currencies start to get more of a boost. that's another bit of an edge. >> and ifo is saying the german economy is not going to recover automatically, but there is more traction and this data, both the pmi and the ifo suggest -- >> yeah, and it doesn't mean that there's no other problems out there and there aren't some areas which are still contracting, but it's the rate of contraction that is important. confidence and sentiment is improving. >> richie, stick around. let's bring you up to speed with where we are on the equity markets. the cnbc ftse 300 is absolutely flat at the moment. we had a slightly better session in japan today. some good earnings there. christine will detail that.

an hour into the trading session here in europe. we had a negative start. the ftse 100 actually is by the slimmest margin in positive territory. very slim losses for the rest of the european stock markets. we're up 10.5% just about for the if it is presidents 100 in the last nine days. we have positive 278% for the year. currently over that 4,500 mark. rich might have changed his view on these, so we'll get his views in a second. on the currency market, the euro is doing quite well. sterling has reclaimed 1.65 against the dollar. euro/sterling, still kind of where we've been in those tight ranges and dollar/yen, just below 95, christine. >> hey, ross. here in asia, most of the markets ended higher. strong corporate earnings coming in to provide some upward momentum for these markets. the nikkei 225 is up 1.6%. the kospi is up 0.4%.

the shanghai market is up 1.3%. the hang seng is up 1.8%. it briefly touched a level shy of that, pulling back just a little bit. the bombay sensitive 30 is up 0.6%. so a pretty strong session here in asia. in terms of oil, nymex light sweet crude should be putting on gains if we have the sharts for you. nymex light sweet crude is trading around the range of $67.24 a barrel, climbing higher by 8 cents and brent is around $69.52 a barrel, up 27 cents. bertha, it's a friday and it's always good to see you. >> it's always good to see you, especially on a friday, christine. and we've got the futures even pointing to a bit of a negative start, not unexpectedly after we've seen that big jump yesterday on the dow crossing the 9,000 mark for the first

time since january 6th. we have the nasdaq with a 12-day winning streak. results from american express and microsoft are going to put a damper on the day today. the nasdaq down about 17 points and the s&p down about 4 points or so. let's see if the ten-year bund is reacting to that ifo information. right now, we've got yields at 3.49%. it looks like. and here in the u.s., not a lot of economic data today. no big testimony from ben bernanke. it could be a quiet day when it comes to treasuries here in the u.s. we've got the ten-year yield back up as people yesterday moved towards riskier assets much more heavily into equities, back up to 3770%. >> taking a look at gold, despite the weakness in the dollar this morning, trading a bit to the downside.

it has come off the lows of the session. joining us now for market strategy is richard cunningham. he joined us at the top of the hour and also joining us, our juno mahendran, hsbc private banking, who is celebrating a birthday. happy birthday to you. let's start off talking about this move that we have seen in the markets. and stock traders and analysts. they are saying when you get such a strong july, it often precedents a strong sell-off in the fall. let's start off with you, mr. mahendran. do you think that's the case here? we are getting our gains early here and setting ourselves up for disappointment come august and september? >> yes. i mean, i would agree with that. i think volatility is going to rise as we go into the fall for the simple reason that markets

ran ahead of themselves even though the july -- i mean, they've had further evidence of the green shoonts, i guess, from is the strong earnings. clearly the picture that's coming across is the top line growth is stagnant. it's because of cost cutting that profits are rising and they haven't seen that change in that picture of the u.s. economy. clearly, the demand is not there. it's just the exiting fairly stagnant economy that's -- and companies benefiting from downsizing, if you like. if that trend persists, and i think a lot of the rerating we've seen in the markets in the last week or so has been based on hopes that the third quarter would see revenue growth. i'm not entirely sure that's the case given there's all this talk about the new in the u.s. for tax breaks and such. the jury is still out.

i reckon you'll have the market finally divided between the bullets and the bears going into the late summer and we could see more volatility. i guess you'll see lots of swings in both directions. >> richard, what's your thought on that? we have moved through some real technical resistance on the upside to all the major indices. >> absolutely. some of the volatility has been quite low. looking at the fixed index and implied volatility here in the uk, volume lows of 23, 24 implied, which is quite low compared to what we've seen in the laugh year. but believe it or not, for the past two years, for good reason and been vindicated on most of our bearishness technically, we have our first reasons to start reviewing that outlook based on the price behavior in most of the major indices in the past two or three sessions coupled with the price from last month where we saw another big

retracement. we saw a price reduction on all the major indices and the s&p, the dax, and the ftse, etcetera. now we're seeing a move back above those and perhaps most key of all is the s&p 500 in terms of a good, broad-based indicator for maybe the global economy and that's showing a clean break, as well. we tend to look primarily at technicals, probably 30%, 40% fundamental, as well. we're looking at data coming through. we're looking at three home starts in a row on the positive side, breaking a bit of a range in itself. not necessarily key, but when you couple that with other ipdsys improving, some generally improving data on individual stocks. some of it just passing lower expectations and the fact that, of course, we are seeing a lot of laying off, a lot of paring down to the bones in terms of company overhead which means some of these companies will put

on impressive returns and profit growth when we see some kind of contraction in the economies and bear in mind we're always looking at six to nine months forward, at least. those combination of factors tell us that, believe it or not, we will be out of the bear market. it could take two or three months of volatility. but for the first time, we're calling the end of the bear market. >> okay. you're calling for the end of the bear market, richard. ar juneau, when you get companies like samsung posting better than expected quarterly earnings, how would you compare earnings in asia compared to what you've seen in the west? is there room for asian companies to come off better than those in the west? >> certainly companies have come off remaining term despite the recession. if you look at the retail sales numbers on technology, it's been quite good for the last 18

months for technology and that's now filtering in to the share prices. asian banks and properties are definitely on a roll, thanks to the chinese stimulus money which is now filtering out of china into hong kong and singapore and other markets, as well. so yes, i think asian companies' earnings do look better, the banks in particular. and what's interesting about this current rerating phase in the stock markets is that it's mainly the cyclical sectors that are running like property, etcetera and technology rather than the defensive sectors which you would have expected in a more defensive market. so looking forward, i'm cautiously optimistic. i'm turning more bullish as we go along. others have said the technicals look reasonably good. of course, there are signs of a

bubble there which makes us a bit cautious about the weeks and months ahead. it will be discipline. we should be able to get through this period and longer term, i'd be quite positive. >> are you willing to bet asia will be the first to come out of this economic crisis? >> well, we already are. most of asian markets are growing quite positively. china, indonesia, all showing great signs of growth. there's no recession to talk about in asia. it's just that we've seen slightly growth going forward wool see a resumption of strong consumption and domestic-oriented growth, i think. >> there have certainly not been any bear markets in asia in the

last few months, ar june ya. do you share the view that maybe the bear market is over globally? >> i think so. now i think we're seeing signs in the u.s., as well. if you look at the export numbers out of the u.s. popping up quite nicely, which is quite a contrast to what we've seen over the last decade or so where the u.s. consumer was the main engine driving out of asia. now we've seen a complete turn around, at least in the last few months and that, i think, suggests that chinese stimulus is working for the global economy. >> richie, do you believe that's a big bear market? based on technical analysis, if you believe that, where are you going to put your investments? >> well, again, there's various ways you can express your views.

we use options, some short-term trading approaches. what we're not saying is this market goes up in straight line from here. clearly that will never happen. we get volatility even if our expectation is proven correct. but the point being is that you start now trading this market more from the short side over the next two to six-month time period. again, there's the going to be certain sectors of stocks. to put i crudely, yes, rather than taking the view that you just stated. >> richie cunningham, thank you for that. arjuna, happy birthday, sir. >> thank you very much. >> it's going to be a good dinner tonight. shares of ericsson have had hit hard after losses. profits came in at just over $110 million, below expectations. ericsson, the world eeps beggest

telecom company warnings that the economic downturn is now hitting some of its main markets. this is off the good news that service demand is increasing. we'll get more of a detailed view when we are joined by carl-henric scanberg, ceo of ericsson. vodafone has add more than 8 million customers. they reported only a small organic supply in sales. vodafone hasn't given a detailed full year outlook, but says it expects flat to slightly lower profits. >> and here in asia, samsung electronics, the world's topmaker memory chips and lcd screens released better than expected second quarter earnings. a 5.2% rise from the year before. it joined other big tech names in urging caution about the

sector's recovery. competition and a rebound in the currency could pressure samsung's bottom line in the second half. shares rose 2.3% in asian trade. right now we're talking about monex, they saw a second quarter slump. the company earned 1.4 billion yen or $14 million compared to the $22 million the year before. sales meanwhile slumped more than 16% to $64 million. shares of monex, now we can show the board, up 2.3% higher, 43,100 japanese yen. don't miss our interview with oki matsumoto in the next hour on the company's results and what the strategy is going forward. >> christine, microsoft's fourth quarter profits fell, revenues

were down 17%, more than expected and microsoft reported its first ever annual drop in sales of windows. the cfo says conditions will still be challenging for the balance of the calendar year. microsoft is launching a new version of windows in october, but they say that woevent on its own spark a recovery of pc sales. in frankfurt at this our, shares are off nearly 8%. american express, another dow component that disappointed, second quarter profits dropped 48% on higher loan losses but that still beat forecasts on the bottom line. am ex took a charge on paying back loans. the decline moderated somewhat in june and july. he says charge-offs or debts the company does not expect to be repaid could fall below 10% for the rest of the year. still, shares were down 5% in

the after hours trading. at this hour, they're off just 1.25%. >> still to come on the show, bertha, we'll find out with the release of preliminary gdp figures. we'll hear from the ceo of monex. and ericsson has warned the downturn has hit some of its markets. you have questions. who can give you the financial advice you need? where will you find the stability and resources to keep you ahead of this rapidly evolving world? these are tough questions. that's why we brought together two of the most powerful names in the industry. introducing morgan stanley smith barney. here to rethink wealth management. here to answer... your questions. morgan stanley smith barney. a new wealth management firm with over 130 years of experience.

can the rallies continue? we'll find out starting with becky in london. >> let's take a check with what's going on with the ftse 100. we have had a strong couple of weeks. it looked like we were going to be disappointed to finish off the week, but maybe not. we are now moving about 42 points higher. now, in general, we're seeing a pretty strong growth today as is wolsley. i do want to point out what's going on with vodafone today. the company, vodafone, came out this morning and told us that sales were in line with expectations. they saw particularly strong sharing in india and africa and that helped to offset declines

in some of the more mature markets, particularly in europe. they also reiterated the guidance that it issued back in may. and the fact that they had reiterated did seem to lend strength to the stocks, 3.4% higher in shares for that company. united utilities has been strong this morning, as well. this is the uk's largest listed water company. this tells us that trading is in line with expectations. the stock now is pretty flat having started the day in positive territory. wolseley, the world's biggestmaker of plumbing and heating materials will a strong day yesterday at the end of the session and appears to be moving higher on optimism about the u.s. home building market. existing home sales yesterday was better than we expected. this is a company that has a lot of exposure to the u.s. so a bit of a bounce going on there. how is it looking in frankfurt? >> all components of the ifo index were better than expected.

the recession will end in the third quarter and the companies have their feet on the ground again. and that's about all in terms of hope for ex ports and ex ports is quite important here in germany. as we all know. and that's why, as well, the market rally sat in for very much export oriented values. companies such as k plus s, daimler and thyssenkrupp, they are leading the gainers here today merck is down by almost 12%. it's not so much the disappointing figures for the second quarter. it's the intention to be sold in the europe union. now we are crossing to france. >> and it's the first time in more than 10 years that we have

seen such a situation on the french market. it's the 10th positive session in a row for the cac 40. we have the media and communication group lagadair safe for the first half of the year, but that was in line with expectations. also leading the french market today after the french company missed expectations in the first half of the year with an 88% decline of its net profit. but the company has decided to step up its cost savings plan from 600 to 1.1 billion euros. and that is the reason why the stock is trading much higher today. the company posted a 20% decline of sales in the first quarter of the fiscal year. air france klm, down by 1.9%.

now for a look at the asian markets with christine in singapore. >> hi, stephane. thanks for that. asian markets are mostly in the green for this friday. the nikkei 225 closing up 1.5%. 9,944. in south korea, shares rose for the ninth straight session, the longest winning streak in more than three years. strong earnings from blue chips samsung electronics improving gdp figures helping the kospi end 0.4% higher, 1,502, it's the ninth cob secretaryive session. and greater shares in china got a nice boost. coal shares led the composite higher by 1.3% to close at 3,372. the hang seng, however, off its earlier highs as investors took profits and property stocks. profit taking also muted the gains in australia.

the asx 200 was up 0.6% at 4,089. on that note, over to you, bertha. >> thanks, christine. investors get a bit of a boost from the onslaught of earnings we've had this week. but consumer sentiment numbers are due out at 9:55 a.m. new york time. analysts are looking for a number of 64.6. at 10:00 a.m., we'll see numbers on home ownership. the house committee is holding a hearing today and treasury secretary tim geithner will go before the panel. at 1:00 p.m. new york time, lawmakers will get a chance to grill fed chairman ben bernanke, fdic chairman sheila bair and the office of comp troller currency and the office of

supervision. that is your global stock watch. >> coming up on "worldwide exchange," one of japan's largest online brokerages are feeling the pinch as earnings fall. we'll speak to the ceo of monex. plus, alistair darling says the country will be out of recession by the end of the year. we'll get a look at whether that's possible. gdp data will be released right after this.

i'm christine tan. in asia, stocks hit a new high. shanghai composite is up a massive 85% year-to-date. >> and i'm ross westgate. business sentiment jumps for the fourth month running. so and i'm bertha coombs. here in the u.s., the tech sector just got a bit bumpier. microsoft reports disappointing earnings and says conditions remain challenging. >> we just got english growth figures out of the uk. a little weaker than expected. preliminary figures gdp down 0.8% on the quarter. the annual rate 5.6%. we were looking for a figure there of 5.2%. so the economy has now contracted 5. 7% since the

downturn began in the second quarter of '08. the second quarter gdp, annual contraction rate, the biggest since records began in 1955. economic output, 3.2% in the first half. the government is looking for an overall economic output. ooushg government and other services proved an economic drag in the second quarter. you can see the reaction in sterling. it was up. it was well over 1.65 and it's well below that level now. shams shugg is with us. after a bounce in positive data, this is disappointing. >> it is a little disappointing. minus 0.8 was our initial forecast for q2, but we had been inclined to revise it forward.

and in the recent trends persist, it's bobble by the late third quarter and fourth quarter, we should be seeing positive growth, very minor positive, but positive nonetheless. >> uk's government and other services proved the drag. >> that's interesting. we know from the pmi that the services in may and june extended somewhat. so the comment you just made there is totally in contrast to this. we were expecting services in the quarter as a whole to be negative, anyway.

so it's not entirely surprising. >> will this have a bigger impact than thought? >> a lot of the strength has been in surveys, not really hard economic data. it's been explainable by weather continues and so on. the underlying story is still very, very weak in most of the major western economies. >> we'll talk about more of the global economy in just a few moments time. stock market is trying to make it ten days out of ten for gains here in urch. the ftse cnbc 300 is just nudging back on that uk data. the ftse 100 had gone into

positive territory. we'll see where the reaction is on that. maybe we will, maybe we won't. who knows. there we go. we just put some boosts on before the data. if we close at these levels now, we will be up ten straight days here in europe and indeed we will up around 3% at the moment on the year. euro had been firmer against the dollar. .4212. putting meat on the bone against the pound, as well, at 0.8626 and the dollar is pretty steady against the yen, christine. >> hey, ross. here in asia, most sessions got a lift from strong corporate earnings improving sentiment on the last trading day of the week. the kospi up 0.4%. the shanghai market up 1.3%. a lot of sentiment got a boost basically from reports that the government will keep monetary policy lose. the hang seng is pulling back

just a little bit after breaching the 20,000 level and the bombay sensitive index is up 0.9%. but you know what, china, bertha, this particular market is up 85% year to day. pretty impressive. >> it is pretty impressive. certainly a lot of the major indices here have moved up past resistance on the downside. the dow closed above 9,000 for the first time since the first week in january. let's take a look at the boards. dow futures are just about flat. they did come up on that better than expected german ifo number business sentiment in germany doesn't seem to be getting hit so badly on the worse than expected uk gdp. miex row soft was a drag on the nasdaq which had a 12-day winning streak. it doesn't look like it's going to start that way today.

consumer sentiment will be the big thing everybody will be looking for this morning. taking a look at the ten-year yield, the ten-year bund in germany coming off that high yield on the back of the uk xhb which moved up to the highest on the ten-year yield since some june numbers that we had seen on the bund. the ten-year yield and the ten-year note has come off just a bit.we were at 3.70% at the top of the hour. we are now at 3.69%, nonetheless. it's been quite a roller coaster ride as we moved up to big highs here on folks moving more into equities. christine. >> hey, bertha. let's talk more to james shrug. james, the south korean economy growing in the second quarter thanks to a stimulus package. >> i think that's a fair comment

to make. it's not just today's recent gdp figures. it's a whole range of data that are showing very solid improvements month after month for the region. compare and contrast that with what we're seeing in the emerging markets in europe where there is still economic armageddon taking place. so you can really make a real distinction between, you know, the various emerging markets around the globe. the asian ones are certainly performing very, very solidly. in australia, it now looks like the australian economy will avoid a recession this year, out forecast for 2009 for 0.2% growth. very weak growth compared to what australia could typically average, but nevertheless, it looks like the economy there will avoid a negative year.

>> james, what could potentially be the risk for asian economies going forward? >> well, something bad happening in china would be -- the chinese growth story is very much domestically driven now, given the significant fiscal stimulus has been put into place. there are political issues in china. there are issues related to chinese trading. i don't want to go into too much detake to exacerbate the situation. but the chinese aren't doing everything in -- the chinese are perhaps not behaving as well as they should at the moment and that's perhaps having negative implications in social and is political spheres. so i would watch the chinese story. that could be something that -- you know, the risks of the chinese story could have an impact in other parts of asia. but the bigger issue for me is what's happening to the global economy and there is still very significant head winds that

they're going to confront the u.s. economy, the european economy and the uk economy certainly going forward. the most obvious one being rising unemployment and the tendency of households to want to save more than spend. that's going to be an ongoing significant drag on the economy, the global economy going forward. >> james, i feel like i should get my passport out just in one sentence you've taken us around the world. but let's talk about that riegz unemployment. do we risk a double dip because of the stimulus spending and going back into negative growth? >> i wouldn't call ate double dip. the u.s. economy, the uk economy, the european economy, all of those economy res still shrinking. possibly going to shrink in the third quarter or at best maybe flat growth. i think the bigger is that when the growth does return, and we think it could be returning before the end of the year in some parts of the western world,

it's going to be very meek, very mild, very modest growth. and next year, in some countries, at least, there's going to be significant fiscal tightening coming through. the uk, obviously, comes to mind there with a new government likely. so that is going to be an added weight on the prospects of recovery. so i'm already talking about double dip. but what i am saying is that we're not out of the negatives yet. and when the growth comes, it's going to be very disappointing growth. >> all right, james, thank you very much for that. have a good friday. >> thank you so much. >> james shugg, economist at westpac bank. monex saw a 34% slump in the april to june quarter the company earned 1.4 billion yen or $14 million. joining us in a first on cnbc interview is the ceo himself, oki matsumoto. thank you for joining us.

your earnings are dictated by what's happening in the equity markets. do you think the worst is over? >> i think the worst is over. compared to the same quarter last year, still the revenue is slightly down, but compared to the previous quarter, actually 2 top line was about 30% better. soble the japanese are better. and i cthink, you know, it's coming back now. >> do you think earnings will be enough to support in upturn we're seeing in the japanese equity market? >> well, the japanese equity, as you know, there are lots of uncertain political environments right now. so i believe earnings will be better, but it's not very clear

how the markets will react going forward. >> what sort of clarity do you need to see in terms of where your direction will be headed? >> well, i think, you know, possible we need to -- i mean, the market needs to clarify the concern about the balance sheet and we need to see financial institutions and other companies reporting whereby the balance program is over and that is going to be very important information for the market, i believe. and as i said, you know, the more stable political environment will be very important for japanese stock market, i think. >> and matsumoto-san, you talked before about getting some kind of alliance or working with citigroup as the biggest shareholder in the company. are you any closer to formalizing something that would be a real benefit to the

company? >> well, citi owns 26% of my company. and we are discussing what we can do. as you know, citi has their own agenda with regard to their properties. and the meanwhile, it will be great if we can work together in japan between citibank and monex. so there are many various possibilities, but nothing has been decided. we just, you know, keep discussing. >> matsumoto-san, you mentioned the political environment. we all know the elections are just around the corner. if the democrats win, how do you think this is going impact the equity market? >> well, used to be people tend to think that the democrat party is not good news for the stock market. but if you look at the rehabilitate reaction of the

market to the solution, it seems that, you know, everybody is looking for some sort of change. so even we, the democratic party win the election, probably it will be -- i think the market has already discounted any kind of, you know, reaction from the election so that, you know, whichever party may be, either party wins big, that would be probably better news for the market because the government now can, implement more strong policies. >> all right. we'll have to leave it there. matsumoto-san, very good to talk to you. thank you for being with us on "worldwide exchange." from japan, let's head over to india. ayesha faridi joins us live from mumbai for the indian business report. ayesha. >> thanks for that, christine. after the run up that we had

yesterday, it chooses to consolida consolidate. holding on to that 0.5% gain mark, but it has been chopping in a tight range. the broader markets, more resilience, up about 1.5% for the midcap index. all eyes are on a liance industries. clearly that stock looks a little pressure. most expectations. analysts seem to feel their net profit softened by 3 odd percent and margins may come in the ban of about 8 to $8.5 dollars. that is perhaps keeping the market edgy considering the kind of weight reliance industries has on the stock ibdsys. oil and gas is currently in the red. a slew of numbers came in. today also that counter is holding up very well.

tata motors is another one seeing a gain of almost 8% in trade and itc, the major, that counter came out with a very strong set of numbers and it's holding up very well in trade. besides that, iet is back which is clearly shining in trade. with that, it's back to you. >> ayesha, thank you very much. you have a good weekend. elsewhere, the imf considers the chinese yuan the currency to be substantially undervalued and said it needs to be appreciated further. this is according to the chief of the asian department in the imf. he said eye difficult to determine how unvalued the yen is and that a stronger renminbi should be a part of the package. there are sign that's south korea's economy has finally hit bottom, thanks to the government's $50 billion stimulus package. data showed asia's fourth largest economy expanded by a seasonally adjusted 3.2% in the

second quarter. that's the fastest pace of quarterly growth in more than five years. the number is slightly lower unanimous what analyst hesitate expected, but sharply higher than in q1 which gdp rose only 0.1% quarter on quarter. now, the german recession is almost over, according to the ifo. the ifo survey came in at a reading of 87.3, compared to a forecast of 86.5, the fourth consecutive jump. it did see the euro continue to push higher against the dollar. in corporate news, merck shares have plunged in germany on disappointing second quarter figures, and news that the eu regulator have rejected its drug which treats lung cancer. the german group had a 42% slump in operating earnings after raising spending on medical research. quarterly sales were unchanged, though, borrowed by pick up in demand in its liquid credit talls unit. merck is sticking with its full

year target for the year. >> amazon's second quarter profits fell 10%. but on the top line, revenues rose 14%. that was just shy of forecasts. results were hurt by weak sales of higher margin media products, such as video games and a legal settlement with toys r us. amazon is offering a wide range for third quarter results and that doesn't help. they're projecting sales growth of anywhere from 1% to 23%. amazon stock is up and fell more than 6% in after hours trade. at this hour, it's trading off nearly 7%. citigroup is nearly close to reporting diana taylor as a new member of its board. she is managing director at wolfen sohn & company. she's on fannie mae's board. she began her career at smith barney. taylor would leave fannie mae if she joins citi.

her appointment would be a boost for citigroup's board which has been criticized for its lack of banking experience. citigroup shares were down 1% on thursday. you should check out of website, where you can get more news, videos and blogs, anything moving markets at cnbc.com. still ahead on "worldwide exchange," the dow closes above 9,000 for the first time since january 6th. but will a slew of bad news from microsoft, american express and amazon pull markets lower today? well, stocks here in europe right now are firmer, bertha, so that's giving the euro a perk up against the dollar.

second quarter gdp contracted by 0.8%. we were looking for a contraction of 0.3 prs. euro is being boosted by news that the pmis and the ifo sentiment came in better than expected.

joining us is david johnson. how disapointing was that number? >> pretty disappointing. as we were talking before we came on air, the markets had started to rearview mirror up their expectation and thought that maybe it wouldn't be quite so bad as they had originally thought. but you know, the service sector is struggling. manufacturing sector is struggling and we shouldn't be surprised by the bad figures. the problem is that it makes a bit of a mockery of alistair's comments in the last few days that we'll be out of recession by the end of the year and it will be a fast recovery if we manage to do that. >> where does this leave us? equities are going with the 10th day of gains in europe. even the euro has come back from its best levels of the day. despite the pmis and the ifo figures were better. >> it's a question just of general market sentiment, isn't it? and poor data from the u.s. is negative. data from the uk.

i think even the transient pieces of information that come through that change month on month when uk retail sales were pretty good this week, mortgage data was good this week and the net result for sterling has fallen through the week. and it is a question. i think people are looking at the longer term picture, not just the month on month spikes and troughs. so i'm not surprised that sterling is taking a hit and i wouldn't be at all surprised if it slides further over the next few days. >> david, here in the u.s., we've seen greater risk appear tietd, certainly witnessed by the dow crossing 9,000. today we're going to get consumer confidence numbers. is that going to impact the dollar today? >> difficult to see whether the consumer confidence numbers will have too much effect. i think as i was just saying to ross, i think people are start to go take a much longer term view of data and something like a quarterly gdp figure or something with a moving average which is moving in the right direction may well have a strong

effect. but i think these individual spikes and troughs are developing into a lot of range trading and is we're seeing that in a lot of currency pairs. sterling/u.s. dollar is generally heading higher. but it is capped to sort of the 1.6660 level and finding it difficult to make headway above that. i'm not sure it will come on the back of a relatively minor piece of data like today's figures. >> hey, david. the imf considered the chinese yuan, the chinese currency to be substantially undervalued. do you think the chinese central bank is going to allow that to happen? >> i'm not really sure how they're looking to play this, to be fair. i think we regularly hear comments about whether the currency is undervalued or overvalued, whether it's the u.s.'s fault because they talk of a strong dollar, etcetera.

but there seems to be a lot of conflicting pieces of information on that and it's hard to tell whether it's comments being tape out of context of longer term strategy. i think certainly the yuan is in a situation where the chinese economy is, i don't think, the big driver of the fight from recession. ting chinese economy is really a passenger on that. if demand builds elsewhere, then demand the for chinese goods will build. but i think the consumer demand has to be the starting point for that and i'm not sure that the currency movement has anything more than a -- you know, a follow on factor from the demand drive elsewhere. we're not seeing that pick up why he yet. until we do, then i think there will still be problems with all of the currencies. >> so briefly, currency pairs

are in the ranges. >> there seems to be. st sterling/euro is no different to cable and no different to dollar/yen. >> david johnson, thank you for that, dealing director at halo financial. coming up in the next hour of "worldwide exchange," telecom giant ericsson says the economic downturn is hitting its biggest market. we'll speak to the company's ceo in about 45 minutes. >> plus, confidence among u.s. consumers expected to fall in july for the fist time in five months. we'll assess what impact mounting employment may have been having.

i'm ross westgate. the british economy shrinks more than forecast in the second quarter, quashing hopes of a speedy recovery and dragging the pound lower. i'm bertha coombs. in the u.s., the tech sector's road to recovery just got bumpier. microsoft reports disappointing earnings and says conditions remain challenging. and i'm christine tan. samsung warnings about being too optimistic will recovery in the sector. if you're just joining us in the united states, hello and welcome to the start of your global day with "worldwide exchange." we broadcast live from the u.s.,

asia and europe. here in the u.s., we've seen the futures flat, at least as far as the dow is concerned. pretty much flat. the nasdaq futures are trading below value by about 14 points or so. the nasdaq, of course, a 12-day winning streak could be hemmed in today on the last day of the week because of microsoft reporting disappointing earnings. s&p futures are a couple of points below fair value. german business confidence came in better than expected. that sent ten-year bund yields to their highest in a month. they've come off a little bit because of disappointing gdp data. right now we're at 3.49%. taking a look at the ten-year yield here on bonds in the u.s. treasuries, we are now down to about 3.68%. ross, we have seen a ferocious appetite for risk, a ferocious appetite for stocks. it looks like your winning streak is set to continue in europe this morning.

>> right now, we're up ten days out of ten, bertha. we're up over 11 prers in this move. the cnbc ftse 300, just off this dip. again, we've bounced off that move and actually, the ftse 100, the pound had an effect. the ftse 100 shrugged it off. xetra dax, up 0.75%. cac 40 up 0.5% and smi up, as well. good numbers out from vodafone supporting the ftse, as well. and we're up what, i guess at this particular moenlt, about 3% for the year. on the currency markets, the ftse didn't lock into the gdp numbers. sterling undoubtedly did. before that came out, it was well over 1.65 against the dollar. at the moment, 1.6444. euro has just hit a session high, 0.8640. supporting the euro today, the

ifo institute business confidence is better than expected, as well, jumping for the fourth month in a row. all of those factors helping the euro out with the pound, i'm afraid, is down slidely, christine. >> most asian markets holding up pretty good on this friday session. the nikkei within for instance, is up for the eighth straight session. this particular market is up 1.5%. kospi is up at 0. 4/%. corporate markets are helping propel this market higher. the shanghai composite is up 1.3%. a lot of talk from the government about keeping monetary policy lose. the hang seng up 0.8% and the bombay senive index trading up 0.8% higher. in terms of oil, it is trading up and down, pretty flat at this moment in time. nymex light sweet crude is up 37 cents, $67.53 a barrel. brent should be moving higher the last time we checked, as

well. brent is up 53 cents, $69.76. >> joining us now is james barty, with us the best part of the rest of the hour. james, thanks for coming in. we'll get your view here of these moves we've had on global stock markets. we had richard cunningham this morning on his technical view. we've now broking through to the upside and he now says essentially the bear market is over. what do you think? >> i completely agree. i think it was about six weeks ago on this program i said i thought this was going to be the principally that would break the back of the bear market. i think that's what happened. yesterday was literally the last gasp for the bearish technicians. when we took out 950 on the s&p, that was it. the head and shoulders that everyone was focused on two weeks ago -- >> failed. >> completely blown out of the water. to my mind, this rally has always looked different to us. >> why is this different?

what's underpinning it? >> if you go back to march, there were two things we were looking for at that time. it was recapitalization of the banking system and stabilization in the macro data. i think the combination of the stress tests in the uk, recapitalization in the ike banks led us down that route to believe that the banking system is getting itself sorted out. and then we started to see evidence that the stimulus upon tear fiscal was starting to stabilize the economy. you saw the european numbers this morning. >> but then i saw the uk growth figures this morning. sentiment is better, but growth data is -- it's a danger we're getting ahead of ours, isn't it? >> not particularly. that was q2 growth. we're now looking at surveys which were in q3. i think the surveys in q3 are telling us that growth is stabilizing and we should start to expect some improvement in the second half of the year. any upturn will be relatively subdued. but the key point for equity

markets is we weren't pricing any recovery. now we're starting to think about pricing a recovery. >> james, this is christine. let's talk about some of that the growth that you talked about that seems to be stabilizing. is there a repeat somehow of the japan experience where the economy was stuck in no growth, the deflation scenario, the boj just did too little too late? >> well, i think a comparison with japan is comparable with one level, which is this is a major downturn which is taking rates down to zero and we're probably looking at a deflation or very, very low inflation. where i think the analysis of the comparison breaks down is that the boj did too little too late and we're too reluctant to basically get involved. and i think the western central banks have learned that lesson. they're a bit slow for the party and i certainly was very critical of mervyn king and jean claude trichet last year about not realizing how serious it was. once they realized how serious

it was, they have reacted in a clear and fast way. i don't think this will be a repeat of japan, but i think we have some severe headwinds and the deleveraging that's going to go on the with the consumer and the banks and the fiscal tightening which we know has to come, all of those things will be headwinds to recovery. >> james, it seems as though the markets are all in lock step to the outside anticipating this recovery. yet what we're seeing reasonably, they're real disparities. witness this morning, the disappointing uk gdp and the ifo that was better than expected. should you be picking our spots internationally more carefully? >> i think the market has done that to a certain extent. the recovery or the improvement in the data came fastest in the emerging markets, particularly in asia and you can see those markets substantially outperformed. i think for the developed world now, we're beginning to see an improvement in the data across the board. i think actually the uk and the u.s. are ahead of europe and the

european index is playing catch up now. so i -- the way i see markets from now on is we're starting to get a much more synchronized recovery so that emerge markets and developed markets should start to move more in step. i'm not worried about trying to pick individual markets or economies that might benefit from this better in one area than another. the one thing i would say, a lot of people in talking about the dollar and equity markets having to go in opposite directions. now, the data is starting to be better out of the u.s. the earnings are starting to be better out of the u.s. and people expect the earnings to go down. maybe that's the correlation which is going to break down. >> so where are you putting your money and where would you look for a few months out to see the best returns? >> well, we've been running a prorisk approach at our fund, really, since march. we continue to do so. i think some of the most interesting strategies at the

moment are -- and what i would call credit compression strategies. there are a lot of companies out there who are addressing their balance sheets in one form or another. new bond issuance, convertible bond issuance. there's still a lot of number of those trades where you can find a company which the market is pricing at a stress level and you can see a cat lift for it basically addressing its balance sheet. so there's some scope there. as far as equity markets are concerned, i think there's scope on the up side. we've got a long way very, very quickly. so i would expect markets to bet in here. i think they can push markets higher until the end of the year. james, we're going to hold it there for now, but you are going to stay with us. james barty is the head of macro strategy, our guest host for the remainder of this hour. still to come on "worldwide exchange," ericsson becomes the latest blue chip to be hit by the recession. what went wrong for the world's largest telecom company?

we're going to find out when we talk to the ceo of on ericsson later in the show. stick around for that interview.

fourth quarter profits were down 29% for microsoft as the company continues to be hit by

weak sales of pcs. microsoft reported its first ever annual drop in sales of windows. the cfo says conditions will remain challenging for the balance of the calendar year. microsoft is launching a new version of windows in october, but ladell says he doesn't think that's on its own going to spike recovery in pc sales. shares were off 15% in after hours trading in new york. in frankfurt at this hour, they're off less than that, off almost 7%. american express second quarter profits were down by charge-offs. customer spending was down 16%, but the ceo says all things being considered, that decline moderated somewhat in june and july. he says chargeoffs with debts, the company doesn't expect to be repaid could fall below 10% for

the rest of the year. shares were off about 5% in after hours trading and frankfurt is not getting hit as hard this morning. amazon was the third link in disapointing, which could mean the nasdaq would start off in negative territory today. profits fell 15%. revenues were up 14%, but that was short of the forecast. results were hurt by weak sales of higher margin media products, like video games and a legal settlement with toys r us. amazon is offering a wide range for third quarter results. you could drive a truck through that range. they say sales should be up anywhere from 11% to 23%. amazon stock was up about 80% year-to-date coming into those earnings results. it shed about 6% after hours in new york and in frankfurt, it's off better than 7% this morning. ross. >> beshth ya, the british economy saw its biggest contraction in the second quarter since records began in

1955. gdp down 5.6% on the year. we were looking for the annual rate of contraction to be down 2%. sterling was dragged back. we were well over 1.65 before that figure came out. at the moment, 1.6458. so we lost at least 50 cents, a little bit more. the german recession, though, could be nearly over, according to the ifo think tank. it's a measure of business sentiment reached its highest level since last october. the fourth consecutive jump in that particular measure. the news saw the euro push higher against the dollar, as well. that has just come back down to 1.42. shares of ericsson have been trading lower after being hit by a challenging outlook and restructuring costs. profits came in at just over $110 million, below expectations to nearly double that amount.

ericsson, of course, is the world's biggest telecom network company by sales and it's warned that the economic downturn is hitting its main markets. but there has been good news because it says service demand is increasing. we'll get plenty more of an outlook with the ceo of ericsson in around about half an hour's time. >> ross, here in asia, south korea's samsung electronics, the world's topmaker of memory chips and lcd screens release better than expected second quarter earnings. samsung says it erped $1.8 billion for the april to june quarter. despite the upbeat results, they joined others in urging upswings. any potential rebound could pressure sam supg's bottom line in the second half. shares of samsung rose 0.75%. in south korean trade, 683 thousand korean yuan. meanwhile, heinix reported a

narrower second quarter loss. the company lost money in june on a consolidated basis. sales, meanwhile, came in fwhaernt expected at $1.3 billion. analysts predict hynix will likely swing back into profit in the third quarter. shares of hynix fell 0.3% in trade. you should check out of you website, whether it's news, videos, blogs, find them all at cnbc.com. coming up next, merck shares are taking a beating this morning after european regulators advised against one of the company's key sales driving. we'll bring you more details on that sorry and others around the world.

okay. time to find out whether the rally can continue around the globe. becky is looking at london. >> it certainly am. it looked this morning like we were going to break that winning streak, but now we are seeing gains again. about 31 points almost to the

good for the ftse 100. this will make two straight weeks of gains if we manage to stay in the green for the rest of the day. let's take a look at the movers. we are seeing gains coming through, as well. i want to mention vodafone. vodafone telling us that the sales are in line with expectations. we have seen strengths of india and africa helping to offset weakness. they reiterated their guidance, as well, that they had issued back in may and that did seem to give a bit of support for shares of that company. we are seeing a mixed bag of stocks otherwise gaining. i want to mention a couple others. wolseley has been strong at the end of yesterday's trading and again this rng month. on better than spec'd existing sales data in the u.s. helps to give a boost to that company. this is the world's largest maker of plumbing and heating materials. that stock has moved higher

today. annette, how is it looking in frankfurt? >> here, everything is quite positive. the better than expected ifo index boosted the dax into positive territory, so we are mainly seeing export oriented stocks up leading the winner list. but the main story is a fair one here in terms of stock market development. merck is down by 12%. it's not so much the figures which they are, as well, published today in the morning which were disapointing. it's more the news that the company, merck, will not get the opportunity to introduce their newest drug and that would have been a very big profit potential for merck as jpmorgan analyst put the price tag on that. it would have been roughly

revenue up 250 million euros which is now really unlikely. stephane, what is happening in paris? >> well, the french market also is in good shape today. still, danone ex ports are trading lower. a 20% decline was reported yesterday of its sales for the secretary quarter. the company sees no improvement before the end of the year, at least. air france klm is facing a lower demand, both for passenger traffic and cargo. danone, the company this morning announced an 8.1% rise for the first time for operating profits and the company pete expectations for its diary division. it posted 0.7% rise in value on the second quarter and a 2.7% increase in volume. that was the first increase for the diary for danone for the last five years. despite this announcement, the

stock is trading a bit lower. a 2.2% decline in sales for the first half of the year, sincobat, the number was not very good for the company. that's why the stock is in good shape today, up almost 6%. now to singapore with christine to have a look on the asian markets. hi, christine. >> thanks, stephane. asian markets are mostly in the green today. in japan, shares are up for the eighth straight day. chip stocks led the gains. the nikkei 225 closing up 1.5%. 9,944. in south korea krb shares rose for the ninth straight session. we had strong earnings, improving gdp growth figures helping the kospi end 0.4% higher, 1,502. in greater china, shares got a

boost from beijing knowing it would keep its ra shum. 3,372. the hang seng, however, off earlier highs of 20,000 as investors took profits on property stocks opinion index ended up 0.8% higher. property taking muted gains in australia. the sensex 200 was up 0.6%. on that note, i'll send it over to you, bertha. >> thanks very much, christine. the nasdaq has had 12 state days of winning streak, the biggest number in 13 years. economic data on top includes consumer sentiment for july, due out at 9:55 a.m. new york time. analysts are loor for a reading of 64.6. just before that at 10:00, the commerce department will release second quarter figures on u.s. home ownership. washington is very much in focus

with the house financial services committee holding hearings today on president obama's proposed financial regulatory reform. treasury secretary tim geithner will be before the panel at 10:30 a.m. new york time. then at is o'clock, we'll hear from fed chairman ben bernanke, fdic chairman sheila bair and the office of comp troller of the currency and the office of thrift supervision. that will be very interesting to see where they all come down on this. that maims makes up your global stock watch. you'll find that only here on "worldwide exchange." coming up next in the show, we'll take a strategic look at the markets after the break. >> plus, we'll talk to the ceo about their strategy coming up in just 15 minutes.

it is just about half past the hour. here are the top business stories from around the globe. in the u.s., a tech sector's road to recovery just got bumpier. microsoft reports disappointing

earnings and says conditions remain challenging. >> in asia, samsung electronics, the world's biggestmaker of lcd screens warns about being too optimistic about recovery in the sector. >> but in germany, the ifo institute says business sentiment jumped for the fourth month running. >> hello and welcome to "worldwide exchange." if you're just joining us in the u.s., futures have been point to go a bit of a flat to negative start. we've got the dow futures just about fractionally above fair value. we've got the nasdaq futures down a bit because microsoft's earnings were disappointing. am ma zone is likely to dral drag lower, as well. we've got all three major indices up at year highs. the s&p crashing to resistance on the upside and the nasdaq having put in a 12-session winning streak, it's best in 17 years. it's likely we'll see a bit of a

pullback today. as far as ten-year yields, we are up close to one-month highs as we have seen an appetite for risk and investors plowing into equities and out of bonds this week. right now, the yield is at 3.69%. we're getting mixed data as far as the recovery in europe, ross. it seems to be a bit of a tug of war with germany looking good. the uk, not so hot. >> well, i think it's a tug of war by the sentiment data and the ifo figures. while you're looking at the futures, stock markets here, we're trying to make it ten days in a row. the ftse 100 up 0.6%. banks, construction, telecoms are outline doing fairly well. vodafone had good numbers out today. but you're right, we've had the business climate index in germany represented by the ifo up four months in a row. pmi, both services and manufacturing in the euro zone again contracting less sharply than expected.

that's where the good news was. the gdp data, i'm afraid, shares contracted more than we thought. that certainly provides disappointment for those trading in sterling. down against the dollar and against the euro. elsewhere, the euro is firmer against the dollar. dollar/yen, just below 95 and the pound against the dollar, is.6446. >> it was a good session here in asia, ross. most sessions moved higher because of strong corporate earnings. in the end, the nikkei 225 up 1.5%. the kospi up 0.4%. the shanghai composite up 1.3%. this particular market is up 8.5% year-to-date. the hang seng is up 0.8%. the bombay sensitive 30 is trading up 0.6%. so a positive session here in asia. in terms of nymex light sweet crude moving higher, nymex is

tacking on gains of 39 cents the last time we checked. now it's pulling back, up 8 cents, $67.24 but still in positive territory. and brent is putting on gains, as well, now trading around the range of $69.48 a barrel, up 23 cents. bertha. >> thanks very much, christine. so markets around the globe, very bullish at this point. where do we go from here? let's bring in william grainer. thanks so much for joining us this morning. still with us is james barty, ahead of macro strategy at aerograff, and he's been our cohost or the majority of this hour. let's start with you, bill. we've seen the nasdaq, the dow coming above 9,000, the s&p pushing through resistance on the back of these great earnings. and now we get a bit of a hiccup coming from microsoft. is it time for a pullback? is microsoft the reality check to what intel told us last week?

>> usually when the market holds up the way it has, it is probably due for a short-term pause. but we believe that we're witnessing the end of the recessionary environment we've been in for the last 18 years and we've dubbed this the great recession for 2008 and 2009. we think the rebound will be very weak here in the united states, and probably in most of the developed world. so we do think the market is due for a pullback, probably followed by another leg on the upside as we go through the end of 2009. >> one of the issues that a lot of people point to for the weakness is rising unemployment. if we continue to see unemployment move higher, if in the u.s. it gets to that double digit 10%, could we risk a double dip in whatever growth we have? >> you know, you're bringing up a really good point. i don't know that an unemployment rate above 10% will throw us if we recover from a recession back into a recession,

a double-dip kind of environment, i don't think that's what the catalyst is going to be. we believe, though, that the risks of a double dip recession is higher now driven by two factors. number one, a weak consumer and number two, a weak financial system. both of those systems, normally speaking, are morrow bust and more clean than they are right now with a lot more power. so we feel the risk, a double dip recession this time around, while it's not our base case, we think the risk is probably higher than normal. >> james within what do you think? >> i think it probably is higher. but i believe with the amount of stimulus, it's unlikely unless we get a policy error and unless the central banks start to raise rates too early. my guess is actually they're going to need to keep rates very low for a long period of time. one of the concerns i have about central banks is they all felt that greenspan kept rates too low for too long and that led to

the inflationary bubble. i think it's a very different environment. >> you're not one of the inflationist fear camp? >> no. i mean, i think there's so much talk about inflation and yet, if there's any environment where inflation is really not very likely at all, it's right now. you've got massive amounts of unemployment, output gap is probably 6%. u.s. capacity utilization is the lowest since the war. that's not what you get in an inflationary environment. >> william? >> i believe that's correct. i believe inflation is very much at bay. >> william, this is christine here. what are you doing with your money? >> we are -- late in march, we started advising clients put money back to work in u.s. equities. we stayed underweight for a year and a half period of time. in november of '07, we advised

consumers to be underpaid. we're moving money back to a normalized equity market, but no longer than that amount. while the recovery is probably eminent, it's going to be a less row buflt recovery than normal. as far as where we're particularly interested, we believe inflation is going to away rise in pressure and a rising risk sometime later in 2010. with that in mind, we think putting some money to work in tra dil additional inflation hedges, certain kinds of real estate investment along with pressure metals problems makes sense to a limited degree. >> would you play that yield story? would you park your money in t-bills? >> no. we've been holding excess cash in clients' portfolios and we're looking at ways of getting that money out of cash because we, along with your guest host, believe that inflation, at least for the next 6 to 12 months, is

going to stay relatively benign with that federal reserve policy is going to stay very, very acome dafb and interest rates will remain very, very low. in that environment, we think we can probably make a lot more money in asset prices than cash. >> james, moving forward, though, there is yield to be searched. we just have to look for it in the right place. is that -- >> absolutely. i think zero to one potentially for inflation. if you think the short rates will be very, very low, then you have to hunt for yield. corporate bonds are still good value there and there's a number of high yield equities which you can buy into. dividend yields which we haven't seen in a long, long period of time, the difference aren't going to be tough. >> that's the play you would be most comfortable with? >> it depends on your investment

style. but as a long-term investor style, you want dividend yielding companies, particularly in europe. >> james, thanks for that, james barty. and thank you, as well, william grainer, ceo of scout investment advisers. >> and they're both going to stay with us, but still ahead on "worldwide exchange," next we're going to talk to one of the world's largest telecom network companies. ericsson becomes the latest blue chip to be hit by the recession, sending earnings lower this hour. we're talking to the ceo of the company just after the break.

welcome back to cnbc's "worldwide exchange." here are some of the top stories we're watching from around the globe. microsoft's fourth quarter profits falling 29%. the company continues to be hurt by weak sales of pcs and servers. revenues were off 17%. that was more than expected. microsoft reported its first ever annual drop in sales of windows. the cfo chris ladell says it will be challenging for the rest of the year.

dell says windows launch is not expected to spark a recovery in pc sales. shares were down about 17% after hours. in frankfurt, they're off better than that at this hour. not boding well for the nasdaq this morning. american express second quarter profits dropped 48% on higher loan losses. that beats fravts on the bottom line. am ex took a charge on paying back its t.a.r.p. loan to the u.s. government. customer spending fell 16%. but the ceo says that decline is moderating somewhat in june and july. he says chargeoffs, the company doesn't expect to be repaid could fall below 10% for the rest of the year. in frankfurt at this hour, they're off by just 2%. >> james, you're fairly positive, i guess, from this

point on and you talked about how you would to play yield in corporate debt and service stocks, as well. there's a lot of cash still on the sidelines. when you still see earnings like microsoft and am ex, it's going to take a lot to pull cash out and put it to work, which would help those who are invested? >> a lot of retail investors have been cautious and a lot have missed this rally in markets. they're sitting on a very, very large portion of cash in money market funds. frankly, i think they're going to realize pretty soon that that is a waste of money and they're going to need to start to reinvest it. >> how much cash are we talking about? >> well, the last numbers i saw, it's about 40% of the u.s. market capitalization. it's way above normal. it's an absolute classic sign at the bottom of the markets that people have more cash than they've ever had before right at the time when they should be investing their money. >> what are you fearful of?

>> i'm fearful that some of the stimulus will start to peter out once we get to this inventory adjustment. but i think providing that the authorities don't tighten too early, i think we're going to get a decent recovery. >> james, good to see you. thanks so much for joining us, james barty. >> up next, investors get a breather from the onslaught of earnings reports, but they'll keep their eyes on consumer sentiment data. we'll get a full preview of the day ahead on wall street.

you're watching cnbc's "worldwide exchange." let's just bring you up to speed with where we are right now on the markets. ahead of the u.s. open, the ftse cnbc global 300 is 5 points higher. here in europe, we're trying to see if we can get a rally of ten days in a row. we've been up nearly 11% in the last nine days on the ftse 100. we're up around 3% for the year.

so 0.5% gains at the moment. most people hadn't predicted this perform at all if indeed we close there. and that's despite data out today that retail sales -- sorry, not retail sales, but the uk economy contracted more than expected. just to recap this data, because it's the one bit of negative data we've had out, preliminary secretary kwarder gdp down 0.8% on the quarter. the annual rate 5.6%. that's the worst contraction of the second quarter since records began. it was counter pointed, though, by the fact that euro zone july services and manufacturing pis came out or contracted at a pace that was less than expected and the fact that business sentiment is measured by the ifo. on the currency market, the market has done well. what is noticeable here with the currency markets is they've been very highly correlated, but

maybe in the last 24 hours, we've started to see a breakdown of that correlation. because for the first time, despite equity markets having this big jump yesterday, the most meaningful moves was a standout. ericsson was hit was restructuring costs and a challenging outlook. lowses at the sony lsh ericsson join venture caused losses to come in below expectations which were nearly double that amount. to get more, we're joined by the ceo of the company, carl-henric svanberg. carl, thank you very much for joining us again. the impact of the economic downturn on your mobile network is becoming more noticeable. what's going on? >> well, in fact, there are a couple of different trends in the market for us right now.

we said already a couple of quarters ago that we expected that our industry would be less affected than most others in society. and that is what we still believe, but that we also expected there will be some effect. now we're just describe whag we're seeing. there are three things. one, there is a dramatic increase in multi media services and huge rollouts between japan, china and the u.s. that is one side of it. another is that we are in countries where the currencies have dropped. it would be less equipment and less orders for us, of course. the underlying trends in those markets are the same. and the third aspect is actually the fact that services is growing so strongly. >> we'll pick up on the services growing in just a second.

i just wonder, we've heard this week operators in europe cutting their expenditure. is that just because they're being prudent in a recession or is it -- are they -- is there a credit aspect to this? does a tougher credit environment make it harder for them to spend more money? >> well, i think it's just -- in the mature markets, i think it's just normal caution in the environment. we've seen no change in any traffic patterns. you can see some people laying off their fixed lines, keeping the mobile lines. some are writing shorter contracts, 30 days rolling instead of two years with the phone in the package. the underlie traffic patterns are fairly unchanged. the different is more, i would say, in some of the emerging markets that i talked about. >> carl-hric, you just seened a

dial with sprint. where are you seeing the best growth right now? >> well, in fact, the u.s. is an interesting market because that is where it has always been the most advanced telecom markets in the world and it still is. and the rollout we're doing for verizon, for at&t are huge. the sprint deal was a major inroad into managed services in the u.s. japan and china, the three world leading economies have bigger rollouts than we've seen for a long time. so those are the exciting parts. and then services overall is growing. >> carl-henric, this is christine. talk about china. it's interesting. what is driving your sales in china? how much of this is because of the infrastructure spending due to the stimulus package we've all heard so much about? >> well, we have to remember first that the rollout of 3g in

china has been awaited for a long time. so that in itself is not a newborn idea. with this package, it's just that it's more financed through it than it really exited. but the rollout of 3gp in china is pretty massive. and in a minute, china mobile is upgrading their networks to the chinese standard and still underlying is a big pick up of new subscribers. >> carl-henric, always a pleasure to talk to us. is this the last time we'll talk to you? because you're moving jobs, aren't you? >> right, i am, but there is a quarter report, so let's focus on that. >> i can't remember when you actually stepped down. >> i'm stepping down around

here. so hans sdpir working in parallel and we have an excellent successor there. >> we hope to talk to you again before you go. thanks very much, carl-henric svanberg of ericsson. >> thanks. let's get final thoughts from william. bill, looking ahead today, we're going to get consumer sentiment number. what is your expectation and is this a number that you're watching carefully since you're so worried about the consumer? >> well, we are. we are looking at this number and it seems -- it appears to us over the last number of reads of this number that it's not rebounding. it's staying relative ly static. it hasn't rebounded a lot. so my expectation for the read today is probably more of the same. the economy last month, according to the indicators that were released early this week, showed that the economy

continued to contract during the month of june. and so i think that the consumer in general still has a less than positive attitude right now towards the economy. >> all right. we've got less than a minute left on programs. this will have to be real short. what's the key point you're going to watch next week? >> well, you know, the key point that we're looking at continues to be corporate earnings. not only the earnings number themselves, whether the company is making their number to the penny or not, we're paying a lot of attention right now to the attended statements by those companies as far as what their outlook is for the remainder of this year. and if the economy is going to rebound, you're going to see evidence of that with corporate statements about the remainder of this year. so i think the statements that go along with those earnings announcement are very, very important and we're right in the middle of those announcements right mow. >> all right. and as far as data, again, very quickly, gdp, consumer confidence, ism?

>> gd -- exactly. gdp will be released. that's a backward-looking number, obviously, as far as the second quarter and we expect that number to be very negative. but we expect a pick up in that number probably this quarter. we think we're going to see a neutral number for the third quarter leaning into slight growth during the fourth quarter for gdp. >> bill, thanks so much for joining us this morning. we appreciate it. absolutely. >> have a great weekend. and that will do it for us this week. thanks to all of you for being with us this week. i'm bertha coombs in the u.s. >> i'm ross westgate in europe. and here in asia, i'm christine tan. thanks for watching "worldwide exchange." have a great weekend.

good morning. summer fireworks display on wall treated. the dow closing above 9,000 for the first time since january 6th, my birthday. the s&p finishing the day at its best level since november of '08. the nasdaq chalking up its 12th straight session of gains. but mr. softy didn't get the message. microsoft's earnings and revenue falling below expectations. a new day, a flesh plate for the markets. can the bulls keep the rally alive for the weekend? it's july 24th as "squawk box" begins right now. ♪ celebrate good times come on let's celebrate ♪ ♪ celebrate good times come on let's celebrate ♪ >> good morning, everybody, welcome to "squawk box" right here on cnbc. i'm becky quick along with joe

kernen and carl quintanilla. it is friday and our top story today, stocks are soaring and knocking down records in the process. let's start things off with the dow. the blue chip turning in the fastest rebound since 1975. i think that's when they strong was out, right? you can go back to 2005. since then, we've watched the index breaks through 7,000, 8,000 and 9,000. by at a, if you do the math on that, you'll see of gain of 38%. we are still below the highs that we reached. the dow finishing its highs yesterday. the blue chips are still down about 36% from the record in 2007. there was strength across the board, though, yesterday. materials leading the way. we had financials up 3%. remember, this is over just the last nine sessions or so that

you have seen gains of about 11% for the dow and the s&p. the nax dak, by the way, up 12 days in a row, the lockest winning streak we've seen. >> we have cashin on today? >> we do. >> he was open to this happening, but he still had a negative bend. remember, at first the market had to prove itself. then we had to get through the solar eclipse. i think at this point, the bulls have at least to 9,000 have been in charge. and i can -- >> it's like jesus take the wheel, bulls take the wheels, that kind of thing? >> and i can paint in hindsight a logical explanation of how it happened. remember the first 35% hit us by surprise and it was like, oh, my god, this can't be real. i'll wait for a pullback. then it went sideways and then we