And hollande calls the bid for alston unacceptable and focusing on Getting Better offers if the firm. A warm welcome to todays program. Plenty to get through in the Corporate News front. Well be focusing on the bank sectors. But before that, we have the final print of the eurozone pmis. And they have come in at 53. 1. They were forecast at 53. 1. But its the highest since june 2011. Com miss composite 54, german 53, forecast at 55. Italian april surface pmi, 51. 1, and that was forecast at 50. 2. French services pmi, 50. 4. So again the two economies most concerned about coming into the beginning of the year showing continue rebound. Eurodollar up to 139. 20. Up to the best levels of the session. In fact were up to nearly the highest in three weeks. Joining us with his you views and for the first part of the show today, tim hayward, head of fixed income. Another sign of increasing activity in the economies weve been most worried about. Spanish yields now below 3 for the first im time in minnine y. I think a lot of the Economic Data is coming through quite positively. What is showing is the rate of change of credit provision is really having an effect on those countries which had seen contractions, now either contracting lessor expanding. To economies like italy and spain are doing quite well. Is this farm flows or is this will domestic money buying spanish and italian debt . Im not sure who its buying. Were getting to be rather concerned the spanish five year yields are below the u. S. Five year yields. German ten are blow u. S. Five year yields. Is that why one of the reasons the euro still maintains its levels against the dollar, do you think . There are very few people who seem to forecast 140 and higher. Doesnt the market seem to move to try to hurt as many people as possible . It seems even the weakness of the dollar is somewhat surprising xwigiven the payroll data. Yes. Good to have you on. Stay with us. If you have any thoughts, you can email us, worldwide cnbc. C worldwide cnbc. Com. Plenty of news out of the banks. Barclays suffered a big drop in fixed income. I mean, so does jpmorgan, so does the whole sector. Are they doing worse . In a word, yes. Much worse than the rest of the industry. You have some numbers ill just show you. J morgan in fixed income current cities, commodities down 11 prks Credit Suisse 21 , citigroup down 7. 5 . Sorry, Deutsche Bank down 7. T3 jpmorgan down 21 . Theyre down 41 . This is not pretty reading however you slice it. Barclays finance director on the line this morning talking about the fact that because they are geared towards macro products, these are things like Interest Rates, currencies, the lack of volatility has actually september the flow of client trades has slowed down, especially when you compare it to 2013. So massive problems that the weakness will continue in q2 and it already has in april. Obviously barclays are about to unveil a major strategy review in their eneinvestment bank. Investment bank profits down 49 . Were going to probably get a whole series of the European Business especially in fic moved into the bad bank. You have decisiivisions that if could sell, they would sell. There are a lot of people this hindsight who say why werent they more proactive in selling these divisions. But the question is who would buy. All right. For now thank you. Plenty more online, as well. Well get more into the banks. We have swiss bank ubs, bring you details on that. Meanwhile japanese Prime Minister is holding his keynote address in paris. All keen to see how they react to the consumption tax hike. Lets listen in a bit. Merely by owning an asset, its value increases. Inflation is a terrible demon against peoples desire for change. Seven years ago on, the economy was better than now, and yet the head way was made. That was because we were upable to banish the demon of inflation. But the japanese economy has been reborn. Compared to seven years ago, the fund state has changed completely. The ratio of job offers to job seekers have rich f s have ri6 consecutive months. A large number of companies took the decision to raise wages. Mofr monthly wages will rise by more than 2 . Well aim at further economic recovery. According to an analyst by bank of japan, all of japans nine regions are in the midst of economic recovery. Business sentiment among small and Medium Sized Enterprises turned positive at the end of 2013 an accomplishment not seen in an astonishing 21 years and ten months among nonmanufacturers. I believe it will be fair to say that japan is now truly on the verge of pulling out of deflation. The future also looks encouraging. One economist points out that the waves of four economic cycles espoused by distinguished economists are new on the upswing in japan. Beginning this autumn, construction will begin in japan on the super conducting magnetic technology. The other day i had the opportunity to experience that speed. Ten years ago when i first had a test ride, there was a substantial a vibration and noise. That month that had been transformed in to an extremely comfortable ride. After more than 40 years since the first success during testing, the technology has at long last evolved to the stage of practical use and eninvestment of 90 million u. S. Dollars just about to xhecommen. In the field of medicine, in years to come we can expect to receive Capital Investment on enormous scale. They have hit their cyclical bottom. The other day secretary general visited downtown tokyo. Wonder he might have gotten a bit fed up at the shear number of signs theyre announcing construction and progress. Now half a century later, development is taking place in every part of tokyo. And in 2020, tokyo will once again host olympic and paralympic games, preparations for the games will take place in earnest. Large scale Construction Projects are you causing the cyclical swings to make their way upwards. That is todays japan. While i do not have enough time to expound on all four of these economic cycles, i trust that you have come to understand what is now happening. Japan economy is back. Engine of work growth has returned once again. Youre listening to the japanese Prime Minister in paris. On the verge of moving out of deflation and looking for expansion of consumption. Do you fully go along with his assertion . He talks a good game. The problem is that the consumers arent really on board as much. Confidence is not as high. Earnings have not risen for the individual. So i think they talk a better game than the consumers are feeling. What happens to spanish sorry, japanese debt yields . Future is trading well below 0. 5 . Its not very exciting. We dont think it will be a huge rise, but clearly a funding currency. Also there in paris is steve sedgwick, as well. Im going to speak to trade investment minister quite soon. Im holding the Economic Outlook panel which comes out within the hour. A 326 page report and it makes interesting reading on japan, as well. Key challenges for japan of course are basically they need to get economics up and running with degrees of success pretty quickly because theyre racing against time. They have a demographic time bomb. And they also have the small matter of a debt to gdp, which is over 230 . Need to get it done before the demographic becomes a huge problem. They have stimulus, but in three we either succeed or fail. This is the growth bit and the structural form bit. And here in lies the issue. We have a story online which follows an interview i did yesterday with the head of the japanese trade unions where he turned around and said structural reform in the labor market could be absolutely disastrous for the labor market itself, for employees, for their wages. And if were getting consumption tax increases and another one to come in 2015, we need a wage increase. But if we get a destructing in the situation, you see the two dont necessarily saltally. So all potential problems. The other thing is trade. He needs to push forward the japanese export story because the corporates have surging profits at the moment, but were not seeing necessarily the followthrough into broader tax seasons. So the next leg is lets get the ttp up and running, improve relationships with our pacific rim partners. Except he hasnt been to south korea and china and those are two key partners. So its all to play for. Absolutely. Steve, thank you. Staying in paris, hollande says alston deal is not is acceptabls it stance. In a letter, hes called for a balanced partnership between the two firms. Joining us with his thought, stefane from the other bit of paris steve isnt in. So when they talk about balanced partnership, what does it mean . They want a similar offer to the one were expecting from siemens. Basically without asking for it precisely would like ge to bring transport activities to alston or to a joint venture in order to make sure tyi tiny part of its business. If fwchg. E. Is to buy the whole business, it will only be one third of its previous size which they say sun acceptable and for the first time the French Economy minister is threatening to block the deal for strategic reasons because alston is producing some Nuclear Power in france. But also it skpt want tdoesnt company to disappear. The deal will be similar to the one were expecting from siemens. In response, ge says the deal was good for alston and france, but the u. S. Company says it is open to further negotiations with alston or with the french government changing the original deal would be for the government a way to escape from that story in a positive way in terms of communication in france. Not sure that it would be the best option for ge for alston and even for french employees. Staying with a and h, m and astrazeneca has received approval for a new drug. And this is the kind of medicine that they will rely on to fight off the bid from pfizer. I think it will be a little disappointing and you see this in the share price. This is an interesting treatment for a particular condition. But its only really going to be analysts think maybe a 200 million a year seller. Thats not really a blockbuster, that wont restore the lost sales astrazenecas pipeline. So what we hear is the new cancer drugs which will probably come on stream 2017, 2018, expecting more of those later this month. This month well hear about that. Got to have something, otherwise pfizer wouldnt be bother to buying. It cant all be about tax. Fair enough. Plenty more on cnbc with that. Also still to korgscome, ubs be the street. Well have the numbers breakdown. Breakdown. Drivers want to go further with their electrical vehicles. 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. Were 20 minutes in to the trading day in europe. Weighted to the done side. S out. Were down at session lows. Uk down a third. Cac 40 down about a tenth of 1 , as well. A stock worth looking at says 2014 numbers will be significantly lower than expected. Ceo also departs with immediate effect. In a traeding update, saying pretax profits were significantly lower. Talking a range of 145 to 160 million. The problem, the uk Construction Business. Stock town nearly 20 at the moment. On the bond markets, a little higher than yesterday. Yield on the ten year 2. 62 a where we stand at the moment. 2. 577 yesterday. Three hospital low. We did have good ism Services Activity up to an eight month high. Not far away from the august number which was a seven year high. Well keep our eyes on the yields. Currency markets, sterling still not far away from the 1. 70 mark on the cable. Can we get any higher. Well see what happens. Aussie got a little lift this morning after rba talked about it being historically fairly high. Eurodollar 1. 3960, we talked about this at the top of the show. Thats where we stand in europe. What about asia. Lets know to sipping pore. We got a strong lead there wall street and ism Services Number was upbeat, as well. So really some consolidation. There were pockets of resilience, when you also some negative aspects here. Probably related i suspect to the political background here. You have to remember Thai Constitutional Court will rule on abuse of power charges against the Prime Minister tomorrow. And if that ruling does go ahead, it could see her removed from power. So chances of political instability affecting the market there. Rba kept rates unchanged. So a pop and then a drop for the aussie dollar. A pop and then a drop. Like that. Sri, catch you later. Ubs has posted a net profit of 1. 1 billion swiss francs which beat expectations. Caroline has more details. Good morning. Three things you need to know about ubs this morning. First of all, numbers for the First Quarter were actually a mixed bag. You have the headline number which looks to be better than expected, but if you look at the divisional profit before tax, especially for the investment back, thats where we saw a big miss. According to citigroup, fixed income down 38 year on year. 22 below consensus. And if you look at what jpmorgan said over the weekend, they say that going into the Second Quarter, fixed income unit will still be very challenging. So were not expecting a major improvement on that front. Secondly, the company is going to set up a new legal structure. A holding company. And that will hopefully allow help to pay a special dividend. So that is quite positive for shareholders. Thirdly, the outlook is still pretty murky. Take a listen. Unfortunately, our outlook has approach to be correct. I would have preferred to have a better environment. Its still challenging out there and every quarter we see each other, there is something new popping up. Thousand we have russia and ukraine and the sanctions and how those sanctions will potentially have repercussions on the economies. I think there is a level of com pl complacency in the financial markets. That was the ceo of ubs speaking to me earlier. Shares up around 0. 8 , trimming shall gains this morning, but still seems as though investors clearly focusing on the capital return story, not so much on the miss in the investment bank. Back over to you. Thanks for that. Credit suisse to pay 1. 6 billion to resolve the probe. Prosecution also pushing for the company to plead guilty. There is no such thing as too big to jail. Some have used that phrase to describe the theory that certain Financial Institutions even if they engage in criminal misconduct should be considered immune from prosecution due to their shear size and their influence on the economy. That view is mistaken. U. S. Attorney general eric holder met with the minister friday to discuss the investigation of swiss banks. Credit suisse right now down three quarters of a percent. Still to come, head of the bank of england had a meeting this week. Well look at the services economy. Pmi number coming out. Mber comi. 40 slump in fixed income send barclays shares into the red and sets the seen for a structure shakeup thursday. Mixed picture for swiss banks. Ubs higher. Credit suisse down after they will pay a bigger fine for the u. S. Tax probe. And alstons bid unensl and focusing on Getting Better offers for the pirm. And japans Prime Minister says the nation is now truly on the verge of moving out of deflation. For nearly 20 years, japan has suffered under deflation. Deflation is a terrible demon. F Services Sector expanded at the fastest pace this year. Services pmi up 058. 7, strongest since december. It was 57. 6 in march. And better than expected number of 57. 6 p. So grown fastest annual pace in more than six years in the First Quarter of this year. Lets get some rouks to that. Joining us is bill oneal, ubs. And tim hayward still with us, as well. 13wi8, the uk has the fastest g 10 economy at the moment. How long will it last . We see it sustaining current rate of growth. I think the period of acceleration is behind us, but it looks as if well sustain this pace certainly into the middle of the year. Second half i think you will begin to see some of the effect from a softening growth in manufacturing. But as you can see from the numbers, it does look as if the uk is getting improvement in the eurozone which i. And clearly in the imt employment domestically and particularly improvement in the prospects for disposable income. P. Are you treating uk assets differently from others . Were still underweight in uk equities. And that is ris reasoning for t fact we feel market may be less than elsewhere to a degree affected by the currency. We did like the currency. We anticipate sterling continuing to appreciate. Youve already seen a dramatic rally against the u. S. Dollar. We think that may top out with a recovery in the dollar and the uk tracking the value against the dollar. Do you think 1. 70 is about as high as we can go. I think the important thing to emphasize here is that the uk and u. S. Monetary cycles are very much al al lined for 2015. We anticipate a rate hike to be followed in q3. Tim, you just heard the forecast for rate rises. What happens to gilt yields. Bond markets have been quite well beat despite the fact the economy is improving. Well, i think the Monetary Policy experiment will probably be the shortest in the uk. These sort of numbers are far stronger it seems than even in the u. S. And as a consequence economy is still a lot smaller than it was. P. More open, too. But sterling is a popular trade. Quite interesting how cable has worked so well. 1. 695. Pound is proving to be taking position were likely to see the pound rise against the euro down to about 0. 8 the figure. Thats a forecast would he hae saying for some time. We think the euro should be underperforming a bit from here at 1. 39. If we continue to get data like this, will we get for guidance three . Officially we would have had to weve got Inflation Report coming out next week, as well, and officially w