welcome. you're watching worldwide exchange. i'm kelly evans. headlines from around the world. bob dimon resigns as ceo. doesn't want to risk hurting the franchise. the returning chairman to lead the search for a new ceo one day after stepping down. the uk finance minister is calling the news the right decision for britain. >>ment rba presses pause after three months of easing. the australian central bank sees a more subdued global outlook. microsoft is throwing in the towel in the fight to steal market share from google taking

a $6 billion charge to write down its web business. welcome everybody. yes, our top story this morning. definitely that of barclay as and the ceo bob dimon has stepped down. just one day after he himself announced his own resignation. age he is is going to be leading the search for a new chief executive. this throws up a whole bunch of questions to the market. a lot of questions for barclay's shareholders. the shares, though, incidentally trading higher by 1.3%. initially when they opened, we saw a dip lower. a dip down by 3.2% was the lowest print i saw. before then, reversing and coming back up a little bit.

earlier calls showed they might be down as f as much as 10%. somebody getting that wrong obviously. market share hasn't been that. it's been a muted to positive market reaction. the reaction across the rest of the uk banking sector slightly mixed. much of this reaction, though, isn't a direct reaction. it's a broader banking reaction in today's trading session to what otherwise is taking place. you have a full parliamentary hearing in the uk tomorrow. 1.3% down. lloyd's relatively flat and eye cap relatively flat as well. issues that need to be figured out. probably going to see a spotlight shine on to them now in the wake of in the lie bore scandal and the wake of the resignation from bob diamond. speaking moments ago, george osborn welcomed diamond's decision to resign.

>> i think he's made the right decision for barclay's and the right decision for the country. we need banks focused on lending to the economy, not on the scandals of the past. i hope this can be the first step towards responsibility in british banking, which is what the british public want to see. >> joining us is bank equity researcher at lie brum capital and the guest host for the hour. vice president of wells management, singapore for ocbc bank. core mack, first to you, this decision a surprise? >> not really actually. there was a story in the ft overnight saying that bob diamond was threatening to reveal embarrassing details and if he was pushed. when things descend to those levels, it's inevitable that the ceo is on the way out. is this story about the bba, the bank of england and those --

>> my cynical view is that he's being used as a scapegoat. if you tried to settle the issue over the last five or seven years, which is the time in which to some extent the distortions were occurring, you would start to have systemically claims. given we're in a economic slowdown, there's a reason for regulators to turn barclay's and mr. diamond into a scapegoat and hopefully the lybor issue you will die away. >> look, it was four years ago that they brought the issue to light with regulators. it's been going on for quite some time. there are at least 20 banks involved in this. i'm wondering but barclays could use the changes taking place in the management team for their benefit. we're seeing the share price not really reacting that negatively this morning. >> exactly. i think the fact that mr.

diamond was viewed as on the way out, now that that's out of the picture, we've seen -- the trades .4 times tangible end of 2013, tangible book value per share. that's .4, versus .45 for rbs and .5 for lloyd. barclays does look cheap here. a fresh set of eyes, doing anything that's necessary would actually be a key positive to stop -- >> bob diamond has been with barclays for a long time now and u.r. you've seen barclays throughout very, very tough times. they were only the uk bank that didn't have to go ask for aid. with regards to your scapegoat comment, i mean, they're so closely linked, bob diamond and barclays, i would like to disagree in terms of it being a surprise element. i think a lot of people were -- especially the chairman. the chairman goes and then diamond stays and now that the roles are reversed.

but it does seem -- the element of surprise definitely catching people -- >> the stock reaction today would slightly disagree with that, right? if it was genuinely a surprise, we might have seen. there would be different arguments, some people could take the view that the regulatory will come off and therefore it should rally. it's hard to know what people are expecting. >> i wonder to take a look at the bank sector here, barclays first out of the gate. some people say perhaps because they had the most, how to i avoid saying, the most telling -- most telling e-mails and were one of the first to come forward, why haven't we seen more banks if they are next in line rerating or repricing to reflect something like the settlement risk they could now be exposed to. >> we've seen a selloff in rbs. if you remember the day, i think it was thursday that barclays was down 16%, rbs down 11%. if you check the end 201 annual

reports, they give their notion al disclosure. i can't remember the numbers but it was around 36 or 37 trillion for rbs and barclays. rbs has comparable exposures and has derated quite a lot. >> what about the hearing tomorrow, how heated is that potentially going to get? >> i think the excitement will be much lower now that mr. diamond has resigned. so you could start to see mr. diamond become aligned with the regulator, actually, kind of critically looking at the whole lie bore issue. so i think that the focus certainly will shift to rbs and potentially the u.s. banks. >> curious what the view from singapore is with regard to this. a lot of people playing this as a london story. but it's a global benchmark. what's your take? >> what's happening at barclays clearly diamond resignation i think will be viewed positively as what judge osborn said.

the uk banking sector cannot afford to pay attention, get drawn into scandals like that. i think the resignation is a responsibility on his part. it will take the attention from barclays, allow them to focus on their main business once again. i think allow the uk banking system to go back to what they should really do, which is try to take stock in the economy and lend more. here, i'm sure investors are looking at what's happening will be relieved to see what's happening. at least you won't see the headlines being hogged by the scandal. >> i wonder, people -- diamond's management and his team in particular were seen as a key reason why people liked barclays, why it had a premium. you take that out of picture, does the longer term story worry you? >> not really. we've seen changes like this before elsewhere in the banking system, even here in asia.

i think barclays is an organization, it's not really about one person yet. there are a lot of senior people in barclays who can run the show. until they find the new ceo. the fact of the matter is that this scandal and bob diamond at the helm clearly is not -- it's not going to do markets any good. it's not going to do barclays any good. i think the fact that stepping aside and allowing somebody else to come in, there are a lot of capable people. >> cormac, you want to respond? >> one point about barclays. some risk of kitchen sinking in the eyes of some with a new ceo coming in. the limited scope to take additional rights -- given there's already something of a capital deficit for barclays. they don't have much room to maneuver in terms of -- i would be reasonably optimistic that from here the earnings performance is reasonably good. >> that might explain why --

core mack leech, thank you for coming by. lou?mac leech, thank you for coming by. lou? we're seeing green stock. 600 higher by .4 of 1% at the moment. when we spoke late last night on the european close, we were looking at green markets across the board. we're holding on to these levels in the morning trade despite the fact that it was gloopy. same with the ism data in the u.s. we've had chinese data out that was slightly better than anticipated. the stock share higher by a half percentage point. most equities are indeed trading in positive territory. higher by .3%. cap 40 higher and the ibex. higher. just to give you breakdown in the sector level, especially the banks. banks right here, higher by .8 of 1%.

not huge negative reaction, as you would expect at this stage to the barclays resignation news. telecom is off and utilities are lower by half percentage point as well. auto is up followed by insurance. a board of banks just so you can see i'm not lying. most of the banks are indeed trading in positive territory. you have the likes of -- higher by 2%. bp up by half a percentage point. loids higher by half a percentage point. really a positive banking session start. bond markets are closely watching was taking place with yields. whether or not yields are coming down in periphery europe especially. france and spain, yields down a tad there. the bond is being sold back a bit. 1.5%. a lot of people looking ahead to the ecb and bank of england meeting and it's thought that we'll see moves from both the central bank, potentially a rate

cut from the ecb. let's recap if you're catching us now. what's taking place in asia. tracy chang in singapore. she joins us right here as if by magic. tracy, how are you? >> yep. i'm good, louise. investors here are back to risky bets. at least for the moment. on expectations that central banks and the u.s. and china will do more to stimulate growth. the sharing composite end is flat despite starting on the -- one of the best performing sectors continue to rise after news that housing prices rebounded in june. china's property index 1.7%. in tokyo the nikkei rose to an 8-week high. posted big gains by shares owe airways slipped by 13% on news that it plans to raise $2.5 billion in the near share issue. south korea stocks climbed to a

two-week high. it's easy expectations because of the rise. the market hardly reacted to the rba. no surprise decision to keep the rates unchanged at 3.5%. we'll have more on that a little later in the show and a quick check on the india. back to you louisa? >> thank you, tracy. stick around. after the break, we look at microsoft. it has a breakdown of $6 billion for a web business. all details on that next.

welcome back to welcome back to the program. the royal bank of australia has decided to keep rates steady at 3.5%. this the first time they're on hold in three months. the bank says it needs more time to gain evidence that its back-to-back cuts have managed to support the economy from the global slowdown. the australian dollar inched higher after the news and the rba gave little clue about future policy strategy. most analysts expect the central bank will wait on inflation figures due out the end of this month. next policy meeting is august 7th.

kpmg joins us for me. nicki this decision expected, i guess, but how will australia remain -- to china? >> very vulnerable our rue is very much that china while it might have a slowdown, that's a good thing. that means it's long-term but more sustainable growth. we're tied in through resources sector. as i said, we expect the china story to remain quite firm. >> nicki, do you think that the second quarter inflation figure could potentially surprise people and not be quite as soft as anticipated, thereby not leaving room for another cut come this late summer? >> look, kpmg is that there won't be another cap this cycle. inflation has been held back here very much in terms of the australian dollar driving the price of trade of goods down.

in fact, i think the reserve bank alluded to that in the elise today that accompanied no change rate decision. from our perspective, the downside on inflation has actually well pretty well fed through. prices are well-behaved. over the course of the coming year, we'll start to see inflation move up into the target band. >> nicki, i wonder to what extent australia's economy is rebalancing. there were concerns about it having disproportion nat health in a housing bubble even. do you see evidence that things are hoffing in the -- are moving in the right direction? >> that's a very deep and meaningful question. for australia, we're very much leveraged to the mining sector. a lot of growth is driven by huge amounts investment into that sector and supporting infrastructure. there is weakness in the construction sector and -- a lot of that is in traditional

retail. the private consumption as a whole are stronger than the retail sector would have you believe. there are very significant long-term structural challenges facing some sectors of the economy, especially things like retail and tourism where there is a competitiveness element. we immediate to see a very big shift in competitiveness, in value ad, in productivity for that to change. that won't be affected by 25 point basis cut. that is a long-term structural adjustment that is required. >> so net net nicki in summary, we're looking at a slowdown taking place out of europe, a slowdown out of asia by the looks of things, a slowdown in the u.s. how would you cache advertise the australian economy, a slowdown for the res of the year? >> i think it will come back a bit from the stronger march quarters that took people a bit by surprise. that said, we're still looking for a round trend growth, 3 to 3.5% over the next 12-month period. while parts of asia are not

doing so well, asia as a whole is looking reasonably firm and i think that will carry the global economy forward and australia is well placed to leverage that growth. >> nicki, thank you very much. nicki hutley, director of kpmg. microsoft will take a -- for money losing internet business. the move is mostly related to the company's 2007 purchase of online advertising firm a quantum. this was supposed to -- microsoft has failed to make a dent in google search dominance and struggled to sell online ads at competitive prices. this will wipe out any profit for the company's fourth quarter. you can see the shares reacting a bit negatively on the news. down .7 of a percent. vasu, what do you make of this news? emblem attic of the 2007 culture? is it specific to microsoft or a distraction to other issues plaguing the company? >> i think let's talk about technology sector in general as

opposed to microsoft. the sector is a volatile sector. given what's happening around the world, given the global slowdown, clearly the sector will see some kind of a derating. we're cautious in the technology sector in general. >> with regards to microsoft in particular, if you don't want to comment on this deal, i totally understand. just curious if we should read through, looking back to some of the deals done in 2007, similar looking at the wall street journal making the point that this maybe represents overpaying that companies did at the time. >> well, you know, honestly, i don't cover the stock in detail. i'd rather give that question a miss. >> do you think that we're going to see more m and a in the sector, vasu? it seems there are a lot of big technology companies sitting with a lot of ksh cash and the ke is whether you -- potentially the markets will be lower and you see more value if you hang on for a bit?

>> well, you know, it's difficult to generalize. if you look at the u.s. corporate sector as a whole, they're sitting on huge amounts of cash collectively. in europe, sitting on $2 trillion in cash. it's difficult to -- sometimes even when you want to buy something, it may not be available and you may be hoping to buy it at cheaper levels. i think sometimes it's opportunistic. when opportunities do turn up, clearly many of the technology companies are in a good position because they are cash rich. >> vasu, your vice president of wealth management. your client, are they investing in technology now and are you advising them to be to put money in the sector? >> in all honesty, technology is not one of our top sectors. i mean, clearly, it's a cyclical sector and you look at what's happening in the global economy, we're not comfortable what's happening there. we think that there will be a global slowdown until we get a bearing on the global front. technology is clearly not

something we push. it's a fairly risky proposition. we think that there are other sectors here in asia and other parts of the world that offer better value. we feel it's better for investors to take a more defensive stance and our view has been for investors to put their money into more defensive sectors that offer -- yields becoming a major theme here in asia. defensiveness is something that we are recommending. >> okay. defensiveness, not -- vasu stay with us. we'll be back with you in a bit. our top stories in a moment. glaxo-smith-kline settled the largest health care fraud case for $3 billion. glaxo-smith-kline agreed to plead guilty to misdemeanor charges, including marketing drugs for purposes where they were not approved and offering legal kickbacks to medical professionals. the fraud is believed to have taken place the mid 1990s to 2007. glaxo-smith-kline ceo said that the criminal activity occurred in a quote-unquote different era for the company. a line referred to by some

banks recently, louisa. >> airbus says it will open a factory in the u.s. state of alabama. right in the backyard of fierce rival boeing. the plant in mobile will be airbus' first in the u.s. and will employ close to a thousand people but won't open until 2016. airbus will build narrow body jets at the plant as it looks to boost u.s. market share. >> alabama. never been. >> bama, mobile, alabama, great place to go. >> you've been? >> okay, i haven't beenment so i hear. a judge has meanwhile rejected samsung's request to lift the u.s. sales ban on galaxy 10.1 tablet which competes with the ipad. the same judge imposed the injunction, asked for by apple amid a patent dispute between these two companies. samsung appealing the ban with the federal appeals court in washington, d.c. which has jurisdiction over intellectual property rights. look at how they're trading.

up half a percent. samsung just barely higher. listen, you can always reach us. we're on e-mail as per usual. worldwide at cnbc.com. or on twitter as well. @louisa bore he sen. or kelly he have achbs. >> never been to the southern states. >> did spend time in chicago. which is a good one. >> okay. still to come on the show this morning, china's strong services performance in june may have -- not enough to subdue calls for policy easing. our next guest tells us why.

welcome back to the program this morning. bob diamond resigns as ceo of barclays with immediate effect saying he won't let external pressure on the bank following the libor scandal risk hurting the franchise. marcus aigis returning as chairman leading the search for a new ceo one day after he stepped down. finance minister george osborne calls it the right decision for britain. pressing pause after three months of easing.

the australian central bank sees a more subdued global outlook compared with a month ago. microsoft throwing in the towel for google. to write down web business. hello everybody. top story of course this morning being that of barclays as you've heard. the ceo, bob diamond, stepped down with immediate effect. marcus aigus returned as full-time chairman of barclays one day after he himself announced his own resignation. aigus will lead the search for a new chief executive and we're asking a lot of questions what it means in the long-term for barclays. who will be brought in, is it going to be internal or external candidate and what does it mean for the banking sector as a whole. there's a hearing taking place tomorrow which could get interesting where a number of execs will be grilled. slightly mixed in uk. opening lower by 3%.

3.2%. reversing that early morning trade to trade higher. it's up by 1.1% now. we haven't seen a lot of negativity into the barclays share price. holding on to the levels that we saw yesterday on the close. we were floating with two-month highs. of course, a lot of people now saying thank you very much to the eu summit agreement that is in place. whether or not more has to happen is another question. >> there's a lot happening. payroll report out in the u.s. on friday. look at what we're seeing across the bond space. spain key one to watch. 6.7 is that -- green arrows across the board. 1. -- italy, 5.75%. louisa? >> and fresh data out of china showing the country's service industry growing at the fastest pace in three months in june. the data though failing to calm down calls for pay shing to ease policy further. tracy chang has more.

tracy? >> hi there again. louisa. chien's nonpmi rose to 56.7 reversing two months of decline. the rating was a best since a ten-month high recorded in march. 43% of output in the world's second largest economy. the data cover services including freight, travel, retail and software as well as construction. so far, china's nonmanufacturing sector has managed to endure the global slowdown much better than the factory sector over weakened china's june pmi data came in at a seven-month low. the data may alleviate concerns of -- it's unlike tloi condition firm whether china's growth is firmly rebounding. there are ongoing debates among economists about whether the economy is bottoming out in china. still most expecting central bank to move soon to cut the ratio for banks again. some feel beijing needs to act

aggressively and are calling for another racut later this year. key data will be released next friday july 13th. back to you, louisa. tracie, thank you very much. continuing on, china's central bank pumped in more than $22 billion into the money market. that's the biggest offering in almost half a year. the injection was made via the reverse repurchase agreements offered in the regular open market operation. let's get back to our guest host, vasu menon, the vice president of singapore from ocbc bank. vasu, your thoughts on china? the data seems to be slowing down. i was having an interesting discussion about whether or not the chinese data really is heading as far south as what we think it is. >> well, you know, clearly china is slowing down. our own projection is that the economy will slow down to 7.5%.

we were previously looking at 7.8. weave pushed that down to 7.5%. the second quarter numbers won't be pretty when they're announced next friday. but i think going -- looking forward, we see a rebound in the chinese economy in the second half of the year. the more recent data has been slightly better than expected. the pmi data, it's low. it was a slowdown for me. but it was still better than expected. it was still above the 50 level. i think you look at bank lending for me shall it was again better than expected. i think chinese government will cut rates further. it cut rates earlier in june. they're probably going to cut rates further and cut the out ratio further. all that monetary stimulus will help the economy in the second half and we'll see evidence of that in the coming months. >> we'll leave it there for the time being. couple much news flashes on the uk economy. construction pmi falling into contraction errie territory.

adding bad news for britain. 48.2 is the pmi. this is a reading of 44 -- 54.4 in may. it dropped there of six points. pretty significant drop and one that crosses into the territory. quickly, too, want to mention a couple of lending figures. sterling weakening against the dollar in light of that weaker data. may net consumer lending was up at 1.3 billion pounds. a slight drop from april and that was just a bit better than forecast, though. consumer credit figures expanded and the money supply data was weak. showed a drop of about 4% year on year. but, again, it's probably that construction figure that's giving -- >> just glancing at the currency crosses makes you wonder what bank of england is going to do on thursday. whether we're going to see more stimulus in the economy. some say as much as 25 billion in additional stimulus from the bank of england. some say 50 billion. this is what we're looking at on the markets now.

our next guest is val en continue my nof. let's kick off with sterling and the bank of england and where sterling is headed from here. >> all eyes will be on thursday. the market is looking for 50 billion additional asset purchases. our own goal is 75. we also expect potentially more details on the bank's new program for supporting the so-called lending channel in the economy. governor king hinted at the measures at his speech not so long ago. ahead of the daily meeting, i suspect sterling to underperform other risk correlated currencies. we think sterling against new zealand dollar could provide interest in short positions there. the thinking really being that as global central banks provide additional accommodation, the

so-called -- likely to outperform given their relatively superior fundamentals, but also the fact that the investors are looking for alternatives from the majors. >> valentine, to what extent do you expect easing moves this week and is that one reason to expect the euro to trade lower among many others, but expect the euro to trade a little bit lower going forward? >> i think 25 basis point cuts by the ecb is widely expected. less certain is whether they will lower the deposit rate, which is more closely linked to the interbank funding rate. our own expectation is a ten basis point cut which will likely keep the interbank funding rates close to their lows. i think the strongest impact, if at all, could come from any indication that the ecb is considering extending the maturity of its programs effectively replacing the three

year loans with longer term loans and this accompanied with further lowering of the requirements for the yeurozone banks. a safer trade would be short euro against the smalls, we send a trade being short euro against australian dollar. expecting that more accommodations from the ecb to really add to the headwinds for euro gains on the australian dollar. >> even if we don't see as soft an inflation picture emerging out of australia as what could be the case and if they don't cut at the next meeting on the 7th of august? >> admittedly, it's short term. the inflation dates are out of australia end of july. it's clear risk to that position. that said, the negatives, the euro negatives coming from the ecb meeting and any further developments in the eurozone will likely outweigh, i think,

any aussie negatives related to the domestic data. needless to say, the australian domestic data is looking far, far better than what we're seeing in terms of data releases out of eurozone at present. >> valentine, safe-haven plays, i'm interested in what's taking place in japan at the moment. it really seems like things are starting to switch around a bit on the political front which could have ramifications for the ruling party there. which in turn could lead to instability in the yen or do you not see it that way? >> no. actually we agree and we see potential further developments there with the -- the ozawa group leading the ruling party there. adding to the uncertainty in the near term outlook for yen. i suspect veneer term, focus will be on the next meeting.

we think the latest data out of japan are ruling out further accommodation from the doj for now. this coupled with potentially more accommodations to come from the ecb, from the fed on august 1st. all that hikely to keep yen maybe supported really, more supported against its peers at. g-10, the euro and the dollar. political uncertainty will likely play a role over longer period of time. in addition to further potential further deterioration in the fiscal outlook for japan. >> valentine, lovely seeing you this morning. head of european g-10 for ex strategy. brightening up our screens on this, what is it, tuesday already. goodness. time passes. >> time passes. france's prime minister will be outlining the government's economic agenda in parliament later on today. the prime minister has pledged

to keep spending flat between 2013 and 2015 and government officials suggest tax hikes may be necessary in order to cut the country's budget deficits. the world's biggest money manager, black rock is buying a -- the move will see black rock's private equity size move to $15 billion. we're joined from zurich. a big strategic move for black rock. how important where you are? >> it's actually quite a sizable deal in the private equity phase, kelly. as you say. analysts come out and say this is a great deal for both companies. they're buying private equity and infrastructure a fund for fund business. the two companies are entering a strategic partnership. kelly, as you say, the financial terms of the deal have not been disclosed. it's seemingly an all cash deal and black rock said this morning that this deal will be earning neutral or close to 2012

earnings. the sale is expected to be complete by the end of the third quarter. let's talk about the rationale a little bit here for the deal. it is quite a significant push for black rock into the private equity state. the private equity part will be doubled to $15 billion. the private equity part or unit had around 7.5 billion in total commitments in end of may. it's exiting -- having said that, it will still remain invest north dakota that unit. in terms of the equity market performance or the share price reaction, higher by 1.6% versus a market up by .6 of 1%. kelly? >> thanks. we'll check in how barclays is doing the big mover of the day as bob diamond will resign effectively immediately. shares moved lower initially. up 1.9%. we'll have much more on this coming up. we will indeed. also still to come on the

program, kelly, grab your pen and paper. fire up your laptop. it's time to get stock picking ideas for your portfolio. i like the ones that you've never heard about. they're like small strange companies nobody has heard about and they rocket like 250%. >> or you can get creamed. >> or you get creamed. >> play carefully. >> that's always the opposite side. our next guest is looking at plastic and gas packaging as well. stay with us. so, how do you feel about cash back? i would not say i'm into it, but let's see where this goes. [ buzzer ] do you like to travel? i'm all about "free travel," babe. that's what i do. [ buzzer ] balance transfers -- you up for that? well... too soon? [ female announcer ] fortunately, there's an easier way with creditcards.com. compare hundreds of cards from every major bank, and find the one that's right for you. creditcards.com. it's simple. search, compare, and apply. wñwñwñwñwñwñwñwñwñososososvycyíy

. welcome . welcome back. yes, you are watching worldwide exchange. let's get down to business. the business of stocks. sky deutsche land has seen a share climb over 100% since the beginning of this year. the pay tv broadcaster has given a boost earlier in the year when the firm successfully renewed. my next guest believes it's a stock to keep an eye on over the next two quarters. let me introduce scott meech, co-head and european equity at ubp. scott, welcome. >> good morning. >> a company like sky deutscheland. we were saying the share price is up by more than 100 percent by the beginning of the year. you think it has potentially more to go. >> that's correct. i think there's an inflexion point. they've renewed to 2017.

that's a big, big feeling of security for them. for not only that, they have the exclusive rights as well. they've avoided the problem of having any disruptive competition from deutsche or telecom for example. closing their ip base. i think they'll use that exclusivity to push prices up and subscribe and something accelerate from here. it's difficult because it's slightly loss -- it will make the profit this quarter the first time. we're just beginning to see it move into profitability. but you do have to look a few years out before you see a sensible -- >> not trading at price to earnings, it's trading at price to lack thereof. >> exactly. if you look at it, it's probably 4 to 5 euros compared to the short as it's trading out right now. >> positive sky deutscheland. who is first quantum.

>> we have a big debate about shareholder power going on. we've got huge debates what to pay these guys. if you look at the companies, it really creates a shareholder value the last ten years. it's an $8 billion company. doesn't get too much comment. it's listed in london and canada and they've created that value of developing projects in africa typically and zambia where they find and develop the projects. huge growth ahead. really exciting prospect. >> but i mean, what's the valuation, how well has it done this year? do you think it has room to go? >> it's trading at depressed levels compared to the history. it's come back a long way this year because of price falling. the biggest driver. and if you look at the valuation on an mpv basis, it's very

cheap. on a pe basis, looking at euro search five or six times. make it one of the world's biggest players in four or five years time. >> we imagine that looks like the copper chart this year. >> it does. >> is there a way that if you're worried about the price of copper, can this offer you some protection or are you going to be vulnerable to any more down drafts? >> you are, i think. that's the key risk with the stock. the stock will follow. the copper is interesting in itself. and supply of copper this year in the market has been much less than expected. big mines globally are suffering from low grades. that market, to me, looks like a tight market anyway. >> i was doing something a while back on the transportation of lmg and restructuring and things like that. once you look into it, super, super interesting. this next company you talk about is exactly about the ownership and management of storage

facilities. right? for oil and things like that. >> it's infrastructure play. they operate big storage facilities, petrochemicals, lmg increasingly growth market for them. the assets are scarce. the port cities across the world, they own a secure, safe long-term outset. the contracts they right in lmg with customers are inflation hedged and long-term in nature. it's righty think this stock is beginning to trade like a port stock or infrastructure play. they bring on new facilities. it does seem to be very high demand globally for storing more of this essential -- >> especially places where you can't build out. some of the ports are stuck. >> lastly, you like also a german specialty producer of plastic and glass packaging. >> yes. this is pretty small stock. it's just over a billion euros. on the face of it, it looks like -- it makes glass and

plastic packaging. >> geir shiemer. >> yeah. what they are plugged into is high credit barriers in plastic delivery mechanisms, insulin pens, inhalers for -- those are sectors. but those problems in population and diabetes or asthma are growing fast issues. they're plugged into that growth. >> with a company like this, how -- why wouldn't one of the larger companies manufacture their own plastic and glass packaging? >> i think it's a specialty area that the drug themselves that want to get involved in. they probably don't produce enough volume individually. so they have lots of customers it services and can leverage that volume through the business. but it's equally a very important part of that drug and that product. >> can i just ask you a broader question. i mean, i was discussing on european closing bell last night with some of my guests whether

we're heading into a buy europe phase on the back of relief over the eu summit, maybe some pent up pre-relief into bank of england ecb. do you think we'll see a balance in equities in europe? >> i think it's very possible. we see a lot of value in european equities. all the surveys tell you that global managers and asset allocators are more under way in europe equities than they ever have been. i think it's a very good case for a gentle recovery. we see lots of value in stocks like the ones we talked about. even the major players in europe, been trading quite cheaply. little bit more sort of steadier background in the bond market and bit of better news as you say. >> did you pick up a bit of barclays this morning too? >> for the -- with bob going and the chairman going yesterday coming back today. >> you stay away from

financials? >> i think selectively we're interested but this issue with libor, to me, could broaden because the two issues that perhaps barclays has taken the folks away from. firstly, that lots of banks are involved in this collusion potentially. it's got to broaden out. and secondly, you know, this integrity of libor is sort of for london particularly is incredibly important. that's being in question. i think -- >> not much left in that rate i think. we'll see what happens going forward. >> scott meech, thanks for walking us through the picks. >> let's talk about barclays and shares this morning. we saw them open lower, then turned around and we've been trading higher since then. by what, 2.5%. >> only two hours into trade. but still, that's what we're seeing. >> that's right. we just want to mention some comments from uk chairman,

turner. he says they will review wholesale markets supervised in the wake of the libor scandal. there's no such thing as a victimless crime. the same that you've heard from our guest there. let's get back to vasu for final thoughts out of singapore. vasu, we've discussed barclays already. we'll continue to follow the story throughout the morning. but financials, do you generally like the sector? >> well, you know, it depends on which financials you're talking about. if you're talking about european financials, u.s. financials. here in asia, when we read the headline news coming out of that part of the world, it's not the most comforting. you've still got a lot of bad news coming out of the financial sector. it's hard to be -- of course, it boils downey vently to what you think. it's generalized. here in asia, i think there are more opportunities, i think given what's happening in europe, it creates opportunities for financials here in asia. they'll be able to pick up the

slack that european banks that will have to give up when they deleverage. quite positive on the financials in asia. we think playing to the asian growth story which is still very promising. it's really this region we're -- >> i on der too if we're not seeing strength in equity capital markets. lamb purr, this incredible story, ipo market activity, is that the place to watch? is that where you want to bet? >> koala lamb pure, you have a couple of ipos that have done well. the most recent fell der. i would say, be cautious there. at the end of the day, the situation is quite different. you have elections coming up, not sure how that will play out in the last elections. in malaysia didn't do as well. the ground as weswell is there.

done quite a bit to satisfy the people. politics is a big thing in malaysia. malaysia is not a forum -- the domestic -- you don't see malaysia jumping on to the big wheel with the huge rallies and selloff in the market. a lot of the stocks are very tightly held and handful of them are trading for global fund managers. >> vasu, are we going to see a reversal in fixed income at the moment? we had a couple of guests indicating last week we could look at sub 1% deals still and positive news from the eu summit again and heading into the ecb. is that going to reverse things or a big selloff to come and continued buying in the other markets? >> well, fixing is fine. the developed markets are concerned.

as far as the -- the german borns, u.s. treasuries, the yields are fairly low. i think there is some international fund managers that have said we could be be seeing a mini bubble formed. we've seen so much money gravitate in that direction. clearly what's happening in europe will affect germany. they will have -- the credit risk to germany is growing given what's happening in europe. despite the fact that the yields in germany are low, the chances of things going wrong -- we're cautious on the developed markets, bonds. we're more optimistic on the fix -- here in asia, where the yields are a lot better. the fundamentals are a lot better. not just the sovereigns but also where you're seeing more and more companies here in asia actually issuing fixed income and using that as a way to fund your balance sheet. >> vasu, thank you very much. vasu menon from ocbc bank. much appreciated.

let's give a quick check of what's on the agenda in asia tomorrow. retail may sales figures 3:30 central european time. japan's retail group reports -- japan and india are due to report their respective june services pmi figures. >> still to come here on the program, bob diamond has lost his sparkle as he resigns as ceo from barclays with immediate effect. not quite sure if i agree with that. hasn't lost his sparkle. we'll look at the implications of this move and the future for the bank. stay here on the channel. [ male announcer ] this is the at&t network. in here, every powerful collaboration is backed by an equally powerful and secure cloud. that cloud is in the network, so it can deliver all the power of the network itself. bringing people together to develop the best ideas -- and providing the apps and computing power to make new ideas real. it's the cloud from at&t.

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well well come worldwide exchange this morning. i'm kelly evans. hello everybody. i'm louisa bojesen. these are your headlines from around the world. bob diamond resigns from barclays saying he won't let the pressure on the bank following the libor scandal risk hurting the franchise. marcus agius returning as chairman one day after he stepped down. meanwhile, george osborne is calling the news the right decision for britain. >> microsoft throws in the towel. taking a $6 billion charge to write down its web business.

hi everybody. good morning. yes, you are watching worldwide exchange. if you're just joining us now, our top story this morning is that of barclays. the ceo bob diamond has stepped down with immediate effect. marcus agius returned as full-time chairman one day after he himself announced his own resignation. agius is going to be leading the search for a new chief executive. this morning, what we initially saw, we saw barclays opening lower by somewhere in the region of 3% much the lowest dip was 3.2%. it's reverse that trade. trading higher now by approximately 1.8%. over the past week, it's lower by around 11 percentage points. a lot of questions being asked, who is going to take the place of bob diamond. he's been interlinked to keeping barclays out of headlines with regard to ge -- they were the only uk bank that didn't have to do that through the financial crisis. some are saying he's a scope

goat and he's being hung out in this libor case. one out of at least 20 banks involved in this. the first bank to blow the whistle on their own traders in this case, too. we have a parliamentary hearing tomorrow which will get interesting where the banking execs are going to be asked a whole bunch of questions by the uk parliamentarians. it will get interesting. looking at a couple of banks, trading slightly mixed in this morning's session. speaking earlier, the uk chancellor, mr. osborne said that diamond's decision was the right down. >> other banks are under investigation. that's well-known. i think barclays was in a particular position because the management hasn't changed in barclays. the same people were in charge. this is the right decision for the bank and also important the right decision for the economy. now, let's get on and create that new cultural responsibility in banking. that is what we need to see because we need strong responsible banks lending to the

british economy in order to create the jobs and growth that we want to see. >> yes, a lot of commentary on this issue this morning. of course, more from the fsa's adair turner who called the libor scandal just now a huge blow to the reputation of banks and says banks must be purged of their "culture of cynical entitlement." a pretty easy in in case, louisa, i think for politicians and regulators to use barclays, use libor scandal as a way to play on the public angst about things. >> yeah. in danish we have this saying, don't call kettle black or pot calling the kettle black. now the spotlight -- >> it's universal. >> yeah. the spotlight is going to be returned now to the regulators and i just kind of -- if i were a regulator now, i wouldn't speak too freely before we have these hearings. be interesting to know what the politicians know as well and what did some of the bank of england officials know too or

the mpc officials know. we're in the heart of a financial crisis. you want to keep the market stable. if that means turning the lights out for an hour and making sure that rates aren't going even nuttier than what they already are, is that okay? >> this is the question we should put in the next guest. senior bank analyst, also with us gordon, head of bank research at invest tech securities. first to you, you heard louisa commenting there. what do you think about this? >> definitely it's easy to throw stones at banks. they're not exactly flavor of the month. i think that bob diamond is sort of the baby in this. he's been thrown out with the bath water. i heard your other guests and commentators, talking about him being a scapegoat. i sort of agree with that. certainly from the community and i don't acclaim to represent them, but bob diamond was seen as a rather credible and bit of a steve jobs in the banking world really. he built up bark clas and was promoted to ceo and seemed to be

doing a good job. he's fallen on his sword. he didn't jump of his own volition. it's a good time for the politicians to poke at this. but as you say, i think there's a limitation to how far they can do that. >> just the poking might just come back to themselves. ian, a few tweets in. john tweets in says goodbye to big bob. britain got lost its smartest banker. way to go. another view that indeed he is put out as a scapegoat. >> i think that's true. i think the decision is regrettable. that said, all the reasons it's -- he has won the day. the political -- but for barclays, maybe we'll get more dispassionate viewing of the key issues here. there will be greater recognition that barclays -- it's a bank issue and we'll perhaps have greater focus on the fact that barclays

operational performance is superior to the domestic peers at which it's now trading at a discount to. >> you see barclays as potentially being an opportunity after selloff. you're not concerned necessarily that the departure of bob diamond, what that means for his top lieutenants could mean for the bank's longer term management. >> i think it's a short term of operational risk. risk of inertia. the worst thing that could happen to barclays if we have a protracted period of job search for a new ceo leading to a loss of vision and direction when actually barclays needs to take some really radical action to improve returns and deliver shareholder value. >> back to the point about whether or not it's okay to close the light, shut the light for an hour when the market is in complete chaos and whether that can be okay sometimes in order to stabilize markets. so your thoughts on this? i mean, is stuff going to emerge

about this in in the parliamentary hearing tomorrow or squarely towards the mpr and the raeg lay tors now? >> interesting to see what comes out. obviously the politicians are hoping it will be another brow beating session. my hope is that that will have a more mature level of discussion and debate, more forward looking rather than backward looking. because there won't be a need for retribution because he's fallen on his sword. >> ollie, where does this leave the banking sector? rbs is a little bit too. we haven't seen a broader selloff to the same degree. yet a lot of the banks could be exposed to settlement costs. >> this is not a crisis. it's a scandal. it's a very political scandal. it's been driven by the politics in the uk. the uk trying to defend itself as a center of excellence for the global financial industry. so looking to show that it has a

clean bill of health that it can regulate banks properly, et cetera. it doesn't really have a -- per se to other banks. s ian mentioned, this is global in terms of the -- from germany, japan, the u.s., switzerland, et cetera. it isn't just the four banks mentioned. if it was time too look at the fundamentals of barclays, obviously they would stand out. you got to remember, the department of justice pointed out yesterday that barclays praised barclays for being open and swift and the first to stand up and put their hands up about this. barclays approach four years ago about this, about the problem with the libor fixing. so the fact it's taken so long and the fact that they've been so open and swift with it surely gives barclays credibility. >> ian, that's -- what do you think, is there going to be more

exposure for the other banks for settlement costs, barclays being first out of the gate? >> absolutely. barclays is the only bank that settled with the regulator. 20 other banks either under formal investigation or helping the regulators with their inquiries. i'm not anticipating any news in a matter of days or weeks. over the course of the next months or years, i expect there to be a number -- >> two years. what does an investor do with that kind of risk out there? >> it provides an element of uncertainty. to be fair, the quantum of -- 290 million pounds is not significantly material in valuation terms. the issues driving barclays are the uncertainty and the perceived risk of civil action relating to the alleged manipulation. >> i have to say a lot of people tweeting in and giving us their views on barclays, on whether or not bob diamond should have stayed or whether or not it's a good thing that he is stepping

down. keep tweeting in. let us know at louisa bojesen or kelly evans. do you think barclays can turn this to their advantage and who do they bring? snoo. >> exactly. a top lieutenant of bob diamonds is likely to step down. an article also raised reaction to this. >> i think there will be -- there's likely to be other departures. certainly from the -- indeed across the industry. in terms of succession, i think it's a difficult question. one of the reasons i regret bob diamond leaving is it does raise the risk of a vacuum of leadership. had terms of internal candidates, the standard candidates, jenkins, who runs barclays, believe it or not defensively positioned retail and commercial banking businesses. on balance, however, i think an external appointment is more likely if a suitable candidate can be found who is available

within a sensible time frame. >> ian, thank you very much, ian gordon joining us in studio. head of banks -- also thank you to you olly burrows at rival bank. we'll have more live coverage of bob diamond's appearance in front of the committee which is scheduled to happen tomorrow. that is supposed to occurred about 2:00 british time, london time or about 9:00 a.m. eastern. but, in the meantime, let's check in on markets in asia. tracey chang joins us live from sing support. hi, tracey. >> thank you for that louisa. investors are here back to risky bets. at least for the moment on expectations that central banks in the u.s. and china and europe. hong kong back from holiday weekend bounced to a high. the shanghai composite ended flat despite ending on a high note. fresh data showed the services

sector, including construction, accelerated at the fastest pace in three months. property developers, one of the best performing sectors continued to rise after news that housing prices rebounded on a monthly basis in june. the sub index closed out 1.7%. in tokyo, an 8-week high. big gains posted. airways, slipped more than 13% on news that it plans to raise about $2.5 billion in near share issue. south korean stocks climbed to a two-week high. because they rose .9 of 1%. the afx 200 stayed in the red. the market hardly reacted to the -- to keep the rates unchanged at 3.5%. back to you louisa. thank you very much, trace y. let's get a quick check of u.s. futures. a lot of news to digest. a lot happening with the barclays story. the effect speaking on markets is muted. the dow jones industrial

higher -- pointed lower by 30 points, taking fair value into account. the nasdaq struggling to stay higher. s&p 500 same thing louisa, a couple of points to the downside. let's take a look though at how european markets are reacting. here the one to watch, the ftse 100 in britain, up a quarter of a percent. this despite weakness from the uk construction activity data. a little bit of weakness in mortgage lending figures. the banks among the reasons the ftse 100 is higher. kack ron out of paris -- ibex chucking in about half a percent there. >> definitely. this coming back a little bit. holding on to the levels on the close. we were around two-month highs. we continue to see that. in the last hour, since we last spoke at the wall, we've turned decisively, a little more negative. not by much. we're still holding on to green.

i just saw more red creeping in. basic resources in insurance and autos, still holding up. telecoms and real estate, utilities off by a bit. we've had a lot of focus on the banks this morning. barclays with the resignation of bob diamond taking center stage. we haven't seen a real reaction in the banking sector to this news as you would anticipate the banks are going to be looking at some of the broader things at the moment. the things that caeu summit. a supervisory banking body, the various banking mechanisms being put in place. the esf -- to inject capital directly into spanish banks as opposed to the government route. we're seeing a slightly mixed board on the banking board this morning. barclays trading higher now by 1.8%. you've got b and p and rbs trading off by a couple of points here in this morning's trade. the bond markets, we've continued to see a little bit of buying in spain, italy and france on the ten-year yields

falling especially over here in spain. want to draw your attention as we were close to 7% just a few sessions back. we're currently at 6.3%. yields continued to come down as a sigh relief off the back of the eu summit decisions. the ten-year bond being sold back. 1.5% there. it is anticipated that the ecb could comfort with a rate cut on thursday. we'll be doing a special show for you tomorrow. don't -- make it a date with yourself to tune in for that. and of course, more stimulus potentially also from the uk kelly. >> thanks louisa. want to mention, ireland is giving us some headlines this morning. the nation, of course, had to restructure its debt and exit bond markets in 2010 will be returning. it will be auctioning off three-month bills, only about half a billion dollars in size. but that to happen on july 5th. the auctions, again, a bit of a landmark there for ireland as it struggles to return to long-term -- to bond market

long-term. perhaps a step in that direction. let's check in on what's happening across the u.s. first news out of boeing. the airliner raising its forecast for the next many, many years. 20 years in fact. 20-year market forecast now sees itself spending $4.5 trillion in size. expects 2.5% global growth. and boeing itself is expecting a doubling of air travel over the next 20 years. i believe they're talking too about how much they expect to spend broadly speaking this is boeing's broader market forecast. 4.5 trillion in size or 34,000 new airplanes. >> a 4% increase in the number of people flying each year. >> 4%. >> that's quite a lot. >> it is, especially giving slowing demographic trends. banks on the emerging middle class across a lot of nations. >> up to 2050. then -- yeah, yeah.

anyway, just be interesting to see where that's coming from. >> 4.5 trillion is a big number. as promised, here's a quick look at the agenda in the u.s. today. manufacturing orders out at 10:00 a.m. eastern. expected to show a one tenth of a percent gain. automakers report june u.s. sales today and markets will close a bit early because it is the 4th of july holiday tomorrow. stock and bond trading, therefore, will end at about 1:00 p.m. eastern. ♪ ♪ ♪ ♪ [ male announcer ] what's the point of an epa estimated 42 miles per gallon if the miles aren't interesting? the lexus ct hybrid.

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welcome back to the welcome back to the program this morning. these are your headlines. bob diamond resigns as ceo of barclays with immediate effect saying he won't let the external pressure on the bank following the libor scandal risk hurting the franchise any further. marcus agius returns as chairman to lead the search for a new ceo only one day after he steps down. george osborne is calling the news the right decision for britain. wall street journal is saying coo jerry dell miss yea is likely to step down. also happening this morning, microsoft will take a $6.2 billion charge for its money losing internet business. this move is mostly related to the company's 2007 purchase of

online advertising firm a quan tiff. it was supposed to counter google's takeover the double click. microsoft failed to make -- struggled to sell online ads at competitive prices. the charge will wipe out any profit for the company's fourth quarter. microsoft shares trading about .8 of a percent in frankfort this morning. you can see there. >> very hard to take on google. extremely hard to take on google. >> it is. you see google on the defensive on the hardware market fighting back with the tablet. this goes back to 2007 when microsoft really was trying to defend itself and hasn't paid off. >> if you're dealing with internet search, i mean, google is a verb. let's go google it. let's microsoft it. >> band-aid. >> it's a hard one to take on. microsoft is an interesting story. when you look at the share price, you still manage to gain quite significantly here within the past couple of months. you know, it has managed to see

a return into some of the territory that it lost here recently, right? >> anyway, still to come on the program, we'll take a look at the oil market with the head of the commodities reserve. stay tuned for that. keep your tweets coming through. do you think it's a good move that bob diamond stepped down or not. @louisa bojesen or@kelly evans. 

welcome back. let's get a welcome back. let's get a sense of what's happening at the gas pump. crude oil prices have ticked higher today on hopes of more stimulus from central banks and the european union's day old embargo of oil out of iran. as you can see, 1.5% is what we're looking on the crude price. joining us is harry chill geirian at b and p -- both supply and demand reasons i guess to like oil. but how much further could this move go? >> well, certainly we're clinging on to the rally that we had last friday which was a positive response to dispositions in the eu relative to the recapitalization of banks. we've been having -- that's fueling expectations of further monetary policy stimulus. so from that viewpoint, i guess the appetite for risk is increasing as a result of these expectations.

at the same time, of course, we still have iran in the headlines. that's going to have importance in the second half of this year. >> but harry, if we get mormon tear i easing, how much of an impact will it have on the oil markets, how much further in the price of oil and which element of the two that you mentioned, the monetary easing and iran is driving the market the most? >> i think in the short term, it's anticipations of further monetary easing. certainly in terms of what we're seeing in the u.s. x people are now thinking more and more about quantitative easing part 3. the pmi dat or the ism data have been weak. trends in labor markets have been weak. two of these have been essential factors for action, if you will, by the fed. if on friday we get a disappointing payroll data, those expectations will move higher and push the price of oil higher. second -- >> sorry, harry. go ahead and finish the thought. >> i was saying in the second half of the year, this unavoidable reduction in spare production capacity as we seek

to replace embargoed oil will make the markets simply more vulnerable to unforeseen supply outages. as such, of course, the market, of course, will price higher accordingly. >> i wonder as we see slowing across emerging markets, this isn't 2010, even 2011 when it seemed that the central banks kind of ride into the rescue here. do you really want to bet, i guess, on their actions to o offset some of the fundamental demand weak yes, sir we may be headed for in the next six to 12 months. >> in terms of emerging markets, concentrate on oil demand growth. that is china. now, china has taken steps to reduce or reserve requirements at the commercial banks. it has cut interest rates effectively early june. we look at the latest data in terms of pmi -- we're expecting them to make further cuts in the reserve requirement ratios for commercial banks.

we also expect a further rate cut sometime during 2 opinion 3. as a result the stimulus measures will encourage and protect economic growth and oil demand growth as well. >> a couple of viewers tweeting in, harry. wanting to know what your oil price call is. >> we're looking for higher oil prices through the balance of this year. we could easily see wti return to an average of 90 to 95 in q 3 and move on higher to 110 by the end of the year. >> you said 90 to 95? >> yeah. q 3 average. >> also curious about the spread between brent and wti which a lot of people have been playing in the market, harry. what do you see happening with that? >> it's always a difficult one. the spread between wti and brent is notoriously volatile. we're assuming we'll have a spread between $10 to $15. the movement will be contained within that. we do not see a return to parity

between the two crude because we have so much surplus in the u.s. actually, calling a number is extremely difficult. >> harry, good seeing you. have a lovely rest of your day. harry chill en gearian, head of commodity market strategy. coming up on worldwide exchange, we'll break down the ism report and previewing the rest of the key u.s. data. some pretty big ones. >> much, much more of course on the big story of the morning, barclays. we'll speak to a shareholder in ten minutes time. stick around for that. >

welcome back. if you're just tuning in i'm louisa bojesen and i'm kelly evans. bob diamond resigns as ceo of barclays with immediate effect saying he won't let external pressure on i libor scandal risk hurting the franchise. marcus agius, one day after he stepped down takes over. the uk finance minister george osborne is calling the news the right decision for britain. microsoft throws in the towel. taking a $6 billion charge to brig write down its web business. all right.

with a good morning to our u.s. viewers who may just be tuning in morning. the big story, barclays and the continued fallout from the libor scandal here in london. but the effective market is muted. dow jones industrial average pointed lower by 30 points. s&p 500 and nasdaq pointed fractionally lower as well. the european markets give you a look at what's happening. the ftse one to watch in britain. the banks are trading. barclays included 16.16, 17% now. banks among those doing better. up in the range of 1 to 2%. out of germany, seven tenths to the up side. the ibex 35 out of spain is managing to post gains this morning as well. continuing the relief rally we've seen more or less since the eu summit last week. yeah. the question is still how do you make money in these markets? this is what some of the experts

have been telling us this morning. >> the lack of a move in australia maybe means the high yielders are slightly better tone. things like aussie, canada, relatively attractive. norway suffered a bit yesterday. that might do better today. i buy those things against the euro dollar. >> given the soybeans tends to be the market on the global basis. u.s. farmers at these prices aren't looking to plant more soybeans. there's probably gains however they may come in soybean prices at least relative -- in the elevated levels. >> if you're an investor, not a trader, for six months or more, usa -- to answer your question directly, it should allow us to participate in outside rallies.

>> markets did okay. but red flags may have gone around trading desks in the u.s. yesterday. this after the isn manufacturing index fell to 49.7 in june below forecasted 52 and importantly, the first time the index has been below that 50 level indicating contraction since july 2009. all eyes shoot to the june employment data due out friday. our next guest says he expects the payroll figure to show a gain of 125,000 jobs for the month. paul dales from capital economics. that's not terrible. we've seen forecasts weaker than that. >> yes. we're fairly optimistic on payrolls this friday. the thing you need to think about here is how much of a slowdown in recent months is temporary due to maybe weather effects or the run-up in gas prices whisk reversed. how much is persistent due to the slowdown in china and europe. we've taken a view that maybe some of it is temporary. we might get a positive spin on this friday's report.

>> what's positive? >> positive is anything bigger than the 69,000 increase in may. and admittedly, it's worth saying our forecast was made before the fall in the ism index. that does suggest that maybe more is due to effects from china and europe. >> just briefly shall on numbers themselves, sometimes we have a little bet going, we make bets how much it's going to be on payroll. the numbers are anywhere from 50,000, 25,000, 200,000, right, in terms of a guessing range? what's the normal? where would you like to see a normal average payroll addition be in a good economy? >> well, the thing we need to do is get the unemployment rate down. for that to happen, we have to have monthly payroll gains of 150,000 at least. that is enough to absorb all the people who come into the u.s. labor force every month and provide them a job and a few more and that brings down the employment rate.

that's what you would call a normal figure. that is what we really would like to see. but we're not quite there yet. although, i am a bit concerned that our positive forecast this friday has been overtaken by events in the u.s. falling yesterday. >> expectations may have been lowered a bit. >> exactly. i would say the risks are on the downside. i have to admit that. >> i wop der, going back to the ism figure that was weak, below the 50 level for the first time in three years, if we see continued kind of either decent or even negative or weak data on the payroll side, is there a reason to worry more fundamentally about the health of the u.s. economy right now? >> i think there would be, yes. i mean, that would suggest that the slowdown is more persistent factors from china and europe than i mentioned earlier. then we don't really want to get carried away. we're assuming that china will avoid a hard landing. and that europe, even though the euro may break up.

we think it probably will, it will be an orderly and managed break-up. that might not be a complete disaster for the economy. it should continue to grow but not as fast as likely six months ago. >> philosophical point of view, i find that quite interesting. what happens if we see a yeuro breakup still and what reaction what we see in the u.s.? you don't think you wouldn't see that big a reaction? >> i don't think so. when you look at the exposures through trade, through the banks, through -- well, pretty much confidence as well and wealth effects and they're not that big. the link between the u.s. and europe aren't as big as everyone seems to think. now, there's a lot of unknowns here. we have no idea. the euro never broken up before. we don't know how it's going to affect confidence or the financial markets. i think the u.s. is actually well-placed to shrug off some of it. i don't think it will be completely -- i don't think the

break-up of euro would drag the u.s. back into recession. >> even extending to places like manhattan where real estate markets have done quite well as people look for places to hide. the u.s. still an attractive place? >> i think so. it's relative really. is it attractive by 2%? that's not brilliant. but the europe is in recession and the uk is. i think it could do better three or four years than most other places. >> that says a lot about other places. paul dales, senior u.s. economist here onset this morning with us. thanks very much. >> thank you. >> coming up in a couple of moments, more on barclays ceo, bob diamond's resignation. is the heat moving to other big banks? stay tuned. we'll be right back. [ man ] ever year, sophia and i use the points we earn with our citi thankyou card

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teaching data how to do more for business. [ beeping ] in here, data knows what to do. because the network finds it and tailors it across all the right points, automating all the right actions, to bring all the right results. [ whirring and beeping ] it's the at&t network -- doing more with data to help business do more for customers. ♪ welcome back to the welcome back to the program. you're watching worldwide exchange. these are your headlines. bob diamond resigns as ceo of barclays with immediate effect saying he won't let external pressure on the bank following the libor scandal hurt the franchise. marcus agius leads the search for a new ceo one day after stepping down.

george osborne is calling the news the right decision for britain. the wall street journal is saying the coo. jerry dell messier is likely to step down. all right. let's bring you more details on our top story. barclays ceo bob diamond has stepped down with immediate effect. marcus agius returned as full-time chairman of barclays. that's one day after he himself announced his own resignation. agius is going to be leading the search now for a new chief executive. reports are emerging out of the wall street journal and also saying that barclay's coo jerry del messier is likely to step down too. speaking a couple of moments ago, the uk chancellor, george osborne welcomed diamond's decision to resign. >> i think diamond has made the right decision for barclays and also the right decision for the country because we need our banks focused on lending to the economy not on the scandals of

the past. i hope this can be the first step towards a new counter of responsibility in british banking, which is what the british public very much want to see. >> joining us now is managing director and cio of svm asset management. he's with us on the phone. steven peek joins us too from henderson global investors. colin, we'll start with you. you are air shareholder in barclays. what's your reaction to bob diamond stepping down as a shareholder? >> i think it's a favorable one. i didn't expect it to come as soon as it has before all the other information is out. i think while he's led the bank through some success, part of the next challenge for barclays is cutting costs in the -- it may be a successor finds -- coming from perhaps a different area. i think it's something that's positive for barclays and might have investors focusing on value instead of the history.

>> i have to say, colin, a lot of the communication that we are getting through this morning from you out there, from viewers out there are indicating that they think that bob diamond is being made a scapegoat of this particular case. you're not in the camp who thinks that this is a -- bob diamond is a scapegoat for this wider ranging libor case? >> i think to some extent he is because there are a number of banks involved and the -- certainly the u.s. department of justice have given their version of events and the reasons for the action they've taken and that explains that barclays has been a whistle blower and been cooperative and we're likely to find that some other banks have at least the same extent of exposure as barclays has to this particular practice and problem. so i wouldn't condone what might have gone on at barclays, but i think we're going to find that it's far from unique and in fact, it has an advantage over the other banks and they've been

proactive in bringing this directly to his attention before other banks did. >> it's likely to be months and months of further detail on settlements roping in other banks. o how does that affect trading? how does that affect investing and financials across the market? >> i think it creates a huge cloud that everyone knows won't blow away any time soon. i think that the first emotion most investors has is what's next? there is a specific case with barclays, the first in the firing line. i think attention on barclays is going to dilute as other people become -- report on other people and clearly fines to come. we all expect that. but it creates another issue that investors have to think about in terms of trepidation. >> financials already? >> i think i do think that financials are incredibly difficult which is probably not the most enlightening thing you will hear today. this creates other issues. i think colin mentioned in his

remarks, there's a potential -- whether barclays or some of the other candidates. i think investors are looking very closely to look at the point where the market may be overdiscounts the issues coming or ware. >> barclays shares are up. >> they are. a full reversal from this morning. >> colin, before we let you go, who would you like to see taking the place of bob diamond, internal candidate or external? >> i think they will probably achieve more by bringing in an external candidate and look at fresh at the cost base there and make a more demonstrable public statement that the leadership in the business. i think there should be an opportunity to bring someone else in rather than promoting internally. >> colin mclean. thanks for calling in this morning. stephen peak will stick around for more on this story in just a bit. >> yep. but on this day when one of the highest profile chief executives in the banking sector

is walking away, we're going to continue to have more analysis with that in a second. we're heading to a short break. >> we'll be right back. >> we can make faces and do things like that. see you in a second. ♪ ♪ ♪ ♪ [ male announcer ] what's the point of an epa estimated 42 miles per gallon if the miles aren't interesting? the lexus ct hybrid. 

okay. on the day when one of the highest profile chief executives in the banking world has walked following the libor scandal, let's take a look back at some of bob diamond's thoughts over the years on risk and regulation during the financial crisis. >> i think the key for banks for regulators, for everyone is to learn from the mistakes that have been made. and we're very supportive of the recommendation that the fed becomes the lead regulator over financial institutions in the u.s. we think that clears up a lot of confusion and absolutely the right regulator. >> we want a safe and sound financial system. we want banks that are

confident, strong and willing to take risk and in particular, willing to transfer risk and transfer capital and transfer investors in support of international trade and cross border flow. >> we decided to take what we acquired with the loy man's acquisition. rather than purchase that business in europe and asia, take the strength of the u.s. franchise and build out. >> putting our risk and capital in our client businesses rather than in separate proprietary trading groups is right for us. it's the business model that we want. we want to stay very close to the clients. that's where we think we have a value add. >> joining us for more is ryan mummy, founder and president at mummy financial advisers in charlotte. of course, still with us onset stephen peak. ryan, as we look ahead to the u.s. trading day, practical -- out of the news out of barclays. >> good morning.

well, unfortunately, mr. diamond, a well-respected ceo as your previous guest said, a little bit of a scapegoat, many of the banks are getting looked at under a microscope and many of these things are coming out. one of the take aways is that it takes the spotlight off the united states banks right now. who unfortunately are, as i said, being vilified, but they have very strong balance sheets relative to where they were a few years ago. as your previous guest said, there could be some opportunities in the finance sector in the coming months. >> in which particular companies do you think, ryan? where are you looking? >> well, we like bank of america, bank of america has a very good cash position right now. as well as wells fargo. wells fargo doesn't necessarily have the institutional side exposure that barclays and bank of america and jpmorgan does, but they have a very good balance sheet. those are two united states

firms that have a lot of upside with a good balance sheet. once the headlines take away from all the pressure on the banks and the news media and they start looking at the true intrinsic value, we could see a nice run in those two particular companies as well as the overall sector. >> stephen, there's been no shortage of attention on these banks but also no shortage of missed practices. some of the stuff that's not getting attention, miss selling of swaps products, concern over pay, all of these issues added pressure on bob diamond. there were real instances here of wrongdoing. maybe at least of misleading people. so what happens next? >> well, that's a fantastic question. i wish i had a crystal ball with the answer. that's one of the great worries. there's more to come on the issues we know about in terms of libor fixing. we also suspect there's other things to come out in due course as to who is in the frame, which company is in the frame. you have just as good an idea as

i have. it clearly creates a big question mark for investors. how do the banks clean their stables, how do they get things tidied up and ship shape? that's a long laborious process and has to happen for the good of the uk market in relation for global markets well. confidence needs to be restored and the pressure will mount on both politicians and regulators to actually see this process through. >> would you prefer to see an internal and external candidates succeeding diamond or does it make a difference? >> i'm watching closely from the wings. there's only one answer to that question. i think you need that new -- the new -- the fresh set of eyes from an appropriate qualified individual. has to be external. no question. i think the combination of the chief execs and the chairman, not necessarily this chairman. i would have preferred michael, seeing an independent director become chairman and then you had the new team going forward for shareholders in terms of them working hand in hand to reshape.

-- >> oh, my goodness. jim o'neil's name comes up for everything. stephen, wa are the practical locations for libor? this is a rate that is key to the financial system but people have lost confidence in. these issues are years and years old. ha do you do about libor? >> as we all come across libor, actively or pass civil in our lives. i personally did not know how libor was arrived at until relatively recently. it's an archaic process. will it be revised? my view, yes. >> this is a question that the bba asks to banks each day. at what rate could you borrow funds? were you asked to do soy -- were you to do so by asking and accepting interbank offers.

in a reasonable market size just prior to 11 a.m.? this has only been the case for 15 years? >> it does seem when you look at it -- i'm an equity guy. not dealing with bank and interbank dealings. but it was an education for me i confess. it doesn't strike me as being 21st century. >> no. ryan, quick comment from you. nonprompt payroll data this friday, what are your expectations? about ten seconds to go. >> i would expect them to surprise a little bit to the upside. but not to be anything outstanding. our economy seems to be a little bit into a moving sideways. >> ryan, thank you very much. pleasure having you on the show today. ryan, and stephen thank you to also. pleasure having you in the stowed yoe. >> thank you for your help. >> here's "squawk box." we'll see you right back here. stay tuned.

good morning. good morning. the libor price fixing scandal claims another player. barclays ceo bob diamond. falls to pressure and resigns. microsoft's strategy to keep up with google proves to be costly. the software giant will take a $6.2 billion charge for a deal it made five years ago and boeing's outlook for the next 20 years. a $4.5 trillion market for jetliners calling for 34,000 new commercial jets. it's tuesday, july 3rd. i sound like brian williams as "squawk box" begins right now. go