well could to today's "worldwide exchange." equities trade higher, but spain remains the red spot with the map. the country's borrowing costs hovering near record highs. >> and china and japan say they'll start trading currencies directly on friday. >> also the smart phone war heats up as samsung's s-3 hand set goes on sale in 28 countries and reports suggest facebook could launch its own phone to smarten up its mobile approach. >> and shares in facebook rally on reports they could buy the norwegian software maker.

>> welcome to today's program. for those who don't know, it's a pie, not deep fried. >> we should have gotten some into try this morning. >> we'll do that. also coming up on today's show, egyptians asked to choose a former ally ond an islamist. can either be a candidate for change. >> and we'll see how honda is getting back on its feet after being hit by flooding. >> and a big day for samsung

executives as they roll out their smart phone. can it gain supremacy over the iphone. >> and a first look at the new shadow banking index as they take aim at this multitrillion dollar industry. >> and why commodities are more likely to drive markets than corporate earnings. but first, spanish yields are still trading close to this year's highs with investors concerned about the country's ability to restructure its banking sector and service it debt. the parent company of bankia revised its 2011 results last night to report a 3.3 billion euro loss that follows massive losses in its sub sudden dear. at the same time consolidation continues. reports suggest that savings banks will be being look at merger options. and also keep an eye on italian yields. auctions up to 8.5 billion euros in six month bonds.

results of today's sale are expected around 11 cet. and our next guest says the italian five year part of the curve already looks fairly attractive. that is peter chatwell. and marco bardeley also with us. peter, why is the five year part of the curve looking interesting for italy? >> it's a relative consideration. what i'm looking at is the amount of curvature that currently exists in that market and i think the five year has just given up quite nice amount already ahead of this auction. so i'd expect to go well also bearing in mind that there's some quite good domestic demand around the area. >> i was going to say, are these auctions now primarily domestic driven? >> particularly at the front end. yeah, that's the pattern that

we're seeing. longer he said is moend is coven the market, but at the front end, you're correct. >> the turn of the year, it was italy that had investors attention and worry, where yields were higher than spain and spain seems to be the real pressure point. why has italy receded from the top of the list of worries here? >> well, our opinion last year was that italy really only got dragged in primarily because it's a large issuer. the market was closing in, was drying up, and so the large issuer then got brought into the problem. and then the political focus got on to berlusconi and the fact there was not much of an effort to cut spending. so then the crisis got in to full swing and it took italy into it. but now that we have the

technocratic government and there seems to be control of spending, italy for the moment is out of the crisis. but i still think that the same could happen purely because if the market dries up, then the focus will be back on the bigger more regular issue, i'm afraid. >> and i wonder given the reports that we got out, talking about how people concerned about italy not pushing through with reforms on its tax side of things, whether that is down the road going to reappear and get investors concerned again about italy. >> there's no getting away from its high beater to spain and where yields are. the higher italian yields go, the more the focus will be on the fiscal side of things. and although the fiscal side appears fairly tight, in terms of putting in place structural reforms to really turn their finances around here, we're still waiting for things to be done. i would say they're making better progress than many, but

there's no getting away from the fact that they have a higher a debt to service. >> marco, how in your mind will this pan out? sdw it's always a very interesting question. i think that i agree with what peter is saying in terms of differences between the spanish and italian situation. at the moment whereby there are more negative news coming from spain than from italy. i think that there is more focus now on what greece would come up after the election and how these two countries might be affected if the european union can ring fence any potential contagion afters elections.

>> retail sales focus posting a huge drop and points to a second quarter contraction. unemployment there all right high, reports that they may merge. and then you mentioned today bond futures could make it even easier to bet on the ten year price. >> i think that is an interesting factor that should be followed closely today. i don't know if peter maybe has a remark on that. >> i haven't seen activity in this today for technical reasons, but the short term impact means that i agree. this means that the ten year is more exposed than it was. but over the longer term, it's

that old -- it's not ann adage, but the existence of a local bond future, the greater the open interest, the more expensively the ten year cash bond can actually trade relative to the curve. but at launch, i think it's that negative direction and exposure which will catch a lot of focus. >> peter, thanks very much for that. just to remind everyone, bank of spain data pointing to second quarter gdp contraction. >> pretty grim picture there. china and japan will start trading currencies directly. tracey chang has all the details on on this move. >> japan's finance minister says

the trading relationship will begin june 1st. that's this friday. analysts say the move is aimed at shoring up trade and pnks ties between the two biggest economies. also another baby step toward internationalizing the renminbi. they're using the dollar to set the exchange rate. the deal is a part of a broader financial ties which include japan buy going government debt and efforts to forge a trade pact between china, japan and south korea. you but critics of the direct deal say it doesn't go far enough and won't open up the capital account, just allow the direct to be traded instead of actually increasing flow. back to you. >> and we want to get more thoughts on this from marco.

some saying this will encourage a hollowing out. do you agree? >> not really. i agree on one micro effect for sure is that it reduces transactions cost for japanese companies that have productions already in china. it's already a long term trend in the fact that japan industries are looking oversees for better places of where to produce at a lower cost. so i don't think this will accelerate. on the micro side, i think it's a good move in order to get broad recognition of the renminbi internationally, but i would not go that far to ask to extrapolate that this is a further step towards opening of capital account.

>> certainly it would seem given the raft of data some weakness there. inflation not hitting targets, retail sales weak, unemployment ticked higher. so it would seem the last thing people would want to see happen is for more incentives to lead production elsewhere. you think yen stronger levels from here would prompt further intervention from the back of japan? >> well, i think that in different occasions also recently from tokyo if the

situation in europe detear kror rate after the greek elections, you have these trade of yen seen as safe currency which might go against whatever intention they might have in tokyo to fight appreciation of the yen. >> okay. we'll leave it there. and we want to mention reporting we're getting out of italy at the moment. an earthquake has yet again struck the northern part of the country there and according to reuters, there is one dead, four wounded at this point. no further detail, but i'm sure we'll get that in and keep you posted. >> and we're just over an hour into trade here. you see green on the board. 8:2. a fairly flat session yesterday for european bourses. ftse 100 just over four points. cac 40 up three quarters. but really it's been spain the

story that's dominating. down again this morning another half%. trading at nine year lows. down 9% the month of may and the fifth month that we've moved down in spanish stocks. and the focus still very much on the spanish yields, as well. gilts and bunds still fairly steady. what we did see was just around 6.53 during the session yesterday, highs since november last year and the spread between spain and germany hit well over 511 basis points. we're near that mark at the moment, but that was a euro record high on the spread, as well. we'll be concentrating on this italian short term auction coming up this morning.

and let's look it the currency markets. euro-dollar just above the four month high. aussie dollar still trying to move away from the six month highs. euro sterling, can we sustain a move below 80. so that's where we stand right now in trade here in europe. what about asia? tracy oig has the latest. >> we're seeing decent gains. shares put on a big rally finish higher boosted by the capital gains tax. revised tax plan led to the finance minister's resignation. the greater china markets rebounded on renewed stimulus hopes. finished up 1.2%. led by automakers and financial related stocs. hang seng index 1.3% up with property develop respect outperforming the broader

market. nikkei inched higher of a taker choppy trading day. and the kospi had a strong performance after sitting out yesterday. and australian shares rose strongly finishing up 1.1%. so it looks like china stimulus triggered short covering and bargain hunting prevailed over early weakness for the regional markets here. back to you. >> moving on, delarue has reiterated guidance after reporting a 73% rise in 2012 profits to almost 58 million pounds. trading is strong in its currency division and it order book is growing. it has also been at the center of speculation that it may begin

printing drachmas. so trading potentially on a greek exit. if you want to join the conversation, how would you design a new drachma? worldwide@cnbc.com, @cnbcwex, @ kelly_evans, @rosswestgate. >> greeks don't want any drachma. violence has returned to the streets of cairo as egyptians face the choice of a mubarak ally or islamist as their next president. we'll be asking if either can deliver political and economic refoorm. i would not say i'm into it, but let's see where this goes. [ buzzer ] do you like to travel? i'm all about "free travel," babe. that's what i do. [ buzzer ] balance transfers -- you up for that? well...

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a statement out from the japanese trading house that it will buy for $3.6 billion. the two companieses have been in discussions since early may. gavilon will be valued at $5 million debt included. and violence has erupted across egypt.

fifrp has warned further unrest could delay crucial talks with the imf over a $3 billion aid package. jew receive yousef is in cairo more. >> good to see you. a lot at stake for egypt which really marks the first free presidential election and the outcome really confirms what preliminary indicators. you mentioned the two candidates. we saw quite a reaction to those results. campaign headquarters torched yesterday and protests in the square. but from investment peck speaker difference, this puts a lot of added perceived risk to the

situation. polarity of choices which also for a lot of egyptian voters, a choice of a lesser of two evils is what many have described to me as being. and again, fitch ratings putting out a statement saying the runoff could prolong the political stalemate and that will put a lot of pressure on the loan negotiations, death desperately needed funds. take you a look at some of the investor reaction, we saw a loss of some 4.7% in two trading sessions. similar for some etfs. we're seeing a similar reaction when it comes to the three month t-bills, trading or had yields of record highs that we haven't seen in over five years, some

14.3% on the three month. and again the central bank of course under pressure dwindling reserves and at the same time also cutting the reserve requirement ratio to 10% to ease credit conditions. so there's a lot at stake here and the outcome really adds not more clarity to the picture, which is already quite ambiguous and very uncertain. >> yousef, what are the percentages that these two runoff candidates got in the elections and do we know rest of the votes will end? >> that's where a lot of the calculations come in. the top two finishers, they were quite close when it comes to the votes that they got. we're talking between 123 and 24% respectively. and then there's quite a gap

that follows to the leftist solution. and then you had a disappointing fini finish with smaller percentages. when it comes to the reallocation of votes, any islamist votes could go to people like morsi and people who voted for morsi who were looking for stability, they would look for shafiq. but a lot of told me they would boycott the elections, they're not convinced these are choices that would push the country forward. >> o >> okay. thanks for that. what do you make of the situation we've now got in egypt? some have described it as a nightmare choice and not

representative. as if the revolution never happened. >> what's important to remember is that the revolution was pushed by small minority of egyptians and then all the rest followed. so the revolutionaries per se are not a very large number of egyptians. today they find themselves king makers in terms of the votes. >> are you suggesting that all egyptians weren't behind the resolution? it did capture something about the people more broadly. >> no, the resolution was started by a small number of people and the rest followed. and so what that means is that that small number of people were the most ---represent only the size that they represent as when they started. and now that the rez revolution has taken place and the egyptian system is transitioning toward something else, the others have -- their votes way in very heavily. so what's going to happen now is we'll see a transitioning of the

system whereby the liberals are very much king makers in terms of where they kafs their votes. the silver lining is that half of the population of egypt chose something else, chose something other than the two candidates that today are in the runoff. so what that tells you, similar to the new constitution which was halted, was dws solved. so there's a balance in the system and they're actually winning by a thin majority. they're going to have to prove themselves. we've done research on the economic platform. >> i was going to come on to that. what influence is the muslim brotherhood going to have on the economics of the country? >> if they govern, all the

influence. the question is what will they be able to accomplish.ish. if you examine their rhetoric, it's really quite interesting. firstly, it's quite mar kell friendly. it will tackle some of the very issues that the imf would like to see them tackett, not unlike what the freedom and government tart pi in turkey did when it came in 12 years ago or so and they'll have the same sorts of challenges as islamists in turkey had. there is nothing that is market unfriendly. >> what are some of the same structural impediments that they are he facing? >> they would like to raise the minimum wage. difficult to do when you're trying to pursue fiscal consolidation simultaneously. they would like to privatize. it's difficult to try to

privatize more when you are also trying to conserve jobs in the economy. so they will have some of the very same challenges. the nice thing about financial markets, and that's a note we can bring up here, is that they're very respectful of central bank independence and there's no indication so far that that's something that they would try to touch in any way. >> and this could unlock those imf funds? >> what will unlock the funds is consensus in terms of the shape of the imf fund and the execution. >> all right. thanks for that. >> florence on the regime we could call her. still to come, martin in thailand will have perspective on one of japan's auto guy acia. >> those specs behind me are car, thousands of them ready for export or sale. there's not enough space for them because honda is back to

full production, but six months ago, it was a very different story. the hows of cars were all floating. it's been a long way back. a living, breathing intelligence helping business, do more business. in here, opportunities are created and protected. gonna need more wool! demand is instantly recognized and securely acted on across the company. around the world. turning a new trend, into a global phenomenon. it's the at&t network -- securing a world of new opportunities. ♪ of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials...

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headlines from around the globe, equities trade higher,

but spain remains the red spot on the map. >> china and japan announced they will start trading their own currencies directly on friday. >> smart phone war heats up. the s-3 goes on sale and reports facebook could launch it own phone. >> and facebook shares rallying on reports the company could buy the norwegian software maker. >> facebook said we won't get involved in mobile but now these reports. >> and shares up on double digits on speculation. >> you're he pea an equities a little firmer today. fairly flat yesterday. ibex down 1.33.

down 9% in the month of may. trading at nine year lows. going to be down five months in a row. >> and one of the big stories in the market was spanish bonds. take a look at where we are today. the ten year down to 6.44%. this after breaching new 2012 highs yesterday. german bunds are a little bit firmer. what we're seeing is just generally a bit of a risk on. france is down about 2.5%. >> euro is below 80 against the pound. keep your eyes on that. we'll see whether we can sustain a move below 80. dollar-yen pretty steady. aussie dollar just staying away from six month lows against the u.s. dollar. companies in thailand had to shut down as flood rather water

ravaged. one of the hardest hit was honda and they only returned to business less than two months a ago. >> japan is thailand's biggest direct foreign invest tore. 1.3 million cars made in thailand last year. but the country's worst flood mishalf a century highlighted supply chain vulnerabilities. these stamped metal parts are crucial to honda production globally. that's why the flood six months ago hurt honda very badly. more than a biller dollars of damage around the globe. from thailand, these honda parts are exported to as near as indonesia and malaysia and as far away as brazil, argentina and the u.s. while most of its competitors resumed operations at the end of last year, honda, japan's third largest carmaker, only finally started revving its engines in

march. cnbc got exclusive access to one of its facilities. what we're walking through isn't a junkyard. these are parts of the factor that were damaged during the flooding about six months ago. i want to show you how bad was the flooding? follow me as i climb up. i'll just use this broom thing and see, that mark there, that's the high water mark. i estimate that's about 2 1/2 meters high. that's how bad the flooding was the entire factory totally under water. with you as the floods receded, the importance emerged especially to japanese companies who last year invested $6 billion into the thai economy. >> more than 50% of our cars are produced in he thailand.

our total sales, nearly 60% we create here. so quite important market for us. >> tie lanlhailand was the loca its first overseas plant and the company has been there for 50 years now. just one of the 4,000 plus japanese companies operate manage thailand right now. and the president of the company says thigh land will continue to see steady growth. >> they have developed a good infrastructure includes roads,s communication. at the same time, they have accumulated good support in industries. >> thailand has near term challenges. the daily minimum wage was

increased to 10 u.s. dollars in bangkok and plans for to be hiked nationwide in the new year. and following last october's rising floodwaters, the country faces receding water levels especially in the eastern provinces. potential droughts are dumping the government and foreign investors are watching very closely. >> will at the same time japanese consumers continue to spend in april according to fresh data, but that was with the help of government subsidies and reconstruction money. retail sales rose for the fifth straight month. household spending up 2.6% from a year ago. april's unemployment figures did inch up slightly higher from the previous month. unemployment rate 4.6%. marco is still with us. when you looked at what the

nikkei had done, like every other equity market has come back, how would you summarize the opportunities at the moment for investors in japan? would you be willing to par take or not? >> tough question. the thing is that the situation in japan is affected by different factors, some internal, some external. we should be looking at the domestic consumption figures if we would see a decline or not in the pace of growth especially after certain in-september differences would not be available. there are certain factors that are hampering japanese exporters.

and the prospects long term of asia, the fundamentals, continues to be good in the long term and therefore japanese corporates as we saw in the previous might benefit of that. >> would you not want to bet on south korea? every time samsung is in the headlines with their new devices, why not look for opportunity there? >> will, i'm not into tech stock for what comes to my knowledge. but i would use the same parameters for what i said with japan. the business play is china where we just had today the headline whereby china is going to

reintroduce stimulus packages in the west of china and you saw a sensitive market on australia of what happens in china benefiting on that. i'm afraid that this might just be a headline driven move and therefore would wait a bit more before jumping in to an asian market. >> on friday, the yen becomeses second major currency over the dollar to trade directly against the yuan, the renminbi. will that have impact on trade or not? >> i presume japanese companies that have operations in chi i in a will definitely benefit from that because there will be for sure improvement in transaction costs. and probably other companies that were looking to start corporations in china might be

incentivized to do that. overall, i don't see a huge impact. it is just i think from beijing perspecti perspective another small step. >> all right, marco, stay with us. we'll have more in a bit. but first a check on some news breaking this morning. reuters reporting some information on jpmorgan, specifically saying that the company leaked information to asset management regarding trading of sheet metal. jpmorgan says it's not accused by japan authorities of organizational involvement and insider trading of nipon sheet glass. we'll keep an eye on the headlines. obviously anymore bad news would come at a difficult time for jpmorgan. and we will also get a quick check of what's happening in athens. talk of a greek exit is gathering pace across the public and private sectors in germany

with lenders and blue chip corporates bracing themselves for the worst. so let's get the view from frankfurt. patricia, right now how are companies bracing themselves potentially for greece to leave the eurozone? >> they definitely have contingency plans. in the case of bmw, since 2008, they actually sold one third of the bmw dealerships in greece going bust. the deliverers is to down about two-thirds. so starting to draw up scenarios and say they're really well prepared for it. tui also saying since last november, they already have new contracts with some some greece in drachma. so we're saying we have something in place now, but should everything change, ie the currency in greece, we are well prepared for that, as well. and when it comes to possible

social unrest, they've known that already from the situation during the arab spring. so they're well prepared to move customers to other potential holiday destinations. interesting also to see in general the comments whether or whether or not what will happen once there should be reality, what is the debt fallout, what is the corporate fallout for the entire economy. a leader said little or no impact effect on average german citizen, whereas of course we heard from fitch that they it actually think that there could be quite a bit of pressure on further downgrade it is in the eurozone should the greek exit really happen. so at the moment, the market very much playing exactly that, not only perhaps a greek exit,

but the knock on effect on spain and we see that in the cds. >> hard to imagine a greek exit not having any effect on the german citizens as you heard those companies say. but ( -- >> we already know what the costs will be in terms of bank exposure. spanish yields trading close to the high. central bank warned the latest data points to further contraction in the second quarter, as well. this as the parent company of bankia has revised results to report a $3.3 billion euro loss. and savings banks are looking at merger options today, as well. also keeping an eye on italian

yields. results of today's sales expected a little bit less than 30 minutes time. >> and meanwhile in italy, news how that the quake which struck the northern part of that country just a little earlier this morning has now resulted in a death toll of three. that's up from one earlier. again, three now the confirmed death toll according to reuters from in a quake. the smart phone war is going galactic. samsung's latest offering hits shelves across europe today. so whether it make it harder for apple to regain its crown? >> the galaxy 3 was unveiled earlier this month, but it now hits the shelves in several major markets including the uk, france and uae. by july the phone will be offered in 145 countries by some

296 wireless carriers. what makes the phone special, it has face recognition technology and powerful enough processor to let years watch videos and write e-mails assignle taken yusly. it also has a bigger screen and a voice command system that's a little like apple's siri, but lets you control things like volume through voice. only when sales number comes in will they know if it's enough to erode apple's market share. back over to you. >> facebook options are making their trading debut today. nymex is the primary market, but also available at nasdaq and international securities exchange. initial strike prices are between $16 and $49. and facebook could launch it own smart phone next year. the company has reportedly hired engineers who work order the iphone and ipad and is expanding a partnership with htc for the

phone code named buffy. facebook shares closed at just below $32 on friday. >> buffy the vampire sleigher? >> that's what i was wondering. >> also another top person at research in motion resigned less than a week after the head quit. reports r.i.m. may cut 2,000 people. shares down 75% in the last year. >> i still have a blackberry for what it's worth. crank up the rumor mill. china media reports fox con has begun production on the long awaited television set. just two weeks ago, the ceo said the company was preparing for the device, but then flatly denied everything a few days later. analysts are divided over whether apple could launch an itv as early as january, others

saying not until 2014. apple up a little bit this morning. foxconn up 7% there. >> independent television sector. >> then again people thought the ipad wouldn't work. >> wasn't another company called ipad, was it there. it was the itv already exists. that's my point. we should also mention facebook, this rumor that they're interested in -- this is a norwegian browser. they make desktop mobile browsers. there's a rumor going around that they are interested in custom i'ding their own bruowse for facebook. no idea whether it's true, but

opera stock moving. >> up 18% almost you can see this. >> what was that picture? is that the opera website? okay. >> some good news from norway after a dismal finish in the euro song competition. >> sweden won. >> and finland as i joked on twitter had a great cameo with the guy who i guess has won in the past. they fralashed to this crazy looking guy and he's some famous -- >> never know what's going to happen. moving on to the middle east, we will speak to a hand set expert about samsung's battle for supremacy with apple, but let's give and you look at what's on the agenda bomb. the japanese prime minister will meet with ruling party heavy weight hoping to gain support to push through his big consumption

tax hike plan. on the earnings front, genting reporting first quarter earnings. good and the british government being forced to revise its plans for attacks on hot take away food. the u turn on the pastry tax reversal means food left to core naturally will not be subject to v.a.t. a levy was also scrapped. both moves expected to cost the treasu treasury 70 million pounds. >> i had to google after hearing about it this story. the party claims this will make things simpler and i'm going so explain it has to do with the temperature of the food? >> no, they brought in this tax on hot take away food and they were trying to define what was hot take away food and they said there is an ambient temperature. there's this idea that inland

revenue space would go around and put a thermometer in which is obviously crazy. so now they said if you freshly bake and the bakers were -- this was going to put out a lot of bakeries. >> tax it because it's considered unhealthy? >> will they say if it's freshly baked and you leave to cool naturally, no v.a.t. on that. if you take -- that's meat and potato basically. if you now -- if you take it out of the oven and then keep it artificially warm, that would be v.a.t.able. >> it sounds biz an teen to me. apparently it will keep the budget in balance. i'm trying to understand what -- >> why this has been such a big thing post the budget. but, yeah. >> all right. still to come on the show, we'll take a look at how the global

skill shortage is continuing to drag on business performance. this has manpower left with its latest talent shortage survey. 

bankia will recapitalize, a lot of ways to work around the european effectively funding the bank itself. they use a restructuring fund and treasury liquidity. the spanish government likely to adopt a new mechanism to back regions debt. the spanish treasury would centralize an issue debt for these regions. so a lot of different steps here being taken. all with the central aim of trying to recapitalize spanish banks. we heard earlier this morning savings banks might merge. >> if you put two weak banks together, you end up with a big weak bank. one in three employees around

the globe cite the lack of available skilled talent. latest survey says the most severe is coming with fr asia pacific. david is the second most important man at manpower. maybe the most important. >> i'll leave you to debate that one. >> why is japan, which has a very good education system, finding it so hard to find skilled workers? >> we're finding the same supply and demand matching problem in every country and it's being a send schu eig being a send schu chew eighted where countries are falling. relatively high unemployment rates. so they're doing academic subjects that aren't suitable for the job market and coming out, trying to find jobs and they don't have the right skills and are not work ready.

and the population falling. >> what's the answer here? there's also a multi-strategy, but what should it be? >> the answer is fairly straightforward. hardly anyone in the world is really a forensic forecast of economic growth. certain places have started to do it very well. cities like shanghai are doing it superbly and they have more than 20 million people. >> there's still a question of what the next growth industries are going to be. >> i think everybody know what is the growth industries are. we could do a relatively accurate forecast of the growth sectors. service sectors will grow. that might lead to some kind of

a recovery. even in spain, we're finding difficulty to find technical and vocational workers. we can't find people with trades and technical skills and competencies. >> david, we'll keep you over the break because you raise a couple interesting points. so stay tuned. more to come. >> and investors are still jittery about spain as central bank warns of further economic pain in the second quarter. [ male announcer ] this is the at&t network... a living breathing intelligence bringing people together to bring new ideas to life. look. it's so simple. [ male announcer ] in here, the right minds from inside and outside the company come together to work on an idea. adding to it from the road, improving it in the cloud all in real time. good idea. ♪ it's the at&t network --

providing new ways to work together, so business works better. ♪ of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. soons that matter.

welcome to "worldwide exchange." >> headlines today from around the globe. equities trading higher, but spain is the red spot on the map. >> smart phone war heats up. samsung s-3 hand set goes on sale in 28 countries and facebook could launch its own phone. >> and shares in opera rallies on reporting facebook is looking to buy the norwegian software maker.

if you're just joining us, let's take a look at u.s. futures. green across the board. the dow jones pointed up about 80 points at this points. nasdaq something in the range of 20s and s&p up 9 or 10 points on the day. hope out of asia overnight that china may be readying a big stimulus package. up about 2% despite concerns in spain, markets broadly keep hoping central banks will help support risk. take a look at the european bourses -- am i doing it? >> no, i'll take that one. thanks. i hope you had a good memorial holiday in the united states. this is what we'll hand over to you from europe.

ftse 100, cac 40 up four points yesterday. but the focus has really been on spain. currently down 1.4% at the moment, down 2% yesterday, down now 8% for the month of may. and it would be the fifth month in a row that we've seen falls for the spanish stock market. and currently at nine year lows on the ibex. a couple other stocks in focus, a baker up 6%, the government has revised rules on hot cooked take away foot. delarue stock actually down 1.5%, but if there was any new drachma, people think delarue would be the company involved. they're making it possible for the british government and more

confidence of that in 2012 and opera up 17%, this is the stock the people believe facebook may be interested in buying. a leading investor saying we should stay independent and not sell us out to facebook. take a look at the yields. if you weren't watching yesterday, we hit 6.53% on the spanish ten year. the highest since november and the spread hit 511 basis points, widest since we constructed the euro. euro-dollar just up over the two year low. dollar-yen pretty steady at 79.9. aussie dollar just above six month lows against the u.s.

dollar. not a major reaction to those reports that china is considering a big miss cfiscal stimulus plan. euro trying to see if it can break through the 80 mark. >> a quick check on what's on the agenda today in the u.s. it's a big week for economic data. but today investors will get the mark case shiller home price index. that's expected to show prices fell 2.5% year on year. and we're get may consumer confidence expected to tick up just slightly. and it could also be a big day for mitt romney. he's expected to collect the remaining delegates needed to secure the nomination. >> and the spanish government likely to adopt new mechanisms to back the region's debt.

strict regional control. >> and speaking of spain, reuters reporting regarding bankia in particular, we're getting details on what the bank recapitalization might look like. reuters saying spain is likely to recapitalize through new debt issuances, but not by necessarily injecting bonds directly into the lender which would raise broader concerns about the roll of european central bank. >> let's get more on that. anna, nice to see you. while we wait for the greek election, it seems whatever happens with greece, spain is going down a certain path.

how is it going to win when they still haven't got to the godden to the bottom and the spin off through the banks and mbing pressure? >> if it's disorderly could accelerate the process in spain, but even about we don't have something untoward in greece, as you said, spain has its own and will continue to suffer from that, i think part of the problem with what you were just discussing before, plans to kooe recapitalize, the problem is that people are getting grips that there's too much debt in spain. that's why there's a bailout sooner or later. >> public debt was as low as 40%, but always like ireland, private debt.

so what september is it a model for spain here? >> i think in the end that's where we're headed. it may not be exactly, it may be some variant of the bad bank kind of approach. too much private debt, not much public debt. now it's heading to 100 or something. >> we see the impact on the ten year. private sector problems are becoming nationalized or socialized, becomes a burden on the taxpayer. >> absolutely. a lot of losses have already occurred. a supermajority have not been recognized. >> so your view is they all end up in a bailout program. is there any way, though, of neutralizing -- spain was held up as applauded.

this is not the story that german -- do you see any plan where spanish bank losses will be neutralized across europe or pot? >> i think that would be a nice outcome, but that would be a fiscal union at the end of the day. one way or another, the public debt of the hur row zone in a hole, so tough to -- >> how on earth do they dig themselves out of the hole? >> eventually there will be a recovery in southern europe. there will be. there has to be for all of our sanity. don't know when it's going to happen. we're building up a huge problem of people we need in the workforce. we're developing an underclass of unemployed young people and this will be a huge social and economic problem within the next

five to six years. employers can't find today people with the right skills. we surveyed 40,000 companies. a third can't find the right skill, can't foond trades and vocations. things that allow you to build stuff and make things. people are carpentry skills, leb electrical engineers, basic technician, software programmer, salespeople with the right kind of skills. we can't find any of those in countries. we have 11% eurozone unemployment. probably about a million unfilleded jobs out there in europe. why can't we fill them? we're not preparing young people with the right skills.

>> we sold 8.5 billion six month bills at 2.1%. that's a higher yield than previously. the auction highest since december 2011. the point is i suppose that it's only six month money. >> we have a system that's liquid and we have a very steep curve. >> would you buy italian debt at these levels? let us know. worldwide@cnbc.com, @cnbcwex, @ kelly_evans or @rosswestgate. and still to come, markets

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welcome back to the program. a quick update on the quake that struck northern italy.

six now confirmed dead. and additional people wounded. we'll keep checking on that. big question mean whwhile, the . economy will have added about 150,000 jobs in that i, but may not be enough to cut the unemployment rate. i increasingly hear people talk about the u.s. is a safe haven to ride out the global storm. do you feel the same way? >> the way we think about it, the yund is tunited states is tt in the room. we have our share of problems, but they're more attractive. no one rightly expects the u.s. monetary union to break of the in the u.s.

>> we have, though, seen job creation take a step back. if that continues and the u.s. while strong is not strong enough, could we see a repricing of say equities? >> yeah, there's every risk that as europe heads further south and the u.s. growth process takes a hit, there are outsized risks that could hit and make things worse. >> what's the biggest outside risk? >> i suppose the eurozone is still a disorderly outcome, greece, spain. >> you still expect spain an italy to restructure their debt? >> we certainly expect by early 2013 for spain to need a bailout and of course they're a bit of a

kiss of death because you have to go down to further austerity and it's a vicious circle downward and then eventually a restructuring of spanish debt, as well, and quite possibility italian debt, too. >> hard to shift the dial here. what's going to happen to the rates? >> i think something has changed fundamentally in the american employment market. the whole psychology of hiring has changed. if you look he fundamentals and compare it with any weakness in the u.s. since the second world war, we should have been hiring in much bigger numbers already because the fundamentals are getting better. but the ratio being employed is staying flat. that's because the last thing any employer will do in the u.s. after being damaged, torched, burned over the last two years is to say why don't i hire a whole bunch of people that i i might have to lay off six months from now about this turns down again.

they have jobs they need to fill, but, no, we'll do lots more overtime, job sharing, so we can fulfill the output of the company. >> what about contract based work. when i was in new york, you saw so much of this. it seems as though fewer and fewer people are working full-time jobs and you have to wonder long term what that does to stability. >> keep a job if you can. and that means people have been willing to go part-time, job share, contract at another company. so you're absolutely right. that has been a huge up swell in the u.s. during this recession. i think that is now the new normal as we call it. you'll see a lot more contracting, a lot more part-time work. companies trying to improve as the u.s. usually does relative

per capital productivity, in other words, doing morning with the workers that they have. >> does that favor companies? >> in the end, it benefits the company. >> there's a lot of naysayers say that has to revert back at some point in the future, but within wonders if they might not keep that share for quite a lot longer than people believe. >> i think what's happening is each management is behaving rationally in its open term. they're maximizing productivity, maximizing profits, share price for any given level of activity. however, the result in aggregate is a negative because it means the labor market is very weak and demand weak, as well.

so bochb bond prices also bland. and i agree, that is part of the new normal. there's a structure all shift which is that we're in a much less leveraged state and a lot of those jobs were previously in construction, that had to do with the overbuilding of residential commercial real estate. it will be a long time before that comes back. >> all right. thank you so much. appreciate your time this morning. a kick check of your headlines. spain is in the red this morning. equity markets amid a going concerns about the future of country's banks. >> smart phone battle is heating up. facebook may launch it own version. >> and shares in opera rally on rumors facebook may buy the software maker.

we have green arrows again helped by some talk from asia that china may be more aggressive to stem its own slowing growth. dow jones up 80 points or so. s&p 500 about nine, nasdaq up about 6 before the open.

ben bernanke recently suggested that the shadow banking sector had a large part to play in events, so what is had dough banking? deloitte is trying to provide answers. adam, explain to people what you mean by shadow banking and where potentially risks to the financial system more broadly are coming from. >> good morning to p. shadow banking is in this fact one of these interesting undefined terms and out in the marketplace, there are estimates that range from literally 10 trillion to 60 trillion. we thought that range was extraordinary and that we could put together a fairly standard definition of what we would call bank like products and add them up over time. so we put together the deloitte shadow banking index to track from 2000 forward what the

values are and the resulting effects in the marketplace. >> so what you say is that in the u.s., and this is just focusing on the u.s., these kind of activities that are bank like but happening outside the traditional banking sector amounts to about 10 trillion in size. and that's down from its peak. should we view it as a good thing? >> if you go back to 2004, it grew about 60% until 2008. starting in 2008, every single component that we identified has decreased, mostly some have been removed because they become more guaranteed activities you can others have simply gotten smaller. is it a good thing, the issue

with the had lowe dough banking products, they're valid products. the question is from a systemic point much view, bank like products without bank like protections. and hopefully we're trying to size them and let participants weigh the risks appropriately. >> i don't know if people realize, but the a activity that happens outside traditional banking. back during the peak, there was more going on in this sector than there was in the regular -- and we saw all these things considered outside the system brought into the light. >> i would imagine with the crack down on regulation, you'll see growth wouldn't you as people can't get what they want from the regulated sector? >> that's exactly why this index will change over time. we expect to add new products

and new services. and we expect to see as the market evolves. we've had some leave the index. we expect to follow them going forward and see what happens as new things are added. >> i know that you had excluded hedge funds from the index and i wondered why that was and if you added hedge funds how would that look. >> it's a fair exam. we examined over 20 different types of investment and banking product before coming up with the subset that add up to about $10 trillion today. hedge funds at the end of the day are investment products. they're not a bank catch surrogate. we made the decision that shadow banking should be bank like and so we pushed them out. >> the point here being is that the activity is still below

where we were, but still incredible. adam, thank you so much. >> still on come, earnings commodities more likely to drive global markets? we'll speak to an analyst that the price can tell you more than corporate profits. >> plus spain, facebook and samsung all in the headlines.

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equities trading higher, but could be further contraction against ongoing concerns. >> samsung s-3 is on sale in 28 countries. reports suggest facebook could be launching its own phone to smarten up its mobile approach. >> and reports facebook looking to buy opera, but the company's founder says he's not pushing for a sale. >> plus investors get back to work with their attention squarely focused on the jobs report and also housing data.

>> green behind me this morning. dow jones at this poents up about 80, nasdaq about 20, s&p 5009 or 10. take a look at what's happening across the globe. global 300 has traded higher. up about 0.2%. ftse 100 is up about a tenth of a percent. xetra dax almost 0.7%. cac 40 about 0.4%. and spain the weak point here. ibex down almost 1.5%. that has a lot to do with the will headlines.

people speculate about further stimulus out of china, problems aren't going anywhere soon. >> no, the ichlt beks down at nine year lows. a lot of opinion today. here's a reminder of what some have been talking about. >> u.s. economy is in pretty good shape, which underpins my believe that u.s. equities are the place to be. >> you get a different type of risk on a geographical basis. >> the higher italian yields go, the more the focus will be on the fiscal side of things. and although it appears fairly tight, it needs structural reforms to you were it the pie nan turn the finances around.

still waiting for things to be done. >> a number of comments coming out this morning. euro bonds are possible is what he's saying this morning. and it's in the best interests for the eu. >> and officials talking about lending $60 billion worth of euros with another $10 billion capital increase. en investments of course there must remain profitable and we'll continue to bring you the headlines. >> if you're going to have project bonds -- >> european invest the bank sounds like a good place to do it. >> and plenty going in the smart phone business. the samsung gallon laaxy on sal

today. likely to prove one of the most popular hand sets of the year. >> facebook could launch its own smart phone next year as it looks to boost mobile revenue. and a top level departure at r.i.m. as the chief legal counsel has resigned after the mobile sales chief quit. >> and nick, thanks very much for joining us. so how much of a threat is the new samsung phone to apple? >> well, samsung is launching the s-3, and the 2 sold over 20 million hand sets last year. and currently the top android smart phones. and the strongest challenge to apple at the moment. so it certainly has plenty to koer about with the launch of the s-3.

>> it has face recognition technology. so this knows when you're about to make a call? how does this work? >> two technologies. first is face recognition for unlocking the phone. you don't need a pin or password. can just identify you and unlock the phone. but the second probably more interesting one is the smart stay which is eye tracking. so that can tell whether you're looking at the screen or not and so if you're reading a web page, it don't turn the back light on if it knows you're still reading it. >> should apple be worried here? >> it could be the technology that it should be fairly easy to reply date, but they go above and beyond what the iphone can currently do. so they have to make sure that the next iteration of the iphone will have to raise the bar again. >> who else benefits from the halo effect satisfies the samsung launch goes well?

>>. >> samsung is the main beneficiary. it will be far ahead of the pack. >> also the "times" reporting facebook might launch its own smart phone next year. opera shares up nearly 20%. rumors that they might be interested in making a bid for that particular company. what does facebook need to do in the mobile space, is launching its own smart phone the right road for them? >> i think the main thing is they would be ill advised to enter the smart phone business

that the stage. and there's a number of reasons for that. they probably wouldn't make much money from it and they haven't really got the expertise to do so. >> finally, is there any potential for regulators to look at some of these technologies and express concerns about privacy down the road? >> potentially. there's been -- i think this is always going to be a concern for them, but i think it's a shipping target at the moment. still quite new territory. so we'll definitely see more in the future. >> all right. nick dylan, we appreciate that. thanks. in other technology news, chinese media reports foxconn has begun trial production on apple's long awaited television set dubbed itv. we've already discussed the problems potentially with the name. but just two weeks ago, they

said they were preparing for the device and then flatly denied everything a couple days later. analysts are divided, some saying as early as january and others saying not until 2014. >> the problem in the uk is i chlt v is the main commercial network. that's why that name here as a problem. won't be a problem for anybody else in the world. so slightly confusing. still to come, we'll be in cairo after the controversial results of the presidential election that sparked violence in the egyptian capital. [ male announcer ] this... is the at&t network. a living, breathing intelligence teaching data how to do more for business. [ beeping ] in here, data knows what to do. because the network finds it and tailors it across all the right points, automating all the right actions, to bring all the right results. [ whirring and beeping ]

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and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter. welcome back. delarue has reiterated guidance for 2013/2014 after reporting a 73% rise. the british company says trading is strong and that its order book is growing. and if the name sounds familiar, they also say they are ready to print drachmas. nothing as far as we know to the rumor. get in touch with us. for all of those asking how tall and i him, the answer will

remain a secret. you can contact us by e-mail or twitter. >> i know the arranges but and i have been paid to keep mum. let's show you where we are on dell larue shares. you've talked about a good outlook for them, but stocks up 2.33%. i was speaking to someone recently at a conference and they're fairly secretive and i said had anybody spoken about printing drak machmadrachmas. and my sources saying no one had been asked to print drachmas. in europe, opera up 80%. it is a norwegian browser. jumping this morning on talk that facebook may be prepare to

go bid for the group. opera's founder and top shareholder says he's not pushing for sale of the company. he doesn't know how he'd react to any approach. he's also suggested that opera should focus on organic growth. why would facebook be interested in they make browsers for desktop and mobiles, as well. they could customize their own browser very possible facebook mobile operation. the other focus a mid cap stock in the uk, up around 6%. the budget here have proposals to tax hot takeaway food, they revised it, krar filed the revisions to that this morning and it's known as the if you just bake food and threat cool naturally, no v.a. temperature. that's beneficial to greggs. >> you're watching "worldwide

exchang exchange". spain in the red in the equity markets this morning. a going concerns about the future of the country's banks. and facebook could launch its own version of the mobile phone. and shares in opera up sharply after reports facebook could be eyeing the software maker. we'll be right back.

violence has erupted in egypt after the announcement of the candidates. fitch has warned further unrest could delay crucial talks of a

$3 billion aid loan. yousef is our man in cairo and joins us now. some people-wi -- some say this the nightmare scenario. and of course the muslim brotherhood. how have the rest of the population feeling about this and how many people didn't vote for them in the first round? >> takes nightmare scenario for a lot of people especially those who did not want people from the old regime to come back to power or be provided the other in their view extreme alternative would be the muslim brotherhood. in terms of who didn't vote for them is quite a sizable chunk. almost half the population did not vote for the two. and about 75% did not vote for islamic candidate either. so it's a tough choice and the people i spoke to said that they would not vote because they felt neither of the choices really provided the alternative that would push the country forward.

this is quite a complicated situation because again also from an economic perspective, this scenario just adds to perceived risk. you can see the reaction on the domestic exchange which lost 4.7% in the last two trading sessions opening this morning lower once again 1%. again when can comes to some etfs, a similar picture, as well. what will happen here until the runoff on june 16th, june 17th, you'll see more and more protests. again, we will see them coming back to tahrir square. they need to revive the economic growth indicators like tourism

revenues, like foreign investment. and the country is running out of time. there's a lot at stake here and the details will trickle in. another risk event is around the corner, as well. i do need to note that, that will be the verdict for the trial of former president lohos mubarak and that could add further pressure and political tension. >> we were is speaking earlier in the program that what was interesting is that the economic plans of muslim brotherhood were actually okay. a lot would be the sort of things the imf would institute. are people in egypt sort of happy with the economic program that they would suggest? >> well, ross, what's interesting to note when it comes to the candidates and their economic programs is that they haven't been quite in focus for the most part. the talk has been more about

returning to political stability and providing national security and the economic policies or economic revival would come as a logical consequence of that. now, the policies that the the muslim brotherhood have been talking about when it comes to to r economic programs, yes, as you mentioned there your former guest that that of course does souc sound barely solid. but it's the implementation that will be the key question and how much of it is campaign rhetoric. a lot of the policies are similar, a lot envision some larger national projects. we talked about reviving the suez canal, that is an important driver of some of the economic indicators, a well. the economy can simply not handle it at this time. but at this point, at this jupg chur, still quite uncertain how the muslim brother hood would implement the policies, whether they would stick to their

promises or whether they would start to go back on some of them in line with perhaps some of the compliant guidelines that they may or may not believe in. >> okay. thanks for that. >> a quick check of the agenda today in the u.s. futures still in the green across the word, but we've really paired back the gains from earlier in the session. now pointed up about 60 points on the dow from about 90 this morning. and this comes as the ten year german bund yield has just hit a fresh record low of 1.346%. it's a big weak for economic data. topped off by friday's jobs report. dane investors will get the march case shiller home price index at 9:00 a.m. expected to show prices down about 2.5%. and then we'll get may consumer confidence forecast to tick up just slightly. it could also be a big day for mitt romney. he's expected to collect the

remaining delegates needed to secure the nomination as residents in texas vote in the state's primary. >> stocks have just turned negative. a fresh record low. keep your eyes on the spanish market. down 2%. now down well over 9% for the month. down a fresh nine year lows. if there's anything here, there are reports going ash thround t maybe the ecb sort of frowned on spain's plans to bail out bankia. couldn't get the help they wanted. and that certainly is concerns about spain, seems to have put the brakes on the stock rally that we've had. spanish ten year also heading back up to the 6 aboutme.5% tha yesterday. fresh record spreads. >> and the euro lower on a day this morning again we saw that in the green, we saw equities across the board higher and bond markets looking a little better. that has reversed just in the

last couple minutes. >> and bankia will be issued new debt. previously reports suggested quoechlt wanted to have a controversial plan that would have allowed bankia to access ecb funding. also reports that the spanish treasury is planning to centralize an issue debt to fund the regions. >> and we've been talking a lot about this, china and japan will start trading currencies directly on friday june 1st. the move aimed at strengthening trade and financial ties. still critics are less enthusiastic. they say the move will not open up capital accounts and is unlikely to increase money flow between the two regions. some are concerned about japan in particular being hollowed out by the move. facebook options meanwhile make their trading debut today. the nyse has been picked as the

primary market, but they will also be available at nasdaq and the international securities exchange. the initial prices are $16 to $49. and the "new york times" reports facebook could launch its own smart phone next year as it looks to boost mobile revenue. the company has reportedly hired engineers who worked on the ipad and is expanding a partnership with htc for the phone code named buffy. shares closed $32 on friday. we were on holiday in the u.s. yesterday. >> why buffy? >> i still think it's buffy the iphone slayer. >> okay. maybe. >> u.s. cultural reference. >> justice department investigating whether bp lied to congress in 2010 about how much oil was leaking from the deepwater horizon well. the probe could lead to more criminal charges against current and former employees.

investigators also looking at weather engineers working on the seal tried to withhold data about the true size of the spill. just keeps going on. >> u.s. law firm throw management towel filing for chapter 11 bankruptcy, this after the country's one of the largest law firms. now seek approval to liquidate after failing to find a buyer. the job market, we've turned out a ton of new graduates, aren't a lot of new desirable corporate jobs as in the past. you see it a lot in new york. >> i thought if you were in litigation -- >> if you're restructuring sovereign debt, you're doing all right. >> the british government has abandoned the tax on hot

takeaway food. the revised planle following accusations hat government was out of touch with the ordinary people. food left to cool naturally will not be subject to v.a.t. the move expected to cost the treasury -- that's what a psa tcht psatpasty. a cara vap is a mobile home -- >> a food truck. >> it's not a food truck. >> it is a food truck. but it reads like it's out of the onion. the pasty tax, the temperatures -- >> that's the kind of nthoughtn >> that's it for today's show. coming up next, "squawk box."

today's top stories, europe trying to get its act together. greece pouring money into its banks while spain looks to support its biggest lender. offsetting the london whale. jpmorgan sells good assets to make up for it trading losses and on the economic front, we're waiting for word on jobs, the may employment report just days away. why? because it's tuesday, may 29th, 2012, "squawk box" begins right now. >> good morning. welcome to "squawk box." i'm becky quick along with joe kerr anyonen and andrew ross so. as u.s. investors return to work, there ar n