining us from new york. mcneil, a huge amount of tension around some of the tech numbers today. what do you think facebook and apple will be doing for sentiment? >> i think generally speaking, if we step beyond those individual names and look at the sector in general, frankly if you look at the u.s. equity mark net general, we're seeing a rotation out of the likes of tech and relatively small cap names and into more defensive type sectors and into larger caps. we have seen a fair amount of consolidation and pullback within tech in general. in the near term, things should do all right. we've seen pretty decent momentum transpire to the topside which has in the near term, we think equities should do well. not just tech but u.s. equities
in general. the big question is could the index sustain or gain its larger uptrend? we think the s&p can make new highs. we're not sure the tech stocks and tech index, nasdaq composite or 100 can do the same. they have significant head winds. especially notwithstanding the fact that we're about to move into negative seasonality for the year. equity markets tend to struggle and they tend to face significant head winds. as we move into given the breakdown we've seen in tech, given the rotation we've seen in the u.s. equity markets, we're certainly on a medium term perspective, there are challenges facing the larger uptrend. >> we had a decline in took place over the course of march through to april but then a pickup in the last week or so. which has lifted the nasdaq off some of the lows. is it possible we'll be break
even by year end or will we be higher on the nasdaq still, despite the head winds you see? >> sure, sure. i would argue more important than what our year-end target might be is the fact that between here and year end what we would expect some decent volatility to transpire. so, you know, i would argue that it's more important to focus in over the course of the next quarter, quarter and a half. we could see decent volatility which is more pressing than if we are able to finish positive on the year. >> if we look at your call on u.s. treasuries, you've also noted that the broken -- this is the oth integral part of the picture. we have 2.7% on the trading range in the yield. why do you think we're looking at interesting levels in your book? >> i think if you look at u.s. treasuries, you're referring to ten-year yields, ten-year yields haven't done much of anything
over the course of the past couple months. we've effectively been stuck between a 260, 280 trade change. there isn't a lot of evidence that says we'll break out of this range, certainly by historical measures it's tight range, one that is difficult to sustain for any significant period of time. but at this stage, you can make a good argument as to which way it's going to break one way or the other. what i do, you look at the five-year part the curve, the belly of the treasury curve, that looks bearish. it looks like we'll see a break through the highs of september and earlier this year that could potentially see a push up to 2% from right now. over previous highs of 185 or thereabouts. the front end looks like it will sell off further which is probably -- probably suggests that risk assets should do well over the course of the next couple weeks, next month or so. especially as long as fixed
income volatility remains subdued. if you see higher yields and volatility and fixed income, then risk assets should -- equities in general should also come under a bit of pressure. right now, fixing volatility is subdued. as long as ten-year yields remain subdued, that should be supportive of risk assets. >> you've eluded to flattening of the yield curve. do you think that is something in the back of people's minds, that there is concern about the u.s. growth strategy still? >> i think there's definitely a lot of concerns around growth but if you look at the equity markets, yes, they continue to do quite well. if you look at the curve it depends on what part of the curve you're watching. there's concerns about whether or not inflation will pick up this year. because if you look at the crb, most commodity indexes, they've started to perform quite well. in fact, if you look at natural gas, which had been in a rather significant long-term down trend
since 2008, you're seeing significant strength out of that sector which is a change over the course of the past couple years. commodity markets definitely are warning that we could see a pickup in inflation, given their strength on a year-to-date basis. >> much appreciated. mcneil currie joining us, head of global technical strategy at bank of america merrill lynch. as we've been reporting, david einhorn is warning that a tech bubble is brewing. in a letter to investors he says there is a clear consensus we're witnessing our second tech bubble in 15 years. so do you agree, is there a tech bubble forming? join the conversation here on "worldwide exchange," get in touch with us. chris has been tweeting, when do intel, microsoft and cisco get to be considered industrials rather than techs? objecting to the fact they've been bubbled up with the rest of these. also get in touch on e-mail,
firstname.lastname@example.org. the twitter handle, @cnbcwex or direct to me, @cnbckaren. we're live in ukraine, next. and we'll leave with a view of the hee map here in europe. the markets still trading to the downside, down 0.25% on the benchmark index. as part of your service, we did a 27-point inspection on your chevy, you got new tires and our price match guarantee. who's this little guy? that's birney. oh, i bet that cone gives him supersonic hearing. watch what you say around him. i've been talking a lot about his procedure... (whispering) what? get our everyday price match guarantee plus a $100 rebate on 4 select tires from your tire experts. chevy certified service.
the easter truce is over, ukraine's government says it will act to eliminate militant troops in the east of the country in the coming days. nbc's jim maceda joins us now from donetsk in eastern ukraine. jim? >> karen, there's a very tense q quiet here today so far. the kiev government and the pro-russian insurgents have signaled they have no intention of backing down, the easter truce lasted a few days but it's over now. ukraine's acting president called on his security forces to take back the towns and buildings occupied by the pro-russian militia after one of two bodies found in a river next to slovyansk, one of the pro-russian militant strongholds was initially identify as a local politician belonging to that president's own party.
now, people manning barricades here in eastern ukraine say that they are worried about an attack, not so much from the ukrainian military who have shown them as much as to be inept at countersuinsergeancy s far. just the kind of provocation, karen, that might justify a major intervention by russian troops as lavrov said today, an attack on russians is an attack on russia. back to you. >> jim, thank you very much for the update. jim maceda. we leave you with a look at how futures are shaping up ahead of the open on wall street. we have a bit of a mixed picture. both indices about been up for six straight sessions. perhaps opening up on the back foot this morning, dow suggesting a bounce. stay tuned. we'll be right back.
no cheer for tech investors. arm trades lower. ericsson disappoints with a big miss. we'll be speaking to the ceo in a first on cnbc. and the easter truce is over, ukraine's government says it will act to eliminate militant groups in the east of the country in the coming days. and fast food translates to fast money for yum brands as the operator of kfc, pizza hut and taco bell reports better-than-expected results thanks to strong sales in china. you're watching "worldwide exchange," bringing you business news from around the globe. if you're just tuning in, thanks for joining us on the program today. markets are faring ahead of the open, futures suggesting a weak start for the s&p 500, the nasdaq, after six straight sessions of gains, the dow showing firmness still,
suggesting we might see green on the open. the ftse cnbc global 300 index has been in positive territory. still holding on to that and off the lows of the session. up less than 0.1% so far. it's been a fairly weak session so far. we've had selling across the main markets, germany in particular, the cac in france, the weakest of the bunch on concerns about whether the publicist, omnicom merger could be in doubt. the ftse did have gains but has succumb to the selling pressure. so how do you make money in these markets? here is what some of the experts have been telling us this morning. >> we're not a buyer of portuguese debt. >> way not? >> they're not as attractive as they were in terms of evaluation. if you go back three or four months ago, yields were significantly higher than what
we were. i don't think the fundamental situation has changed so significantly that it justifies the yield levels, the level at which they are at this point in time. >> if we think about the middle east sovereign wealth funds, which are fundamentally based on oil, if you assume one day we're either going to stop burning oil in the far distant future or run out of oil, long-term investments in other assets with a view to maintaining the wealth of society after 40, 50 years, the norwegian model, seems to me to make a lot of sense. >> big theme this year actually is divergence between different markets. i think you've got to focus on the markets while you have a good economic story, a good corporate story plus valuations are not stretched. i think that's southern europe, part of asia, particularly north
asia and i think it's central europe. >> there is an update now for you on that missing malaysia airlines flight, mh-370 which went missing on the 8th of march. the latest is australian authorities and it's a police report that material has washed ashore near augusta. this is very far south on the western coast of australia, local authorities are examining photos to decide whether it needs analysis and if it is in fact related to this missing aircraft. also we've heard that photographs of material have been provided to malaysian investigators. so that is the latest on that flight. an appetizing set of earnings from yum brands, the parent company of kfc, taco bell and pizza hut has been gaining
traction in after hours trade. that's despite u.s. sales being hit by poor weather conditions. saraizen has the details. >> yum brands, the owner of taco bell, pizza hut and kfc chicken resulti inin ining -- reporting than expected results. sales, $.72 billion, less than the 2.8 analysts were looking for. the theme of the quarter, a rebound in china. china is hugely important for yum brands. it gets more than 60% of its revenues from the country, 9% same-store sales growth was the number. pretty much in line with expectations. david novak in the earnings release, the ceo of yum brands saying he's pleased with the rebound they've been seeing in china. last year, a tough year for kfc
chicken, concerns about avian flu and some of the poultry turning off customers in the country. yum has been working hard to revamp the brand and work on bringing those customers back. and in fact, they're sticking with their guidance, 20% earnings per share growth for the year for the entire company. yum saying it's opening another 700 stores in china alone. just this year. in terms of the rest of the brands what we saw in the numbers, same-store sales declines actually for taco bell and for pizza hut. kfc coming in pretty much in line, up 1%. one thing to look for going forward from yum brands is going to be breakfast. taco bell making a big, aggressive push into the u.s. breakfast market at the end of march. not shown in these results, the taco waffle. we'll see if it can give mcdonald's, the breakfast leader a run for its money. so far, mcdonald's saying no
impact yet. one thing we look forward to going forward. >> taco waffle, not sure i want to start my day out with that many calories. peter saleh, he'sland on the life, live from new jersey today. that's one of the keys, innovation on the breakfast menu at taco bell. is it going to work for yum brands? >> it's still yet to be determined. they've tests that taco bell breakfast for two years now on the west coast of the u.s. they liked the results. they rolled is out march 27th nationally. here in the u.s., they probably have to meet 3,000, $3,500 for each franchise to make this work. so i think it's yet to be determined. but we've tried the products. it's actually pretty good. >> let's come back to the main game. we've seen numbers out of the
chinese market start to recover for the company after a scandal around the quality of chicken that was being sold to customers. do you think the worst is now behind yum? >> well, we sure hope so. they had negative comps in the first half of last year in china. and then they were negative also on the back half of the year. we're definitely hopeful that this is the end of it. it looks like the traffic rebounded. they have 3 percentage points priced in the quarter. the kfc numbers came in at plus 11%. that is really good news. >> you mentioned aggressive promotions and the kfc brand positioning in the second quarter of 2014. how key is this going to be to the company's fortunes? >> i think you have to compare what they did this share versus what they're doing this year versus what they did last year. last year was a year of defense
where they were trying to protect their brand against avian flu and they entered in china. this year it will be about promotion, advertising and getting on social media, getting the word out for people to come into the store. it's very important to drive that incremental traffic this year. >> showing yum versus some of its peers, how do you think it stacks up? >> you know, yum's a great company. all around the globe. i think they're a highly franchised business model. they're very different in tells of investment of what you're going to get out of mcdonald's. when you're investing in dominos, you're investing in a franchise growth model around the world. you know, and mcdonald's is a
much bigger company with a lot less growth but a lot more cash flow. i think they're similar but very different in terms of different investors. >> thank rou very muyou very mu joining us today, peter saleh, senior restaurant analyst for telsey advisory group. a bond auction, the first since april 2011 as it returns to the markets, 750 million euros in offering today in ten-year bonds in terms of the average yield on this price. we know the odds have been pushed very much south across the eurozone. 3.57% versus what they paid back in february at 5.11%. in this syndicated offering a huge retreat in the yield to that 3.57% bid-to-cover ratio in the ten-year bond.
this is how yields are performing, 3.65 on ten-year. there's offering below what we have in the market currently. elsewhere, at&t's first quarter profit fell 1% due to higher taxes. but still beat forecasts. as revenues were up more than 3%. the company added 625,000 post paid wireless subscribers. the strongest growth in the first quarter in five years. at&t also sold 40% of its smartphones at full price. that's without subsidies. the company is raising its full-year revenue forecast projecting growth of 4% or more. at&t shares in frankfurt today have been trading lower to the tune of 1.8%. facebook reports first quarter numbers after the close today. analysts are looking for earnings of 24 cents a share on $2.36 billion in revenue. that would be slightly higher than the fourth quarter, thanks to strong ad revenue growth. investors will be listening for comments on the oculus and
wassup acquisitions? facebook refuses to increase the number of ads in user's news feeds. apple reports after the bell today. it's estimate revenue of $43.7 billion. apple stock has been stuck in a tight trading range for months. it's down about 5% overall so far this year. there's been some concerns about the company's third quarter guidance and that it could disappoint as it's facing pressure from the china mobile deal and subsidies from its u.s. wireless partners. apple stock is drifting lower with caution in frankfurt, down 0.2%. up next, a strange twist in the long hiv r-running act visi ackman and the company he
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shares significantly lower while yum brands beats with the hope of improving china sales. bill ackman has been battling with herbalife for nearly a year and a half. new details are emerging about the person who may have been feeding him information from inside the company. cnbc's hampton pierson joins us from washington with the details. hampton? >> hello, karen. ackman who as we all know runs the hedge fund, pershing square capital management reportedly promised to pay a former herbalife whistle-blower up about $3.6 million. the payments would come if he lost the job he took after leaving herbalife. he's already been paid $80,000. ackman tells him, paying him was, quote, the right thing to do.
he signed the confidential deal with ackman in june of lat year and lost his job with a u.s. dry cleaner chain a few months later. ackman unveiled his billion dollar short position against herbalife in december of 2012, accusing the company of running a pyramid scheme. ackman's newest target, allergan, is athe doing a poison pill defense in the wake of the $46 billion hostile takeover bid by the activist investor and rival drugmaker valeant. the move would effectively prevent ackman from significanting building his position in the botoxmaker. ackman currently owns a 9.7% stake in allergan. checking the share of allergan and valeant, basically allergan down about 1 3rer%, valeant up t 1.5%. carl icahn making news today. he has been at this for years and now he wants to practice to
continue well into the future. in an continuer view with cnbc's david faber, icahn says activists per phenomenon an important service and he plans to back the next generation of investors. >> i would like to see more of this done. done by the real good guys. i think it's very hard to break into the business of activism. you have to have staying power. you have to have a fairly good bank roll. >> icahn also talked about butting heads with bill ackman in the past over herbalife and weighed in on ackman's bid for allergan. >> you know, frankly, with all the stuff i've said with ackman, back and forth, back and forth, i think he's dead wrong about herbalife and we have our differences but i never said he's not a smart guy. >> right. >> and i think the concept of this is good. i hope it works out better for him.
ericsson has disappointed investors. sales and profits have both missed forecasts, partly due to weak demand in north america and japan. shares are trading lower, currently down more than 4%. joining us now in our first on cnbc, hans vestberg, the ceo of ericsson. let's start out with your biggest market in north america.
you blamed the lower revenue on two large mobile broadband coverage projects. is this related to t-mobile and sprint? >> i won't agree to which customer it is but you're correct, we envision that we would come in to face lower activity on the coverage projects in north america. that's a big market for us. that has continued into the first quarter. it was as expected, of course, you never want to have a decline in revenue but it was very much expected. the same goes for japan where we also talked in q3 last year about the lower activity. those are not offset on the improvements in capacity, where we're selling more software. that took us to a negative growth of 7%. it also led to profitability.
>> you have one broker who's holding on to hope around your company and sees the drop in the share price as a buying opportunity. that's bernstein. they're appointing to what lies down the track in the pipelines. tell us about the activity you're chasing. >> it's very much what we're having on infrastructure, the company, we grew 5% and improved profitability. we have in the second half lower growth and better profitability. now we see the same tendency coming in here in the first quarter. what we are also saying is that with the current visibility and avoided contacts we have, when you look into the second half, we believe we gradually will have an impact on sales in the second half on infrastructure, that will come back compared to where we are right now. there's a lot of activity in our business right now. >> when i look at the rationale behind some of the weaker
numbers in escape, there's a slowdown in fourth generation mobile data networks. are we looking at a gap period now? we're waiting for the next phase, the next investment really. >> you build coverage first. you build out coverage of the technology and after that you start to identify it and add capacity as subscribers are coming on. what we see now on the general level worldwide, we see more of that capacity cycle right now. the market is still doing a lot of 4g coverage. we are into 180 countries and of course can see this from a global level. that's what we see right now. that is coming on the flip side where we have coverage projects in 2010, '11 and '12. we grew in our network spaces because we were gaining market share and rolling out networks. >> i want to get to the gross margin quickly in about ten
seconds or so. 36.5 versus 32 a year ago. how sustainable are margins? >> i think there's a couple reasons for it, number one, the mix we get much more capacity upgrades right now. that's one reason. another reason is that in general, lower net rollout, et cetera, is impacting. finally we have less restruct e restructuring. on top of that, it will work with our commercial strategies as well as cost over time. we have been focused as well for the last two years, we're very much focused on profitability. >> we have found more time on europe. what are you seeing on this side of the world? >> i think that what we have seen for quite many quarters right now, we see good activity level in europe. it might be because we have
gained market share, of course. we also see deployment happening in europe and of course our western europe region had a flat sales this quarter. but still some markets were growing. if you take northern europe and central region was growing this quarter. we see fairly stable situation in europe where we have been growing the last couple of quarters. not really in this quarter, it was probably more flattish this quarter. >> appreciate the time today. thank you for joining us on the back of earnings, hans vestberg, the ceo of ericsson. just a quick look now at how u.s. futures are faring, coming up to the market, open state side today. all indices in negative territory. that's given way to a negative enication as you can see, does come the back of what has been on the session. six straight days of gains. "squawk box" is coming up next. becky quick will have an exclusive interview with warren buffett this afternoon following his annual charity auction in
good morning and welcome to "squawk box." the s&p and dow inching closer to record highs. and it's another big day for quarterly results, including dow chemical, procter & gamble, boeing and apple. and factory activity slows in china and this is the fourth straight month that that has happened. it's wednesday, april 23rd, 2014. "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on
cnbc. i'm becky quick along with joe kernen. andrew is off this week. we have another big show this morning with a huge newsmaker coming our way at 7:30 a.m. eastern time. bill ackman will be our special guest. he's making waves as he teams up with valeant in a bid for allergan. we'll talk about this more coming up, including comments from carl icahn. he was on the opposite side on herbalife. there's a lot of enimity. >> at one point he said i have nothing at bill ackman. he made me $400 million. i like him. >> there's been a lot of bad blood there. >> he was saying in a way he took advantage of