welcome to welcome to today's edition of "worldwide exchange." i'm ross westgate. >> and i'm kelly evans. these are your headlines. three sessions of big losses pushing higher in early trade despite a negative day in asia. cypress will request 10 billion euros in financial assistance from the eu bailout fund accord iing to reuters quoting eurozone officials. and eitalian bank seeking 3 billion euros of trade, trading lower after the moody's downgrade. and parliament passes doubling the national sales tax by 2015.

a very warm welcome it to today's edition of wo"worldwide exchange." three days of losses for european stocks. we tried to buck that trade now as we're an hour into the session. we're only doing it just around about five to four advancers outpaced declinesers. so not big gains. the ftse 100 down some 3% in the last three days. right now it's just up 0.2%. xetra dax down, just up for the cac. ibex down heavily yesterday. currently just up 0.6%. the focus, of course, on another bailout for the fifth eurozone country, cypress. potentially asking for some aid. and the moody's downgrades as

well of 28 banks. let's show you some of those banks currently trading at the moment. what is of interest. biggest ones are actually higher. up 1.4% despite a downgrade from moody's it is rated higher than the sovereign nation of spain. bankia down. on the bond markets we focus in on spain again today. we have seen italian and spanish yields higher. spanish yields 6.69%. we're in green today which is an interesting -- not quite sure why that is. 6% over italy as well. we have, of course, got some auctions coming out in spain and italy. auctions $2 billion to $3 billion t-bills. interest rates on those, they were around 1.827, it double what they paid in may. zero coupon bonds being issued by italy. we'll keep our eyes on that. gilt yields higher, 1.7%

yesterday. we're looking ahead to the latest br owing statistics, cash requirements as well. currency markets, the euro has been pressured down. we are back over 125. dollar/yen we pulled back from 80.63. aussie slightly stronger against the u.s. dollar. sterling is also up against the u.s. dollar at the moment. that's where we stand. kelly, back to you. ross, thanks. the latest on what's happening across asia. tracey chang joins us for more. markets are mostly down as investors stay cautious ahead of the eu summit. mainland china had five straight losses. recovered from earlier lows to finish down with about 0.1%. brokerages and property plays outperformed the broader market. hong kong shares ended 0.4%

offsetting weakness in chinese banking majors and macou gaming stocks. a one-week low before copping passed a bill to double the sales tax by 2015. else with where the kospi dropped about 0.4%. foreigners it continue to sell local stocks. and in australia trade volume was very thin. and just a quick check on the sensex, bucking the trend up 0.3%. back to you. tracey, thanks. the latest on some pretty woeful numbers coming out of italy. retail sales for april fell 1.6% from the month earlier. usually we see those kinds of declines year on year. in fact, from a year earlier retail sales in italy were down almost 7%. ross, it was a record month drop. a sharp decline swrund scoring

t underscoring and we haven't seen talked about the peripheral nations but italy will be in the cross hairs. >> it's always been about can you keep it and should. we have to talk about that on today's program. hungary is refocus ising on eastern europe. the debt it is having on the region. we'll focus on japan's tech sector. why japanese firms are losing out to the taiwanese competitors. >> now telling cnbc he's not all that worried but markets shouldn't rule out more action from the ped. he'll be with us from philadelphia in an hour. >> live in new york city for the first preview on wall street as markets gear up for the latest reading on consumer confidence. and, ross, we'll see if lower gas prices can do anything to help sentiment there. >> there is always some offsetting benefit, right? and let's talk first about eurozone officials estimating cypress may need up to 10

billion euro in aid. it hasn't been decided though it's thought to be between 8 billion and 10 billion euro to meet an eu deadline to recapitalize the second largest lender struggling to exposure to greek debt. and in greece, rapanos has resigned due to ill health, the chairman of the national bank of greece was taken ill. elected to the new prime minister samaras. after discussions with my doctors, i reached the conclusion that my health condition for the time being does not allow me to sufficiently perform my duties. former greek interior minister has been linked with the role. >> and hopefully not with the illness. joining us for more on all of this, global chief investment office of a private banking will be with us for the whole hour. didier, we are getting reports

not to expect too much from the summit of the leaders. does that mean the market is right to be selling this news? >> i think probably the good news is that there is not so much expectation about the summit. we expect kind of a muddle through exercise as we have seen, but what is interesting that we see from the leaders is that they are already preparing for a leave in term of governance because they want to address the banking system, also the fiscal discipline. this is really the bedrock are for the future of the resolution. >> is that governance going to be a redemption fund basically, a mechanism by which they can come together to impose from brussels or from germany budget discipline going forward? >> i think the good thing about the european redemption fund is that it comes from germany. and it fits the german low so that's already a good mark.

and i think it will be officially presented by one way or the other and can be put on the table as a way out, the negative spin between banking sector and the government. >> and how would it work in your opinion? >> i think to have the discipline above the 60% with the special conditionality that is attached to the european redemption fund we really fit the bill in the aspect of discipline because it ises an old idea that was discussed some years ago to create a european fund so it's really entering but this time it's through the german door. >> and the key aspect here, of course, is all the other plans have been about countries willing to give up sovereign control, france as much as anyone else. does this get around those

aspects and will countries have to give up some sort of a job and would they be willing to do it? >> there is a raidoff to access to finance. probably will not go on without a compromise on serenity. we need 0 to really reel europe in wider. serenity, that's probably what is at stake. >> i guess what i struggle with a little bit is the sense that if we can only tighten sort of the treaty or the original provisions in it by redemption fund or whatever that will offer some way out of the crisis because getting back to anything like 60% debt to g it dp ratios is a pipe dream at this point and to basically sort of say if only we could enforce this it going forward, everything would be okay when the crisis has demonstrated, no, there were real imbalances. if anything you should have said to germany at the time, your surplus is too high. >> but the european redemption fund is pretty presentable in the landing on the target of

60%. it's something like 20/30. it has a lot of time to achieve that. and there is all this discipline behind. i think it's achievable and i think we are really waiting at this summit just as we had in the '80s the brady bunch. so maybe this will be under the next one. >> it is the 20th meeting since the eurozone crisis. >> as we go through it this it's pretty clear bunds, gilts, treasuries, cash deposit facility. what investment opportunities, though, are there as we go through this ongoing situation? >> you touched the point can we consider really something with negative yield as a safe haven? i think the investor is looking for proxies of safe haven and

probably the investment grade bonds are for safe havens for the people who really want to get the return on their investment, that's probably the place to be. besides that, there are plenty of opportunities now if you look, for instance, into the high yield business in the u.s., you have less leverage, you have really decent yields and that's probably a place to look at. if you look also into the space of emerging markets, the interesting part will be to play really the country that is stimulate on a short notice. >> and who are they? >> you can look at china, you can look at brazil that have already enter ed ined into a stimulating mode and something we don't have in europe. >> indeed. >> all right, didier, great to have you on. u.s. news corp. could be heading for splitsville, considering a plan to break apart its publishing business which

includes "the journal" and ""the new york post"" as well as the fox network. they are apparently warming to it. it is similar to what viacom did when it split off cbs. news corp. stock yesterday -- i can't remember what it did. we'll have that coming up. >> investors have the stock over the last year or so and they split off the entertainment business and publishing business, they will not be equals. it is 90% of operating profit publishing 10%. think that one over when you think about the future of publication. >> particularly media rules in this country may enable them to come back at some point. >> exactly. anyway, a look at how the eurozone crisis has impacted eastern european economies, hungary gets set to unveil its latest rate decisions. acceler-rental.

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moody's has downgraded 28 banks and cut the sovereign rating. moody's was citing the exposure to commercial real estate as two main reasons behind the actions. stephane is with us.

in terms of stock performance the bigger banks today are up like santander. >> reporter: yes, globally speaking the market reaction is quite limited. we have very negative session yesterday this downgrade from moody's was widely expected here in madrid. in total 28 banks have been downgraded. 21 and seven just above the junk category including the biggest ones. santander, moody's is pointing out large exposure to latin america and to emerging markets which offsets the stagnation. the outlack for all these banks remains negative. nevertheless moody's points out that the recent bailout request for the banking sector is globally positive news even if if moody's will assist the impact of the bailout once the amount, the timing, and all the details for each individual bank will be officially announced.

we may have more information in the next couple of hours. the spanish finance minister will speak before the commission of the spanish congress before going to paris later in the day to meet the french, german, and italian finance minister. the other piece of news out of spain today, we have the bond auction taking place in spain this morning. the treasury is aiming to raise between 3 billion and 4 billion euros in very short term bets in three and six months yields. the average yield could double from the last auction in may. we'll have the results at 10:40 central european time. over to you. >> all right, stephane, thank you. hungary's central bank is due to unveil its latest interest rate decision later today. markets expect the bank to stay on hold for a fifth straight month at 7%. the eu's highest benchmark rate. the hungarian foreign is trading against the euro lower. no surprise there as it's been lower for quite some time. so how is the eurozone crisis

impacting eastern europe? capital economics is an orderly breakup the euro could knock 2% to 3% off gdp in most countries in the region. joining us now is neal schering. >> robert, isn't it? >> neal was talking on that report. robert, hungary is meeting later today. should we be that focused on the importance of this particular action or more broadly in the vulnerability of the region to ongoing trouble in europe? >> i will agree with that statement. i think with regards to hungary, the economies are so small and they're dependent on the eurozone and the issues that are there. with regards to policy, yes, they can tweak their policy here and there. ultimately it depends on what's happening in western europe. >> and it would seem that they have some structural issues here that of course would make it not just a matter of banks deleveraging and pulling out of eastern europe or weaker trades

and weaker export flows, which countries have some of the biggest structural impediments? >> i think the balkan countries will be the most challenged especially if we have a greek exit scenario. we're talk iing romania, bulgar where the greek banks are significant players in those markets. specifically back to hungary, it's a very domestically weak economy. it's got a lot of challenges. it has a lot of nonperforming loans with regard to foreign exchange loans made in swiss. the currency has weakened significantly over recent years. actually a weaker currency sometimes benefits hungary but of course they need euro/swiss at 160 and not at 120. they have to sign this imf deal towards the end of the year. they have some cash reserves now. >> how fragile is the banking syst system? >> i don't think it's a question of vulnerability right now but it's the impact going forward in a few months' time and that's the question for the whole of the eurozone whether it be central and eastern european

states. i don't think policymakers have actually that much say in the matter. the central bank aren't central bankers anymore but politicians. >> we heard cyprus needing its own bailout hinting that it will come from china or russia and it to what extent does eastern europe amid this crisis end up looking, i guess, to its east? >> everyone is looking east. they're hoping east. i think the word hoping is a danger. hoping that the chinese have run over the hills is one thing but of course in china they have significant issues for the economy slowing anyway. downgrading to 7.8 recent ly an perhaps could go lower in some people's eyes. with china slowing and having nonperforming loan issues themselves, it may be hopeful to expect they're going to come to the rescue. >> any help with -- what political strings does it come attached with? >> i think the comments your previous guests made with

conditionality and loss of sovereignty is the ultimate question. germany understands control. that's in its psyche and it wants that. and if it doesn't get that, it's unlikely to budge towards the summit at the end of the week. >> how important is this imf loan for hungary which has had a lot of issues regarding its central bank, regarding the political direction the country is headed in? >> the key issue really with regards to the prime minister and his efforts and his intention of the imf negotiations which haven't started yet, the bill should be going within the next fort night or so but various delays. it wouldn't be surprising if we saw another delay. but going forward i think he will be boxed into a situation where he has to take the conditionality most likely to the end of the year. >> spain is the one country sort of outperformed. will that continue? >> poland has outperformed its economy, the population of 40 million. domestic demand has held up

very, very well. actually if you consider domestic demand, that is the big hope in emerging markets there is this velocity in the economy locally. now if that were to slow down, it could be quite significant. >> poland is a green island in '09, one of the few nations that posted growth, showing weaker signs now. how important is that note we saw the other day about poland opening swap lines with the swiss national bank? >> i think significant. poe lapped has swiss loans for their mortgages and that will enable them to be able to achieve swiss funding and having to go into the exchange market. that would have an impact as well. >> bottom line, growth prospects across eastern europe severely set back? >> it depends on the eurozone. if we get to the summit on thursday and friday and we see a continuation of the paralysis with regards to policymaking which i think on balance is more than likely to happen because there's a lot of things you've got to do. i don't really think eastern europe can achieve what it

actually means at least in the short term. >> robert hoodless of citi, we'll keep an eye on hungary's central bank. in a bid to ease economic growth, china's commerce ministry says the trade picture is stabilizing and that will be reflected in upcoming data from june. tracey chang has all the details. tracey? that's right, kelly. china will be able to reach its targeted goal of 10% annual target growth. that is as long as there is no, quote, dramatic reversal in the world economic situation and no sudden plummet in global demand. a commentary says beijing should cut its benchmark interest rate again given slower than expected economic growth and declining inflationary pressure. the paper argues that lowering interest rates could cut financing costs for small companies and help ease the debt burden for local governments. and it seems like local authorities actually may need

some funding help. "a financial times" report says cash strapped governments in china have leased off cars in an effort to prop up revenue. back now. >> all right, tracey, thanks. all right. so let's bring back in didier. didier, the investors in the eurozone have been worried about slowdown in the u.s. and, of course, commodity players, very worried about spain and china. when you look at what's happening now, last week's commodity prices in it growth, how do you assess the value or not in that space? >> i think there is a rebalancing going on in china. it doesn't say that we will finish in a hard landing and that's not the purpose of the plan, of the fifth year plan. there is a ben pit in the commodity price even for china

as well as a benefit of seeing lower oil price for china. we have certainly at this stage the price of oil today already acknowledged dividend for china. so that's the reason we are positive on china itself. beyond the stimulated story, also in other countries like malaysia or indonesia, the lower oil price is really an interesting element because it lowers the subsidies for energy so it makes a rebalancing. >> the economy is weak er, righ? the economy is weaker you get lower investor returns. is it bad for timing? if this becomes beneficial, what is the angle for european investor to leverage it? >> i think it's a benefit because it more or less gave a kind of a margin space for the companies that can have really a kind of additional element because one of the elements is the margins are very fat.

that's true. but we cannot expect them to expand forever. >> right. >> so it gives more room to add more expansion in the short term. >> i just want to bring up this story in "the financial times" about chinese officials forced to sell luxury cars across many of their local governments they had previously these fleets of cars, many audis and other things at a time of more stringent finances they're turning around having to sell. i think it should just temper a little bit of the enthusiasm that china is successfully engineering, you know, slowdown. it really is coming home to roost. >> i think they probably want to make an example also with this measure to the whole scheme in china. it may temper the exports. this is a symbolic measure. as always in china, any measure has a symbolic dimension. so it hides a real phenomenon.

maybe we should expect in years it to come. >> we'll see how the automakers react it to that. didier stays with us. meanwhile, millions of customers in the uk are suffering from a computer glitch that has left them frozen out of their bank accounts. natalie westaway, a 22-year-old who has the twitter handl handle @natwest which she has had for years. the twitter account has been inundated to the point natalie had to declare i'm a person and not a bank. do you think big corporations need to start taking control of their twitter handles to prevent confusion and if so, how? how much should they pony up? shoot us an e-mail or tweet us. >> they would be aep all those e-mails are going to someone else, all those tweets.

>> if i'm nat west. >> yeah, you take the twitter handle. it is extraordinary that the closure of accounts. missed bills, direct debits, bail post iing. some people stayed in jail a couple of days because they couldn't clear the bail. so it's extraordinary story. more on that when we come back. plus the latest breakdown of the public minister.

european stocks have three sessions of losses. >> cyprus will request financial assistance from the eu bailout punned. according to reuters quoting eurozone officials. a volatile session. financials are mixed after a moody's downgrade. >> and the lower house pass as controversial plan to double the national sales tax by 2015. welcome to cnbc's "worldwide exchange." just had the latest public sector borrowing figures out of

the uk. i can tell you they're a little higher than expected, public sector 17.94 billion. they are forecast at 14.8 billion. public sector 15.5. that's higher than the forecast. net cash requirement minus 4.42. it was forecast at plus 2.9. so the onus saying the public sector is a percentage of gdp was 65%, a record for the month of may and the third highest on record. the pound just hit a session is high against the dollar. no surprise perhaps to see it coming off that session high. joining us today european research bank of tokyo mitsubishi. thank you for joining us. not the best for the uk. it takes a while, though, to get a patent set. how does this all play into sterling when, of course, we mo

that we're on the brink of another bout of qe? is. >> that's a driver at the moment. the steps that were taken by the the bank of england, the uk treasury department and then the minutes from the meeting. everything is kind of putting pressure on short-term interest rates in the uk. so from a simple spread perspective, some downward pressure on sterling. so i think going forward if you get what the markets are expecting given what's happening in europe, i would say the pound is going to move lower against the dollar. >> which i think is terrific news, someone long the dollar and short the pound. what surprises me about your points is that you don't think there's more quantitative easing coming in the u.s. and that puts you sort of opposing the view the market seems to have. >> well, certainly last week, i think, is a good case in point where the markets were expecting potential quantitative easing. i think there's strong reluctance on the fed generally

to take that step at this point in time. i'm sure in the background there's a very strong political current coming from the white house that would probably be opposed to quantitative easing at this point in time given the fact that in the past the immediate response has been higher economic prices, higher gasoline prices for the u.s. consumer and that going into the presidential election is something that i think the obama administration would likely to avoid. >> don't you think we are entering into a world where there is more coordination between the central banks that you cannot entertain quantity tate ive easing in one country alone and we are really in a kind of moment to provide money to the system? >> sure. i think the second point that i would make in terms of what happened last week, i think they are keeping a bullish bear if things really deter rate in europe. i'm not saying definitely for sure there won't be quantitative

easing if things worsen in europe if we have an intensification. there is a risk that they do. >> we already saw the reaction in asset classes to qe and fisher talked about this last night as well. the question is, if there is no more qe in the states, have we seen a lot of the asset price reaction to that? >> i think the expectation of more qe can come back. i will not say with revenge but with benediction, in fact. add more qe in the future, the fact we say no today doesn't mean that we will stay on the sidelines. >> we have seen the reaction to the prospect of no more qe because the only way to go from here we might get some. >> is back towards it. >> it's a paradox. >> another part of what we're doing is they know for sure the impact on the financial markets will be nothing like it was in qe-1 and 2. the reason for qe-3 would be

europe centric. >> the oil is up $4 or $5 last thursday and that was because they didn't think we would get any more money, i suppose. euro/dollar, around 1.25 level. very low expectations for the summit. are we in a period where we might get a squeeze higher? >> could be. there was a degree of optimism last week. there are two elements that i'm looking at quite closely. they seem to be addressing the bigger picture, having this constitutional document being put together by the ecb in brussels that is looking up a long-term plan towards fiscal union. i think all of that is excellent, it's necessary. it's what's needed. however, there is another element of what needs to be addressed, the concern of the markets in regard to the firewalls and the size and the ability of the authority to contain a loss of can haonfiden

the short term. on i think the structure -- the capital structure of the esm just doesn't cut it for the markets at the moment. if you assume that they only have about $120 billion left after it is given for spain paid in capital is required and you can only leverage up to a certain degree. the capacity of what's available i think the markets are concerned about that. and i think that's the other element that needs to be addressed. >> all right. stick around, both of you. japan's lower house has given the thumbs up to prime minister noda's controversial sales tax plan after breaking negotiations with two of japan's largest opposition parties. the bill is set to double the nation's sales tax to 10% over the next three years. the deal, though, still threatens the government. lawmakers from the ruling democratic party voted against the hike could still split and help topple the government. as we know japan's government has been one of the more unstable western regimes lately. we've had so many prime ministers in so many years.

didier, you're still underweight japan. the sales tax plan, do you read this as a favorable thing from an investing point of view, make you any more optimistic on japan? >> having a tax increase in japan is an achievement considering the quagmire, the political quagmire that we have there. and in absolute terms, we are not talking about the sales tax that we have in europe which is close to 20%. so it will certainly not kill the consumer and when we have a tax increase and then the consumer will go back to the underlying pattern. what is interesting in japan if we compare japan and europe we're kind of double the growth in japan and in europe. it's something that we were not used to. we become positive on japan so that's -- >> if there was any risk would japan deliver in the first quarter when germany's dax?

>> yes. i think on the short term we can see balance in japan mainly driven by the balance between the currency market and the equity market. >> briefly, what happens to the yen? stays strong? >> i think very short term there's the potential we could get some weakness but it looks like we're not going to get political uncertainty. they have indicated they're not going to split at this point in time. if that's the case, noda starts to look pretty good. we've actually had some development, some process. some people are comparing him. if he can push policies through, i think his popularity could rise and that could bring about a degree of political stability we haven't had for a while. that's, i think, the risk. but short term europe financial markets globally, that's the driver and we would say stay strong for now.

>> well, considering that japanese tech companies have been facing a tough time trying to catch up with rivals such as south korea's samsung electroni electronics, they have had to seek support for major shareholders and banks as it struggles to keep up. the strong yen had trouble on the european front making the situation more unbearable for the sector. shares closed down almost 6% today and for the year it's lost more than a third of its value.. joining us for more is mark newman, senior analyst for consumer electronics. mark, a pretty big drop there for this company. is the tech sector more broadly in japan at risk of being who will hollowed out? >> i see tech in japan we've seen a lot of problems recently. we saw the bankruptcy earlier this year. and it was the last d-ram company in japan. so that's very bad sign there and across other parts of the semiconductor industry we're

also seeing today other parts of technology a lot of issues with sony display of batteries. really several areas of tech. the japanese are find iing it tough to compete with their korean, taiwanese and chinese competitors. >> mark, stay there for just a second. we want to first bring you results of spain's treasury auction. >> euro is falling to a fresh low. the amount they wanted, 1.6 billion of three-month t-bills, 2.6 is the bid to cover. 3.9 previously. 1.48 of the six-month t-bills. >> 2.5%. >> the yield on the six month is 3.36 which is considerably higher than we might have expected and what was the three month? >> 2.5% up from about 9% on may 22nd. since may 22nd, just about a month's time, we've seen spain's three-month borrowing costs go

from 0.9% to 2% and six-month up. >> your reaction? >> that's not really surprising. confidence is extraordinarily fragile. i go back to the points i made earlier in terms of addressing the firewalls and restoring confidence. until that is done, upward pressure is going to continue. >> didier, people buying presumably are the spanish banks. >> certainly. it's interesting to see that some are interestied for debts. they tried to make a kind of order between the good, the bad, and the ugly. some of them are showing interest. >> okay. let's pause will. we'll let you go. thank you very much for joining us. let's just get back to mark. >> yeah, mark, we've been talking about the trouble europe

is having borrowing. japan still able to tap debt markets quite successfully despite its high level of indebtedness. the yen still quite strong. we've been talking about the tech sector there, though, and the risks it faces as operations for other countries. is this just an issue for your sector for memory and consumer electron snix is there a degree this is more vulnerable than others in japan as to what's happening? >> i think the tech industry is more vulnerable because you've got a lot of competition very nearby from the koreans and taiwanese and chinese competitors. and tech industry is very much a global industry. there are other industries much less global. tech is very global. the cost of shipping something from japan or korea to the united states is relatively small, for example, as compared to the cost of making them. it's a very global industry and

this is where the japanese are having a lot of difficulty competing partly due to cost competition from the local asian rivals but also, i think, japanese have shown over time some lack of nimbleness compared to some of their korean rivals especially samsung, and i think some issue with the japanese tech being somewhat isolated from the rest of the world have some of their own isolated tech bubble going on in japan for some issues. >> mark, let's talk company specific for a second. you mentioned samsung. do you expect them to continue stealing market share or fight ing for market share from apple? >> yeah, i think in smart phones clearly what you've got in the top high end you've got really a battle between apple and samsung. those are the clear two companies at the high end. i see samsung has a strong window of opportunity right now with the galaxy x-3 coming out.

apple doesn't have a product right now. that gives samsung several months window to really sell a lot of galaxy s-3s and sell as many as possible to get in front of consumers' eyes. on the low end, though, however, it's really samsung versus what i see the upcoming threat from low-end competitors such as local chinese players particularly zte and that's much more low cost competition fighting on cost. samsung is having a tougher time there but they do have strong brand and low costs as well. >> mark, real quick, does r.i.m. exist in its current form end of the year? >> a great question. i don't know the answer to that question. clearly they're very desperate. lots of issues with r.i.m. i think that there's been a lot

of rumors, some rumors even samsung will buy part of that. i think it's difficult to see samsung ever buying the operational part of r.i.m. but if r.i.m. were to sell off the operating system i think samsung may be interested in that. i don't know what r.i.m. ends up doing but clearly they're looking for solutions right now. >> don't you think samsung for a pure prospect in terms of pricing, in terms of valuation, present more value than apple, you know, we are talking about it there. >> yeah, samsung vs. apple is an interesting can he bait. if you look at the valuation and you look at the capability of samsung right now, samsung is a much bigger company than apple on a rech knew assets basis. apple is generating more profit because they have much higher march gygin margins. samsung with the different

products that they have, different operating systems that they use, they obviously have a lot of reliance on androids for smart phones but also windows. they have more diverse -- they're spreading their risks more widely and they are generating a lot of profit from other businesses such as semiconductors, displays, tvs, et cetera. so the risk is much less for samsung rather than apple which has all of its eggs pretty much on one operating system, ios, and on one product, the iphone. >> mark newman, senior analyst for global and memory and consumer electronics. thanks very much. japan has driven up its ceo package. earning $12 million in salary and bonus, more than any other executive. protesters have had reports

ghosn might leave me san. >> india feels confident about sealing a new deal. we have had more on this story live from new delhi. so how much potential is there for more trade with europe? >> reporter: this is basically a review meeting. negotiations have already taken place. several services, investments in it goods, rpi. we have learned they have asked for market access to let indian banking and legal certificaserv sector to commit anything because of domestic sensitivities. india is more come can for theable in allowing european companies in its retail, insurance and aviation. all three sectors are at an advanced stage. the negotiations are almost

over. there are only a few remaining issues which includes the auto sector, the european union wants access to the indian sector, agreeing to give limited access but europe is not satisfied. it wants more on investments. post likely all the trade investments will be now consolidated into one agreement in the fda. the one big take from this meeting will be that we will get to know a signing date which will be probably later during this calendar year. back to you. >> thank you very much. over in hong kong the occupy movement is still going strong. it has forced one bank to head to the courts in exasperation. emily chang has been following the story. >> reporter: hsbc ends legal action. protesters have been camping out at headquarters since october. so about eight months they've been living in tents in the public passageway on the ground

floor. hsbc said they asked the group to vacate voluntarily but since they never heard back they applied to the courts for an eviction order. this group of protesters are made up of mostly students and young people and at its peak totalled about 50. the encampment becomes the latest of the occupy contingent to face legal action. the occupation prevented the bank from conducting fire drills and fund-raisers and of course posed health and hygiene risks. the court will design own ershi of the area and if things go in hsbc's favor, a bailiff will be appointed to repossess the area. >> thanks. interesting that it is happening in hong kong. we haven't heard much about it in london, are ross, lately. what's on the agenda tomorrow, shareholders of troubled fukushima plant are gathering for the annual meeting. china holding its first organization of islamic corporation congress in beijing. that four-day event will focus on economic interests in the

muslim world. and the third annual meeting of the financial partnership. still to come on the show, samsung a good pick for your portfolio. our next guest thinks so. worth pointing out post that spanish t-bill auction, yields were sharply higher. yields going higher across the curve in spain. the ten year back up to 6.67%. more continuing reaction when we come back.

welcome back to the program. let's recap. we started positive but have since turned negative on the broader european indices, this following spain paying a lot more that expected perhaps for its short-term debt although not too much of a surprise there given what we've seen the country's borrowing costs. ftse still trying to hold on to its gains in the green. the dax in germany and the cac lower by 0.1 to 0.2. >> the five year up to 6.42%. the three-month doubling what

they paid in may and june. a final thought from our guest host, didier, you have some specific stocks picks. we were speaking about sam supg. do you like it? >> we like it because it's at the crossroad of the consumer in general. i think they are the broad span of products. the valuation is also very attractive. when it comes to portfolio construction we are facing a lot of companies that are trading at good value. value is not enough. we really need to link it up to the broad mega trends they are operating. the access to consumer, the access to emerging market infrastructure, infrastructure would continue to be a story. >> who do you like in that space? >> caterpillar? >> even if it's cyclical we will see stimulation.

>> but doesn't caterpillar's own performance suggest they matter more than the powerful, longer term trend you are talk iing about? >> true but i think if we are coming with stimulus plan in terms of infrastructure, it will have an impact for our companies like caterpillar. there is a cyclical to it in the industry. you cannot avoid that. but we are at the moment probably not in a good window to buy it. >> and just for clairification, do you own any of those stocks or have relationship with them? >> no. >> okay. that's pretty good. we talked earlier about investment grade debt. >> yes. >> where do you go for that? >> i think one of the biggest exporters we have in terms of active exposure is credit space. i think probably it will remain so for the coming months because

clients really want to have yields. they can have yields with dividends but they cannot afford the volatility so the invest lt grade remains for the private investor. >> and you like the mexican peso, your favorite currency. >> kind of an exotic threat. it's like a way to play the u.s. dollar anyway because it's strongly linked to the u.s. economy. growth is more than 5% in mexico. there is a strong -- >> thank you for your thoughts. plenty of stuff to think about there. when we come back we'll talk about sandberg cementing her position at the top of facebook. don't go anywhere. [ male announcer ] this is the at&t network.

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welcome to welcome to "worldwide exchange." if if you're just tuning in, i'm kelly evans. >> and i'm ross westgate. >> no letup in sight for spain as they jump at a sale of short-term debt and banks trade lower after a moody's down grade. a volatile session following reports the italian bank is seeking 3 billion euros of government aid. >> and japan's lower house pass as controversial plan to double the national sales tax for 2015.

welcome back to the program. a good morning to our u.s. viewers who may be joining us now. as you can see we have green behind me for u.s. futures but the question is whether we can stay there. we've seen stocks across europe weakening a bit on the heels of some auctions in spain. more on that in a second. the dow jones industrial average to open higher by about 16 points. the nasdaq pointed up about five. the s&p 500 just a couple of points as well. here is what's been happening in the ftse global 300. we're barely in the green. 0.01% and as you can see we are higher just about an hour or so ago and we've really traded down since. a broader sense of what's happening. the ftse 100 down. z xetra dax down about the same amount. the cac down 0.3%. the ibex is still up 0.2%. keep an eye here. the question increasingly is the health of spain, ross, after

that auction of short-term debt went 0 off. >> absolutely. that's taken us down to full session losses. the auction just a short while ago, we had the moody's down grade. they're fairly mixed. still under 1% primarily because it still has a higher rating than the spanish sovereign. s&p up as well. the focus very much on that t-bill auction we had in the last half hour. they sold sort of over the 3 billion they were looking at but the three month yield there, the comparison was 0.84% in may. 3.23% with the yield on the six month. that's pretty high yield for six-month money. it was 1.73% last time around. bid to covers were okay but they were, again, lower than we had before. so that has pushed the spanish ten year back to 6.7% and some zero coupon index linkers out of

italy as well. keep your eyes on that. what is interesting this morning is, though, as well as we get yields higher here, we have yields higher in the uk. pretty poor government borrowing figures out in may for the uk as well. tax receipts lower there and even bunds right now slightly higher. as far as the currency is concerned, spanish auction pushed the euro down to a session low below 125. aussie dollar still up against the u.s. dollar on the session and specious sterling against the dollar is above this 1.56. that's where we stand in europe. what about the trading day in asia? tracey has the latest for us out of singapore. hi, tracey. hi will, ross. over here in asian markets headed south as investors weighted risky playing ahead of the eu summit. mainland china marked a fifth straight session of losses.

they recovered from earlier lows to finish down about 0.1%. property plays outperformed the broader market. remember, china is expected to release official june pmi data this sunday. over in hong kong shares ended higher with strength in defensive sectors offsetting weakness in chinese banking majors and the macou gaming stocks. the nikkei share fell to a closing low today before parliament passed a controversial bill to double the sales tax. and elsewhere the kospi up about 0.4% in choppy trade as foreigners continued to sell local stocks. in australia trade volume was very light ahead of the fiscal year closing on june the 30th. a quick check on the sensex now down. now back to you. >> okay, tracey, thanks very much. that's the latest out of singapore. >> yes, it is. >> eurozone officials say cypress may need up to 10

billion in aid. the exact amount has not yet been decided but it's thought to be between 8 billion and 10 billion. cyprus has three days left to meet a deadline. at the same time vassilis rapanos has resigned as the greek finance minister because of ill health. rapanos the current chairman of the national bank of greece took ill on friday before being sworn into the position. elected to the new prime minister antonis samaras he wrote after discussions with my doctors i reached the conclusion that my health condition for the time being does not allow me to be sufficiently perform my duties. michael crofton can perform his duties, at least i hope you can, president and ceo of the it philadelphia trust company and joins us now. thank you for joining us. there are very low expectations for the eu summit this week. we've had yields higher again this morning on spanish debt. are investors still going to

stick to the sidelines, still keep their money in core bonds? >> oh, absolutely. there is just too much uncertainty both in europe and in iran and now in egypt as a result. here in america or the u.s. one of our big concerns is the coming election. it's not necessarily who wins the election but how polarized the electorate will be and how that will affect consumer confidence which will then have an impact on the markets. it's a minefield. >> so what do you do in the minefield? >> well, you grin and bear it. in the equity markets, actually if you look at equities almost acro across the spectrum worldwide, the valuations are so cheap and you have to really be disciplined not to be buying stocks every single day because if you think about it ten years from now those stocks are going to really be worth quite a bit of money. obviously these problems will clear and we'll get back to normalcy. but what you do in our instances

we bar bell the portfolio. you put some stocks long in beta like technology and some stocks in low beta like utilities and telephone stocks and offset that with some dividends. so you can do that and wait it out, keep some cash on the sidelines and pick your spots. >> michael, i think you just said something there about owning stocks for the long term. but the s&p 500 is effectively at levels we saw back in 1999. i'm not sure that we can assume it will -- you know, that the stock market continues to be a rising tide. >> you're absolutely right. that's why you have to pick your spots. it's not going to be across the boa board. the indexes may not perform well but certain sectors of those indexes will do extremely well. you're buying into some companies with double digit growth rates that just doesn't persist so you have to be very careful what you buy and you have to really base those decisions on a couple of things,

on strength of balance sheets because that will take those companies to the long run and on valuations. broadly buying indexes is not going to work. >> we're hearing more from spain that they will take bank aid including conditions but will take time to negotiate the bank package for spain as well. are you hopeful we're going to get any kind of move towards a banking union or working out or clearing out the bank's problems in a timely manner? >> you know, the big problem in europe, obviously i'm not a european, seems to me it's a sovereignty issue. how much sovereignty are these countries willing to cede to these bodies that sit above them? i don't know. i think the spanish problem is a lot deeper that they're letting us believe. i read a report had a said the accounting methodologies used are flawed and those flaws will be exposed and a negotiating

meeting that the bailout amount of $125 million bailout may be a lot. i'm not sure we're going to get a solution anytime soon. i think a band-aid would be some sort of a deposit guarantee across europe. whether or not they could accomplish that given the treaties that they have between all the various sovereigns, i don't know that would be a band-aid the markets would like to see and would give the negotiating parties time to work out longer term details for a much broader solution. >> michael, stay with us. dallas fed president says the u.s. economy is heading in the right direction dismissing concerns about deflationary pressures. in an interview on kudlow report last night he says he didn't support the fed's last move -- the latest move, that is, to extend operation twist. >> we have over $2 trillion sitting on the sidelines in a publicly traded companies. we have additional money sitting on the sidelines, nondepository financial institutions that's a

very good question. it's an argument that i make, larry. that's not being put to work. so the question is why would you add 0 to it? >> michael crofton is still with us there. richard fisher is a well-known hawk at the fed. his comments not perhaps too surprising. but do you agree with his sentiment that more quantitative easing would not necessarily do much good? >> 100% i agree with it. actually what this economy worldwide is missing is the concept of creative disruption. weak bodies have to go out of business or reorganize for growth to occur and we're basically thwarting that with all of these artificial mechanisms to keep everything buoyed. we're afraid of failure. it's unbelievable to me. you have to let a few people go. >> michael, we seem to have plenty of destruction and the creation part seems to be a bit of a problem in the u.s. if you look at business formation, if you think about companies

worried about who they're going to sell to given the economy is so weak. what do you do to support growth or 0 to get more confidence in the creation part of that formula? >> fantastic question. the real problem here is regulation. the problem is that we're not sure what kind of government we're going to have at the end of this election cycle and what the regulatory framework that companies and businesses will have to work with in as that government forms. so it's a very, very important election for us. companies here have tremendous amounts of cash on their balance sheets but they're not going to spend it in an environment that's uncertain and that uncertainty is what is the regulatory framework they're going to have to work within and what is the government the going to look like? is it going to be a big government or a limited governme government? and that's the big question that's keeping businesses on the sideline here. it's not necessarily they can't find access for their money or reasons to grow. they're just afraid that growth is not going to be valued the same way given the changing

dynamic in the regulatory and administrative fashion. >> michael crofton, we will leave it there for the time being. as we take a look at what's on the agenda today in the u.s. the s&p kay schiller home price index is out at about 9:00 a.m. eastern. prices in 20 u.s. major markets are forecast to have dropped about 2.5% in april from a year earlier. at 10:00 we get june consumer confidence. a reading there of 63 down a couple of points from may. h&r block will report results after the closing bell. zynga is set to celebrate its fifth birthday soon. the video game maker will outline its growth plans in an event called unleashed in san francisco. this will include new facebook games and a push into mobile apps. zynga shares, however, are down 37% since the i po in december. so, ross, they're clearly going to need to generate excitement around this event. >> bank of england governor king is giving testimony with fellow monetary policy committee

members before the uk's treasury select committee. he's defending monetary policy, says it still works though we're not in a liquidity trap and can inject more money into the economy. many think there is another bout of qe on the way. ♪ [ engine turns over ] [ male announcer ] we created the luxury crossover and kept turning the page, this is the next chapter for the rx and lexus. this is the pursuit of perfection.

we've got italian auction results, zero coupon bond yield 4.71%. it was 4.37% at the end of mid may, the highest since december. some index linkers as well. we'll wait for the index results. the point is this morning yields are going higher in both spain and italy. euro/dollar is down. >> how much demand do you think in italy? i take deflation if i had the choice. in any case these are your headlines if you're just joining us this morning. no letup in sight for spain as borrowing costs jump at a sale of short-term debt. >> cyprus will request up to $10 billion euro 0s in assistance from the eu. and reports news corp. is considering spinning off its business. a plus a controversial plan to double the national sales tax by 2015.

moody's has downgraded the credit rating of 28 spanish banks cutting it to just above junk status earlier this month. stephane has more for us in madrid. and, stephane, we're hearing comments from the government on how soon it's going to take to work through the bank bailout. not that soon. >> reporter: unfortunately it will take some time because the negotiations are very complex. it's what the finance minister in congress commission a few minutes ago. he also mentioned that the creation of a bad bank was definitely on the table for the weakest of the spanish banks and later in the day with the french, the german and the italian finance minister. yesterday evening moody's says the bailout for the spanish banking sector was definitely

positive news but the rating agency will wait for the details, precisely they announce the timing and all the details for each individual bank before re-assessing the rating for the spanish bank. yesterday moody's downgraded 28 spanish banks, 2 1 are now below the level in the junk category and at least seven of them including the two largest ones. >> all right, stephane, thanks for that. monetary policy committee members testifying at the moment to the treasury select committee. king has said we haven't reje rejected a cut to the bank rate. the reason they haven't done it is the impact on small savings banks. >> oh, interesting. meanwhile, spencer dale, also the boe, is expressing concern about the european debt crisis. says if the economy needs more stimulus it would look to boost bank credit flow to give some support. this follows measures they've

already tried. you can see there the it testimony continuing. we'll it continue to watch headlines for the flashes. still to come on the show, harry potter. the book franchise marks its 15th birthday. but is there much to celebrate for the rest of the publishing industry? we'll discuss the outlook for the sector. >> wave our wands and see what happens. 

welcome back to "worldwide exchange" this morning. thanks for being with us. let's take a look at how u.s. if you tours are positioned. we've seen the s&p 500 turned lower did you know only about half a point, so we'll see what happens. the dow jones did you to open up about eight points. >> pretty flat. cnet reports they may relaunch the second generation of kindle fire tablet end of july. the first came 0 out in september. they may have a camera and a physical volume control addressing complaints about the on screen buttons. there's no word on pricing or whether the new fire will be faster, stronger and include blue tooth capability. at the same time harry potter, can you believe this, celebrating another milestone. this week marks 15 years since

j.k. rowling's first book. it was published in 1997 and followed by six other novels. it has sold 450 million copies and was made available in an ebook format. joining us for more is the director of the bookseller. philip, thanks for joining us. michael crofton is still with us as well. the ebook format is fascinating. what's happened here is never really had the digital rights and publisher of harry potter owned by j.k. rowling, and they are now selling this through amazon. it's a first, right? >> it is. that's the only place you can buy the harry potter books, the first time ever amazon has pushed customers to another transactional website to complete the purchase of the harry the potter ebook. >> and it is owned by -- >> j.k. rowling and the agency. >> so she's managing to capture -- it doesn't go to

amazon, it also doesn't go to the publisher. it goes to j.k. rowling. i don't think we'll have any other deals like this. >> this is like a music band setting up their own record label and everyone settibuying the record label. >> that is truly unique. obviously the harry potter ebooks are so unique, it's the only organization which you could get amazon to push customers away from their own website. >> she has broken amazon. is that the thin end of the wedge? will others have the power to do this? >> there is talk others could have the power. john grisham, other big name authors like james patterson. it is sup a phenomenon. >> it's a stroke of luck and timing. 15 years ago this wasn't part of the formula. today a lot of publishers or maybe a.m. zop would be a lot safier about how they negotiated

those rights. >> now if you're a publisher, you buy just the rights and all rights. back then it wasn't such a big issue. >> is that a litmus test? >> it could be. she has broken amazon but it's not so far broken. apple wants to sign an agency agreement which brings with it all sorts of legal issues as i'm sure you're aware. >> how important has the harry potter franchise been? >> massive. it's grown and encouraged younger people to read. >> i think it's encouraged older people to read frankly. >> and it's shown publishing can be front and center of the media industries. for a long time the harry potter book for childrens and teenagers and adults. that is the place to be. >> michael? >> you hit on a great point

because my kids loved the harry potter series and they started reading them when they were quite young. i've noticed that the trend is back towards reading, the younger people are reading again, but they don't read books. they read on the ereaders. i read books because i'm technically challenged so i can't get those ereaders to work. you think that because of the harry potter migration to the tablet format and the migration in general of publishing to that format that printed book is sort of going the way of the dinosaur? >> at the moment the very young reading market because objects like the kindle fire have not encouraged children to read books and play games on them. the young adult market as is the adult market but the print book market is strong. it's still 7% of the overall sales. perhaps less so in america. 70% of overall sales.

we do have phenomenon like "50 shades of grey." >> i heard about that one. >> that sold a million copies on the kindle but also sold a million copies in the uk in print. >> incredible. >> thank you very much for that. people say i look like harry potter sometimes. >> with those glasses. >> i do? you can e-mail us or tweet. do i look anything like harry potter? i don't see where that comes from. >> i certainly do. >> i have no idea. >> no impersonations. oot still to come, the latest on the early prices and consumer confidence. >

welcome back to welcome back to "worldwide exchange". if you're just tuning in, i'm kelly evans. >> and i'm ross westgate. these are your headlines from around the globe. borrowing costs jump to short term debt and banks trade lower after a moody's down grade. and japan's lower house passed a controversial plan to double the sales tax by 2015. the finance minister says he'll try to block the plan in the upper house. breaking up may not that

hard. news corp. may be eyeing a split of its publishing and entertainment businesses. good morning to our u.s. viewe viewers. thanks for tuning in this morning. let's see what markets are doing. the dow jones industrial average still pointed higher by about ten points but continuing to come off a little bit as the rest of the indices fight to stay in the green. the nasdaq up about five points. the s&p 500 a couple of points. the european markets give you a sense of the challenge here. we have red pretty much across the board. ftse down about a tenth of a percent. cac down. now that may have something to do with auction of short term

debt, much higher yields than just a month ago. as a result, as you can see, over here the ten year in spain, the yield is in green here, the price in green has moved higher, 6.722%. italy a focal point this morning as well amid weak retail sales data. that yield 6.07%. italy back above the level. gilt doing better. german bund, ross. mervyn king, the under bank of england, is testifying along with monetary committee members in front of the treasury select committee. king has said he's particularly concerned about the eurozone, is pessimistic about that. he's concerned about worsening in asia and other emerging markets and says things have deteriorated in the last six weeks. they are discussing whether it needs indemnity as well for the

funding for the lending scheme which they announced last week. and they're very struck by how much has changed since the inflation report. so that's some of the news we're following right now, but what are investors to do? here are some thoughts of the experts that have already been on cnbc today. >> my feeling is safe haven bonds are really going to be in demand still. it's just a question of when. we see more pressure on the peripheral debt. >> basically right now it's more than 95% of revenue outside of spain. it's a company. there is value in this.

>> we like it because it's the role, a broad span of pro 0 ducts. the valuation is very attractive. >> this is yields as kelly said just a short while ago, heading higher. si six-month t-bill yield 3.3% so a plan can't come sun enough. he has one that could save the euro and, get this, it would only cost 50 billion euros. a lot less than they're planning to pump into greece. joining us is editor of reuters breaking views. back with us michael crofton as well. welcome to you all. hugo, 50 billion. europe the man who has dug this

up. it's kind of half your plan. >> what it is, it's a direct interest subsidy so rather than most of these other schemes we've seen for trying to narrow that spread between german and spanish yields which involve guarantees like euro bonds, which involves guaranteeing trillions, this is just tra transferring some of the difference between what they pay on interest from those countries like germany issuing bonds on the cheap to those like spain and italy which are having to pay for the nose for their debt. and because it's only working on the interest payment but it is a direct subs did did i so real cash that leaves the german pocket and goes into the spanish or italian pocket but then it actually is a much smaller amount of money. >> how does that direct transfer of interest? how does that get ad any of

the lawmakers because they're basically saying we are going to physically write you a check. >> the constitutional courts in germany have a problem with unlimited amounts of money. they have a problem with bailouts, the essence of their judgment at the end of last year. the beauty is it would be limited. another part of the beauty is it hasn't yet been shot down by the jer marns. germans. it hasn't yet. >> just enacting it you would hope to close the yield gaps just by sort of enact iing it. >> there should be a double benefit. the actual transfer of cash and what i'm proposing is the it difference in spreads but that you halve the spread the first

the transfer and then the markets start to think well, actually there's a plan. spanish and italian debts are sustainable. and if it works out for the cost of $50 billion, the spanish and italian ten year would come down to just over 0 four. >> but part of the reason it would be $50 billion is because you assume that the yield in core countries would only rise 50 basis points. if they were taking on more credit risk, not direct dread it risk but some degree to these struggling countries, they see much more especially if you consider inflation that that might imply the eurozone much, much more than 50 basis points. >> well, they might. but if you say it's 50 billion, again, if you sell it and you say it's 50 billion over seven years of which 30 billion is coming from germany, 30 billion is just over 1.5% of german g

did dp spread over seven years, you might get away with not such a big hike. we might. it's an idea we're throwing out into the debate. it will be interesting. >> and let's throw that out. what do you think? worth exploring? >> anything is worth exploring in the peripheral nations. i don't necessarily think the problem is with ultra low german bund yields. the problem is with the fierce costs that the spanish and the italians are having to pay. >> yes, and the point about this is that you are doing with ultra low, it won't make any difference. what do you think, michael?

it will work to the extent they dent, it won't. and that doesn't get to the core issue of stimulating core demand around these weak economies. >> it's clearly not a long-term complete solution. however, if you get those yields down in spain and italy, and as i say you can get them down to 44.5%, that in turn would have positive feed back in the spanish and italian economies and it would be part of what might actual ly turn you out of that vicious spiral into something more. >> the politicians the time they need to go down the other end. >> go down the road. >> it's really great. >> just return your guests from america was saying, of course it doesn't fault the germans putting out money. the amount is quite small compared to the trillions of

what would be sort of almost unlimited guarantees that people are talking about in other schemes or even sort of bond buying might be hundreds and hundreds of billions. so what you're talking about is actually much more limited. that's why i think it's certainly worth giving it a whirl. >> i still see it as a problem. you have to remember the germans are benefiting hugely from the single currency. if the single currency explodes, they will be very, very badly damaged and cheapens the price. >> andrew, give us a final thought. >> i think germany will push and push and push until everybody -- they've basically said there's no low common denominator here.

everybody has to rise up to its standard. and that means that it will ultimately back everything but not at this point. hugo is right, we need to break this feedback loop and i'm convinced there will be some measu measure. i like the plan that was in "the financial times" yesterday that broke late on monday evening. that suggests that brussels will ultimately have -- a plan will be put forward tomorrow -- i'm sorry, thursday and friday, that would help break this gridlock that's been devised by draghi barusso and juncker and would lead to a redemption fund of the german economic advisers have already backed. so, yes, it's having the spanish yields will ultimately come down. i'm not sure how much german yields will need to go up in the meantime. ultra low interest rates for quite the same time because of

the lack of growth. >> andrew, michael, stick around. thank you. >> thank you. >> i like hearing fresh ideas. >> it's worth throwing it at the wall. maybe something will stick. hugo, thank you very much. >> thanks a lot. coming up, more signs of a recovery maybe in the u.s. after a rise in new home sales at least. we asked our next guest whether this could be a way out of recession. [ mbut they can also holdes you back. unless you ask, "what's next?" introducing the all-new rx f sport. this is the pursuit of perfection. 

welcome back to the welcome back to the program. a warning for mac users out there. your holiday could be costing you more than windows users. online travel agency orbitz has found mac users spend 30% or more on hotels so it shows costlier prices, this according to the wall veit journal. is this fair? if you want to join in the conversation, acceptsend us an , tweet us or reach us directly. >> has anybody said i look like harry potter? is. >> where did the glasses go? is. >> going sharply higher after the t-bill auction in italy, yields higher on that.

in italy -- in spain, yields are higher. the government ten year back over 6.7%. we keep our eyes on that. we saw commodities affected since last thursday as well. what's going on here this morning, brent back over 91.70. the fact stocks are lower, well, they were higher this morning, but it hasn't come back in the same way. nymex just over 79.24. spot gold pretty steady at 1,582. and copper down on six-month lows. hasn't really happened. 331.25 is where we stand at the moment. so brent is a little bit firmer. other commodities pretty flat, kelly. thanks, ross. you are watching "worldwide exchange." these are your headlines. no letup in sight for spain as borrowing costs jump at a sale of short-term debt. cyprus will reportedly request up to $10 billion euros in assistance from the eu.

meanwhile suggests news corp. is considering spinning off its publishing business from the entertainment side. and japan's lower house pass as controversial plan to double the national sales tax by 2015. still to come on the show, wall street doesn't seem to lining mon like mondays. will that carry over? choose control. introducing gold choice. the freedom you can only get from hertz to keep the car you reserved or simply choose another. and it's free. ya know, for whoever you are that day. it's just another way you'll be traveling at the speed of hertz.

welcome back. a look at today's other top stories. microsoft is buying yammer for 1. billion dollars. companies like ford and become part of the microsoft office unit and i don't know what it

does. >> they call it the facebook for enterprise apparently. they only launched it four years ago. not too shabby. talking about-face book, the first woman on the board that includes seven men. >> you were surprised she wasn't on the board. >> she is like the number two most important person. i was surprised she wasn't on the board already. >> they also do have -- i think the uk is much more gender -- you know what i mean? >> we're pushing for women on the board. >> pushing at least. in an interview it is said the eurozone's permanent bailout fund borrow money would equate to direct financing of states. we just it continue to hear the german pushing back against. >> we're not going to do that unless we get some control and i don't think that will change. >> it's about the redemption fund. those are the words to watch for

the week. and in talks with china, about $1.7 billion in capital. >> because it wants to redevelop military bases as new housing blocks in california. >> get it from china, is that the deal? >> how many times did we see headlines like this lately. that is the deal, in fact. >> and those are some of the stories we're watching. with european stocks ahead of the u.s. open pretty flat the really. we were trying to snap a three-day losing streak. the dax down 4% and the cac off 3 1/3. it was that spanish auction that turned things around. >> take a look at what's on the agenda in the u.s. today. the s&p kay schiller price index out at 9:00 a.m. eastern. that tracks prices in 20 u.s. markets and is expected to show a drop of 2.5% in april year on year. at 10:00, june consumer confidence, economists expect a reading of 63, down a couple of points from may.

and results after the closing bell. and zynga is set to celebrate its birthday soon. they will lay out its growth plans in an event called unleash unleashed. it will include new facebook games and further push into mobile apps. it will need to show something to investors. the stock is down 37%. i'm just helping out because my pronunciation is terrible. >> futures. >> i tried. here is what's happening in the dow. a better tone. the dow would be opening higher by about 24 points. s&p 500 four or five and the that is dabbing a point higher by about nine. still with us is andrew wilkinson, chief economic strategist at miller tabac. the question as we look for the

case-shiller home prices today is whether there's some strength in the u.s. housing market. >> there definitely is strength. you have to be careful what you wish for. as far as i'm concerned the worst sign of -- well, the worst thing to take away from the housing market is that prices continue to recover. the biggest problem facing the housing market is really the level of transactions and that's a function of the availability of credit. the fed has done a very good job. of credi that has helped would had been be homeowners get back into the market. however, getting credit into the market has proven very difficult. in 2006 the average credit score, the median credit score on the fica basis and in 2009 at

the heart of the crisis up to 90 points and today even though the economy is recovering on banks more willing to lend, the median credit score 690. it's still very difficult to get a loan. you also need 20% down to get a house. going back four or five years ago you could borrow 5% from credit cards. that would have taken 3 1/2 years to get the 20% down payment. today you can extend that period through which you'd have to save ten whole years. it's still very difficult to get the money to one side for new homeowners. what we're finding is that people in the housing market are able to trade up. that means they can pay a higher price as long as they can get a higher price for their house. so things are beginning to turn over but what you also have to remember that with new home sales which came out yesterday,

it's the strongest in about four years, if memory serves me correctly, that showed a very uneven recovery. the biggest region of the south and the smallest region of the northeast saw the level of transactions increase. other two regions saw it decline. >> i want to jump in as well. we have the consumer confidence, like to jump four months in. michael, whether low oil prices are going to have any meaningful impact over the summer months? >> yeah, i think low oil prices will definitely have an impact over the summer. consumer confidence is the number of the day. housing is what it is. it seems to be bouncing along the bottom. there's a lot of inventory that has to clear and the guest that just spoke is right. the banks are very reticent to lend the money so it's going to be -- the housing recovery has started but it's going to be a long time. it's bottoming and will stay on

the bottom for a while. consumer confidence incredibly important. the market has basically tracked consumer can confidence all the way up. so consumer confidence comes off, the market may begin to track it down, down further than it is now. and, you know, gasoline prices are did he haefinitely going to this summer but i think prices have bougttomed there and energ prices will move up. >> andrew, briefly, what does it tell us about the labor component? what will that tell us about jobs next week? >> well, the labor market for now is on its back. we've seen the big rebound over the winter months and if you look at the initial claims series, that's not a good sign of things to come. we're looking probably for the next couple of months at sub 100,000 payrolls. >> all right. andrew, michael, thank you both. that's it for today's edition of "worldwide exchange." >> and harry potter edition. >> what's up next? >> "squawk box" i hi it's called. stay tuned. [ male announcer ] this... is the at&t network.

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good morning. two key debt auctions in italy and spain offering insight good morning. two key debt auctions in italy and spain offering insight into global investor appetite. and a big question, are changes coming in a media empire? news corporation, mr. murdoch, considering a move to split itself into two. plus the social network, facebook named coo cheryl sandberg as its first female board member. it's tuesday, june 26, 2012, and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick along with andrew ross-sorkin and michelle caruso cabrera. joe is on