i'm craig melvin. thank you for watching. ♪ good morning and welcome to "street signs." i'm frank holland and these are your headlines. hsbc shares bounce as the banking giant announces the retirement of noel quinn and eyeing buybacks after the earnings beat. and imf's talk georgieva tao

cnbc about inflation and the euro beat. >> it started in europe and then the united states. we like to see the european central bank to take action on interest rates earlier. automakers hit the brakes after profit figures shift down a gear at stillantis. and raising a grlass amid better than expected quarter. >> it is a tough consumer sentiment out there with european businesses or asian business withes. no doubt the consumer -- we are not seeing the same consumption as a couple of years ago. despite that, we are pleased with the way we started the year.

good morning. welcome to "street signs." we begin with german flash gdp numbers. these are seasonally adjusted figures. these are coming in right now at negative .2%. that was in line with the forecast and month over month number. we are looking at quarter over quarter numbers coming in hotter than expected at .2%. the forecast was .1%. this is a rebound from the prior read and quarter over quarter read. coming in line with the forecast at negative .2% and similar to the prior read of negative .2%. we are taking a look at the euro to the dollar. the euro falling to the dollar, but gaining the losses right now. we have to keep in mind germany is a big manufacturing economy in europe.

this gdp print is influential when it comes to currency and bonds. i want to say one more time. the year over year figure with german flash gdp at .2%. in line with the estimate. similar to the previous read. we saw a surprise to the upside with the quarter-to-quarter read. watching the german yield curve. the two-year bund is under a 3% yield. the ten-year bund at 2.54%. we have a guest coming up in a bit that believes we may see the top end of the range with the ten-year bund. now sitting at 2.54%. on top of that german gdp print, we have italian print cross the wires. silvia is joining us with the numbers. >> let's look at the numbers from italy. the first quarter gdp came in at

0.3% for the quarter. that is above what analysts were expecting at 0.1%. the annual figure came in higher compared to analysts expectations at 0.6%. i want that take a step back and adjust the results we have seen throughout the morning with the gdp figures. italy, the first quarter preliminary figures are higher than what analysts expected. that was the case for france and particularly spain this morning. the surprise was quite significant with the quarterly figure coming in at 0.7%. above the 0.4% that analysts were expecting. this is positive news. later on, we will get the eurozone reading as well as the latest inflation print for the month of april. it is worth taking a step back and understanding the last month with the inflation figure for the eurozone came in at 2.4%. analysts do not expect a change

for the month of april. this is important because we are approaching crunch time with the ecb meeting which is due in early june. the expectation is we will see the central bank cutting rates. however, the key question at this stage is whether the sustained drop in inflation is sustained and here to stay and, therefore, whether the ecb will be in position to continue cut rates post june. taking this into context, i had a chance to speak to the managing director of the monetary opportunfund. i asked about the eurozone economy and i asked about the bund growth with the challenges to compete with the united states and china. this is what she had to say. >> it is very important to focus the european budget on removing the biggest obstacles to

european competitiveness. number one is energy. energy security can be combined with addressing climate change. it can be a win-win opportunity for europe. it is a must for europe not to be dependent on what is happening in energy markets elsewhere. number two, we are on the cusp of the new industrial revolution. artificial intelligence has a major potential driver of productivity and the european budget can help with more innovation. when i look at european countries, one can see clearly in some with further work on the digital infrastructure and in some with the quality of education and skills and ability of labor. overall, this is an area where european budgets can play an

important role unifying everybody. why? the risk of different levels in moving artificial intelligence across european union would mean more inequality in europe. something europe cannot afford. >> i also had a chance to address the open question about divergence in potential rate cuts with the ecband the fed with the imf managing director. she said she is not too concerned about that with the two central banks because they don't expect changes in the exchange rate if the ecb moves ahead in terms of cutting rates, frank, compared to what we would hear from the fed later on this year. nonetheless, an important one for the markets to monitor. >> we will hear from the fed tomorrow. not expecting a decision, but jay powell's comments are

watched closely. we hear european leaders say it is time for a diffivergence wit the fed. thank you, silvia. take a look at shares of hsbc up over 2%. we are getting news that noel quinn is retiring. that is a surprise departure and said the formal process to find a successor is already under way. quinn took over at hsbc in march of 2020 steering the bank through the pandemic and rise in interest rates. hsbc posted a pre-tax profit of $12.7 billion. shares up 2%. the profit in the first three months of the year was ahead of estimates, but slightly down on the year. santander saw net interest

income grow by 18% on the year to the highest level at 11.98 billion euro. charlotte has more on the earnings report. >> thank you, frank. you were saying the result was below expectations for santander. they are on track to meet the 2024 target with the single digit growth revenue this year and return of tangible equity up 16%. it is 14.9% in the first quarter. looking at the different parts with the geography, there is a criticism from santander with the spread of latin america and europe, but it has offset the weakness in some markets. spain boosting the economy on the higher net interest income.

that helped the performance in the uk with the miss in the uk with the profit down 25%. they said they have cost of deposit and lower mortgage volume in the uk as well. the different parts of the business shows the results with the divisions in the business and revamp last year. retail and commercial bank profit up 22% and digital consumer profit down 5%. the bulk of the retail bank helping offset the weakness, including in the investment bank with profit down 5%. certainly, reconfirming the target for 2024. sl shares are weaker off the back of the result. >> charlotte, thank you. turning to the u.s. fed who starts the two-day policy meeting today and with any comments from jay powell in focus. expecting sticky inflation and some policymakers are hinting at

a possible rate hike. now analysts are pricing in 35 basis points of cuts this year after paring back on the easing. lseg sees a 60% chance of a cut in september and 20% chance of no rate cuts at all this year. big shift from the start of the year. let's bring in kristof for more from commerzbank. >> good morning. >> i think we need to start with the u.s. fed with the two-day policy meeting today. no decision expected at all. the comments will be watched closely. what is your expectation? hawkishness or dovishness? >> hawkishness is very clear prediction. the point is by now no one should be surprised by a more hawkish undertone.

as long powell does not discuss rate hikes, i don't think the market will be shocked. looking at how the market has been trading since the end of last week, i have a strong feeling which has been backed up by data, that is the market is trading out of the short space. hod evident hawkishness, i don't think will be a major problem. >> not a problem for the u.s. i want to turn back to the eurozone. the first read of the german gdp. surprise to the upside. bund yields right now are ticking up a few basis points. you believe we're at the high end of the range with the bund. you say about 2.5 is the high end of the range. why is that your forecast and what impact does it ha ve on th broader complex zone? >> gdp is on the strong side.

later today, we will get a .3 number for the eurozone. that is a strong number compared to expectations and, hence, the market will struggle through the 2.50 level you mentionmentioned. that is our forecast for the year. we will probably be trading lower as the ecb begins cutting rates for sure by june and then the fed will join later this year. inflation will continue to come down and especially the indications so far for april are really encouraging if you look through the noise of the data. by september, we could be talking 2% eurozone headline inflation and that will create a favorable year of 2.50 and bund yields are looking to add duration. >> we have been talking about

divergence from the u.s. fed and ecb. silvia with the great comments a short time ago. with the divergence in play, you believe that 10-to-30 year bonds are in play. yields are almost 5%. >> i think a lot of investors will be eager, actually, to park cash in the front end of the u.s. curve. that, i think, is a major risk for the u.s. in the long run later this year. keep in mind, we are heading into the u.s. election. we have a fed which is in no hurry to cut interest rates. we will get more issuance if you look at the latest borrowing estimates out last night. they were not as encouraging as some hoped. this could be a consolation which is similar to last autumn when we came out of the summer

and we had a very bearish u.s. re-ste re-steepening. you could get risk free 5.5% on the front end of the curve. that is a risk you see for the mainly u.s. curve. >> you see for the u.s. curve. i have to ask one more question. the rise in bond yields. the bund and gilt and ten-year yield have moved in lockstep. they are increasing competition for the equity market specifically in the u.s. with the ecb cutting rates, do you see that competition lessening with the european equities? >> yes, i'm quite relaxed about equities or credit in general at least when it comes to the macro and central bank impact.

we have rates at such elevated levels and if something goes wrong in the economy, central banks can cut rates and they will do so significantly if something goes wrong. that is a difference from two or three years ago. i don't think this will be a major obstacle for credit space. >> christof, how much cuts for the ecb this year and fed? >> three from the ecb and one from the fed. >> one cut. a .25-basis point cut for the fed? >> yes. first cut in december. slightly less aggressive than the four you mentioned before which are going at 32 or 35 basis points. >> we have seen forecasts come in at .25 cuts and then another cut later in the year.

>> the june rate cut is almost a done deal. the way i put it before, it is not whatever it takes, but no whatever they cut in une, but sequential cuts are not likely because the inflation problem will not be solved and the divergence we have with the other economists and also the four happening next year. for the ecb, we expect four rate cuts. i think they will be done next year as inflation will converge to 3% than the 2% the ecb now expects. >> june for the ecb seems all but certain with the oil markets staying calm. christof reiger, thank you. coming up on the show, maintaining the full-year outlook as it expands the use of a.i. with telenor. we will discuss with the ceo next. what rkul? cirkul is

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at normal expectation. we have siege here with us. i see shares are up 2%. >> a pleasure to be here and present a strong quarter. >> i want to talk about net income 40% above estimates. what were the drivers for the quarter? >> the drivers for the quarter were the revenue growth in the nordic. we grew 6% on revenues across the nordic markets. we also grow revenues 5% or 6% in the asian markets. even better was the cost focus which gave us 7% growth. we also see that our companies

in asia are on track from the mergers. this is the main driver in the quarter. >> you mentioned strength in asia. we heard a different story from a number of other businesses. what parts of your business are seeing the most growth when it comes to asian consumers and are you seeing weakness there in the future? >> no, i would say that in all markets, as you know, we are operating in thailand and asia and bangladesh. we are finally back to get out of the covid effect. that took a long time. now the growth is back. we see that the asian customers are leap-frogging on data conne connectivity. using data on applications and services in a different way. this is what is driving our business. in all of the markets across

asia, we see this happening. >> i want to point to your stock with the shares off the high of 1.5%. i want to talk about the use of artificial intelligence in your business. how are you capitalizing on the emerging technology? we hear the companies talk about the benefits of a.i. what practical uses are you seeing? >> we have been working with a.i., not generative a.i., for the last six or seven years. it is automating our services. it is to help us with the predictive maintenance in the stack and take physical interaction with customers into the digital experience. we use this across the operation. now they will scale this further and we have announced cooperation with the media to build new data centers in oslo. several data centers. we use them to help us to take

the next step to make ourselves a fully based operation and putting a.i. first. we have opportunities here on the cost side and efficiency side and the way we are improving our customer experience. even putting data services on top of the connectivity. >> you highlighted a big surge in the cybersecurity business stopping over 300 million cyber attacks in norway alone. that was quarter over quarter. i want to talk about the security business and protecting the data centers. data center cybersecurity is a growing issue for many companies. >> the data center is first. the data center challenges we have and the opportunities means the security loss in the country now is based onning having a local ownership and having secured data center structures.

the data center we are building in oslo is exactly that. the first data center which has 100% regional ownership. it is under the security law of norway. this is what we want to do to not only secure our own data, but bring in customers into the setup. on the other part, we are investing a lot in keeping customers secured. in the most consumer packages now, we have data filters. the number you talked about was cyber attacks against our consumers alone. we are taking that away from the data filters and we are selling services on top of that if you want to protect yourself further. this is revenue growth which is connecting people with data and security solutions on top of that. our customers are willing to pay for that. i'm happy with our ability to take the security position in

the market. >> i want to clarify one thing. you mentioned the domestic data center. they will be held on the sovereign cloud as opposed to the cloud? >> yes, i'm talking about the sovereign cloud. we want to be a fully-based collaborator. some is going to be the private cloud data sovereignty regulations. >> it will be an interesting topic going forward. one last question. a report out earlier this month calling for consolidation when it came to the euro telecoms to improve service. with the recent awards for fast service in minds, does this make it easier to grow the networks country to country? >> absolutely. the industry has been talking about this for several years

now. the european market is too fragmented. if they wanted to strengthen the way we work not on the con conne connectivity, we need a long-term scale build. we are waiting for what will happen after the european election this summer and commissioner coming in and new commission established. i think we will see a little bit more of a friendly tone from the authorities allowing us to consolidate ourselves in the market. if you want a european consolidation and build stronger players in europe, you have to do that first. we are looking at the options in sweden and denmark if we see that is being accepted not from the regulatory point of view. >> shares are up 1.5%.

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welcome to "street signs." i'm frank holland and these are your headlines. hsbc shares hit a five-year high as the banking giant announces the retirement of noel quinn and announces $3 billion of buybacks. imf managing director expressions concerns over divergence telling cnbc the inflation gives the ecb more room to maneuver. >> on the inflation front, europe is starting over the united states. we like to see the european central bank to be in a position to take action on interest rates earlier. the automakers hit the

brakes after profit figures shift downa gear at volkswagen and mercedes-benz in the first three months of the year. carlsberg announces a 1 billion krona buyback. the ceo talks about the challenging environment. >> a tough consumer sentiment with the asian businesses or european businesses. no doubt we are not seeing the same momentum as a couple of years ago. despite that, i'm pleased with the way we started the year. welcome back to "street signs. it is a very busy day for earnings across the boards. we are looking at the ftse 100 which is the best performer and continuing to hit record highs.

the german dax is down .3% of 1%. it is a surprise to the upside quarter over quarter. the dax down .13%. the fmib is flat. let's look at the fx situation. the dollar and yen making gains. pulling back from the 160 level before. across the continent, the euro gaining on the dollar. the dollar gaining on the y auyuan. looking at futures this morning ahead of the two-day fed meeting. no interest rate decision expected. a lot of pressure with the

comments from jay powell. the dow would open up 40 points lower. s&p and nasdaq are lower. moving on to other earnings. logitech with the 5% bump in the fourth quarter coming in over $1 billion. the company's first quarter in the black for two and a half years. sales full year were down 5% at $4.3 billion. that topped the estimates. it expects sales in 2025 to be in a similar range. moving to on stellantis with a 12% decline in the first quarter. the carmaker flagged a 10% decline in shipments as it s shifts to a new portfolio. mercedes-benz posted a 29% decline which was in line with expectations.

luxury carmaker will hold the pricing at full levels. it expects stronger sales volumes ahead. mercedes-benz down 3%. we have volkswagen next with the operating profits declining 20% in the first quarter to 4.6 billion euro. the german carmaker is hopeful of the rebound later in the year as it prepares to launch 30 new models and increase market share in china. look at that stock here which is down 2%. weiss annette is here with more on that. >> one thing is clear that the german carmakers headache is china. development in china for volkswagen, it has struck from 6% in 2020 to roughly 3.5% in the last year. there's also no silver lining on

the horizon. also mercedes-benz is now saying there is weakness in the luxury segment in china. that is important for them. both carmakers expect pricing pressure especially in the ev space which is getting tougher especially because the competition from china is growing. that is the most true in the mass market segment where volkswagen is feeling the pain already in china and then mercedes-benz, it did go well. they both say there may be a silver lining in terms of volumes and growth and development in the second half of the year. both have new models coming up. volkswagen with 30 new models across the product range which is coming to the market, especially in the luxury segment

with porsche introducing new models. mercedes-benz is upgrading with the g-class. what we see now is probably the bottom of the cycle which is what we hear from both carmakers with the expected sales pickup over the remainder of the year, especially in china. that is at least the hope. when it comes to profitability, the first quarter was difficult for volkswagen and mercedes-benz. you see it on the analysts' call of mercedes-benz clearly saying they are not happy with the car margin which is 9%. porsche's operating profit margin dropped to 14.9% which is not where they want to be. they want to be at 20%. it is a mixed bag and a different market environment. both carmakers are confident that the momentum and sales

should pick up during the course of the year. >> annette, thank you. turning now to carlsberg posting the beat on the back of price increases in all of the main markets for the first quarter. volumes jumped 2.1% driven by growth in asia. the company reaffirmed guidance and announced a 1 billion krona buy back. did not take the job offer earlier. arabile is here. >> a good set of earnings, nonetheless, from the numbers. the market clearly not necessarily liking it as much. it is slightly down. year to date, it is up 11%. it has performed better this year. premiumization is the buzz word. heineken has spoken of the same thing as the other players particularly in the market. the makers of guinness speaking

about the key part of the business. the premium beer brands up 8%. that is a significant push for the company. asia being a key part of the market makeup as well. that is the one that's grown significantly as well in terms of regional growth for carlsberg at 5% across the time period. overall, revenue going up 4.4%. better than the market anticipated. the market looked for a 3.6% figure when it comes to that revenue figure for the first three months of the year. again, bettering the currency situation. that helps significantly. the situation has been price increases. yes, inflation has played a key role in the market, but price increases have come into play for carlsberg. they have a notion of pushing price increases on to consumers. i asked the ceo whether the

price increases remain key to combating inflation and whether the firm's focus on non-alcoholic beer is paying dividends. >> we have been clear that the cost increases we have been seen coming through, we need to price through to the products. we are seeing this year is the cost increases are lower than in previous years. our costs are still going up. overall costs are still going up. we price that through. i can't comment on the future pricing, but we have a ground rule that we pass cost increases through to the pricing. when we look at the other element around alcohol-free beers, that is a trend that will continue. you mentioned asia. asia is a very niche market. not a big thing this asia. we saw solid alcohol-free growth in asia. alcohol-free beer is gaining

momentum. >> organic volumes did go up by 2% and organic sales grew 4.6%. they closed off the russiancomp. >> the ceo said he cannot comment on future pricing and then commented on pricing. why is the stock down? >> that is the big question here. one might look and say they have an overreliance on china in the set of earnings as the key driver for the uptick. the question mark remains whether that is sustainable having seen weaknesses in areas of the asian market as well. perhaps the price increase situation may not be sustainable. he said they will give the price increases to consumers.

that may not be sustainable particularly with the likes of europe with the cost of living crisis has hurt a host of consumers. growth is taking a bit of an ease on that front. not trusting the volume story. the company did maintain its guidance. the market looking for the uptick. >> arabile gumede, thank you. thanks for staying here. you got an offer and you didn't take it. >> i'm staying here. turning attention to the next beat. covestro looking at falling materials costs. the company also confirming its full-year guidance. c the ceo told cnbc there are green shoots. >> i'm positively surprised we also had a significant volume increase year over year. we did 12% more volume compared

to previous years first quarter. that volume growth happened in europe as well as in asia pacific. that leads me to your question because what have we seen in terms of market dynamics? all major industries we are serving were up. that means the construction industry and high teens and we have seen high single digit growth this electronics and furniture industries. still, a mid-single digit growth after the performance last year. all industries are contributing to the first quarter results. we see also green shoots here and there with more positive surprises than we were planning for and that's why we came up at the end of the corridor we have guided for for the first quarter. and clairant had a bigger than expected drop in the first quarter sales.

they cited successful margin management in the deflationary environment. we spoke with the ceo who said there are persistent challenging operating in europe. >> the challenges europe had about a year ago with the energy crisis have actually improved significantly. lng gas prices around 30 euro per megawatt hour. there are more fundamental issues if you look at the production. there are labor markets which are tight. even in the current environment, it is challenging to find operators to run chemical plants. this is the issue of running tight migration policies in recent years which have become more political. and finally on legislation, environmental legislation, there

is not a level playing field. not compared to the united states. coming up on the show, amazon becomes the latest of the magnificent seven to report earnings that are due after the bell. we will look ahead at what to expect coming up next. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life

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welcome back to "street signs." asia's first spot bitcoin and ethereum etfs start trading today. this debuted three months after the u.s. launched the spot etf. bitcoin and ethereum are trading lower right now. amazon earnings are due after the bell today. it had strong results from microsoft this week. ad sales will be watched after commercials started on the prime platform. joining us to discuss the

quarter is chief investment officer at musketeer capital. josh, good morning. >> thanks for having me here. >> so many parts of the business to discuss. the cloud business was the real driver of the business. estimates are for it to grow 15% year over year. muted with alphabet and microsoft. is 15% growth for aws good enough? >> good point. i think the first point you made was valid. they are the market share leader. they are the most size and most scale. from that perspective, the growth rate on the year over year basis is acceptable for it to be a little bit lower than likes of google or microsoft who are the smaller guys taking share. that said, investors really want to see signs of re-acceleration

to be overweight in the stock compared to the other two. the investors want that to come in on the high end and the growth rate stepping up going forward and not suffering from loss to the other guys in the permanent way. >> you are happy with the 15% growth estimate. what about the comments? that is crucial with the mega cap tech earnings. what kind of comments do you need to hear related to artificial intelligence from amazon going forward to give you confidence in the company's ability to compete? >> again, we want to see signs ofre-acceleration. we see the demand for a.i. particularly with the semiconductor companies which will report in the after hours. expectations are high. they know hyper scalers are spending a ton of money. they want that to flow through the figures of amazon the way it

flowed through to the other magnificent seven. it is all about that coming up and going forward. the 15% or 16% in the quarter is acceptable for now, but investors want to see that is going to step up. as you know, multiples in the market are going toward the a.i. story. it is what is open-ended out there. for people to get really excited about amazon again, they want some new growth story coming. that materializes itself in the acceleration comments of bigger numbers going forward. people want to see them get on the call and talk about 15% to 16% being the base for the quarter. we think it looks like 20% next quarter going forward. kme the comments will be picked apart. >> you know what? we are talking about acceleration and open-ended growth story. you are talking about the ad business.

estimates to grow 2% 3% year ov year. as we mentioned, it is also in the prime video business with the addition of a.i. in the business as well. what is the outlook with this? 23%. is that good enough? what about the comments going forward? >> we think that range were a slight beat given where the stock is at right now is a beat. if you look at the last earnings print, it got the big bump on the last print. it has given that back in the last pullback. we don't think they need the huge beats to get the stock to work right now. that range will be okay. going forward again, investors are looking at ad supported prime video and they want to see 23% stepping up.

our ex-p pepectations for the qr is fine to hit. people want to get excited in the future particularly with nvidia trading for 15 times growth all it has. >> by the way, i don't know if you can see, we are showing the audience the logistics business. hard to believe we are touching on the third ecommerce business. so much of the business is in the united states where higher rates are impacting the consumer. what do you expect with the core business? >> as you know, all of the macro data coming from the u.s. has been pretty strong up until the gdp number. the u.s. consumer is one of strength right now. i think people don't expect this ecommerce business to be super weak. they want to see because if you think about it as we move forward, if we start to cut rates, people want to see signs

the economy is slowing down. people want to be sure of the macro resilience. people want to make sure it is doing well before the economy starts to slowdown. i think people want to see strong numbers there. that's not going to be the driver of the open-ended growth story going forward. it is in the u.s. where it has penetrated. people want to see it hold up and it will in the quarter. it is a stable cash generator as we mentioned the prime video helping with the overall marketplace. >> you sound bullish on the stock, josh. do you expect a beat going forward? how do you see investors viewing the stock and the growth story? >> i think that overall, amazon is in a position in the stock where we like it going into the quarter. we don't think it is an absolute kind of lock, but we think the numbers should be solid in mind

or ahead of consensus. we are looking for the commentary. we want to see the aws acceleration. the stock valuation is fair relative to the other magnificent seven. it is not one of the top performers out there and it has lagged a little bit. it could get a catch up with the beat and acceleration commentary. there is so much growth from the a.i. semi companies and these others have to make a case that we deserve this capital at a relatively similar multiple. right now, our growth rate is lower, but we can give you an open-ended growth story, too. that is the fight for capital across the market. in terms of the magnificent seven, people feel it is fully deployed. there is not much capital to go to mag seven as a whole, but it can be shifted around after the meta miss. people are looking for

destinations within the magnificent seven to shift capital market share and that's where the performance for amazon will come going forward if the quarter shows the accelerating comments. >> josh koren with musketeer capital partners. thank you for being with us. before we go, hsbc ceo noel quinn retiring. the bank announced the departure ahead of the earnings release. quinn took the reins of hsbc in march 2020. you can see hsbc shares moving more than 3% higher. that's going to do it for today's show. i'm frank holland. "worldwide exchange" is up next.

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it is 5:00 a.m. here at cnbc global headquarters and here is your "five@5." we begin with win streak snapped. stocks look to close out the worst month since september and we look at the latest fed decision. earnings at the half. investors bracing for another busy day of reports including the latest from amazon. and also look out for the golden arches. let's see if mcdonald's can snap the slowdown. and paramount ceo bob