hello hello and welcome to today's edition of "worldwide exchange." i'm ross westgate in brazil, rio de yeah nar . a new twist from the fed. could the federal reserve launch a new round of asset purchases? failing to lift european stocks at the open. >> g-20 leaders back a european pledge to overhaul blocks of the eurozone, starting with the region's banking sector. >> i'm pleased the european leaders said they would take all necessary measures to safeguard the integrity and stability of the eurozone to improve the functioning of the financial markets. japan records its first ever trade deficit with europe underscoring asia's vulnerability to that region's troubles. and we're also hear in an exclusive interview from brazil

january central bank president. he talks about record low rates and the impact from the european financial crisis. so, welcome to today's program. with just a little twist. i'm here on the beach in rio, the copa cabana. it's pretty early, only 5 a.m., so pleasant of lights around but nobody here playing football or doing any sand at the moment. they're tucked up in bed. we're here for the earth summit, rio 20, 20 years on from the original that set out those sustainability that led to things like the kyoto protocol. >> i don't know how you got this assignment. i wonder if you're drinking yet f you have a caparina. >> i tried one last night. they're pretty strong. a lot stronger, the local stuff, than what i've tried before in

london. i have to tell you that. you went to vienna. i don't know anybody told you, whether the choice was going to vienna for opec or come here. >> it's "worldwide exchange," the best part about it, we get to dot around the globe, popping up who knows where. i understand you have a bunch of interviews lined throughout the show, yeah? >> yeah. look, we have that exclusive with the central bank president. we've been talking to a whole range of cos about a number of different topics, growth here, the driver -- the level of consumer, of course and the impact of the olympics. i think it's worth pointing out at the moment, brazil is coming off the first quarter of really big fall in gdp numbers, 0.2% in the first quarter. we've seen interest rates cut to record low of 8.5%. our reporter has been out and assessing the state today of the brazilian economy.

>> reporter: at $2.5 trillion, brazilian's economy ranks sixth largest according to the imf. growth managed to withstand the worst global crisis since the great depression. in 010 the latin american powerhouse expended 7.5%, which slowed. now many see economic activity in brazil picking up again this year. a growing middle class and rising commodity prices have fueled the boom since 2003. resource prices have fallen but the middle class is still spending and expending. 36 million people rose above poverty line between 2003 and 2011. another 10 million will join them before 2014 according to brazil's central bank. managing partner at sherman agrees. >> i think this will continue. probably more slowly but it will continue even as the rest of the

world cools down. >> reporter: main had challenges remain for brazil as it attempts to shift away from commodity-led growth. according to estimates the country's infrastructure is among the worst in the world. private sector is still burned by high taxes and low productivity. but there are opportunities. rising consumer prices have given the central bank room to cut interest rates to a historic low. the brazilian real is weakening steady allowing them to compete locally and global. >> we estimate the impact of the world cup and olympics at around 1.5% of gdp. so 1.5% higher. >> reporter: brazil is hoping to benefit from investment in its infrastructure as it holds the world cup and olympics in places

like rio de janeiro. world cup fever may be the push brazil needs to overhaul the infrastructure before joining the world to celebrate the goals. from rio, cnbc. >> now, besides that interview with central bank president i talked about, we'll be joined by a couple of great guests on the beach. the biggest listed hotels group in brazil, 60,000 rooms. they hope to add another 20,000 on -- by the time the football world cup comes in two years. that would be around 1110 cet and investor in google earth talking about sustainability because they can map the deforestation. just an hour into the trading day in europe, over to you, and let us know what's happening with those markets.

>> ross, thanks. let's take a look at what's happening in early trading here across europe. the stocks 600 is down 0.2% as decliners are outpacing advancers by 2 to 3 ratio. driving headlines this morning we have greek bank -- greece's alpha bank, second biggest lender, denying its in talks. we're following this story throughout the morning, after an earlier report the two were in talks. take a look at what's happening across europe. we have the ebex in green, up 40%. cac 40 down 0.3%. and ftse 100 down. the federal reserve may do something to further stimulate the u.s. economy, we're not catching that much of a bid in european markets yet. what's happening in fixed income, in uk gilt, 1.729%.

spain, up. the ten-year german bund is down 1.56% and we'll keep an eye on the euro/dollar. today that's down -- in the red but barely. down 0.1% to a level of 1.2675. a lot of people are watching the 1.27 level to expect the euro to continue weakening to the end of the year. let's check markets in asia from tracy chang. >> good morning. asian markets are mostly higher as investors bet europe's worsting debt crisis will trigger major central banks to launch a new round of investments. index market highest closing level since may 17th as risk sentiment picked up and spurred

gains for insurance and property sectors. elsewhere the kospi gain of 0.7% on a third straight of foreign buying. australian, the asx 200 finished modestly higher as anxious investors awaited the outcome of the u.s. fed policy. take a look at the greater china markets, hong kong stocks inched higher with banking and resource sectors in the lead. the shanghai composite landing in negative lower dragged lower by real estate companies and financial related shares. what's interesting is property companies all landed in negative territory today. china daily reports country's top advisory body wants beijing to lose property restrictions to keep the economy growing and this is the first time the body has made such a recommendation. back to you, kelly. we're joined on set by guest

host, former deputy governor at bank of england. it's a great day to have you with us. the bank of england minutes will be out in just half an hour's time. do you expect, given their potential bias toward more easing, maybe a little action from the u.s. federal reserve today, that we're embarking on another global easing cycle to support growth? >> well, we definitely are in the bank of england. we saw three measures last week at the mansion house, which they have the next mpc meeting. the u.s. it's a bit less clear. i don't think we'll have full-fledged qe but we could get more asset purchases at the long end. we could get some more pledges to keep interest rates low. i think they're in that sort of territory. >> what do you think should be done? what does the growth outlook in your view argue for at this point? >> i think it's different in different parts of world. we see a slowing down in the bricks in the developing world, which is causing them to bring their interest rates down.

in europe we're still in the throes of a political crisis, which is actually getting worse, so we need some decisive action there. how long have we been saying that? in america i think it looks relatively stable. it's not growing as much as obama would like in the run up to an election, but it causes difficult time for a central bank to start pumping up the economy. >> this actually is a central question here, which are central banks acting because nobody else is? would it not be better for politicians, for fiscal stimulus to have been in place from the get go? >> well, if you look at the british situation, we have the biggest deficit since history began pretty much, since war time. it's just beginning to turn down. there isn't a lot of room for more fiscal action. that's why so much attention is being pushed on the monetary side. >> i would argue if you look at what's happening with interest rates in the u.s. and uk and

keying off japan's experience a while ago, they're saying to the market now is the time to borrow at super low rates and stimulate the economy, grand austerity experiment has been a failure. >> well, you -- it's -- it's what would have happened otherwise. i mean, we had a splurge. we had the biggest fiscal deficits ever. we had zero interest rates. we had qe. as it turns out, rather than leading to a big bounce, that's just stabilized the situation. i think the two things that are holding britain and europe back at the moment are the lack of clarity about where europe's going. is it going to consolidate and deepen the union or is it going to break apart? that -- that is still not reached its critical point. in britain, it's the banks. the banks are still retrevenlging. that's woohy you've seen extra measures taken last week. >> ross has a question from rio.

>> morning, sir john. nice to see you. sorry i'm not with you. i want to pick up on this point with record low yields for the british government, is there an argument not to be made actually the government could borrow more or they could say, look, this borrowing is going to be for infrastructure spending, maybe build a new heathrow or a third airport? i wonder whether investors wouldn't reward them for taking -- and if you make that long term borrowing because what they could do is change the future landscape of what britain has to pay on its debt. is that not an opportunity to do that? >> well, the trouble about government borrowing and the cost of borrowing is it tend to be an on/off switch. we've seen that in europe. if you have the confidence at the moment, you can borrow for almost nothing. if you lose confidence, you then see rates zooming up. i think the government is to be quite right and cautious about increasing spending. what you will see, and the chancellor was saying this the other day, is a greater use of the balance sheet to guarantee

private sector and infrastructure projects. it will be -- it won't be classic spending. it will be more guarantees to take some risk away from the private sector, coupled with cheaper lender to the banks to get them moving. >> we'll have more with sir john in just a bit here. first we want to get to our latest headlines this morning. an italian proposal to use european rescue fund to purchase peripheral debt is supported by france. italian prime minister mario monti suggested the permanent and temporary resources could be used to buy bonds on the secondary market. that is the esm and the esfs. it was hoped it would stabilize borrowing cost for countries italy and spain. let's get out to madrid for more on this. stefan. >> reporter: it would give spain breathing space. this year the ten-year bond

reached record level at 28%. we're not so high but still a speculation spain would need to be bailed out. this morning told congress spain doesn't need bailout despite tension on bond market and despite increased speculation. spain gets support from european union. europe project would have to be reinforced to get out of the crisis. that's the latest from spain. in the meantime we're still receiving conflicting reports regarding timing of the banking rescue package. yesterday the european leaders increased the pressure on spain to request formally its bailout for banking sector as soon as possible. prime minister said spain would not make a formal request until the publication of the stress test results for its banking sector. that's the other question, when the tests are going to be

published. yesterday bank of spain say final report will be delayed until september but the finance minister rejected the call and say the result will be published at the end of july as expected. knowing that, of course, tomorrow we'll have the first indication about how much the banks would need in spain. this will be the preliminary report of the stress test in spain. that's the latest from here. i send it back to you in london. >> thanks. timing, of course, continues to frustrate investors there. coming up next, are brazil's boom years over? after the break, brazilian central bank president gives us his take on growth and interest rates. stay with us. ross will have a lot more.

you're watching cnbc's "worldwide exchange." i'm in rio de janeiro, the rio 20 is under way. it's given us a chance to come to this country and talk to various parties. we had weak growth in the first quarter for brazil down to just 0.2% with interest rates at a record low. carolina took a chance to catch up with president of the brazilian central bank and asked him what he thought his growth rates were going to be for the year.

>> according to market projections, growth, economic growth in brazil should pick up the second half. we should have growth around 4.1% year end by the end of the year in the fourth quarter. this projection into 2013 is that growth year-on-year basis should be running at 4.6% rate according to market consensus that we collect here with market participants. >> do you mean this year? >> this year. by the end of the year, year-on-year, fourth quarter against fourth quarter, is going to be running around over 4%. 4.1% gdp growth year-on-year in fourth quarter 2012. >> reporter: having this scenario in mind having growth come back only at the end of the year, can we expect half percentage rate cut in interest rates in july? >> we have a number of other

issues that support our view that growth is going to be sustained and pick up throughout the year. first, the policy stimulus, as we mentioned, and second we have had continued growth in labor markets, job creation has been great in brazil, 1.4 million jobs have been created in the last 12 months, in april. we have had wages growing at around 3%. so, this makes the rio wage growth at 5% in 12 months. 5% rate in 12 months. which is an important rate. it's been higher than that in early 2011 but still growing at 5%, the rio wage bill, which is a very important support for expansion in domestic demand, which is growing, if you think about retail sales to the order of 7%, 6.7%, 7.in 11 months.

we believe growth will sustain and pick up throughout 2012. >> so you think the central bank job is done here? >> i'm not going to anticipate policy -- future policy moves, but what i've said, the central bank has said, is that everything we have done so far, it's in response to an economy which is weaker than what potential output growth could be for brazil. and this bodes well for our strategy of bringing inflation to converge to the inflation target for brazil. i think we've been very successful in doing that. >> reporter: and credit expense, so does that and defaults in this country, does that worry you? >> the rates have picked up in brazil, but they are a result of what has been done in late 2010 and early 2011 in terms of credit extension. when you look at the new vintages of credit since the second half of 2011, you see a

much lower delinquency rate. much lower than the previous. our expectation is with the pick up in the economy, throughout the second half of the year, with labor markets still working strongly, 1.4 million jobs in 12 months, with real incomes showing expansion also, with the control of inflation, with lowering -- lower rates, i'm talking about lending rates and bank spreads, so we have all the conditions set for the delinquency rates to be reduced. that's our expectation. some stabilization throughout the middle of the year and then a retreat in delinquency rates as you move towards the end of 2012. >> we'll hear more on his views on the real as well. it's worth pointing out the new growth forecasts are going to be outlined next week. we may see a downgrade of that

to what most economists are predicting 2%, he was predicting 3.5%. john, we know brazil has struggled over the last year with the value of the real rising and then falling again. similar problems with the rupee in india. they didn't cut rates. china has. we may get more rate cuts here. what do you think the emerging market central bank reaction is going to be in terms of supporting growth further? would focus be on central banks or government fiscal, domestic policies? >> the big one is china, of course. what we've seen in the past is that they tend to use every instrument they've got. they direct banks to lend, cut interest rates and spend government money all at once. if they get alarmed. as i read it at the moment, they're not alarmed. they're seeing this as a turn down in growth, but at the moment, a manageable one. they're starting on the monetary side.

but if growth lags further you'll see them bring out the rest of the armory. in brazil, it's different. they've got different markets. and they're very dependent on the u.s. still. as you were hearing there, i think the central bank feels it's more or less done its job. so, we're not promised so much more action there. >> yeah. that's the tone we got from india. we're saying, it's down to the government to put their house in order. it's like what the -- there's this gain between central banks and politicians saying we've done our job. you've got to do yours. how much leverage do central banks have over the governments or do they not? is that a game of bluff? >> well, it's -- it's a very complicated game of bluff because central banks generally lecture governments on spending too much.

that's the reflex additive of a central banker. in these circumstances where you're actually saying the governments aren't stepping up, they're not spending enough money, that's very unusual position for central bankers. normally what they mean is tighten up. high moral tone. >> and speaking of high moral tones, the minutes from the bank of england will be out in a couple minutes. sir john will stick with us for analysis on that. we'll be coming to it just after the break. investors want hints on whether there will be more quantitative easing in the cards. [ 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.

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this is this is "worldwide exchange." here are the headlines from around the globe. a new twist from the fed, hopes of coordinating central bank action failed to lift european stocks at the hope. >> g-20 leaders are backing a european pledge to overhaul the building blocks of the eurozone, starting with the region's banking sector. >> i'm very pleased european leaders have said they'll take all necessary measures to safeguard the integrity of the eurozone to improve the funct n functioning of the markets. >> japan underscoring asia's vulnerability to the region's ongoing troubles.

w welcome back to the promisgram. ross is in rio. in meantime, we have comments from european central bank member saying it's key reforms in greece are implemented before financial aid is granted to that region, saying that if the troika is detailed, he says he's not in favor of euro bills. he's been a well known critic of government bond purchases and of the broader euro bond schemes being discussed. take a look at european stocks before these reports that we're expected to get at bank of england minutes. first, we've got the ftse down about 0.1% on the morning's, xetra dax the same thing, cac

also down, and ibex up about 0.6% in spain. take a look what's happening in bond yield. we've seen a bit of a bid under those but we'll get back to that in just one second here. first, we've got the unemployment figures out for the uk. we're seeing the unemployment level rising. unemployment falling. and average earnings are up for the three-month period to their highest since december 2011. now, let's just bring up the minutes here, if we can, and take a look at what we're hearing from bank of england. wow. a 9-0 vote to hold key rate unchanged. a 5-4 vote to hold quantitative easing unchanged. king, miles and posen wanted a 50 billion pound increase in the quantitative easing scheme. fisher wanted a 25 billion pound easing move. most mpc members said more

stimulus was likely to be needed at some point. and some wanted to first see how near term eurozone events played out. a couple more comments. key ones to focus on, we'll throw this to john gieve with me. 9-0 holding the key rate unchanged but 5-4 on quantitative easing which sounds it's more more dovish than expected. >> yes, i think that is a nearer vote than we expected. the rate is a bit unrelevant. it hasn't been changed for three years. no surprises there. we've moved from having david miles as a lone voice to having a 5-4 balance. in case we weren't sure what that meant, we had a broad hint from the governor last week at the mansion house that we could expect further qe as well as the measures that they discussed. >> i'm just taking a note of the market reaction. if we can show what's happening with sterling, it's down on that dovish signal.

a big move in the last couple minutes, down 0.3% against the dollar. gilts are climbing. we'll take a look at the ten-year as well. not surprising the market's reacting this way but it goes to show perhaps people weren't expecting the bank of england to seem quite so ready. >> this is a closer vote than people would have thought it were. all you get is the result. the result is no change and people thought it was a little closer than in previous months. this certainly suggests we're on the verge of another round of qe. and, of course, we have these three other ways the bank's intervening on liquidity, on special discount window, providing cash on broader collateral and funding for lending scheme. >> yes. in fact, the cash for broader collateral. we'll get details. but i think ross has a question from rio. >> yes. it's quite a result. the fact as well that the

governor got outvoted here. doesn't happen that often but measure vin king, the government got outvoted. he wanted 50 billion. i wonder because so -- paul tucker had come out and talked about whether we need to go other things besides qe. are we getting to a stage actually here where we're reaching the limits of qe as evidenced by the new liquidity schemes and turning around and reducing the amount banks need to hold capital, they need to hold in their books. >> i think what measure vin srvy need to do other things but that didn't mean they reached limits on qe. i think we'll see more qe and other things. but the big change in the last month has been this funding for lending scheme, directly helping the banks with their funding costs, plus the decision to ease off on the regulatory squeeze on liquidity on banks. now, these are two things -- two new things. one thing i will be looking for

in the mpc minutes is any discussion they had of those measures. did they discuss the whole package or did they just discuss the interest rates and the qe, buying of gilts, which stle focused on traditionally. >> i want to bring into this conversation, head of european strategy at barclays. what's your take on these minutes and what this means for bonds yields in britain and potentially worldwide? >> well, i think it's very clear that over the past few weeks or months there's been a reversal by a number of central banks, which we're saying we don't really want to provide more accommodation. now they've turned around and much closer to providing more accommodation. in form of extra qe, extra operation twist or rate cut by the ecb. it's all positive for -- >> laurent, it's ross. just tell me -- it's ross.

how much more positive can it be for gilt? yields already at record lows. what more is qe going to do? >> no, i totally agree. i think it's positive for bonds but at the same time, the output diminishing returns to these extra accommodations provided by the central bank, which was the first point, why it didn't really want to provide more accommodation. so, it's other margin that it helps. and as we were discussing earlier, the other schemes, the lending -- the funding for lending and other types of direct access to the economy are probably going to be a little bit more effective in the medium term. >> is this going to -- how much more will this weaken sterling, do you think, laurent? because in some ways slightly stronger than in the past three months has been fairly good for inflation number that's been coming down as we evidenced

yesterday down to a two-year low? >> well, you've seen sterling moving against the dollar, but, you know, it's been -- it's been actually strengthening against the euro, broadly speaking, since the beginning of the year. i think that trend is likely to continue. the path of lease resistance is euro, maybe a stronger dollar and then sterling in between. >> laurent, we're going to get in the next hour or so, bidding opening for the broader collateral short-term measures that the bank of england's going to be providing, liquidity measure. ectr, what do you expect out of that program? >> i think that this is the first bidding. there will be more. it will probably take some time but it is definitely a move that is very helpful in the sense

that banks can use a lot of the collateral they were not necessarily mobilizing of the central bank. more effectively. and that should filter through to the economy. at the same time, you know, you can provide as much liquidity as you want. there must be also some demand for credit on the other side. so, it's not necessarily the case that you're going to see a very big pick up in lending to corporates or households in the coming months or quarters. >> demand for credit, that remains the sticking point here. and not just in britain. laurent, head of european interest rate strategy at barclays, thank you for that this morning. moving on now, export dependent japan posted worse than expected trade deficit in may. details live from tokyo. >> the trade shortfall came in at $11.5 billion last month, nearly twice the size economists

were expecting. three main factors were at play. japan's first ever trade deficit with debt-trubled europe. the yen at historic high levels and rising energy imports to make up for the idle nuclear power plants. the good news is that exports remained resilient. they rose for the third straight month in may, up 10 3rs from a year ago, thanks to a hike in auto demand, especially from the u.s. still the figure was essentially overwhelmed by gentleman. 's need for expensive fuel impor imports. analysts say these conditions will likely exist, forcing japan to report second annual trade deficit this year. back to you. >> thank you. joining us for more is nicholas smith, director and strategist at clsa. i guess the question is, how vulnerable japan really is. people have been talking about this economy struggling for so long now but we started to see signs of a turn-around. will they be able to extend those gains?

>> vulnerable? i don't think so. obviously, what you've seen over the last ten days or so was a sharp pick up in people's consensus forecast for the gdp, so they've picked it up to 2.5% against 2.3% for the u.s. obviously, europe sitting here in bad territory. compared to other advanced nations it's looking pretty good. in the last quarter it got 4.7% growth. you're worrying about the trade numbers. as you've kind of just heard, really what this was was the import side of it. actually exports was better than expected. people were looking for 9.7% growth in exports. they got 10%. the trouble is they missed it on imports. that's because you get numbers have ten days out of the ministry of finance. they were forecasting 3.3% growth in imports. they got 9.7%, i think. as you've just heard, that's

because imports of oil. what we've seen over the weekend was the prime minister finally making his mind up, thank you very much. could have been a little earlier. to restart nuclear. this is the start of the big change now. if anything, we're going to see an improvement in this. don't forget the fact, much more important than trade, is the fact that the current account surplus, the wider view of japan's import/exports, which is a surplus of $334 billion. not deficit surplus and that's why we'll be getting slightly stronger yen. >> i guess the vulnerability question is more with regard to japanese government bonds. people have been warning about their vulnerability for 20 years now. regarding the yen, if japan moves to reactivate nuclear power source, you say it could put upward pressure on the yen. how much upward pressure? >> oh, i don't think we're about to see some massive surge in the

yen. obviously, you will be watching 1:30 tomorrow morning, we'll be seeing the results from the foomc meeting. possibly twist extended rather than a big qe3 now. but that's another thing that could push the dollar down against the yen. but i don't think we're about to see some massive yen strength here. we're staying broadly where we are at the moment. especially -- if they manage to get their act together in europe, really what's moving the yen is risk aversion because for all you say about the jgb being ricky, it's seen as a safe haven. we've seen enormous flows into japanese government bonds. in fact, the highest holding a japanese government bonds for as far back as records go.

>> strategist at clsa, thank you for your time this morning. fascinating situation in japan. a preview, perhaps, of what's to come. rupert murdoch's global media empire is looking to increase dominance in the australian pay tv market. matthew taylor has details in this report from sydney. >> reporter: it appears as though there's more consolidation in store for australian media sector with news corp. splashing out on a multimillion dollar takeover. news limited is offering almost $2 billion for consolidated media, which is controlled by one of australia's richest men, james packer. $3.50 a share will hand a greater slice of subscription television market, seeing stake in foxtel to 50%. mr. packer owns 51% of consolidated media and indicated he will accept the offer but it will require approval from

australia's foreign investment review board and australian competition. the move comes two day's after the world's richest woman announced she upped her stake in rival media company fairfax to 20%. heightening concerns about media ownership in australia. separately, news corp. has announced a raft of changes at australian operations, reviewing newspaper business and streamlining the operations. the company says there will be job cuts but has not given any firm figures. back over to you. >> that was matt taylor from sydney. take a look at bonds. we'll see how they're responding to the dovish minutes out of bank of england. ten-year bund is up less than 1%. quick look at european stocks. ftse 100 up 0.1%.

xetra dax, same thing. paris is lower. spain up about 1% now. ross? >> yeah, it's amazing, those minutes. we'll talk about it with sir john in a minute, the fact the governor got outvoted. the only central bank where we know that's happened and allowed to happen. you talk about the markets as well. let's remind ourselves what happened in this part of the world. here in brazil, the bovespa up 0.25%. chile up 4%. that's the local markets have done here. still to come, though, of course, we'll hear more in our exclusive interview with brazilian central bank president and ask him about the impact of the european economy, slowdown

in china and a subject we picked up with a number of investors, ceos and economists and got their views on what happens with the growth in brazil, particularly as alluded to by the middle class. >> i believe income growth will continue, even if it doesn't continue to rise as fast as it did in the past, it will still continue to rise. it means the middle class will still be buying goods, still be wanting to have houses, cell phone, car. so, this process will continue. >> the current six years we probably have 35 million more brazilians in the middle class and upper classes. what that means is consumption in brazil will continue to grow very strongly. >> i think this will continue probably more slowly but it will continue even as the rest of the world cools down. úú]úñ

ross is still with us in brazil, but first we want to get some final thoughts from sir john gieve, who's been with us all hour. we just got the minutes from the bank of england out. you say that that's not necessarily driving trading action across the globe this

morning. don't tell, you know, the bank of england that, but that there's potentially maybe a resolution to the situation in europe, is what's calming people down a little bit. >> well, i think that's why you've seen german and spanish yields go the opposite direction because people now think post g-20 they'll see them sort this out in europe. i'm not so hopeful. the situation in europe is getting worse at the moment. that is to say, greece is in dire straits. it's not sure whether they can survive in the union at all. all the numbers are getting worse in spain, italy and greece itself. so, everyone knows that national guarantees of their banks no longer work but they need a european wide, european wide collective guarantee. the issue is, can they agree on one. can they agree on the terms with germany saying, it's got to be uncondition, austerity and a big sacrifice of national sovereignty. >> right, right. what do you think of this plan

apparently being floated now to have a temporary or permanent rescue funds buy european government bonds in the secondary market? >> well, i mean, that's always been an option. they're looking at it again. but, of course, the ecb has been buying bonds in the secondary market. the sums they're talking about -- >> a lot of good that did us. >> well, it's useful. helps to get you through the month. doesn't help to get you through the end of the year or into next year. >> and what in your view is -- so, if these measures are not something people should buy into with the idea it's going to solve anything, what would? >> what we learned from northern rock is putting a limited sum of money on the table doesn't convince people. they want explicit unconditional guarantee. in the end we'll have a eurozone guarantee of national debts. that's what we're talking about. the terms of that guarantee. what's unclear at the moment is whether greece will have leave

before that action. i think that's what's going to happen. >> is what's fair here the emergence of that new country and that country is europe? >> it's never going to be as close as the u.s. but it is going to be more of a federal union. that's why people talk about a banking union. that's another way of saying, can't we get the guarantee for the banks -- >> this is such a huge issue. shouldn't it be put more directly to people to vote on? shouldn't the debate held more in the open than is it as disguised as emergency crisis measures? >> i think most people in europe know what this is all about. this is all about how far you hang together or hang separately. the problem in europe is the peripheral countries are all in favor of hanging collectively. the call members are losing political support for standing behind the periphery. it's a question of how they come out of that. you know, we've been living this

for 2 1/2 years. at any point they could have solved this by going for a deeper union, but they haven't, and that shows how difficult it is. >> how do you think with the benefit of retrospect juan claude troichet reputation stands today? >> i think it's strong. he kept the european union afloat during this political crisis and was very sure-footed in doing it. nonetheless, you know, he left unfinished business, no question about that. >> what should mario dragi do now? >> he's flooded the market with money. he's pushing this notion of a banking union, which would in a sense collectivize banks, another way of periphery. he can't start attacking people. that's not his job. >> ben bernanke talking about the u.s. fiscal clip at the end

of the year, he's saying, look, there's only so much the federal reserve can do here. >> there's only so much that policymakers generally can do. there is no magic bullet, if everyone was sensible could get us back to 3% growth and 2% inflation bit end of the year. that isn't going to happen. >> well said. sir john gieve with us this whole hour. ross, back over to you in rio. >> yes, it's a good day to have a former deputy governor of the bank of england with us. meanwhile here in rio, they're building up to a couple of really big events. the world cup is coming to brazil in 2014, although it's the london olympics this year. they are coming to rio, yes, rio 2016. it means it's going to be a huge amount of investment and infrastructure needed. we've been asking a group of senior people, advisers, ceos, what impact they think those two events are going to have.

>> we estimate the impact of the world cup and olympics at around 1.5% gdp. 1.5% higher. this will be distributed over time. half percent a year, for example. >> these are going to be large financial injections into the economy. the old fashioned kansian sense. we're seeing stadiums, we're seeing airport renovations and expansions, subway systems and local transit. in rio they're taking it right down to b achaja and other project-based expenditure. that will give it a traditional kansian injection into the economy. >> coming growth in coming years will be 1.5% higher than if the world cup were not helped in brazil. particularly in 2014, but on top

of that, probably 250,000 jobs are going to be generated directly or instrictly. >> just two enormous event coming up. the famous football stadium built just after the war which is not far from where i am now and that's completely gutted and put back together again. a big four years coming up for brazil, indeed, rio as well. a little later we'll be talked -- joined by ceo of the hospitality group, biggest listed hospitality group on the benovespa, tapping in how people are coming over for the event and tapping into something long-term to sustain tourism as well. more of the subjects we'll get into here in rio. i'm still looking and thinking, if i were there now, just the reaction to those mpc minutes. >> to your point, king was

outvoted. it's been a big half hour as we look through these minutes. the governor king wanted more quantitative easing and was outvoted by a 5-4 margin. remind me of the supreme court vote in the-u as we look through these bank of england minutes. we'll keep an eye on sterling as that was knocked immediately following that report. you can see that move in sterling. take a quick look at the ten-year gilt in the uk as well. we're now -- there's the whole curve. ten-year now 1.72%. that's moved up a little bit. of course, what's cross-current against the bank of england minutes is the reports out of g-20 the temporary or permanent funds may come in here, ross, and buy european government debt. again, this is something european central bank has done in the past. nevertheless, it seems to be supporting sentiment. >> that's fine. great. still plenty more to come. we'll have more from rio.

we have more from central bank president talking about the impact of growth from brazil, from china, the lack of slowdown and euro zone financial crisis. we'll talk about the fed as another operation twist, an impact on that. more from the bank of england. they have their first of the special liquidity auction coming out at 1130 cet, 10:30 london time. more on "worldwide exchange." wñwñwñwñwñwñwñwñwñososososvycyíy

hello this is cnbc's "worldwide exchange." this is ross westgate in rio. kelley is in london. a new twist from the fed. hopes of a fresh round of coordinated central bank action have lifted risk aspect but failed to do much more european stocks. >> that's right. a fresh round of easing at bank of england looms closer as it shows governor king is calling for more stimulus but outvoted 5-4. g-20 leaders backing up european pledge to overall the building blocks of the eurozone starting with integration of the region's banking sector. >> i'm very pleased the european leaders have said they will take all necessary measures to safeguard the integrity and stability of the eurozone to improve the functioning of the financial markets. >> also in the show, more on our exclusive interview with president of the central bank. what impact from the slowdown in

china, eurozone financial crisis and what is he going to do with the volatility of the real? if you've just joined us stateside, a very good morning to you. you might have noticed something different today. i'm sitting here on the copacabana reach in rio. the rio summit is happening here. an excuse to come over and not just talk about sustainability and green issues and what is now the world's sixth biggest economy, kelly. you know, we had that very weak growth in the first quarter, just 0.2%. but a lot of people are still talking about the world cup coming and world cup and olympics, if this is a blip rather than a sustained downward trend. >> i'm shaking my head because you're on the beach in copacabana and i'm here in london. i'm okay with that, actually.

for you it's a lot earlier. i suppose it evens out. >> yeah. it was an earlier start because of the time. look, did no one tell you, you had the choice last week of vienna or coming to rio. did you not get that -- vienna was okay. >> beautiful architecture, hanging nout palaces, not bad. "worldwide exchange," you're like our matt lauer, where do you pop up? people are hoping where you are, ross, that brazil will be able to flex its muscles more in the second half of the year and show some growth or give boost and lift to the global economy. do you get that sense from the people you speak with that that can happen? >> i think the long term development of the classes is in play. what happens is the short term fle fluctuationses. 50% of this country's gdp is resource-led in terms of the exports as well. we'll get into that. let's remind ourselves, because we had that 0.2% growth in gdp

in the first quarter. we've seen 20% depression in the real as well. the interest rates are now at record low of 8.5%. carolina has been out and assessed the current state of the brazilian economy. >> reporter: at $2.5 trillion, brazilian's economy ranks sixth according to the imf. growth managed to withstand the worst global crisis since the great depression. in 2010 latin american powerhouse extended 7.5%, a marked slowdown followed as eurozone crisis followed. many see economic activity in brazil picking up again. growing middle class and growing commodity prices have fueled the boom since 2003. the middle class is still spending and expending. 36 million rose above the poverty line in 2003 and 2011. another 10 million will join

them before 2014 according to latest estimates. john ellis agrees. >> i think this will continue, probably more slowly but it will continue even as the rest of the world cools down. >> reporter: many challenges remain for brazil as it attempts to shift away from commodity-led growth. according to estimates, the country's infrastructure is among the worst in the world 37 the private sector is still burned by high taxes and low productivity. there are opportunities. rising consumer prices have given the central bank room to cut interest rates to a historic low. the brazilian real is weakening steadily, allowing local manufacturers to compete better at home and abroad. chief economist at the bank says these two major events could make a difference. >> we estimate the impact of the world cup and olympics at around

1.5% of gdp. so, 1.5% higher. >> reporter: brazil is hoping to benefit from investment in its infrastructure as it hopes to host the world cup and olympics. world cup fooef may be the push brazil needs to make refors and overhaul the infrastructure before joining the world to celebrate the goals. cnbc. >> still to come, we'll are more on our exclusive interview with the brazilian central bank president. his thoughts on the impact of the slowdown in china, the eurozone financial crisis and volatility in real. we'll also look about the impact of the olympics and world cup coming to rio and brazil with ceo of brazil's hospy tal group and talk to rebecca moore from google earth and the role they're playing in the sustainability arguments and

bearing in mind they can really map what's happening with deforestation. all that coming up from rio. if you want to talk to us or get in touch with us, e-mail us at worldwide @cnbc.com or tweet us or @cnbcwex is the show twitter handle. i think i got that all right, kelly. >> yeah, you did. keep your tweets and e-mails coming. i'll give you a sense if you're just waking up in the u.s. and joining us as to where markets are positioned this morning. green behind me yet again. not by a lot. not a strong move but the dow would be opening higher by about eight points. nasdaq, same amount. the s&p 500 pointed up a couple points as well. now, this follows mixed data out of the eurozone. in fact, it's been a bit of a struggle for stocks to get direction. we're now firmly, it looks like, in the green behind me pebex up

about three-quarters of a percent in spain. the cac in paris barely in the green. xetra dax up 0.25%. ftse 100 up 0.2%. building on gains as people take a look at headlines and see temporary bail outfunds will start buying european bonds in the market. that's affecting the trade in fixed income as well, bouncing a little bit of a risk-on move this morning. gilts down 1.73%. they've actually -- well, that's a different story. we'll get into in a minute. ten-year in spain 6.8 % and ten-year german bund is trading under. euro/dollar, now moved up 0.2%. aussie dollar above parity with the u.s. dollar.

we can see risk is on, traecy. what's the mood across asia 1234. >> mostly positive driven by stimulus hopes but there was caution as investors stayed away from big bets ahead of the fed's decision later. earlier in japan, nikkei outperformed peers gaining more than 1% today as index market at highest closing level since may 17th as risk sentiment picked up and sent insurance and property sectors higher. also where the kospi gains about 0.7% on third straight day of foreign buying. the asx up. and a check on the indian market, sensex gaining 0.4%. hong kong stocks inched higher with banking resource sectors in the lead. shanghai composite is the only one landing in negative.

what's interesting here is property companies all landed in negative territory today. the china daily says the country's top advisory body want beijing to lose property market controls to keep the economy growing and this is the first time these advisers have made such a recommendation. kelly, back to you. >> tracey, thanks. in the u.s., meanwhile, the fed wraps up two-day policy meeting today. the rate decision is due at about 12:30 p.m. eastern. that will be followed by the fed members' economic forecast at 2:00. and chairman ben bernanke will begin speaking at his press briefing at about 2:15 p.m. fed watchers expect central bank will announce or at least signal further easing with an extension of the current operation twist program, the most likely operation. cnbc will have full coverage of that decision beginning at 12:15 p.m. eastern followed by the news conference with ben bernanke live. joining us with a preview of all

that is julia kor in addition dough, chief economist north america bnp paribas. in your opinion, thanks for getting up early, what's the most likely outcome of the meeting today? >> well, as you said, i think the most likely outcome is that they choose to extend their current operation twist program and, perhaps, signal they're laying the ground work for another quantitative easing program. operation twist has a limited capacity but they can extend it for several more months as they gather more information and, perhaps, lay the groundwork for a mortgage buying program at some point. >> and focus on that a little bit. so, the fed at this point, you think, may shift into what you say is more credit easing than quantitative easing? >> exactly. so, that's something they've been signaling for some time. and i think that it gets to the notion that the most blocked channel for monetary policy right now is for households and it is through the mortgage

channel. in other words, they've managed to deliver record low rates, but not everybody can access those rates. they think if they can really push through some easing in the mortgage channel, that that will get some more relief to households and that will help stimulate the economy. i mean, i think there's two rationales for doing something here. one is, the domestic economy has pretty seriously underperformed their forecast. and that's over the first half of the year. so, they can't with any confidence project further progress in the labor market or an improvement in the labor market from here. secondly, the global risks have intensified since they met last. looks like the second half of the year would be hard to achieve the kind of acceleration they were hoping we would be looking at in the second half. that says they would need to get easier and i think their preferred option is to move toward a more credit easing approach in which they're buying mortgages. >> what's interesting about your comments there, too, is what

you're saying is it's not necessarily about getting that mortgage rate from 3.5% to 2%, it's really about having to fit in their buying mortgages so that people making those mortgages are more confident and may extend credit to a wider range of people. forgive me if this sounds a little like 2005. >> well, you know, the fact of the matter is, these problems are still with us. i meenl, we were hoping, and the fed was certainly hoping, the healing would happen faster but this is going to be a very long road. and i think that's a disappointment to them but nonetheless it does mean they still have to engage in these similar types of programs. we saw the bank of england take a similar approach last week. so, you know, this -- these are not easy problems to solve. when you build up excesses over a number of years, it's going to take a number of years to correct them. >> that's for sure. julia will be with us throughout the rest of the hour. stay there and we'll get back to ross in rio.

>> yeah, absolutely, great to have julia on the program. still to come, we'll be back in rio where i am. we'll be talking to ceo of brazil hospitality group, largest listed hotels group in brazil, about what they hope to do and how they're leverage olympics and world cup. we'll be back on "worldwide exchange." 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, or on the go.

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welcome back to a special brazilian version of "worldwide exchange" this morning. the federal reserve may launch a fresh round of monetary stimulus at the conclusion of its two-day meeting later today. a close call. the bank of england's governor is outvoted as policymake ez vote 5-4 to keep quantity taiftive easing unchanged in june. italy's prime minister proposed the european rescue funds purchase peripheral debt in order to bring borrowing costs down. those are the head loinz. today, i'm here in the copacabana bench in rio. it's not quite the event it was 20 years ago when they really laid out the agenda for sustainability and global warming that led to kyoto

protocol. it's given us a chance to be here. two major sporting events coming up. in two year's time the world cup returns to brazil and 2016 the olympics coming to brazil as well. peter from ceo of brazil hospitality group. you're the biggest listed hotel group in brazil. what are those two events doing for your business? >> well, i think the main thing is the run up to this business. we started our business four years ago. we announced over 8,000 rooms, growing 1500 rooms a year. you have to be careful you don't get carried away by the events because you cannot build the hotel for one month. what we believe very good is the built up to the event. you get a lot of businessmen come, a lot of people want to do business in brazil.

and then have you to expose it for the whole country which after the event will steadily increase tourism. >> rio is a great place to come already. how much work needs to be done in terms of refushment of rebuild? how much scope is there for redevelopment? >> well, our program is effectively buying a lot of old hotels and fixing them up. we've been doing that steadily and continuously. probably all our rio properties will be very nice before the 2014 games. >> are you comfortable administrators can do their part? there's an enormous amount of infrastructure that needs to be built in this country to meet the requirements? >> let me say the structure, the sport structure will be all fantastic and all ready. everybody will have a fant time. i think rio has a good

opportunity because it had pan american games first so it did part of the infrastructure. now the world cup. they can do another part. and for the olympics, obviously, which is only in rio, they will be completely ready, i think. >> in your business, one of the big things we saw, it was the former practice sdmrbrazilian b seen massive volume in real, up to record highs against the dollar. a 20% depressiciation this year. how do you manage that volatility and how has the strengthening of the real affected business? >> 85% of all hotel guests are brazilians. even with all these big events coming in. it's the brazilian middle class, up coming class, filling in hotels. now with a strong real. two things.

braz you have continuously weaker import/export because of the real strength and that impacts meetings, tradings, companies. we're very happy with the real, the real to the dollar. you're right, if it's table, it's a lot better. >> thanks for getting up early. we have the sun just behind you coming up over sugar loaf mountain. that's why we've come here. that's why people come here for scenes like that. thank you for joining us, ceo of brazil hospitality service. it's turning into quite a scene on copacabana. peter was talking about the volatility in the real, something we ticked up in our exclusive interview with the central bank president. 

good morning to good morning to you, especially stateside. i'm in rio de janeiro, the earth summit under way and given us an opportunity to sit down in an exclusive interview with the central bank president. they asked him what they would

do if there's more volatility and if he's happy with the currency, the real. >> we don't have a level here. >> the exchange is under 14. so i think that's the best regime to protect brazil. what you have done in brazil is have a policy of accumulation of international reserves. we have now 370 billion u.s. dollars in reserves, plus. behave said at the central bank, the central bank stepping in markets in every segment of the foreign exchange market. be it interbank, spot market, in chef segment of the foreign exchange market, if you see the market's not functioning as well. >> reporter: as we see those slight slowdown in china that has an effect in commodity prices and commodity prices have a huge effect on the brazilian economy because it is driven by -- the growth is driven by the commodity prices, growing as

well, so do you think that we shouldn't look for a more sustainable model for growth in this country? >> our rue is an economy like china will be very well placed to engineer soft landing, as it's doing right now. this environment is positive for brazil. >> also lous for a high level, historically high levels. therefore, i think we're well positioned to take advantage. >> i'm very curious to hear your opinion about the eurozone crisis. is europe in the right direction now? do you think this 100 billion euros for the spanish banks is going to start solving the crisis now? >> i think there have been important progress in europe.

we found there was a big issue at the end of last year and beginning of this year. has been addressed and continues to be addressed by central bank interventions, as we are seen. on the other hand, more structural problems dealing with banks, dealing with capital, dealing with a need to recapitalize the banking system. i think in this regard the 100 billion euros that's announced recently, it is an important contribution to the process. >>. >> president of the brazilian central bank. julia is still with us. we've seen the real reduce in value mainly because the dollar has appreciated. the dollar index appreciated across the board, at least until the last week or on. what's your outlook for what happens to the greenback? >> i think in this environment the dollar is pretty well supported. i think as the fed takes action and as the economy takes

traction through the year, we'll see some support fade and the dollar should fade. it's interesting, you're talking to the brazilian central bank. it was brazil that accused the fed of engaging in wars with quantitative easing. what we've seen in the foreign exchange market suggests that tension, that pressure has eased on the fed. they're not likely to get the kind of international backlash they got last time around, because the global backdrop has changed so significantly. countries want the help the fed can deliver. >> juliet, thanks for that. that's what "worldwide exchange" is about. you're in new york, i'm in rio, kelly's in london. that's what this program is all about. we'll take a short break. as we do so, plenty more to come as we count down toward the fed decision later. meanwhile let's remind you where u.s. futures are trading. optionsxpress, where you can trade your favorite products,

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this is cnbc's "worldwide exchange." this is cnbc's "worldwide exchange." this is ross westgate in rio. kelly is in london. are we set for another twist from the fed? hopes of a fresh round of coordinated central bank action lifting risk assets. hasn't done much for european stocks. >> no. a fresh round of easing at the bank of england looms closer as minutes from this month's

meeting show governor king is calling for more stimulus. he was outvoted, though, by 5-4. g-20 leaders backing a european pledge to overhaul the building blocks of the eurozone, starting with the integration of the region's banking sector. >> i'm very pleased the european leaders here said they will take all necessary measures to safeguard the integrity and stability of the eurozone to improve the functioning of the financial markets. >> as we continue our coverage here at rio 20, the earth summit, we'll be joined by rebecca moore from google earth is find out how they're getting involved in the sustainability debate. good morning to our u.s. viewers tuning in. let's take a look at how we're trading this morning. u.s. futures are pointing higher, not by a ton. dow opening six points to the

upside. nasdaq, same. s&p 500 up a couple points as well. we've been hovering around these levels all morning as european stocks search for a direction. you can see what's happening across the region. the ftse 100 up about 0.1% where it's been most of the morning. xetra dax about 0.13%. cac is down.2%. ibex of spain holding up with 1%. how do you make money in these markets? here are what some of the experts we've been speaking with all morning have been telling us. >> we know that dollar positioning is extremely long. from that point of view the market doesn't want to aggressively buy more unless the scene in eurozone worsens. >> it is still undervalued as the current levels. we still have a supply that even

though inventories rose by 1% yesterday. >> not only these days in american politics a democrat and republican agree on anything but two former treasury secretaries, hank paulson and robert ruben, says congress needs to meet a grand bargain to balance the u.s. budget. both lawmakers will find it politically difficult but doing nothing will cause the u.s. market to tank. julia joining us. it's interesting to hear hank paulson and robert ruben talking about taxes going up. is that what americans should expect? >> ineffortably yes. taxes are near record lows. living on trillion dollar deficits. we're looking at higher tax

liabilities. the important thing, though, is to raise tax revenue in a way that's growth friendly in a way that doesn't harm the economy too severely in the near term. getting to these solutions is, of course, very, very difficult in this political environment. and in an election year. >> and there's been so much focus on the fiscal cliff itself. there's the tax issue can and separately whether congress can come together to forestall the tightening we're expecting at end of the year. is that your base view at this point? how much tightening have you penciled in for 2013? >> i don't think anything gets done before the election but when push comes to shove, there's going to be a lot of posturing and positioning after the election but in mid to late december, i think everybody holds hands and pushes most of this back at least a year. i don't have built into my forecast a severe fiscal tightening. a modest fiscal tightening is

what we're looking at. financial markets are basically throwing money at the u.s. government. we don't face the kinds of market discipline pressures that spain or om some of the other peripheral european countries are taking. what will politicians do? take the easy road and push tightening back. >> is it your view for the time for u.s. to borrow and spend more given the low interest rates? there's room for fiscal stimulus that might accomplish something that quantitative easing cannot? >> there's certainly is scope for better fiscal policy, to be sure. fiscal policy that better takes advantage of the current low rates the fed is deliverying. for example, could we engage in much needed inventory spending? yes, that would be a good idea. i think too much of the stimulus we've seen has been very short term, very focused on let's just get through the next year or the next six months rather than on the structural issues facing the economy.

so, we've had a lot of temporary tax breaks and temporary spending programs. that just doesn't do a lot. and i think the multiplier on those programs is very low. so i think there is scope for better fiscal policy but i don't think throwing more money at the economy is necessarily the most efficient way to go about it. >> julia, stay with us. we'll be back for more in a bit. first we want to bring you the results from germany's debt auction. the country has sold about $4 billion of two-year debt. that went for a 0.1%. so, a whopping high yield compared with 0.07% at auction similar just a couple weeks ago. bid to cover ratio, higher, 1.9% versus 1.7 from the last one on may 23rd. fed wraps up two-day policy meeting with rate decision due at 12:30 p.m. eastern, followed

by fed members forecast at 2 p.m. and ben bernanke's press briefing at 2:15. fed watchers think the central bank could ask for further easing with the operation quist program, the most likely option. cnbc will have full coverage of that decision starting at 12:15 eastern and then we'll carry the press conference live from ben bernanke. a fresh round of stimulus from bank of england looks more likely after a knife-edge vote at this month's meeting. monetary policy committee members voted 5-4 to keep quantitative easing unchanged but bank of england governor king was among those outvoted as he called for more, 50 billion pound, specifically, of further asset purchases. a look at how sterling is trading. the move lower after those minutes crossed about 9:30 local time. we've since recovered and we're almost back to even for the morning. that, again, may have something to do with expectations --

actually, that may have something to do with the stronger than expected employment data that showed unemployment in britain high, but employment was rising. some good news on that front at least. >> yeah. we've talked about how much you need the private sector to step in you-f you have government cuts, kelly. we'll keep eyes on reaction to that. i'm here, of course, in rio. remember, it's 20 years on since historic earth uhm minute really set the green agenda for the next years. they had legally binding agreement that led to the kyoto protocol. we're at and we're trying to lay down a road map that's responsible for all diplomats that are here, 130 heads of state. no barack obama, no david cameron, no angela merkel either. so, what can be achieved here and what role does google have

to play in it all? you know, they're in every other part of life. joining us is rebecca moore who's with google. thanks for joining us. the early indications are that we're not even getting the road map we thought we were going to get. is this now turned into -- but there's a lot going on on the sidelines. is this turning into this move into not what the governments are doing but more what the ngos, the companies and people themselves want to get done? >> i think that civil soelt cies going to play a huge role in putting a spotlight on where there are issues and where creative solutions can be found. we at google believe technology can play a role in putting that sharp spotlight on there and helping to create those solutions. in particular, mapping software. >> what does the mapping software do? we're in latin america. one time ago, what now a sprawling city, used to be in a rain forest the thickest in lit tan america.

>> right. i'll give you an example of a initiative we launched in rio in collaboration with the european parliament. it turn out addition you need to explain it. but where there are roads, urban development, you lose biodiversity, you lose water, you lose healthy forest, where if we can identify where there are areas of no roads and you can protect those, amazon, congo basin, indonesia, canadian forest, that can help us a lot. where are those roadless areas? a member of parliament came to us in december and said, cue use google maps, don't tell me where the road are, tell me where the roads aren't. >> then the planners can put in a protection on that. >> exactly. >> also, are you measuring deforestation rates? >> what's happening? quicker? slower? >> probably depend where you are looking in the world. we also launched in

collaboration with a brazilian scientist, a new deforestation alert system, based on real-time data coming in from satellites every day over the brazilian amazon. the platform we built is google earth engine which is a powerful analytic engine which has update every day and thousands of computers for processing that information. there's never been anything like that before. people know google earth and google maps which lets you look at satellite imagery and now you analyze it. we just laumnched that next month. because that's powered now in the google cloud, we'll be able to take that brazilian scientist methodology, at the cutting edge, bring that to congo, indonesia, ecuador, peru, that don't have that capacity so we'll have a global forest

monitoring system. that's never happened before. >> the u.s. maintained its technology was way out. i don't know whether you want to be in line with the u.s. government but you're trying to prove technology has an important role to play. thank you for joining us. rebecca moore from google earth. dawn is starting to break. i think she's down at that end preparing -- >> ross, that shot is gorgeous. i like just having it up in the background there. we'll have still more from rio with ross just after the break. plus, a preview of what to expect in the u.s. trading day. with the spark cash card from capital one,

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[ garth ] why settle for less? great businesses deserve the most rewards! awesome!!! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? welcome back to welcome back to "worldwide exchange" this morning. these are your headlines today. the federal reserve may launch a fresh round of monetary stimulus. at the conclusion of the two-day meeting this afternoon in the u.s. a close call. the bank of england's governor is outvoted as policymakers vote 5-4 to keep kwan taiftive easing unchanged to june. procter & gamble is cutting forecast citing weaker than demand in developing markets.

special music for the rio version of our program. to spain where budget minister says final banks rescue figure will depend on result of audits. let's get details from stefan in madrid. can you clarify what's going on with the timeline regarding audits and what steps are specifically next. >> it's not entirely clear. we should have by thursday, which is tomorrow, the first detail of the banking sector need. basically we'll have the first glass to the stress test that we are expecting. not for the end of july. the full report will come at the end of you'll. yesterday the bank of spain said that the publication could be postponed until september, but it's been rejected by the finance minister, stick to the original may 31st but first indication will come tomorrow. that's for the calendar. in terms of market reaction, very positive reaction in madrid this morning to franco italian

to stabilize the bond market at g-20 meeting. the french president and italian prime minister monti suggested the e is sn, european stability mechanism, would buy italian and spanish debt on the secondary market to stabilize the borrowing costs. of course it's not approved by germany. it will be discussed in rome at the end of the week but the reaction here is already very positive. ross, you're having a good time, i think. over to you. >> yeah. well, we're here on copacabana beach. the sun is just rising, so there are worst places to be in the world. julia, you just heard what stefan was saying there. there are plans -- the problem is europe is we hear ideas and plans thrown around and how we might use the esm. the key point is stefaned the germans haven't signed off. how hard is this making it for investors when the story is so political and we don't know day by day what -- how politics might change or might not change.

>> exactly. indeed, the politicians are using the markets to try and gain each other. clearly, of course the spanish reaction to such a proposal would be positive. of course, the germans wouldn't sign on to such a proposal without pretty significant strings attached. essentially, this would be like a euro bond. why would germans sign on to a joint obligation like use the esm to buy italian and spanish debt without any framework for ensuring fiscal discipline down the road? i think this is just another example of politicians sort of taking -- battling for their positions in the public domain. of course, the markets are to decide what is the signal and what is the noise. this doesn't sound like a very realistic proposal. certainly not a near-term proposal and not without significant negotiation and significant strings attached from the germans. >> what kind of hope -- bearing that in mind, julia, what kind

of hope should we have for the eu summit? germans are saying we'll only back these things if you give up a degree of sovereignty in. >> right. ultimately we have to head down the path toward fiscal union which gives up some degree of sovereignty for everybody. the united states and europe is an extreme possibility but something that does take the fates of these country and create a fiscal framework where there is some joint control. that's not going to be easy to achieve. i do think there is a recognition that's the path. we may get some sort of general road map out of the summit next week. i think that would be very constructive. also we're going to have discussion of a eurozone-wide bank regulatory system. that's also an essential building block to getting through this. none of these are -- they all involve their politic so they're not easy solutions. they're not going to happen overnight. if we know we're moving in the right direction, i think that's constructive. >> julia kor in addition dough with us this morning.

we appreciate your time. we'll see if mortgages be as you were saying earlier, are part of anything we hear out of the fed later today. still to come, u.s. markets closed at five-week highs on tuesday. will investors now sit on their hands until the fed decision and the bernanke news conference this afternoon. we'll preview the trading head just ahead. [ male announcer ] trophies and awards lift you up. but they can also hold you back. unless you ask, "what's next?" introducing the all-new rx f sport. this is the pursuit of perfection. optionsxpress, where you can trade your favorite products,

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u.s. futures have been sitting about where we're looking all morning. the dow opening up about nine points higher. same for nasdaq, and s&p 500 up a couple of point as well. for more we're joined by rick gardner, ceo of rick gardner and associates in north carolina. rick, what is the federal reserve have to deliver today to prevent a market selloff? >> well, you know, that's an interesting way of putting it. i think we're probably going to see coming out of the fed more -- or an extension of the operation twist. you know, i know there's a lot of talk of qe3 and i think that could be what's pushed our markets up. i think you have to be really, really careful right now and very deliberate in the decisions you're making in the market because it's -- it's very hard to trade monetary policy. that's something we've kind of been trapped into for the last several years. it does make things difficult coming into days like today. >> what are you doing with client money at this point? how much is in cash versus stocks and bonds?

>> well, you know, you want to have some dry powder to take advantage of opportunities. i was on in march, one of the things we were looking for was a pull back. we saw that. in fact, it came a little more significantly than we were even expecting. and because we're in an election year, one of the things that we tend to look at is when you have a pullback like this, on average, it's around 8.5% in an election year. and election years tend to be very back-end loaded as far as the returns on the market. so, the money we have in cash right now, we're actually deploying over the next six weeks to try to take advantage of these opportunities, but from an equity standpoint, to make sure i'm answering your question, we do have a very high concentration in dividend-paying securities. with bonds and treasuries right now, we're taking the rallies that occur there and using those as opportunities to lighten those positions. >> rick, you know, you mentioned

u.s. election and what typically happens but we heard about the third year rally last year and stocks went nowhere. how much -- you know, how much do we pay any attention to these typical things when, as you mentioned, there are monetary policy, things happening in global growth problems with europe that seem to be the overriding factors here? >> well, all of these things really just present us with clues. things for us to work with throughout the year but just because something has happened in the past, obviously, that's no guarantee we'll see it in the future. to your point, the macro environment we're in right now, the global volatility that's there does make it difficult. again, have you to proceed with caution and you have to expect volatility. we live in a world where things are moving so fast, but historically the world doesn't come to an end that often. so, have you to be very shrewd as an investor and look at these opportunities to buy. >> well, we'll take that for

what it's worth. rick gardner, thank you for your time. ross, rio, the sun's up behind you. >> it is. day's dawned on rio, four hours behind london. we have the earth summit urn way. i say, you know, expectations for that are fairly slim. what will be interesting the central bank, what they'll do with the growth forecast next week. there is an expectation they watered them down. i have to say, it's time for me to go because i've been here 4 hours. i haven't gone near the sea, the sand, the beach or anything else, so i'll see you again. i'm going to try to get back to london by the end of the week. otherwise, from "worldwide exchange," good-bye

good morning. do good morning. do i hear a helicopter circling? is it ben bernanke or andrew coming to work? bernanke preparing to answer questions from reporters. the world remaining on europe watch. in could be the headline every day. probably for the foreseeable future. spain's sky high borrowing rates edging down, though, somewhat today. the country's finance minister again denying the madrid will need a full-fledged bailout of its public finances. and dow component procter & gamble warning investors it will fall short. it's falling short in early trading. june 20, 2012. first official day of summer. it's going to be hot. "squawk box" next.