this this is today's edition of "worldwide exchange," i'm russ westgate. spanish and italian fields spike after another downgrade. that's weighing ahead of a three-year bond sale. meanwhile, u.s. treasury secretary geithner -- onus on the u.s. and other countries to do their part to boost global growth. plus output levels at the opec meeting in vienna. crude could slump to $50 a barrel.

and another profit warning and round of job cuts from nokia, the ailing phonemakers forecast bigger than expected loss in its mobile business. once again, sending its shares sharply lower. you're watching "worldwide exchange," bringing you business news from around the globe. welcome to today's program. one hour until the trading day in europe. stocks on the downside, advances being weighed down by the decliners ratio a little bit more than 7-3. european stocks yesterday, it was a mixed session, the ftse 100 is down 18 points. we're pretty flat for the xetra dax, the cac current down a quarter. we'll come in to spain but that country's debt rating one notch

above junk according to moody's. there are individual stocks worth pointing out. bskyb, down 7%, bt down nearly 3%. the total package for the premiere league 3 billion. bt spending 738 million pounds to show its matches on the internet and the bt vision. the rest of that money is what bskyb have pumped out. it means the football clubs in the uk will get another 30 million a year, which one expects will go straight into waejs and other issues as well. nokia down today, its their third cut in earnings outlooks in just about a year. they took 10,000 job losses, stock now down 7% in helsinki. it's the concentration on the bond markets we look at today as well.

1.5%, it has been noticeable so far as we ten to see rises in yields elsewhere. some people are wonder whether they're starting to price in a convergence strike. 4.5 billion euros to be auctioned today. the key is the 2 billion to 3 billion of the march 2015. that's the three-year. in spain, we're up fresh, euro highs right now on debt, 6.88%. and we'll keep our eyes on gilt as well. 1.5 billion. what's the the appetite for money at these yields. 1.5487, it will be interesting how the dollar trades. we have cpi today. if there's any hint, we may get qe. euro dollar at the moment, 125.76.

we have been above the two-week low of 122.80. that's where we stand right now in the european session. we have more on asia out of tseng pore. good morning. >> thanks, ross. similar picture in asia. markets are mostly in the red as investors scale back on risky assets ahead of the greek election. the shanghai composite is down 1%. gains in chinese liquormakers were one group providing comfort to that index but not enough to keep it in the green. the hang seng also lower on then trading. average turnover has fallen year levels last seen at the debts of the financial crisis in late 2008. the most actively traded stock by far was retailer esprit holdings which lost 11% today. the nikkei is off at the close, down 2%, as the yen strength eases. the kospi finished in positive

territory, helped by bargain hunting. no such luck for australia. its index finished at its lowest level in ten days, down 0.5%. and have a look at india right now, down more than 0.5%. that's after wholesale inflation data came in slightly lower than expected. we'll have more on that from mumbai later in the show. back it you, ross. >> thank for that. those are expected to climb to 5% for 3.9% reach at a similar auction last month. we'll bring you the latest from that auction plus in-depth analysts from 11.10. the l they are facing increased

downside risks with the ongoing debt crisis the main worry. they've kept rates at 1% last week. besides talking about the u.s. needs to do more for growth, she's also come out and said we need a political union in the eurozone. a political union. and that politics for the people are what's important, not the markets. keep your eyes on those comments. madrid the victim of a downgrade. moody's cutting the rain on spain's sovereign debt. concern about limited access to the markets and the cost the country faces to restructure its banking system. it's now baa 3 from a-3, one level above junk. it pushed the rating further into junk territory. and eu commissioner says spain may need to liquidate. he says winding down one of the lenders may be less burdensome

than rescuing it. at the same time, it was suggested an audit of the spanish banks. the paper cites a draft report by oliver wyman and roland burger. plenty to talk about once again with spain. let's go to madrid. that 65 billion recapitalization, i mean, i'm presuming, you know, that would be 65 out of the 100 possibly they are allowed to take from the eu. >> reporter: indeed. it would be much more than the estimate made simply by the imf over the weekend, last weekend, that spanish banks would need less nan 60 billion euros.

that the first piece of information. the second one, of course, is the comments, that were less than welcome in spain. the spokesman for the spanish economic ministry say the government would stick to the plan to clean up, recapitalize older banks which had been rescued by the state. the statement came after the spanish government was planning to shut down one of the three banks which is currently being rescued. they didn't specify which bank would be of concern. the spanish government is waiting for eu approval for the rescue of these banks. back to you. >> thanks for that. we had a note out as well. spanish banks borrowed 324.6

billion euros from the ecb in may. joining us, european strategist, from absolute strategy research. nice to see you. >> good to see you, ross. >> i think that's quite encouraging. we're moving to some form of resolution and that there's a recognition now that germany is going to be paying. and that rotation out of puntz is quite encouraging for me, recognizing people are starting to recognize, maybe this is a time to start saying what does the end game look like? where are people heading? is the breakup the most likely option or is a solution that fully involves germany the most likely option? >> where do you get the idea that germany is ready to pay? >> i think if you -- >> they seem to reject it every -- apart from the redemption fund scheme, everything else seems to be squarely rejected. >> what we keep on getting is

that we get some action from them. so all those people that told you last year that the euro was going to break up, greece wasn't going to be part of the euro by the end of 2011, they were wrong. we still believe that the euro will have 17 members at the end of this year and whatever is needed to be done at some point germany will do that. germany wants to see everybody sign up to that fiscal compact. then they will start to talk about some form. >> let's talk about sovereign control. >> i think the answer will be yes, they will do, if they need to do that to keep this euro project alive. before they let the project go, we will see all of those things happen. >> are the european people prepared to give up sofr controlcontro sovereign control? >> i think that's the question. do they want to go for the immediate prices being outside

the euro would present them with? >> how do you keep greece, keep in mind, the numbers never stacked up. what program do you come up with? >> you have to come up with a wide range of programs. the key thing is that the euro as a whole has to be weak enough to provide competitiveness for the weakest members. so our key strategic view here for the markets is that, you know, that weaker euro, that stronger dollar, is going to be the strategic thing for the year. >> you i don't have to take a firm political view, though? >> absolutely. so far we've seen these governments prepared to take those actions even where it has been unpalatable, the answer has been yes. >> >> all right. >> no matter what they say initially. look at what they do, not what they say. >> i'm looking at what they're doing. germany hasn't done anything yet. that's my point. >> three months ago there was no

chance at all there would be any kind of socialized fund. now we have them accepting the idea of a redemption bond. >> there is constant movement. >> meanwhile, withdrawals of greek banks increased ahead of this weekend's elections, according to the dow jones. the rate of withdrawals has been edging higher with an estimated 600 to 900 million euros leaving the system each day. according to the report, that amount could reach 1.5 billion euros by tomorrow. julia's got more for us in athens. >> reporter: thanks, ross. i think given the level of uncertainty here it's not surprising that reports of this nature surfacing, i can tell you we've been making withdrawals here at the atms on a daily basis, certainly no sense of panic but here given the talk of a potential return to the drakma and what this election might mean, i don't think it's surprising there is a level of concern among people here. that's the message i'm getting. the authorities will be monitoring this.

analysts have been talking about this as one of the potential accidents that could happen in greece. a lot of oversight on this matter. we're not going to see a resolution of any sort until we get sunday's election results. the new democracy leader yesterday said he's as open as he can possibly be since he's been making comments in the election process about how willing he is to form a coalition. that is a change. it's an important point to note, it comes of course on the back of comments he made to on this series apart, he said they've written anywhere policy in drakmas. they will get their opportunity to response. it's the last policy rally before the election on sunday, looking out for this emergency plan, should negotiations fail. and moving away from the initial rhetoric they mentioned. ross, back to you. >> thanks for that. just a couple days to go before those elections.

ian, what happens on -- what happens on monday do you think? >> i think what we see on monday, we'll see the greeks decide they want to remain part of the euro, that they will accept some form of. >> he says he wants to stay part of the euro. he says vote for me and we'll stay part of the euro. >> that is a move from where we were a few weeks ago, when everybody was saying if there is that vote, they'll be out. >> people have said he said we'll rip up the terms of the bailout. >> if you've seen this all the way through with every government that comes up against an imf loan package in the part. they talk about the fact they're going to rip it up and the international policymakers go in and explain the facts of life and the reality and they accept some kind of oversight from either the imf, the troika, et cetera. >> we get a third bailout. >> and we get another bailout. because the politics are here. thinking about investment rather

than, you know, mice economic theories. the investment conclusion here is that you want to bet on the euro staying together. and that means it has to be a weakened euro. >> you talk about investment. no business -- which international investor, whether business or fund or anybody else, private equity group, women put money into greece until they really know where greece is staying in euro? >> that is why the whole rest of these packages that we're going to be talked about at the end of the month have to be in place. you have to have bank resolution process. you have to have the deposit insurance in place. you know, and some banking unit. and this is what the eu is moving toward. >> -- flatly refused. >> let's see what the outcome is at the end of this month. >> okay. >> from an investor -- >> they've been playing it down again. they've been playing it down again yesterday. >> betting on breakup is the way to lose an out. and short term with very, very

oversold on europe relative to other markets. that's where the sentiment can kick back aggressively. >> i'm enjoying this. be sure not to miss the in-depth coverage of greece's crisis. go to cnbc.com. we've had something out of the philippines central bank as well. it says volatile oil prices hike demands, upside risks to inflation. the inflation expectations are anchored. on today's show we'll be out to vienna. what will the ministers decide on output levels? also, the eu lifted a 13-year trade restriction in myanmar. we'll have an expert opinion on that. the british prime minister david cameron. plus, we'll have the first view

from north america as timothy geithner says europe has to take more measures quickly. we'll be in toronto at 5:30 a.m. eastern. boss lloyd blackfein. he said he was more likely to die at his desk than leave the bank. if you want to join the conversation at "worldwide exchange," e-mail us at cnbc.com or tweet me @russwestgate. >>. kelly is reporting on the latest out of opec. >> the politics of opec are difficult as well. more on what to expect out of the meeting later today. behind me, we'll leave you a

shot of the hofford palace, where meetings are already under way.

welcome back to the program. i'm kelly evans. not in london, i'm in vienna, in

front of the hoffburg palace where behind me the opec seminar is taking place ahead of the opec ordinary meeting that will start this afternoon at about 3:00 ordinary time. the key question, of course, is whether opec members will agree to keep the current production quota at 30 million barrels a day. and perhaps more importantly, whether they'll reign production in so that it will meet that level, given that we're running 1.5 million barrels above that in recent months. i caught up with certain members of the committee, the libyan oil minister, here's what he had to say about the meeting. >> i think we're in the market of supply and demand, not for the sake of lowering production but having a stabilized price is the issue. >> would you prefer to see prices stay at current levels? >> $100 i think is reasonable for everybody. >> so $100 a barrel. that's what he and a lot of others say is a reasonable level. what's interesting, though,

you're seeing the political fractions develop. this is opec between the iranians, the venezuelans, the algerians who would prefer a cut to keep the brent prices at 97 or a little higher. ross they they may have the longer term view in mooned knowing that it will do more to support the global economy and maybe keep the shale revolution from move iing this to the u.s. years to come. >> certainly we've been detecting this with our u.s. clients, the view they were able to -- the u.s. was going to get that energy independence and the more oil was pushed up towards 100, 120, the more pressure there was. is there a willingness to accept these lowest from some quarters in opec to stop the u.s. from

moving to that independence? >> you know, ian, i don't know. there is a willingness among the saudis. question is to what extent they're facing opposition among the rest of the members who would prefer to see a little higher oil price and have their own political reasons for doing so. iran would love to see higher oil prices, ease pressure internationally on some of the sanctions that are supposed to go into effect july 1. that may prevent them from any real kind of action later today. it does seem likely that it would make it more difficult for them to agree to a cut in production. keeping current levels, given that we're at five-year high will be a bear erb signal for crude and that could help them accomplish the goal of not preventing too much from shifting to the u.s. you know, these dynamics are too strong for this group to be overcome. >> we had this -- kelly, we've

seen some extreme reports out today, credit suisse in one of their reports saying, look, in a potential eurozone crisis we could see $50 a barrel on brent. has anybody there talking about sort of a crisis scenario and those prices for oil if europe implodes? >> i have to say, you still hear people talking about this idea that a $100 level is ideal and sustainable and where we'll stay right now. they keep emphasizing how they want stability. the macro forces are so strong here, even in a bearish situation we're going to 50. we do head lower, opec will come together and agree to production cuts and stick by them. while they're important, there are much stronger demand factors here at play. it's kind of up to opec itself to demonstrate it can do something to stem precipitous decline in oil prices.

don't rule out the possibility of maybe an extraordinary meeting in a couple months time if there's more clarity on a deepening global demand situation and the situation in iran. >> the weather is getting breezy there, huh? >> yes. i'm going to blow away. it's actually a beautiful day but the wind seems to kick up every time that i'm talking. >> just for you. just for you. great to see you, kel. check in with you later. over in india, rising fuel prices are one factor that caused their inflation to jump 7.55% in may from a year ago. the central bank could cut rates on monday. we have more from mumbai. hi. >> thanks for that. it definitely was a disappointing inflation reading but do remember that it is pretty much in line with consensus estimates. 7.55% is what it has coming in terms of the wholesale price

index for me this time. the manufactured products inflation has come in at around 5.02 versus the estimated 5%. hence there are a lot of analysts working on the street with a possible rate cut of around at least 25 basis points on monday and that maybe the result, the bank of india will look at crr, basically the gas reserve ratio in order to ease liquidity in the scenario. at least around 50 basis points, some banks even asking for 100 basis points. with regards to inflation it has come in at 7.55%. it's not taying away from the fact that we are working with the consumer price index of 10.3% in the last reading. it has been data which has been generated over the past couple of months. it's something they cannot ignore. the other point is march inflation figures have been

revised upwards by 80 basis points as well. >> we should consider joint european banking supervision, carried out by the eba, not the ecb as some think. but the financial watchdog should not oversea national banks. one wonders how much power it would really have if it doesn't oversee banks. >> there has been discussion whether the large systemic banks would be covered and then the national structures would maintain the smaller links. that certainly seems to be favored by the germans at this point. what we will end up with is a eurozone banking union. my suspicion is they may well model it on bank of england, having the fsa within that enterprise. you might see the ecb and the eba merged at some point.

you're watching "worldwide exchange," bringing you business news from around the globe. and here are the headlines

from around the globe. spanish and italian yields spike again. u.s. treasury secretary timothy geithner rejects calls to push europe harder to solve its debt crisis as angela merkel puts the onus on the u.s. and other countries to do their part to boost global growth. output levels at the opec meeting in vienna. another profit warning and another round of job cuts from nokia be with the ailing phonemakers forecast are bigger than expected loss in its mobile business. its shares are lower once again. kelly is in vienna for the opec meeting. we'll be back out to her again. european stocks are down on the session lows, advances being without paced by declines.

less, the xetra dax. spanish bonn yields have hit fresh euro highs this morning, around 6.88%. we're now at 6.94%. we're not far away from the 7% level. we're seeingiels in germany slightly higher as well. italian yields at 6.28%. we have 4.5 billion euros worth. they'll be looking to do 2 billion to 3 billion today. we have an auction today from the uk as well. there's been several central bank decisions recently. its kept its benchmark lending rate at 6%, borrowing costs at 4%. it's delayed a forecast of when rates is likely to climb again and thailand and indonesia have kept rates steady this week. the bank of japan, most people

think it will keep its bond buying program at current levels. the bank of canada is facing a delicate balancing act. canada should hike rates this year if the economy doesn't turn sour. the paris-based organization says the country may need to slow down budget timing if the economy naturally does deteriorate. how do we sum all this up? thanks so much for joining us. let's kick off with this, to get how central banks should be responding, what's your global growth responding this year? >> i don't think we'll be in recession. the emerging world is slowing down a little bit. it's still on a pretty rapid pace. but the fact that the emerging world is slowing down is extremely important, i think, for commodity prices and for the overall momentum that we'll see in developing countries. you mentioned canada, bank of

canada. i don't suspect they'll be raising interest rates anytime soon. they're worried about the slowdown globally and its affects to canada as well. >> how much is this accelerating the slowdown because of europe? >> over the last couple of months we've seen downgrading of forecasts, half a percentage points in the case of many of the merging kmaes. brazil has been knocked down quite a lot. in canada and the u.s., growth channel is 2% to 2.5%. a lot of the forecasts are at the bottom end of that rank. it's still disappointing growth by the standards what was normal before the financial crisis. >> yes. obviously, what happens with the u.s. and canada. we're seeing retail data out of the u.s. is coming in weaker now. we get inflation numbers that suggest we are getting lower

again on those numbers. do you foresee another bad qe3 -- >> you have to ask yourself whether qu2 did anything. >> is that point? >> another round, if the second round didn't work thatch, the third round will not be all that therapeutic. you've got ten-year bond yields in the u.s. down to levels we've never seen in our life. economics is a confidence game. if you can't get confidence built up on consumer side and business side, effectively you're pushing on the string. >> just because it didn't do it, doesn't mean it won't do it again. >> that's true. the republican party is not that enamored with multiple rounds of quantitative easing. we are going into an election which will be a tough call as i said, the value of an extra

round is quite questionable. i think the u.s. is going todef >> u.s. treasury secretary timothy geithner has called on leaders to speed up the crisis. >> i think what you'll see in the g20 and after, for them to lay out more clarity what these broad objectives mean on banking union, on a firewall for the reforming countries and on the growth stuff. i think more clarity would be better sooner. >> angela merkel had a speech to parliament this morning, sayinging the u.s. must reduce its budget deficit and the eurozone does not have sole responsibility for the global growth. what do you make of that tit for

tat? >> they are still not having an adult conversation about their fiscal problems. after the election they face a fiscal cliff that's pretty substantial. the rubber hits the rouxed in january of next year, effectively if they don't do something over the next few months you'll find that their deficit does not come down, perhaps even the u.s. economy could go into recession be with which will not make the miss cal situation better. >> taking up on several of those points, i'm interested in your view on this as well. what we sense, the eurozone crisis intensifies as global growth slows down. euro sovereign debt is trading like corporate debt. if we get stronger global growth, then actually a lot of these pressures will be eased. for us, the answer lies in emerging market policy easing. >> i think your point is very well taken.

our folk dus is on europe or occasionally the u.s. it's the emerging world. that's basically the locomotive for growth globally. it affects so many issues globally. it's domestic demand in these markets that is important. >> yes. >> unless we do get stronger growth -- >> that requires them to change their policy focus and put the focus on domestic demand. they can't really switch those strategies and economies around quickly, can they? >> the funny thing is, china is already the largest car market in the world. number three in the world as far as tourist expenditures. they've done the transformation over the last few years. what is needed is stronger consumer spending. overall growth in china will be difficult to get above 8% this year. by the standardses of the last 25 years, 10% was a benchmark. >> the economy is so much bigger, so 8% of the current size is to the rest of the world

is just as powerful as 10% when it was smaller. >> and 8% in china, getting india back on track again, growth seems to be falling towards 6%. brazil, back up to 3% to 4% as opposed to 2.5% is extremely important. that's the story for the next couple of years in terms of getting the global economy rolling again. >> thanks for seeing you today. >> thank you. >> thanks for joining us. jp morgan ceo jamie dimon said he needs to focus on the eurozone. >> we're going to confess our sins, we're going to move on and hopefully not going to take our eye off the ball, which is running the business. that's what i worry about now. we have to are a business. every day people are buying and selling and macing loans and trading. we're worried about europe. >> meanwhile, pro democracy

leader aung san suu kyi is on a 17-day european tour. her first stop, geneva. restrictions have been lifted. she will visit five countries, including britain where she once lived. there has been communal unrest back home which has reportedly killed 28 people in western myanmar. we're joined by a senior analyst for asia at the economist intelligence unit. thanks for joining us indeed. we have seen indications of lose losening up from the regime. are they on a process that will lead to inward investment? >> we don see myanmar achieving a escape velocity yet.

we will very much take it at pretake upstage. smlt reforms can still be rolled back, the violence you describe happening in the western part of the country. that's one of the biggest challenges for the government. reforms will continue. the momentum for reform will continue as it has been but without real structural change. investment will still come in, foreign aid will come in and growth could be up to 7.5%, 7.7% in later half of the decade which would put myanmar as one of the fastest growing countries in the region, albeit from a low base. >> how long before restrictions on trade and investment get lifted from western governments? >> we've seen the suspension. i think the western governments are looking to see what the reaction from the burmese

government is, things like labor protests, protests about power shortages, the reaction from the government has been quite positive so far. they're used to, you know, ruling with an iron fist and they haven't done that. that's a good indication. the absolute suspension and lifting of sanctions we think that that is still 12 to 18 months away. >> we've already seen leaders from the west very keen to get into myanmar. hillary clinton and foreign secretary here in the uk hague. myanmar is the leverage pin between china and india and the west looks as if it's desperate to get hold of this geopolitical asset, which is the key thing here. >> yes. if you look at the region, asean, general democratization is not a prerequisite for investment to flow in. there are neighbors, territory

and regimes. myanmar is looking at models like china and singapore and saying what can we do to implement reforms that will mean that we get the asean share that will allow investment to come in. the suspension of sanctions means that some investment will come in. i think there will be companies and investors that are still looking and waiting for sanctions to be lifted. >> and what's your outlook for the currency, the chat? >> the chat has depreciated somewhat from the levels from april 1st. we see some slight depreciation but maintaining 815 to the dollar for the remaining year and slowly appreciating as the investment comes in, probably around 790, 780 going into 2014. >> thank you for that.

senior analyst at the economist intelligence unit. overin japan, eu measures are men to the slow down the flow of oil. we have the story from tokyo. >> reporter: hi. japan's lower house is set to pass a bill on friday that will guarantee insurance for shippers carrying uranium crude oil to japan. the aim is to keep uranium oil coming into japan after the european union bans its insurers from providing coverage for iranian oil shipments from july 1st. the government will shoulder up to $7.6 billion in damages if a tanker containing uranium oil to japan gets involved in an accident. to comply with u.s. sanctions, japan is already cutting oil supplies from iron which account cot for 8% of its total crude oil imports. the country is looking to avoid any further drastic supply costs that could drive up the cost of

expensive fuel imports. that's all from nikkei business report. back to you. >> thank you. in the asian ipo space, malaysia is on track to clinch the tight of the world's second biggest public offering after facebook. they priced its $3.1 billion offering near top of its target range. they are expected to be listed later this month. manchester united has reportedly delivered a swift kick to its asian ipo plans. various supports suggest it's looking to go public in the united states instead. the club has decleaned to officially comment. and despit a series of deferred and dropped ipos in the asian region, dow jones suggest formula one has told the singapore exchange it still wants to list later this year.

formula one was supposed to begin trading this month or the next. either way you look at it, it's been pretty poor. >> absolutely. the interesting thing for us, again, from an investment strategy perspective is if people don't want to list or see lots of m & a, is that more likely to be a time to be buying if somebody wants to be selling? i think this is one of the signals that we are at one of the longer term entry points into the market. if you look at the very long run data for m & a, the low point for ipo, 82, 92, 2003. these are points where longer term investors, people that have got more than a three-week, three-month horizon should be coming back in. the bank of japan is set to ounce no its policy decision. no aigs diddal easing is expected this time around. the bank of japan is awaiting

t the impact on sunday. analysts suggest it may be lower. also still to come on today's program, the british prime minister david cameron is appearing before the committee. we'll be outside the royal courts of justice when we come back. so, how do you feel about cash back? 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... too soon? [ female announcer ] fortunately, there's an easier way with creditcards.com. compare hundreds of cards from every major bank, and find the one that's right for you.

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you're watching "worldwide exchange." you're watching "worldwide exchange." as another european leader in the spotlight today. she's been in the head liens a lot lately for her part in the eurozone financial crisis. angela merkel is in the tabloids for wearing orange. patricia, is a lady not allowed to wear orange? is it just a fashion statement in what's the problem? >> this is just the media looking at things in a different way, russ. it was interesting yesterday, on the day of this very important gain between the netherlands and germany, she had to wear orange in the morning and i'm sure she did not think twice about it or

whoever dresses that wonderful lady didn't think twice about the gameamehat was up in the evening. and then of course our tabloid paper here said today, after all days, you did put on orange. how could you? even a national paper in the netherlands says maybe merkel is a seek rate fan of the dutch. it did not help matters. interestingly for the game itself she wore an apple green kind of knit ty jacket. underneath, a slight orange touch. maybe that's her diplomacy as a political figure. >> i think she's being politically astute. she needs the dutch support. she knew germany was going to win, so it didn't really matter. i think that shows a lot of political astuteness. >> yes.

the real problem is that's an old jacket, we've seen it before. that's my real issue. >> she should have put it on e bay a long time ago, selling it. >> all right, patricia, thanks for that. besides angela merkel we're focused on the british prime minister david cameron for a different reason. becky is outside the royal courts of justice. you're reporting on it, becky. you're not giving testimony, are you? no, not on this occasion. luckily i have not been call. what david cameron is wearing will be the least of his problems today. in the royal courts of justice, david cameron will be giving evidence of the leveson

enchoirry. now, this all came about because their voicemails of a murdered school girl had been hacked into by news of the world, which in turn is own by news corporation ultimately. this brought about the media ethics inquiry which has quickly turned into close scrutiny of the relationship between news corporation and rupert murdoch and empire in general. and how close they are to the political classes here in the uk. very tough questions being put to david cameron today. largely around his close personal relationships to a couple of key people who previously were close parts of rupert murdoch's empire. rebeckah brooks to start with. she was lastly the ceo of news international. she was very good friends with david cameron. there are all sorts of stories

about their friendship, how rebekah brooks and her husband would enjoy horse i'ding sessions with david cameron, send each other with texts. another former news of the world editor who was then hired to be the communications chief for david cameron's government. that all came to a sticky end as well. he's also been charged. lots of question about his relationship with these people and how close he is to rupert murdoch and news corporation. back to you. >> okay. becky, thanks so much indeed. on trade web, spanish bond yields hit 7% for the first time in the euro era. currently on our reuters quote. on trade web we did go through 7% parentally.

and ian, let's bring you in on this. everybody talks about the 7% mark, the magical figure. the point is, spain is already saying we don't want to fund ourselves at these prices anyway. >> i think -- i'm surprised we're at these levels. the reality is that funding will be there. the spanish banks will be taking that debt and they'll be getting the support from the european union by the government. so it's a timing issue here. our sense is still that what we have seen, the most interesting development in the last few weeks, as soon as francey the to a growth narrative, it started to come down. >> which is bizarre. they're going to get growth from borrowing more. >> but what's -- the lesson of these markets is that as long as you feel you can sane tenant

payments short term we'll carry on funding you. there's still a lot to be unwound. our sense is there is a little will to put this in place. >> you've laid out your base case on the political will aspect. if you believe the political will is there as you suggest, it is now an entry point. >> absolutely. you're gambling on the next political decision or looking at sentiment. sentiment is extreme. the probability of a rally is very strong. for longer term investors you've got a three-year view, a seven-year view, evaluations are attractive relative to bonds and cash. the things that are oversold at the current time are a lot of the european stocks and a lot of the cyclical stocks. >> should you be if you take

your strategy should you be looking to hedge downside risk or is that too expensive? >> you would hedge the downside risk of that being in the euros. >> right. >> that's where the hedging should be. the key thing -- oh, direct currency. what we're trying to say is that emerging markets looked cheap. global growth will be the solution here. and you know, tholz exposures from the cyclical lows, international stocks will be some of the key players. >> thanks for joining us today. he goes, we stay. still to come, more on spain as we take a look at an italian auction coming up as well.

this is "worldwide exchange," i'm russ westgate. the sovereign rating suffers another downgrade, weighing on markets ahead of a three-year bond sale in italy. timothy geithner rejects calls to push europe harder to solve its debt crisis as laange merkel puts the onus on the u.s. and other countries to do their part to boost growth. analysts at credit suisse warn that crude could slump to

$50 a barrel. another profit warning and job cuts at nokia. a better than expected loss in its mobile business sent shares sharply lower once again. if you're just joining us state side, a very good morning to you. what kind of news are you waking up to? well, the news this morning is in italy we haviels over 7% on ten-year debt for the first time since the euro has been created. this of course after moody's as well has downgraded the country to one notch above junk. and of course we're still waiting for the details of any bailout for.ba banks as well. some suggest we need 60, 65 billion euros for a bank bailout. now, we've got that focus on.

coming up in the next 15, 20 minutes we get a result out of italy. they're auctioning up to 4.5 billion worth of debt today. we might get the rest of the money from two runoff auctions, 2009, 2020. what do those spanish yields mean for thely and this auction? and how much closer are they being dragged into the crisis and there may be a potential bailout for them as well yields are still going up even though we have those yields going up in the periphery as well. bund yields are also down. some start to speculate we're getting yields rising in spain and some of the core like germany as well, is that the start of a convergence trade. we started off around the 126

level as far as we move it on, we'll show you where we are with the currencies. there we go. 125.47. still above the two-year low that we hit in june. aussie dollar, u.s. dollar, sterling. we have a 50-year auction of gilt today. retail seams weaker than expected. if we get low inflation as well in the u.s. today, people might start thinking about whether we get another bout of qe in the united states. that's why the dollar may not strengthen an awful lot more even if europe's problems get worse. what about european stocks down on the session lows right now? we're off about 0.5%, the ftse 100 down 1% as well. the u.s. futures there for this early stage. well, we are just above fair

value, half a point on s&p 500. we're about 4 points above fair value on the nasdaq and right now, the dow is called around 4 points above fair value. flat start indicated for the u.s. markets. that's where we stand hear. let's get up to speed with what happened in asia as well. joining us is sixian li. the shanghai composite is down about 1%, gains in chinese premium liquormakers added little warmth to the index but not enough to keep it in the green. the hang seng lower on thin trading. average tornadoover as fallen near levels last seen in late 2008. the most actively traded stock by far was retailer esprit holdings, down 11% after its ceo

left. the nikkei is off its low at the close, down just 0.2%. as the yen strength eases. the kospi managed a mild rebound to finish in positive territory, helped by bargain hunting. no such luck for australia apparently. its index finished at its lowest level in ten days, down 0.5%. top miners and banks were lower. the sensex, trading down by about 1%. that's after wholesale inflation data came in slightly lower than expected. that's all from me here in asia. back to you, ross. >> thanks for that. also so you know, david cameron is starting the inquiry into press ethics at the high courts of justice in the uk as well. that's the british prime minister today talking about that. for financial investors, the focus once again on spain with the high yields.

and that downgrade from moody's and jones. they cited concerns about limited access to the markets. stephan is in madrid. we have sort of a -- we're working through a proposal for a bailout for the banks. with the yields hitting 7%, how long before people are i saing we need a bailout for the whole country? >> that's the question. according to the bank, actually the level of 7% will prompt the ecb to add if you'll remember, the spanish prime minister, sent a letter to ask action at the european level. he would like european action to ensure stability on liquidity for the banking secretarier in europe. this is clearly a call for the ecb to re-activate its program to buy sovereign debt from europe. what moody's said yesterday evening, spain is just not one

notch above the junk category. moody's says that's, of course, the in fact that spain requested a -- up to $100 billion. the limited access to the financial markets for the spanish government, the concern is the spanish economy, which is not widely expected to remain under recession. moody's keeps on the span economy, it says it will review its rating once the size of the banking bailouts will be known. we'll have the first announcement next week on the 21st of june at the latest from two people, expected to announce how much money will be needed. in morning, abc newspaper here in madrid, a draft saying that the banks would need 60 to 65 billion euros. it's far from the total envelope

of 100 billion but it's much more than the estimate that was given last weekend by the imf. they say the banks would need less done. 40 billion. the latest here in madrid, yields up 7% for the spanish tenure. >> so how do we break the negative -- thanks to are that, stephan -- how do we break the negative feedback loop? helen, yields above 7%. is spain just a question of liquidity now or does it rapidly become a question of solvency can be too? >> good morning. so offiously as we see yields pushing through the 7% level, the focus is on whether this becomes a self-sustaining loop and with the rating downgrades, there is obviously a risk that we end up with a lot more selling. we aren't quite there yet, i would say. what it does confirm that is a pure banking bailout for spain in its own right is not going to

be enough. it will eventually correct itself into a full bailout for spain or a european measure that comes out of policymakers as a whole. >> how do we broke that loop as you've put it. >> we published a big report yesterday. the idea was every time you look at the sovereign crisis and how it works out, the end points and end games, everything comes back to the banking system and also the central banking system within europe. the key that up, s out for us in terms of breaking this issue, it's an issue on the banking side and also on the sovereign side. to our mind there's two. it will be a choice for europe. they take the tough decisions which would involve sovereign debt on the sovereign side. actually moving losses up the capital structure in terms of

where costs need to be taken. >> once you start talking about more losses, of course, for debt holders, then you also get negative feedback from that, don't you? >> you do. what you need to get, if you look at the situation we've seen in spain, spain is a good illustration, pertinent, obviously. good illustration with of the forces at play in europe. the bamplgs are actually big investors in government debt. it used to be the risk-free asset which then needs to support their weaker bank and you end up with this feedback loop. you need to get to the stage where you have to allocate the costs without impacting the other. if you think about where the costs need to fall and in terms of whether on the bond side you need to haircut sovereigns or the banks, if you think about greece, the effort there was very much the take of the

sovereign bond holders and keep the banks intact. the numbers there, it said that was possible. when you look at spain and the contagion we see happening, there with within the system, through the banks and sovereigns themselves, spain itself not not be considered in terms of what what's done there for spain. it's more a question of what gets didn't for europe overall. if you end up going to sovereign haircuts because of the exposu e exposure, the you are an automatic leader and wind up having to put senior bond holders in the banking system. >> how much time do they have, helen? >> obviously events are moving very, very quickly. spain is touching through in the ten-year, which for those countries who have been bailed out previously has been a trigger point. spain does differ from those

countries. you can't think of this as a hard threshold. the greek election has to be taken in mine. this will set a back drop for what's going to happen on monday morning. the spain news directly will be very much a function of what happens in greece. if we get a failure to form a government there that can work with the rest of europe, then we're going to -- things will be very, very fast indeed. however, we if we get a more positive result in greece, a lot of the fear could reduce. we could end up with a market that's more supportive. >> thank you, helen. we're also going to focus of course on what is going on in the old markets today. opec, a meeting to decide on

their production quotas. >> hey, ross, here it's going to be a question of the oil hawks. as we couldn't down the hers until this afternoon's meeting, that's what to watch. the politics between these nations, i'll have full details just after the break. [ creaking ] [ male announcer ] trophies and awards lift you up. but they can also hold you back. unless you ask, what's next? [ zapping ] [ clang ] this is the next level of performance. the next level of innovation. the next rx. the all-new f sport. this is the pursuit of perfection. all in one account. keep watch on the markets.

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he he says he's worried about oil prices this as opec meets to decide on output levels. kelly is in vienna and joins us now. how heated is this debate, kelly? >> ross, it's heated. when you talk to people here, it's clear there are deep divisions. you have the saudis on the one hand who wouldn't mind keeping production at or above the ceiling of 30 million barrels. you have libya, algeria, iran, venezuela, the hawks if you will who would prefer to see production cut. why? that would not only support oil prices but in the case of iran, a higher oil price would put more pressure on eu sanctions going into effect july 1st. it's the biggest producer, the one that has a lot of political influence. what happens with the saudis and

its oil minister is closely watched going into this meeting. we saw the iranians storming down the hall yesterday after what was a meeting between the two. a lot of this happens on the sidelines before the event take place today. there is not going to be necessarily a real outcome. maybe they stick to the 30 million barrel target that was set in december. it could be an hours long meeting, a dragged out affair that we saw last june that comes to very little or it could be a short meeting that comes to very little. it's not clear if they're going to do anything about naming the next secretary general. there's talk it could go to the iraqis. that depends on the relationship between iraq and iran. all of these politics seems to make federal reserve meetings by comparison, like a walk in the park, ross. >> interesting. we could debate that point,

kelly. good to see you for now. thanks so much. kelly will have plenty of reports from vienna throughout the day. nokia has come out today with its third profiting warning or earnings restructuring in about a year. the stock today down another 10%. we're now at 199, the lowest level we've seen for 17 years with nokia's share prices, bearing in mind the rises we've had. still to come, european stocks are id traing right now, the spanish bond yields reach a 7% level and we're waiting for an italian auction, right after the break. optionsxpress, where you can trade your favorite products

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we have the results of italian bond option yields. sharply high. the yield 5.3%. it was 3.91%. this is seventh charge and sixth charge we had on may 14th. it's the yield that's the focus. and they also sold 627 million in february 19 btp. the yield on that 6.1%, nearly a 4 percentage point higher than 4.2 that they paid on april 7th. a bid to cover 1.99. the 2020, 73 million of that,

the yield 6.13 versus 5.33. the bid to cover on that 1.66. the good news if you can put it like that, they did sell the maximum targets of 4.5 billion btps. on that, a sharp jump in the yield for the three-year money, 5.3% us 3.19% back on may 14th. don smith is government bond strategist at icap. this is the spanish year, 3.7%. what are the implications. >> it highlights the nervousness across the eurozone at the moment. everything, even periphery markets are on the back foot. there's an awful lot of domestic deman for italian government debt. the auctions don't provide that much of a litmus test for the euro itself. more generally, nervousness is

increasing particularly ahead of the sunday greece elections. >> yes. some people wondering whether we've parked grease or volcano parked greece. what's going to happen? what's your key thought on this? >> i think it presents a tremendous venture for the euro and the implications of what might happen have been deflected in the reactions we've seen from euro officials this past week. the spanish bailout package was larger, came earlier than expected. you get the impression that eurozone authorities are trying to build a firewall around the spanish banking sector ahead of a possible major event after the greek election. there's a good chance that zeriza is voted in. possibly grossross goes into di conflict with the eurozone, particularly germany. i think it's a fast track to a

greek exit from the eurozone. and the contagion effects across the eurozone. they're almost unthinkable in that evolcano. >> the we just don know. is the price we're seeing this week, how much of that is related to people being worried about being subordinateed in a spanish bank bailout. >> i think the subordination issues are important, but i think it's more about the event risk presented by the greek election on sunday. that is now the big focus for the markets. if we get through the greek election with some kind of stable government, perhaps new democracy forming a stable government, there will be an enormous sense of relief akrorns the kurnz. i think the chances of that happening are less than 50%. >> what would relief look like in terms of yield action for spain and italy?

>> well, i think over the next week or so, we'd see perhaps 0 to 40 basis point contraction. there are still underlying concerns, very intense concerns about the long-term viability of the currency, in particular, the ability of peripheral countries to remain in the currency itself. even in the event of a new democracy government in greece, there's a huge question mark about the longevity of support for such a government, given that there will be almost immediately cutting back heavily in public sector workers and eroding their support base. folks at first glance, there's a fairly stable government emerging in greece, that may be unraveled within a matter of months if there's support from the broader electorate diminishes sharply. >> we've seen this week, even as we've seen yields in spain head

higher, we've seen german bund yields move. is this the first sign of people thinking if there is going to be a solution, we're start tock play a convergence trade? >> i think there's a sense in which, even in the event of euro fracture, ultimately, the cost to the german taxpayer in germany, germany will be on the hook for a lot of this. i think as that realization continues to strengthen across the markets ultimately, i think short term you'll get tremendous flight to quality into germany but ult mayly it wi ll ll lly - will push them higher. the yaeld for the italian auction sharply higher. 5.23% versus 3.19%.

the bid to cover were okay. domestic policies support that. ten-year spanish yield just below that level. euro dollar, we're around 1.25, 1.26 mark. euro dollar is slightly lower, 125.50. as far as stocks are concerned right now, we were down about a percent. ebex is flat, interesting enough. we are still called just above the line at the moment, a pretty flat start for u.s. markets indicated by the futures. our next guest says the it's reminiscent of the action that

took place during the height of the u.s. financial crisis in 2008. we'll be joined from canada with david rosenberg, next. optionsxpress, where you can trade your favorite products, all in one account. keep watch on the markets. or use our exclusive tools to help find ideas. it's powerful, easy-to-use technology for trading stocks, options, and futures.

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is this this is "worldwide exchange," the headlines from around the globe. stocks head lower, spain enters the danger zone, yields top 7%. an area that has forced other

into accepting bailouts with conditions. the treasury sells three-year bonds amid the country may be dragged into needing a bailout. oil prices hold steady. and shares of nokia fall below 2 euros for the first time in 17 years. this after the phonemaker hits investors with another profit warning and more job cuts. a very good morning. if you're just tuning in state side right now, u.s. markets are calling a flat open. the s&p 500, the nasdaq and dow is currently around five points above fair value. european stocks have had losses around about a percent, a little bit less. the xetra dax and the cac

current. the ibex is fairly flat. italy, sharply high yields. 5.3% for the three-year auction yield, compares withiels of below 4 in may. they did sell the targeted amount, though, across three actions. 4.5 billion. that was seen as good domestic support. we have the money away. hope it yields higher. the key point is yields have been hitting higher. italy now up to nearly 6.3%. spain this morning has been through the 7% mark for the first time in the euro era. people keeping their eyes firmly mixed on that ahead of the greek election. what have the guests on cnbc said about what they should be doing. >> if you've got a positive outcome, relatively positive outcome to the greek election,

the aussie may gain against the euro. >> using the $95 barrel brent price. that comes from the basis that opec countries set their budgets, their treasuries long term at five years. >> the focus is on avoiding knee jerk reactions and being very confident in where you are invested, investing in quality companies, companies that are cash flow rich, have protected demand, et cetera. potentially on the defensive side. >> this is what some guests have said today on cnbc. timothy geithner says it doesn't make sense for the u.s. to push europe harder to solve its debt crisis. geithner says eu leaders understand they have to do much more to restore calm and not

minimizing the risks. >> from talking to them and listening to them over these last 2 1/2 years of crisis, my view is they considered this carefully and they've decided that it is in their interest to hold it together. what they say to us privately, they will do whatever is necessary to hold it together. >> geithner says the g20 meeting in mexico next week will be a good place for european leaders to outline steps they plan to take at their summit later this month. join is us more is david rosenberg. thanks so much indeed for joning us. do you share this view, european leaders will do whatever it takes? because whatever it takes seems to me to be -- angela merkel said it this morning, we need a political union in europe. >> that's 100% correct. there's no history of a monetary union surviving without ultimate political and fiscal union.

and the problem in the eurozone is that you want to go that route. you have to pass legislation through all these individual member countries. it's not as simple as the united states where you can just snap your fengers and in two days get a tarp program through congress. it's very complicated. the problem in europe is that time is running out. and to embark on that path would probably take years, even the stability fund is still not in place. only three countries have vatfied it so far. it's much more complicated and i'm very skeptical that the policymakers and europe will be able to get their act together on time. the markets are selling them that the sand is running quickly through the hour glass. >> the whole process has been about buying time so they can move the political assess. what can they do to give

themselves more time? i don't think you can necessarily have things like eurobonds or bank unions unless you get the politics right first. and countries are prepared to give up sovereignty and control. >> that's right. and angela merkel has already said there's a quid pro quo. germany will not give the entire continent a credit card that doesn't have a limit. all the pressure is on germany. meanwhile, germany's done quite a bit. they've put in 25% of gdp toward these rescue packages. if you want to become a united states of america, ebb prepared then as a country to sacrifice your sovereignty. i just don't see it happening. and the other reality that has not been addressed is that

economic growth, nominal gdp growth, some growing xwautds of the eurozone are not sufficient to service the debts. the average eurozone country has a 500% debt-to-gdp ratio. these countries cannot service their debts and they can't service them in a period where nominal gdp growth is flat. that's the overriding problem that hasn't been resolved. just throwing more debt at the leveraging cycle is not a durable solution. ultimately you look at these countries whether it's greece, spain or ireland, they dramatically require a currency deval situation. that's what we need to restore competitiveness. that's a classic textbook case of how you deal with a debt crisis. >> if they can provide a result, it doesn't mean they face an

immediate exit. what is your prognosis for what happens. >> whichever party wins, the question is what sort of coalition will they put into place. it will be a fragile coalition if we manage to get a resolution. both parties are committed to the euro. let's assume that the right thing prevails and that they live through the bailout terms. the reality is that the greek economy is still employed. they're going to require even more bailouts in the future. and as we're seeing right now, it's not even greece anymore. it's now attacking the banking system. and it's heading into spain and italy. so greece maybe is the poster boy for europe much like thailand was the poster boy for asia back in the late 1990s. the situation has spread. when you start getting bank runs, you know you're dealing with more than a sovereign wrish in a teeny country.

>> the president obama expected to use a speech in ohio today. aides suggest he'll ask voters for more time to boost growth. he also says romney's proposals would return the u.s. to the drink of economic crisis. romney is also speaking in the balle ground state of ohio. what's your own view of fiscal cliff as it's called? will we get over it, through it, over it, under it? >> you know, it's lots of question marks as to what a lame duck congress will be able to accomplish later this year. then again, a lame duck congress in late 2010 after the midterm elections managed to kick a few cans down the road. this is a net result of having the tax code down the road. you have 43 tax provisions

expiring, the fiscal withdraw is 4 percentage points at gdp. do the math. under status quo we get a significant fiscal contraction next year that looks like 1960 and 1969. those those fiscal contraptions led to economic recession. as you said wean you're talking about the president is that we don't have an escaped philosophy in the economy. if we had typical 5%, 6% growth, which is not atypical, you take the lamborghini from 120 to 40 or 50. in this situation, the baseline trend and gdp growth is so weak, less than 2%. let's assume congress can kick half of this down the road. i don't think there's an easy way out. >> thank you so much for joining us early. still to come, we'll be back out in madrid as the bond yields

break through the 7% barrier. we'll find out who is in the running for the u.s. open when we come back. could tyler get back on a major trail? >

so the maximum amount of debt targeted its latest auction. we'll have more on that. meanwhile, aung san suu kyi has just received the nobel peace prize. those pictures at the moment coming from norway. sorry, from stockholm. not that we can see her. she's hidden. she has just received that. let's return to what's going on in the debt markets. italy in its latest auction did auction the amount it needed, 4.5 billion, although at a significantly higher borrowing cost. one tweeter said who is buying? if you want to join the conversation, get in touch with us here at "worldwide exchange." we heard don smith it was quite clear they were buying domestic purchases, not just insurance companies.

tweet me @rosswestgate. you have to remember italian yields were above 7% in november. before they had a change of government. in a fresh sign, though, in spain's banking system, the ecb revealed borrowing has increased again, reaching a new record high of almost 325 billion euros. stephan is in madrid. what are people saying about not only a bailout for the banks, we might need a bailout for the sovereign as well. >> that's a risk indeed. the yield on ten-year spanish bond has reached 7% this morning. clearly it's unsustainable level for the spanish government to finance itself and actually it

should prompt the ecb to act on the market. that's the view from are the bank. that's what the spanish prime minister was asking to european officials in the letter sent that was unveiled yesterday. it's a reaction to the downgrade, double downgrade from moody's. moody's is baa-3, within level above junk territory. egan-jones, spain is now in the junk category, downgraded from b to ccc. we had this morning, the numbers, the level from the ecb. we had people saying that the banks would need up to 65 billion euros in spain. the official announcement will come next week. >> stephan, thanks for that. shares of nong nokia are be

euros. they hit investors with a third warning. nokia also says it will cut 10,000 jobs. credit suisse says oil prices could slam to $50 a barrel. analysts at the bank say collapse in trading and global activity because of the eurozone crisis would lead to a sharp deflation in oil demand. the producer priced its $3.1 billion offering near the top of its target range. if you want to take an escape from everything else, i recommend this, the first round of golf's second major, the 112th u.s. open tees off in just a few hours. we're at the olympic club in san francisco. the big question is can tiger woods get back on the trail? or could it be phil mickelson or

another player that may come out of nowhere? we have been previewing the field from the bay area. >> the question is, what should we expect this week considering the year of 2012 when so many proven champions have won and also the history of olympic when there have been so many upsets? >> i think we'll get more "are you kidding me" moments from this u.s. open. it's wednesday and we already have an are you kidding me moment. there are tantalizing tee times and groupings that grab your interest and the fact that we've followed so many qualifiers and are familiar with them, no telling what we'll get from day one. i have i afeeling we'll get mind blowing exploits. >> we have the youngest player in the field, a 14-year-old, then you have the oldest, michael allen. i think the players that would

expect to do well is the ones that will feature come sunday. i don't think we'll see as many putts made as what we'll see this career in a u.s. open. i think the greens are perfect. that's usual see 20, 30-footers go down in a u.s. open. we may see that this week. are you kidding me, what a great pairing with mickelson, tiger and bubba. we have tiger wants to improve upon the performance at pebble when he was paired with phil. phil gets focused and keyed i when he is playing with tiger. then we have bubba, refreshing aft after. >> let's not forget about luke,

rory and lee, easily the champion at olympic could come out of that three-some. >> that's a preview of what's taking place in olympic. if you want to stay away from the market action, watch that. that's what i'll be doing. and the dow has narrowly escaped a down day. optionsxpress, where you can trade your favorite products,

all in one account. keep watch on the markets. or use our exclusive tools to help find ideas. it's powerful, easy-to-use technology for trading stocks, options, and futures. keep trading whether you're at home, in the office,

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the rest the rest of the european markets today, down about a percent across the board. is i is pretty much the session. the ibex down 0.3%. the united states, there's a trio of economic reports, all out at 8:30 eastern, weekly jobless claims, may cpi and first quarter current account figures. look for results from kroger, smoothfield foods and retailer pier one imports. they've been indicating a flat open for most of the day. we're now indicated for a slightly negative start. that's slightly worsening we've had in the last half hour. rob morgan is chief investment strategy and joins us for more. a good morning to you. a lot going on in europe. we have the inflation data out of the u.s. what gets your attention? >> well, i think ross, the spike

in spanish and italian yields certainly is troubling. i'm surprised that u.s. futures are only off a little bit. i would have thought they'd be off more dramatically. something else going on, though, is that we also have -- this is an options expiration week. there's a lot of potential for volatility as we close out the week today and tomorrow. >> we have inflation numbers today. weaker retail sales. some of that was down to lower gasoline prices. if we get weaker inflation prints, will people start thinking about what the fed might do? >> it certainly could give them more room for qe. they are trying to wean the markets off of qe. but certainly if inflation remains constrained, then that gives them more room for that

type of approach if they wanted to do qe3. >> with so much uncertainty coming out of europe and the economic story as well, what are investors to do? >> well, they have to stay conservative, ross, as far as u.s. investors go. we're recommending large cap dividends. dividends give obviously some return in a sideways market. those large cap multinationals based out of the u.s. can reach the emerging economies where two-thirds of the world's growth is, even though that seems to be slowing somewhat as well. so staying conservative makes some sense. that's from a macro standpoint, the area that we like. >> rob, that sounds good. thank you for that. good to see you. rob morgan, chief investment strategist at fulkrham

industries. he says he never traded policies in return for their support. he's also admitted you have to take care when you have personal relationships with members of of the press but he says he thinks he's done that. aung san suu kyi has just received the nobel prize for peace as well in stockholm. we keep our eyes on what happened with spanish bond yields. italian yields were sharply higher. up to 5.3% from 3.9% from three-year debt this morning. keep your eyes on the yields. "squawk box" is coming up next with becky jo and andrew. i almost said carl. otherwise for me and "worldwide exchange," i'll be back again. whatever happens, we hope you have a profitable day.

i'm telling everyone, you know what, it's going to be tough. we need people to put on their jerseys, figure it out, help and we're going to get through this. we have to run a business. every day people are buying and selling and making loans and trading. good morning. the yield on the spanish ten-year hit 7% for the first time ever. after a moody's downgrade. italian yields also jumping. treasury secretary geithner says 2% growth won't cut it when it comes to job creation and history is made once again on the baseball diamond. it's thursday, june 14th, 2012. "squawk box" begins right now. here we go. good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick.