Transcripts For CNBC Worldwide Exchange 20140605

Margins. Plus, cut taxes to boost growth and create jobs. Thats the message being sent to the eurozone. He jones us exclusively in the studio in just over 30 minutes. Youre watching worldwide exchange, bringing you Business News from around the globe. Good morning, everyone. Just over the last couple minutes weve got some very interesting flashes and comments from the French Foreign minister. He calls for fair u. S. Sanctions against bnp. Earlier this week there was speculation about bnp being slapped with a 10 billion fine for violating u. S. Sanctions for dealing with the likes of sudan and iran. The French Foreign minister warns against bnp paribas does face sanctions or a fine rather but he says total penalties against bnp must be fair. This is a very interesting comment. He says it would be shocking to see a french ally and friend twisting u. S. Justice. Very harsh words from the French Foreign minister. So just how much economic justification is there for policy action from the ecb today . Unemployment may have edged down in may but it remains near record levels. Business activity is still comparatively weak. Most importantly, inflation has hit a fouryear low well below the Central Banks own target. How far will mario draghi go to boost the recovery . Theres one big bazooka he could fire, quantitative easing. Anyone hoping for this is likely to be left disappointed. In its absence well get measures that might cause far less of an explosion, these include a cut to the refi rate, the ecb could go where no Major Central Bank, except for the Danish Central Bank has gone before, that is to charge banks for depositing their money. Or purchases of assetbacked securities, to persuade lenders to sell more bonds. Without qe, draghi runs the risk that investors will think hes fired a pea shooter rather than a bazooka. Do you think investors will be disappointed once again today . I think youve laid out the policy options fairly neatly as far as mr. Draghi is positioned today is concerned here. I think hes got a challenge. Because i think the market coming into this is positioned with Great Expectations that there will be something new on the table. And there are almost people poised, i think, to sell on the back of this news. But the positioning does seem to be that he will announce enough here to weaken the euro. Hopefully at least when it comes to his position, i would say. Because what we heard also was one of the big goals of the ecb is to lower the Exchange Rate. Also, its not that prime mandate. To discuss that, a Macro Economic professor at at university. What are you expecting from todays meeting . Of course what draghi announced was a rate cut, the main refinancing rate will probably be cut. And hence to that due to that, i would also expect maybe negative deposit rates because we have to take care that the distance is still there between both rates. Its very important to have that in order to give an incentive for banks to lend to other banks. According to that, liquidity squeeze for banks and hence i would expect another which is conditioned on credits so smes. Is it your interpretation that the bundesbank has given him room to maneuver here . My sense is germans are unhappy with where we are on Interest Rates already. Today we come into the meeting with export numbers that are twice the market expectation. This is not the backdrop for stimulus that germany needs. This kind of Interest Rate policy is not adequate for germany. What we also observed was that he was to a certain extent agreeing to what hes supposed to do. At least an Interest Rate cut is an ordinary means to find the quite low inflation which we see in the euro area. Its not abs purchases or Something Like that, which is adequate to tackle that issue. Nevertheless, lower Interest Rate for germany would not necessarily mean higher consumption in germany because there are so many targets, saving for their retirement, which germany probably cannot fulfill its role. If you lower Interest Rates in germany, maybe this means higher savings and not consumption. One of the big topics also was that theres a divide in the credit market between Big Companies which have the benefit of tapping the Capital Markets and benefit of the low yield environment and those who need to go to banks. And do you really think that what the ecb is planning on doing could enhance bank lending or is it a demand problem . Your point is a good point. What might have functioned in the u. S. Which is a very much bondbased system, a financing system, bankbased system, especially in germany. Smaller banks would not be would more or less be impeded to get loans by this kind of stuff because the problems are regional. They are very much focused and its Still Available in the local banks and also you have Business Cycles in different countries. Thank you very much for joining us today. So jeff, its all up in the air, right . It remains all to play for, doesnt it, going into this. The key issue is really for our audience one of Market Positioning running into this. There are expectations built into the market that there will be at least that cut in rates and of course the likelihood of some ltro program. I think thats the fascinating bit here, whether we get significant price action at the back end of mr. Draghis press conference if the market doesnt feel that its hearing enough dovish noise from mr. Draghi at this meeting. Well send it back to you, carolyn. Jeff, thank you so much for that. It is all about rumor and with the fact of the euro on the back of the ecb statement. Stay tuned for our live coverage on the ecb Interest Rate decision, followed by president Mario Draghis press conference. Well see what kind of question jeff will fire mr. Draghis way. Also coming up, we speak to the president of ifo, hanswerner. Also coming up, jeroen dijsselbloem. Moving on, g7 leaders say they wont shy away from taking further action against russia if necessary. Condemning moscows continuing violation of ukrainian borders. Julia is in brussels where leaders are due to convene for a second day of the summit. Im just wondering, theyre very good at putting verbal pressure on russia. But is that still credible . Its a really great question, carolyn. Three conditions they want to see from russia, the first is they want to see russia admit and acknowledge the next ukrainian government. The ukrainian president that was elected 11 days ago. Theyre still not happy even with the softer tone coming out of russia. They want to see complete removal of troops on the border and they want to see this flow of weapons from russia into ukraine stop. At least they are laying out conditions right now. As you quite rightly point out we dont have a deadline as far as this ultimatum is concerned. What we really want to see is when the dialogue on the bilateral conversations happen as we move on from the g7 to france. Putins going to be talking to cameron. Hes going to be talking to hollande and Angela Merkel, too. For that we have to wait and see. I did catch up with the president of the European Commission here. I said, look, what is the actual purpose of this g7 meeting . What do we hope russia take away from this as they sit back there in moscow, Vladimir Putin himself . Listen in. Regarding ukraine, our message should be the following. We stand by ukraine. We want this country to be viable, democratic, hopefully prosperous country. You cannot accept the behavior thats been the behavior of russia. That message should come out loud and clear. Just how credible is the threat . Weve had Angela Merkel saying if russia doesnt use its influence to stop the activities of the separatists in the east, well look to enforce further sanctions right now. That violence has been going on for weeks. How much more can we continue to press russia verbally without seeing response . Our goal in European Union is to put the priority on the deescalation, not on confrontation. The decision taken by all european leaders was clear, if the deescalation does not happen and if russia prefers confrontation, additional measures will be taken. Indeed they are ready. Its a question of a common assessment, when and how, if the escalation continues, when and how these additional measures can be taken. The only dialogue were seeing between the ukrainians and the russians is to try and solve the issues over gas disputes. That moves me on to the sensitive topic of conversation today, energy security. Its a third of the Energy Requirements that europe takes right through. It comes from russia. Its obviously going to be expensive, take time and it will be reliant on the u. S. And their willingness to supply gas to europe, too. Hopefully well thrash out findings and decisions at the g7 meetings. As always, we dont hold our breath. Karelcaro carolyn, back to you. Thank you so much for that. Were about one hour into the european trading session on this thursday morning. Lets have a look at the europe stoxx 600 is doing. Investors are sitting on their hands ahead of that ecb meeting or announcement later on today. We are close to the 6 1 2 year highs. Really, we just want to see what mr. Draghi has to say. The xetra dax is down by six points, just below the record high. The ftse 100 coming under pressure a little bit because retailers are down today. Well come to as to why that is the case in just a little bit. The cac 40, seeing modest increases of 0. 1 . Here are a few corporate stories this morning. Asos shares have plunged after the Online Fashion retailer issued a profit warning this morning. The ceo says the company will be less profitable due to high promotional activity and the impact of the strong pound. Asos shares were down by 40 this morning, have you trimmed some of those declines but still off by a whopping 30 . And smith nephew, investors welcoming reports that smith nephew attracted another takeover company, medtronic. There were reports stryker was looking to make a bid last week. And remy cointreau in france, said they would cut its dividend by 10 . The company was hit by a slowdown in china after a government crackdown on corruption hurt demand for premium cognac. Shares in cointreau were sliding earlier but seem to have stabilized by now. In the bond markets, the tenyear bund yield at 1. 34 , tracking u. S. Yields higher. In terms of u. S. Yields, were close to that 2. 6 level. We have risen in terms of the yield by almost 20 basis points last week. Well off the 11month lows. This is despite the fact that we saw mixed Economic Data in yesterdays session. In terms of the tenyear gilt yield, were at twoweek highs at 2. 68 . Were pinned to the 1. 36 level for the Euro Dollar Exchange rate. The japanese yen is making headway against the u. S. Dollar, after a couple days of decline over the last week or so. And the aussie dollar is modestly higher against the u. S. Dollar. We get the boe meeting later on today. Ahead of that, cable is trending slightly higher at 1. 6754. Still coming up on worldwide exchange, pressure builds on the bank of england as uk house prices continue to heat up. Were live at the bank of england, next, dont go away. Huh, 15 minutes could save you 15 or more on car insurance. Everybody knows that. Well, did you know that game show hosts should only host game shows . Samantha, do you take kevin as your lawfully wedded husband. Or would you rather have a new caaaaaar say hello to the seasons hottest convertible. Ohhh. And say goodbye to samantha. [ male announcer ] geico. 15 minutes could save you 15 or more. [ male announcer ] geico. Honestly, the offseason isnt ive got a lot to do. Thats why i got my surface. Its great for watching game film and drawing up plays. Its got onenote, so i can stay on top of my todo list, which has been absolutely absurd since the big game. With skype, its just really easy to stay in touch with the kids i work with. Alright, russell you are good to go alright, fellas. Alright, russ. Back to work youre watching worldwide exchange. Uk property zoopla will offer shares between 200 and 250. The company aims to sell up to 43 of its existing Share Capital and comes on the back of a slew of uk ibos, including just eat and foxes. A surging Housing Market and strengthening employment provides the backdrop for todays meeting at the bank of england. A recent poll by reuters shows the majority of economists are expecting the first hike in april next week. Helia ebrahimi is outside the boe. Ive read that the slack has fallen to a fouryear low. Wouldnt that tell us that a rate hike is on the cards much sooner than wed all expect . Listen, i think i cant compete with the ecb today. Thats where youre going to see the action. Its very unlikely the big question is next year, will it be before an election, a rate hike or after an election. It certainly wont be this year. What the bank of england behind me is going to be looking at is the Housing Market and how it can temper these runaway prices. Even though in the last two months weve seen that come away a little bit, today we had figures again showing monthonmonth in may, house prices up by 4. 3 . It means the average price is now five times peoples earnings. Thats the highest ratio since the financial crisis. Now why is that important . Thats the area that the bank of england is concerned about, whether things are becoming unaffordable so when Interest Rates do go up, people are unable to service those mortgages. We had the Mortgage Market review tighten up lending at the end of april and in a couple of weeks, we have the fpc meeting. They, we all think, will bring in a series of tweets, macro prudential tools to make sure the bubble did not getting out of hand. I remember interestingly just this week and the week before, we saw lloyds, not too far from here and rbs impose their own loantoincome caps on homes worth more than 300,000 pounds and 500,000 pounds. Here in london where really most of the heat of the Housing Market is. So there is stuff to be done in this economy. There is stuff to try and temper the housing bubble. But what the bank of england is thinking is that Monetary Policy changes wont be their first line of defense. Instead, theyre going to look at other ways to reign that in. Helia, thank you so much for that. Its not the end of the world if you cant compete with the ecb today. I dont think anyone or anything can do that today. Thank you so much for that. In brussels, the g7 talked tough on russia, saying the group stands ready to intensify targeted sanctions. What is the impact on the ongoing unrest in ukraine . The Stock Exchange group is in the heart of europe. Good morning to you. What is the impact of the tensions between russia and ukraine on your business. At the very beginning when the crisis broke out, there was definitely a slump in the prices. People were reluctant, people were taking away some money but most of the outflows came from russia and ukraine. Meanwhile, things have calmed down and we do see some of the money floating into our region again. Further away actually from ukraine and russia. Especially the vienna Stock Exchange is getting quite a bit beneficial of that. Thats interesting. You know, its worth noting that over the last couple of years you have been expanding quite aggressively towards the east with breaching into new markets. Would that still be justified even if the tensions between russia and ukraine linger on . Yes, we do think so. Actually our home turf, we do believe are the Central Eastern European Countries. Its not the cis countries. Its not russia or ukraine. This is a different animal. This is further out. Definitely the countries which are more unvogd us. This is going down to romania, bulgaria, poland, definitely. We have been seeing great improvement in terms of the economic fundamentals, in terms of sentiment and Capital Markets have been buoyant this year at least. How is Capital Market activity . How is trading currently . Trading volumes are within our group of foreign exchanges by almost 40 during the First Quarter of this year if you compare to the last First Quarter. We had Strong Capital inflow. We had two very big actually capital increases. At the beginning of the year there was a spinoff of a new company, yesterday actually there was a press conference, another ipo came to the market last week, a brewery in the czech republic. Theres a lot of dynamism right now in our region. Your business is all about liquidity. You dont necessarily have that with many of the exchanges because theyre so small and you cant necessarily compete against the rest of europe. Im guessing, warsaw is still the way to go. Any news on that front . No news on that front. Actually there are talks. Theres open talks that might end up in whatever, some kind of cooperation. I cant comment any further as it is an ongoing story. With regard to other other exchange, i might want to mention, the fact is to bring more volumes and liquidity is our main goal. Everybody is trading on the same Trading Platform which is also used by the german Stock Exchange. Therefore, with everybody being on the same footing, we already have attracted, for instance, Societe Generale and theres two or three others in the pipeline. Ba what do you want to see based on where youre sitting in europe . If they stay or go down by a little bit, i dont see much of a difference, not for our country. Michael, the ceo of the cee Stock Exchange group joining us around the desk. Frances foreign minister warns that a severe fine against bnp paribas could destabilize the entire financial system. The u. S. Is reportedly considering a fine of as much as 10 billion on the lender for violating sanctions. The finance foreign minister says while the french bank has committed wrongdoing in the eyes of the u. S. Justice system, the bank should be treated fairly. Deutsche banks plan for a capital hike has ground to a halt due to a paper jam at a german court. What about german efficiency . The biggest investor paid 1. 7 billion euros for the first part. The second part of the capital hike is expected to resume in a few days once the court bottle neck has cleared. Still to come on the show, all eyes are on the ecb but what tools does europes largest economy hope draghi chooses to use . Is professor sinn against the cat breaks . Answers after the break. But you cant take a trip from lisbon to stockholm if you cant plan and recharge along the way. The European Commission is using cloud to make this possible. Creating a single charging and Billing Network across 28 countries. So drivers can travel as far as they want to go and when they want to go. Youre watching worldwide exchange, bringing you Business News from around the globe. The june meeting is upon us but will the ecb pull the treger . Governor draghi says hed be comfortable to act now as the mark eight waits an unprecedented policy shift. G7 leaders talk tough on russia. Sanctions stay on the table but the group shies away from taking further action over ukraine. Uk Online Retailer asos loses nearly a third of its market value. The fashion firm blames costly promotional activity and lower margins. Plus, cut taxes to boost growth and create jobs. Thats the message euro Group President is sending the eurozone. He joins us, exclusive, next. Ahead of that exciting interview, lets show you what european mark hes are doing. The ftse 100 coming under pressure off by 0. 25 . Many of the retailers trade lower. The xetra dax pulling further away from the record high that we saw recently, down by 0. 1 ahead of that ecb meeting. The cac 40 is up slightly and were seeing marginal gains for the ftse mib. By and large, yes, markets are range bound ahead of that allimportant ecb meeting. Also want to show you bond yields, tenyear treasury yields, 2. 58 . Inching closer to that psychologically important 2. 6 level. Just in the last week we have seen an increase in yields of almost 20 basis points. German yields, 1. 43 , tracking u. S. Yields higher and tenyear gilts at 2. 69 , close to a threeweek high. The markets, obviously it is all about the euro. The euro dollar at 1. 3607. 102. 52 is where the dollar yen is seeing. The yen seeing a rebound against the dollar after weakness in the last couple of trading sessions, close to a onemonth low and the sterling dollar, 1. 6757, up just slightly on the day. For a month, speculation has run high for unprecedented ak from the ecb would provide the right conditions for a move. Following draghis may press conference, most ecb observers expect a small rate cut and negative deposit rate and some form of liquidity injection by president mario draghi. We heard the comments in may that in june hed be quite comfortable to act. Jeff and annetta are standing by in frankfurt. Interesting tweet about an hour ago, he said, or he tweeted rather, is this a historic meeting . What do you think . Well, i think a lot of people are thinking that mr. Draghis most important meeting in his tenure, because this is the first time hes actually he needs to not only talk the talk but also walk the walk. And do something substantial, i. E. , cutting the deposit rate into negative territory. That would be an historic event, as it would be the first time a Major Central Bank is doing so. That is clearly unchartered territory, isnt it . He did promise, what, nearly two years ago he would do whatever it takes. The latest prints on inflation for the eurozone clearly ratcheting up the pressure here. The target rate, 2 as we know here. And that number coming in at 0. 5. There is a big gap between what the ecb is looking for and what the market is currently delivering or the economies are currently delivering. So if we get these moves on Interest Rates, how will they go down . Lets play you a sequence of comment from people in the central banking world. The ecb is acknowledging with money that they are worried about the Downside Risks but its not going to have a very big impact. It will be 25 basis points. I dont think anybody feels they can do much lower than that. The impact i think will be limited. There is more unconvention itunconventional policies that will have effects on the Global Economy but at the same time it is important to have a strong europe. And if the Monetary Policy helps to strengthen europe, we need a net positive result. The Exchange Rate is not making things easier. Fragmentation remains in the lending markets in europe. This means the ecb is considering all kinds of actions. President draghi has been very explicit on this. So far now, it is quite clear that we probably dont get a big bond buying program. But what could happen is actually that mr. Draghi will keep its easing bias and to keep the door open for action at a later point in time. Absolutely. Remember the omt, whatever happened to the omt . Are the germans now ready, though, for something that looks more like fullblown qe . Well find out at this meeting. Back to you, carolyn. Gdp in the eurozone was confirmed just above the flat line for may, weak growth coupled with Inflation Fears playing into expectation for action at todays ecb meeting. Our next guest has called on the eurozones governments to lower taxes, a move he said could boost the economy an create jobs. Were now joined by president of the europe row group, dijessellbloom. Do you believe in the economic effectiveness of that or is this a political comment after the eu elections . If you look at the strength and weaknesses of the eurozone, one of the key issues keeps coming back is the high text labor. Most of the countries are on the wrong side of that average. It would it means choices. You have to open up the space in your budge tote do that. After this election we have to look at what we can do more instead of doing less. Let me tie that into your recent comments about a potential third Bailout Program for greece. You said that would be possible. This may happen sooner rather than later. I just wonder, with the outcome of the european elections which saw a major drubbing for the established parties and the proeuro parties, how would you stump up the cash . How would that be feasible . After the crisis we put the emergency instruments in place. Which we can still use, also in the future. We have resolution sorry, the crisis funds to help countries. After this summer we will look at guess and their debt sustainability which is the key issue. Theyve improved on many issues. The growth has returned to greece and the industry and tourism is picking up. But the question is whether they will as a sovereign be able to fund themselves already. I think that might be too early. Lets see after the summer. First time it was the taxpayers who paid the bill. Second time is the private sector. Third time is it going to be the official sector . Are they on board . Youre talking about debt relief. Yes. And how to deal with that. Actually, its too early to say. Well do the calculations on what that depth sustainability looks like after the summer. It very much depends on Growth Potential in greece, which is there but has to be opened up by further reforms and other measures. We can look at Interest Rates on debt. We can look at the time given to the greeks to repay their debt. Those are the key factors that we can use. A couple months ago when you talked to my colleague, julia, you said that countries run the risk of being complacent about the drop in yields. Do you still think that this is the case and are they relying too much on action from the ecb . The ecb help is welcome. Lets see what they bring us today. I think that the countries cannot lean back and look at the ecb. The countries are still in the lead where Macro Economic policy is concerned and where Economic Reforms are concerned. We need those. We need to become more competitive. Tax regimes is one thing but opening up labor markets, Service Markets need to be opened up. International trade has many opportunities for europe. So a lot of work has to be done. We cannot just rely on the ecb. Whats the right mix, 50 50 . There is no right mix, is there . More emphasis on policies. There are tough measures to be taken. Worst outcome of the election would be for us to become hesitant or scared to do more. I think we need to do more to get the results that the electorate really wants. Lets stay with the ecb. I know you completely respect the independence of the ecb. I want to know from you, you work so closely from so many governments in the eurozone, what exactly do you want to see from the ecb today that would avert the risk of disinflation or deflation even . First of all, on the risk of deflation, we have to be careful that its becoming a selffulfilling prophecy. The more we talk about it, the more reluctant people will to be spend. In the midterm, they have to make sure inflation stays close to the 2 target. Its not going in that direction. There seems to be grounded to act. Well just wait for today and see what they do. Within their mandate. I dont want to open up a whole new debate, which is not very productive anyway at this stage about the ecbs role. Dont you think whatever is coming from the ecb today or over the next couple months, its simply too little too late . If you listen to the expectations that some of the commentators have shown the last couple of days, they will probably be disappointed anyway. No way can you deliver such big results in such a short time. What the ecb can do will help, im sure. But it cannot just come from the ecb. The National Governments and joint cooperation in the euro group has to stay strong to do the work that we have to do, we, ministers. Is the euro really too high, currently 1. 36. Not too long ago we saw it trading closer to 1. 40. Is it really too high . Spain and germany are doing well in terms of the export sector. Maybe the strong euro is an excuse for the lack of competitiveness in countries like france. Certainly we have to work on competitiveness, whatever the Exchange Rate is. I think Exchange Rates should reflect the true economic strength of a region. At the moment we are an exporting region and we will probably, hopefully, remain so. That will be reflected in our currency. Lets not focus too much on the Exchange Rates. Lets do what we can do in order to improve that competitiveness which has to be brought up to a higher level throughout europe. So dijsselbloem, youve done work on the Banking System in europe but we are seeing a very Aggressive Department of justice in the u. S. , visavis european banks. Over the weekend we heard that bnp would be slapped with a 10 billion fine. We are getting comments from the foreign minister saying this could be unreasonable. What are your thoughts . Do you agree with him or do you think, yes, a fine of this size is actually justifiable . Well, i do think that the size of the fines, especially coming from the states are very, very high. And much, much higher than traditionally in the European Countries youll see. I think we have to look at that and possibly found grounds for an International Harmonization of the level of fines. If a bank has messed up, they should be fined, dont get me wrong but the height of the fine seems to be overexcessive. Its not helping the recovery of the banks. Thats the kind of figures were now talking about. All right. Thank you so much for your time this morning. President of the euro group, dijsselbloem. Lets continue the conversation about eurozone growth and the ecb. Youve been fairly outspoken in your criticism of further easing that could potentially come from the ecb today. What about your thoughts on a negative deposit rate . Would that be so bad . Well, it depends on what you have in mind, what should be achieved. A negative deposit rate will induce the banks to bring their money abroad into devalue of euro. That in itself would certainly help to improve competitiveness. I understand such a measure but i have the more general problem with the measures of the ecb that theyre fighting against the lack of competitiveness of Southern Europe by providing funds and giving guarantees for investors, while in fact, this competitiveness can only be reestablished by a process of real devaluation, meaning basically deflation. Deflation relative to the north. Now, it does not have to be a deflation in absolute terms, if the north inflates, but we have wrong relative prices in the eurozone because when the euro came, it brought a credit boom to Southern Europe which triggered inflationary development depriving the southern European Countries of their competitiveness. The price clock has to be turned backward. That is the fundamental problem. Easing policies of the ecb are painkillers that help for the moment but slow down this process. You repeatedly bemoan the fact that german savers would suffer from a lower refi rate. This is the central bank that is acting on behalf of all eurozone members. Yes, we are seeing different growth and different price dynamics across the region. Have the germans lost their sense of solidarity here . Of course one has to show solidarity. I think germany has been by far the biggest provider of rescue credit and liability on behalf of the creditors of Southern Europe. So all these rescue operations rely basically on the northern countries of which germany is the biggest. You should not forget that. The question is whether what you call solidarity is really helping. As i said, easing money, reducing the Interest Rates, making money from the Printing Press available when the market charges too high Interest Rates is, of course, something that eliminates the pain but it is no measure that would improve the competitiveness of Southern Europe. To the contrary by eliminating the pain, you reduce the reform effort, Reform Efforts basically meaning making the labor market flexible so that you can carry out a process of real devaluation. The public and the financial industry in particular tens to overlook these fundamental problems. And we can go on like that for years and years. But in the end, it will cost everyone a lot of money. It will have led to a misallocation of investment. And the end result will be disappointing. At best what we might get from this policy is a japanese solution of 20 years of stagnation. Well, japanese solution. Thank you so much for your thoughts, ha in. Swerner hanswerner sinn. Thank you. Still to come on the show, softbank says its created a robot with heart and emotions. The tech giant unveils a humanlike robot that will hit the market as soon as next year. We meet pepper just after the short break. Dont go away. [ female announcer ] theres a gap out there. Thats keeping you from the healthcare you deserve. At humana, we believe if healthcare changes, if it becomes simpler. If frustration and paperwork decrease. If grandparents get to live at home instead of in a home. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Youre watching worldwide exchange. David Camerons Conservative Party has joined forces with the euro skeptic Danish Peoples Party and true finns. Softbank is looking to spice up the tech space by inintroducing pepper. Our tokyo bureau chief joins us now. Have you tried out this new robot . Im reading on the wires that it can baby sit. Can it cook . Can it talk to you . It can. Hi, carolyn. It wasnt enough for the entrepreneur here to buy sprint and rumor has it possibly ink a deal for that company to buy tmobile. He has to be in all sorts of businesses. Today it was a dream come true whos been talking about robotics and Artificial Intelligence for quite some time. Thats why two years ago he bought that a french Robotic Company and this is the latest creation. Meet pepper. Hes a humanoid robot. He says its the first robot that actually has feelings. Well, when you say humanoid robot it sounds like a lot. Basically its a cute computer. Going to be on sale next year in japan. This is the clincher. Its going to be price at 1900 u. S. Dollars, a lot more affordable, probably the first affordable humanoid robot out there. Its about 120 centimeters. When i say it can tell emotions, basically its a computer, coming with operating software but sim lack to your mac theres going to be an applications store where customers can Download Software that tailors to your needs and the interaction you have with pepper, the robot, will be sent up to the cloud. Theres a learning curve that pepper will have so that he can interact with you in a way that hes accustomed to over time. So softbank says that Artificial Intelligence will be a pillar Growth Strategies over the next couple of years but how does it fit into the overall softbank strategy . I had a quick chat with him earlier today. I dont want to provide just a service. Mobile service is available by many other companies. If we just have regular hand set and just a regular communications, its not exciting anymore. So id like to bring something totally unique, something totally surprising. Right . And i would like to, you know, make a big unique expansion and surpri surprise. I think well make it happen. Mr. Son wouldnt comment on whether the smile he had at the press Conference Today was being recognized as a potential deal between sprint and tmobile. This robotics space has been extremely active. Google bought eight robotic companies in the space of six months. Yahoo is getting into that. This will hit the stores in japan and will go on sale next january for a price tag of 1,900. I wonder how the bonding process will work out with that robot . Thank you so much for that. Fascinating story. You spoke about softbank. U. S. Mobile carrier sprint owned by a Japanese Firm is reportedly making progress to acquire tmobile for 32 billion. Makiko has the story. The two sides could Reach Agreement as early as july. The deal would merge americas third and fourth Largest Telecom carriers, bringing them closer in terms of scale to top rivals, verizon and at t. Sprint is set to agree to pay tmobile 40 per share, which represent a 17 premium over its share price at wednesdays close. And softbank, sprints parent company, is eager to go forward with the deal. However, the Japanese Firm spent more than 21 billion todays acquire the u. S. Telecom last june and facing another largescale buyout within a year could affect its Balance Sheet. Softbank is expected to improve its financial position by raising roughly 3. 7 billion by this fiscal year. Securityizing receivables from installment sales of smartphones and other sources. The deal also faces steep hurdles as u. S. Regulators have voiced concerns on the tieup, saying it could reduce competition in the market. Thats all from the nikkei business report. Back to you. Thank you so much for that. Moving on, china is taking aim at Microsofts Windows 8 operating system at a National News broadcast on wednesday afternoon, the countrys staterun broadcaster questioned the Systems Security and alleged that it puts user data at risk. The new segment quoted chinese expert who argued that microsoft cooperated with the u. S. Government to carry out cyberspying on china. China and the u. S. Have been trading blows with both sides accusing each other of cyberspying. India could be opening its Online Retail mark tote foreign companies. A report says an announcement could kol next month as one of the first big initiatives for new Prime Minister modi. Officials reportedly say players like amazon and ebay could spur consumption and competition in the 500 billion retail sector. Alibaba has bought a 50 stake in one of the countrys top soccer teams, yes, soccer teams. The company paid close to 200 million for this stake. Lets have a look at u. S. Futures on this thursday morning. Theyre looking like this. We have the s p 500, the dow jones and the nasdaq, seeing modestly higher, taking fair value that account. This is after yesterday we saw another record high for the s p 500, the s p was up 0. 2 despite the fact that we did get mixed Economic Data. Still to come on the show, as the european siene tacentral grows, how should you be positioned . Plenty more to come in the second hour of worldwide exchange. Dont want to miss it. Welcome to worldwide exchange. The june meeting is upon us. Will the ecb pull trigger . Governor draghi says hed be comfortable to act now as the mark eight waits an unprecedented shift. And asos loses nearly a third of its market value. The fashion firm blames costly promotional activity and lower margins. More consolidation is ahead in the u. S. Tell cco sector. And u. S. Medical tech giant medtronic is reportedly eyeing a takeover of smith nephew. The deal could move medtronics tax base away from the states. Youre watching worldwide exchange, bringing you Business News from around the globe. For a month or a couple months, rather, speculation has run high for action from the ecb following Mario Draghis may press conference, most observers expect a small rate cut, a negative deposit rate or some form of liquidity injection. Lets get out to jeff and annetta, standing by in frankfurt. Is mr. Draghi going to be shooting peas or are we going to see the big bazooka . Thats the funniest crossline ive ever heard, is mr. Draghi going to be shooting peas. Im thinking hes going to hope the market buys into the message. It will be interesting to see whether mr. Draghi feels that he has to talk more to the market after the initial announcement. Because the expectations seem fairly clear, dont they . Its Interest Rate moves and ltros. I think thats very much what everybody is expecting but mr. Draghi also has a legacy of actually doing Different Things than the market had expected. So theres still room for any kind of surprise. But i mean, at least, according to analysts, what we shouldnt expect is the big bazooka, even though the market is, again, hoping for it. Not for this time. Probably mr. Draghi will keep its easing bias. I think we need to get off the pea shooters and the big bazookas. Im starting to think mr. Draghi may need medical attention at some point if indeed hes shooting peas. Its interesting, axle vapor has talked about the risks to the market of this divergence of policy among Central Banks. If we have the fed continuing tapering and expectations coming in of when the Interest Rates may move, the ecb, if today we get a big announcement of some form of qe or even something more dramatic than that, that begins very soon, i think the markets will be quite confused about this divergence of paths between the two Central Banks here. Thats very much probably the case. Also that might actually, i think this is one hope i should frame, of the ecb to have the fed move earlier than expected on the Interest Rate cycle and by that, actually lowering the euro Exchange Rate in comparison to the dollar. That would a huge relief to the guys behind us in the central bank here in europe. Of course as well during this conference last week, mr. Draghi was quite vocal about the threat to inflation by a very strong euro. So thats his primary objective. But there is one perverse potential outcome here, isnt there . If we have that movement from draghi, that starts to attract flow from america into europe, ultimately that will strengthen the euro rather than weaken it. Which is his intention at this point. Theres an awful lot here for us to work with, carolyn. We will be obviously running you through strictly rates, up to the announcement and well be here all day to try and give unless on exactly what happens from mr. Draghis press conference. For the time being, let me send it back to you. Jeff, thank you so much for that. What could draghi unveil today . Here are some of the calls our experts have been giving cnbc in the past month. 10 to 15 basis points on the refi, the discount goes to tiny negative, some ltro discussion, something to try and help smalltomidsize Companies Get access. Were focused on the specifics of what they may do, i think more important than that is to seem to be willing to be radical at least. I think everyone should really just, you know, set aside their views on how much ecb can do at this point. Theres not a whole lot more ecb support can do right now. They have bigger structural issues they need to take the time to work on. Improving communication further, basically relaying the message, the rates in the eurozone are not going up for a long time, three, four years, very different from the fed and the bank of england. If we can stop the yields tightening, that will help. Mr. Draghi does nothing on thursday. I think hell do very little. People will be disappointed. Lots of talk, very little action. Were now joined by managing director at conservative wealth management. Phil, good morning to you. What do you think the ecb will do . Maybe more importantly, can whatever the ecb tells us today, can that drive equity Prices Higher . Theyre in a pickle. Its king kong versus godzilla. They have the godzilla of Global Deflation stopping on tokyo, now threatening the eurozone. So draghis now in the position of king kong having to take this on. He wants to create more inflation. In theory, as you increase that, then asset prices are going to go up. Stocks are going to go up. But at the same time, were also in this kind of dialectical Looking Glass land where we never know quite whats going to happen. It could sell on the news. Anybodys guess. I love your godzilla analogy, though. Quite interesting. What about the other drivers for equity prices right now . We talked about earnings. Were not seeing encouraging Revenue Growth at least in europe. That may be also applies to the u. S. What else will be driving us higher from the 6 1 2 year highs that were seeing in europe and the record highs were seeing in the u. S. . Its kind of eerie. We have low volatility. Theoretically that means everything is safe, everybodys happy. Its also like walking outside on a day where theres no wind. Its creepy. Its like could everything suddenly shift quickly . While valuation ratios are very high and theres lots of theres no eminent sign anything will collapse, were in a strange world where the central bankers have taking over control of the pilot seat an we dont know how it will all turn out. That all depends on the Central Banks. Stay tune for our live coverage of the ecb Interest Rate decision at 13 45 cet, followed by Mario Draghis press conference at 14 30 cet. For the latest developments and analysis on the ecb and the bank of enge len, head to cnbc. Com where the web team are hosting a live blog. All right. Heres how markets are faring ahead of the u. S. Open. Looking at futures and taking fair value into account, were looking at a slightly mixed picture. The dow is seen modestly higher, and why were expecting red arrows for the s p 500 and the nasdaq. Yesterday, another day, another record high for the s p. Marginally up by 0. 2 . The nasdaq adding on 0. 4 and the dubai 0. 1 . We had mixed Economic Data points. The ism services print, that was better than expected. The fastest growth rate in about nine months. All of this is happening on very low volumes and very low volatility. Once again, that tells us that there isnt that much conviction in these markets. Seasonally we are in a Holding Pattern ahead of that crucial ecb meeting later on today. The xetra dax pulling further away from the record highs, down by 13 points, the ftse 100. Coming under pressure this morning on the back of weakness in retail stocks, we had asoss profit warning and the cac 40 and ftse mib are seeing red arrows. The italian market seeing a fair bit of outperformance. Up 0. 8 . I want to come back to one of the top stories. Asos shares have plunged after the Online Fashion retailer issued a profit warning. The ceo says the company will be less profitable due to higher promotional activity and the impact of the strong pound. Heres whats going on in the bond markets, by and large we have seen a tick higher in yields, especially for tenyear yields. Right now at. 58 . Over the last week or so we have seen a rise in yields to the tune of around 20 basis points. This is quite huge. Thats managing to lift the dollar higher. Tenyear bund yields, yield is at 1. 44 . And the tenyear gilt is at. 69 . The currency markets look, who with he kidding . Its all about the euro isnt it, ahead of the ecb meeting. Euro dollar, 1. 3613 is where were currently trading at. Close to fourmonth lows. The japanese yen is seeing some respite against the u. S. Dollar, up by 0. 25 . Cable at 1. 6754 up by 0. 1 . Up next, we get out to brussels next as the g7 leaders continue their talks. Dont go away. Did you know a tensecond test could help your business avoid hours of delay caused by slow internet from the phone company . Thats enough time to record a memo. Idea for sales giveaway. Return a call. Sign a contract. Pick a tie. Take a break with mr. Duck. Practice up for the business trip. Fly to florida. Win an award. Close a deal. Hire an intern. And still have time to spare. Check your speed. See how fast your internet can be. Switch now and add voice and tv for 34. 90. Comcast business. Built for business. Fifteen minutes could save you fifteen percent or more on car insurance. Yeah. Everybody knows that. Did you know there is an oldest trick in the book . What . Trick number one. Lookest over there. Ha ha. Madeest thou look. So endeth the trick. Hey. Yes. Geico. Fifteen minutes could save you. Well, you know. These are your headlines. The ecb could pull the trigger at its june meeting. Sprin is the reportedly paying 40 a share for tmobile. And the result of gms ignition switch recall are set to be unveiled today. G7 leaders have just arrived to continue talks in brussels, this after they said they wont shy away from taking action against russia if necessary. Julia is in brussels where leaders are reconvening for a second day of the summit. Julia . Thanks so much. You said the g7 leaders taking out conditions for action they want to see from russia. First after, they want them to recognize the election results. They want troops removed from the border and they want to the see an end to the troops and weapons crossing the border from russia to ukraine. Theres no ultimatum but the threat is there that they could increase sanctions and move them to the phase three, the socalled sanctions that would impact trade and energy and of course the financial sector, too. Thats how the land lays right now. Focus, of course, turns to the bilateral meetings that happened over the next 24 hours, not here but in france ahead of the dday celebrations tomorrow. We know perhaps the busiest man will be Francois Hollande of france. It comes down to a topic of battle ships or banks. Hell be meeting president obama and Vladimir Putin within a twohour window. He gets two dinners tonight. You have to assume, given the focus on bnp and the possible threat of that 10 billion fine for the bank that that will be the crunch meeting. The question is whether or not hollande can get wiggle room out of president obama given the view electric them or the u. S. Camp has been, look, this is a department of justice situation and theres nothing we can do to interfere. Have to see whether hollande can get leverage there. Lets give you a look at whats on todays agenda and the united states. Weekly jobless claims are out at 8 30 a. M. Eastern. Forecast to rise by 10,000 to a total of 310,000. A handful of Companies Report earnings today. Among them, ciena, jm smucker, vera bradley, cooper, verifone, mens wearhouse and vail resort. We heard from costco earlier this morning, samestore sales rose 8 last month, well above estimates. Were still joined by managing director at conservative wealth management. Phil, the fact that were seeing very low volatility, very low volumes on the u. S. Markets, does that have you worried . It does have me worried. Things are seemingly great were a wash on a sea of liquidity, asset prices are high, valuations are very rich but as yellen starts to tighten, if the employment to up today, theres more grounds for her to continue tightening. Well find out, as Warren Buffett would say, whos been swimming naked after the tide goes out. Volatility may be low because people are complacent about the risks in the market or you can say, everything were seeing in terms of Economic Data profits is encouraging. Which camp are you in . I think both are true, oddly enough. Nothing will be known until the tightening comes. Were kind of in an unreal world right now. We start to go back to more of a natural economic environment, well find out what the story is. How do you invest in stocks . You say that the profitability factor, that is one of the most important investment discoveries of the decade. What is it . And why is it so revolutionary . Well, it goes back to the 1950s with Warren Buffett and charlie monger. Warren buffett was a classic style picker, but charlie monger, his side kick comes along. Quality is important. Lets buy high profitable, Quality Companies even if we have to pay more. It was done by a professor at the university of syracuse. He found that high quality, highly Profitable Companies actually do perform much better over the long run than companies that dont have this kind of stunning asset in terms of possibility for profits today. And this is an extremely important finding from the academic world because the previous big finding, the buffett rated finding was that value, was all important. This profitability factor comes along, its as big as value but its not correlated with value. You put the two of them together in a portfolio and you have better risk adjusted returns. Does that show you outperformance . Can you mention a couple of the stocks that have outperformed on the basis of this criteria . Sure. In buffetts case, it moved to american express, cocacola, heinz is a more recent acquisition. They have extremely strong topline profitability. Thank you, phil. Appreciate it. Consider youre in holiday and you came in to join me around the desk, that is very, very honorable. An honor. Thank your for having me. Thank you so much. Enjoy the rest of your holiday. Phil demuth, managing director at conservative wealth management. Some of the other top stories, gm will release results today of the threemonth internal investigation into the ignition switch recall thats been linked to at least 13 deaths. Ceo mary barra will talk to employees and dealers at 9 00 a. M. Eastern. The media at 9 30 and analysts this afternoon. The wall street journal says the report will conclude there was no concerted coverup but managers working in isolation failed to make connections and act on evidence. Sprint will reportedly pay about 40 a share in cash and stock for tmobile u. S. , or more than 32 billion. Reports say Deutsche Telekom would keep a 15 to 25 stake in the newly combined company. Softbank is the majority owner of sprint, ceo son has been wanting to buy tmobile to better compete with at t. Sprint, tmobile and Deutsche Telekom are trading like this. Deutsche telekom higher by around 1 in normal trading, sprint up 6. 62 and tmobile u. S. Up 5. 14 . The ceos of both companies are expected to testify, that is at t and directv. It must be approved by antitrust regulators and the fcc. Congress has no sway in the decision process. At t and frankfurt up just modestly by 0. 5 . Directv almost flat in frankfurt trading. Still to come on the show, another day, another bidder. Coming up, we find out which company has reportedly joined the race to take over smith nephew. Well leave you with a view of the heat map to see how the european markets are trading right now. Pretty much unchanged going into that allimportant ecb meeting. Well see you in two. Then we gave each person a ribbon to show how many years that amount might last. I was trying to, like, pull it a little further. [ woman ] got me to 70 years old. Im going to have to rethink this thing. Its hard to imagine how much well need for a retirement that could last 30 years or more. So maybe we need to approach things differently, if we want to be ready for a longer retirement. Welcome back to the show. Lets give you a look at u. S. Futures as we get ready for the u. S. Trading day. Were looking a little bit mixed in terms of the futures. Yesterday we saw another record high for the s p. Rising by 0. 2 , the dow eking out a modest gain of 0. 1 . Of course everyones waiting for that crucial ecb meeting, not just here but also state side. Frances foreign minister warns severe or illegitimate penalties against bnp paribas could destabilize the financial system. While the french bank committed wrong doing, he says bnp should be treated fairly. Deutsche banks plan for an 8 billion euro hike has come to a halt. According to frankfurt, has yet to enter the purchase into the shareholder registry according to reuters. The second part of the capital hike is expected to resume in a few daus once the court bottle neck has cleared. Medical devicemaker medtronic is considering making a bid for smith nephew, thats according to reports, the takeover could reduce medtronics tax bill by moving its base overseas. Katherine boyle joins us with more on this story. Is this another case of tax inversion . Carolyn, thats obviously potentially one of the reasons that might drive a deal of this kind. Medtronic has 13 billion in nonu. S. Cash and it may prefer to spend it. Having said that, medtronic is already reasonably tax efficient compared to some of the other pharmaceutical companies. Theres not quite the obvious benefits that there was with the pfizer astrazeneca deal. Potential other factors might drive this deal, too, that has a lot of overlap in terms of businesses. There could be potential for combining administrative functions, too. Smith nephew is a u. S. Based company. It could be interesting one for the sector. Given how much the smith nephew share prices jumped, its likely that medtronic will have to make a statement within the next day or so. That could potentially also bring striker back to the table who have already mentioned, of course, theyre interested in potentially making a bid for smith nephew. We could even see a bid battle just absolutely jump off this with company, too. Another bid battle. Now that we have astrazeneca and pfizer out of the way, we need a new one. Did we hear anything about the Price Medtronic is willing to pay . Nonu. S. Cash thu. S. Cash is pounds. Theres been a huge share price spike in the past few days. Having said that, shareholders are likely to hold out for as much of a premium as possible. Thank you for that, katherine. Costco goes big planning to open up more warehouses on the back of growing samestore sales. But are other retailers not faring so well . Thats next. We get retail detail, next. Free hot breakfast options. Hampton, enjoy our you did a great job. It looks good . Then fuel up with Double Points or double miles on your next getaway. Make every stay more rewarding and feel the hamptonality welcome to worldwide exchange. These are your headlines from around the world. The june meeting is upon us. But will the ecb pull the trigger . Governor draghi says hed be comfortable to act now as the market awaits an unprecedented policy shift. Gm Ceo Mary Barra will release the findings of the internal probe into the automakers ignition switch recall and is expected to outline changes to the companys culture. More consolidation is ahead. Reports say sprint is close to buying tmobile for more than 32 billion. U. S. Medical tech giant medtronic is reportedly eyeing a takeover of smith nephew. The deal could move medtronics tax base away from the states. Youre watching worldwide exchange, bringing you Business News from around the globe. Good morning, everyone. If youre just tuning in, thank you so much for joining us here on the show. Here is how futures are faring ahead of the u. S. Open. A bit a mixed picture. The dow taking fair value that an cot, seen higher by 14 points, the s p 500 could fall by 1 point and the nasdaq off by around 2 points. This follows another record close for the s p 500 yesterday. Even though it was up by only 0. 2 , the nasdaq was up by 0. 4 and the dow eking out just a very marginal gain of 0. 1 , that came despite the fact that we had mixed Economic Data points, adp slightly worse than expected. We got the services pmi that was slightly better than forecast. Lets have a look at the european markets ahead of the crucial ecb meeting. Were treading water. The xetra dax is off by 0. 1 , the ftse 100 under pressure a little bit because of profit warning from one retailer, thats asos. Thats pulling down the entire sector. The cac 40 is flat and the ftse mib seeing outperformance up by 0. 7 . Overall we are still close to the 6. 5 year highs. Take a listen to what some former and current policymakers have been saying about the prospect of ecb action later. The ecb is acknowledging with money that they are worried about the downside risk. Its not going to have a big impact. Its going to be 25 basis points. I dont think anybody feels they can go much lower than that. The impact will be limited. There is more unconventional monetary policies that can have spillover effects on the rest of the Global Economy but at the same time its important to have a strong europe. If the Monetary Policy helps to strengthen europe, they will submit positive result. The Exchange Rate is not making things easier. Our fragmentation remains in the lending markets in europe. This means that the ecb is considering all kinds of action. But draghi has been explicit on this. I was just talking about asos, just want to bring you more details on that story. A profit warning from asos has sent shares in the Online Fashion retailer sharply lower in the uk this morning. Take a lack at shares now. Theyre off by 28. 4 . They were down by as much as 42 at the start of the trading session this morning. Over the last three months, the stock is down a whopping 53 . The uk company has lowered its operating margin for accounts for 6. 5 to 4. 5 , citing the negative impact of the strong pound on its International Sales as well as increased promotional activity. About a dozen u. S. Retailers will report their may samestore sales today. The Consensus Forecast is for an increase of 3. 6 , excludeing drugstore sales. We heard from costco earlier this morning, samestore sales rose 8 last month. Well above estimates. According to our next guest, other retailers that are still due to report like gap are facing more difficult annual comps. Joining me from new york is director of Consumer Research at thompson reuters. Good morning to you. Thank you so much for waking up early. What are you expecting for the month of may . I guess the effect after that cold weather at the start of the year, that is going to peter out a little bit, isnt it . That is correct, especially because consumers already release the pentup demand in the month of april. And also because easter fell in the month of april, we saw huge spike in apparel sales. And about 9 growth rate. As a result, analysts are looking at a slowdown for the month of may at about 1 . In general, when you look at the overall picture, things are not that bad. We saw costco already beat. Earlier this week, they also posted their earnings for the quarter. We saw that membership not only did they increase the fees but the membership itself, the number of members increased which bodies well. Its a good sign that the middle Class Consumer is still engaged. Even if things are not looking all that bad, the problem is, they are going into a season where were seeing very, very tough comps. Which company, which sector will be hit the hardest . Well, gap and steinmart have the most difficult comparisons from a year ago. Gap itself, the Global Division is suffering a little bit. While in the united states, the Old Navy Division is doing well. We usually find the old navy session does much better during the backtoschool season. We could see an improvement as the month goes by. In general, may does mark the first month of the second quarter. And its off to a healthy start, even though theyre facing difficult comparisons, sales are still above the 3 mark, which is a sign that Consumer Spending is healthy. Consumer spending is healthy but im wondering what the pricing environment looks like for many of these retailers. We know from the last couple months that discounting is still very much the name of the game. Is much of this growth coming from volumes or are we seeing an uptick in pricing . For costco itself, thats why it was such a good sign. They saw an increase in the number of members signing up. That is a good sign. The other thing to take into note also is that may is just the first month of the second quarter. Soweak, we could see more promotions in july. Analysts are keeping a close eye on it because it could, like you said, hurt margins. Especially because memorial weekend we saw a huge amount of promotions towards the end of the month. That did increase mall traffic. What will be key for retailers is to keep a good balance with the amount of promotions and not to eat the bottom lien. One retailer that does that well is macys. They have timely promotions and only a certain limbed amount of number of items that are on sale. And thats why they have great merchandise. So those three are key in order to not hurt the bottom line and have the right amount of pricing to attract consumers into the stores. All right, appreciate your time this morning. Director of Consumer Research at thompson reuters. And coming up on the show, gm Ceo Mary Barra is set to reveal the findings of an internal probe into the recall of faulty ignition switches. Will any heads roll . Well have a live report from phil lebeau, next. 3 million lines of code, 40,000 sets of eyes, or a million sleepless nights. Whether its building the worlds most advanced satellite, the space station, or the next leap in unmanned systems. At boeing, one thing never changes. Our passion to make it real. Youre watching worldwide exchange. And these are your headlines this morning. As the eck could be set to pull the trigger at its june meeting will it have enough gun powder to boost the economy . Sprint is reportedly paying 40 a share for telco rival tmobile. And the results of gms ignition switch investigation are set to be unveiled today. All right. When is it possible for an industry to get both smaller and bigger at the same time . When theres a new round of consolidation in the work. Bertha coombs is at cnbcs headquarters and can answer that question for us. Bertha, good morning. Carolyn, dial up another deal. It looks to be on the horizon in the Telecom Sector that we reduce the number of Major Players from 4 to 3. Sprint will reportedly pay about 40 a share in cash and stock for tmobile u. S. Or more than 32 billion. Several details still need to be worked out such as financing and due diligence. Reports say Deutsche Telekom would keep a 15 to 20 stake in the newly combined company. Softbank is the majority of sprint, the ceo has been eager to buy tmobile to expand sprint mobiles network and better compete with verizon and at t. U. S. Regulators have frowned on further consol dag in this sector, raising concerns it could lead to higher prices for consumers. You may remember they rejected at ts planned 39 billion purchase of tmobile back in 2011. Checking shares today at this point, all of the players are trading to the upside, better than 6. 5 for sprint. Tmobile up more than 5 while Deutsche Telekom has gained 1 . The House Judiciary Committee plans to hold a hearing on june 24th on at ts planned 48. 5 billion takeover of directv. Mean tame, the ceos of both companies are expected to testify, that deal would combine the second largest u. S. Wireless carrier with the top satellite tv provider. Must ab proved by antitrust regulators and the fcc. Congress has no sway in the decision process, however. At t and directv this morning are both trading fractionally higher. An awful lot of deals going on. It looks as though these companies are finally looking to put their cash to work. Finally. Bertha, thank you so much for that. Softbank is spicing up the tech space by introducing its robot pepper. The 2,000 humanoid can read emotions and is envisioned as replacing babysitters to nurses. Even a plus one at a party. The robot will be in the mobile phone stores this week in japan. Twitter is looking to add music to its hash tags and 140character messages. They have viewed acquisitions within the past few months, including spotify and others. Analysts say twitter doesnt have the cash to buy Music Service as it raised 2. 1 billion from its ipo, has a 1 billion credit line and is still unprofitable. Ceo mary barra will first deliver the results to employees and dealers at 9 00 a. M. Eastern and will hold a Media Briefing half an hour later. A reporter, phil lebeau, johns me from warren, michigan, where the gm headquarters are located. What can we expect . This will be a big day for General Motors. Weve been told that Ceo Mary Barra will be taking significant action, thats the way it was termed to me talking to peoplen side General Motors. Significant action that seasonally will include two things, one, holding those who were responsible for the ignition switch defect and the delay in alerting authorities, holding them accountable. Also, shell be announcing a number of steps that have been described as bold and decisive in terms of how General Motors will try to correct this problem in the future and essentially make safety a top priority for the automaker so that this situation does not occur again in the future. So this is a substantial day for both mary barra and General Motors as a whole. All right, phil, thank you so much for that. Staying in the sector, the United Auto Workers union elected a new president. Dennis williams says he will only serve one fouryear term. He faces tough contract talks with the big three automakers next year p up. About a quarter of Union Workers at gm, ford and chrysler are secondtier employees make less than veteran work hes. The uaw accepted the Wage Structure back in 2007 when the industry was struggling. Now all three automakers are profitable. Breaking news on Deutsche Bank. Let me just get you the latest. Deutsche bank says it will issue a total of 299. 8 million new registered no par value shares. The Gross Proceeds will be around 8. 5 billion euros from capital increase. That is around 22. 5 per share. So, again, fixing the subscription price for new shares at 22. 5 per share. Weve long been waiting for the pricing of that deal. This has been much anticipated remember there was a slight delay, really just for bureaucratic reasons in germany yesterday but once again, pricing new shares at 22. 50 euros. If youre a dedicated fed watcher, dont make any vacation plans for late august. Reports say janet yellen will be attending the kansas city feds economic symposium in jackson hole, wyoming this year. Last year, ben bernanke caused a stir when the fed announced he would skip the meeting, raising speculation he was stepping d n down, which in fact he did. The symposium will focus on labor markets. This is, of course, one of Janet Yellens strengths. Lets have a look at u. S. Futures. Were looking mixed this morning. The s p 500 taking fair value into account is seen down by two points after it hit another record high in yesterdays trading session. I believe it has hit, how many, 50 record highs so far this year. The dow jones is seen up by 15 points and the nasdaq seen lower by 2. Still to come on the show, as the European Central bank smr speculation grows, what affect will it have and how should you be positioned . Thats coming up next. Welcome back to the show. We have breaking news on Deutsche Bank which has been pricing the new shares as part of the capital hike. 22 euros and 50 cents a share. That was pretty much expected. Gross proceeds of 8. 5 billion euros. Let me get out to annetta standing by in frankfurt. Annetta, in line with expectations but a hefty discount, isnt it . Yes, its a hefty discount. Its roughly 30 discount just the rule of thumb. But that was pretty much expected. Interesting if you look at what that means for the qatari family. They have played 28 euros for the first chunk of the capital increase. They also said theyre exercising their rights which now means that they get quite an attractive deal here and theyre known for getting attractive deals done in other parts of the world like in the uk. Going forward, what does that mean for Deutsche Bank . Its relief. Were hearing from analysts across the board that they are bolstering their Capital Position but at the same time there are still doubts of what the bank has to pay when it comes to legal settlements in the united states. This is a fascinating story. Its interesting that the timing of the announcement comes just as were on the verge of mr. Draghi and this bigger announcement that the market is awaiting as to exactly what hes going to do at this point to arrest this disinflationary trend in the eurozone. And of course one of the suggestions is that we go negative deposit rate. This is not a great story for the banks on a day when Deutsche Bank also has another not great story out there. Yes, its essentially boils down to a penalty for the banks and of course, banks are very much the focus this year here in the eurozone but the asset quality review and also Deutsche Bank recently was saying in an analyst calls that they dopt really know what the stress test will mean for the Balance Sheet of the banks. So i mean, that whole problem, also is flagging that probably the ecb cant do a lot to spur credit growth in the eurozone. The other challenge is how you position today and what is the scope for surprises. The earlier story we were looking at is suggesting that a lot of the Hedge Fund Community are short euro on this and think there will be a dramatic fall in the euro from this meeting. Previous experience from draghi press conferences would make that a difficult trade it seems. It does. He doesnt really have a legacy of surprising the market to the upside, does he . Lets send it back to you for the time being on that. Thank you so much for that. Lets stick with this topic how do you trade the euro going into this meeting. Amelia, good morning. Quite interesting, in your notes you say theres a risk that the ecb will overdeliver. The market is afraid of the fact that once again the ecb will underdeliver. Explain your stance to us. Well, today is a very historic day in eurozone. Its an exciting day for fx trading, the euro especially. They will cut negative deposit rate to 10 to 15 basis points. They could take a longterm ltro. No one agrees upon that or the mixture of measures draghi could announce in the press conference. I think this event will introduce volatility into the euro and it will be a good day to trade. I heard your last segment that hedge funds were positioned short euro into this meeting. All in all, the balance of risk is that draghi could overdeliver because the ecb didnt do anything in march. We have disinflationary trends going on in the eurozone. I think hes going to get out in front of this with the slower upcoming summer months. Id like to be short the euro into this meeting. This is a risk that well see increasing flows into the eurozone. Maybe mr. Draghi is undertaking actions that really will have not the desired effect but the opposite effect. Maybe hes shooting himself in the foot. Well, i think that all in all, eurozone Growth Prospects are picking up. Draghis most worried here about inflation. Today they are supposed to have a slight downward revision to the inflation forecast as well. You know, i think what it means negative deposit rates for euro trading is that euro can now be used or more likely to be used as a funding currency. That will be against other g10 measures. Also with u. S. Interest rates rising. We saw a pretty good pickup in the tenyear yield this week. And so that also relative yield differential is also making weigh on euro this morning. Traders are bemoaning the fact that were not seeing volatility or volume in the fx market. Do you think with the ecb meeting and the jobs report tomorrow, that will finally change . I think it will. Thats what were looking for. Theres not that many events in one year that can trigger volatility and pick up. But i think this is definitely one of them. I also think that as i mentioned last week, last thursday, it looks like the u. S. Tenyear yield bottomed which was also a perplexing problem for currency traders. Now that thats trending higher, it looks like it will help trade a dollar yen and euro dollar lower. We are looking to this event to trigger volatility. Stay tuned for our live coverage of the ecb Interest Rate decision. 13 45 cet followed by that allimportant press conference. Well see you tomorrow. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. Morning and welcome to squawk box. The markets are waiting on word from the ecb. What does mario draghi have planned to give the eurozone a jolt . Certainly it will have ripples over here which is not usually the case but this is important. Gm gets ready to unveil the details of an internal probe surrounding the recall about those faulty ignition switches. Sprint is getting closer to striking a mega deal with tmobile. It is thursday, june 5th, 2014. Squawk box begins right now. Heres my number so call me maybe hey i just met you and this is crazy but heres my number so call me maybe good morning, everybody. Welcome to squawk box here on cnbc. Im becky quick along with joe kernen, Andrew Ross Sorkin is reporting from Silicon Valley today where he sat down with Mark Andreasen and the ceos of ebay and linked in. Andrew will be bringing us those conversations in just a few moments first we start out with a major Global Market story this morning, the ecb meeting. The European Central bank is expected to cut rates and push banks into lending. The ecb is seen imposing negative Interest Rates on its overnight depositors. In an attempt to make sure money gets out into the economy, they may also announce a loan program. Michelle carusocabrera will join us in the next hour. You have a frog in your throat. Yes, im a little stuck. Youre not sick, are you. No, the pollen, allergies. Becky would have saidr