hello, hello, welcome to today's "worldwide exchange ". . the spanish prime minister vows to overhaul his country's banking system with help from the eu 8 as welcomes them in madr madrid. a sharp rise in machinery order signals japanese market may be strong enough to head off headwind from the rising yen.

first the reason i'm on my own today is because kel is in vienna at the opec meeting. this is the eea, the international energy agency released the latest oil outlook. i'm missing you a lot there, but what did the iea say? >> i miss you, too but it's not often you get to hang out in a palace. they say the springtime slump for oil accelerated. futures down 20%, as we know, prices down sharply in may. they see demand for oil growing by 820,000 barrels a year. as we know, forecast range from anything from the high to much lower end of that here at opec. they say there's too much uncertainty to lower that demand forecast yet despite clear downside risks to the outlook. let's talk about supply.

they see supply up 200,000 barrels a day. it's north america boosting supply. it's non-opec supply that increased by 700,000 barrels last month. oil inventories rose again. we'll watch and see what this impact has on crude. >> they looking after you all right there? >> oh, yeah. it's wonderful. i'll be back with you in a couple minutes because we have cambridge energy research associates sitting here to tell us what to expect from thursday's meeting. it's fascinating. i've never been to vienna. it's beautiful. no better surroundings than this for a meeting. >> and they do awesome cakes there. if you get a little low on sugar levels. >> and coffee and coffee. >> that will help you out with that. we look forward to seek you shortly. coming up on today es show as greece gives up for a fresh round much election, victor says

he sees no one leaving the bloc. hillary clinton will be in the new delhi. also we'll be in the u.s. capital as jpmorgan boss jamie dimon prepares to testify to lawmakers. we'll preview his highly anticipated appearance on capitol hill at 5:30 eastern we'll be there. that's not the time of his testimony. first, what's happened in asia. one chinese government advice suggesting two gdp improet may be under 7%. >> reporter: thanks, ross. volatile trade, investors still still have greece on their mind ahead of this sunday's election. nikkei grew boosted in part by positive economic data. core machinery orders climbed stronger than expected 5.7% in april. more on that with our guest

david reed just a little later in the show. china stocks are up more than 1% driven by gains in the insurance sector after local media said regulators are expanding investment options for insurers. hong kong managed to close in the green but retailer espirit had an awful session as shares fell the most in 14 years after the company's ceo resigned and that threw the firm's expensive restructuring plans in doubt. sectors that are strongly exposed to europe continued to underperform. australia ended in the red but there were bright spots. west haven shares surged after being approached for a possible buyout. india and the u.s. will hold high-level talks in washington later today. we'll tell you what to expect in roughly 30 minutes. back to you, ross. >> thank you very much for that. check in with you later here.

in europe we're one hour into the trading session. the ftse up 3% higher the ibx up trying to move away from the recent nine-year low. bond markets, would he keep an eye on the italian t-bill auction. yield in italy have come down slightly 6.092%. spanish yield at the moment 6.7% is where we stand. yesterday we got to 6.86% today as well. yesterday ten-year bond after hitting lows around 1.147 that we hit, of course, back on june 1st, the beginning of the month. really our focus will be on italian t-bills. i thought today was thursday already. i'm just -- i'm getting ahead of myself. too excited about what's coming up.

spanish prime minister vowed to overhaul the country's banking system facing law makers in parliament for the first time since requesting aid. joining us from madrid is stephen. what's he been saying this morning? >> to be honest, ross, not that much. he's not giving much details about the plan itself. he is attending the q&a session at parliament. he says the crisis in spain was linked to foreign debt, local government deficits. he says once again the whole of the banking system should have been conducted some years ago in spain and also confirmed spain will need to cut its budget deficit. to be honest, nothing new. the spanish finance minister is also attending this q&a session. they say the plan will be

concentrated only on the banking sector. he made clear that the plan won't cost anything to the spanish taxpayer. they say the cost of this plan willen financed by the financial community. he was more precise about the terms of the conditions of this loan for the banking sector. earlier the newspaper was reporting the rate of the loan would be at 3% and that spain was granted a five-year delay before it would start repaying the loan. that was not confirmed by members of the government. also comments yesterday from a spokesman from the european commission who said that the banks could be charged at least 8.5% for this public money but again no confirmation from the government after the weekly q&a session. >> thank you. henry distributionen, asset management with us for the first time. nice to see you. how are you dealing with every

day, each step of the unfolding eurozone crisis? >> that's a good question. very difficult with equities. i think if we look at the bonds, i think last week we saw gain, whereby the evaluation in bond market is akin to the valuation we saw in the equity mark in 2009. we need to be very conscience cache cash flow first and foremost, there is life after death and you can -- >> you see money. >> yield below 1.5%. >> although briefly. even yesterday the five-year auction, the yield that was attracting and disappointing demand that went with it. how is that feeding back into, you know, what you're doing with equities by comparison?

>> the key question is what the asset allocation does. we're just starting to get a feeling that the insurance companies, indeed, if you like national pension funds are starting to take up equities from a very low waiting. that's an entirely sort of reasonable thing for them to be doing, given the possible yield we have at the moment with regard to equities and bonds. i sense we are on quite low volume market. and i think it's a thin door to get through. it seems odd to talk about big moves but i think the biggest risk we've seen, i think the equity market has taken as much as it needs to with regard to eurozone concerns, chinese hard landing, fears of that and i think we need to upside risk just with regard to positioning investors and actually the volume and lack of volume we see in the market at the moment. >> the next would lead me to greece, so let's find out what's happening in greece. they ruled out the possibility of forming a union government with pro bailout parties after

greece's election on sunday. julia has been in athens. seems like for most of the year you've been in athens. what has he been saying in terms of -- he still maintaining this line, i want to be in the euro but i need to renegotiate. we're the only party that can deliver a solution. >> reporter: we had the op-ed and he picked out he's an alternative party that doesn't have a track history of reneging on the policies they've tried to put in playing but he is, as far as we can see, sticking to the mandate this current bailout deal is not good enough for the people. he pointed out it's the greek people that want to replace the bailout deal and put into act a growth and redevelopment plan for this economy. we've had mixed messages from this party over the last couple weeks. he made a statement yesterday here in athens and he did point

out the risks to the country of the current bailout deal. you can listen to what he said. >> translator: if we don't cancel the memorandum of the default, now that we're on the knife's edge, then catastrophe will be unavoidable. to put it plainly, we won't go there to pick a fight. but we'll go there to convince them that a eurozone country is currently collapsing because of your choices. >> reporter: the other thing that came out of this press conference yesterday actually was the first time where he acknowledged the idea of an emergency plan should the negotiations fail. who knows. we didn't get much detail. we don't tend to get details from this party. this is the first time they're acknowledging europe won't back down on the mandate. that's something to watch. >> you've been fining out human stories as well so what's coming up later? >> reporter: this week i went to

understand a soup kitchen and how the crisis is affecting people there. 20,000 people across from athens go up to 70 of these to get their daily meals. it's an interesting story and important story for the social impact here. >> we look forward to that. catch you later. thanks for now. henry, you talked about equities are priced in a lot of downside risk. what have they priced in as far as greek elections are concerned? >> i think the party does get in. i think we're in a situation whereby that would cause equity weakness, to doubt. i think the equity market feels the stage -- it will unfold. the head of s&p did document the social cost if the greek exit. in truth that's not his area of expertise but i think there is an encouragement that there is a

path with regards to following the agenda -- the key thing have you to address is the rate of interest paid on these bond yields of the government. if you look worldwide, you know, japan, uk, u.s., you could say levels of debt and deficits aren't wildly divergent but we enjoy lower interest rates because our central bank is active. the only thing to come up with in europe, bond markets would represent something approaching the euro bond. that does buy economies a huge amount 6 time to return their budgets -- >> germans are saying it's the end -- they've been -- angela merkel reiterated anything you talk about that looks like integration is the end of a process and comes with them taking away sovereign control of public finances. also comments saying greece --

whatever happens with the election, greece are going to miss the terms of their bailouts. then we wonder, even if they want to renegotiate, one does wonder what the fallback position is in germany. >> all deficit targets will be missed, no doubt about it. there is a section of society, the corporates with cash to invest and get us out of this, but right now we don't have a political agenda to incur -- >> why wouldn't you give us money if you didn't know the end result? >> and when you see people giving money to the german government on a negative yield, you literally know the price is total inactivity. they want to sit on their hands. i think we need to address that and address that with a slightly more pro-business agenda than we currently have. >> the international energy agency says it sees downside risk to oil. a springtime slump in crude

prices report out ahead of opec meeting in vienna where kelly has flown to, which is why i'm on my own. there are arguments for raising output can or cut output, which way do they go? >> eyes are on the saudis to figure out the key queg question whether the 30 million barrel agreed in december will be raised. they're already producing at levels above that level. i caught up with the saudi minister here's what he had to say. >> reporter: good to see you just curious if you're going to agree to stick to the production targets. >> nothing this morning. >> reporter: would you agree to stay with the current ceiling where it is? what do you think about potentially lowering or raising levels?

so, as you could hear, no comment there. he did indicate in an interview earlier this week they might want to raise production levels and walked that back when we pressed him about it upon his arrival into vienna. what's the likely outcome for thursday's meeting? joining me is ihs cambridge energy research associates here for the meetings. what do you think is the likeliest outcome of thursday's meeting? >> probably no change. some people want higher ceiling and some want a lower ceiling. and compromise might be keep it where it is and tweak the production as needs are in the world. >> we just learned from the iae report out this morning that, in fact, non-opec production has been higher than opec production. opec controls something like 40% of the world's oil supply. how important is this decision? >> well, i think one of the things you're seeing is north american production particularly from thai oil is headed fast on

the upward trend and accelerating. we'll see more and more oil coming from north america, it will make a big change in the whole scene. >> and i think that's putting pressure -- at least analysts say it's putting pressure on opec to react by mag lowering their own output to keep oil prices at current level. what level do you think saudis would like to see brent oil at? >> i think they've been explicit. they want to be around $10 0, just keep it within $100 a barrel for the moment. >> because they have their own domestic pressures to take into account. post acrab spring these countries have higher oil than they might need in the past. >> that's right. i think $100 an oil seems acceptable for producers. >> what happens if global demand softens and we head south of $100? >> that's one of the big things

buffeting the market is the prospect of the eurozone prices affecting the worldwide economy later on this year. the other side is if what the talks with iranian and nuclear issues go wrong and that could push prices back up near a political premium. >> how important is the iran decision? more important than this decision? what should we watch for? >> iranian talks and greece election. >> do you think it's possible if we get no decision out of this meeting they could call an extraordinary meeting in the fall or wait until december? >> it's always possible. they'll come together. >> thanks for your time this morning. ross, back to you in the studio. >> good stuff. i like the way you tried to cut off niami, trying to prevent him to go where he wanted to go.

>> it's a bit of a scrum. >> enjoy. still to come, japan has surprised markets with a strong set of materials order data but the next guest expecting a sharp pull back in output in the next quarter. find out why and what it means for investors. [ male announcer ] this is genco services -- mcallen, texas. in here, heavy rental equipment in the middle of nowhere, is always headed somewhere. to give it a sense of direction, at&t created a mobile asset solution to protect and track everything. so every piece of equipment knows where it is, how it's doing or where it goes next. ♪ this is the bell on the cat. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪

japan's core machinery orders were up more than expected in april, signaling strength in domestic demand but auto sector orders dropped by 20%. that's troubling analysts since it's a sign of slipping investment. firms may be worried about slackening demand in the future once government stimulus measures end. what does it all mean for policy? bank of japan is japanese economist at capital economics, henry dixon still with us. thank you very much, indeed, for joining us, david. going through your notes and it's interesting because on the one hand you say, recent data out of japan has been mixed but it is borely indicative of a pickup in coming quarters but on others you were quite pessimistic growth of quarter. how do you -- what are you actually saying? >> we are fairly pessimistic about growth in the third quarter and latter half of the year because firms are fairly optimistic there will be a

rebound in business conditions and things will pick up. we think that optimism is misplaced and it's been misplaced in the past. the business services industry, the business outlook survey from the japanese government, it's very much like the tankan survey and that pointed to pick up in second and third and fourth quarter but much worse than expected in q2. we expect probably the same thing from the tancan it will be worse. start of the year firms expected a big pickup in q2 so that optimism was misplaced. >> this data is providing a head fake. what should policy makers be doing they're unlikely to do? >> i think from the bank of japan's perspective, their biggest concern is what's going on in europe. and there's not a great they can do for the japanese economy given they're providing a great amount of stimulus, they could

provide some more, but if things in europe collapse, kick off even further, then they'll have to repeat their action. so, we think from their point of view it's probably better to hold off until they've got just cause, or at least maybe even coordinated intervention with other central banks to deal with the crisis as it developing. >> japan stock market is making 28-year lows but i believe there's a growingness and willingness from western analysts and allocators to allocate to japan based on japanese markets and balance sheet of corporates and looking at the government. you should be cautious of equity markets in japanese markets based on the strong yen or would you see value emerging at some stage as well? >> we would be cautious on the basis of the strong yen. if there's any other crisis, if greece leaves, we think flight from risk, safe haven demand will push the yen higher. we're thinking into the 70s

against the euro and dollar. as yen strengthens, equities will fall back. >> why can't the backe of japan draw a line in the sand the way the s&b has done? >> it's a much bigger bank, more liquidity and g-7 partners it cannot manipulate exchange rates. it could prevent excess volatility. the imf said they would be happy for bank of japan to do that without undue consequences but i think it's overpresumptuous the bank of japan could put a line in the sand on the yen without any retal tags -- >> they can't use -- they couldn't do more quantitative easing without intervention to weaken the yen? >> if they did quantitative easing on a scale that hasn't been seen before, debase the yen, that would put a line in

the sand. i don't think they would be keen on that and the bank has said it's not overvalued. the imf says it's slightly overvalued. to do that would be moving against the markets. >> when we spoke to former mr. yen, i suppose mr. yen, on this program a couple weeks ago we asked him about japanese debt. concerned about the japanese debt level. he says we have to worry about this for four or five years. would you agree with that assessment? and then what happens in four or five years? >> i think it would be difficult to put a time scale on it. could be four, five years, ten years, two years. it depends on what point people lose government's ability or belief in the government they're going to address the problem. at the moment they are pushing through. the increase in v.a.t., the consumption tax in japan. that a step in the right direction. if that's the only step, their markets might lose confidence and then, you know, four years down the line they might say,

nope, we've had enough of japan's debt. on the other hand, if the government keeps doing and implementing reforms, that might give them a longer stay of execution. >> one point. what do western governments have to learn therefore from the japanese government they can sustain bond yields where they are with debt to gdp over 00%, if you like? what would be their advice to western leader? >> declining population and structural trend growth your bond yield will stay put. >> try and sell that one. that would go well. thank you very much, japanese economist at capital economics. italy in the spotlight. investors are concerned about the possibility of the country also being in line for a bailout despite monti. they have a auction as well.

thehere are here are the headlines from around the imploeb. spanish prime minister vows to overhaul his country's banking system with help from the eu aid as he faces lawmakers in madrid. bond in spain with highs and rome preparing to sell up to 6.5 billion euros worth of t-bills. no facebook and that might be a good thing. the world's second biggest ipo

fell with its $3.2 billion offering near the range. and jamie dimon says he's sorry for jpmorgan's trading loss. he's facing a grilling from lawmakers on capitol hill today. we'll be back out with kelly with the opec in vienna. european stock markets today, well, they're pretty mixed at the moment. a session low in germany. the xetra dax is down and ibex up. ten-year spanish bonds have fallen after hitting 6.84 somewhere yesterday, currently at 6.68. ten-year yield are back as well to 6.11 and yields slightly higher in germany and the uk. we have a ten-year bond auction this morning as well italy is

also at auction, selling up to 6.5 billion euros in a one-year bond auction today. this is the country's back in the spotlight with investors fretting about the possibility of a bailout following the request of aid by spain. mario monti insisted euro leaders must take serious steps to make investment. joining us is chief strategist at bnp paribas. thank you for joining us. t-bill auction today and then up to 4.5 billion of btps being auctioned tomorrow. with the recent increase in volatility and spike in yield, what happens at these auctions? >> i think what happens is what has happened throughout the course of the year. there will be a strong domestic participation. if you look at the evolution of domestics, nondomestics and the flows that banks like us have monitored in the market. you will see domestic buyers are actually the only source out there in the market.

>> has the ltro skewed the sort of risks? >> you know, the long-term financing operation has provided, let's say, a stability of funding for a longer period in time than just one year as previously was. it has, however, not improved the quality of the underlying assets. in a carriage rate, you have a funding lag and coupon lag and a carriage rate is not a risk for trade. i think a lot of investors at the start of the year have been caught wrong but because they have understood their carriage rate, risk-free trade which in reality it is not. >> yes. i wondered if we sort of concentrated the risk in a fewer number of institutions. basically, have we tied in italian and spanish banks even

closer than they were before the ltro into their own sovereigns? >> indeed. the process of an drdrogenizing public debt, and once you have the bulk at home, you are able to deploy other means of creating public demand. you can use pension fund money. you can change regulation. and then you can do what japan has done successfully, i.e., taking privately-owned, private savings and using them in order to finance public deficit. >> right. where does that lean -- when everything is going on at the moment, you know, we're going to get more details. we have the greek auction this week -- greek elections this will weekend. we're going to get more data on this bank bailout and the eu summit. what trading strategy are you supposed to employ? >> our view is that we are left still with -- even if you -- even if you take apart the near term event risk, we're still

left with longer term issues in terms of growth for spain and italy. in terms of the rating for spain. i think the latter is an important issue as if you -- for example, if you assume spanish government bonds will be -- spain will be downgraded further by two to three notches then have you to assume that automatically spanish government bonds will be kicked out of the major bond indices. we're talking here about almost a half trillion of securities. you know, repercussions on a grand scale can be much bigger than the impacts that greece and portugal had when they were kicked out of the indices. i'm just talking about bond indices and having access to ecb in terms of liquidity. >> yeah. this is a second proper bailout for spain. do you think that's inevitable? does it follow italy will lead one as well? >> on the second question it is

not immediate. of course, market participants always speculate with the idea of who's next. there is some legitimacy in this way of thinking. but for the moment, we tend to think italy in terms of privately owned financial assets and real estate assets is much richer than spain, hence, the ability to absorb shocks by the general government is stronger and the banking sector is not as leveraged and overexposed to real estate market as spanish banking sector. in terms of the first question, i think when i look at the fundamentals in italy, you will see that we are, of course, fundamental and the public -- the fiscal policy and monetary policy, we are exposed to probably even weaker growth in the next months, next two years. so, i would say that at some point even here the question of being supported somehow externally could have legitimacy

but for the moment we don't assume this is a highly probable scenario. >> what about a full bailout for spain? >> that depends really on how deep the recession will be and on how the government will be able to insulate the banks, private sector from the public sector. at the moment what we need is we need to reduce the sovereign risk premium which is making funding for privately owned institutions, i.e., banks, quite a difficult task. to the extent we're able to do so, and i doubt the current plan is able to do so, we will need further aid. i think the only mechanism that can stop this vicious circle and the only way to reduce the sovereign risk premium in the market is for the ecb to stop buying bonds again. for spain it's easy because spain needs to issue 30 to 35 billion of bonds to complete the program for 2012. in august last year the ecb has bought 22 billion of security in the last week. stabilizing the bond market is

easier than stabilizing the italian market. >> good to talk to you again. thanks for that. we just got reports of an earthquake of magnitude of 4.9 hitting taiwan, according to the central weather bureau. we'll keep aur eyes on that. one of china's influenceal government vers has made bearish comments about the economy saying annual growth could slip if june indicators disappoint. beijing is due to publish second half data by mid-july. henry, if we get a sub-7% growth number, reaction from vinnesters? >> i think in the uk we've seen this sort of mining sector, major exposure to china that's been derated, ignoring when we've seen. the truth in other thing we'll

see, sloet of chinese growth. what are the causes of that? more comfortable view on iran? but i think it has been to some extent that china has to slow down otherwise inflationary story will be too great for western economies. while we don't get benefits for filling up or tanks it does flow quickly in the states. i think all in all the damage has been done to, if you like, the shares that most closely reflect china and we must discount lower commodity and sturmz. move over, hong kong, the second ipo could make kuala lumpur the place by value. felder is expected to top it at up to $3.2 billion. asia-pacific ipo volumes have

fallen by half, but malaysia is dominated by investment to shelter it from the global headwinds. it's not been great three months for ipos, planned ipos. what happens now? >> it's been incredibly disappointing and much made of it in the uk. that seems to be a slight situation whereby companies listing are sort of, if you like, not that keen on listing the discount. that's an obvious starting point for a successful ipo, peers are been listed for a longer period of time and deserve that premium ask and a discount that worked incredibly well in the market in years gone by. i look at bull market of '03 to '07 and ipos outperformed the market and recently ipos dragged the market. kuala lumpur to rio tinto,

really, really disappointing. i think it's the valuation we need to look at and we need a discount relative to peers. uk equities up eight to nine times, you're not going to win the ipo pitch right now. >> the reason for an ipo is to raise funds, right? you want to raise as much as you can. >> i agree. and i think large corporates, even the private space, will probably look to debt markets because it's fascinating last month. barclays banks listed but rose five-year money but if they were direct investors you could argue implied cost is 15% to 20%. they need to look to the bond market and not the equity market for this point in time for those businesses. india's foreign minister is telling u.s. economy will pick up and business will improve. we have more details from us from new delhi.

>> reporter: well, that's right. india has been maintaining what we're currently seeing is a result of what's happening in the west and what's happening in europe and indian economy fundamentally continues to be strong. india also saying it does not understand why s&p nan maintains we're just a notch above junk stages. they want s&p to share their methodology because they don't find that too transparent. the takeaway as far as india/u.s. dialogue and the big headline coming in, there's been a lot of pressure on india to cut down crude imports from iran. the u.s. has now put india on the exempt list from sanctions so that's a big positive there. from the u.s. point of view, they would like to hear from india on whether india's going to pick up the pace in terms of reforms. the likes of walmart waiting in the wings. there was a decision to open up the sector to follow direct

investment and then put on hold. they are hoping a notification will now allow that process to be resumed. it's really going to be about a revival of the program the u.s. would like india to talk about. hopefully once the presidential elections are in the process of being done in india, once that's over and done with, we could perhaps see a big up on the pace of reforms. >> india is getting criticized for at minimum straightive obstacles olding back projects, investment prals, i mean, are there any signs the government really is going to get to grips with these issues? because a lot of the problems seem to be self-inflitted. >> well, you're absolutely right. a lot of the problems are self-inflicted. there are indications the government has sort of snapped out of its denial mode, acknowledging these problems are serious. we've had two sets of meetings to talk about the infrastructure

cabinet. that meeting took place yesterday. there is once again a renewed effort on the part of the dpovt. we've had road shows in the gulf countries to attract foreign investors into the indian equity market. that's happened owe the last few days. there seems to be a renewed commitment to go out, sell the message that india is serious about reform agenda. we welcome foreign investor. that seems to be the campaign they exercised on the government india has decided to embark on. >> always good to talk to you. on the agenda in asia tomorrow, central bank, reserve bank of new knee land and philippines will announce their policy positions. and bank of japan is meeting for the first day of its policy session. johnson & johnson says it

plans to close bid by tomorrow. carolyn for once in in zurich. how is this going to play out? >> reporter: well, basically this week johnson & johnson got regulatory approval from the ftc to go ahead with this $19.7 billion deal. i want to remind you of the rationale behind this deal. johnson & johnson, once leading medical devicings maker, because of engs pose you're to emerging markets and because of the strong standing in trauma. johnson & johnson in connection with this announcement yesterday gave us a little more detail about how this deal will affect its business. it said in 2012 it will incur acquisition to grace and charges to the tune of around $1.1 billion. on top of that, the steal will boost its adjusted eps this year between three and five cents. that's pretty good news because the premium guidance was for a

negative impact of around 22 cents a share. i should point out that synthes will be removed. >> thank you, the latest out of zurich. let's turn to a recap of what's going on. poland and russia drew 1-1. russia has taken the top spot in group "a" with four points despite poland's second half equalizer. the match was marred by violence as fans piled out of the stadium. over 1030 supporters were detained by police. in the other game of the evening, czech republic with three points against greece who managed one goal to bring the final score to 2-1. before the match, the czech fans booed their coach but six minutes after the start they could barely contain their joy. the czech captain came off with an achilles tendon.

still to come, plenty more on greece. the country's troubles may trigger a tu man teryn crisis. we'll be back in athens. úú]úñ 

greece greece the unemployment rate hit a record high of 21.9% in march. more than half of the country in the country are out of work. julia has been in athens and she spent time taking a look behind scenes. what's going on affecting individuals' lives. what have you found? >> reporter: thanks, ross. as you said the unemployment here incredibly high. we spoke to the head of the democratic left party this weekend and he pointed out he thinks the unofficial unemployment stats are actually at 28%, which just gives you an idea of the exteptd of the problem here. in the op-ed, the unemployment, humanitarian issue here is huge. we basically went to a soup kitchen earlier this week to see just how the crisis here in greece is impacting ordinary people. you can listen in. it's a simple meal.

but it represents a life line to thousands of greeks who now rely on charity organizations to get their daily meals. the center for the homeless in athens started providing free lunches to the poor in the spring of 2009. the initiative is funded by the church and by private donors. when the program first started, it used to serve around 400 people a day. but as the country slipped further into recession, the number of people turning up to the center has surged. >> translator: we say care of 1,200 people daily. throughout the whole area of athens, the parishes feed about 10,000 people a day. across the attica region, other archdiocese take care of a number of similar people. >> reporter: in other words, more than 20,000 people across the attica region now queue for over an hour every day in the stifling heat to collect their lunch.

and it's not just immigrants struggling, although they do make up the majority of the people here. a significant number of greek citizens. >> translator: here the proportion is 70/30. at other parish soup kitchens it's 100% greeks. those numbers are growing. >> reporter: not all the people here are homeless. doesn't matter who you are or what job you once held. as one elderly man once said, poverty is the ultimate leveller. we've talked about the unemployment states growth fell more than 6% in the first quart this year. people on the streets say their income has dropped between 30% to 50%. it's tough to be talking about further austerity measures and higher taxes in this kind of an environment. there was an article in the german ft overnight pointing out eurozone leaders may be willing to pull back on some of the cost-cutting going on in greece right now. i'd have to argue irrespective of the election outcome, this

has to be ultimately the big debate. ross, back to you. >> thanks very much for that. european central bank warned of the fragility. an interview with sylvia, the bank's vice president say eu member states must dwoep a coherent long-term vision for monetary union. >> now everyone is expecting to see if member states will say something significant about the future of monetary union. how they see monetary union going in the medium term because that is important to reassure everyone that really this country has embarked into such a deep sharing of sovereignties, really want to pursue the

project and -- which means, and that's one of the lessons of the crisis, that to make the functioning of monetary union more effective, we need to have deeper integration in other areas. meaning fiscal, meaning financial. so, everyone is awaiting a sign of this commitment to a medium term development that will consolidate and deepen monetary union. >> reporter: it's big enough -- can you imagine a country to leave -- >> no, really, i cannot. for that country in particular it would be catastrophic. i think in the end, that's why we see even in the gas of greece, majority of population doesn't want to leave because they understand this would be really very, very, very negative for years. no, i don't see really any country would leave.

also the heads of government and state of many member states have said they don't want anyone to leave. so, yeah we have to sort out this situation and really kill the doubts in the market about the future of monetary union. >> he also outlined his views about what a european banking union would entail in order to avoid a repeat of the crisis. >> the break of that would be to more some aspects of dealing with the banking sector to a true european level from the national level. for example would imply currency scheme at the european level which would be, by the way, a powerful sign of commitment of member countries to really stay together in the monetary union. and at the same time it would be reassuring for depositors in our

countries. and also at the same time, and in particular, in my view again, in what regards the more significant banking groups, we could also move to the european level, the supervision of these big banks, if they have cross-border activity. and the creation of a resolution fund for those banks. >> talking to sylvia. henry final thought from you. germans are still pretty clear a lot of these things about banking union and euro bonds are the end of a process and they have to retain control. give us your final thought here. the next few weeks there's a lot of event risk. how do you think it pans out? >> in truth i believe -- i believe there will be a move

towards -- i do believe euro bond will be mentioned next week as well. i think we'll see something as notes to u.s. as well on that scenario. i think that will be quite supportive in truth. i know that's the only way -- the only mechanism by which we will be able to get yields down in spain and italy. that will buy a crucial period of time. you're talking about a budget deficit in spain if the bond yield falls to near our levels. under that scenario, i think we've had a moment where i think the bond market was too overvalued and we can make money in the he can quit market. >> henry dixon, asset management. spain is talking about euro, effects of reform. twork... 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.

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this this is "worldwide exchange ", i'm ross westgate. the spannic prime minister vows to overhaul his country's banking system as he asks the ecb for urgent short-term action to stabilize markets. bond yields in spain retreating after reaching record highs in the euro. as rome prepares to sell 6.5 billion euro worth of t-bills. no facebook and that might be a good thing. the world's second biggest ipo, malaysia felder gets set to offer near the top of its range. and jamie dimon says he's

sorry for jpmorgan's trading losses. he faces a grilling from lawmakers today on capitol hill. if you're just joining us stateside, a good morning to you. what are the futures suggesting we'll get in terms of the opening today? well, mild positive start is what we're looking for here. the dow is just trading three point above fair value. the nasdaq at the moment is trading, what, two points above fair value. s&p trading about a point -- a point under fair value is what you should say. arrows are down at the moment. the ftse up 0.2 of 1%. following a slim game for european stocks. we just turned tail. ftse and dax is flat. the ibex is up a percent but

near nine-year lows. as far as currency markets are kerpd right n concerned right now. euro/dollar 1.25. we were up 1.2670 on monday as well. right in the middle of the range. we keep our eyes on bond markets. we've got 12-month t-bill out of italy. ten-year bond market as well so it will be interesting for the demand when you offer yields around 1.5% italy, yields are lower today at 6.1%. in spain, yesterday we hit 6.84% or thereabouts. a fresh euro era high. at the moment, 6.69% is where we currently stand. we have got comments coming out of the spanish premier who's

written a letter suggesting the ecb needs to do a lot more in terms of liquidity. we'll get more from stephen on that in a moment but let's check in on the asian markets from singapore. >> reporter: thanks, ross. asian ended the session modestly higher. trade was choppy as investors held their breath ahead of greek's election. nikkei rose, boosted in part by positive economic data. japan core machinery orders climbed a stronger than expected 5.7% in april. china stocks are up by more than 1% driven by gains in the insurance sector. that's after local media said, regulators are weighing and expanding investment options for insurers. hong kong managed to close in the green. but retailer espirit had awful session, the shares fell the most in 14 years after the company's ceo resigned. that threw the firm's expensive restructuring plans in doubt.

sector mostly exposed to europe continued to underperform. australia ended in the red but there were bright spots. coal shares surged after the company was approached for a possible buyout. a quick look at india sensex up by 0.4% of 1%. back to you, ross. >> thank you very much, indeed for that. let's get more comments here. in a letter written to the eu, the spanish prime minister says the euro sees effects of reform, increasing pressure, doubts on euro's worsening pressure at an accelerated pace and as a result he's asking for urgent short-term action to stabilize markets. he want that action to come from the ecb to ensure stability and liquidi liquidity. he says the ecb is the only way to ensure stability. this is also backed up as well

by the oecd calling to ecb to fight contagion. i guess what they're talking about is a reduction of securities market program. stephen has been following the prime minister this morning in madrid and gets more from us as well. first of all, we have testimony out today and these new comments. what sort of reaction are we getting? >> reporter: the testimony before the parliament was widely expected but this letter sent to the president of the european commission and to van rompuy was unexpected. the spanish prime minister says eurozone uncertainty is increasing pressure on many countries in europe, including on spain. he believes liquidity is fleeing from the eurozone going to the core of the zone. mainly to germany. he's asking for ecb action to

ensure stability and liquidity in the eurozone. also asking for urgent short-term action to stabilize the market. it's been announced a few minutes ago. the announcement came after this session this morning at spanish parliament. the prime minister and finance minister attended weekly q&a at parliament. we didn't have details about the plan, the bailout plan for spanish banking sector. van rompuy says it was linked to the government. he confirmed spain will have to implement further budget cuts. but on the bailout itself, we didn't get that much detail. the finance minister only say the conditions attached were only focused on the banking sector. and also confirmed this bailout won't cost anything to the spanish taxpayer, it will be paid by financial community but on the terms itself, the rates, duration of the loan, nothing

was saved from members of the government, ross. >> stephen, for now, thank you. the results of the 12-month t-bill auction in italy. the average yield on that, 3.972%. it was a sharp rise -- sharn jump from 2.34 it paid on may 11th. a bid to cover ratio, 1.73 versus 1. 79 and raised 6.5 billion they were looking for. they got the cover but a sharply higher price. joining us for the rest of the program, chief investment officer in the studio in london, chris i'ver. how are you responding to the selloff we've had in equities and the ongoing event risk we've got, this week with spain, greece election over the weekend, eu summit coming up and everything else. >> well, what we've been mainly doing is resist the tech tags to

do anything. i think unless you have positioned ahead of this, you're probably a bit late. in other words, if you wanted to get defensive, the opportunity was clearly a couple months ago. if you want to do it now, you'll celek wits, buy expensive bonds or hedge in the marketplace. guess what? hedging is extremely expensive now because anyone that insures your portfolio wants to be paid for it. i think it's a bit late. we're inclined to think we might get a little better news in the past few weeks and panicking has been done already. that's a good prospect, a bit of a squeeze higher in markets which is against the recent run and against expectations and against how most people are positioned. but i don't think we've learned anything new over the last few weeks. that's the critical thing. sentiment is swelling massively but i don't think there's been an awful lot of new information. spanish banks are in trouble. we knew that a few years ago. we have some sort of solution

there. tech tonic plates -- >> do we have solution? >> yes. >> all we've done is give them a credit line. >> right. the credit line, which ultimately funded out of boroughing. i mean, all of the governments are running deficits. so anything they do to fund their banks is done by borrowing. >> in the uk we could deappreciate our currency. >> that's true. something you'll ask me. in a little while should the ecb do more and i think the answer is yes. >> react to the s&p. they only need -- i think spain only needs 30 billion more borrowing this year. they could move that up. >> the spanish have done a lot of work, put in place a lot of the austerity measures that are beginning to get real with banks. they had prefunded themselves nicely. of course they didn't want to be forced to go into the market and

gdp at 6.7% more interest rates. of course they didn't to want do that. they did need -- i think there's a bit of a difference between a bailout bailout and this is driven by economics. they don't want to borrow money at the wrong price in order to sort out their banks. >> let's move on. jpmorgan ceo jamie dimon is testifying in front of senate at 10 a.m. eastern. he says he feels terrible about the incident, as a result of overconfidence, poor judgment and a breakdown in risk controls. he's expected to say more details will be released when jpmorgan reports second quarter results next month. he says we'll not make light of losses. we'll lose some shareholders' money but no client, customer or taxpayer was affected by this incident. he says the second quarter is shaping up to be profitable. what's your own view on this,

chris? you get trading losses. you get mistakes. it's a question of whether -- you know, by the size of the bank, whether they're sort of easily absorbable, which they appear to be. what are the long-term consequences? >> in terms of the impact for the stock, it's pretty small because as you say these losses can be absorbed. the long-term consequences are more its impact on the regulatory debate, isn't it? poor jamie dimon has had the rug pulled from under him. he had been up with of the people at the forefront saying they should be allowed to continue to do proprietary trading. here they are nursing unexpected losses. also his risk controls have proven to be wrong because a few weeks before he said it wasn't a problem and then he had to eat humble pie. couldn't be worse from that perspective. i tend to think -- i'm on the traditional side of the debate here. my first job in the city was working for a commercial bank. back in the '80s, the golden rule as a commercial banker is you didn't risk the firm's proprietary capital.

you didn't use balance sheet. it's amazing how common place that has now become. and i think that this does illustrate, first of all, the perils of doing that and it needs to be controlled. secondly, the merits of actually having that extra twist for the systematically important banks. this is another die mention to that. of course, they've become the market when they start dealing, therefore, it's another argument as to why they should put aside more capital. >> all right. don't forget "worldwide exchange" we'll focus on jamie dimon's testimony before the senate banking committee. andrew ross sorkin will join us around 30 minutes' time. we'll have plenty more to come as well. more out of greece as well. we'll keep you up to speed with the u.s. open.

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if you just joined us, headlines around the globe. spain's prime minister asks the ecb for short-term action to stabilize markets. borrowing costs rise again as a result of one-year debt. and jamie dimon says he's sorry for jpmorgan's trading losses. he faces a grilling from lawmakers on capitol hill today. so, ahead of the u.s. open a

little bit later, this is where we stand stateside. we're implied flat for the s&p 500, firmer up for dow jones and nasdaq flat. fairly flat session in europe. sharp increase in italian borrowing costs this month, 12-month t-bills. spanish bond yield are slightly low but it is to remember high, currently trading 6.69%. italian yield, 6.10%, slightly lower and a ten-year bund auction coming up. we'll see what they get with yield around 1.5%. some other stories we're following today. dell plans to issue its first ever dividend starting in the third quarter. the company will pay quarterly dividend of eight cents a share. they say the decision was prompted by its strong cash

flow, as a result to stream line operations over the past few years. shares were up 3% in after hours and up 3% in frankfurt. global payment says a major data breach this spring may be initially bigger than thought. they say thieves may have gained access to personal information from its merchant customers. the breach affected up to 1.5 million accounts. this confirms reports last month that more debit and credit card customers may have been exposed to fraud. global payment stock is flat in frankfurt. the justice department is reportedly investigating whether u.s. cable companies are trying to quash competition from online video sites such as netflix and hulu. comcast, parent of cnbc, time warner cable and others have been asked about issue such as data caps and limits on how much video subscribers can download each month. cable providers are worried customers will drop tv packages

if they can access cheaper video online. something slightly lighter. burger king -- in terms of calories. is rolling out a new summer menu and we'll tempt you with salt and sweet. bacon sundae served with fudge, karmle, bacon crumbles and a piece of bacon. it was was started in nashville, tennessee, earlier this year. you may have to drop your diet for a day or two clocking in at 550 calories, 18 grams of fat and 671 grams of sugar. burger king is expected to go public later again this month. just doesn't look right. a piece of bacon sticking out of an ice cream sundae. still to come, we'll be in vienna where they know how to make sweet things. opec is trying to get set to decide on output levels.

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the international energy agency says it sees downside risk saying euro crisis and slowing chinese growth have caused a springtime slump in

crude prices as opec ministers meet in vienna to decide output. kelly has gone to vienna. this is interesting ahead of the meeting because they could justify cuts in output because prices have dropped or increases in output because they want to help out the global economy. what are people saying there? >> exactly. ross, the big question for thursday's meeting is what decision, if any, will be made with regard to raising or lowering that 30 million barrel per day ceiling agreed to in december. most people think it will be lucky if they come together to agree to keep it steady or more production over that ceiling will be curbed back. given the price declines we've seen, we've seen oil stocks across the moving from five-year lows to now five-year highs and the question is why? how much is the market oversupplied? joining me is international

energy forum secretary-general aldo flores. is the oil market oversupplied? >> i think it's well supplied. oversupplied is the eye of the beholder. we clearly have been for a while although a very comfortable level. >> the function of your agency is really to bring together opec and non-opec members in an effort to collect data, get greater transparency on this question. so, from what you see, do you think there should be less production if opec members would prefer to keep prices at these levels? >> what we work on, is beside transparency and transmission of data, is to bring together these groups of accurate producers and consumers so they understand better what is going on in the market and what has to be done so that stability is accomplished. >> what would keep prices stable here? >> much more transparency, much more idea of growth and demand.

much better information on day to day developments. >> is that something opec need to do to open up more. >> it's something everybody has to participate on. where all countries participate, apec, european institutions to try and build a good data space about the state of the market. >> it would seem as much as you might know about the state of the market, demand factors can change quickly. when we're facing a slowing global growth outlook, it would seem those factors are more important right now maybe than having detail on what happened a month or two ago. >> it depends on the time frame. if you think of demand short term right now, of course, there is a concern about the impact that the economic crisis in europe will have over the overall demand of oil.

but long term, and this is something just in this session is, this morning, the outlook for demand is very positive. population growth, economic growth as well -- >> what about this year, what's your forecast for this year? >> this year things seem to be remaining stable. growth in europe. >> do you expect oil prices for that brent oil price, which is about $97 today to move lower in the second half. >> if i only knew -- nobody knows. >> lastly, do you get the sense, because we saw this iae report showing it was non-opec members, including north america, that are producing much more of the supply. do you expect that to continue? does that threaten to marginalize opec? >> every indication we have is that output in america is going to increase from nonconventional sources. but there is no need f-- it's nt

that opec will be a marginal supplier. it's that more countries will be participating. >> maybe not participating in opec itself. thank you for your time. back to you. >> thank you for that. by the way, you doing a little waltz later or try out some of the pastries? >> i have tried the pastries. i love the coffee. it's a milange, it's a latte, delicious, some croissants and chocolate wafers and a sausage with mustard. i'm getting a taste of vienna. >> that sounds more american. kelly, thanks for this. catch you later. i know you're contributing a lot today for the u.s. as well. we also apologize for the sound quality on that interview. remind you what's on the agenda in u.s.

producer prices are forecast to drop by 0.8% and 0.2%. also at 8:30, may retail sales. expected to slip 0.3%. and at 10:00 april business inventories are out. jamie dimon will try to keep his cool from sharp criticism he's likely to get from u.s. lawmakers. we'll be on capitol hill for a preview of the senate hearing. don't go anywhere. "worldwide exchange" continues after this short break. optionsxpress, where you can trade your favorite products,

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youif if you just joined us, a very good morning to "worldwide exchange." the spanish prime minister is on the defensive. he's vowed to overall the country's banking system but asked the ecb for urgent short-term action to stabilize the markets as italian borrowing costs rise again as an auction of short-term debt. monti urging steps at a european level to get the economy growing. jamie dimon says he's sorry for jpmorgan's trading losses. he faces a grilling from lawmakers on capitol hill today.

we'll be going to capital in a few moment. a very good morning to you. this is where we stand right now ahead of the u.s. open. futures implying a mild tick higher. not by much. the s&p 5001.7 points. dow jones up 19 point and nasdaq up 2 point. the european market flat lined and flat right now. just 0.1% higher for ftse, dax, and ibex is strongest performer up 1.43% but down near nine-year lows. so, plenty of focus on jpmorgan today. the ceo jamie dimon is testifying before the senate banking committee about the bank's trading losses at 10 a.m.

eastern. in prepared remarks he says he feels terrible about the incident which was the result of overconfidence, poor judgment and a breakdown in risk controls. here's a treat for everybody. cnbc's andrew ross soshg sorkin d.c., where that hearing is taking place. thanks for taking the even earlier shift, andrew, and talking to us this morning. i appreciate that. >> ross, we're together so infrequently that i needed to take this opportunity. i miss you. i miss you. >> i know it's painful to get the makeup and everything done half an hour earlier, so we appreciate it. look, what's your view, jamie has come out, said, yeah, we screwed up. so, what happens today in? >> three things are going to happen today you should be watching for. there's going to be the disclosure issue. what did he know? when did he know it? when did he tell everybody about. it? there's going to be a lot of focus on that april 13th

statement, tempest in a teapot. what did he know when he said that? what did he know on may 10th when he said, oops, we have a problem? there's going to be a lot of conversation around that. also a big policy debate about portfolio hedging, the volcker rule. he's been such a -- so adamant about regulation and what he describes as overregulation going on in the banking business, that there's going to be a lot of questions there. the last piece is for investors, something you can take away from the pretestimony they put out last evening. the company saying they'll be solidly profitable. they're not giving true guidance on the size of the trading losses but if you read between the lines, it sounds like they're getting this under control. i think investors will be looking for that. i am told he is not going to be answering specific questions about the exact size of that loss. that's something we'll learn more about on july 13th which they report second quarter earnings. >> okay.

those are the three key things. andrew, stick around and continue the conversation. also joined by lynn bloom, managing director at westwood capital. andrew laid out neatly the three things we want to learn. which is the most important to you? >> well, i think the second of the two is going to be very important. andrew correctly says there will be a lot of disclosure. i think the disclosure, if it's properly vetted will focus on policies and procedures that were put into place because here we have a $2 billion loss. but it could have been any number. and the question is, what's so wrong with jpmorgan that they can have a loss like this and not know about it immediately and not have policies and procedures in place? i think there will be a lot of political grandstanding. you've got a lot of different views in washington as to how this -- how the banks should be

handled. republicans saying we want more regulation. the one thing that's very clear is what we're doing doesn't work and hasn't worked for a long time. that really doesn't give much guidance except gives banks a lot of wiggle room to do whatever they want. washington really has fallen down on the job once again. and incumbent on washington, more so than mr. dimon, to say what they're going to do going forward. once more, washington does not want to take on difficult issues. it's a political time bomb. >> let me jump in here. there is a sense, something

you'll hear from jamie dimon over and over, the banking business, that risk has to be taken and risk has to be allowed. in this case, he is not making any apologies for the risks that were taken and clearly should not have been. you'll be hearing a lot, by the way, about ina drew, head of the chief investment office where these losses took place, his relationship with her, why he trusted her, the mistakes in perhaps trusting her for as long as he did. the question ultimately becomes, how do you truly regulate risks? there are size limits you can put on and obviously things we can do with the volcker rule. at some point people will make mistakes and in a system when it's working, you should be able to make a mistake without the whole system crumbling. that, of course, is what i think we're all after. >> right. you probably just said one of the most intelligent statement i've heard about banking regulation. if the rules are correct, we should be able to make mistakes

and recover. see, but the problem that we have now is we have not only banks that are too big to fail. we have banks way too complicated to understand. which makes them too complicated to regulate. we have banks that basically have the government support because those banks are expected to make loans to homes and businesses and to safeguard consumer deposits. we have something so complicated but in essence so simple. why do we make it so complicated? it would be very simple to say with every bank, here's an activity you're doing. how does that are to do with lending money to homes and businesses or safeguarding consumers' deposits? banks are into far-flung business activities and huge and no one knows what's going on and we can see right now that arguably or best bank in the country, the healthiest, the best managed doesn't have

adequate policies and procedures in place to avoid a $2 billion trading loss. >> well, i was going to throw in two two-cents if you will. one is this idea about what a bank should be doing, what they should not be doing. this happened in their portfolio hedging, if you will. should they be allowed to do that? is that a loan? one of the things you'll hear jamie dimon say today is where we can lose real money, where we can really jeopardize the firm is not necessarily through portfolio hedging, that's obviously possible but through the loans they make every day, that's where the real risk ultimately lies. of course, what do you do about regulating that? i don't know if you had an opportunity to see there's a "financial times" piece that walks through the too big to fail issue but specifically jamie dimon, what happens if they fail and whether the system would break down, whether the bank would break down and how that process would work. the article suggests it would. of course, we won't know until we get there.

that's something we don't ever want to see. >> right. you may remember. there's a great story when volcker came up with the volcker rule, went out to the harvard club, came back to his office the next morning and found it had been drilled full of loopholes. there's really no reason for a bank to have to proprietary trade or to trade for its clients' accounts or trade stocks or anything else. i've actually traded swaps and sat on the desk. many large companies with huge currency and interest rate risks trade with counterparties to hedge that risk. they don't need their own proprietary trading operations. if it was correctly administe d administered, the regulators should be able to go over each and every hedging transaction and understand why it's a hedge. it should be hedging credit risk exposure in the bank's portfolio.

>> where are you on market making in terms of the volcker rule? i think that's another issue we'll hear about today during the hearings. >> i don't see it. look, we are where we are and a lot of things i'm saying will never come true, andrew, but banks do so many things in finance. it's hard to find something that's financial that a bank doesn't do. at their essence, the united states government and the taxpayers protect banks and give them a backstop because we want to make sure they're safeguarding consumers' deposits. we've gotten a long way from there. it's just like dodd/frank, 2300 pages out of three simple ideas that i can write in one paragraph. why did it do that is because the people were regulating have strong lobbies. it's because we -- we lawyer everything to the extent where either itself no longer has any

teeth or it can be completely circumvented by someone who's smart and then we don't have regulateders with the resources to regulate it. basically what we end up is a case of inmates running the asylum. >> i have a guest in london, chris wily, who runs a family office called iver. you made a point about banks using the balance sheets. ask these guys, you know, that question. >> yes. well, i was reminiscing about my first job in the city in the '80s when i worked for a commercial bank and the golden rule drilled into me is that you didn't risk the bank's capital. even if it came to time to time often we had opportunities to take equity, we wouldn't do it. banks -- i think we're in agreement here. banks have a privileged position and pivotal role in the capital system in the fact they have a license to print money because they can leverage up balance sheets and therefore bank

capital is a precious resource that needs to be safeguarded and that's why it's incompatible -- my question, volcker is just reiterating the glass/steagall rule really. we don't seem to be getting political progress or unanimity in the u.s. where are we going to be after today? go further, get any backbone or go around and around in circles? >> no, nothing will really happen from today. i think you'll see some senators grandstand a bitagenda. you know, i -- unfortunately, i don't think we'll hear enough about conflicts of interest that arise from banks being able to enter into other business activities. a very simple one. if a bank lends to its own client and allowed to do investment banking for that client, whose pocket is the money going into from the

securities takeout? it's the bank. is that bank going to be as motivated to tell investors when something's wrong with a company? no. because the bank's wearing two hats. they may do it, be very honest, good people, but we've built so many land mines into the system and built so many temptations into an environment where inmates are running an asylum. >> good to talk to you. thank you for joining us. andrew, can't thank you enough as well. what time do the hearings start? what's the schedule? >> 10 a.m. eastern time we will begin and we'll be covering it live throughout the day. don't move your dial. >> good man. thanks, andrew. great to talk to you. plenty more of andrew coming up on "squawk box." we've just had german bund auction, ten-year, average 1.25. the bid to cover okay, 1.4.

these amazingly low yields. received $5 million in bids. seems extraordinary to me. i'll get thoughts from chris on that. back in madrid where prime minister is trying to urge the ecb to take urgent steps to stabilize the market. i guess he's talking to them about reactivating their s&p. you can follow the latest developments on our website, as europe's peripheral -- we've excited up with yahoo finance so you'll get greater access to our content of essential business news and analysis. we have an exclusive interview with yahoo experts. [ mechanical humming ] [ male announcer ] we began with the rx. ♪ then we turned the page,

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let's get an update on spain. the prime minister asked ecb to take short-term action to fight volatility and prime minister says the only liquidity needed is ecb. what do you think he wants the ecb to do? >> reporter: he want the ecb to reactivate their program to buy

debt from european countries but the tune has changed from the country here in madrid. the prime minister decided to leave some sort of war against european central banker in this letter sent to the president of the european commission ba row sew and eu president van rompuy is requesting short-term action to stabilize the market and asking ecb -- he claims the ecb is the only institution in europe able to do so. in this letter he claims the euro uncertainty is increasing pressure on some european countries, including on spain and stressing liquidity was fleeing, going to the core of the eurozone by requesting action he's leading a war against european institutions including the bundus bank. just one detail, though this letter was made public this morning but dated 6 june, which

means it was sent before the bailout for the spanish banking sector. >> so, he knew what was coming. an interesting date. thanks for that. meanwhile in greece ahead of the election tsipris has refused a bail out. julia, what is he is saying with more? is he covered he can win any kind of majority? >> reporter: well, the point he made yesterday at this press conference is you've got two questions, go with a leftist government in syriza or pro democracy party. he was saying to the people, right now you have to choose. one person i spoke to yesterday said it's basically blackmail. he wrote in the opinion piece today, he said he wants -- although greek people want to move away from the current bailout deal and move to a growth or a different pact all together, so he's moving away it seems from the initial

declaration deal. that's what the market wants to hear and europe wants to hear. another point he made for the first time yesterday was an acknowledgment perhaps of an emergency plan. something that is there if negotiations with europe fail. this is the first time we've heard anything like that from him at all. go to watch. back to you. >> jules, thanks for that. meanwhile south korean president says europe's crisis will take center stage at g-20 summit as european leaders get their house in order. on the asian front they warn japan will have to take more action on a bilateral free trade act. he says japan must slash surplus with south korean before talks can continue. bilateral negotiations have been suspended since 2004. reminder of headlines from around the world. spanish prime minister has asked the ecb for urgent short-term

action to stabilize markets italy has seen borrowing costs rise again at an auction of 12-month t-bills. and jamie dimon says he's sorry for jpmorgan's trading losses as he faces a grilling from lawmakers on capitol hill today. 

u.s. open, european stocks at session lows right now, off 0.2% for ftse 100. ibex the stand up, 0.8% and that has impacted u.s. futures right now. we are forecasting -- seven points above fair value on the dow about 3 1/2 points above fair value on the nasdaq -- or below, i should say, below fair value and a point below fair

value on s&p 500 indicating a negative start now. just a reminder of what they told us on today's cnbc about investment strategy. >> people are concerned there's not a lot of top soil moisture so it's dry and they're taking a long position in corn and possibly wheat as well. >> i still have the same as i did for q4. 50% in corporate bonds, the biggest in the marketplace giving close to 10% in return this year. 25% in tail risks where i buy different options, a little gold hedge and then 25% in cash because i think the market's extremely cheap. >> i think, you know, we've had a moment where the bond market gets too overvalued and we can make money in the equity market. >> chris wily joins us with his final thoughts as well.

one guest said the market is extremely cheap with sir henry saying with bond valuation you can make money in equity market. are they right? >> i am inclined to agree. equities are cheap. european equities are definitely extremely sleep, the lehman lows, cyclically adjusted. u.s. equities are the floi in the ointment really because much more nuanced debate about whether they're cheap or not. if you see earnings retreat in the u.s., suddenly they won't look cheap. the broad take is equities a good value, very good value compared to bonds. it's not fashionable to say at the moment, but people will have to come back and think about how they return on capital rather than just worrying about the return of their capital, that debate. and they're not going to get a return on capital of bonds. if you're a fund manager and sitting in bonds, the yields

you'll get will be eaten up by fees, nothing left for your clients. i think you have to have some equities here and you have to be brave, man up, accept a bit of volatility because you're going to be in it to win it. >> thanks for that. good to see you today, chris wily. what's on the agenda in the united states today. may ppi out at 8:30 a.m. eastern. producer prices broadcast to drop. 8:30 we'll get may retail sales. they're expected to slip 0.3% as well. we'll see whether there's any benefit if we get low oil and gas prices, will that feed through. plenty more to come next on "squawk box." you've seen andrew's in washington, joe and becky will join them as they count down to the jamie dimon testimony. i'm ross westgate in london. thanks for watching "worldwide exchange."

morning. good morning. today's top stories -- jpmorgan, jamie dimon, the chief to apologize for the bank's trading losses. his testimony is hours away. dell decides to give back to shareholders, declaring its first ever dividend. the leader in business news and most visited financial website are joining forces. cnbc and yahoo finance forming a strategic content and programming alliance starting today, wednesday, june 13, 2012. "squawk box" begins right now.