Confirms a possible deal with mylan. A merger could create a 23 billion company. Gloo and throughout the day, were at the workshop on the shores of lake como and theres criticism over the lack of action from d. C. Unimpressed about the with which the ecb is acting. Welcome to the show today. Plenty to come from the chinese computing firm lenovo, the brazilant development bank, good old richard koe will be joining us about an hour from now. Towards the end of the show, Luigi Zingales from the university of chicago. Jules is going to be there. Right now, though, we are just over an hour into the trading day in europe. Its all about the countdown to the employment report, as we know. The forecast is going to be 200,000. The numbers could be higher, 230, 240, Something Like that. Ahead of it, european stocks are weighted to the upside. Around about 6 3, thereabouts. Advancers currently outpacing decliners. U. S. Stocks down a little bit. The first fall in five sessions yesterday. Not far away from the intraday high. The ftse was down some 10 points. Today its up 26. The xetra dax, the cac 40, just up 0. 2 . As is the ftse mib, as well. A number of individual stocks were looking at here. M a very much in focus again. Meta says it has held preliminary talks with mylan over a possible deal. The stock follows a report that the two have held talks to merge. Meda shares are currently suspended. Tesco stocks just down 0. 6 . The finance director may be leaving on account of poor financial performance. And remy cointreau up 5. 5 . This is on speculation of a possible trade, as well. Now, on the bond markets, ahead of the jobs report today out of the United States, treasury yields have inched a little bit higher. 2. 80 is where we stand, getting up to about the highs for the week, the 30year, 3. 265 on wednesday. As far as currencies are concerned, euro dollar, we hit 1. 3698 on thursday after more dovish comments. Just above it at the moment, just below 1. 23636. Dollar yen, we hit 104. 12 on thursday and the aussie dollar with that fourmonth high during the week. Below that,. 9238. And sterling is just below 1. 66. Lets recap where asian markets finished the week, as well. The nikkei composite fairley flat. So they escaped with that. Of course, when the yen has been weak, its done fairley well. The hang seng is down 0. 25 and the s p asx in australia up 0. 25 , as well. Now, the Prime Minister, meanwhile, has wasted no time in implementing the first step of his ambitious reform agenda. Legislation was passed through the lower house yesterday to cut down the local government. Renzi says the bill will reduce the by 3,000 saving around 300 million euros. What do the they think of the italian Prime Minister on the shores of lake como . Jules, its a lovely spot to be. Look, what do they think of mr. Renzi so far . Its interesting. Ive heard a lot of the words hope used this morning. Actually, i quote the professor arriving and she says optimism right now can be a selffulfilling prophesy. There is a lot of hope here that he can push through and implementing some of the reforms hes implementing at this stage. Election reform, institutional reform is absolutely vital for him to implement some of the reforms that hes talking about. Those kind of institutional changes in the senate in particular, they could take a year or more. And one of the questions that i asked this morning was how long is renzi going to be given in order to enact some of these reforms . I was speaking to lorenzo at the ecb. This is what he had to say. If he will or if he doesnt the the european nation, which i think is the main target right now, then they have, you know, a few years, maybe a couple of years to do that. In any case, any reform has to be done at the beginning. The parliament is not his own parliament. So, you know, there is a risk that some of these lie in the party. So lets add another voice to the debate right now in italy. Im joined by frank colanc had i, the ceo and president of lameer. Whats your sense of being back here . Do you think this is a turn around story now for a clear game changer in the new Prime Minister . Good morning, first of all. Good morning. I think if i look, for sure, they are moving in the right direction. We need to look at execution and speed what its going to be. That i think is we have some structural issue and we need to see how we are going to impress this structure issue. We need to speed up structural changes that are for sure not going to be easy but we need to do it. Youre asking the question, i think, that everybody is asking right now about execution. Why will matteo renzi be any more capable of achieving what other ministers have failed to do in this country . Well, the real difference i see is probably i see mr. Renzi much more pragmatic. He has the right plan. He looks like to make some changes and to greet very, very quickly. I think he was good, for sure, we received some changes. We received some improvement. As i said, we need to because in my opinion, dont have too much time. How much time are we talking about . I think we need to see within the next 6 to 12 months, important structural change. And then what . If we dont see structural change in italy, do we start to see market pressure back on italy . Theres a difference between that and what were seeing now as far as renzi is concerned and mr. Berlusconi. The markets were pressuring action there and they still failed. Renzi doesnt have that problem here. I think if we dont see some serious improvement within the 6 to 12 months for sure, market will come back and we saw some pressure. 6 to 12 months. But i want to talk about your business in particular, too. Two big acquisitions. Motorola, ibm, its been a tough Growth Strategy to sell to investors, hasnt it . First of all, we didnt go through the full process in terms of so its still an invention of acquisition. I think its too important acquisition in the sense that the market is changing and we see pc market developing into much more mobileconnected device. And this is motorola acquisition, smartphone mainly embracing markets. On the other flight, when you think about mobility, client, pc, the other part that was missing, structure partner, this is acquisition, the ibm server acquisition. Lenovo has been through organic growth or merger and acquisition. We continue to be very good position in terms of organic growth. On the other side, if you want to speed up the growth, sometimes you need some acquisition. You quite rightly point out you dont yet have u. S. Approval right now. The problem is u. S. Investors, Global Investors might quite like that if you dont get approval. How are you going to sell this . How are you going to continue to sell this . Is it going to come down too the proof is in the pudding . I think first of all we are very, very confidence that we can get the approval. We are following procedure in order to we are used to do it because we have been doing that starting from the ibm pc acquisition in 2005. And then to some other things b that we need to do in the last couple of years. So we are very, very confident to follow the process. Also a chinese corporate and theres been a fixation on the First Chinese corporate not being able to make their debt repayment, their debt default in a sense. Do you see this as a possible thing . Perhaps it might change investors perception perhaps at the risk of china if we would start to see something that arguably happens in west markets all the time. Its a sign perhaps of a healthy and more discerning market. Again, if i look at our history, we both or ibm pc in 2005. We develop the ibm pc from more than china. But in both parts of the world to still begin number one worldwide and being 3 30, 34 billion in a Company Making money. If i look at china, china gdp is slowing down, 7. 35 growth as compared to europe. That is not comparable. But gdp is slowing down. I think its mainly coming from the overall worldwide crisis because in terms of export to the others slowing down, i think china is taking all the action in terms of speeding up technical consumption because they need to speed up internal consumption. Im quite confident that they will come back on this point. And i think we will continue to see at least while i look at i. T. And our business, we will continue to see consolidation. It is difficult competing in this market. Thank you so much. Great to chat with you this morning. Coming up in a few moments time, im going to be talking all things brazil. Weve got the president of the Brazilian Development bank. Hell be speaking to me in a few minutes time. Ross, still stick around for that. Oh, we will, dont worry. Mow zill la has a step down after a storm of controversy after his opposition to gay marriage. He donated to the antigay marriage opposition in 2008. The news gained traction once he took over as chairman last week. The chairman of mow zill la steps down over the backlash. Investors will be close willing watching todays u. S. Jobs report. And the Unemployment Rate expected to tick down to 6. 6 . Inning us for the first part of the show today, ian harnett at absolute Strategy Research inc. Theres a suspicion here, a whisper in the markets. Then people looking at 2. 32 the. I think its dangerous to get too hung up on these specific numbers. There is clearly the possibility that the bounceback from the that the u. S. Had will provide some boost in the construction area. I think the key thing for us is the direction is broadly bottom. Unemployment is being driven down. Thats what possible is all about. Everybody talks up the numbers. I think theres a difference in getting separated. And i think those are the the u. S. Economy was on track and a lot of the weak number thats weve seen from the ism, in of the pmi numbers weather related. I think thats going to be borne out. That means that equities go up when people are focusing on unemployment. How much does it matter on that inflation . We actually find shortterm Unemployment Rates are relative to things like bonds. Were happy to see these shortterm unemployment numbers coming down and tracking those. Now those adjust to 1. 6 or 1. 7 in the lows of the last few cycles. So were actually watching that. How close are you watching wages . Yeah, because what you have got to see, youve got to see those nominal wages go up. You could also argue one of the big reasons for the increase in corporate profits is companies at the extensive labor. Thats the squeezing labor share of National Income. Thats the thing thats going to change in the next decade. But labor is going to get their share. Labor is going to get their share of National Income coming back. There will be higher Pricing Power for the corporate texter. So the big mistake to think is that rising wages automatically push down margins, automatically push down profits. What happens is you get Pricing Power, you get the consumption, and its only when the policymakers say right, it has gone too much. Were way away from that. Well come back to you. What happens when yields keep rising . More to come from ian. And what do you think the jobs number is going to be today . As we said, the consensus is for a rise for 200,000 jobs. Send us your guesses for the nonfarm payrolls. Email us, worldwide cnbc. Com, tweet us cnbcwex or direct to me rosswestgate. Still to come, rbs has chosen its new cfo. Find out who made the cut after this. [ grunting ] im taking off, but, uh, dont worry. Im gonna leave the tv on for you. And if anything happens, dont forget about the new xfinity my account app. You can troubleshoot technical issues here. If you make an appointment, you can check out the status here. You can pay the bill, too. But dont worry about that right now. Okay. How do i look . Thanks. [ male announcer ] troubleshoot, manage appointments, and bill pay from your phone. Introducing the xfinity my account app. We have some comments out from andy from the bank of england. He said moderating the risk could be the next frontier of macro prudential policy. What do you think of that, ian . You might come under closer regulation. We only do the research. We dont do the Asset Management, but we do work with Asset Managers, clearly. I think theres a lot of discussion. Theres been paper in the u. S. That has had a similar theme. Now its an exceptional economist, andy howell, an exceptional economist in the uk. Were starting to see the mechanism through which these markets are supported, going through the Asset Management business. So its absolutely right that the central bank should be focusing on their systemic risk. They are overinvested in bonds and unemployment. Thats the one thing that loses. And even their Equity Portfolios look like bonds. Corporate bonds or as i say, the risk is that their Equity Portfolios look like bonds. If we were to get a bond blow up for whatever reason, then that would be major. And thats how financial repression works. Theyre trying to make sure that people remain invested, perhaps for too long in those bond markets. Theres a limit to the fed ford guidance. The Central Bank Must avoid being locked into calendar based commitments. Sedentary policy is reflective enough to respond to changing conditions. Fisher said the feds balance should be would be quite large once his upon buying program wins and it would be incredibly fast moving. Where are we with appreciatories . The tenyear 2. 8 and the 30year 3. 63. Actually, going up across the board, ian. How much higher are yields going to go . We think the u. S. Authorities are just trying to the tenyear. Trying to push those yields up to normalize them. And remember the yields dropped in july 2012. They doubled over the next 12 months, 14 months. The equity market went up 20 . The economy over 2 . History, in the last 100 years, 1902 to 11920, 1946 to 1981, secretaries did outstandingly well in that period the. In the third episode, they gained 5 annually and in the second episode they gained 10 . The people that lose in a rising bond yield environment, theyre bondholders, not equity holders. Yeah. They also announced in this ma lip yumm it was the bond bonanza. So how long can equities outperform bonds . Its only laterally that you see inflation getting out of control and its that inflation, once it gets above 5 , once it gets above 8 , historically, thats been the point where multiples get hit. And its the point that youre making, its overinvested in bond markets. Its a big pension fund. So do they have a choice . They are going to have to move away. And if you look at when a gpis, for example, in japan massively overinvested in bonds are being told by the government there they have overinvested in bonds, the shift is that rerisking of assets, we believe, is a process that is starting in japan, well see it in the u. S. That becomes a fundamental longterm support. Absolutely. People are underinvested in the productive capacity of the global and then its incumbent on companies theyve got to. And investors, those Asset Managers have got to stop saying we want you to run yourself the cash, we want those buy backs. Theyre going to go out there and be told by their the end investors that they have to invest in companies and investing in people and investing in capital. Thats going to be the way you see that. Thanks very much for joining us, ian. A little bit more from you from absolute strategy. Meanwhile, rbs aappointed a new finance chief. Were starting with new position at cfo on may 19th. They have been a member of Credit Suisse for a number of years. Hes replacing Nathan Bostock who quit last year to join santander. Tepcos finance director may lead. Its increasingly been under pressure since last autumn. The gross half year profits on were down by 23 . Analysts have cut their forecasts and full year results by 7 . Well take a short break. Still to come, growth and welfare organization. Which Party Platform will win out in the indian election . Ind . Huh, fifteen minutes ind . Could save you fifteen percent or more on car insurance. Everybody knows that. Well, did you know bad news doesnt always travel fast . clears throat hi mister tompkins. Todd . Youre fired. Well, gotta run. Geico. Fifteen minutes could save you fifteen percent or more. The headlines from around the globe, the u. S. Jobs numbers are expected to be the best in months. Executives shake up. Rbs appoints a new cfo. Reports say tescos finance chief could be on the way out. Meda confirms it is in talks with mylan over a possible deal that suggests a merger could be on the way for the company. And throughout the day, were at the workshop on the shores of lake como over lack of action in the ecb. Naturally, im unimpressed about the slowness with which theyre acting. An hour and a half into the trading day in europe, equities here have some mild gains this morning. Up 0. 3 for the ftse 1100. 0. 2 for the xetra dax, less for the cac 40 and the ftse mib is flat. On the bond markets, yields are trying to edge up a little bit in germany and the uk. Theres a lot of caution ahead of the employment report. The Unemployment Rate is down to 6. 6 . Weve got dollar slesh yen, 104. 12 on thursday the, which is the highest. Euro dollar, 1. 37. We got to 11. 3698 on thursday on the back of fairley dovish comments from mario draghi. But theres still the possibility of more action effectively is what theyve been saying, as well. Lets just pick up on that, as well. Whats your own assessment of the ecb as it relates to Equity Investment in europe . I think what were saying is that the ecb have got a window. If theyre going to act, they need to act in the next two months. All of our leading indicators do show inflation dropping out in this type of phase. Look at what the crb index is doing. Its started to reaccelerate. The bottom line is that europe is going to be an attracter of capital, still, because there is healthy growth. Worry seeing the balance between growth and inflation is very healthy for equity investors. Multiples continue to rise in that environment. The question is whether now europe is an overowned trade relative to places like emerging market