i'm christine tan. in asia, the bank of japan keeps interest rates at an ultra low .on 1% and extends its credit support to december. >> and i'm scott wapner in the u.s. intel's rosy earnings report is giving a boost to tech in the overall market. futures sharply higher. >> and i'm ross westgate. bexley is getting a boost from intel's report while rivals -- hello and welcome to cnbc's "worldwide exchange." global equities are looking up. the ftse cnbc global 300 is up 26 points today. we were firmer, of course,

yesterday and right now, as you look into the european markets which are an hour into the session, you can see the ftse 100 up nearly 1%. xetra dax up 1.3%. cac 401% up and smi .8% up. technologies are firmer. resources, insurance, financial services may be what is being particularly focused on with thain tell report. we'll talk about it. they had an improvement in margins and they're talking about revenues improving in the third quarter and that's the top line growth that we're interested in. on the currency markets, the yen is weaker across the board.d. not much against the dollar. 93.47. the euro has top out over 1.40 against the greenback. sterling is at 1.63. we were at 1.61 at the beginning

of the week. and euro/sterling islty th the .8586 mark. christine. >> hey, ross.. it's good to see you. take a look at gains in japan, gains are limited. in japan, the boj extended its credit support until december. the kospi up 2.6%. nice session there. the shanghai up 1.4%. hang seng up 2.1% and the straits times index up 2.34%. nymex right sweet crude should be trading higher, $1.10 higher at $60.61 a barrel. brent is moving higher, as well, $61.82 a barrel. we are watching for the u.s. weekly inventory report. that's due out at 10:30 a.m. new york time. a dow jones forecast calls for oil to drop by 1.5 million

barrels, gasoline to rise by 900,000 barrels and distillates to rise by 1.9 million barrels. scott. >> christine, thanks. in the u.s., let's take a look at where futures are heading this morning, and they're sharply higher as a result of those better than expected numbers out of intel. the guidance was strong, as well. and that's why when you take a look at the treasury, the fair value or the futures, i should say, i'm sorry did about that, we're looking at substantially above fair value, as you saw there. 10-year bund yield, 3.34%. there was selling yesterday and the 10-year yield is at its highest level since july. take a look at where gold is trading this morning, as well, as we shape up for the market day today. up 2.65. christine, i had a little trouble spitting it out there but i did just fine.

>> you did just fine. i didn't notice anything. now joining us, we have sebastian and vasu mennen, vice president group well management. gentlemen, thank you very much for being here on the show. vasu, getting a lift from better numbers from goldman and intel. how about the herbings from asia, do you think they'll come in better than expected? >> well, i think they will. my suspicions is they will. analysts have had it wrong for several quarters. we are erring on the side of caution. that's what you're seeing in the west, as well. the numbers are exceeding expectations because analysts are turning cautious. i think the same thing is happening in asia. asia is dependent on what's happening in the developed world. much analysts have been careful in guiding investors.

you're seeing at the same time analysts raising their forecast, but gradually. and that's a good sign. i think it means that you don't underestimate earnings, at least for the second quarter, and that's going to be good for the stock market for the next couple of weeks. >> sa barb tan, do you agree with what vasu is saying? >> i don't know for sure. analysts have been revising earnings down quite sharply. now, the important thing here, i guess, is the outlook and what type of guidance we are going to get from companies. again, let's remember that we are still in a recession, things are improving. to me, what is going to be important are the guidelines and, you know, what we got from intel was quite positive to see that they were seeing things improving going forward. so that would be the good thing. the same for goldman sachs when we look at the financials.

so i do believe going forward earnings are going to start helping the market. to me, this is going to be more the 2010 and late 2009 story. >> vasu, it's scott wapner in the united states. fed minutes are out today. obviously, those are going to be important. the cpi closely following yesterday's ppi. you say here until we see more significant improvements on the economic front, the rally is likely to stall. so you'll be watching that data closely today, then? >> i'll be watching the data closely, also what the fed has to say in its minutes. i think the upcoming data over the next few days, the new few weeks, the earnings numbers, a whole bunch of things. i think the recovery is sketchy. we need to see broader based signs of economic recovery before the market can go higher.

the markets have rallied about 30%, 40%. if you look at the pe multiples, they are looking at fair value or slightly rich. so in the short-term, i think, you know, economic improvement is a green shoot score. we'll need to see markets in a broad based recovery in the economy and that will take time. >> sebastian, it's scott again. everybody was looking for language like exit strategy and things like that, but little cusp on that because of these minutes. is that because earnings are overshadowing that? >> yes. but i think the fed is sending a message that we need to support the economy where it is now. they are suggesting guidance of what could be an exit strategy

going forward. but i don't think that the fed wants to jump too early in any -- or given in the statement that they are preparing the exit strategy right now, you know, like moving rates up in 2010 or earnings in 2010 or removing the quantitative easing in place. you know, i guess these guys are going to tell us that the situation remains quite difficult and they need to continue supporting the economy. >> and sebastian, you know, in this stage on, we're still sort of working our way through the earnings and we're still unsure of what happens. are you less willing to take any sort of major bet? >> yeah, i guess, you know, we change our betts early this year, you know, as the market was moving up and the economic situation where it was improving. we maintain a very cautious position for more than a year, being underweight equities for

all that period. so today we are -- as i said, we are climbing the wall of worries. you know, at this stage, i would be cautious.. we're still betting more on the credit side, on the high investment grade in particular. we like that part of the market. on the equities side, i think that we are going to have a choppy market here until at least september/october, which as you know are difficult months. because again, this is a specific and very rare event. we are living all -- this is not the usual recession. this is systemic situation and, therefore, the improvement in the economy is going to take some time. >> do you take a long-term view with your investment strategy, or not, or do you have to say, this is just a trading environment? >> yeah. traders have been doing very, very well, as you know. the stock has been doing a fantastic job here because valuations are difficult to get and difficult to see whether the

companies are going to be the winners here. but you know, on the longer run, you know, there are the usual betts. we are certainly looking at the things that indeed let's say in the next three years are going to be the ones delivering groceries. tech sector is something that is important, but also emerging markets.s. we believe today that valuations are little stretch or at least the markets have gone up sharply. again, going forward, i think that you really have to be positioned in that area. but in the short run, indeed, we are rather cautious and as i said, you know, the betts, you know, we like is invest in grade credit at this stage. >> yeah. i'd like to get a quick comment from you, as well, vasu. >> i tend to agree generally. in the short-term, one should not trade excessively. it's difficult to see the markets going up a lot more in the short-term. but nevertheless, you know, the volatility here in asia and i'm sure in many other parts of the

world are very high. although traders have to be very, very disciplined. but i think if you take a longer term view over the next two or three years, yes, the road ahead is going to be volatile and bumpy, but we see opportunities in emerging markets, in asia, even in commodities, although commodities have sort of fallen by the wayside for a short while. but any pullback in the commodity markets we see as an opportunity for the longer haul, gold especially because we think inflait flagz will come to the forefront again. for longer term investors, any shuffle will be an opportunity to buy gradually and our advice would be to buy gradually over the next 12, 16 months, spread your betts out over that period. >> vasu menon from ocbc bank thank you and sebastian, thank you, as well, head of investment strategy at axa. >> thank you. european car sales have risen for the first time in months.

thanks to government scrapping incentives which boosted demand for new cars. sales are still down on the year, but the best performer was acea and fiat, then volkswagen, peugeot citron. we were talking about intel. isml has followed in its step with better than expected results in the second quarter. it reported loss of 400 million euros for the period compared to an average forecast of 109 million loss. it says customers are returning, but it is not yet seeing a full recovery. h&m is recovering sales down 5% compared to last year and that is sorter 1.7% than a reuter's poll.

h&m stock is down 2%, christine. >> ross, the boj kept rates unchanged as expected and in order to support the world's second largest economy, the board voted naturally to extend its corporate finance measures until december. the boj governor said an improvement in financial conditions led to the three-month extension as opposed to six months. but the outlook for the economy remains week. the boj is downgrading its full year gdp forecast to a 3.4% contraction. rio tinto has posted a for the second quarter of production. they're up 43% than the previous quarter in production. and that's well ahead of analyst expectations. rio what the has maintained its

guidance of 240 million tons.. it has warned that foreign exchange and noncash effects will drag first half earnings lower. before the report, real shares in sydney closed up 2% and in london it is trading up 2.5%. more on china's iron ore negotiations, the saga continues. the china iron and steel association has said that it is unaware of any iron ore price deal rushed between mills and anglo american miners.s. this is after the news said that a 33% cut has been struck. separately, rio and bhp billiton says it is business as usual in china after it was suggested that the two stopped the bids in order to put pressure on china. the stern hu case is being

closedly watched.d. >> australia has significant economic interests in its relationship with china. but i also remind our chinese friends that china, too, has significant economic interest at stake with its relationship with australia and other commercial partners around the world. intel reported a second quarter loss as profits were hurt by the major anti-trust fine imposed by turpan union. there were strong sales of the company's adam chip used in notebook computers and a boost in command from asia. intel expects third quarter estimates to beat estimates. they're expecting a better than expected back to school shopping season this quarter. >> our outlook for q3 has reinforced our view we saw a quarter ago.

we expect to be seasonally up in the second half. >> intel stocks are at 7% in after hours trading. today in frankfurt, getting another big bump up by about 8%. so the market is clearly liking those numbers. president obama's plan to give the fed greater power over the u.s. financial system is coming under attack. financial times says a coalition of investors and analysts will release a report today critical of the president's regulatory forms. the investor's group says the fed's credibility has been tarnished by its role in contributing to the financial crisis. they're calling for the creation of an independent body to police risks and curves on banks' proprietary trading. the treasury department and the fed are working on a package for cit. consumers have been tapping their credit lines about $750 million over the past two days.

reports say the government's options may include a temporary loan, access to the cit woend or allowing it to transfer assets to a bank in utah. cit is struggling to refinance its debt as the financial crisis has cut off access to the corporate bond market. ross. still to come on today's program, the bank of japan left interest rates on hold, but has loaded the gdp forecast fort rest of 2009. can the economy recover next year? and intel beats the street in the second quarter. and u.s. crude stock piles for the second straight week. undefeated professional boxer floyd "money" mayweather

has the fastest hands boxing has ever seen. so i've come to this ring to see who's faster... on the internet. i'll be using the 3g at&t laptopconnect card.

he won't. so i can browse the web faster, email business plans faster. all on the go. i'm bill kurtis and i'm faster than floyd mayweather. (announcer) switch to the nation's fastest 3g network and get the at&t laptopconnect card for free.

>> thanks, ross. the u.s. earnings were very positive. here in the uk, markets were higher by just over 1%, almost 44, almost 45 points. we had positive things coming from intel in the u.s., so that's helping to lend a bit of support. also, we are seeing some of the

uk companies that have reported today with increasing share prices, too, the likes of lan securities we see the shares of that company higher by about 3.6%. now, land securities tt largest real estate investment firm. they told us, as we know, that it's been falling. they are now looking at capitalizing on those falls in property values with some new investments and the market seems to be quite pleased about this news because the shares are rising accordingly. also, london stock exchange, let's take a look at the shares of lsd group are doing. we heard from those members this morning and they told us that third quarter revenue is falling by 8%. weak revenue trading coming through there, but also saying that they have been cutting bact on jobs and increasing their efficiency and that effect continues to pull through the company earnings, as well. so lse group is also on the move

today. plus, icap is one of the biggest decliners. this company had to sell its stock saying that earnings for 2010 looking flat and therefore, we see the shares drop by 1.3%. patricia, how is it looking in frankfurt? >> it's not looking too bad. up about 1.6%. after that, the gains we saw monday and tuesday, we are up about 6% for the week so far. however, let me point out to you that there's hardly any volumes, about 350 million shares have traded so far. usually around this time, we have few a few million shares being traded.. interesting to see m.a.n., the truckmaker being up 4.6%. gaining quite a bit of buoyantsy. there was an interesting article with the truckmaker talking about the perspective and perhaps the stocks are gaining a bit on the back of that one. deutsche borse and deutsche post

also among the gainers. i have to see, yesterday the steelmakers were doing fairly well. deutsche telekom and bayer, the only underperformers today, as well. data came through from offer taea and keep in mind all the government incentiveincentives. midcap, up about 2%, as well. fairly above when you look at the percentage. that's frankfurt. over to stephane in paris. >> the situation is very positive for the cac 40. it's still a positive session for the french market. weep up 1.2%. starting with alcatel lucent, still the top gainer. from bank of america merrill

lynch with its opinion on the stock from underperform to buy and al cassell lucent to 1 euro 7 the. the tech sector is up more than 6%. the maker of telecom for the semi conindustries is doing well. so it was less than forecast for the full year. the focus today on soitec after the company said this morning that the recent study of its lungs treatment were not consistent and therefore could not prove the link between the treatment and some counter product. that is expected to reach 4 billion euros this year.. that is a significant issue for

the company. now let's have a look at the asian markets with saijal in singapore. >> we saw the banking stocks higher as well as a lot of the tech stocks today. we didn't see much reaction to the boj announcement because it was pretty much expected where they held rates on hold at 0.1% extending corporate funding, as well, until december. where we did see a sell-off, surprisingly were the banking stocks today. a lot of profit taking happening there. but some of the tech plays and the chip related stocks holding on to some of their gains. that lent support for the nikkei which closed up about 7 points there. the kospi is putting on very strong gains. the memory chip stocks like samsung electronic and hinet adding on from that positive report from intel. we saw a strong rally in the banking plays 37 supporting the

hang seng index, which closed up 2%. of course, the tech-heavy taex loss 1.7%. rio has been in the news and came out with their production numbers. iron ore output, 8% year over year. but you saw a big jump quarterly where we saw a 43% rise to 45 million tons, widely beating expectations. those shares closing up 2% in australia and extending a rally in london. currently up 2.8%. now over to scott in the u.s. good morning, scott. good morning, saijal. thanks. june cpi is out at 8:30 a.m. new york time. consumer prices are forecast to rise .6%. while the core ppi is seen edging up by 0.1%. at 9:15 a.m., june industrial production will be released,

expected to decline by on 0.7%. at 2:00 p.m., we'll get the fomc minutes. just a few companies reporting today including abbot labs, amr corp., gannett and cintas. and that is your global stock watch. >> coming up on "worldwide exchange," china's foreign exchange reserves top $2 trillion for the first time. is this a sign that capital is beginning to flow back into the country? >> we'll find out. plus we've got unemployment data coming out from the uk right after this. welcome to the now network. population 49 million. right now, 1.5 million people are on a conference call. 750,000 wish they weren't. - ( phones chirping ) - construction workers are making 244,000 nextel direct connect calls. 1 million people are responding to an email. - 151 accidentally hit "reply all." - ( foghorn blows )

that's happening now. america's most dependable 3g network bringing you the first wireless 4g network. - sprint. the now network. - ( whoosh sound ) deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com. - sprint. the now network. - ( whoosh sound ) when a major hospital wanted to add on to their benefits package at no direct cost to the company, their very first word was... aflac! aflac! find out more at aflacforbusiness.com thrive on collaboration with the world's leading companies. together, we're helping to shape the exchanging world. nyse euronext. powering the exchanging world.

i'm christine tan. in asia, the boj keeps rates on hold .1% and lowers its gdp forecast for the year. >> i'm ross westgate in europe. car sales rise for the first time in a year thanks to strong sales by fiat and vw. >> and i'm scott wapner. intel's rosie report is giving a boost to the tech market. futures are sharply higher this morning. >> and we've just got the latest employment picture out of the uk. the june claimant count, up 23,000. that is not as big as an increase as expected. we were looking for an increase of over 40,000.

the unemployment rate is at dshg it seas here 4.8% on that measure, the highest rate since november '97 opinion the iol jobless up 281,000 in the three months in may. that's the biggest rise on record. here is the thing. the unemployment rate there, 7.6%. we thought that would come in at 7.4%. average earnings up 2.3%.. that's a little stronger than consensus of 2.1, but it's the highest since may. the reaction, sterling against the dollar, it is weakening a little further. 1.6387. i think that is perhaps different numbers there. we'll have to look at both of those. joining us now, david page. david, not as big of a claim in the claimant count, but the wider measures have shot up. >> the claimant numbers have been surprising us to the best of side of expectations for the last three or four months.

what we're starting to see sthos coming in. but the ilo measure is almost double what the claimant count is whereas normally they would move in tandem together. so one wonders if there's something about the level at which people could claim and at the moment, we would tend to favor the ilo measure as perhaps more accurate. >> when you compare the high, it's below the 9% levels we're seeing in the euro zone and the u.s. at the moment, but nevertheless, isn't the uk going to get to those unemployment numbers? what are your forecasts for total unemployment? >> well, much of it depends on the trends we're seeing in the claimant count which tends to be a good leading indicator. the claimant count is telling us things aren't quite as bad as we expected. they're cutting rages and not reducing head count. but if we're just seeing a distortion coming through here, otherwise we would have expected

ilo count come in at 3 million. at the moment, it's just shy of 3 million, 2.9 million. >> and it's a round number, i suppose, frankly in the scheme of things. stick around with us. there's plenty of other things to talk about with global data today. but a rather mixed unemployment figure there from the uk. nevertheless, equities are firmer today. the ftse cnbc global 300 up 30 points just about. here in europe, an hour and a half into the trait trading session, we've been touching on the gains. and the ftse 100 is now at perhaps the best levels of the day. tech stocks are undoubtedly part of that move back.. financial services are firmer, as well. that means on the currency markets, the yeng yen has been weaker against most things. dollar/yen has just edged up. the euro is back over 1.40. the pound, as it digests those numbers is just below 1.64. it was below 1.61 at the

beginning of the week. and the euro is firmer against the pound. we're still in the narrow range on that cross, christine. >> overall in asia, markets are getting a lift on the nice earnings numbers we got from intel as well as goldman sachs. that gave investors more ince e incentive to get back into the market. the boj today kept rates unchanged and extended its credit support measures until december. the kospi up 2.6%. the shanghai composite up 1.4%. the hang seng up 2.09%. nice session of gains here in asia. scott. >> christine, let's see what all of this means for how the u.s. is shaping up this morning. futures have been above fair value across the board and sharply, at that. as you take a look here, specifically, the dow, better than 50 points above fair value, taking a queue from better than expected intel earnings today. look at the nasdaq, by the way,

because that's likely to be the strong point today, up some 17, 18 points or 16 points or so there. also, as i mentioned, data cpi today, there's fed minutes later this afternoon that's going to be closely watched along with industrial production. take a look at the ten-year yield. there was selling yesterday in treasuries. that gives you an idea of what's been taking place in the fixed income markets. christine. >> hey, scott. let's bring back david page from investec and let's get his view on the bank of japan rate decision today. financial conditions are tight but improving. do you think things are getting better in japan? >> unlikely it's improving. so there is growth coming through. the question, i think, japan has to ask is a global inventory adjustment factor which looks

positive there or is the japanese economy finally making grounds? i think what the bank of japan doesn't want to do is take too much for granted. what we're seeing from the u.s. is we don't want to make the same mistakes made in the '90s. well, guess what? the bank of japan doesn't want to make the same mistakes they did in the '90s, either. they're pushing through in the hope final demand does pick up in 2010. the bank of japan needn't worry too often about it at this stage. >> japan doesn't have an inflation problem, david, but what japan has is a strong currency. could that somehow kill off the recovery? >> it's a real risk. the way that it was moving, particularly this week where we saw the yen appreciating and that having a negative impact on stocks and those stocks exacerbating -- not as these levels, but if they were to move lower, tightening credit and therefore, basically restricting the amount of credit provided to

the economy. it's a vicious circle and one can see why officials were very keen to start flagging that they were uncomfortable with the levels of appreciation. now, what we've seen over the last day is greater risk appetite globally and that has helped the yen retreat a little bit. but i think, you know, the yen officials or people in japan will start to get very concerned if we see the yen pushing much over 90. and if you move much over that way, the next monetary policy intervention might be through the currency. >> david, scott in the u.s. what's your read inn flagz risks in the u.s.? the fears stoked a little e yesterday with the hotter than expected ppi and better than expected retail sales and today we're looking at more data. >> the retail sales, if you rip out the odd auto gain, it's basically pretty weak. same retail sales are still soft. ppi numbers did raise an eyebrow. this could be a bit erratic and we don't think there's much to

read on a month to month basis. so we have cpi sense illed in at around 4%. the key, we continue to see negative or downward pressure on inflation. >> does that apply to the euro zone, as well? >> yeah. this is the second shot for the euro zone. that's going to come in at down 0.1%. there is not likely to be a strong recovery that's going to close the output cap soon. medium term pressure on inflation will continue over the next 18 months to two years, i'd say. >> david, thank you very much for that. good talking to you. david page, economist at investec. let's continue our boj discussion with our next guest, naomi fink. good to have you with us.

first of all, xwompts in financial conditions have led the boj to extend credit support measures by three months instead of six. do you think things are improving in japan? >> well, i had flagged on the 10th of july that the boj might do something similar.r. except what i had expected was perhaps an emphasis on the commercial paper operations over the long-term debt given, tin turn in capital markets. we've seen a variable mountain of debt issuance from private debt in japan. that is one signal that financial conditions are improving. >> do you think at the end of three months the boj might consider removing those credit support measures? >> yes, the boj might consider it, but it remains in wait and see mode. and i think it signaled pretty clearly what we have to wait for and that's financial recovery in the second half of the fiscal year.

i think the last quarter of the calendar year, the october to december quarter will prove the crucial one. however, given that the operations are mostly extended to the end of the year, just noting that the boj does tent to extend additional liquidity, perhaps we can look at it as a bringing forward of that extension of liquidity near the end. the biggest downside risk is still external, that of a relapse of the financial market crisis. so if we do have such an inventorilty and that does pressure growth in japan, then the boj can very well extend those operations. but all else equal, the boj is signaling that it doesn't and if it does grow by the end of the year, it should be on track to let those expire. >> what do you know about

japanese companies? how about the smaller japanese firms, are they getting access to the badly needed financing? >> well, this was what i pointed out about the commercial paper operations and why they're still necessary. even though commercial paper issuance amongst large firms has improved a little bit, it still remains negative year on year. why is that important for small to medium sized businesses? well, commercial paper issuance amongst large firms is an important part of the multiplier of the extension of soft credit lines or trading partners in the small to medium sized space. if cp issuance continues to recover and large firms continue to extend their credit line to the small and medium sized business sector, then that multiplier will work. it hasn't quite recover to the boj's satisfaction yet. and i think that's why it's extending the operation. >> naomi, it's ross here.

talk to me about the politics. we've seen the ldp got pretty crushed in metropolitan elections on sunday. are investors now having to price in the prospect of a changing government, the opposition party gets power for the first time in 50 years.. how do we have to price it in? how do we have to think about the possibility of that? >> well, the market appears bemused by the potential change in government, especially since the dpj doesn't have a transparent economic policy. however, i think the market should be aware of a tremendous opportunity that the dpj has to change policy. basically wibt has committed to cut waste and spending. that's not too possible given that the largest increase in spending is on social programs and given japan's aging population, it's very hard to cut those.

as such, where can we cut? it's the government's balance sheets. it's privatization. if we go back towards a koizumi-type platform targeting privatization and targeting more efficient use of underutilized assets at the moment, that's where we can probably see productivity start rebounding again and the dpj is in a position where it might be able to champion this type of policy, but it hasn't yet, and i think that's why markets aren't pricing that in. >> naomi, always good talking to you. always good talking to you on the show. >> christine, we want to interrupt in just a second because we have reports about porsche we want to bring you. the sock is declining further in a rising market today. we're get ago report that the

debt has ballooned to more than 10 billion euros for the company apparently. these are reports from the wires that the company is getting fresh fronts through deals being grate agreed with qatar.r. it's suggested that the debt will be worth capital injection worth about 5 billion euros and porsche would trvr to qatar about 5 billion worth of options it holds in vw. these are according to sources reported on the wires. so we'll to see. but the size of the debt, maybe vw won't buy out porsche. back to you was christine. >> ross, let's head to india and talk to ayesha faridi for the india business report. >> thanks for that, christine. another good day for the equity markets after the 3.5% rise yesterday in the equities. another 2% put on. it's innering closer to the

4,200 mark. one space that's catching the eye is the power space. he's confident of delivering at least about 65,000 megawatt additional power coming the 11th plan and that's nearly three times what the 10th plan talked about. that indeed is seeing a fair amount of boost for the entire space to pick up any counter and that is showing you a very good case. that sector is indeed the most in trade today. we have news coming in with satyam, as well. this is indeed the first interview ever since they were taken over by mahindra. they have told us there has been no significant declines since april and therefore no large dip in revenues is expected going forward. meantime, of course, hdfc bank is the only loser. it disappointed in trade.

besides that, the market is looking good all in all. >> ayesha, thanks for that. elsewhere, china's foreign exchange reserves we're told have risen to a record $2.13 trillion by the end of june. according to a roort by the wall street journal, the group by nearly 1.78 billion in the second quarter of this year, compared to an increase of $7.7 billion in the same period last year. secondly, anyone industry of commerce says they attracted investments in june, down 6.8% from the year earlier. that's smaller than the 17% drop seen in may. rio tinto and bhp billiton are considering emerging their call operations in queensland and new south whales. analysts say a joint venture makes sense, given the tough

regulatory environment. rio and bhp have declined to comment on the report. in sydney, shares of rio rose 2%. in london, shares of ree yoed in london up 3.3%. scott. >> okay, christine. thanks so much. former general motors ceo rick wagoner will officially retire from the automaker in august. wagner was ousted by the obama administration in march as part of gm's restructuring plan. he'll get about 8.5 million in retirement pay. he had been eligible for more than $20 million. wagner will receive a life insurance policy worth about $2.5 million. wagner's retirement package was one of the unanswered questions when gm emerged from bankruptcy last week. yum brands, a parent of kfc, taco bell and pizza hut reported

second quarter profits beating forecasts. but the company is cutting its salesout look on weakness in the u.s. and china. yum expects china to be flat and u.s. stores to be down slightly. yum fell 4% in after hours trading and in frankfurt this morning, off by another 3 plus percent. wizards and witches were mingling with muggels tuesday night. harry potter and the half blood prince, the sixth film in the series opened at midnight in the u.s. as a matter of fact, i heard someone walking through the news room here who happened to catch that film. the first four movies made 4.5 million worldwide. scholastic, which publishes the books in the u.s. is seeing renewed interest in the series with each movie released. coming up, nymex could average $45 a barrel in the third

quarter according to morgan stanley. do you agree with that? e-mail us as worldwide@cnbc.com. looking at the harry potter pictures, it looks like we're getting a bit more mature and grownup there with that story line. on the current markets, pound and euro up against the dollar.

i'm sorry. i can't hear you very well. announcer: does someone you know have trouble hearing on the phone? dad. dad, let me help you with that, okay? announcer: now, a free phone service shows captions of everything a caller says. i'd like to make an appointment to see the doctor. announcer: to learn more about captioned telephone, call 1-800-552-7724 or go to our website. i'll see you at 3:00! announcer: captioned telephone - enjoy the phone again!

shares in porsche have fallen by 5.23%. >> the shares at the moment are down about 5.3%. we're down as much as 6% on the rumors and porsche is talking to the market says that the debt pile could be about 10 billion euros instead of nine and that they're eyeing up a deal with qatar. so the sources are talking about a deal which is basically twofold. first of all, kind of capital injection and qatarrys amounting to $5 billion and that the ka carries would take about 5 billion worth of options in the vw shares over. that is one thing of the story. we'll have to see what is happening. if you look at the credit default swaps of porsche,

they've been tightening by about 100 basis points over the last few weeks. there is a belief that we might see a deal being struck. i'll point out to you the 23rd of july, there is a supervisory board meeting at porsche which is very much looking at the qatar deal, ross. >> patricia, thanks very much for that. we'll keep our eyes on that story. equities are firmer. as a result, the dollar is weaker against the euro and tpo. 1.6342 against the pound. dollar/yen is a little firmer. joining us for more, ian stanoff. ian, we're going to get into the earnings and the impact that's having on the dollar. i just want to get your view out on the unemployment data we just got out in the uk. pretty mixed. which number do you concentrate

on and what do you do with sterling? >> yes. it is a bit of a mixed report. but i think it will take a little comfort from this number, given that it could have been n far worse. but i think the market does realize further down the road we are going to see further deterioration in the labor markets data. but in the time -- for the time being in this current environment, i would expect sterling to continue to remain quite well supported. so i would expect further gains over the coming days for serlg, particularly against the dollar. hi, ian. this is christine here. we have data showing foreign reserve topping 10.2 trillion. does that somehow put pressure on the chinese currency to appreciate? >> it's interesting. we have seen reserves jumping once again because they had slowed down slightly. globally, the reserve accumulation process has slowed

down and, in fact, has gone into a decline recently. china is the only major economy which is still accumulating reserves and certainly the pace seems to have picked up again over the course of the past month. but i think the most important thing for foreign exchange markets has been the money supply data, as well. we've seen from china, this is coming very strong, much stronger than the market was expecting. that at the moment is providing some support as well to the commodity currency suggesting that the growth in china is likely to recovery and that is learning to increase the demand for commodities. but we would raise one longer concern, if the state is seeing as growing too quickly, the money glie growth rate has picked up too much, that may well prompt the authorities in china to actually start to

withdraw some liquidity from the system.. that would have some impact on the commodity prices and commodity currencies. that is something to watch if authorities do become concerned with regard to the pick up in the money supply and what that means for inflation, bearing in mind that the output gap in china is relatively small. so the data looks strong, punish but the risk is that it could be too strong. >> ian, it's scott. your outlook for the dollar? >> we're likely to see that the dollar remaining under some pressure because this will maintain this optimism globally that we are seeing the recovery

process picking up and that will obviously provide support for the procyclical currencies against the dollar. so if we do see some further strong data, it will actually keep the dollar under some pressure for the time being. although i would suggest that although we are seeing some strong data coming through, strong earnings coming through from the financial sectors, we need to keep a close eye on the nonfinanci nonfinancials, some areas there. the story may be quite different. if we start to see some more negative surprises as we get further through the reporting season, then some of this optimism may start to fade and that would allow the dollar to recovery some of the ground the dollar has lost recently. >> ian, thank you very much for that. good talking to you. >> coming up next here on "worldwide exchange," we will continue to monitor and bring you all the headlines making

story across the globe. >> is intel a good barometer for earnings season? we'll bring thaw analysis. companies on the planetmosl speak one financial language. the language of exchanging. together, we're helping to shape the exchanging world.

nyse euronext. powering the exchanging world. whento compliment theirflac benefits package aflac! it made a big splash with the employees yeaaaahhhh! find out more at aflac!... ...forbusiness.com (laughter) it can be tough living with copd... but i try not to let it slow me down. i go down to the pool for a swim... get out and dance... even play a little hide-n-seek. i'm breathing better... with spiriva. announcer: spiriva is the only once-daily inhaled maintenance treatment for both forms of copd... which includes chronic bronchitis and emphysema. i take it every day. it keeps my airways open... to help me breathe better all day long. and it's not a steroid. announcer: spiriva does not replace fast-acting inhalers for sudden symptoms. stop taking spiriva and call your doctor if your breathing suddenly worsens, your throat or tongue swells, you get hives, or have vision changes or eye pain.

tell your doctor if you have glaucoma, problems passing urine or an enlarged prostate, as these may worsen with spiriva. also discuss the medicines you take, even eye drops. side effects may include dry mouth, constipation and trouble passing urine. every day could be a good day to breathe better. announcer: ask your doctor if once-daily spiriva is right for you. i'm christine tan. the bank of japan keeps rates at .1% and extend liquidity

measures for another three months. >> and i'm ross westgate in europe. porsche's debt has reached nearly $14 billion equivalent. >> i'm scott wapner in the u.s. intel has given a boost to u.s. futures this morning. >> hello and welcome to the program. if you've just joined us in the united states or anywhere else in this particular time. just got euro zone inflation out. euro zone june cpi up 2% on the month as forecast. the annual rate minus .1% as forecast. the core cpi, minus 1% on the month. tobacco .2%. stephen gallo is with us for the best part of the next hour. a very quick comment on that. inflation everywhere is still very, very subdued. what do market participants --

how are they treating inflation? >> it's yesterday's news. we know that in the middle of this year we'll see negative growth rates in inflation. what we need to look at is whether or not there's evidence in any of the reports that we get like ppi from the united states that pressures are going to build later this year and into 2010. >> there's so much excess capacity. >> ross, one thing i would caution about that is that the economy is changing. do i buy into all of this view that compare capacity is going to severely limit inflation pressures over the next 18 months? not necessarily. obviously, there are certainly areas of the economy which are overused as a result of the credit bubble. so sure, there's spare capacity in the construction sector, in the housing sector, in the financial services sector, but not necessarily in the pharmaceuticals sector. by and large, short-term next 6 to 12 months, inflation pressures will be subdued.

bring you up to speed on the market and the futures, scott. >> thank you very much. if you're just joining us in the united states, welcome to the start of the trading day here. let's look at where futures are shaping up right now. as i mentioned, we've been sharply above fair value on the back of stronger than expected earnings. couple that with what we heard from goldman sachs and you've got the dow futures substantially above fair value. nasdaq, we're about 21 points or so above fair value. we're still 4 1/2 hours away from that, but that story is likely to be unchanged as we head into the morning here. take a look at bund yields, as well today as we focused on the fixed income markets, 3.34% and over to the u.s. treasury market, ten-year yield inching higher.

the yield curve steepening. the stock market was moving higher, rots. >> scott, thanks for that. and the global equities reflecting similar numbers, just hitting a session high. european stock markets two hours into the trading day, we're up nearly 1.5% for the ftse 100. xetra dax is up over 1.5%. technology is the best performer here. resources and financials are fairly stronger at the moment. the only weakness is telecoms. the dollar is fairly flat and the euro is range bound against sterling, as well, christine. >> call it the intel effect or goldman effect, in terms of sectors, financials and techs got a lift, as well. the nikkei 225 up 0. -- well,

pretty much flat. the boj kept rates unchanged, extended its credit support measures to december. kosty up 2.6%. shack high market up 1.4%. the hang seng index up 2.1% and the bombay sensex up 1.6%. right now, nymex light sweet crude is climbing, $60.29 a barrel. and brent is putting on gains right now. it's trading at $61.37, 89 cents higher. stephen, what do you make of all the this reserve data that the china's forexs have touched $2.1 trillion? our previous guest was saying this puts pressure on commodities because all the excess liquidity will force the chinese government to put pressure on commodities. do you agree with that view? >> i'm not sure what you mean

entirely by putting pressure on commodities. if what you mean is that the chinese economy might be the first to tighten monetary policy as a result of some of the economic indicators that we've been getting out of china, i know they had money supply data out today which is relatively strong, or certainly stronger, and showing that the policy stimulus is feeding through, unlike what is the case in parts of the developed world then yes, that would put pressure on commodity price owes a short-term basis and commodity linked currencies if that's what you're referring to. >> yes, yes, that's what i'm referring to. in the meantime, do you foresee in it any risk of a liquidity bubble in china itself? >> i don't think so. not a liquidity bubble. if we need to watch anything, we need to watch how the chinese central bank is dealing with the

positive indicators that we've seen coming out of china in the last 3 to 6 months. clearly there is evidence of outperformance there in china. we need to see what the -- we have to get some kind of indication of what the official stance is here of the chinese on the holdings of u.s. dollars.s. in recent weeks, we've seen sort of a disparity between what the government says they want to do and what the pboc is best economically. the pboc seems to be leading towards the notion that it's not good carrying on dollar reserves like they have in the past whereas the government reserve is playing towards the bernanke/geithner camp where the government wants to see an orderly loosening of this reserve accumulation. >> stephen, better than expected earnings so far, blowout numbers from goldman, better than expected numbers from intel.

that's likely to mean a weaker dollar. the better than expected earnings, is that trend likely to continue? secondly, even if demand falls off for oil, can the dollar move lower and the oil oil move lower? >> it's a puzzle. what i would say is that the market at the moment, currency markets, anyway, are relatively directionless. on the one hand, there are some signs. we had intel out overnight. there are signs that possibly the earnings season might be a bit better than expected, hence risk appetite is relatively elevated today in the financial markets and the dollar is slightly weaker. again, we're trading much closer to the 8,000 level in the dow than we were just a few weeks ago or just a few months ago and that is the reason that we're now at 1.45 in euro/dollar.r. so what i would say to you in terms of direction, you know, there's fought going to be any major direction until probably we get out of the december

period and liquidities start to improve again at the end of the third quarter heading into the fourth quarter. we'll get more direction in the currency markets. right now, it's relatively fickle. one day risk appetite will go up. the next day it will go down. so we sort of have to get through this period first before we can make any calls as to where things are head or what trends are likely to resume or appear. >> okay, stephen. i know you're going to stick around a little bit and we'll get back to you in a bit. stephen gallo will be with us for the rest of the morning.g. still to come on "worldwide exchange," weekly crude inventories expected to fall for the second consecutive week. stay tuned. welcome to progressive.com. you must be looking for motorcycle insurance. you're good. thanks. so is our bike insurance. all the coverage you need at a great price. hold on, cowboy. cool.

i'm not done -- for less than a dollar a month, you also get 24/7 roadside assistance. right on. yeah, vroom-vroom! sounds like you ran a 500. more like a 900 v-twin. excuse me. well, you're excused. the right insurance for your ride. now, that's progressive. call or click today.

welcome back to "worldwide exchange." the weekly u.s. inventory report is due out at 8:30 new york time. crude is forecast to drop by 1.5 million barrels, gasoline projected to rise by 900,000 barrelses. let's talk more about oil. alexandro jones us now and stephen gallo is still with us.

alexandro, let's talk about prices ranging from $55 to $45 in the third quarter. what is your price range for the quarter? >> well, what we've seen and the analyst community, ban consultants is a clear convergence towards $70 a barrel for both the fourth quarter this year and the full number for next year. so if anything, analysts in general are seeing a rising trend from here. i've heard about those forecasts.s. we've seen about -- some of those forecasts pointing lower, but i think they're more an exception compared to the consensus. >> how much of those forecasts have to do simply with the fact that if you're in a long-term trend of a weakening dollar, then oil is going to go hire? it has nothing to do with

demand? >> at the moment, we have to see first weather opec is going to be ready to keep complying with production costs agreed over the past year. in the past few weeks, in the past couple months, we've seen a relaxation in compliance with opec production. so that has contributed to the weakening of the price. but if they manage to stick to the compliance of 80% that they were achieving until about two months ago, that could boost prices and that would be unrelated to the dollar and would be directly related to the fundamentals of the oil market. >> well, yeah, and those fundamentals, i mean, at the moment, we've seen this environment where actually we're going to have sluggish growth. did the fundamentals over the next quarter justify oil over -- you know, i think bnp is talking about oil, christine, at $45 a barrel. do the fundamentals sound realistic over the next quarter?

>> you're increasingly seeing a consensus among analysts, industry officials from the eu, from the iea, producers, consumers, everybody talking about the fundamentals of oil being between $60 and $80 a barrel. the range is getting narrower and narrower and, you know, more and more people are pointing in -- because of the opec discipline, and gasoline has given some support to the market and there is some expectation that the distillate is start to go clear.r. >> do you think we might soon set up a ministry of oil? it sounds like we might want to get rid of the market completely. i don't know. but that seems to be the way they're talking. they're saying 60 is a price that's good for everybody. >> well, what we have to be careful about here is that the markets need to work efficiently. and for that, you need liquidity

to be there. and if you enact regulation that it's not consistent with the way the markets work, that is going to damage -- >> yeah, no, i agree with you. we just seem to be leaning.g. what do you make of the oil dollar and the other correlation? >> well, i'm worried about it and i've been worried about it for a while. of course, i can't comment on specific demand trends or anything like that and i can't predict what course of action opec is likely to take, but i think the supply constraints in the raw materials and commodities space over the next 12 to 18 months is going to be a huge challenge for policy makers when they have a trend of weakening currencies as a result of kiwi, as a result of fiscal deficits. so i think it's going to be a real issue and i am worried about it.. you know, longer term expectations for oil, alejandro, do you see it back to where we saw it last year? >> well, increasingly, we're

hearing less and less about the the supply crunch that took -- you know, the expectations that took supply crunch to $150 a the barrel. so even the most bullish analysts in the market are not foreseeing a return to 95 or $100 a barrel until 2011. so it is very difficult to see that where the market is going to take from for that dil distillate, demand would have to recover. it's the industrial part of the economy that needs to start absorbing and turning out the amounts of oil that we're turning out a year ago for that surplus to be absorbed and for the market to take off again. otherwise, just with a lead of gasoline, it's going go to be very difficult. >> okay. we will leave it there, alejandro barbajosa with argus media and stephen gallo with snyder foreign exchange and stephen will remain with us.

intel adjusted earnings topped analyst forecasts thanks in part to strong sales of the company's adam chip used in notebook computers and a boost in demand from asia. analysts expect third quarter revenues to boat adjustments and they're expecting a better back to school shopping season in the quarter. >> our outlook for q3 reinforced the view that we had a year ago which is that the we saw the computer markets bottoming in the first quarter, we saw improvements in the second quarter and we expect a seasonally higher second half. >> intel stocks surged after hours trading and in frankfurt, another boost up by some 8%. the treasury department the and the fed are reportedly working on an emergency aid package for cit, the commercial lender's cash crisis deepens.

customers have the tapping their credit lines, draw about $750 million in the past two days. reports say the government's s action may include a temporary lobe, access to the fed's discount window or letting cit transfer funds to a bank it owns in utility. cit is struggling to refinance its debt as the financial crisis has cut off access to the corporate bond market. >> in asia, the bank of japan has kept rates unchanged at 0.1%, as expected. the board voted naturally so extend its special corporate finance support measures to december. the boj governor says an improvement in financial conditions led to the three-month extension as opposed to six months. but the outlook for the economy remain s weak with the boj downgrading its forecast to a 3.4% contraction. >> while france, christine, was

celebrating bastille day last night, some french workers have been threatening to blow up their local factory. what's that all about? we'll find out in our global stock watch. to redefine air travel for a new generation. to ensure our forces are safer and stronger. to take the world we share to tomorrow and beyond. announcer: around the globe, the people of boeing are working together-- to make a difference. that's why we're here. you all want to run your businesses more efficiently, so we've brought in a team of experts to help. one suggestion is to make your shipping more efficient with priority mail flat rate boxes from the postal service. call or go online for a free supply and up to $160 in offers from authorized postage vendors.

shipping's a hassle! weighing every box... actually, with flat rate boxes you don't need to weigh anything under 70 pounds. if it fits, it ships for a low flat rate. ok, but i ship all over the country. you can ship anywhere in the country for a low flat rate. ship international, too. yes, but i ship hundreds of things, in all sizes. great, because flat rate boxes come in four sizes. call now and we'll send a free supply, plus up to $160 in offers. when you're ready to ship, we'll even pick them up for free, no matter how many you have. priority mail flat rate boxes only from the postal service. a simpler way to ship. call or go online now to get started.

ahead of the u.s. open a

little later, global equities markets are reacting. we have our team to talk about it apart from in france where they're talking about blowing up factories. we'll get to you with that in a moment, stephane. first, becky, over to you. >> london securities, coming out with some figures today, telling us that they've seen a real drop in property values. now they're capitalizing on that with some investments. the shares of lon securities are track ago fair bit higher this morning pushing up about 1.67 overall. we've had figures, too, from the lse group, as well. kwifrt facilitier revenue down, but they are cutting back on jobs and that is helping to support efficiencies in that company, too. patricia, how is it looking in germany? >> up about 1.6% on the german market. infineon being one of the big

beneficiaries of the numbers yesterday. pore ska down about 3%. we were down as much as 6%. they are talk that their debt might be balloon to go about 10 billion euros. we myself a deal being struck with qatar. only sources. the company doesn't want to mention anything. we have a board meeting on the 23rd of this month by which the market is protecting a vote on an injection by qatarys. up about 2.4%, the first increase in about 14 months for european car sales and new regular stralgzs. daimler up about 4% and m.a.n. up about 3.4% on the word that they are restructuring and we might soon see a deal between m.a.n. and scannon. alcatel lucent is driving the market higher on the back of

merrill lynch which raised its recommendation from under3r6r78 to buy. the tech sector is in good shape today on the back of the announcement from asm in the united states. a supplier of silicone and microis up nearly 7% right now. we've got some social news. the french employees of nortel are threatening to blow up their factory outside paris after the company went bankrupt on may 28th and announced 683 job cuts. they are protesting against the lack of dialogue with the administrator of the company. employees said some gas cylinders to run the company and threatened that the rally could get out of control. we had a similar case of another rally. now to saijal for a quick view on the asian markets. hi, stephane. it was a positive picture here.

the kospi in south korea, up 6.2%. that's because we saw a strong rally for the chip stocks there on the back of that intel positive report card. speaking of the automakers there, as well, hyundai up 1.5% saying it raiseded its 2009 sales target in china for the second time this time by 13%. and kia also doing very well and this is in spite its unionized workers saying they're planning to launch a partial strike for two days. over in japan, the nikkei closing up slidesly about the line. and not much reaction to the boj announcement as that was pretty much what was in line with what was expected. and the taiex markets are up.

now back to scott in the u.s. >> and saijal, thank you. earnings meantime are going to take a back seat to the economy today. because there's a lot of data out. june cpi, 8:30 a.m. new york time is when it is released. consumer prafrts forecast to rise there .6% while the core cpi, which strips out food and energy is seen edging up by .1%. at 9:15 a.m., june industrial production will be released wbl expected to decline by .7%. at 2:00 p.m., we'll get the fed minutes from last month's fed meeting. and just a handful of companies reporting results today, including abbott labs, amr, parent of american airlines, gannett, parent of and cintas, a uniformmaker. is intel a one of or can

these companies continue to perform in the second half? úúúúú

it is 30 minutes past the

hour. here are the top business stories from around the world. in the u.s., intel's rosy earnings report is giving a boost to tech in the overall market. futures are sharply higher this morning. >> here in europe, stocks are benefiting from that impact while air zumel has boaten forecasts. >> and here in asia, watching the boj keeping rates at 0.1% and extending liquidity measures for another three months. >> let's take a look at where u.s. futures are shaping up this morning. we've been mentioning sharply higher throughout in the morning on the back of stronger than expected intel earnings and picking up off of those better than expected & numbers from goldman sachs. right now, the dow is slated to open higher, four hours utah here. nonetheless, slightly above fair value. right now, it's about 2 points

above fair value on the results of better than expected earnings. focus on treasuries yet again today with the fed minutes and consumer prices off of yesterday anticipates retail sales and producer price index and right now, the ten-year yield at 3.47%. ross, got another busy day. >> yeah, absolutely. and the stock markets right now in europe, 2 1/2 hours into the session are doing okay if you're long in the market. the ftse 100 up 1.5%. 1.75% for the xetra dax. cac 40 up 1.5 and smi up 1.25%. most sectors today are in positive territory. stronger stock market means the dollar is weaker against the pound and the euro. it's fairly steady against the yen, actually. you would have thought the yen might have weakened a bit more. euro/sterling is very much in the ranges, christine. >> techs and financials doing pretty well here in asia after those good earnings numbers you saw from goldman and intel.

gains were limited in japan. the boj kept rates unchanged and extended its credit support measures for another three months. the nikkei 225 finishing flat. the kospi up 2.6%. the shanghai market up 1.4%. the hang seng up 2.1% and the bombay sensex is up 2.1%. in terms of oil, it is recovering well. nymex light sweet crude up 89 cents, $60.41 a barrel. and brent is moving higher, as well, up $1.06, to $61791 are a barrel. scott. >> christine, thanks. i mentioned this morning, intel reporting that second quarter loss as profits were hurt by that major anti-trust fine imposed by the eu. adjusted earnings topped analysts' forecasts. intel expects third quarter revenues to beat estimates.

management says the russian orders indicate a better than expected back to school shopping season later this summer. >> our second quarter results in the outlook for q3 just reinforce the view that we had a quarter ago, which is that we saw the computing markets bottoming in the first quarter. we saw improvement in the second quarter and we expect to be seasonally up the second half. >> joining us now to discuss all of this is hank smith, chief investment officer at haverford investment. stephen gallo is still with us. is this shaping up to be a upside surprise through earnings season? >> actually, we think it is. i think it's reflective of the tremendous pent up demand that has been building up. look, the consumer has been frozen, really hasn't done any spending over the past nine months to 12 months.

so the pent up demand has to be extraordinary, not just in technology, but throughout the economy. so we are very encouraged by both goldman sox and intel's reports and we're very optimistic for the recovery during the second half of this year. >> stephen, what do these reports tell you? do they tell you something more than what the markets are doing? >> no. your point is well taken, scott. in terms of the broader picture, i mean, it does seem to me that, you know, in an environment where the economic outlook is weak, companies are going to take cost cutting measures, they're going to cut the hours worked of their employees, they're going to lay off employees. so there's no limit to how creative the strategies can be of companies if they want to cut costs to improve their bottom line. i suppose the question i would have, though, is can the top

line continue to grow in an environment where consumption is weak? i remember the last time i spoke to the other guest that's on at the moment, he was banging on about the fact that he thought many people or many analysts, perhaps, were selling the u.s. consumer too far short. but my question is, how long can revenues continue to grow if savings rates in the united states are continuing to go up and it does seem likely that spending is going to be restrained for quite some time. looking at the retail sales report yesterday, it seems in the second quarter that consumption is going going to contract from gdp or at least be weak. can top line continue to grow with consumption weak? >> well, i would respond to that by saying that one very unique aspect of this recession has been the extraordinary amount of cost cutting much gator than in previous recessions.

so that any sign of top line improvement is going to flow dramatically to the bottom line. and again, given the extraordinary amount of monetary ease and stimulus that's been n put into place and now the fiscal stimulus that really isn't going to be kicking in until later this year and well into 2010 and into '11, i think you can make the case for a recovery. a robust recovery? probably not. but a recovery, nonetheless. >> hank, so how do you price that, right? what have we priced in then in terms of the value of stocks? >> well, i would point out that the market dramatically overshot in the first quarter in the sell-off in late february and early march. and so this recovery has been a little bit of a catchup from

overshooting. the idea that the market, having peaked in june 12th and now correcting is forecasting a question mark to this recovery is nonsense. we think it's much more a natural pause. markets can't go straight up forever. and so this is giving an opportunity for all of the cash and we still have a tremendous amount of cash on the sidelines, an opportunity to get back in in what we view as still an attractive valuation for equities. >> hank, christine. my fallout question to you is where do you find at that tractive opportunity to invest, and which sectors and which stocks? >> well, yeah. very interestingly, from the market lows, this has been a market that's been driven by lower quality in 2008 in every sector higher quality outperformed lower quality.. and so far this year, lower

quality has outperformed higher quality and we view that as indicative of the market forecasting a recovery in the economy. longer term, we still think investors should favor higher quality companies that can grow earnings and grow dividends in a relatively muted, slow growth economy. so that is where we think the opportunities lie today. >> okay. hank, hang on to that thought. we'll come back to you. >> just a bit. and stephen gallo will still be with us, head of market analy s analysis, snyder foreign exchange. let's head over to tokyo and get an update on the trading day. >> hi there, christine. tokyo stocks ended marginally higher. the nikkei 225 rose in the

morning, boosted by better than expected u.s. corporate earnings. but the lack of queues and uncertainty in economic recovery ahead weighed on the index. strong concerns for intel rose. ibiden rose more than 4%. elpida memory rose nearly 5%. but both shares later declined as investors sold off the stock. investors welcomed announcements from nippon steel that will be restarting one of two furnaces that have been off since february. shares climb up to 3% during the morning session. real estate fared worse after the new condominiums being put on the market rose to 26% in the first half of 2008. mitsubishi estate dropped more than 2%. meantime, politics appear to be

gaining sway in the market. investors seem to expect consumer finance regulations to be tightened if the opposition democratic part in japan takes party in the upcoming election. promise, another new lender hit a new low for the year. >> thanks so much for that. >> christine, still to come on "worldwide exchange," rick wagoner is retiring in august with a pay that's largely below what he could have snatched a year ago. stay tuned to find out how much money he's leaving with. i don't think you'll feel bad for him.m. before that, though, here is a look at how u.s. futures are shaping up this morning. at 155 miles per hour, andy roddick

has the fastest serve in the history of professional tennis. so i've come to this court to challenge his speed. ...on the internet. i'll be using the 3g at&t laptopconnect card. he won't so i can book travel plans faster, check my account balances faster. all on the go. i'm bill kurtis and i'm faster than andy roddick. (announcer) "switch to the nations fastest 3g network" "and get the at&t laptopconnect card for free".

welcome to cnbc's "worldwide exchange." here are some of the top stories we're watching this morning. president obama's intention to give more power to the has come under attack.k. a report will be released today critical of the president's regulatory reforms. tin investor's working group, led by former s.e.c. chairman bill donaldson and arthur levit says the fed's abilities have

been tarnished. they're calling for the creation of an independent body to police risks. former general motors ceo rick wagoner will officially retire from the automaker in august. wagner was ousted by the oh bam in administration in march as part of the gm's restructuring plan. an s.e.c. filing shows he'll get about $8.5 million in eligible pay for the next 20 years. wagner will receive a life insurance policy worth about $2.5 million that gm has held since 199 opinion wagoner's retirement package was one of the major questions whether gm emerged from bankruptcy last week, ross. >> inflation down to 0.1% in june. the first ever negative inflation reading. a sharp drop in fuel prices drove figures down.. it was largely in line with market expectations. christine. >> ross, rio tinto has posted

its big jump in second quarter iron ore production. rio has maintenanced its guidance of about 200 million tons. it was warned that foreign exchange and noncash effects from its struggling aluminum business will drop first half earnings lower. before the report, rio shares in sydney closed up 2%. right now, it is trading up 3.73%. >> final thought from stephen fall low. it seems to me every day we swing, depending on risk, assested by stock market. what is it going to take to shake us out of this? and when we get a turn, which direction are we going? >> we're potentially destabilizing forces, if you ask me. my hypothesis continues to be that over in next six, 12, maybe

18 months, the -- and all of this is factored into the fx forecast. the anglo-saxon model, quantitative easing, benign neglect of the exchange rate over the currency, this is going to come under threat by the world's financial markets. and i think you're going to see a recovery trade turned into a stability trade. there's going be a search for stability at some point in the not too distant future. it could take some time for this to start to play out. we have to see the impacts of this spending. we have to see the currency. in that environment, i would tend to favor currencies not qe related, certainly not sterl, certainly not the dollar, tend to be short qe kwurntsys versus baskets of non-qe currencies and favor currencies that are linked to canadian plays. >> this may not be the trade right now? >> it will take some time.

but i think we are in for more stabilizing forces ahead. >> stephen gallo, from schneider foreign exchange, thank you so much. good morning, carl. it was a good day yesterday for news. >> yeah, not bad. we're getting somewhere. and the intel numbers, as you know, didn't hurt. we're going to talk about the economy, regulation reform and face book all part of squawk today. we'll hear about another bubble forming in the housing market. that's right.. there could be another shake-up in the foundation on the way and we'll find out why. the regulation rev institution, bill donaldson, a wall street insider, another round of breaking economic news, we'll get cpi at 8:30 a.m. eastern time and a story of an internet phenom, ben mierich, author of the accidental billionaire, the founding of facebook, a tale of sex, money, genius and betrayal will be our guest. let's just say the book is not

winning him any facebook friends, ross. we'll talk about how that company came into being. and our guest host is a former delta ceo, ron allen. and the e team, you know, we have earnings central going all week here. we'll get earnings from amr, gannett, abbot labs and a bunch more. we'll see you in just about 12 minutes time. >> looking forward to it. thank you. >> okay. >> thank you. up next, we'll take a look at the trading day ahead on wall street.

all right.. let's get a look ahead now to the u.s. trading day and bring in jack bouroudjian. he's chairman, capital market technologies. jack, we're off to a pretty good start afterfour straight down weeks, right? intel gave us a nice surprise overnight and goldman set the table with the glo blowout numbers. >> scott, it's a renewed sense of optimism. we're also in the wake of that wonderful reception of the 10 and 30-year option when we thought the rest was going to

yield the long curve in favorite of the short curve. it's start to go add maybe there is a renewed sense that there is appetite risk for the market. it might be premature, though. two sets of numbers does not an earnings season make. >> the market was almost looking for any excuse to go lower rather than higher. it's gotten a couple of better than expected earnings reports. but that doesn't change all that much, right?? >> it's funny you say that. i said that on koorchbs call to some of our largest investors yesterday. this market is becoming a professional's market. it's almost becoming counter intuitive. all the smart money is doing the wrong thing. and it's funny when i start to see that happen. it's bnling a very, very confusing market. it's indicative of a market loor fog direction, looking for leadership. this market has not found that why he yet. >> jackly, essentially, we're going to be range bound, aren't

we? we got to the lower end of the range. >> it does feel like we're range bound. the only concern i would have is remember, you've got some serious issues hanging over our washington -- you know, people right now. so there's a bit of a trench warfare going on between wall street and pennsylvania avenue.. the question is, will that man fast itself in lower prices? and i say that only because when you talk about regulation, when you talk about taxation, when you talk about protectionism, which is coming up, these are prosperity killers. and he's absolutely right. and because of that, we have to be very careful. that's why i say, let's make sure that appetite for risk isn't a sucking noise that sucks people in before the next wave down. >> we have cpi, industrial production, fed minutes. what are you watching more closely? >> cpi. i want to see cpi improve just a little more than the core. that is if you take out energy

prices spike. inflation is not the concern right now. earnings are the concern. you want to see operating margins increase for corporations going forward. >> you know, jack, remember, the last time we were talking a lot about the fed minutes been what are we going to hear? are we going to see exit strategy? do we care about that at this point or do we know that the fed is not getting out of this game any time soon? >> no. i think that exit strategy is critical. the other thing is to see if the euro zone comes in. now that inflation seems to be a negative over there instead of a positive number. you know, that's what was -- you know, the big concern that trichet was telling us. maybe they're going to come on board and see more of a coordinated effort. we're going to see more of the central banks work in coordination because that's the only way we're ever going to get it done. this is not a recipe that calls for one central bank. >> what sort of coordination are you talking about, jack? because the ecb, i don't think they're going to lower rates any more, but they had that 400

million euro one-year funding exercise for banks a few weeks ago which they pit their arm off at 1%. >> ross, not enough. they need to get a little more aggressive. it's hard for them to get aggressive. the problems they have in spain and italy and portugal are much different than what's going on in germany and france. so that's a coordinated effort that they're having a difficult time internally making sure that they have so they can come on the world stage with it. for me, it's making sure that everybody gets money down to zero. right now, you have to make sure that the banking system is safe, that credit is eased and more importantly, that you have what i consider to be the real flow of funds moving through the world corridor, through the capital market system. you have logjams.s. the logjams have to be removed and a lot of it is because of the mispricing we see between currencies and between the central banks.s. >> jack, i need a quick answer to this. do we take anything more broadly

from intel's numbers? goldman isn't really what the financial sector is doing. does intel mean more? >> intel has 90% of the market share. you expect their markets to go up. interestingly enough their numbers improve because of what's coming in from asia and what's coming in from russia, not the u.s. consumer. that is an interesting observation out of those numbers yesterday. >> jack bouroudjian, thank you very much. it looks as though we'll have a strong open because of those intel numbers. that's the story for today's "worldwide exchange." i'm scott wapner in the u.s. >> i'm ross westgate here in europe. >> and here in asia, i'm christine tan. thanks for your company here auto "worldwide exchange."

the gold delta skymiles credit card... from american express... it's the official card... of the world's largest airline. and it's the only credit card... that earns miles on delta. miles that take you... to more places than ever before. over 350 destinations worldwide. so switch today. get up to 25,000 bonus miles-- good for a free flight. call now to apply. there's no annual fee for the first year...

and you can redeem... with no blackout dates or seat restrictions. these are just a few of the benefits... of carrying the official card of delta air lines. switch now and you can earn miles... on delta with your purchases: groceries, gas, entertainment, and more. get up to 25,000 bonus miles... with the gold delta skymiles credit card. call 1-800-skymiles to apply. this is the official card... of the world's largest airline.