In the rest of the year. The ceo tells cnbc lower fuel prices continue to help. We benefit from low oil because our cost space goes down but were in a good position when oil prices go up. It means airlines are much more rational about the flights they fly so theres less capacity in the market. Nepal is hit by another major earthquake. Shockwaves are felt as far as new delhi. And coming up on the show a deflate gate verdict. The nfl cracks down on tom brady and the patriots but how tough was the penalty . Stay right there to find out. Also find out how much a picaso fetched at auction. We get to the bottom of who is creating the demand for this art market. Well google reveals how many driverless car versus been involved in accidents but who or what was behind the wheel . Were going to get down to it. Lets get straight to markets. Stock markets sell off in europe. We had a mixed day in asia but its the on going sell off in sovereign debt once again sparking a sell off across the board in europe. You can see there red for european markets. The stoxx 600 is down 1. 4 . The dax down 1. 6. France down 1. 5 and the ftse 100 down just over 1 . Lets look at some of the biggest individual movers. Earnings and takeover talk also driving stocks this morning. Topping the stoxx 600 after stronger results. Up 10 and 7 respectively. On the down side they posted the biggest drop in four years after a disappointing earnings outlook. Meanwhile, easy jet is down 8. 2 . Meanwhile theyre higher after confirming preliminary talks for a merger that could be valued at 23 billion euros. The dutch Food Retailers cautioned discussions may not result in a deal. But lets come back to the bond markets and lets look at the source of the sell off were seeing in the bond markets in europe and the u. S. And that was the steepening we saw in the u. S. Curve yesterday. Lets look at the 10year yield. 13 . Have a look at the 30 tnote yield thats above 3 for the first time this year. The reason huge supply from the government but also from the private sector. We might be seeing concessions a head of that but once again that sell off in yesterdays trading session, that was triggered by the bunds. It happened again in the treasury market but now again today were seeing it seep into the european bond markets again. We have this very negative feedback thats going on. We dont know the sources of the bond sell off. We know that two or three weeks ago the source was the bunds but what is it now . Many were saying the german bund was a leading indicator. But this time around im not so sure. Yesterday wall street stocks did end lower but we didnt reverse all the gains we saw on the back of that jobs report on friday. Some say that in itself indicate there is is resilience in this market. I think also the magnitude with which european bond markets have moved and you look at where they are today to where they were three or four weeks ago its extraordinary. Thats partly that theres inflationary pressures being seen but i think the size of these moves is astonishing. There was a lot of leverage and positions. A lot of people wouldnt have been long european bonds. It was the euro that started the tick up first of all and that spooked investors and they changed their positions quickly. We had an interesting guest on yesterday who talked about who the sellers were. He pointed out it was the japanese sellers. He said though too, there isnt a lot of selling pressure and there isnt a lot of option activity but worth noting once we see that coming in once we see the smart money moving in then this bond sell could become very very violent but for now seems to be some of the foreign investors. There could be a basic concession. Theres three auctions this week. We have a three year note out today, ten year and 30 year on thursday. The other interesting point to know here is this is sparked by european bonds that had been bit up the most in rekrentd weeks but u. K. And u. S. Bonds faced similar moves and they hadnt been bid up to similar levels. I dont think we could say that u. S. And u. K. Bonds are moved. Thats not the driver here and clearly they hadnt been as compressed in the first place. Were now seeing the start of this big reflation trade. I think its a lot of the repositioning of some of the excess positioning we have seen as a result of the qe trade. At the end of the day maybe it is all driven by bunds. But you dont want to fight the fed. Youre in a way fighting the central bankers pushing yields lower when you take a look at the longterm view and what theyre doing with Monetary Policy. Specifically here in europe. It remains to be seen as to whether this is a shortterm blip or longer term correction in the bond market. Lets pick up on european markets again. A quick summary of where were looking at. All in the red. All more than 1 . The ftse just under 1 . Germany and france under just 1. 6 . Lets look at rates because weve seen significant rally over the recent weeks in the euro. A lot of currencies against the u. S. Dollar but the euro in particular. Its rallied nicely today. Up. 7 . About a month ago we were pointing toward the possibility of parity. That now seems a long way behind us. Thats part of the unwinding of the same trade weve seen in the bond market. All of that have been based on european qe and markets moved a little too far. Aussie dollar strong today. The head of the australian budget is due any minute now. Last year there was a lot of political fall out from the budget and he only recently just survived another leadership vote so interesting to watch that and sterling 15568. It started rallying the middle of april. Was down as low as 146 off a hawkish set of bank of england minutes and is up over the resounding election results. We get the bank of england Inflation Report tomorrow. But currently at 15568. Oil was volatile off the back of an opec report. Its holding up well today despite a Goldman Sachs report that suggests the rally weve seen so far in the last month or so in Oil Prices May then derail a longer term rebalancing in the oil markets. So interesting to discuss that further. But were looking at 59. 62 for wti. 65. 40 for brent crude. Lets also check in on markets in asia. Sri is standing by for us as ever in singapore. Just on the back of that the rebound in the price of oil, some 50 will pose a major policy headache in this region. Could create headline inflation later on this year. That could complicate Monetary Policy and the outlook and easing bias weve seen. Let me just talk about the china market. Despite the break up in yields in the global bond market that you have been referencing and also the grexit fears. But theres a degree of resilience as well. The highest in almost a week for the Australian Market just ahead of the federal budget that youre referring to and also the banks making a come back after a lousy week last week. This is going to be an important week for china yet again. Tomorrow fixed Asset Investment retail sales and also industrial output. They do come on the weaker side of expectations and vindicate this policy easing we have been seeing by the central bank in china. Case and point, most recent example was the rate cut that came over the weekend. The third one in six months. Theres more easing to come though in the pipeline to consolidate growth 7 . Back to you now. Thank you. A magnitude 7. 4 earthquake strikes Mount Everest. People rushed on to the streets. This is weeks after people died from a earthquake. Joining us is mark south. Spokesperson from the red cross. What exactly are you seeing on the ground . Well as far as i can see everything is Still Standing. Everything that was Still Standing from before. What were seeing is a lot of people out on the streets. The last few days the after shocks started to come down. People were starting to return to some sort of normality but this has shaken people up all over again. Any reports of causalities so far . So far i dont have that information. I mean it seems likely that buildings weakened by the earthquakes previously may have come down in this recent one. It wasnt quite as big as the big earthquake two weeks ago but it wasnt far off. So there will be lots of damaged buildings under threat from exactly this kind of earthquake while further out in the hill wes still have concerns about avalanches and landslides. Tell us exactly about the efforts that you the red cross and other institutions have taken since the big earthquake a number of weeks ago. How are the people dealing . Have you been able to reach all the people in dire need of help . Thats a big question. Honestly, no we havent been able to reach everybody yet. We have hundreds of thousands of people working to get immediate aid to everybody. That will continue. We have got thousands, tens of thousands that have gone out there. Hundreds of thousands more in the pipeline that are coming and thats scaling up. So our aim is to reach everybody. After todays events there will be more people to reach. Havent people been warned that more quakes could be coming . Thats always a fear. I dont know. I dont know how lucky any of that is but certainly its the fear in peoples minds. Its always there. Especially wp events like today. Thank you for your time. Mark south joining us on the phone. European finance ministers are arriving in brussels this morning continuing talks over a cash deal between athens. They paid 750 Million Euros a head of schedule. The u. K. Chancellor arrived at his first Euro Group Meeting since the surprise election victory. George osborne will be looking to steer talks toward britains role in the eu including a possibility of a grexit. We come here with a clear mandate to improve it and reform the eu so it creates jobs and increasing Living Standards for all of its citizens. I dont think anyone is in any doubt well hold that referendum on the European Union having conducted the negotiations. We go into the negotiations aiming to be constructive and engaged and resolute and firm. Within the last hour the u. K. Chancellor arrived at his first Euro Group Meeting since the surprise election victory. Aside from the grexit George Osborne will be looking to steer talks toward britains role in the eu including the possibility of a grexit. When you take a look at financial markets, markets are more focused on the potential grexit but theres the potential of britain leaving the eu. Youre right in terms of the scale of the issue but the timing is also crucial and yes we have at least a year according to your latest estimates before we start having to even think about the prospect of a british exits. What we need to look out between now and confirmed date for referendum is how those negotiations go. Grexit and the risks surrounding greece are the bigger issue. Julia, we had talk of course we know were going to get a referendum on ab brexit. We might get one in greece. Do you think thats likely . Depending on how the negotiations go theyre not backing down on the need to reform the pensions and labor market reform. These are their red lines. If we have to see those adjusted its going to come down to the greek government having to hold some kind of referendum or vote to justify the decision theyre making and control the extreme left of the party. A great poll that was taken. 65 of greeks want to compromise with the euro zone. 57 say the government shouldnt compromise on labor market and pension reform. Unfortunately they couldnt have it both ways. If they have to do a uturn then it makes a referendum necessary. Its interesting on this point because they were elected on a clear mandate to hold firm against the European Union but only got around 30 of the vote in that. When we see for whatever reason that the European Union doesnt see ground to the european government and mandate. This is why a referendum is necessary. We are to push back on the policies that were enacted but also to remain in the euro zone and comply with the deal or with at least what it takes to remain within the euro zone. At some point you cant have it both ways. Cake and eat it. I want to bring in phillip shaw into that conversation. What very few people talk about phillip is the fact that greeces debt pile is unsustainable. Down the road we do need a debt cut. It probably is unsustainable. The 180 of gdp. If you look at the deficit projections and growth projections it is possible to erode that slowly so you get down to 120 of gdp. I dont know about 2021 as the authorities suggested. Its possible. But dont forget also that the financing costs are low as well. That debt pile isnt quite as bad as it might seem under normal times but yes its almost insurmountable obstacles. You need a lot of growth and political winds to be growing in the right direction as well. We have a number of payments made and thats very reassuring but the big cash crunch thats coming in july and august do you think that greece once again will simply scrape by . It will find some cash somewhere . I think it probably will over the next few weeks. Theres two issues with the big payments coming in july and august. They come to over 6. 5 billion euros. One problem is that its just an awful lot of cash to find and its difficult to see which piggy bank they can raid to find that cash and the second bailout ends at the end of june and what were talking about here is financing needs over the next few years and need for possible third pail out as well. They cant point out dispersements or stop conversations on the third one yet. Do you think the sharp reversal has anything to do with investors repricing their expectations of a greek deal coming together. No i dont. Its encouraging that were not seeing a tangible amount of contagion between greek markets and other Global Markets. No, i think when were rooklooking at the retracement in bond markets, i think the conversation was spot on. Through february and march we were talking about why are markets rallying . This is ridiculous. German ten year bund yield reached below 5 basis points at one stage. What triggered the reversal is not clear. Most people would agree bond markets have become overextended earlier in the year. We have to leave it here. Thank you for your time. Chief exist. I want to thank julia for everything. Still coming up on the show secretary of state john kerry arrives for high level talks with Vladimir Putin. We cross out to moscow next. Well be back in two. Welcome back. Want to bring you the latest on the latest earthquake in nepal. Now according to wires three major landslides have been reported in nepals region and at least 12 people were injured according to a district official who was quoted by reuters. The bodies were being brought out of buildings according to a un agency and buildings have collapsed in nepal after the quake and the injured are being brought to hospital. Of course well keep you updated on the latest events out of nepal. Now u. S. Secretary of state john kerry landed in sochi for high level talks for russian president Vladimir Putin. On the agenda is the conflict in ukraine as well as syria and iran. Jeff joins us live from moscow. Lots on the agenda and very crucial topics. Yeah, absolutely. I think there are a couple of points to make here wilfred. One is that the state of relations right now between moscow and washington could be described as chilly at best and john kerry hasnt been in russia for at least two years. So i think that makes this trip interesting and remarkable. He will not only meet with the minister but he will of course speak with president putin and as you pointed out theres a number of key hotspots on the table, iran and the on going negotiations there. Syria and the conflict and how to resolve it and of course how do we take some steps forward in the ukraine crisis because russia would like to see the end of the economic sanctions and the west would like to see a Peace Agreement and political settlement that will stay. The other thing thats worth pointing out about this trip is that expeck takesationtations are being managed by both sides and pitched relatively low. The state department itself is only describing this as a method of keeping a channel of Communications Open to the senior russian leadership given that there are so many shared interests in hotspots around the world but this meeting wasnt on the agenda before friday and it has come very quickly together over the weekend. So i dont want to down play it too much because the fact that its taking place in itself could mean theres something to be achieved here. Back to you. Do you think mr. Kerry will want to get a feel from mr. Putin to how close russia is moving toward china . Im not sure that this is a path that kerry will go down at this point. The russians used the relationship with china as a Counter Point with the declining relationship they have with a number of western governments. It fulfills a few propaganda angles for president putin but represents economic interests they can do longterm oil and gas deal with the chinese at a time when maybe other countries in the world are not going to take so much. Ill just say we have another thing on the agenda here today and i want to throw this into the mix for a minute. Away from whats happening with kerry and president putin there will be a report released by the friends of Boris Nemtsov, the murdered politician drafting his own report on russian troop activity in ukraine. That report is now going to be released by his allies today in just an hour or sos time. So well be interested in finding out what that has to say and whether that will force a response from the russian government on this ukraine story and whether, indeed it changes the tone of what happens in sochi at all. Well be back later in the show. Lets switch gears. The recent oil rally is premature according to Goldman Sacks that cut its forecast but says that current prices are still expensive relative to fundamentals. They see a decline this year but expects production to return to growth in 2016. For the Second Quarter the Investment Bank predicts the market will be oversupplied by 1. 9 Million Barrels per day. Lets