>> hi, everybody welcome officially it's friday. we're looking at the efo figures. the german business climate fell in june. what we're looking at is a climate index reading of 105.3 for june versus a consensus forecast of 105.9. so relatively in line for the business climate index. current conditions index 113.9 in june, slightly higher than what the forecast was, 112.3. they say that expectations, the

expectations looking forward 97.3 in june. slightly light compared to consensus forecast of 99.8. >> we should just mention the zew survey earlier was negative. conditions in the u.s. sharply negative. this in some ways by only falling slightly below expectations is somewhere a positive. >> i think that too. current conditions again slightly better than anticipated. the forward looking ones are the weak ones. james bevin is with us for the full hour. chief investment officer from ccla investment management. hi, james. how closely are you watching the data at the moment? >> very closely. an awful lot going on. you can't keep your eyes off the data, can you. fascinating. >> what's your impression of this particular survey? >> everybody is thinking that short term sentiment surveys are

very significant. the real issue is mrs. merkel holding out big treaty changes. i think the latter. i think she's playing a long game. there's lots of room. >> why? done she know this will potentially hurt europe even more the longer we draw it out. >> there are two issues. she will not want to go back to her electorate and say vote for me look what i have given away. if you believe her long term objective is political and fiscal union she won't get that if she keeps handing out goodies. she has to say if you want the goodies, you sign here. >> james, you're with us for the full hour. kelly and i very happy that you're keeping us in check here on the set. on today's show, though are livele coverage of the st. petersburg economic forum continues as we assess the health of the russian economy

amid a drop in the price of commodities. we'll have the latest live out of madrid at 10:30 cte as a banging audit reveals a short fall. >> we'll be live from mumbai talking about the outlook for indian equities as jpmorgan upgrades the sector. and we're off to chicago and ask about the debt cross as three major indices clock their second worst trading session the year. but kelly as we saw yesterday it was a pretty dire close on the markets. the u.s. markets especially going through some very important technical levels. the worst, second worst close for u.s. markets, yesterday's trade down. we're seeing some of that feeding through today but not as much as maybes you thought moody's downgrading 15 banks.

european markets in general trading a little bit lower in this morning's session off somewhere in the region off a percentage point. the cac 40 down by over 1%. the ibex 35, a little bit spiky green, higher by .4%. spanish market stepped on so much lately. also it could be seen as being good news that the spanish banks need less in funding than previously indicated. the bond markets, buying in german, buying in the uk. little bit of selling in italy and spain. yields coming off quite nicely. and let's glance at the currency markets, give you a quick update. euro/dollar flat. 1.25. and the commodities as well

because we've seen oil coming off substantially here within the last couple of sessions. in fact crude and brent continue a little bit lower both of them trading off significantly from the previous highs that we've been looking at within the last month or so. but if you're just joining us, very good to recap what happened in the asian markets and overnight session. tracey chang joins us out of singapore. hi, tracey. >> good morning to you. happy friday. i'll tell you asian markets were the first to respond to that big moody's bank downgrade and we saw red across the board. nikkei recovered from earlier lows and ended the day with modest loss. further down side was limited by more softness. kospi continued to fall tumbling 2.2%. all factors are down as foreigners sell local shares.

shanghai was closed for a holiday. hong kong shares slipped for a second straight session. chinese oil makers suffered big losses as oil prices slid lower to below $80 a barrel. taiwan's market dropped .8%, weaker manufacturing data around the globe. same story in awe usa down nearly 1%. quick check on the sensex off by .7%. so, overall a pretty dismal picture here in asia. kelly, over to you. >> the spanish government has been told it will need up to 62 billion euros to successfully pick up. the exact amount won't be known until after a second audit in september. application for aid is expected to be made by the spanish government as early as next

monday. last night eurozone finance ministers agreed any spain would come from the region's temporary rescue fund. but imf chief christine lagarde warned the current measures are not enough. >> the imf believes a determined and forceful move towards a complete european monetary union should be reaffirmed in order to restore faith in the system. as we see at the moment the viability of the european monetary system is questioned. >> joining us now, silvia wadhwa from luxemburg. forgive me if i'm exaspirated with the imf. they were calling for measures. now turning around and saying well, you know, you have to do more to support your economy.

>> reporter: and even more so if the now imf chief is, of course, the former french finance minister who child french finance minister was insisting the eurozone finance minister and governments were doing enough to try to tack tell crisis. i think yes, one may be cynical about madam lagarde's demands on heads of state. that is what needs to be done but we know how difficult it is and she herself should know before anybody else how difficult it is coming from where she was and having been throughout this crisis in eurozone and euro group meetings on a monthly basis where she is joining them now as euro imf. they called for austerity measures. in fact the imf was synonymous with austerity before the europeans took the overtaking lane on the austerity scale.

so i think all the things that is being asked for, fiscal union, banking union, et cetera, we know this can't happen in a hurry not with 17 members of the eurozone let alone something like eu wide agreement. that's the deep game we're playing. the other game that we're playing is of course the immediate one. what are we going to do about greece. troika is heading back to athens. sigh of relief we have a government we can talk about to. but we have the memorandum and it stands. i want doesn't stand like that. there's an easing of conditions that doesn't amount to a formal changing of the memorandum. and the banking stress test out of the way. was at any time worse case scenario that's on the table? markets are doubtful about that. we're using the esff rather than esm may be a seniority issue. we do have the esff we don't have yet the esm but everybody

insists we should have it by mid-july. a german president says i won't sign on it until the german constitutional court has given us an idea of what they think about it. a lot of question marks. >> what did you say that we say -- [ speaking foreign language ] >> treaties have to be served. nine years of latin. >> this is why we love silvia. >> james is still with us. let's recap on the imf and what you think of it as well? again urging the eurozone to give aid to the struggling bank and calling on the ecb. >> absolutely sensible. london's government to loan to

banks causes a very difficult cycle of rising debt. it's very clear the ecb does have to do a lot more. it's been very reactive. the problem, the ecb is not a central bank in the real scene, it's the underlying of all the other banks. >> what's interesting, though, is people are going into these meetings with expectations that we're going to get some sort of resolution. >> terrifying. >> yeah. you would have been disappointed over and over again. what can, in your view -- is there anything that can be done in the short term that it's the f federalization of the eu or not. >> what sort of scale of early day measures buy us sufficient time to get us to the end game i think we're probably talking

about something like a five year ltro of around 2 trillion euro. that's the scale of magnitude required to heal european debt problems while the other issues are addressed. >> five years indicates we can't standalone at all. >> you're quite right. think about deleveraging episodes in the course of history. first, we have to have easier money rates on a sustained basis. we need negative real rates for the next five to ten years. so the five year ltro is certainly consistent. we need a combination of fiscal austerity because it's clear the spanish needs to cutback where it's prudent. managed also with growth policies, unwinding of red tape. talk about unwinding red tape in europe and you have a real party on your hands. that's a real challenge. the other issue is we need more

debt. >> we might be unwinding some red tape tonight if that's what it means. angela merkel is expected to rebuff calls for less stringent fiscal measures as she meets with the french, italian, spanish leaders in rome. the eurozone heavyweights will be discussing the possibility of a banking union ahead of next week as summit. >> moody's cutting rating on 15 banks. cuts could push up borrowing costs and force banks to post more liquidity. morgan stanley faced a possible three notch cut which moody's gave to credit suisse. most banks disagree with the downgrades and it won't have

much impact on its funding cost. markets have expected this move widely. u.s. banks were punished in after hours trading. now the european bank board, we're looking at again, deutsche bank down. let's get out to jeff who has been catching up at the st. petersburg forum. jeff? >> good to see you. we have some real big hitters. i have to say we have the conversation prior to that moody's cut in rating so bear that in mind as you listen to this clip, but we asked about

this issue of capital constraint in the banking system, what's going on in europe and how does that compare with the united states. let's just play you a little clip of that interview. >> tremendous uncertainty. not just europe but a result of some of the european uncertainty. growth is slowing down around the world. the u.s. deficit question that has to be addressed by the end the year, early next year. on top of that a question on the johnson banking system. is it too large, how does it shrink. there are things going on in the middle east you have to watch for because they can affect the price of commodities. this is a year not only do you have an election here in russia but around the world there's 32 major elections. put them together it makes it a tough environment to chart a course in. >> well, doesn't that just fill you with hope. i mean a real talk of some of the issues that are going to

face the global economy. also headwinds for the banking system. this has been a real theme here in st. petersburg as we talked about access to capital and how you match those who need the money with those who were traditional providers of funds like the european banking system and, of course, where those funds are not being provided you have to see some sometimes some other vehicles step in to fill that vacuum. so i'm very pleased to have the opportunity now to talk with the head of the russian direct investment fund. let's make it clear what this is. this is a government sovereign private equity fund. >> yes. $10 billion fund. we need to have the same amount of investment. >> how does this step in and replace some of the more

traditional forms of financing for companies? >> well russia needs long term capital. and we solve that issue by working with other private equity investors. so, for example with china investment corporation, we have russian-china fund. invest in russia, a little bit of china. yesterday a big announcement kuwait is invests $500 million into all of our projects going forward. a lot of it is working with leading investors of the world to provide long term capital that's needed in russia. >> some people might say if the russian economy is so strong, and the opportunities here so good for growth we shouldn't need an organization like this, private capital will step in and fulfill that role. >> we feel there's a major reception gap between reality and what the perception from

investors about russia. president putin told many of them and a lot of momentum, positive momentum. lots of investors have bad perception of russia and we decrease that perceived risk because having safe haven for investors. >> how do you know you're and make the right all location of funds. we expect be the market to make very rational decisions based on profits and likely return. how do you replicate the activities of the market given that you have government support so in a sense there's a state directed element to what your activities are. >> yeah. the key is return only, that our only priority because we believe if you make high return investments and our team came from private equity industry

with an advisory board we're very commercial in the way we make decisions. it means jobs, new companies being created, diversification. return comes first. >> we've seen some moody's downgrades on the banks in the united states in particular. how much of these banks is going to become partners of yours or are they partners already on some projects. >> we announced yesterday but capital is coming in to russia. so we cited yesterday with templeton and blackrock and goldman sachs, they are going to invest in russia. banks having some issues in the world. i think the banks some may actually want to pull some capital out of other accounts, there's so many issues in domestic markets. >> it's been a pleasure catching up with you. thank you for your time. let me send it back to you.

from st. petersburg where we are enjoying catching up with many of the movers and shakers here. >> i know we've enjoyed hearing about it all week. meanwhile over here let's take a look what else is happening. as we know set to be a eurozone showdown of epic proportions not the leaders summit in rome the euro 2012 football quarter final match between greece and germany. angela merkel confirmed she will be in the stands to support her national team. who are you supporting on and off the field. if you want to join the conversation on "worldwide exchange," contact us. you can tweet us at cnbcwex. coming up next we'll be talking about oil and commodities as brent crude is heading towards its worse week in a year. stay tuned, a lot more to come.

hi, everybody, welcome back. this is indeed "worldwide exchange". we need to talk about what's taking place in the oil markets. brent and nymex both lower compared to what we were looking

at three months ago. still trading below$90 a barrel heading for its worse week the year, especially brent. joining us is an oil market specialist. why is it that we've seen the price of oil off? hats happened? >> it's very important to remember that now the global oil system is facing the biggest surplus since 1998 when right after opec increased production significantly, prices crashed to about $10 a barrel. that surplus is coming and filling up inventories across

both developed and developing nations and it's now believed that any increase that we're seeing in demand from emerging markets is not being enough to compensate the decrease that we're seeing from oil economies where demand is falling at a rate of about 950,000 barrels a day compared to last year, compared to growth in emerging markets of 400,000 barrels a day according to the latest fundamentals. >> that puts you at a crossroads with a lot of people who have been arguing for some time oil prices will be at a higher level going forward simply because we have middle income consuming people in the world. how low are you talking about going back to the days of $10, $30 crude? >> it's very difficult to tell exactly a level but it's very unlikely we'll see prices go down to $30 a barrel. undoubtedly we're seeing a lot of momentum especially at the front of the brent curve. what we saw over the past week is a very significant movement where we saw the prices on the

front of the curve or the prompt delivery falling to a discount relative to supplies to be delivered later date. it's indicative of further inventory increases. so this is as a result of saudi increase in production. it took a very long time for saudi arabia to actually set the market into that time structure, and it's unlikely that any reversal of decision in output would have an immediate effect in restoring the market back to the previous situation of where there's a premium for those supplies. so going back to specific question about what the price level might be with the strong momentum we're seeing, at least it's very difficult to see it stopping for now. >> what's going on in terms of the liquid natural gas market and how is that affecting your price? >> quickly.

>> well, natural gas prices, of course, are constrained by regional markets and the pipelines that deliver the gas to those markets so basically we face a scenario of regional pricing which is difficult to couple to what's happening in the global oil market. of course the increase in trade of lie question ifkwi liquified prices generate some type of correlation. the gas market under its own dynamics of accelerating supply and potentially weakening demand especially in developed economies of north america and europe, then we could also see relatively bearish picture for gas. >> got it. we'll leave it there. oil market specialist. and after the break coming up

we'll have an interview with cyprus finance minister. the country is looking at various openings as it approaches russia for a loan. more from luxemburg next. how to better collaborate by using a mobile solution, in a whole new way. using real-time photo sharing abilities, they can create and maintain high standards, from kitchen to table. this technology allows us to collaborate with our drivers to make a better experience for our customers. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪

hello, everybody, welcome back to the program. more evidence this morning that

the crisis is casting a shadow over core european business. >> spain's finance minister says a formal request for aid will be ready soon and a direct cash injection from the eu remains a possibility. >> moody down trades 15 institutions. >> and it's the e-4 today in rome. they meet in a bid to reach common ground ahead of next week's eu summit. >> hi, everybody, welcome back. just a little recap of where we're trading this morning. we saw some pretty dire lows yesterday on the close especially for the u.s. markets with the u.s. markets closing their second worst day for the year. but what we're seeing this morning is the ibex 35 holding up relatively nicely on the back of what could be interpreted good news that the spanish banks

may not need as much money that had been estimated. the ftse and cac trading lower. >> again, given how disappointing some of these news releases have been in the last couple of weeks, "all things considered" this was okay. take a quick look at what's happening in the bond space. germany that bund yield for the ten year down to 1.51%. and gilt on the uk benefiting a bit from a bid despite the safety mood ahead of the weekend, 1.67%. >> let's briefly show the currency cross rates. euro dollar very flat, 1.2537. euro/sterling a bit lower. dollar betting against the yen. what's going on with the yen. a lot of focus on yen in the past couple of weeks.

>> the spanish government has been told it will need up to 62 billion euros to recapitalize its banking sector. it's below the 100 billion. stephane pedrazzi, a sigh of relief or are people casting a skeptical eye on these results? >> reporter: both of them probably. the number 62 billion euro is right in line with the expectation. so in that sense it's quite good piece of news. how credible is this new stress test that's the whole question. if you look at the worse case scenario which is applied to all spanish banks, 6.5% contraction of the gdp over the next few years. if you look at the housing market forecast, the worse case scenario is 26.4% decline on

housing prices in spain. if you look at the crisis in real estate sector. the government insisted the way these tests are conducted, 14 banks were tested. a baseline scenario with 9% ratio. stress scenario with 6% ratio april as a result, the spanish banks would need a minimum of 16 billion euros and maximum of 62 billion in the worse case scenario according to the other audit company. the spanish banks would need in the end 51.8 billion euros in terms of individual cases, three banks won't need. over to you. >> thank you very much for that. now, of course there's been discussion about whether or not cyprus will need a bailout in an exclusive interview with cnbc.

the finance minister said the company is looking at various openings. >> reporter: there was a sigh of relief last night because we have a greek government that one can talk to, whether troika heads back to. we have some numbers on the table that's more or less reliable for pending spanish bailout. cyprus has its own problems, contagion from the greece crisis because they are right at the door of greece and their banks have large exposure there. already last year there was bilateral loan from russia heading towards cyprus and it looks now something else might be negotiated along those lines. we asked the finance minister about this and he said they are looking at all the options. here's what he had to say.

>> so cyprus is one of the countries that has suffered as a result of the contagion from greece. then that effect we're seeing in the recapitalization process. we have one bank which needs to be recapitalized and the government of cyprus has shown its determination to proceed with that. in order to be able to do that, of course, we'll need some assistance and that will have to come out of either an application to esf or esm or bilateral loan. we have an option and we have options that we're looking at right now. >> when i read the news it sounds as if you preferred a russian loan to an esff. is that wrong interpretation? >> don't think it's a question of preference, it's a question

of options. the more options we have the better it is. the terms, i think, so long as the terms are some, something that our government will be willing to accept, then i don't think it matters very much. but obviously an esff approach loan is preferable. >> now there's some good news for cyprus right now because there are natural resources that might actually fill your coffers. >> yes there's some good news coming out of cyprus in that recently there had been a discovery of natural gas in the exclusive economic zone of cyprus and apparently these reserves are huge. cyprus is small and, therefore, we are looking forward to

benefiting from these finds. >> reporter: cyprus is taking on a big role, heading at the end of the month, cyprus will take on the eu presidency and boy it couldn't be a more challenging task at a more challenging time. >> it's set to be a eurozone showdown of epic proportions. greek national football coach will be assembling his best to take on the mighty germany at the euro 2012 football court final and the odds are stacked against the greek despite the team causing the biggest upset in the competition so far in their last game against russia. germany has won all three matches. i've watched all of them in slow motion. i know all the names. >> the greek captain is out with a couple of yellow cards or something. i'm sure most of our football players are cringing as we make through this. i'll be watching that game tonight. absolutely. >> absolutely. >> king james is getting his

crown. miami heat led by superstar lebron james won the nba championship in the u.s. last night. they beat oklahoma city thunder in game five of the finals, 121-106. second title in heat franchise but first for lebron who is named playoff mvp and expectations were very high going into this season and he managed to deliver. james had lost the nba finals twice before. he's in his ninth year in the league but just 27 years old. good lord. michael jordan didn't win the first of his six nba championships until he was 28. more titles ahead for lebron james. good news for nike. >> fantastic news for nike. i love michael jordan. >> i used to have a poster of him in my bedroom. . >> coming up wild find out why our guest host says bearish and short inflation swaps and not equities. details when we return.

hi everyone. welcome back. the indian companies are under pressure from allegations of corruption and price fixing. we have the latest live from new

delhi. >> reporter: that's right. the competition commissioner of india which is the regulator for competition found 11 companies guilty. 39 companies were being probed. the competition commission was served in 2010. they will bear a penalty. it was the highest penalty awarded by the regulator. fairly certain that 11 of these companies will appeal. in the past we've seen that the tribunal has stayed the orders. we haven't seen two of the other big cases actually paying any of that penalty at this point in time. 90 days for these 11 companies to pay up. it does seem fairly certain each of these 11 companies will go through the appeal route.

as far as the stock market, they are under pressure. the larger question really is on what this order means because the order has been issued for a cease and desist order. what does this mean in terms of pricing power. there's a question mark. that's the overhang that the cement sector is dealing with. plenty more action in india. crude prices have fallen off very sharply and that's good news for india because the government oil subsidy bill will come down drastically and impacted that we're dealing in 28% depreciation. rupee continues under pressure today. so in a sense a little bit of good and little bit of bad. >> thank you for that. very interested in this story. the chief asian of emerging

markets strategist. i note you're upgrading in the equities. talk me through this. why? >> i got absolutely no volume here. >> okay. we're going to try to sort out your volume. that would help. james, would you be optimistic on india or pessimistic. jpmorgan upgraded equities. >> optimistic in the long term view. you have to tread very carefully in what companies you invest in. when one looks at companies, this company is doing very well. evaluation is not that rich. >> adrian is back with us. adrian i asked why is it that jpmorgan decided to upgrade indian equities at the moment. >> yeah. i think there's a clear trend out there which is this decline in energy and commodity prices, so what you should be doing is looking at the countries that are relative beneficiaries of

that. so we upgraded both turkey and india, countries with current account deficits relatively large oil importers and countries that are being troubled more recently with high inflation. and as we look towards the end of this year, i think the indian economy will be benefiting from the decline in energy commodity prices, so will be benefiting some of the interest rate cuts that have occurred and also benefiting from the weaker rupee, which makes indian manufacturing, indian software services more competitive. >> adrian, i hear what you're saying and i have a lot of respect for it. at the same time, i'm thinking back to a lot of conversations i've had over the last couple of weeks with a number of guests indicating india isn't as strong as we think it is, they point out a weak rupee, putting pressure on business and consumers, imports, still importing more than you export and that leads to challenges for the indian government as well. it grew the indian economy something like 5.3% which sounds

nice but still the slowest in a decade over this past quarter. industrial output was a lot less than anticipated. s&p saying india may lose their investment grade status and the reforms. let's not forget the reforms that they are not pushing along with the government. there's a lot of headwinds that stand in the way for india to be a good place to invest. >> if you hadn't mentioned the politics i would have thrown that in as well. part of the point is that we're so clear in what's wrong with the indian economy. but the point of stock market is not for us to focus on why the stock market fell by 40% in the last 12 months, it's to think about what the stock market is going to be doing over the next 12 months. if you've got a monetary policy, if the delta on the trade deficit is going to going the right direction because oil prices is going to go down,

commodity and oil prices drive inflation down then those are real positive stories and yes 5.3% that's the lowest level of growth we've had since 2003, but let's not forget that there isn't a lot of choice out there when it comes to growth in the global committee moment. we got 1.1% growth out of the developed world if we're lucky, maybe the u.s. does 2.1% on our current forecast, europe in a mild recession, brazil is growing at 2% at this point. you know, let's not ignore the fact that the relative call is reasonable when it comes to india. >> adrian, briefing we're seeing fitch out with a report the situation in china, slow down in china is not comparable with 2008 which is something we already know but is indicating that stimulus, massive fiscal stimulus on the range of 2008 shouldn't be expected. how important is stimulus in

china and growth in china for your view on india and across the region? >> i would give the chinese authorities an a plus. they have full employment. we have wage inflation, which is in the high teens and we have a cpi level of 3%. governments are meant to provide employment opportunities and keep price stability. the worst thing that could happen to the chinese economy is a stimulus. what we need to understand is this three very important inflection points. there's a shortage of labor as one child policy comes through and more kids are going into higher education. if you look at nongraduates between 15 and 39 that would drop from half a billion of people in china to less than half a million. it's falling at 4% per annum. huge stimulus they have in 2008 and 2009 resulted in over

capacity and now weak profits. that's another reason that the economy will slow down. let's not forget the housing prices peaked in june last year. this isn't the bursting of the bubble. think of this is as the slow deflation of a balloon that will probably be with us for a decade or so. we should be happy if the chinese economy grows around 5%. >> adrian thank you very much. good to get your views. >> the leader will meat with david cameron on talks for further reform. it opens myanmar's push to open its doors to the world. we've been exploring this during a series of reports this week. here's the latest.

>> reporter: the country side stretches for hours. when the farms are suddenly replaced by monument, you know you have arrived. it's arid. massive government ministries. homes of officials. color code by roofs, a replica of this famous building, all raise from the earth. it took the military leaders years to build this fortress. at what cost no one knows for certain. physically and figuratively. it's the place to do deals. [ applause ] it's official. myanmar will have a stock exchange by 2015.

16 years ago a joint venture was set up in the hope that one day this day would come. >> translator: it took a long time. it was up in the air for ages. the biggest reason was sanctions. building a capital stock market a national endeavor. there was a lot of dealing beneath the surface. and be sure to catch our special coverage on myanmar this sunday at about 1:00 p.m. central european time right here on cnbc. a theme i've been watching quite a bit over the past couple of weeks is whether or not we'll see yields doubling over the next year such as this recent citi report suggested about. what does our guest host think? james still with us. do you think bund yields could double? >> what i find interesting about the bank news and this call for more collateral, what is

collateral. banks demand government bonds at a time when supplies constraint. i think we're going to have very low yields. i don't know that we'll have any sell off. the valuation argument for equities is compelling. you might say come on is that not a dangerous place to be. if you're careful there are two areas worth looking at. first there are those equities whose long term profit stream is attached to indicate inflation. companies that have some determination of future profis s >> spanish company. >> yes. you have to be prepared to look at the fundamentals and ignore the companies that are good at throwing out the baby with the bath water.

i'm looking at companies like s.a.p., long term capacity to demonstrate profit growth and high margins. that's a great long term story. >> are we seeing a housing bubble, the start of the housing bubble in germany? >> there's a fantastic opportunity in the german housing market and the u.s. housing market. oil be looking at companies that's been through the bath and israel very cheap from my perspective. capable of delivering high dividend growth. >> your answer is almost yes, so if there's a way to play this which is the companies you mentioned but should we be concerned about until balances we're building up as companies flee to place like germany that don't need it now. >> investors are very rational. germany is relatively safe. on the other hand you wake up and you have drachma and took a

30% hit. not so clever. >> you might have taken a 30% hit in your competitiveness. >> which is why it's critical. >> do you think the eurozone will stay intact or will we have to say good-bye to some of the weaker members? >> think it will stay intact. lots of viewers think they've lost. i look at the factors in turn. i say the cost of leaving looks like it's greater than the cost of staying. so pure economics. second issue is that actually the politics is still very much of favor keeping it going. i don't see political parties say we'll take you out and be better tomorrow. the populace is not saying -- >> we've seen how successful greece's own party making -- >> the greek people saying we want in. we don't like austerity we want to keep single currency. if you were told actually you

got a cheaper currency but your debt denomination, you got a headache. >> goldman recommending yesterday that clients should set up shorts in the s&p 500 and they see a short target of somewhere, a target of more than 5% lower. >> the s&p 500 could finish the year in excess of 1400 points. because the risk premium is close to 7% and i'm not proposing that the forward looking risk will fault the historic averages. but do i think it's still too rich and in moving the numbers forward i do think the s&p 500 coraly quite strongly at the end the year. >> interesting. james thank you very much. lovely having you on the set on a friday. chief investment officer from ccla investment management. you can find us on e-mail as usual worldwide@cnbc.com. the address is right there.

kind us on twitter at kelly evans or louisa bojesen. loads of you writing in. people are asking where are the markets haegd. people talking about the eurozone. people talking about the spanish banking situation. >> coming up after the break live in luxemburg where eurozone finance ministers have agreed to provide initial assistance to the spanish banks. more on that next. wñwñwñwñwñwñwñwñwñososososvycyíy

welcome to "worldwide exchange". if you're just tuning in i'm welcome to "worldwide exchange". if you're just tuning in i'm kelly evans. >> i'm louisa bojesen. >> more the evidence crisis is casting a shadow over core european companies. confidence in germany drops. >> spain's finance minister said a formal request for aid will be ready soon. a direct cash injection straight from the eu is still a possibility. >> mixed reaction for european banking stocks after moody downgrades 15 of the top financial institutions. commodity trading at multiyear loss. >> it is the e 4 today in rome. they are all meeting ahead of

the summit. with a hello to our u.s. viewers who may be waking up. we have green across the board for the u.s. open but, again, this follows one of the worst trading days the year. the dow jones industrial average pointing up 50 points higher. nasdaq opening higher by 10 points and the s&p opening higher by six. the ftse global 300 is down half a percent paring some of its gains from earlier. business confidence in germany dropped. the ftse 100 is down .9% here in britain. cac 40 in paris down .8.

strongest performer providing support to that broader index is the ibex 35 out of spain up 1.2%. that's a reaction to the losses we've had it doesn't indicate a lot of market confidence. >> no. i agree with that. coming off a very low base on the ibex 35. some relief precisely from this latest audit finding namely that the spanic banks need somewhere of 61 to 62 billion euros and extra capital which is quite a bit lower than assumed. what we're seeing today in the bond markets, buying in the bund. buying in the gilt, safe haven positioning once again. selling in italy and spain. yesterday we saw reversal of that as yields came down significantly especially on the ten year spanish yield as i've been saying within the past couple of sessions. we've gone from 7.1 to 6.5. in no time you go up you go down. way of life. let's show you the currency

markets, the forex rates. relatively flat against the euro, 1.25. slightly higher. not a whole bunch of movement on a percentage level in these currency trade. aussie dollar a little bit lower. commodities this is where we've seen moves in the past couple of sessions. a little bit of reversal from when you and i last stood here around an hour ago. crude and brent trading a bit higher coming off the loss we saw earlier. let me mention to you brent slid by approximately 4% over this last session. we're flirting with eight month lows. gold lower by just over 2%. almost wiping out this year's giants. we're looking at the gold price. session low yesterday of 1563. we're at 1571 now. before we go to kelly let's

check in on asia. tracey chang is in asia. >> good morning. asia we're seeing red across the board following that lower factory output reading in u.s. and moody's big bank downgrade. japan came in with a modest loss, further down side was limited by more softness in yen and defensive maker by telecom stocks. kospi tumbling more than 2.2%. all sectors are down as foreigners sell local stocks. hong kong shares slipping for a second straight session, chinese oil majors led the loss with oil prices slipping lower to under $80 a barrel and taiwan's market dropping about .8% of course on weaker manufacturing data around the globe.

same story in australia down 1%. lastly a quick check on india's sensex. recovering a little bit. cement makers were hit hard by massive price fixing fines. kelly tougher. >> well coordinated with that wall there. unfortunately given that means it's red behind her. last night eurozone finance ministers agreed that any aid for spain would come from region's temporary rescue fund until the permanent successor esm is in operation by mid-july. imf christine lagarde warned that the measures currently taken are not enough. >> the imf believes determined and forceful move towards complete european monetary union should be reaffirmed in order to restore faith in the system because as we see at the moment the viability of the european monetary system is questioned.

>> silvia wadhwa joins us now more from luxemburg. the e4 is the lingo we're using to describe the four ministers here who have to come to some sort of agreement but what agreement are we really talking about and how much pressure is on angela merkel to buckle some of her hard line stance? >> i don't want to be cynical about madam lagarde. funny when he was a finance minister what earn u finance ministers and heads of state were enough she said at the time. we're doing what we can. now that she's wearing the imf hat it doesn't count two year crisis management. i do share her sentiment but a note on that. in terms of what's happening to the gang of four summit in rome today, what can they really come up with except things that we've heard before. we're determined to get it right. we're determined to head for more europe. we are determined to get to something like a fiscal union.

we are determined to get the fiscal pact on track. we're determined to do something about growth. you hear a lot about determination. but in terms of -- i forgot they are determined to get to a banking union. beyond that what can they come up with? not an awful lot because we know whatever needs to be done in europe is the long track and not the short track. in the short run what they need to do, all of them is to get the esm even started and we all know that even the a class student, the germans have a few things in the work now that angela merkel got agreement with her opposition, she got the two-thirds majority to push it through. she has her own president say i may not sign up on it until the constitutional court has its say. a lot of question marks. but we'll see a lot of smiles and determination at least in words. >> we'll see if that makes any difference to investors this time around. let's talk more about what's

taking place. we were talking about this e4 meeting taking place in rome. do you think the european leaders can get their act together and put something concrete on the table to spur growth? >> history would suggest not. i think we got to get used to this being delayed. let's say under some dramatic situation that she came up with something today i don't think today would be the day to noints. they would recognize it would be better to come in as an eu initiative. i think most markets can hope for today is germany gives some sign that it's at least willing to discuss some topics that they said is off the table. that's a reasonable out come and lots of determination. frankly we're not bothered. so, don't be too disparaging. >> we should be clear with people as well the lack of any step forward here doesn't mean

things aren't happening in the meantime. capital flight is increasing across the eurozone, it's going into countries like germany and soft core that don't necessarily need it away from the ones that do and to what extent is the euro, in your opinion, vulnerable to capital flight out of the region broadly what's your price point. >> we're possibly should be on the world fund. we're an endangered species. we have 135 at the end of the this year. everything i see, although it's slower and slightly underwhelming, everything i see foist integration. germanization of fiscal policy. that's where we're headed. therefore you got an integration story. you have a euro bull story. short term, you know, today is not the time to start buying euro aggressively. you talk about year end, we'll finish this year higher. >> by how much? especially taking into consideration that the u.s. has been getting weaker.

>> we got 135 as our year end target. part of that story is what i've just described in the euro. the dollar story is part of it. we got lazy about dollar forecasting. what's euro view. u.s. data has been weaker, presumably a response to that will be qe3. i think that's a dollar negative and the whole u.s. fiscal story to worry about. so it's not just the euro story we should be thinking about. the dollar story, what value is there. i think we have to put a question mark over that as well. that gets you to 135. >> he'll stay with us for a little bit more just after the break. >> definitely. >> the world has an appetite for the safety of u.s. government bonds may be helping to keep america's borrowing rates down. for more on the report head over to cnbc.com. let's take a quick look at

today's other top stories. scotland may be able to issue its own debt. it's expected to be announced the government will launch a public consultation to determine whether scotland should have powers to tap the dmaerkts independently. you would think people wouldn't want anything to do with debt markets. >> maybe scotland doesn't want the responsibility itself because if you take full response about it it's your responsibility. plan to pay over 170 pounds to keep senior staff have been condemned. the association of british insurers are concerned about a pay out that was not linked to performance. so much talk about performance related pay it seems if you have pay that's not linked to it then it's not real somehow. >> and to the merger, "wall street journal" pointed out on twitter this morning, if you

bought into glenn core you would be down 40%. difficult time given what's happening with commodities. >> and a 2.5 billion contract to build a chemical plant pinpoint equates up to 25% of the group's null revenue. >> wouldn't be surprised if we see more cross border transactions between asia and the middle east. >> speak being of that report from hsb they are saying it's the middle east that has the resource to spend more. >> precisely. of course it is set to be a eurozone showdown of epic proportions as antonis samaras lines up his new cab bet in greece. and santos will asemipeople his best 11 to take on germany.

and santos team defied to qualify runners up after georgia's strike against russia. >> that was not handed to us by producers. >> i researched this. took me a long time. you're watching the game later. >> absolutely. >> great fun. >> up next we head out to madrid as the first results of an audit of spanish banks reveal a short fall of up to 62 billion euros. who do you think will win tonight? tweet us. [ 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.

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welcome back to the program this morning. these are your headlines. the latest data shows business confidence in germany at the lowest level in more than two years. >> spain's finance minister saying a formal request for aid will be ready soon. he meets with other european leaders in rome. >> commodities are under pressure. brent crude heads for its worst weekly performance in a year. doing a little bit better this morning. now the spanish government has been told that it will need up to 62 billion euros to

successfully recapitalize its banking sector the figure put forward is below the 100 billion euro aid that had been estimated. stephane pedrazzi is still in madrid. you were talking about how trustworthy this last round of auditing has been and whether there's credibility in it. is there credibility in these figures? do we believe these figures? do we think this is a whisper beginning figure and another figure later on? >> reporter: if you think the worse is the worse then we should take this number with a pinch of salt fun look at the worse case scenario that took into account for the stress test, for spain 6.45% contra contracti contraction. if you look at the worse case scenario, it's 26.4% decline in prices which seems to be pretty

light, given the debt cry assists real estate sector in spain. yes it's a worse case scenario but things as we've seen in the last couple of months can always be worse. so if you apply this scenario to the 14 spanish banks that have been taken into account for the stress test the maximum amount that would be needed for the spanish banking sector would be 62 billion euros. to reinfor the credibility of the stress test, the government explained yesterday evening how the tests were conducted. but also what could be the different scenario, the baseline scenario with 9-1 ratio for the bank would require 16 billion euros for the bank and worse case scenario, 62 billion euro. what's going to happen next. the government is going to submit officially it's request on monday. in the meantime still negotiate eight with its european partner, the finance ministers said an hour ago that cash injection

into the bank could still be an option although no final decision is made yet. >> good seeing you again. thank you very much. let's get back to the forex strategist. were you saying the euro dollar was going to hit 130 or 135? >> 135. >> this was by the end the year? >> yes. year end forecast and that rally continues through next. we need to get this year out of the way first. >> you're looking at what's taking place in spain right now and the capital requirements and the details that we're hearing about. you're looking at that as good news. >> it's not unexpected. we recognize the banks in spain needed money. they weren't going to get that internally. they were going have an external source. they will formally apply -- we can debate the numbers. frankly if the 100 billion they have lined up isn't enough they will find an extra billion. the money is found for spain. i don't think that's necessarily

a tripping point for the euro. >> can i ask you about the dollar yen. we're somewhere in the region of five week high on the dollar/yen. will this trend continue? >> the latest trigger seems to be the japanese will raise taxes and there for the quid proquo ease monetary policy. the last time they did quantitative easing is we saw japanese equities rallied and the yen came back, it strengthened. i think to use the same kind of logic this time around, we'll get the same kind of reflex. >> finally, just to focus on the dollar for a second a lot of u.s. companies have been hit by the stronger dollar. should they expect that to continue? >> i think it will continue the u.s. economy will weaken, we'll get a policy response from the fed. as i mentioned much about there's a risk that the u.s.

fiscal position becomes much more of a focus for the markets. there will be weaker dollar and alongside that a stronger u.s. economy, a stronger global economy that i can't promise. >> thank you. show me a weekend that's not nice. >> still to come rumors swirling that carlos ghosn could be stepping down from nissan. the full story next.

and let's see how u.s. futures are pointed this morning. we're seeing green arrows still. 46 points higher what the dow jones is implying. s&p up five minutes. nine noonds. this follows a very weak day for u.s. markets yesterday, loss of about 2% across the board. one of the worst, i think second worst trading day. >> s&p especially going through some super important technical levels. so european markets though this morning, little bit lower. another chart over there. charts all over.

little bit lower across the board except for the ibex 35, a little bit higher. still early morning trade here in europe. chemicals, oil and gas basic resource these are the three sectors they are pulling down in europe. >> some news making stories in asia. sony shares rallying on reports it may have taken over other bidders on olympus. it's counting on an investor to pump in money to shore up its books. t phonesnd tablets. remember the sony walkman? >> i need to move on. nissan ceo says he's not going anywhere at least for not. carlos ghosn was responding to a report he was considering to

stepping down. nissan is being challenged by the rising yen. the promise to churn out a million cars out of japan hinges on where the yen goes. >> shopping spree continues. the mexican tycoon has taken over a fifth of the company. shares in trouble telco have fallen on the news by more than 5%. paring loss down to three points to 5%. >> cisco, of course, coming up. we will be joined first on cnbc by cisco ceo john chambers. we'll get his thoughts. always wonder what the clients are doing are they spending? >> stay tuned we'll be hearing

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welcome back to welcome back to "worldwide exchange". if you're just tuning in i'm kelly evans. >> hello, i'm louisa bojesen. >> more evidence the crisis is crimping core business. business confident in germany drops. >> a formal request for spain will be ready soon and a direct cash injection straight from the eu is still a possibility. >> mixed reaction for european banking stoox as moody downgrades 15 top institutions. oil and good under pressure. >> e4 today in rome. they all meet in a bid to reach common ground ahead of next week's full eu summit. good morning to our u.s.

viewers and welcome back to others who are with us this morning. the dow jones industrials average at this point is pointed to open higher by 50 points. the nasdaq by nine points. the s&p 500 opening up five or six as well. this as we know follows quite a grim trading day in the u.s. with major indexes shutting 2%. hear the reaction from that move has been more mixed overnight. ftse global 300 is down half a percent. you can take a look at where the pressure is coming from. ftse 100 is down 1%. xetra dax down. only in spain over here ir, ibep .8%. it follows losses across the spanish equity sector and perhaps a bit of relief after the independent banking audit found the banks would only need something in the range of 60

billion of capital. that figure on the low end of what analysts privately expect. >> always nice to get ideas about how you potentially could be investing or making money on the markets. how do you make money. this is what some of the experts have been telling us this morning. >> i think the investor in this country has been making lacking returns, massive outperformance because we've gone beyond oil and gas. we're big into retail, consumer goods and transport. >> any increase that we're seeing in the amount from emerging markets is not being enough to compensate the decrease that we're seeing from economies where demand the falling at the rate of 950,000 barrels a day compared to last year, compared to growth in emerging markets of 400,000 barrels a day.

>> the valuation argument for equities is compelling. you might say come on is that a dangerous place to be. if you're careful there are two areas that are worth looking at in some detail. first those equities whose long term profit stream is attached to inflation. companies that are not priced but who have some determination of future profits that they enjoy. all right. plenty of fodder there for your trading day but certain people are paring positions heading in to the weekend. who knows what can come out of these meeting. let's get out the st. petersburg where the national economic forum is under way. today we have an interview with who are you talking to, jeff? >> reporter: john chambers with us from cisco. we're excited about the

opportunity to spend a bit of quality time together here in st. petersburg. we've had a fantastic couple of days here. we caught up with some interesting russian ceos and western ceos and good balancing off, john, these conversations and just finding out what's exciting people. so thank you for stopping by our cnbc position. let me kick off by saying what is the opportunity for you here in russia and some of these other bric economies because we obviously look at some slow down in the western economies, what are you doing here? >> well, i think you know that in temple of our approach we see the emerging economies not only to be growing two to three times faster than our traditional business but we see them as an opportunity for us to begin to talk about how do you change the whole economy. you say how can we do job creation, how can you do inclusion of the entire population, how can you change

health care. that's the panel i came off of. today 20% of our business is of emerging markets. if we do our job very well it should go up to 30%. our role should change from a telecommunications company to be the top company that helps them solve their goals. that's where we are when you talk about our involvement and our commitment here and our ability to work across the whole country. before russia i was down in israel and meeting with the prime minister, the president, the ministries of communications, defense, all the way across the board in terms of inclusion of the population there that's not involved in technology. and the day before that i was in palestine and we talked about how we established an organization there that moved the country from less than 1% gdp to 5%. cisco's role is changing. that's what we're doing in terms of future opportunities and helps us balance. >> that's interesting because we know government spending

programs in the west are under a great deal of pressure at the moment. governments are going to have to cutback on this spend. what are your seeing from governments in russia and india and china and israel, for that matter? do they have a different relationship to technology? >> what's going to be fascinating to watch is first grimace. governments around the world if they don't invest in i.t. can't work their way out of it. quality of education will drop. their ability to provide services to their citizens whether security or defense will drop. the developed countries have to change. you're right on the premise. they are slow. we saw that 15 months ago. three of the four countries you mentioned the governments are doing reverse. they are basically saying in china how can we change health care. even if the economy slows it becomes more important on education and job creation.

russia, if you watched president putin's numbers yesterday, you can't deny how much progress they are making. so they are looking at how they stimulate the economy and how do they create this to be a great place to do business. so far this year it's going in the high teens. nothing i say in this interview should infer what we're doing in the current quarter. but we're beginning to see three out of four countries getting their act together. india is struggling within their government and they need some more direction and i think it's an economy to slow more than most people thought. >> we're in a funny stage at the moment because we thought things were picking up in the united states. recent survey on the ceo hiring intention and spending intentions this year indicate a lot of nervousness about taxation policy in the u.s. towards the end the year here. do we need some politicians to step in and give us clarity about how we're going to tax

capital, people, companies come 2013? >> i wish it was just one variable to get the train going faster again. i think any time you have uncertainty as a ceo and you saw that in the business roundtable results then the ceos look at uncertainty in europe and bother it affecting their business. they look at consistency what the tax policy will be. they see other economies around the world perhaps in india slowing. when that happens they tend to take their foot off the brake. off the gas. cisco focus on market share gains because you can pick up more market share gains when things are slowing or right before they pick up than you do normal times. this last quarter when data came out we picked up seven percentage points. our switching is back to 70%. 15% gain in market share in set top boxes. so, i tend as a ceo i focus on

what i can influence and control. at cisco we're more aggressive when we see things slowing that's when we invest. >> that sound like a gauntlet being thrown down. those metrics will improve through the rest the year because your accounts are cyclical and your desire to win market share. get an improvement in those market share sectors. >> i wish it was as quick. most things we do at cisco we invested in russia two years ago. we invested in palestine four years ago. we invested in china 15 years ago. i tend to look where markets will be one, two, three years out and none of us can control what will happen in a quarter two. to the indirect part of your question do i think if cisco will perform well i do. >> one thing that's keeping you

awake at night. fiscal cliff, european banking crisis, is it something else that i haven't mentioned here very briefly, john? >> cisco's move being from a box company to soflg customers and businesses major issues. to miss that window especially if there's a period of time when our peers take their foot off the gas that keeps me awake. i worry about issues in europe and how severe will they get. >> been a pleasure catching up with you. thank you very much for coming to see us. john chambers from cisco. >> appreciate you being on the ground in st. petersburg and hearing his thoughts, john chambers about the weakness he's seeing in india and relative strength of russia still. >> two prong story to some extent although the weakness across the board with the financial data. just to mention within the past couple of minutes we've had flash out by reuters that the

slovak parliament is ratifying the eurozone, the esm have to go through verification of various countries. >> the big one, the focus deals with germany. still to cobble this show, moody's closes the books on its reviews of several big banks cutting ratings on 15 companies. with the move the industry has made to short finances will these downgrades be a lagging indicator. got to talk bank analyst and former head of the bank bb and t next. don't go away. >

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welcome back welcome back to "worldwide exchange". this morning these are your headlines. latest data shows business confidence in germany at a two year low. spain's finance minister says a formal request for aid will be ready soon as the prime minister meets with other european leaders today in rome. and commodities under pressure. brent crude heads for its worse weekly performance in a year. and let's check in now on how exactly we're seeing markets trade this morning. >> you were mentioning brent. precisely on brent, saying we're on track for the worst week in the year. that indeed is true. but on the one year basis sbrent lower by somewhere in the region of almost 20%.

we've seen a huge fall back in the price of oil over the last couple of weeks. you can see it over here, tapering it off since the beginning of march. seems the geopolitical risks have managed to leave the equation more than what we're seeing with regards to the weakness out there in some of the data, so the data points stealing center stage with regards to how the price of oil is trading right now. on top of that a risk off environment across the board over the last couple of weeks where people have been generally selling a lot. a lot of assets and sitting in cash. same for nymex and gold too. >> moody's cutting ratings on 15 banks citing exposure to volatile capital markets. cuts could push up borrowing costs. b of a was cut by one notch. a slew of others including citi, goldman, rbc, ubs and morgan

stanley were cut by two notches. >> i'll breathe for you. >> morgan stanley had faced a possible three notch cut which moody's instead gave to credit suisse. most banks disagree with the downgrade and they won't have much impact on their funding costs. joining us on the phone, bob albertson and here in the studio, john allison. bob, first to you. what are the practical implications of these cuts going to be. we're seeing bank shares hold up okay this morning. >> good morning. almost none really. it's really rather steal news to say there's little volatility in the market and damaging four months after they were talking about. the numbers are pretty muching

straightforward. there's a narrow impact in the trading arena of banking in the u.s. that has limited impact. the derivative collateral issues are quite modest. the bigger story is the u.s. bank funding hasn't been secured and deposit really since the early 1980s. i think when the "wall street journal" calls at it fresh blow to the financial sector i would disagree. >> john? >> i agree with what bob said. do i think the downgrades reflect reality. these banks had had too high of right. my bank was a large bang but we were smaller. they always say you have to be big to be rated higher. bigger is better is not always true. >> are we seeing more strength in regional banks? >> john is right. we've kind of reversed the playing field, used to be bigger was safer.

now they are going a little too far in the other direction. but the u.s. banking industry outside of the trading business is really improving rather remarkably and investors i don't think are paying attention to it because they have resident growth from low demand. it's small. revenue growth from loans and banks replacing nonbanks which you don't have much in europe. three quarters of our loan base in the united states is from nonbanks. >> but, john, isn't interbank lending tight across the board? >> yes. there's an integration of the banking system, but the regional banks in the u.s. aren't very dependent on the larger banks. there's a connective system. they managed the risk. i think there's a deeper issue here that people really underline this whole euro thing. we've been running an experiment since 1971 with the u.s. dollar has become the reserve standard of the world and been disconnected from a commodity that politicians can control.

so we've been relying on government bureaucrats who are supposed to be experts to set the monetary standard of the world. that's a riskier experiment. it may be better and these guys may be wise or may not be disciplined and i think this is underlying, not just the euro. you got a monetary standard that's based on bureaucrats and set a discipline by markets. that's a risky experiment. >> that warning is partly what you were talking about here in london last night. bob wanted to jump in here with a point. bob? >> i want to talk about the same point. the big story is the problem not the banks, really, whether it's u.s. or europe. the problem is government and what we're going to face is a reality not in the too distant future where interest rates really have to go up and reflect the damage that the governments have done. that's the problem. that's the denial everyone has to get over and kind of stop this bank bashing and focus on

risk. we've overdone that story. >> what should be done, john? >> we need to move to more private banking. before 1913 u.s. had private banking system and banks had 15% capital and very few failure rates. we created central banks to finance governments. >> it had serious economic crisis well before 1913. >> that's a myth. economic history, 1870, 1913 u.s. had the biggest economic boom. we integrated millions of reject from europe and yes we had corrections they were all short and severe. got over with within a year or two. we had the same thing in 1920. really severe correction and then an economic boon. 1930 the government helped us as they are helping us now and didn't get over for 15 years. >> i'll go back home and read more of my u.s. banking history. >> you need to study it.

>> we so appreciate you coming by while you're in town here in london. bob thank you for your time. sorry we didn't have more for that segment. bank stocks holding up okay. >> still to come, we'll look at the trading session on wall street after s&p 500 moves to the death cross. >> all details after the break. 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. optionsxpress, the broker smart traders deserve. open an account today at optionsxpress.com. welcome back to welcome back to the program. the s&p 500 has moved through the so-called death cross. if you're familiar seeing that fatal terminology it means stocks have seen the 50 day average move below the 200 day average. some say that's the kiss of death. jack, bearish sign for stocks or

are you looking elsewhere? >> well, you know, it is a bit a bearish signs. goldman sachs came out and gave us a target of 1285 when we were at 1325. that was silly. bottom line is this. people are just very confused. when you talk to money managers these days i don't think i've ever seen a bifurcated view on the market ever in the last 30 years i've been in the marketplace. what it's telling me is when people are very confused you get this type of action which is triple-digit days up and down. i had to talk people off the leverage yesterday when they realized after a 250 point down move we were where we started the week. all of this is telling me the market is trying to figure out everything and we're one headline away out of europe from being up 5500 dow points. the european has to guarantee

banks and that's the signal everyone will wait for. >> great. goldman recommending clients should set up shorts on the s&p 500 and they say they set a short target of 1285 which is more than 5% lower than what we saw on thursday's close. doesn't this give an indication that maybe the weakness is just starting. >> you know what? first of all that was a silly call. one of the reasons they did it because they are trying to save face. this is the same group that said we probably wouldn't get past 1250 earlier in the year. they were wrong. let's keep that in mind. number two, this is a range that we're trading. what i would recommend is don't get out of stocks, protect yourself with some put, especially the other day we saw when we were at 1355 the volatility index went under 18. use the range as a gem of opportunity to take in but it goes the lower end of the range monetize that.

but all of this is a precursor to what i think is a market that's almost like a beach ball being held under water. every time you try to push it down it pops back up because of the valuation issue. valuation is very compelling and that's the overriding factor. >> you're keeping an eye on darwin results. is it company specific? >> it's more company specific. for me i'm looking at the greater view. i'm more concerned if there's a deflation engineer problem taking place. we're looking at commodities starting to get hit. that's what investors should key on. >> jack, thank you very much. we'll keep an eye out for those results. thanks for standing in for ross. >> great. looking forward to doing it very soon again. have a lovely weekend. >> here's "squawk".

good morning. the markets have been racing and speculating for months. now finally moody's makes its call on the banks. european leaders are gathering again. can today's meeting in rome help solve the eurozone crisis. you it's friday, june 22, 2012. "squawk box" begins right now. >> >> good morning, everybody. one to "squawk box" here on cnbc. i'm becky quick along with concern ken and andrew ross sorkin. happy friday. moody's downgrading 15 of the world's biggest banks by one to three notches. e