momentum. in terms of sector technology having to do better after that stronger than expected outcome from apple. the kospi edging higher, 0.2%. the shanghai market up almost 1%. the hang seng clearly the big winner today, almost 3%. banking and property stocks continue to surge higher on talks of ampel liquidity and the bombay sensex 30 up 1.5%. overall, a strong session here in asia. tracking equity markets, nymex light sweet crude is trading flat at this point in time, $65.33 a barrel. and brent is down just about flat, 1 cent lower, $67.21 a barrel. bertha, how are the futures looking in the u.s.? >> well, we are on a long

winning streak, at least for the nasdaq. 12 straight sessions to the upside after the 11th session. the best since 1996. we have dow components, at&t, mcdonald's and 3m this morning. after the close we'll get microsoft, american express and the weekly jobless claims. we've got the futures bouncing back. we've got the dow about 20 points ahead of fair value. the nasdaq is just below fair value at the moment and the s&p is up just a bit, as well. taking a look at the bond situation, ben bernanke seemed to have survived a second day on the hill and the street taking pretty much what he had to say about the stride that we're pretty much not there yet. the ten-year bund yield is at 3.42%. taking a look at the ten-year note, we will get those weekly jobless claims. we've got the ten-year yield at

the moment at 3.54%. taking a look at gold at the moment, it is trading to the upside one nearly 4 at $952.25 37 christine. >> joining us now for market strategy, we have two persons, max king, investment strategy investec asset management and benjamin pettily from lgt investment management coming to us live from hong kong. ben, do you think earnings will continue to support this rally we're seeing? >> i think so. in the near term, christine, we're looking for the equity markets to trade sideways to higher over the next month or so. you know, we had further positive news on the earnings front just an hour or so ago with credit suisse bidding the street. so i think on low volumes, equity markets in general can probably, as i said, trade a little higher. we're looking for the s&p 500 to

peak out somewhere between about 1,000 or 1,100. but then i think you have to be a bit concerned about what the earnings outlook will be for 2010. so we are looking for further gains in the near term on low volume, as i mentioned. but after that, the likelihood of a modest sell-off is quite high. >> max, do you agree with what ben was just talking about 12347. >> up to a point, yes. it's not surprising that markets have been pretty good recently. we don't know why anyone is at all surprised that earnings have been good. so it's -- whatever he was fussing about last month is completely b beyond us. what i would say, though, is that the market is approaching full value and next year looks pretty good. it looks as though there will be a pretty good pick up on earnings. so as the market approaches the

point at which we can discount next year's earnings, i thought there would be a further run. that might mean a bit more run in the short-term, then a period of consolidation. >> max, it's bertha here in the u.s. you know, we've been watching the earnings come in. let's take a look at the banking sector in particular. it seems as though we're starting to be able to separate the weak from the chaff. the goldman sachs outperforms and then you get the morgan stanleys which don't seem to be getting it right. what can we take out of this earnings season so far when we see some companies outperform and others continuing to miss the mark? >> the only surprise in this earnings season is that people are surprised. it was fairly clear the analysts were being too pessimistic and too cautious and that companies were holding back. so it's no surprise at all that there are more positive surprises than negative

surprises. the idea of the stronger getting better and the weaker falling by the wayside, that's not a surprise, either. don't ignore the blind and the obvious i think is the message from this reports season. >> ben, what's your take on the report season so far? we've still got a way to go, but are we starting to figure out who the winners are going to be here? and are those the ones that you think will continue to move higher? are those the betts to make in terms of investment? >> well, if you take financial stocks as an example, if you're a bank and you can't make money in this environment with a strongly positively sloping yield curve, where the cost of short-term funds is near zero, then you shouldn't be in the game at all. so it's no surprise to me that the bank earnings have been particularly good so far in general and i think that while the yield curve remains as it is and while the credit markets

remain relatively open, then i think that the banks can continue to pose roently strong numbers. i see some significant risks in 2010. unemployment is rising, incomes are falling, debt servicing costs are going up. look at the fact that the savings rate in the u.s. has gone from swee row percent a year ago to 7% now. so i think the economic recovery will be tepid at best and i think the markets are setting them up for disappointment about the earnings. perhaps we can get a sell-off from this near term peak that we are in the process of making which i said should be around about 1,000 or ,100 on the s&p 500. we could easily see a decline from those sort of levels before equities start to move higher again in 2010. so i don't think we're out of the woods yet. i think there is the risk that

this credit problem is not necessarily solved. bear in mind, what got us into this problem? it was basically unbridled borrowing and i don't think that's been resolved yet. so i think there's further deleveraging to come. >> max one obviously disagree because you're saying we're pricing in better earnings in 2010. why? >> well, i think companies are beginning to cut costs. >> aren't we getting that benefit now? >> we are, but costs will be under control. i think actually although we're getting some benefit now, most of it will come through next year. i think the danger for next year is that this year while everyone is skeptical and cautious, the market moves higher and higher and higher. in market terms, i don't disagree with him. i think next year it could be a difficult year in the market.

but this year, when everyone is cautious -- >> so you will price in next year sometime in the autumn, is that -- next year. >> but the cost savings that's going on now will be a benefit to next year because you're saying you only need a small amount of growth to have a big impact on the market. >> yeah. you get 20% of the benefit this year and 100% next year. so the big driver of earnings next year is going to be cost savings and improvements, not top line. >> ben, what do you make of that? >> well, look, i think everyone has a point here and i think max makes a valid point. but i want to add one thing to the list of concerns. i believe with unemployment rising and the savings ratio going up dramatically, i think the prospect of significant tax increases across the western world over the -- well, in

komgsz coming years, let's face it, to fund all of these stimulus and buyout packages, this is another one of the reasons as to why i believe the recovery is going to be relatively tepid. it's not going be anywhere like v-shaped. more like an l-shaped recovery. just a recovery that's not particularly solid and not particularly convincing and i think people do forget that with these perspective tax increases, ross, in the uk, the uk bailout measures on a -- i guess on a pro-rata basis for the size of the uk economy outstrip even though those in the u.s. so i think uk domestic demand will be very, very weak next year and i think it's likely to be a similar picture in europe and maybe to a lesser extent also in the u.s. but i think it's going to be a difficult period. i think we put about 3,000 pounds each equivalent into the banking system here in the uk.

>> i feel great about that. i want you to know, it's going to be a really good investment in about ten years. thank you so much. there's plenty of focus on the auto stocks today. porsc porsche's ceo announced a step down. it endorsed talks with the government of qatar for a possible purchase of stake. it's unlikely to affect the anticipated talks with volkswagen. you heard ben mention it, credit suisse shares are higher after posting a pretty good set of second quarter figures. a strong performance helped net profits come in at $1 billion. the bank's capital ratio also

means it's now one of the strongest capitalized banks in the industry. also in switzerland, roche helped upgrade its earnings for this year and next. despite that, the bank reported a 27% drop in first quarter profits. roche is the world's biggest manufacture of cancer drugs and it's still pretty upbeat about its core business. >> we expect double digit growth for core eps for 2009 and 2010. >> and he expects the company to expand treatment of its tamiflu treatment. south korea's top automaker, hyundai, posted a second quarter profit that zoomed past expectations. that's 48 higher from the year before. earnings got a boost from the

weaker won as well as the korean government's on o to prop up domestic demand. and they're expected to increase demand for smaller cars. its affiliate kia motors ended lower more than 4% today. the world's third largest lcd automaker swung to its fourth quarterly loss in q2. is supply company which supplies panels for dell, hp and sony fell in the june period. that figure, however, was narrower than the loss in the first quarter thanks to recovering panel sales and prices. au's biggest rival, samsung electronics, reports tomorrow. shares of au and its rivals are looking at this at this time. au up 0.4%. samsung down 1.5% and lg display up 0.3%.

elsewhere, president obama says it's closely monitoring the standoff between china and australia over the detention of chinalco employees. meanwhile, action and transparency was called for in response to the case. >> it needs to be more open with what the reasons are and, in fact, if charges are to be laid, they should lay them. but, you know, the relationship is robust enough not just because of the interdependentsy, but because we have been working at it for a long time. >> china is australia's largest trading partner. >> christine, here in the u.s., president obama is trying to rally support for health care reform. the president is saying he'd be willing to raise income taxes for wealthy families in order to

help pay for the plan. on the state of the financial system, president obama urged congress to pass his proposed regulatory reform. he says it's good some banks are reporting profits again, but says wall street has not changed much of its behavior in the wake of the financial crisis. >> if we don't pass financial regulatory reform, then banks are going to go back to the same things as they were doing before. in some ways, it could be worse because now they know that the federal government may think that they're too big to fail, and so if they're unconstrained, they could take even more risks. >> the president says the government may propose trngz fees from financial firms to protect taxpayers from any future bailouts. meantime, the treasury department will send congress another piece of president obama's financial reform package today.

the proposal calls for consolidating some bank regulatories into a national bank supervisor. on wednesday, lawmakers received plans making the fed in charge of the risks. at county 30, tlm be congressional hearings held. meantime, ebay's cycled second quarter profits fell 29%, but still beat analyst forecasts. a drop in sales in the company's main online marketplace was offset by growth from its pay pal and skype unit. the ceo says business did start to improve during the second half of june. ebay is predicting third quarter results will be roughly in line with expectations. shares were up nearly 5% after hours in the u.s. and frankfurt. at this hour, they're up better than 7%. ross. >> still to come on the program, is the british consumer staging a comeback?

we'll have the latest in terms of june retail sales figures. that's in 15 minutes. the ceo of porsche has stepped down. does that pave the way for volkswagen's takingover? what about a possible dee with qatar? are asia tech companies set for a turnaround? we'll take a closer look at the sector and preview.

okay. so we've had a bit of a stop in the united states because the nasdaq didn't make it up. what about the rest of the equity markets? let's start out with our team of reporters starting off with becky in london. >> the ftse 100 is taking a dip today. only by 6 points is how much lower we are at this stage. we opened in positive territory, but it didn't last very long. let's start with some of the movers starting with compass group. this is the world's largest catering company. their stock is down by almost 7%, in fact. the company told us that their sales growth has been slowing and that hurt the shares of that company. we're seeing some of the defensive stocks moving to the down side, as well.

basic resource stocks are appearing to be pretty reliable today. they also told us that the second quarter would be stronger. let's get out to annette now and find out what's going on in frankfurt. >> well, the german trading day is flat. there's not a lot of change. we have lots of different stories to tell. let's start with the biggest gainer, which is deutsche post. they are issued a bullish outlook. that is one of the biggest issues behind the stock price movement, up roughly priced to -- well, 4.4% in its gaining, deutsche post share. on the downside, we have volkswagen, which is probably the biggest story today. deutsche post and volkswagen's board is due to meet at

lunchtime to discuss all the options on the table as well as the possible takeover or the porsche car business. . but in general, volkswagen is down by 2%. pharma stocks is a slightly small news on merck. they are applying for a license for a new oral ms treatment. now we'reoing to paris. stephane. >> and it's a flat session also in paris today after a 10.7% gain over the last eight days for the french market. publicist advertising group is the top gainer after the company beat expect ages in the second quarter with a decline of its net profit. the ceo believes expectations will improve in the quarter. the stock is up by more than 4%. some earnings, that real estate

company is specializing in shopping centers. they had a net loss in the first half of the year, but it's due to one-time items. the earnings per share are better than expected. the company confirmed its sales target of 7% and said it would not consult projects because of the economic crisis. let's have a look now at the asian markets with christine in singapore. >> stephane, thank you so much for that. most asian markets are in mixed territory despite the performance we saw on wall street. the nikkei 25 ending at 9,792. a three-week closing high. south korea edged up light shouldly. lunch day motor continues to be in focus, posted a surprise rise in earnings. the kospi closing up 0.1%,

1,496. in greater china, the hang seng led earnings at 2.96%. almost 3% at 19,817. clearly a big winner today and the shanghai composite up 1% to end at 3,328 on optimism that liquidity will continue to support the market. in australia, they closed 0.1% lower at 4,064. on that note, let me send it over to you, bertha. thanks very much, christine. earnings are going to dominate the discussion again today. but investors are all set to deal with just a pair of economic reports. weekly jobless claims are due out as they are every thursday at 8:30 a.m. new york time. the forecast is for a rise of 43,000 to a total of 565,000. then at 10:00 a.m. new york time, june existing home sales will be released. those sales are expected to rise

nearly 2% to an annual rate of 4.85 million homes. dallas the fed president richard mitchell travels to carlsbad, california, to speak about the economic outlook. before the opening bell, we'll get at&t, mcdonald's and 3m results. we'll also hear from bristol meyer and ford. as well as xerox, wyeth, n northrop, union pacific and u.p.s. then we've got three big names posting numbers after the bell. amazon.com, dow component american express and microsoft. and that is your global stock watch. >> and still to come on the program, did june three-pete wave in britain sales? we'll bring you those figures next. >> the porsche saga continues. the board pulls an all-nighter

and outs the ceo. we'll have analysis after this break. ííííííííííííí

i'm christine tan. in asia, world number three lcdmaker au electronics raises capital targets on hopes tech demand is picking up.

i'm ross westgate. m&a costs hit first half earnings. >> and i'm bertha coombs. in the u.s., the nasdaq tries to extend its win streak to 12 today. it's the longest stretch for the index in more than a dozen years. >> all right. we've just got the latest retail sales figures out for you. i can tell you retail sales up 1.2% on the month. we were looking for a rise of 0.4%, certainly stronger than expected. up 2.9% on the year. the retail price deflator put minus 0.2% in june, the first fall in that since the beginning of the year, i think, is the first time we've had a reduction in that. i want to see if we get knit statement on what was the contributor to the increase in the retail sales.

the onf is effectively saying that the monthly sales target are helped by promotions and indeed the hot weather. sterling perking up a little bit on that, adding the gains for the day up to 1.6537. joining us now, brian 5p'colton. brian, a stronger number than we expected. we thought there was still a bit of a tail here. how sustainable is it, do i think? >> not too bad a number at all, considering what the bank of england said in their recent minutes that the consumption number was better than expected. if you're actually in work in the uk and you've got a mortgage which is a variable rate, the interest costs have gone down, the a.t. has gone down, commodity prices are louder than they were a year ago. other than job uncertainty, the income, discretionary income probably isn't doing too badly, but an encouraging sign. >> what is interesting, we had the hot weather in june, so i

suppose a lot of people were buying clothes for that. big promotions and the sales inflaig flater was down. >> careful interpreting these monthly figures when there's big measures to get people into the shops. the nominal on the real split of spending can be quite volatile. >> quick word about mortgage approvals, 35,200 in june. it was 35,900 in may. net lending $36 billion in june, as well. when you take a look at everything, have we stabilized? >> clearly, there's a pick up in turnover. the immediate aftermath of last september was that the market froze, really. i think it's been -- there's been a recovery, an interesting recovery. i don't think that we've reached the bottom on prices. i think it's the 10% decline on prices. >> brian, stick around.

stock market, well, here in europe, we're trying to make it nine sessions out of nine on the upside. right now, the ftse cnbc global 300 is up 8 points. the ftse 100 is absolutely flat along with the xetra dax and the cac 40. so they're at play at the moment. the smi is boosted earlier by numbers from roche and indeed avb had better than expected numbers on the back of cost cutting. we'll be joined by the ceo later in the program. currency market, we are just seeing, the yen was weaker today across the board. 94.35 across the board. and euro/dollar is back to 1.42 as we're seeing slight gains on the back of those markets, christine. hey, ross. in terms of sectors, technology continued to do well after apple posted strong quarterly earnings. nikkei 225 getting a lift. the kospi up 0.2%.

the shanghai composite up almost 1% and the hang seng is the strong, clear winner up almost 3%. the bombay sensitive up 1.5%. bertha, sending it over to you. >> thank you very much, christine. futures are modestly higher this morning. alternatings parade will continue and tech continues to be the outperformer with the nasdaq now 11 for 11 trying to look for a 12-pete today. we'll get three dow components ahead of the open, another pair after the close, including big old microsoft, as well. ebay performed pretty well yesterday. we had disappointing news in qualcomm. as far as the bond market is concerned, we've got the yields back up above 3.5%. two factors that they'll be watching today, of course, the weekly jobless claims due out at 8:30 a.m. as they are every thursday. also, the treasury will announce

just how much it's goc to auction off next week. the treasury auctions are very important to the market. if there's any signs of investors losing appetite for u.s. dead, that will cast a paul over these markets. joining us now is brian colton. he's been with us since the top of the hour. you've got to get a longer title, i think, at this point, brian. one of the things that everybody keeps watching is this market. everyone keeps talking about the w-shaped recovery, that we're on the upside, but we're likely to move to the down side at the beginning of next year. do you buy into that? if you do, what do you buy? what strategy do you take? >> i don't buy into it n most dramatic form. the story is basically about in the second half of this year, we'll see the pace slowing down sharply.

that is going to have a temporary positive impact on the growth rate. we might see better than expected gdp numbers coming out for q3 and q4. obviously, that impact is not going to last beyond that. however, we think that the fiscal policy stimulus is going to be a lot more noticeable going into the early part of next year. so we may get a flattening off in 2010. we don't think we'll be heading into another sharp decline in gdp. it's going to be a long, hard row over the next 18 months. >> brian, christine here. specifically looking at japan, we have ex ports falling but at a slower pace. do you think this pick up in overseas demand can last? >> i'm not so convinced. we saw ex ports in asia and japan continue to fall incredibly rapidly. you know, as i said, if there's some replenishment going on,

that may have a temporary impact on asian demand. but at the end of the day, i don't think the final consumer demand from the u.s. is going very much sideways. bernanke was actually flagging up the risks that the consumer might take another leg down because of the unemployment rate. that's certainly not the fed's best view or our view, but it's certainly a view. i don't see the final demand for asian ex ports is going to be very dynamic through 2009 second half and 2010. >> brian, if you break down the numbers, the key driver coming from china, to what accident do you think strong growth from china can help replace the u.s. for some of the regional economies here? >> i think the massive stimulus in china through both direct fiscal measures, but more particularly through the bank lending, which has been very, very robust is really all about, you know, replacing the loss of

final -- of external demand for china with domestic demand in china. i'm not sure it's going to help the rest of the world very much. but china is a current account surplus country, so it's producing more than it consumes. and so i think it is good for china. i'm not sure it's so good for the rest of the world in terms of if china is going to be sucking imports from everywhere else. i'm not convinced. >> all right, brian, we'll have to leave it there. brian colton, director of head of european sovereigns in the sovereign group at fitch. i think you just say fitch. porsche's ceo has left the company. the announcement came after a surprise all-night board meeting. the borden doorsed talks with the government of qatar for a possible stake purchase. the negotiations are unlikely to interfere with porsche's anticipated talks with volkswagen. shares of porsche today have

been firmer. for more, we're joined by hans woodnuk. hansfetor, thanks so much indeed for joining us. we've listed some of the uncertainty, but i'm not quite clear exactly what's going to happen between porsche and vw. can you tell us? >> well, if i would only know. remember, we will have the vw supervisory board meeting today and mr. pierre's intention was and i assume still is that vw takes porsche over. with yesterday's decision to collect up to $5 billion in fresh equity for porsche, this is clearly a strategy saying, well, porsche will take over vw. so it seems to me that yesterday in the porsche supervisory board meeting mr. porsche had victory, although he had to dismiss as

the official statements said the ceo and cfo. and it was a defeat for mr. pierre. but we all know mr. pierre might have something in his backhand and we need to wait until today once the supervisory statements are made available. >> so it's still as clear as mud, then? >> well, exactly. my impression is that mr. pierre will not give up that easily and whatever might happen later today or tomorrow morning, it could still put the porsche decision into waves. >> lower sa xw ony says that porsche will remain as an autonomous vw unit in audi. what do they know?

>> well, that's exactly saying we, as vw, have still the intention to acquire porsche. what time porsche's decision of yesterday afternoon or late night says, we still have the intention of acquiring vw. so we are in the middle of no win. we don't have a clearer picture as of today. >> hans-peter, shifting gears a little bit since we are talking autos, can we talk about the situation with gm's discussions on opel? it appears now the chinese investment firm is out. they're still talking to rhj out of belgium and canada's magna. do you expect to see some sort of sale happen there any time soon? this seems to be dragging on. >> well, the media speculated yesterday that a final decision is unlikely to be made before something like november.

and you are very right, because gm is favoring the private equity investor and the government on the other hand, including the unions is favoring magna, these two have to come to a mutual agreement and clearly yesterday's meetings did not result in this final decision. and to be quite frank, i'm not too sure with whether one or the other is actually the better investment in opel. to -- for me, the overcapacity in car production facilities is very obvious and in a market economy, we should start reducing capacities like the u.s. is doing right now. and one solution would be that the opel plants will be closed. but for political reasons and as we are in germany just in front of the federal elections in september, nothing, in my

opinion, is going to happen. after the elections have results and possibly another situation in the government, i.e. another coalition, then everything is possible, i guess. >> right. all right, hans-peter, we're going to live it on that note, thanks for that, from fairresearch. >> burth ya, we're watching the world's third largest lcdmaker au electronics posting its third quarterly loss today. but the company seems to be positive on its outlook. for more on this, we have gearhart. first of all, au electronics, do you think the worst is over for the company? >> i think that the bond

situation is quite good. i think they had some trouble from the glass supply side for glass. but the demand side for panels is looking good. if they can deliver and keep costs under control, i think things are looking good for them now. >> do you think most of positive figures will come from cost cutting or top line growth? >> well, another factor is, of course, the exchange rate. at the moment, the yen is quite higher, so the exchange rate for the japanese companies including fujitsu doesn't look so good now. but fujitsu is looking pretty good. they're one of the better globalized countries in japan and also, you know, i know quite a few of their top managers say they're know quite a lot about

international business. and so i think that the globalization is there. >> what do you think about samsung electronics? how do you think it will do tomorrow? >> i think the koreans in general, also ag, they have a very good position. their price structure is very good, they have high margins, they're overtaking sony now. if you take both ag and samsung, they're both direct competitors with the japanese consumer electronics companies such as sony and panasonic. when you look at ag and samsung, we saw a running after them both on the profits and margin growth. they are going to over -- i think ag is overtaking sony in flat panels. samsung is strong as they are going up in mobile phones. so i think i'll be optimistic for tomorrow.

>> gathearhart, it's bertha hern the united states. from intel's outlook, it seems we're down on inventories, but we've gotten reports from samsung, from qualcomm. where do you see where we are? >> well b i mine, many of the ceos involved start, steven jobs, and samsung, lg, they say we are in a foggy situation right now. it's hard to predict. those which are hardest hit are the electronicmakers. they are in a really terrible situation. so judging from that, that means the orders are down so that means that semi conductormakers, especially the japanese ones are -- they see a very difficult

future ahead. on the other hand, if you look at tvs and mobile phones, they aren't doing that badly. so i think if you are supplying, for example, samsung against ag for chips for their phones, i think in that case you should be in a fairly good position. >> gerhard, thank you very much for being with us, gerhard fasol. >> thank you. let's join ayesha if ary dee for the india bit report. >> thanks for that, christine. turning out to be a good afternoon. right pow, suzuki has come out with its numbers. it has beat the street expectations by huge margins and that stock is set at surging at nearly 5%. we haven't seen those moves coming in on a heavyweight counter like that in a very long time. that is indeed lifting the auto space right now.

broader markets holding up and the auto index is sitting at a gain of 2.6%. meantime, the telecom major chasing mpn is currently -- the numbers came out. the stock has tanked up. they haven't really sort of beaten street estimates and the future outlook doesn't seem positive. but we do understand that officials currently are meeting officials in new deli and yesterday is when they met. the talks will happen in time is what we are picking up from our sources. with that, it's back to you. >> ayesha, thank you very much for that update, ayesha faridi. beijing is seeking more than a 33% cut in iron ore prices, adding to the deal with major global miners will be announced in ten days according to a dow jones news wire report. the china iron and ore was not

available. chinalco is the single biggest shareholder of rio. christine, bristol-myers squibb is buying medarex, a deal that gives it promising access to a cancer treatment drug. the two companies are currently developing a drug intended to treat a form of skin cancer and also being tested to treat lung and prostate cancer. bristol and medarex both rose in after hours and in frankfurt at this hour, we've got bristol trading down about 2%. although you can see, no real vof volume on that trade. medarex, meantime, is up just about 90%. french advertise iing giant

publicis expects to grow next year. they go the third quarter of profits should also deteriorate, but cost cutting will help offset the margins. the ceo of the company says he's confident of a recovery next year. >> we see a slow recovery and the first positive numbers will be probably posted in the middle of next year, sometime the summer of 2010. >> and you can hear more of that interview coming up on "worldwide exchange" in around 30 minutes. we're going to also take a look at what's going on as far as the dollar is concerned. that's a little weaker than against the pound and the euro today.

on the currency market today, the yen has struggled down against everything. the dollar is weaker against through. we're above 1.42 at the moment. sterling has rallied back to over 1.6520 against the dollar. helped, as well, by strongly expected retail sales 20 minutes

ago. for more, we're joined by adam bobroth. adam, the mpc came out yesterday and the minutes weren't quite as pessimistic as people thought they were going to be. retail sales were stronger than expected. . how much more can sterling benefit? >> i think pretty limited. there's retail figures if you look into them. discount, of course, causing people to hit the higher rates. in terms of the bank of england side of thing, again, as you said, qe, no further announcements on that. now we're looking forward to the next meeting where really they should be looking at that extra bit of qe needed. >> why would you cap the upside of sterling against the dollar? and euro/sterling doesn't seem to be moving anywhere at all. >> yeah. euro/sterling, very range bound at the moment and cable is also range bound, looking at the top end at 65.5 marker.

and that's going to be the range for the short to medium term. >> adam, as far as the dollar is creating range, are the movements we're seeing more related to risk appetite? people just moving out of the dollar and into other currencies and into equities or is it really a concern about fundamentals here? >> i think really the traditional type of trade, really, is no longer there. it is all to do with risk and what the mood is in the markets as to whether we're going to see the sell-off of dollars which we've had over the course of the past 24 hours. so yes, it is certainly to do with risk and there's a direct correlation between people's appetite for equities. we've had a good surge on the ftse. the dow is looking up, as well, and, of course, the dollar weakening as a result of that, as well. >> hi, adam. this is christine. what's happening with the japanese currentsies dropping sharply on expectations of investment outflows? >> yeah, absolutely. i think with the yen, much the

same story with the dollar, of course, than the mood for risk there. you know, despite the export figures that they had out, which were slightly better but, of course, still down, people moving out of yen when it was overbought drastically in the early part of the year as people look to riskier assets, commodities, commodity assets, got to be at favorite at the moment. >> adam, good talking to you. still to come on the show, plenty of stories you're watching here on "worldwide exchange." swiss engineering firm abb says the successful cost cutting cushions. a more dramatic fall in profits. we'll hear from the group's ceo after this break. >> plus, financial earnings lose steam as wells fargo warnings of rising

i'm christine tan. hyundai motor reports record falling profits and says it expects its u.s. market shares to grow further in the second half. >> i'm ross westgate. in europe, porsche's ceo leaves after the board approves a $5 million capital hike and dealing

with qatar. and i'm bertha coombs in the u.s. the nasdaq faces its biggest stretch in winning in more than 12 years. if you're just joining us in the united states, welcome to the start of your global day. in the u.s. this morning, futures have been fairly flat, although boy, we've had such a big run up last night. we did see the dow and the s&p close lower. but the nasdaq put in 11 for 11, its best streak since 1996. >> we've got dow futures up at the moment. taking a look at bonds, we are watching for economic data. we did get a little out of europe this morning. we've got the ten-year yield

back above 3.5% at 3.55%. we will hear from the treasury today. just how much more they're going to be auctioning off next week. ross, people keep watching these massive auctions here and waiting to see if investors are going to say, enough. >> right now, as we head towards the u.s. open, the ftse cnbc global 300 is higher, up 7 points. european stocks two hours into the trading day, they're trying to make it nine out of nine. right now, the ftse 00 is down 0.17%. xetra dax is fairly flat at the moment. it's been up nearly 12 days. the ftse cnbc 300 is now positive for the year. as far as the currency markets are concerned, that plays out. resources, banks, financial

services give you a view of that. as far as the impact of that on the currency markets, the yen is weaker across the board today. euro/dollar, just back above 1.42. sterling a little firmer. 176532. we saw retail sales coming in stronger for the month of june than expected. it seems to be due to quite a bit of cost cutting and hot weather put people to the shops. >> you want hot weather? let me tell you what is hot. singapore is really, really hot. you can't be complaining. i need to complain. here in asia, the markets have seen -- enough of the weather. here in asia, the markets are moving higher. the strong yen -- the weaker yen is helping some of the exporters in japan. the nikkei 225 up 0.7%. the kospi up 0.2%. the shanghai composite up 1% and the hang seng, clearly a big winner today, up 3%. with banking and property stocks

leading the way higher and the bombay sensitive up 2.4% moving higher from the last half an hour or so. if you look at nymex light sweet crude, trading up flat and brent also moving in and out of negative territory, 17 cents higher, $67.37 a barrel, ross. >> let's put some of this into perspective for us. joining us now, james bevan, chief investment officer at ccla investment management. good to see you. thanks very much indeed for coming in. what do you make of this rally we've had? since earnings season started, stocks have gone up, 8 date days in a row here in europe. is t is this now time to be positive? >> i largely approve of the move. this is driven gi by

fundamentals. valuation remains reasonably attractive. it's about 1 percentage point above the long-term average. therefore, i think that there are still ample opportunities for people to get on in. >> you mentioned cost cutting. there's no meaningful pick up in revenues. >> that's absolutely true. i accept that cost cutting has been marginal. but the revenue numbers are quite supported. and i think if you said, well, where are the risks? i would highlight two risks. one is the growth that we have seen in the macro positioning. obviously, it comes from

government paycheckes and central bank support and that those stimulus are going to finish and we need the run to go be picked up. now, we have seen falling inventories and that's where we have the inventory rebuild and therefore the secondary risk in terms of where is the growth going to come from is bht inventory growth is over, the next risk is through. we'll have to look forward to next year how do we actually deal with deleverage heing we all know is necessary? >> moving on that theme, let's look at the issue of unemployment. companies continue to cut, continue to move their overhead. if companies continue to decline, doesn't that speak to a lack of demand? >> actually, stock markets deal very well with rising unemployment because that affects consumer sentiment if people believe it is their job

that is at risk. what we're seeing at the moment is that people still are roently detached from the perceived risk of unemployment. so while the numbers are going up, the spending numbers aren't anything like what might have been expected. >> this is christine. with so much slumping around, do you think they can deal with rising inflation? >> i absolutely endorse your perfectism and enormous amount of liquidity in the system at the moment and part of that is in money market funds and i suspect part of the bull market is from liquidity funds into equities and therefore, sovereignty issues become less pressing. but in terms of the inflation numbers, i'm less interested to think about why inflation will come, where it will come from.

at the moment, we do not have bottlenecks in production. >> james, you're going to stick around for a while. shares in abb are trading higher today on the swiss market after cost cutting measures helped to limit the fall in second quarter profits. but it was well ahead of forecast. the swiss engineering giant says the trading environment remains challenging with limited visibility for the second half as industrial companies continue to be hesitant about spending on equivalent. we're joined by the ceo of abb, joe hogan. thanks so much indeed for joining us. it's interesting, your earnings report is sort of a microcosm of the discussion we've just had. you've done better than analysts thought on maintaining cost control, but there are those out there who are looking to see, look, where is the top line growth. what can you tell us about that? >> you know, guy, i was thinking that as i was listening to the

dialogue that we do reflect what you were discussing. overall, i would say that our cost cutting was terrific in the sense of what our goals are and we need to continue that because of the downward pressure that we have on orders. if you look, the comparisons are really difficult. we're comparing against a historical high. i guess on the other side, you would look at our bag log. even though we delivered revenues almost flat with 2008, our bag log went up almost $1 billion for this quarter, also. so it shows there is growth out there in the marketplace. it's primarily in emerging areas. you have to find it and you have to be aggressive in open taig taking it. >> and how, right now, we've seen a big sort of swing around in commodity prices. how is that impacting you? and also, you know, what is the availability of project funding like at the moment for substantial clients? >> well, project funding has

been pressured since the lehman collapse last year we've seen that. but we've seen some loosening in terms of larger projects and projects that we're currently chasing now. secondly, i'd say in answer to your question, you know, also, guy, is that when we look at demand patterns all around the world, i wouldn't say it's necessarily funding right now. a lot of it is confidence about what the economic scenario is going to be over next two or three years. as that comes more into focus and people get more confident, that we begin to come out of this. i think you'll see those funds being applied then. >> joe, it's bertha here in the u.s. what about all the stimulus dollars that are out there? china is spending huge amounts. the u.s. supposedly is spending on infrastructure. are you seeing any of that down the pipeline? >> bertha, we see it in china first. abb is primarily a

infrastructure company. if you look at the chinese package, 80% of that is geared towards infrastructure. so we've seen that stimulus package. it's still extremely competitive, but we've seen the results of that. in the u.s., the stimulus package is less than 20 pirs of that goes to infrastructure. we haven't seen that come through yet. we will benefit from it when it finally reaches the marketplace, but we haven't seen those results yet. >> mr. hogan, this is christine here. are you as optimistic about india? >> christine, i am optimistic about india. i think they had a very favorable election recently that we're pleased about. we had a -- was up 4% in india for the second quarter in orders. it was on the back of infrastructure orders around irrigation and also some green energy applications in india.

>> james. >> i'm sorry, indeed, i was busy listening. when i think about abb, i think it's a great company and i suspect the volatility of currencies is a real challenge for you. how are you positioned on what you think the outlook will be? >> you know, we hedge -- from an operating standpoint, we hedge everything we can. there's no speculation in this business at all. so we don't play the currencies this that way. the dollar is the major currency that we have and that we're concerned with. that's primarily where we focus our hedging. and, you know, it gets to be so complex at times, but from my level i focus on the dollar exposure rates and so far we've been able to mitigate any true operational pressure from a currency standpoint in reference to the dollar. >> okay. joe, good to speak to you today. thanks for joining us, joe

hogan, ceo at abb. >> still to come, the ceo of porsche gets a $17 million golden handshake. it's one of the highest compensation packages ever paid in germany, re-igniting the debate on executive pay. is the payout too much? e-mail us and tell us what you think. 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." president obama is trying to rally health care reform. the president saying he would be willing to raise income taxes for the wealthy to help pay for the plan. >> if we don't pass financial regulatory reform, then banks are going to go back to the same things that's they did before. in some ways they can be worse because now they know the federal government may think they're too big to fail and if they're unconstrained, they could take even more risks. >> okay. i was supposed to continue reading on there that the president was talking about extending financial reform is. the government is proposing

perhaps maybe some tractional fees in order to protect taxpayers from another potential bailouts. those fees could be similar to what u.s. banks pay the fdic to guarantee their deposits. meantime, the refreshry department will send the president another piece of the reform today. on wednesday, lawmakers received plans that included making the fed the main regulator of systemic risk. the senate banking committee will hold a hearing on that issue today at 9:30 a.m. new york time. on the witness stands, expected to be fed governor daniel tarullo, s.e.c. chairman mare schapiro and fdic chairman sheila bair. porsche has dismissed its ceo after an all-night board

meeting. negotiations are unlikely to interfere with boar shah's anticipated cut with volkswagen, although it's still open to debate. porsche shares at the moment, up 1.5%, just about. christine. >> ross, an official at china's top iron ore negotiator says beijing is seeking more than a 33% cut on iron or prices, adding to the deal with major global miners will be announced in ten days. the china iron and steel association wasn't immediately available for comment. meanwhile, chinalco's president says he's closely monitoring the developments of the standoff between china and australia. over the detention of chinalco employees, chinalco is the single biggest shareholder. >> still to come on the show, we've proved credit suisse has weathered the storm. have we now clearly identified

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earnings continue to trickle in. morgan stanley reported its second quarterly loss. joining us now is ross silva. ralph, it looked great last week

with goldman. now we're hearing from wells and from morgan stanley. we still have some trouble here in the banking sector. i just want to mention that james bevan is still with us and he will jump in and also ask questions, as well. what can we make of what we've seen so far from the banks? well, i think it's relatively positive. i remember a few weeks ago sitting at this very table talking about how investment banking was going to recovery in this quarter. that's exactly what we've seen in investment banking coming back. the problem is that retail banking has slowed down. what we've seen with all the banks reporting is that retail banking has all of a sudden become flat and that's a big concern from a financial services perspective. >> so when you look at credit suisse, maybe that highlights the issue. investment banking, you know, it was a stellar performance. >> that and trading activities.

if you think about all the insolvencies that are going on out there, the small to medium sized businesses are dropping like flies worldwide. the commercial loans business is in serious threat and we're going to see a significant write-off in regards to that. secondly, credit card write-offs we're going to see in the upcoming months. >> i think good signs, no question there are good signs, but you've got to hedge your betts in the banking area because it's not done yet. >> what do you think? i look at bnp paribas coming to the table. what's your position on that company? >> i put bnp in a small group that would include hsbc and bunkasaradar. they're three organizes that i think are doing extremely well. very well diversified and huge operationses in emerging markets. and that's the key thing is that most of the revenue egz coming in from emerging markets in this

particular downturn, you need to focus on those operations. >> now, the area which i regard as most tricky are the swiss banks because they will be deeply uncomfortable. where do you sit on the two companies? >> i would never have suspected that years ago. we've seen a huge change there. secondly, i think they need two large organizations simply because they're wealth managers and that's what they're focusing on. i am, however, concerned about the lawsuit that's going on with ubs because there are hundreds of thousands of american accounts sitting in switzerland. i would suspect at least half of them would go away if they had to disclose the information back to the u.s. government and i'm very concerned about the operations because of that. >> you mentioned hsbc. in my neck of the woods, we have great exposure. in china, there's concern about a surge in bank lending.

does this somehow open another can of worms for hsbc? >> it certainly does. they have to continue to be as careful as they have been in the past. i don't see their value right now as their asian operations. i look at their value in their american operations in brazil and mexico where they're making absolute fortunes because of those two operations. i think it's important that the investment say in china, however, i think that's their future, not their presence. >> standard chartered, great emerging market. what are your thoughts on that particularly? >> i really like standard chartered, but i think they got lucky. i don't think they're diversified enough and that's my concern about standard chartered, not on a global level or geographic level and on a product level. i'd like to see far more

products from them. >> they're a pure play on what they're in. >> exactly. >> i see a lot of optimism. do you agree with that? >> i do. first of all, i don't think we have enough information right now to give you a three-year term on these banks. retail banking, the commercial credit area and the credit card, there is too much risk here. but i think right now the banks are probably positioned respectively and i think you have to look at the fundamentals instead of looking at the stock price when you're picking banks. >> thanks for that. some other news, french appetite giant publicis has told cnbc that he's confident for a recovery in 2010. >> it has not a surprise to see that the second quarter was

sharply down compared to the first one. i do believe that we've reached the bottom. if it's not in june, it will be july, and that the third quarter will be much better than the second and that we will progressively and slowly, it will not be a sharp surge of the growth, but will we see if progressive and slow recovery and the first positive numbers will be probably posted in the middle of next year sometime this summer, 2010. >> how do you see the future? >> we don't see any guidance regarding growth or margin. what we can say is just an indication that based on the information we have to date, that things look much better for

the second half and that we -- we have probably reached the trough. >> talking about your customers, you have taken a provision of 9 million euros in the first half of this year to reflect the bankruptcy of general motors. is it your maximum exposure? and also, are you confident that you will continue to work with the new gm? >> we have posted a number of 9 million euros as a risk for our exposure. we believe this number is quite comfortable. we have shared it with gm. regarding the future, we are confident that we will be working. i don't know to which extent, but the relationship operates solid. i hope that the dow contribution is very good and that we learn from our standpoint continue to

help them and do our best to give them the best support. >> and what about the other can customers, do you feel any pressure from them to decrease your fees? >> all the advertisers in the world today want more for less and there is no exception. i have not seen one who is saying i want less and i will pay you more. so we are facing a very serious pressure on our fees. we are seeing a lot of companies struggling and asking for. coming up, we're going to get a glimmer of good news from the uk housing sector with a monthly rise in mortgage approval. will u.s. follow suit later today? we're going to preview big, economic releases after the break.

just about half past the hour, here are the top business stories from all around the

world. in the u.s., nasdaq tries for a 12-pete, extending its is 1-day winning streak to 12. >> in europe, porsche set down with a hefty payout with approval of talks with qatar. and in china, a deal could be announced in ten days on iron ore prices. hello and welcome to "worldwide exchange." right now, dow futures up about 20 poivents above fair value. nasdaq pretty much flat. it's been up 11 days in a row. we have microsoft reporting after the bell. a couple of the chip companies disappointed a bit particularly on their outlook. taking a leigh the ten-year

yield, we'll hear from the treasury today about how much more they'll be putting up for auctions. at 8:30 new york time, bel get weekly jobless claims and they are projected to rise this week. how is it looking in europe this morning? >> well, look, we're trying to see if we can make it nine days out of nine. we've been up eight out of eight. the ftse 100 is flat. the cac 40 is down 0.25% and the smi is being boosted by earnings from roche and abb. we spoke to the ceo a short while ago who says the numbers are boosted by cost cutting. but the market, the ftse 1cnbc s up. the yen is weaker across the board. euro/dollar, 1.4220.

sterling/dollar, 1.6529. sales came in stromger than expected, boosted by a heat wave we had during wimbledon and discounts for the retailer. >> asian markets on the move moved higher and that helped to support some of the upward momentum in sectors. technology tm continues to do better. the weaker yen helping exporters in japan. the kospi up 0.2%. the shack high market up 1%, hang seng up 3% and the bombay sensitive up 2.7%. oil putting on slight gains the last time we checked and still continuing. nymex light sweet crude is now turning downwards. $65.37 a barrel. and brent crude, still holding on to gains of 6 cents, 5 cents now, $67.26 a barrel.

bertha. >> thanks so much, christine. joining us now is allan gayle and still with us is james bevan. he's our chief investment officer at ccla investment management. allan, we have seen a real move towards risk appetite here since earnings have come in. yesterday a lot of people feel as though this momentum can't last very much past the end of the year. what's your thought? >> well, our thought is the market is probably in aerd the of consolidation. there was a big s&p rally that took the market up over 35%. we believe the economy is doing a slow turn and i would say into the wind is the expression that we would use.

businesses are getting their costs under control and they're looking for a glimmer of hope that cost control is going to increase. so far, the cost control is in full force. what we're looking for and still only getting limited signs of is the top-line growth is increasing. >> alan, we had some guests on earlier who suggested that we only need a little bit of growth because companies are so much leaner. we only need a little bit of growth to make 2010 appear better than what we've currently surprised in. >> it's true that the bar has been set very low. in that perspective, we are loolg at a decent earnings number as we go into the fourth quarter. then the question will be what

the overall momentum in the economy is. i'm cautiously optimistic that we'll continue to move forward. and so we're looking for some signs that the consumer is going to stabilize and start to move higher. if that's the case, that is something that could help lift these markets. >> one of the things i find interesting is the earnings price. if we get modest growth, interest looks to be way off target and inflation pressures remain low. do you subscribe to that or do you have an alternative perspective? >> well, i'd say that our view is that the valuations in the market are reasonable.

i would say they're not compellingly cheap. we ought to have a reasonable pe going forward. the first is that interest rates are low. we do think that interest rates are going to remain range bound. i think they're at a secular low and over the next three to five years, they'll be moving up. but i also think the federal reserve will keep interest rates low. i think the central banks around the world will keep rates low until at least the first part of 2010. i think that will create a safe environment. it is important that we continue to pay reasonable multiple earnings for what we're going to see. >> if you subscribe to the view that interest rates remain low, are you a buyer of short-term credit debt on the basis that yields have picked up on the back of limited demand and supply? >> well, that's a great question. on the bond side, what we've been doing with our portfolios

is adding on the credit risk is the markets have begun to stabilize and reliquify. we think the relick wefication trade has been a big benefit. we've been saying with the high quality, high yield in the investment grade corporate market. that's where we've been picking up yield and that's been good capital appreciation, as well. however, getting to your point, though, with the ten-year yield at 3.5, we think there is a limited potential for that to rally from here. so we're gradually shortening our durations on the portfolios in anticipation of somewhat higher rates as we go into 2010. >> alan, great. we want you to continue staying with us. now let's head over to -- and james bev van will be continuing to stay with us, as well. let's head over to ken moriyasu. >> hi, christine. with the yen down to the 94

range against the dollar, the tokyo stocks managed to lock in the seventh consecutive session of gains with the nikkei index briefly surpassing 9,950. the day's value leader was electrical machinerymaker maidenshaw who jumped over 10%. meanwhile, mobile phone giant mp docomo shares were sold due to costs resulting from moving to 3g services. as demand for eco cars grows stronger, the hybrid car prius is attracting customers in the secondhand market, so much so that the price pore secondhand cars has surpassed new cars. for a new prius, buyers have to pay eight or nine months. and in politics, with the general election next month, the

opposite democratic party has extended its lead by 10 percentage points, according to the latest poll by nikkei. the dpj's approval rating of who% was up three points from the previous survey. while support for the ldp has jumped 30%. >> moriyasu-san, thank you very much for that. still to tom, despite our earnings season so far, unemployment is expected to eye another hit today.

welcome back to "worldwide exchange." here are some of the top stories we're watching from around the global. ebay reported its second quarter profits fell 29% and that beat analyst forecasts. a drop was offset by profits from skiel and paypal units. ebay is predicting third quarter results will be roughly in line with expectations. shares worth about 5% after hours here in the states.

after hours, they're up by 7. 3%. bristol-myers squibb is buying medarex. bristol is going to pay about $16 a share, better than a 90% premium to wednesday's closing price. the two companies are currently developing a drug to treat a form of skin cancer that is being tested to prevent lung and prostate cancer. both of them rose in after hours. just like a lot of us, amazon believes you just can't have enough shoes, it seems. amazon is buying zappos.com for $47 million in cash and stock, the biggest acquisition that it's made in the company histories. by offering free shipping and free return.

amazon reports earnings after the close. in frankfurt at this hour, it is off just fractionally. i'm sure ross has enough shoes, but christine and i can't get enough. >> girls can never get enough shoes. i've learned that one. roche is up. the group reported a 29% drop in first half profits hit mainly by its purchase in genentech. it's still pretty upbeat about its core business. >> we expected a dumb digit growth for not only 2009 and 2010. >> and the ceo said the company will expand capacity of its tamiflu treatment. christine. >> ross, bay jij sg seeking more than a 30% cut in iron or

prices, adding a deal would be announced in ten days. the china iron ore and steel association wasn't available immediately available for excellent. chinalco is the single biggest shareholder of rio. >> final thought now from james bevan being with us throughout the show. james, where are the risks for you? >> i think one of the most interesting challenges we face in the runoff in recent weeks has been the degree for which there has been the leadership from highly risky stocks. and i would be going through lists now to see whether actually they merit continued holding and i would be nervous if companies like volvo and some of the banks. we talk about the banks.

i've been looking at lloyds and i think valuations now look pretty stretched. more postally, i think there's a great value. if you take morrison, you see a company with positive cash flow and decent cash flow on investor capital. if you're looking at high dividend yield, can you concentrate on -- >> i don't think you can. the market is attempting to price either a reduction in long-term growth prospects or a long dividend cut. however, there are plenty of companies which high dividend yields and good growth projects and i think they are waiting to be mined. >> what was your favorite of that? >> yeah. i would have to go with france

telecom. come up next, weekly jobless claims, ennings nns and we'll bring you a free preright after this.

okay. time to find out what's coming up in "squawk box" in just under ten minutes. hey, joe. >> good morning, ross. it says here we have a super sized edition of "squawk box" this morning. i think it's the same, you know, three hours, but it's what's in the show is what i think they're talking about because our headline guest is sally krochek. she is on the financial lines as a top executive. now she's free to speak her mind and will do so only at cnbc. our guest host this morning is no stranger to the high stakes world of finance. that's salary right there. we also have bb&tceo kelly king, who from that shot looked a lot

like sally, but i think kelly is a man. this morning, congress responds to president obama's speech. this is senator jim waterloo. he's leading the charge against the president's proposal. senator judd craig will be joining us, as well. we're slogging our way through here. we're making progress. we're getting it done. we will get reports today from mcdonald's, at&t, 3m and many, many more. you take the number from the earnings, take what bernanke has been saying and then you look at health care and it's all about policy, economics, government and "squawk box" and you get the instant analysis here.

i don't know how you could watch some of those new morning shows, new bras, shine na hair. how can you watch anything else besides "squawk box" which will begin at the top of the hour. you know what i'm saying, ross? >> you're making a very fair point, joe. very fair point. >> thank you. >> there you go. we all know. joe, looking forward to it. thank you. we're glad you're watching this show. we're bringing back allan gayle. earlier in the show, you talked about consumer markets. looking at apple's results, it seems they still want the shine noo toys. looking at ebay's results last night, they're not necessarily doing as much as the same old business. we get amazon tonight. what's your read so far for the consumer in earnings season?

>> well, i think so far the consumer is being relatively cautious. we were encouraged by the top line improvement in apple's performance. but consumers are facing significant head winds. the consumer is deleveraging. but also with the job market being as weak as it is, that means overall consumer incomes are lagging. so the consumer is probably facing the greatest stress in the economy as we go forward. we think there is a gradual turn going on, but clearly this is one that is only evolving gradually. >> how can it turn if we are

likely to see unemployment move higher? >> well, i think that the unemployment rate is moving higher as we -- as companies continue to reduce jobs and the labor force continues to grow. but i think we're seeing some stabilization going on that is helped by the stimulus packages going out. that has been a big boost to discomposeble current income. this is where consumers will start to stabilization. our outlook for the economy is one where with consumer is not going to see a robust underturn. as consumers get some sense of what they can spend and what they can't spend that will have at least a more even environment going forward.

>> there's time for one more quick question. we have existing home sales today. do you see housing bottoming? >> we believe that housing is in the process of bottoming. it's at a very low level right now. the market is looking for an increase in home sales. there is still a lot of inventory left to digest. i also think there are a lot of consumers that move towards the housing sidelines. so we talk about a lot of pent-up demand. i think in the housing market, there's probably a lot of pent-up supplies. >> allan, unfortunately we don't have much more supply of time. sorry to jump in here, but we are at the end of the slow. thanks so much for joining us. we'll have you back. alan gayle with ridgeworth capital. that's it for our show. thanks for watching "worldwide exchange."

good morning opinion earnings central. at&t, 3m and mcdonald's all before the opening bell rings. president obama says the economic recovery depends on health care. and the markets at this hour, u.s. equity futures posting mostly above fair value as consolidating a bit yesterday after "squawk box" begins now. good morning, everybody. welcome to "squawk box." i'm becky quick along with joe kernen and carl quintanilla. if you are not awake, you better get there fast. it is thursday, july 23rd and this is the busiest day yet for earnings. we've got earnings and the

economy. but on the corporate docket today, listen to this, quarterly results from mcdonald's, at&t, ford, bristol myers, hershey, nor tr northrop grumon, you've got components of the s&p 500. let's talk about some of those components right now. analysts looking for the home of ronald mcdonald to rise by 3%. and here is an impressive statistic. over the last 12 quarters, mcdonald's has never missed expectations. at&t is forecast to earn 51 cents a share. that would be a 33% drop in profits from a year ago. revenue is expected to decline to $30.7 billion. with the market caps. the final dow component on the

bell this morning is 3m. consensus is calling for the company to earn 94 cents a share on revenue of $5.4 billion. guys, it is a busy, busy morning. >> is it the busiest day of the season? >> so far. >> which is hard to believe. >> you thought it's been a busy week so far. >> we had, what, five dow components from tuesday, something like that? >> yep. >> coming out at 8:30 westbound we will get jobless claims and follow you around at 10:00. but all ooh that, joe, will probably take a back seat. >> and when we talk about health care again, because president obama made a prime time pitch for health care reform. he warned that the debate in his words is not a game. >> i'm trying to make sure that everybody has good health care and they don't right now. if you don't set