tv Worldwide Exchange CNBC May 8, 2014 4:00am-6:01am EDT
you're watching "worldwide exchange," i'm ross westgate. headlines from around the globe. the ax falls. barclays says 1 ,000 jobs will go over the next three years. the stock rallies as he tells this channel he's separating off noncore assets. >> this is not about a set of bad assets we're trying to run off. this is about nonstrategic aette ises which we want to exit or run off over time. the vast majority is from the investment bank. despit a cautious outlook, morrison sales continue to slip
as the retailer is battling to keep market share. and the art of doing nothing is honed both sides of the atlantic. fed chair janet yellen keeps investors guessing while mario draghi is to remain tight lipped on the euro. we'll be joined exclusively as well by the ceo of another big player in the asian market, tid tidjane thiam joins us in three minutes. you're watching "worldwide exchange," bringing you business news from around the globe. hello an a warm welcome to today's "worldwide exchange." as ever, there's plenty to get through. we'll be concentrating on the countdown to the rate decisions from the ecb and the bank of england.
first we kick off in the corporate sector and the uk bank barclays. it's unveiled a radical overhaul that will see the british lender cut 19,000 jobs over the next three years and separate noncore assets into a bad bank. investors have reacted warmly to the plan. shares as you can see at the moment up 4.5% in the uk market. the ceo has been speaking to us in a first cnbc interview. jeffrey is with us on set. >> it's interesting. i went to anthony jenkins first big press conference when he took over in 2012. at the time you'll remember there were calls for something to happen. dimon ha been squeezed out of the investment. jenkins comes in, he knows the retail but not necessarily the banking business.
people waited to see what he would deliver. 18 months on what have we got? a mather announcement with significant job losses. so when i initiated the conversation, really that was my first question, what now is barclays going to be? given the action that they're taking this morning. you have big job losses. you've got four business divisions refocused and of course this spin off into a noncore operation. let's have a listen to what he had to say. >> this is about barclays future as a focused and balanced international bank, a bank that can be the go-to bank for our customers and clients but also deliver substantial returns for our shareholders. basically we're dividing the bank into two, a core group of four strong businesses that are well positioned in their markets with good growth prospects and good returns. we're combining our personal and corporate banking interests in the uk into a new business. we have our barclays car
payments business, our africa interests and an investment bank which will be much more focused on client-led origination. then everything else which is nonstrategic will go into a noncall unit. that includes parts of the investment bank retail interests in western europe and certain other corporate interests in europe and the middle east. >> and just to focus on that noncore operation for a moment here, what percentage of those assets are nonperforming at this stage? because i understand you don't want this to be called a bad bank as it's been christened in the media, you would rather it something else. but to what extent are there nonperforming assets in the portfolio? >> the assets within the portfolio are generally performing well. this is not about a set of bad
assets we're trying to run off. this is about nonstrategic assets which we want to exit or run off over time. the vast majority of it is from the investment bank. it's about 115 billion in total of risk-weighted assets. 85% of that is from the investment bank. we are targeting to run that down by 50 billion of risk-weighted assets by 2015. we're confident we can achieve that. >> yes, interesting someone that he's trying to put on that. i suppose the thing is, the investment bank got to be no more than 30% of the assets, a quarter of the profits will come from that in the future as opposed to 50%. it's a major reshaping. >> this is no longer the bank that bob diamond built. >> this is britain's leading investment bank as well. >> yes, yes. it does raise bigger philosophical questions about the brit's ability to be leading
in the banking segment. >> this is about money. new capital rules means it's just much harder to tornado a profit which leads us to the ficc division. >> yes. this division which is called ficc, effectively, the bond trading desk, currency and commodities, barclays is getting out of commodities. what was interesting i thought in the conversation with anthony jenkins, he basically doesn't see a pickup in the outlook for these business divisions. and so this is what i asked him. you know, it's all well and good to make these structural changes now but what if things start to improve around the ficc business? barclays will not be in a good position to take advantage of that. let's have a listen to what he had to say. >> the combination of much greater capital allocation towards ficc activities and the state of the economy with the
end of quantitative easing tapering and so on means the outlook for ficc is quite challenged going forward. we believe that will persist for a number of years which is the right time to reposition the investment bank. >> his answer is it's structural. >> definitely. but you have to bear in mind he comes from the retail business. there will be those critics sitting in the investment bank who say, well, we were never going to do well under anthony jenkins anyway because he understands far better the other side of the operations. but i think, you know -- >> the investment bankers will be sitting there going we've been through so many cycles, we've seen it so often as well. downturn, fire a lot of people. upturn comes, hire a lot of people. there's money to be made. >> he has been in the headlines for all the wrong reasons recently. there's an issue for bonuses for investment bankers. there were some saying, look, is
there capture here? have the investor bankers managed to get anthony jenkins to do their bidding? he used the term death spiral when talking about what would happen to the bank if they got h rid of the big hitters. i said was that comment ill-advised? he said no, no, no. we still have to pay properly. >> earnings fall, bonuses are going up. >> yep. >> this point about are bonuses linked to -- clearly not lunked to the overall profits of the units, the individual units. >> absolutely. the share price reaction this morning, is this knee jerk because of significant job losses, cut the cost base, improve the margin and so on and so forth? or is this investors buying in to jenkins restructuring of the way the business as a whole operates? >> your thoughts?
>> i'll leave that one out there. if any shareholders or investors this morning would like to write in, we'd love to hear from them. >> jeff, good stuff. thank you. you're welcome any time. >> thank you. >> you have to finish at 8:57 every day. >> i'll bear that in mind. >> you're more than welcome to hang on. >> i wonder what it looks like from where you sit. >> it looks very good, indeed. thank you. let's stay with the banking sector, emerging marcus, standard chartered, a drop in first quarter numbers, as they say the market continues to be difficult. also coming up on today's show, hot or not? samsung sacks their head of design after complaints about their new smartphone. with the ongoing patent war with apple, do problems run deeper? and not so super mario, the
wii-u is a flop. how will they turn things around? and does tesla need a jump start? they are making some massive investments. we'll take a closer look a little bit later. meanwhile, here we are, just over an hour and ten minutes into the trading day in europe. take a look at the dow jones stock 600. we are weighted to the upside. advancers currently outpace decliners by a ratio of 7-2. the ftse 100 was down. helped along by barclays. we're currently up 30 points, 0.5% higher. the bank of england coming out with its latest rate decision. there's a big focus on housing, three former chancellors coming out and saying we are at risk of a housing bubble at the moment. we'll be talking about that later as well in today's
extended programming. xetra dax is up 0.5, the cac current up 0.4 and the ftse mib up 0.8%. other stocks we're keeping an eye on this morning, metro, the german retailer, up 2.5%. right now, coming out with numbers better than expected. one of the top three retailers around the globe. bt as well, this stock currently up 2.5% at the moment as well. investors celebrating the firm managing to report its first growth in consumer revenues in a decade, boosted by strong demand for the firm's broadband and sports tv services. but no letup for the grocers in the uk, marshman's down 1.4%. shares sliding. the supermarket continuing to struggle as it attempts to continue to compete with discounter like aldi. munich re posting a 4.6 slump in
first quarter net profit. the firm hurt by a drop in premium income amid a decline in insurance prices. excuse me. jorg schneider will be joining us later. i might have to get some water in a minute. bond rates, post janet yellen, this time yesterday we were yielding around 2.58%, just up from the three-month low on friday. a little bit higher, 2.62%. janet yellen says the economy still needs plenty of support and we are still data dependent. not too many surprises from her testimony. yields back over the 3% mark. we'll get into that later as well. on the currency markets, we're still eyeing up these two-week -- two-month highs we hit on friday. 1.3952, euro/dollar. mario draghi and the ecb, they've got their rate decision out at 1:45.
the press conference comes 15 minutes after that. what will he say about strength in the euro. we'll get the latest from annette to. sterling, 1.6951. and the aussie today, 93.80. getting stronger. we have chinese trade data that was okay and jobs numbers as well supporting those. they're up, beating for three months in a row. on that data, let's get the latest for all the market reaction out of asia. sri is with us today. i've missed him for the last couple of days. hey, sri. >> you can't get rid of me, ross, that easily. these markets get me choked up as well. i feel for you. broadly, we are looking at quite a positive tone for the asian markets. that's down to the dovish tone that janet yellen struck at the testimony and also somewhat conciliatory statement from
vladimir putin over ukraine and over those referendums in the eastern part of the country. elsewhere, you mentioned big emphasis on the greater china markets and broadly, we did see some pretty constructive trade numbers. the market was expecting a contraction for exports and imports. we didn't get that. we got a marginal pickup. surprise there. in the positive direction. a lot of question marks over why the trade data was so upbeat, was it over invoicing? was it the mmb effect or could it be down to the changes from the policies perspective, the calibrated moves by the pboc and beijing, the mini stimulus, the targeted infrastructure rollout, that all necessitates a more raw materials and we did see quite a sizable pickup in copper and iron ore imports in the month of april. the market is liking these numbers, shanghai composite up,
2,015 is where we stand. the nikkei up, the hang seng up as well. there were pockets of weakness. down by 1.5%, the bank occ set. the pro-government protesters mobilize their forces and the opposition feels somewhat emboldened by what happened yesterday as well. so thailand seems to be entering a new dangerous critical phase in the markets are affecting that right now. back to you now. >> thanks very much indeed for that, sri. we'll catch you a little bit later. pleaseded to know we can't get rid of you. i like that thought. prudential has come out with its figures, the uk insurer with
a growing asian business. the new arab business profit increased 20% in a constant exchange rate basis. they jump started 2014 with growth in new business profit. uk new business profit 90% higher. reflecting strong contributions from bulk annuities. we'll be getting a view on that as well. they may be changing their annuity strategy. they say the m & g enflows, 1.4 billion. up % to 129 billion pounds. a fairly strong looking set of numbers this morning at the moment from prudential. we'll get plenty more with the ceo. he'll be joining us in around 15 minutes time, exclusively here on cnbc's "worldwide exchange."
an awful lot to get through. we'll get his views on the slight problem the fsa had when they announced an inquiry into old policies. more to come. it is also the ecb, a slight tickup in eurozone inflation from 0.5 to 0.7%. it might have eased slightly the pressure for mario draghi. the ongoing strength of the yur coe could force his hand. he warned a rise in the single currency could trigger policy action. the market was pricing out the risk in the periphery and reducing the euro's premium. >> i think policy is a factor but more recently it's been overwhelmed by movements in the perceived riskiness of the euro. that's why the bearish overview,
which is so widespread has not played out for a lot of investors. >> ahead of this ecb meeting, annetta, good to see you. what are the balance of risks right now for the ecb? do they want to do nothing? >> yes, they probably actually are banking on the fragile economic recovery which we are seeing recent pmis are showing that the economy in the eurozone as an aggregate aexpanding. we're seeing a pickup in economic activity. that's one of the big focus areas probably of mario draghi. what he's going to say about the exchange rate and what we might expect from the next meeting i'm going to discuss now, my guest is a macro economic professor from university. thanks so much for joining us. we were discussing earlier on
where the is the pain flethresh for the euro, for the ecb. are there different thresholds. >> the euro is too weak for germany, it could be even stronger because we see a recovery going on there. it's too strong for countries like grease or other program countries. it's a huge difference. for instance, we calculate a pain threshold of 1.55 for germany and below 1.20 for greece. it's very difficult to handle this. >> so in other words, the southern countries probably will be lobbying for some measures to get the exchange rate down. what could the ecb do to lower the exchange rate? >> if i were mario draghi i would not decide in favor of weakening the euro right now because it's dealing with political dependence of the ecb and you never know where the equilibrium exchange rate is. there is reasons for a strong
euro right now. we have capital flowing in, making the euro more strong and also refund efforts might be impeded by a very low currency. so everything is not speaking in favor of doing it. again, you might oppose against the french wish this time to weaken the euro. >> thank you very much. sorry for being so sort this time. ross, this times at 2:30 c.e.t. back to you. >> don't forget that ecb decision aat 1:45 c.e.t. followed by a mario draghi's press conference. and jean-claude trichet is
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bank of england announces its rate decision later today against a mixed matchup. helia is outside the bank of england. helia, they are warning about the strength of house prices. have we got a problem or not? >> well, i think it's fair to say that we have an accelerating boom in house prices. and it's not just the three former chancellors that have been highlighting this risk. there was a part in the oecd commentary earlier this week and even the new deputy governor of the bank of england was warning that the biggest risks to financial stability was this asset bubble and how it's going to be kept in check. we're standing outside here waiting for the mpc decision on rates i don't think we'll get any. no one is expecting rates to change before april next year.
living in this new era of central banking where interest rates remain at historically low levels. and asset bubbles are kept in check by these macro potential tools. we had the mmr, the mortgage market review. that was brought in last week. we'll get banks stress tested that will have more tools in june. the question is will these be enough? with me now to discuss this is sus susan emmit. are these tools going to be enough and is the housing bubble something we should be worried about? >> it's early days on the mmo. it's only been brought in. we're in a bit of a wait and see territory at the moment. what we have been told by lenders is that they've already put in some of the measures that mark carnie is calling for. they've been changing their way since the start of the year. so what we don't expect to see,
a dramatic change. however, given the new stress tests that are coming in, it's hard to see how it won't dampen the housing market a bit. >> we had figures out this morning from the halifax saying that actually house prices have slowed for the second month, ever so slightly. this potential bubble that could deliver us to boom and bust again seems to be the only black cloud on the uk economy horizon. how seriously should we take those figures? >> well, we certainly have seen a slight drop in the halifax prices this month and last month. but i wouldn't read too much into just a monthly set of figures. if you look at price on an annual basis, it's still very strong. if you look at other indices such as the nationwide or the land registry, they are both showing quite strong markets. the mark set strengthening. the strong break we've seen in london is beginning to filter through to the rest of the country, most places around the
country are now see something sort of price rises. >> not as much as london, though, this is 18%. that's massive difference. that's grown exponentially. will we have a complete dislocation between the country's capital and the rest of the country? >> london has been outperforming the rest of the country since the mid-'90s. what we are seeing is the gap is getting wider and wider. the nationwide reported an 18% rise in london, almost double the rest of the country. it's hard to see this continuing. at some stage london will have to slow. we think a lot of people will start to look beyond the capital for better value for money and the price rises will ripple out even more. >> thank you very much, susan there with her view on house prices. the growing conflict, i guess, we'd want to be looking at is between the bank of england trying to quell this asset
bubble and perhaps the treasury and the chancellor trying to encourage and support economic growth in schemes like help to buy and how that develops over the next year. back to you, ross. >> plenty more to come from helia. we have extended program counting down to the rate decision. meanwhile, still to come on the show, prudential is talking about a strong start to 2014. new business profit up 29%, asia new business profit up 20% in the first quarter. we'll dig into the details. we'll be joined by the ceo, tidjane thiam, exclusively here on "worldwide exchange" after this short break. being able to pay as we go is crucial for a start up. having to fork out a lot of money up front was risky. we can launch a feature really quick, and if the feature doesn't work, we haven't lost anything,
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you're watching "worldwide exchange," bringing you business news from around the globe. headlines from around the globe. the ax falls. barclays says 19,000 jobs will go over the next three years. the stock rallies as the ceo tells this channel the difficulties in the fixed income division are expected to continue. >> the outlook is quite challenged going forward. we believe that's going to persist for a number of years which is why now is the right time to reposition the investment bank. prudential shares jump as first quarter sales showing new
business growing in its major regions. we'll be speaking exclusively to the ceo, tidjane thiam, in just a moment. german retailer metro is up near the top of the german market. morrison sales continue to slip as that retailer battles to keep market share. and the art of doing nothing is being honed on both sides of the atlantic. fed chief janet yellen keeps investors guessing while the ecb's mario draghi is set to stay tight lipped on the subject of the stronger euro. day two of janet yellen's testimony to congress today. and of course rate decisions from both the ecb and the bank of england. ahead of that, european equities are firmer, begans of 0.5%. the ftse mib up 1% on the currency markets.
dollar/yen, 101.82. low euro/dollar near tuesday's two-month high at 1.3933 and sterling not far away from its near five-year peak. up near 1.70 the pmi earlier in the week. now, insurance firm prudential says it's confident about prospects for the rest of the year, this after posting a 29% jump in group new business profit for the first quarter. the shares on that news are doing okay, up 2.29%, up 7% in the last 30 days. joining us exclusively here on "worldwide exchange" is tidjane thiam, the ceo at prudential. good to see you. >> good morning. >> i peru you slept comfortably last night after your fairly bullish forecast about the rest of the year. >> yes, i had a good night. better than last time. last time i was here we were
announcing scb. that was being negotiated through the night. i was more tired. good numbers. region, 20% increase in asia, 67% increase in the u.s. 90% increase in the uk. >> as i said, that's down to three big bulk annuity deals. if you take those out, what's the -- >> our retail picture is down about 11%. the good thing about being a diversified group, we always talked about the diversificati n diversification. profit is up 90%. we're quite pleased with that. if i may add a word about asia, i looked this morning, 20% increase. that's 19 quarters in a row above 16% in asia. so our team in asia deserves a lot of credit.
>> you've talked about the key focus sa your asian franchise, personal wealth in south korea, japan, singapore. what's happening with your operating profits? in this region. >> we have four big businesses in the region, hong kong, singapore, indonesia and malaysia, the big four as we call them. hong kong up 27%, singapore up 18% and you pound indonesia flat but indonesia was flat -- actually good news of these results, we're up 20% with indonesia flat. we often said we are not just a play on indonesia and this proves it. in indonesia it's simple. we had floods in january in jakarta. we only sold one month out of four. in march we had performance of 19%. doing very well. >> look, you want to be balanced and diversified, that's where
you get your growth from. >> yes. >> you don't want to tobe too dependent on one group. >> you know, that's enough. >> i don't think we'll actually say that's enough. if you look at the shape of the world economy, you've got a big number. china has about 8 million gdp. southeast asia has about 2. ec is 12, uk is 2. you can see a scenario where asia gets 70% to 80%. i think down the road that's absolutely possible. with the balance coming from the u.s. and parts of the world. i think the rise of asia in our numbers is inabsorbable. 1.5 trillion growing at 10%, so that's going to play a role if you look five, ten years down the road, which is what we need
to do in the long-term business. asia will be very strong. the u.s., we are not a big player in the u.s. but if you are a reasonable -- you get quite big. >> it's a big market. >> exactly. it's just a big market. our u.s. numbers were 1.3 billion in 2014. i always say never bet against the u.s. economy. it's a good part of the world to be exposed to. we like that balance. from time to time, we get criticized. when things get tough, everybody is happy that we have the diverse fiction. >> with these numbers and this sort of growth, you know, are we going to get nice annual rises in the dividend that are sort of a long way ahead of inflation? >> it's tempting to answer that. the dividend is a bold decision as you run the company to create the head room to increase the dividend. i think we have always said we want to have a progressive
policy. raise the dividend regularly. when we do better than expected, we have no qualms giving that back to shareholders. that's what you've seen, two rises in three years. >> how are you delivering? do you see that changing anytime soon? how are you returning the returns that you need? >> it's a very interesting question. as insurers you know that we've said qe was a necessary answer to a crises. we need to operate perfect, it will be the normal yield curve environment and higher long-term rates. the low rates are here to stay for a while for us. we think that investing in real assets has actually become priority for us. you heard us talk about infrastructure. we have 36 billion of infrastructure in the uk. addressing the first quarter, we
did another 700 million. that's one of the answers. something we also intrend to push in our emerging economies in places like indonesia, the demand to are that is very strong. we're looking at ways to also invest in real estate, physical assets there. we like real estate. it's also a good hedge against inflation. so fundamentally, we are happy that rates have been normalizing. we expect them to go even higher. for us, it's probably a good thing. >> it's one of the reasons the chancellor announced in his budget, scraping the annuity rules. he's saying, look, you don't have to buy an annuity. how much can you be protected from that? you talk about these big bulk annuity deals that you've done. that's a massive shake-up. we saw big sell-off. >> it is. it is. we made a statement that was supportive. we said it was a good change. we are for a market-based solutions but provide customers with choice.
property val yaw, because of qe and the price of annuities went down 27%, in other words, if you were born in 1949 instead of 1947 your income in your environment was going to be 30% lower. i said it had become a birth year lottery. and that is not fair. so absolutely relaxed about the fact that it's been put an end to. people now can choose where to put their money. we think it's a better position to be in. we think some people will still choose to buy an annuity. people are still concerned about running out of money and want to ensure against that longevity risk. others will buy -- take someone who has a 20,000 annuity. before they would have been able to take 25% tax-free. the rest would have been taxed at 55%. now they can take 25% tax free, say 5,000, then you have awe
taxation of 10,500. they get 7,500 from the state. 8,000, they can take more tax free, the 12,000 we would advise them to put it in a -- >> they're basically going to get a lot more control. >> yes. >> very briefly, we had the fca announce an investigation about a month or so ago. took them six hours before they clarified it, in which time billions was wiped off the value of insurance stocks in the uk until they came out and said they're not going to retrospe retrospectively ban exit fees. you're also chairman of the abi. what discussions have you had with them since to make sure this doesn't happen again and you guys are working better together. it was a bit of a crass mistake they made. >> things happen. we run organizes and companies to fix things that go wrong sometimes. it was an unfortunate incident.
i think there's been a good dialogue since then to ensure better communication between the industry and the fca. there's an investigation ongoing on the incident. i won't comment on that. it wouldn't be appropriate. it is important, given the size of this industry, i'm speaking here as chairman of the abi, there's no upside for any of the stakeholders in having poor communication with originators. it's important we work more closely together and produce better income for both of us. >> tidjane thiam, good to see you. ceo of prudential. bt celebrates after the company managed to report its first growth in consumer revenues in a decade. they told investors they will extend its share buyback program. the ceo said the numbers are proof his growth strategy is working.
>> when a consumer business is growing 9% at a top line and 5% at a bottom line, you can see it's working. >> it's good news for consumers because it gives choice and ensures the alternatives in the marketplace. meanwhile, a different story at deutsche telekom. the first posted a drop in first quarter profit as it spends more money in its north american operation, t-mobile u.s. deutsche telekom says the numbers show his decision to invest heavily in that business was the right one. metro is in the green as investors strug for disappointing second quarter numbers. the german retailer reporting a wider loss as it suffered from a strength of the euro and late easing. the firm is making progress, especially in emerging markets. a lot less positive for the british supermarket operator, morrisons. shares down. the number four grocer posting a
worsening fall. the retailer continuing to struggle as it attempts to compete with discount retailers. the we'll be speaking first on cnbc to the cfo around 20 minutes time from the munich re. security issues have overshadowed the economic forum in africa. the president and chinese premier will make an announcement. we are joined from abuja. bronwyn? >> thanks, russ. i'm here in abuja, nigeria's capital.
this is the first forum in an african country. desput the security concerns and the international outcry over the kidnapping of 208 nigerian school girls, more than 900 leaders from business, government, civil society and academia have gathered here in abuja. that's to discuss africa's opportunities and challenges under the banner of inclusive growth and job creation. the imf sees africa growing at 5.5% over 2014. that's up aggressively from the 4.9% levels seen in 2013. but south africa does have its challenges. 7 out of 10 africans do not have access to electricity. we have a population of 1.1 billion people, that is 15% of the global population, making us the world's second most populous
continent. of course, there is the consumer story, the emerging consumer is growing and that middle class with disposable incomes. jobs are absolutely crucial to get africa on an even keel and working as part of the global economy. regional integration is one of the big discussion points here at the world economic forum. and i think that that job creation situation is going to take center stage. it's fitting, the opening that we are heading into shortly around about 11:00 central african time will host a number of heavyweight names there. we've got the president of nigeria, president goodluck jonathan. he'll be joined by an east economic representative. and africa's richest man will be taking center stage on the panel. as you said earlier, it's also about china and premier li, the
slightup tick in eurozone inflation may have eased pressure on the ecb. might the ongoing strength of the euro force marrow drag-- ma draghi's reaction? just how the strong currencies hit their bottom line. >> single biggest challenge for global companies is going to be the currency fluctuation, particularly with a very strong euro, which will lead to negative reporting numbers like henkel. >> the foreign exchange rates against the euro are weakening.
>> we gave up five points in currency. we beat in the cloud and we beat on revenue, so here we are. >> where is the pain threshold for the ecb and the euro? annetta is back with us in brussels. annetta, what is the mark that is too much for the ecb to bear? >> well, it's actually really down to calculation, every single broker just doing. the ecb is not telling us where the market is but it fears that the mark is around 140. mario draghi has upped the rhetoric, just before the euro is actually approaching that level with those comments that a further rise in the euro could trigger policy action. the big question is, ross, what can they do to really lower the euro exchange rate on a sustainable basis? there are a lot of analysts saying that it's only a
concerted action between many central banks that you really can lower currencies on a sustainable basis. what they have as measures now is either lowering the rate to negative or to zero and by that lowering the deposit rate into negative territory or they also could go to the markets to buy assets, something which was a big topic during the last press conference. but nobody really thinks that this is actually going to happen today. let me recap what happened after last month's meeting. we have seen inflation picking up slightly to 0.7%. of course, well below the ecb target but on the right track. most importantly we have seen economic data coming in better than expected. that will be one of the big
topics most likely, mario draghi will concentrate on. but also one last word on money market rate, we had a lot of volatility there. that might be an area of concern also for the ecb. ross, back to you. >> that rate decision due out in around three hours time. we'll have that plus the following news conference at 14:30 cet. don't forget also our u.s. colleagues will speak to the former ecb president jean-claude trichet at 10:50 today. for more breakdown on whether the ecb should change interest rates, logon to our website, cnbc.com. there's a big discussion ongoing there. the first japanese carmaker to sell over 10 million units in
a year, toyota. a turnaround for the near burnout it experienced at the height of the financial crisis six years ago. the vice president of austin sullivan joins us now. vick, thanks for joining us. it's actually less the climb back from the financial crisis, it's actually more the recovery from their huge recall i'm interested in. have they restored confidence amongst consumers? >> i think if you look at the financial numbers, it's a bit of both. the numbers have gone up in japan and u.s. so it's not just recovering from the consumer confidence but it's also recovering in terms of numbers. as far as the consumer confidence is concerned, i think it's a process. we can't say they have actually done it. it's a process. and they have begun well on it and they should continue this journey in years to come. >> they are going to get a $1.2
billion fine for hiding the information about the defects in its car. how big a blow is that? >> if you look at the total numbers, the net margin, i don't think the impact is too much. it's less than 10% of their net margin they made in a year. financially, i think toyota will take it by both hands. on the other hand, by settling this $1.2 billion and settling this case and coming out of this case, they have actually turned a page. that i would believe is a bigger impact that they will feel in years to come because now, the past is behind them. now they can start with a clean slate and now they can go ahead and do their best to get the consumer confidence, get the quality back on track. get energy going into their dealership network and, you know, aim for better and better profits in years to come.
>> the yen, of course, is off its strongest levels since he came to power. do you think it will provide from here a favorable boost for the japanese automakers? is it your view it will weaken further? >> if you look at the current yen rates, it's hard to say it will weaken further. it's a model they produce in japan and sell in u.s., that's where they make maximum profit. this year, the bulk of the product is controlled by the consumer movements. if i were toyota, i would not bet on the yen weakening any fudge. at this level, i would say we should plan for the financial year, which is the next financial year and they should aim to make money at this current level of yen and not expect yen to weaken any further. >> thanks for that. nice to see you.
have a good day there. plenty more meanwhile still to come. investors are backing barclays radical turnaround plan with thousands of job cuts. we have full analysis as well in the next hour of "worldwide exchange." also still to come, of course, we'll get more reaction to janet yellen's testimony yesterday. the first of two days of congress testimony. futures this morning are higher. the currently the dow is caught i by around 21 points, the s&p up around 2. second hour of the program, coming up. rapid prototype a lot of ideas.o being able to pay as we go is crucial for a start up. having to fork out a lot of money up front was risky. we can launch a feature really quick, and if the feature doesn't work, we haven't lost anything, and we can have something up and running in days.
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this is "worldwide exchange," i'm ross westgate. the headlines, the ax falls. barclays says 19,000 jobs will go over the next three years. the difficulties in the fixed income division will continue. outlook for ficc is quite challenged going forward. we believe that's going to persist for a number of years which is now is the right time to reposition the investment bank. >> shares in prudential jump, first quarter results show new business growing in all its major reasons. the ceo, tidjane thiam, told me why the results are working out.
>> the good thing about being a diversified group, we always talked about the benefits of diversificati diversification. it shows its value in situations like this. >> metro going fairly well. morrison sales, continue to slip as they bat toll keep market share. the art of doing nothing is being honed on both sides of the atlantic. fed chair janet yellen keeps investors guessing. plus the ecb's mario draghi will stay tight lipped today on the subject of the strong euro. you're watching "worldwide exchange," bringing you business news from around the globe. >> very good morning to you. if you've just joined us in north america, welcome to the start of your trading day on "worldwide exchange." u.s. equity markets on wednesday, today futures suggest ahead of janet yellen's
testimony part two, we might inch up higher at the start this morning. the dow is currently some 22, 23 points above fair value after being up 117 points yesterday. the s&p around 2 points above fair value, it was up 10 points during yesterday's session. the nasdaq was the lagger, dropped by yahoo!. yahoo! off by 6% because the proposed ipo of alibaba looks to be at a valuation less than they had been hoping. the nasdaq is higher by around about five points after being up 0.3% yesterday. a polarized day for u.s. stocks as we were saying. the composite down 13 points as well. pulled, again, down by smaller companies. let's show you what else we have going on at the moment as well. the ftse cnbc global 300, this is where we stand at the moment, just up some 12 points. european equities right now, this is where we currently
stand. we are two hours into the trading day. xetra dax up. we have an ecb and bank of england meeting today. gilt yields steady, nothing expected out from the bank of england. no policy moves expected from the ecb. but plenty of questions, of course, in the press conference from mario draghi "a" on the fact that we have subdued inflation, 7% and the stronger euro as well. ten-year treasury yields. nudged away from that three-month low on the yield of 2.57 which we hit friday posted nonfarm payroll reports and the dollar today, kind of where we were in the last 24 hours really quarterback y really, euro/dallas, just off. we had reassuring chinese trade
data and we'll keep our eyes on sterling. it's not far away from that recent five-year high. that is where we stand right now in europe. let's recap that asian session. no better man than this one. sri is with us. >> we'll try, ross. it was really the dynamics off a dovish janet yellen and conciliatory comments, an olive branch, if you will, from vladimir putin. this is a question i suppose the geopolitical analysts can try to answer. over here, the markets are not looking all that. they're looking at that at face value. they are rallying on the basis of what we saw there. it is one month's data. i think some of the skeptics are looking at this and they are asking themselves, well, we need more confirmations as to wheth this will be a self-sustaining
rebound in imports and x port before we get bull erb on the economy. bay jng has been guiding lower. there's also invoicing which has distorted the trade data on numerous occasions. but you can't ignore the fact that we have seen stimulus, we have seen a targeted infrastructure rollout and we have and continue to see a rollout of affordable low-cost social housing by the beijing government. all of that does play into the theme of stronger imports, especially on the commodities and raw materials side. we saw that very clearly with copper and iron ore as well. let me talk to you about some of the markets in the red, vietnam's index deeply in the red, down by 6% almost. that's down to the escalation of the tensions in the south china sea between china and vietnam. remember, two vessels came to blows, if you will. the chinese turned a water
cannon on the vietnamese and tried to run it. there are fears that we could see some escalation of those tensions in the area. and the markets are getting quite spooked by that. also, there's political tensions in bangkok that are expected to ramp up as well after the moves by the constitutional court to remove prime minister yingluck from power, citing abuse of power allegations there and the bangkok market down by 1.3%. so some pockets of weakness but overall, this does seem to be a fairly pro-risk environment, largely down to janet yellen and this observation that rates are going to be near zero for a longer period of time until we really see escape velocity in the u.s. economy. back to you, ross. >> sri, good stuff. thank you for that. have a good evening in singapore. >> thanks, ross. plz plenty of corporate news out today in europe.
barclays unveiled a radical overhaul that will see the british lender cut 19,000 jobs over the next three years and separate noncore assets into a bad bank. jeff caught up with the ceo, mr. antony jenkins and asked him about the detail of their new restructuring. >> this is about barclays future as a focused and balanced international bank, a bank that can be the go-to bank for our customers and clients but also to level substantial returns for our shareholders. basically we're dividing the bank into two, a core group of four strong businesses that are well positioned in their markets with good growth prospects and good returns. we're combining our personal and corporate banking interests in the uk into a new business. we have our barclay car payments business, our africa interests and an investment bank which will be much more focused on
client-led origination. we set a target by 2016 the investment bank will account for no more than 30% at the core of the group. everything else, which is nonstrategic will go in a noncore unit. that includes parts of the investment bank, retail interests in western europe and certain other corporate interests in europe and the middle east. >> just to focus on that noncore operation for a moment here, what percentage of those assets are nonperforming at this stage? because i understand you don't want this to be called a bad bank as it's been christened in the media. you would rather it something else. but to what extent are there nonperforming assets in the portfolio? >> the assets within the portfolio are generally performing well. this is not about a set of bad assets. this is about nonstrategic
assets. the vast majority of it is from the investment bank, about 115 billion in total of risk-weighted assets, 85% of that is from the investment bank. we are targeting to run that down to about 50 billion of risk weighted assets. by the end of 2016. very significant reduction in the noncore assets over that time period. we're confident we can achieve that. >> jeff also asked antony jenkins about the squeeze in the currency and commodities division, whether he thought this was something cyclical or a problematic structural problem? >> the combination of much greater capital allocation towards ficc activities and the state of the economy with the end of quantitative easing, tapering and so on, means that the outlook for ficc is quite challenged going forward. and we believe that that's going to persist for a number of years, which is why now is the right time to reposition the investment bank. >> meanwhile, a new report says private equity and hedge funds
have been good news for europe's bad banks. ubs says that 200 billion euros of funds have been raised to buy distressed assets from the firms. bad banks have been set up to house toxic and noncore assets. numbers hurt by broad market decline in insurance prices, though the company did reiterate its full-year target of 3 billion euros net profit. joining us on the telephone is the cfo of munich re, jorg schneider. how much is the strong euro denting your net premium income? >> good morning. that's a very important point. because we are somewhat suffering from the strong euro with regard to our premium volume. on the other hand, if there's a strong euro also claims and
expenses come in at lower values, therefore, overall we are not concerned. it's just a parallel movement in a way. >> do you have any views about whether the ecb should -- if the euro gets too strong, whether the ecb should try and do something about it? >> we think that the ecb should continue with its current policy and should, over time, try to overall reduce the volume of money in the market. that is most important now to get back to normal circumstances. >> yes. easier said than done, though. >> absolutely. you're right. but it needs some courage. >> okay. meanwhile you've got a deal with sort of a global low yield environment. how do you -- how are you trying to generate sufficient returns that you need? >> currently we can live with the situation.
so we are re-investing our funds at a rate around 2.5% with, i think, a good mixture of low risk assets and some very limited, very limited bets. and this is somewhat below our running yield in the portfolio of gnawnow 3.1%. therefore, there will be a further moderate decline because it finds its bottom. we can live with the current situation. >> we have a soft market environment, a lot of extra competition from pension funds as well. is the climate going to get more competitive or less? >> it's competitive enough, i would say. so circumstances have somewhat deteriorated. but for us, the business is still profitable.
therefore, i think as long as all competitors behave rationally and they all need to earn some returns on their invested capital, things will not deteriorate further. >> jorg schneider of munich re on the telephone from, naturally, munich. some of the earnings out of europe, investors from bt in britain, the firm managed to report its first growth in consumer ref nivenues in a deca yes, first time in ten years that happened. bt told investors it will extend its share buyback program. no surprise, the result is seeing the shares up 3.25%. the ceo said the numbers are proof that his growth strategy is absolutely working. >> when a consumer business is growing 9% at a top line and 5% at a bottom line, you can see it's working.
>> it's good news for consumers. it gives choice and ensures there are alternatives in the marketplace. >> different story over at deutsche telekom. the firm posted a drop in first quarter profit as it spends more money on t-mobile u.s. last week, the firm announced it added nearly 2.5 million new customers in the first quarter, for outpacing its rivals. the ceo says those numbers shows the decision to invest heavily in that business was the right one. german retailer metro in the green as well. the retailer reporting a wider loss. it suffered from a late easter as well as the strength of the euro as well. though the firm is making progress, especially in emerging markets. a lot less positive for morris morrisons, its stock is down.
you're watching "worldwide exchange." the headlines today, barclays looks to slim down with a plan to cut 7,000 jobs in its investment bank. momentum stocks take another hit as the nasdaq and dow diverge. and as the ecb and others hold their meetings today. janet yellen returns to capitol hill today, this time to appear before the senate budget committee at 9:30 eastern. her prepared remarks will be the sames ayesterday. yellen didn't offer much news in the way of the direction of interest rates. she did say despite the low first quarter, the economy will end the year in better shape, though recent weakness in the housing market did bear watching. meanwhile, a slip uptick in
eurozone inflation might just about ease the pressure on the ecb. it's weak against the dollar. euro has appreciated roughly 0.5% since the ecb's last meeting. as policymakers have been speaking out about what action they think the ecb should take ahead of the decision made today, here is what some of them have been saying. >> the central bank of europe should be better prepared to flex its muscles and to be very credible. >> the ecb is independent. they have a clear mandate and a clear task. and they will consider whether action is necessary and what measures have to be taken. >> at the moment the ecb considers an overly strong euro is weighing too much on prices and leading to too low inflation is, in my view, a correct
assessment. from that point on, it's down to the ecb and only the ecb to draw conclusions. and the ecb's meeting will take place in brussels. annetta joins from us there. annetta, this is a rewind of where we were a month or so ago. will the message be any different? >> the message probably is not very different as the economic data is showing that the economic recovery is on a low level. that is actually playing into the hands of mario draghi who is always saying we are seeing a recovery in the eurozone and the current monetary policy stance is cumulative. on that comment we won't see anything else and the rationale of mario draghi can also be to
wait until they hike their rates. with that, he most likely will get rid of his problem he's having right now of the strong euro. the question is, what can he essentially do to lower the euro exchange rate? he of course can lower the interest rate to 0 or close to 0 but if that will have a dramatic effect on the exchange rate, a lot people are doubting it. and also he could do a little bit of quantitative easing but also here, "a," he probably won't have a lot of support from everybody in the governing council despite the fact he was saying during last session that unconventional measure here, the governing council is anonymous. but at the same time, he's facing pressure as well with that economic recovery gaining momentum. we'll of course feature the ecb press conference which starts at
2:30 cet and, of course, the rate decision at 1:45. with that, ross, back to you. >> we'll see what has. annetta, thank you. still to come on the show, where does the tesla story go now? stay tuned. chocolate is very in. white chocolate lovers don't like dark chocolate. milk chocolate lovers don't necessarily like dark or white. before we couldn't really allow the consumer to customize their preferred chocolate. we needed the scalable cloud solution allowing them to see all 800 products and select what they are looking for. now there is endless opportunity to indulge. when folks think about wthey think salmon and energy. but the energy bp produces up here creates something else as well:
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ahead of the u.s. open today, futures are indicating we'll get a tick higher. the nasdaq up 2. that's after yesterday. we saw biggest gains for the dow and s&p in around three weeks. the focus right now on tesla, it posted a first quarter net loss on surging costs from expanding its vehicle lineup and customer service operations as well as launching a huge new battery factory or a giga factory as they call it. tesla's outlook has some investors -- with the stock falling after hours. in german trading as well, the stock is down 6%. fi phil lebeau has been taking a closer look. >> here in the u.s., shares of tesla moving lower after hours,
despite the company beating the street on both the top and bottom line. tesla earned 12 cents a share, 2 cents a share better than expected. revenue came in at $713 million, a little better than expected. so why were shares moving lower? primarily because tesla did not deliver as many vehicles as the most optimistic of estimates that were thrown out on wall street. overall, tesla delivered 6,457 model s vehicles in the first quarter and tesla says it's on track to deliver 35,000 vehicles this year. on the company's conference call, ceo elan musk made two pieces of news noteworthy for investors. panasonic has signed a letter of intent to provide lithium ion battery cells when tesla builds its new giga factory. in regards to the giga factory, elan musk says it will break ground on at least one of its two locations starting next month. that's the story on tesla's
first quarter earnings. back to you. ford will buy back up to $108 billion in stock, 116 million shares. the move will offset the potential delusion of its stock from convertible debt and stock based compensation for employees. they are holding their annual shareholders meeting in delaware. ford stock up around 1% after hours. down 0.5% in frankfurt. we'll take a short break. still to come, investors have backed barclays radical turnaround plan with thousands of job cuts and the smaller investment bank on the agenda. more from the ceo later in the show.
you're watching "worldwide exchange," i'm ross westgate. headlines from around the globe, the ax falls. barclays says 19,000 jobs will go over the next three years. the stock rallying. the ceo tells this channel the difficulties in the fixed income division, though, will continue. >> outlook for ficc is quite challenged going forward. and we believe that that's going to persist for a number of years, which is why now is the right time to reposition the investment bank. >> prudential shares jump. its first quarter figures showing business growing all its major reasons. the ceo, tidjane thiam tells me
exclusively why it's working out. >> we talk about the benefits of diversification. it shows its value in situations like this. we have many levels we can pull. >> metro up near the top of the european equity market, despite a cautious outlook. morrison sales continue to slip. the retailer battling in britain to keep market share. >> plus, the art of doing nothing. seems to be being honed on both sides of the atlantic. fed chair janet yellen keeps investors guessing. you're watching "worldwide exchange," bringing you business news from around the globe. very good morning to you, if you've just joined us in north america. we saw the best gains in three weeks for u.s. equity markets yesterday by the close helped along by janet yellen still saying the economy needs plenty of support but things are getting better.
we remain data dependent. this morning, the nasdaq, which was the underper former yesterday, we'll talk about the divergence coming up, is currently up by 2 points. the s&p called higher by 2 points and the dow at the moment is currently higher by 17 points. fairly soft indication. a little bit higher but not by much. european equity markets have been up around 0.5%. plenty of corporate news, the ftse, xetra dax. the cac current. we have rate decisions today from the bank of england. not much to expect from there. what will mr. draghi say about the continued underperformance of inflation? the stronger euro as well. >> as i say, the focus very much on the strength of the euro.
that rate decision coming in just over two hours. the single currency, of course, is appreciated roughly 0.5% against the dollar since the ecb's last meeting and mario draghi previously warned that a rise could trigger policy action. this is ceos from across europe have been telling us that the single currency strength has been hitting their bottom line. here's a re cap of what some of them have had to say. >> single biggest challenge for global companies will be the currency fluctuation, particularly with a strong euro which will lead to regularly reported numbers. >> the foreign currency exchange rates across the world against the euro are all weakening. that is worsening quarter by quarter. >> we gave up five points in currency. having said that, we beat in the cloud and on revenue. so here we are.
>> we even heard from the munich re cfo. the euro/dollar 139.43 this morning the two-month high we hit on tuesday was 139.52. we think the threshold for paying for the ecb is around about 140. elsewhere, dollar/yen, that's not far off its three-week low of 101. and sterling against the dallas, the bank of england will meet today, nothing much expected from them but we get strengthing data out of the uk. that's currently 1.6958. here's a reminder of some of
the other corporate stories we're watching. executives from comcast and time warner cable will face critics today. robert marcus and comcast executive david cohen are heffing. comcast and time warner cable have argued that the 45 billion dollar deal to merge the u.s. cable companies won't hurt consumers since they have very little overlap geographically. comcast, owner of this network. meanwhile, directv is reportedly working with advisers, including goldman sachs to evaluate a possible combination with at&t, following a recent takeover approach. directv management wouldn't take questions during the company's earnings call on wednesday. reuters reports the board believes the overture is serious enough but thinks at&t may be more interested in providing dish network which amassed a large portfolio of wireless
spectrum. directv, at&t and dish, directv is up 7%. the other two down around a percent and 2% respectively. still to come, u.s. retailers report april same-store sales. will there be a surprise in their easter baskets? we'll be beginning to the mall to find out. you love this game. more than your wife... more than your kids... more than your own mother... but does the game... love you? who cares? you get to stay at this golf resort! booking.com booking.yeah!
you're watching "worldwide exchange." recap of the headlines, barclays looks to slim down with a plan to cut 7,000 jobs in the investment bank business. momentum stocks take another hit as the nasdaq and dow both diverge. and the ecb and bank of england hold their meetings today. investors will see if they follow on janet yellen's lead. talking earlier about how the strength of the euro will be causing some discussion at the ecb. joining us with her thoughts from toronto, camilla sutton, chief -- good morning to you. look, what is going to happen with the euro and the dollar and the ecb, do you think? >> well, you raise a great
point. certainly president draghi has to be fairly nervous as we have euro here. trying to get close to that year-to-date high of 140. they've been clear, anything that highlights monetary tightening would be faced with traditional policy tools. i think the offset for the strength in euro is we have yields where they are, spanish yields below 3%, yields really across the board at the year to date lows or lower than that. multiyear lows, that's a great offset. the flip side is what about quantitative easing? i think that is where you get into inflation expectations which have come lower. however, president draghi has told us himself, it's too early to expect imminent qe. i think what we get is a dovish tone but no action and it sets us up for june. >> camilla, a lot of people will ask this question. they'll say, look, the eurozone is the weakest region in the oecd, yet it's running with the hardest currency. why?
>> well, everybody would lake to know the answer to that. i think most people are tired of being short euros and being wrong, wrong and wrong again. it looks at capital flows. we have tremendous flows going into europe. some of those flows are on the passing of the crisis, some of those flows are fx reserve managers moving back into euro. i think those strong flows coupled with looking like the crisis has passed, the bottom is behind us, all of that has really helped. we've had people short euro over and over again. those short euro players are out for now. everyone is thinking i'm not going down that road again. >> when they all get out the euro will weaken. look, we have second day of yellen today. i don't imagine it will be too different from yesterday. at what point does the dollar start maybe to strengthen on the fact that we do at some point start pricing in a shift in interest rates? how long before we get to that?
>> you're right. everybody has been wrong on the u.s. dollar strength. we have a broadly weaker u.s. dollar. janet yellen is telling us be even if we start interest rate hikes in q2 of 2015, they will be slow and cautious. interest rates would still be lower than they otherwise would even when they return to normal. we have a bit of that before we get into a time where all of a sudden tonight really does look like interest rate differentials will start to matter. but for now, the trend is certainly the one of a weaker u.s. dollar. >> camilla, good to see you. thanks for that. nice and early in toronto. we appreciate it. camilla sutton from scioscia -- scotiabank. the ceo david dewalt said he can't control witnesser it
numbers and what wall street thinks high growth companies can be. that didn't satisfy brian kelly who pressed dewalt about selling stock days before announcing earnings. >> why were you selling? to me you've lost credibility with me. how do you get that back from wall street? that's why the stock is down 22% today. nobody believes you anymore. >> hey, brian, you said it early, i think, i watched your show. you have to be here rain or shine. i recognize that. that's why i'm here. i couldn't have predicted at that time was $90 the right price for the company? was 82, it was selling at 79 the right time? my selling was consistent with all the executives, all the insiders. i still have 90 plus percent of all my holdings in fireeye. i'm highly motivated to grow shareholder value. we'll work very hard to improve the value of this company over the long haul. i have a track record of doing so. i apologize to you if you feel
like you've lost faith in me. i will work hard for you. i will be there. >> good discussion. fireeye stock down 5.5%, continuing that fall. alibaba has struck one of its biggest deals with a u.s. e-commerce company. they've agreed to help amazon rival shop runner expand in china. that will allow chinese buy from retailers in the united states. it takes less than 10% for each sale it helps facilitate. u.s. retailers help report april same-store sales today. spring my finally have sprung for these stores. courtney has more for us from
cnbc headquarters in the states. >> it's pouring outside right now. overall, things have gotten better. there shouldn't be any more excuses for the retail sector now that that weather has turned warmer. we are feeling spring following the severe winter. the easter holiday prompted shoppers to hit the stores and malls for spring clothing and items. for the dozen or so chains that still report monthly numbers, 2.8% increase. they still should be an improvement from february and march. there are three big names to pay close attention to, costco, gap and elle brands. same-store sales rose 5% for the warehouse retailer in april, beating estimates. the wholesale club operator benefitted from higher gasoline prices. analysts had been expecting sales to rise 3.2%, including
gasoline. costco in germany, down slightly about 0.1%. gap will report sales numbers after the closing bell. analysts expect sales to rise 0.5% an a research note last week, says april was probably still tough for peril retailers. some had to increase promotions to clear winter inventory. so far this year, gap shares are down a little less than 1%. elle brands, the parent of victoria's secret, the limited and bath & body works, they're forecast to rise about 4%. easter is expected to benefit victor victoria's secret the most. elle brands stock has suffered this year, more than 13.5%. good news for victoria secret, the new t-shirt bra was launched in march. they've been doing quite well and expect the momentum to
continue for the victoria's secret t-shirt bra. >> pleased to know we have easter and the weather is getting -- i'm sorry it's bad today. >> april showers. >> exactly. thanks for that. if you're hearing voices by the way, jeffrey is with me on set. >> did she say t-shirt bra? she did say t-shirt bra? >> t-shirt -- >> bra. >> didn't she say that? >> we'll come to that in a second. >> for the men's market obviously. >> we'll get to jeff in just a second. we'll talk about barclays. before you do that -- you're causing trouble. you've only been sitting here for three minutes. >> this is serious stuff. the world economic forum on the african plenary session is under way, by li keqiang.
china has been the biggest investor in africa. >> really has. >> you're not here to talk about that. >> i'm not. >> you're here to talk about barclays. >> absolutely. >> they revealed a large overall. >> 19,000 jobs to go. we knew there were going to be significant redundancies from barclays. we've seen antony jenkins take this one step forward and there are larger losses coming in the investment banking division than we anticipated. rounding it all up, it's 19,000 over the next three years here. and the key point, i think, is, antony jenkins said the investment banking division will be a much smaller part of the new barclays inc. going forward. >> we've already announced our exit from large parts of our commodities business, certain parts of our emerging markets
business. our principle trading activities, these are the sorts of things that we'll be exiting. of course, the 7,000 job reductions that we've announced in the investment bank will be spread across the next three years, '114, '15 and '16 and will be spread between the front office and middle and back. >> the other important takeaway is they're setting up this noncore unit. they don't want it to be called a bad bank and they insist the assets that are going it from the investment bank, the retail branch division, these are performing assets. this is in no sense a rump of bad business. and then ultimately they're just saying this is noncore. we'll run them down over time and we restructured the rest of the bank into four key operations. it is a different looking barclays this morning compared to the one that existed yesterday. and largely the shareholders
have seized on this as a good strategic move. >> yes. >> 5% gains, not to be sniffed at. >> it's a big move. the question is, i asked you this earlier on when we were talking. we won't know the answer unless you talk to individual shareholders. why are they chasing this higher? is it the immediate benefit of laying off so many workers, especially those who may be more expensive in investment banking. because that's an improvement in margin and improvement in return on equity immediately. >> jeff, thanks for that. good to see you. >> yes. >> come again. tomorrow. >> chemistry here. >> there is. >> we should have put this together years ago. hang on, didn't we do a show once a long time ago? >> probably time to resurrect. you see reheating of -- you see it in films, television formats.
>> don't call it reheating. that doesn't sound so good. re-invention. >> re-invention. >> yes. you can teach an old dog new tricks, right? remains to be seen. >> you just learn to wag again. still to come, is it time to live dangerously and move into beaten down momentum stocks? we look at the technicals of the divergent dow and nasdaq right after this.
breaking news. russia's interfax agency says pro-russian separatists will not postpone a referendum on independence that had been planned for sunday in parts of eastern ukraine. yesterday the russian president vladimir putin said it should be postponed. that decision may be now possibly reversed. we'll keep our eyes on that. meanwhile, on the agenda today in the united states, weekly jobless claims out today.
forecasts dropped by 19,000 to 325. a trio of fed officials are speaking in addition to janet yellen's second day of testimony on capitol hill. as for earnings. price line, liberty media, amc networks and wendy's report before the open. after the close, we hear from cnbc, monster beverage, news corp. and seymantesymantec. tesla, facebook and amazon are being hit this week especially as the nasdaq and the dow diverge. our next guest doesn't think weakness in these names will last. we have chief strategist at btig. the washout in the tech names, the momentum stocks, do you think we're coming to an end of that? >> i think so. i look the a basket of about 20 momentum stocks. and about three-quarters of them are deeply oversold.
the deepest oversold condition in some cases since late 2012, of course, when some of the names bottomed. that's compelling to me. it's the kind of environment where you think you might look back and say i wish i had taken that opportunity. about half of those names are still above or testing their 200-day moving averages. that tells us the move can still be considered corrective in some cases. that doesn't minimize the damage to p & ls, though it does suggest that the long-term uptrends could forge higher in the month ahead. we'll be looking for buying opportunities, look for short-term momentum to prove. if that does occur, that should be a confidence booster for the broader market. >> just because things are oversold, doesn't mean they can't go lower. what will tell you when things are change and the buying opportunity has presented itself? >> that is true.
you've seen some of the names miss on earnings. it's been a rough earnings season for them. tesla is another one today. just being oversold isn't quite enough. you've got to nailed right there. what we look for is improved short-term momentum to confirm the oversold conditions. really all that takes sometimes is a few days of stabilization on the chart, meaning it holes a support level of some sort. in some cases that might be something like the 200-day moving average. support is an area of former buying pressure. if you can see a stock stabilize near that area, that's an indication that that oversold condition might give way to a relief rally like we've seen in the likes of herbalife. >> thanks for joining us today from stamford, connecticut. good thing to point out there. that's it for today's edition of "worldwide exchange." u.s. viewers pick up the countdown to the u.s. open with "squawk box." european viewers, stay tuned as
good morning and welcome to "squawk box." more fed speak for today. fed chair janet yellen heads to the hill after easing some market concerns. british banking giant barclays announcing an overhaul plan that includes 19,000 job cuts and tesla leads the earnings parade, beating the street with its latest report on thursday, may 8th, 2014. "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we have a big lineup for you this morning. starting at 7:00 a.m. eastern
time, our guest host is robert wolf of 32 advisers. we have marty feldstein joining us, robert seulentic, marc fabe, jonathan bush and jason furman. we have the european central bank making its latest decision at 7:45 a.m. eastern time. mario draghi and the ecb are likely to take no action this time around. draghi will be holding a news conference at 8:30 a.m. we'll be monitoring that for any market-moving news coming out of that. we have the weekly report on jobless claims, that will be released. economists are expecting the number to fall to 325,000 from 344,000 the week before. and all of this comes a day ahead of two two of janet yellen