hello, welcome to today's edition of "worldwide exchange," i'm russ westgate. these are your headlines from around world. they are expected to cut its benchmark rate to a record low. the bank of england seen injecting another 50 billion pounds. banks under fire once again as moody's downgrade s barclays outlook. and bob dimon gets questi questioned. select opportunities in europe could be on the cards. and volkswagen trades higher after they say it will complete

a takeover of porsche much earlier than expected. okay. welcome to today's program. becky's with us today. >> i am. >> neither kelly nor i were here yesterday. >> i did three hours on my own. it was great fun. i did miss you. >> i am here now and kelly is down at the house of parliament reporting on what's going on. >> second day. i've been looking at the weather forecast. it's supposed to rain all morning. >> perfect. good. we're tucked up here. she's out there. we'll get to kelly later in the show. we will go to singapore. bringing details of how the powerful sovereign wealth fund is shuffling its portfolio. >> we'll get analysis from a

bond expert. that's come up in under 30 minutes and the results of the debt auction will be in an hour and a half. >> i'll be interesting to see what the ten-year is. we'll give you a taste of an interview with the chairman in dubai. >> plus, we'll be joined by a guest from houston who says without further qe from the feds, economy will be close to recession by fall due to the drag in europe. we discussed the state of the commercial real estate market, that at 11:20 cet. the ecb is supposed to cut rates to a record low. sylvia, we might get the main rate cut. everybody seems to be wondering

whether they'll go with a deposit rate as well. >> it would make a great deal of sense for quite a while because it kind of discourages, that's all you can say, at these interest rates that we have, it can't be a major encouragement to park money at the ecb, certainly not from the rate return. it discourages round tripping further. they could even, say we put it at zero, making 100% sure this is not what's desired. we know how much money is being round tripped at the ecb. so far they shirked away from it. i don't know why there was always a feeling in there that where we are, that's a little bit -- the lowest level that they can go but the ecb has said time and time again, also some of their counselors in interviews and other statements there's no technical reason they couldn't go lower.

that would make sense, so far we haven't heard about it. and then some markets saying we could get disappointed by the ecb with only getting a 25 point basis point cut. calm down a little bit there. the ecb are gradualists, they want to smooth the waves. they done the go in big leaps and bounds unless there's a panic situation. if we saw 50 basis point rate cut today that might be a flip side to that, the market would be wondering hang on a minute, have they got their finger on the panic button, do they know something we don't know? i think the 25 basis point is most likely scenario. the deposit rate a maybe with a lower probability in there. other than that we might hear a bit more about how that landed in the banking industry and how dysfunctional the interbank market still is. whether we have easing in there, there were signs of that certainly in the past few weeks.

>> all right. sylvia, thanks very much indeed for that. we'll be with you throughout the course of the program as we count down to the ecb rates. joining us in the studio is patrick legland. sylvia laid out the possibilities, what do you think the ecb should be doing and what difference will it make? >> we expect 0.25% cut, not 0.50%. point number one. it will have a marginal impact. it might give a signal to the currency market that the euro -- the ecb is not waiting the euro. the euro is overvalued but i wouldn't expect too much from this. i think they'll cut by a quarter point. >> we have low rates. these will send them even lower. christine lagarde said she doesn't think the rate cuts is

the way forward, that the ecb needs to be going to alternative actions. is it effective to keep cutting rates when they are already historically low. >> frankly interest rates are very, very low. they are literally two main questions, do we have a decision which will help to curb the crisis? and is there a resolution, on one side, on in europe, where it's becoming critical and that europe and leaders need to take far more drastic action if we're not going to go into a deeper recession for europe. >> should the ecb be doing any other extraordinary measures, should they be doing more rtlo? or are they going to use themself as a threat to

politicians, is that their role? >> i think so far they mainly stuck to their role. europe and gp, it's 1.2 billion. it will be to create treasuries. this is very, very important. literally, it has 1.2 billion. taking this into account i would be surprised that they would come to anything else than to prove a point. >> not just the ecb coming out with its decisions. we have the bank of england, too. no change expected on rates at the bank of england. there's an overwhelming projection that there will be qe.

patrick, what you make of the effectiveness of more qe for the bank of england where essentially they can't really cut at all at this stage so we're looking at qe as the option. >>s a catch 22. most banks are clearly going into printing. and maybe they will try to do something but they will not expect too much. what we need to take into account, currencies in the last few quarters have been mainly driven by central bank balance sheets. this is a question mark. the more you put pressure down on your currency, we might make that with the u.s. as well. there is a need in the u.s. it would put downside pressure on the dollar and put upside pressure on the euro. >> you talk about -- i mean, there's obviously, the last three years it's been part of

the policy to ek waen the currency, not expectly but they're happy with what happens as a result of the policy. should the u.s. actually be arguing -- should they be happy to see a stronger dollar? it would help with commodity prices. it would be a lot of things they'd be beneficial with for the rest of the world as well. >> when there are statements of u.s. political leaders, it becomes very clear in the last few months, they've become very, very worried of the state of the european economy. yes, i think suddenly they will start considering maybe having a higher dollar, not really for the u.s. economy itself but to -- with europe and a weaker euro. >> the high dollar has helped the commodity prices and the price of gasoline and oil has a big impact on the u.s. economy. >> that's true, very true. we need to sort of be careful. we have a massive slowdown in

the emerging market. we have to be careful to make any political bits on commodities at this stage. >> plenty more to come from you. >> he's staying with us for the rest of the hour, which is good news. moody's has changed barclays rating from negative to stable. they cited certain management outlook for the decision. thatle tos the resignation of both the ceo and the coo earlier this week. they found a replacement, too, this just one day after former barclays boss bob dimon apologized to lawmakers after three hours of grilling in testimony. he said he was sad about the reprehensible acts of rate fixing that forced his resignation earlier this week. >> when i got the results of this investigation and it was because of the interviews, as i've said, i didn't see a lot of the detail. i was aware there was an investigation and broadly aware things were coming out.

when i read the e-mails from those traitors, i got physically ill. it's reprehensible behavior, and if you're asking me should those actions be dealt with? absolutely. >> kelly is outside house of parliament. following the story very closely with the details. kelly, what happens next then? >> becky, good morning, hello to you and ross back there in the studio. i'm down here in front of parliament where behind me in just about 90 minutes time the session will begin today. that's earlier than usual. apparently this parliamentary debate over how to proceed will be the fourth item on the agenda. about midday is when we could see this starting. what are they debating? whether or not -- this was the conserve five agenda being brought to debate -- whether or not to continue in the parliamentary debate.

those types of debates are more rare. they're more serious. they're more likely to result in criminal charges. they're also under oath, a parliamentary debate is not, although lying is frowned upon and generally seen as not a smart thing to do. if it's a parliamentary debate, the conservatives have 306 seats, the liberal democrats have 57. that gives them a comfortable majority over the labor party. it would take a look of the lib dems not to go along with it. it doesn't appear that's going to happen. a parliamentary inquiry, the most likely outcome. still could take up to christmastime before they get anything more out of that. the question is then whether the uncertainty weighs on shares of barclays and the financials more broadly. >> thank you, kelly. more later on in the show.

the uk equity markets about on the flat line, advancers outpacing decliners. we're pretty even, slightly outpacing decliners. the ftse 100, we had a fairly stable day yesterday. we'll bring it up for you. maybe we won't. we'll wait. no change in data. there we go, ftse 100 up 10. xetra dax up a third. flat for the cac currant. plenty to focus on today with a bond auction. there are stocks in focus here this morning. let's run through what they are. the british engineer up today, gkn. volkswagen and porsche have found a way to complete the merger. both stocks up.

and finmeccanica up this morning. it's not official, it's just reports. the stock is responding nevertheless. back to spain today, a lot of focus on their debt markets. this is yields in spain back over the 6.5%. the relief from the eu summit already starting to eke out a little bit. they'll be auctioning 2 billion to 3 billion euros across three issues. 2015, 2016. the key one will be the ten-year. they've only had four auctions since the beginning of january. it was 6.044%. the gray market has been higher around 6.4 yesterday. the cash market up 6.5. a key test today. they do need to auction the full 3 billion to satisfy investors. we'll be looking across -- we look at the gilt market.

euro today a little bit weaker. we had a bit of a sell-off yesterday. the starting dollar ahead of the bank of england below 156. euro/sterling, we're around 0.80. we have an oil strike on in norway. that took brent back up around the 100 mark. we are still there. nymex at the moment, 87.25. a lot of data out of the u.s. today. the adp, weekly jobless and the manufacturing ahead of the payrolls report tomorrow. that's where we stand in trade right now here in europe. what about in asia? tracey has more for us in singapore. hi, tracey. >> good morning. good to see you, ross. asian markets traded mixed ahead of the key central bank policy decisions out of europe. the greater china markets ended on two separate notes.

the composite fell more than a percent as lower commodity prices hit shares of energy in the material sector ises. the hang seng index reversed earlier losses to finish up about 0.5%. turnover remained low. share and take a look at japan's nikkei. the index lost 0.3 on the renewed strength and the south korean market had a sluggish trading day, closing flat. another market in the australian esx 200, down 0.1% amid very thin trading volume. lastly, a quick check on india's sensex, up 0.4% at the moment. back to you. >> thanks for that, tracey. well, let's look ahead to what we can expect online as well. europe's tallest skyscraper, the

charde set to open in london. do you think the shard predicts doom for the uk economy? if you want to join the conversation on "worldwide exchange," get in touch with us, contact us by e-mai e-mail @worldwide @cnbc.com. or contact us directly, me me @beccymeehan o or @rosswestgate. [ 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.

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you're watching "worldwide exchange." profit is down at one of the world's largest state investors. singapore's holdings says while its portfolio may have grown slightly, profit is down 16% due to difficult business conditions in the past financial year. but trying times can lead to toots. they may be open to strategic investments in europe. we are joined from singapore. what do they have to say?

>> even long-terms like temasek are like this. it grew to a record 198 billion singapore dollars but a group net profit was down to 10.7 billion. all these numbers are in singapore dollars by the way. that's due to a drop in market values. what was quite interesting was the geographically breakdown in terms of overall portfolio exposure. because in north america and in europe, it was up to 11% from 8%. and i asked temasek's head of strategy why that was given the very challenging environment in north america and in europe. >> the increase in the north america and europe exposure is mannly due to our new investment

in the energy and resources area. you will see our investment in the company, fds, clean energy, they're all in the resources and energy area. as to singapore and asia, the reduction was mainly due to the fall in market values in relation to the rest of our portfolio. >> so the emphasis in terms of north america, beccy, is really on natural resources and energy. incidentally, in terms of portfolio exposure in that particular sector they doubled it to 6%. beccy. >> i'll pick up. it means they can be very opportunistic. at certain other periods. are they viewing europe as an opportunity at the moment or are they fearful, still, of putting

money here, bearing in mind we're still not quite clear about the politics. >> very interesting. they are keeping their options open, ross. the first thing to say is the guiding principle of investment strategy at temasek is really relating to growth economies out here and emerging markets more broadly. this is the message that is communicated time and time again. my quote, diversified and resilient portfolio firmly anchored in asia and singapore is the corner stone, objective and goal at temasek. it was interesting. we did put a question to some of the management. we asked them if they are looking at opportunities in europe. they said they were open, this is what they had to say. >> there are many good companies in europe with significant part of their business in asia, for example. those companies will be companies that will be interested and we kept track of them.

>> so we are quite clear, the caveat is that it has to be companies with a strong growth profile or footprint in emerging markets more broadly. let me sum up quickly, ross, and say this, temasek is being hit by the global volatility. if you consider one key metric, wealth added or returns above, the aggregate risk adjusted hurdle rate, excess returns, in other words, that was negative for the last financial year. even the big conservative investors are feeling the heat. back to you now. >> thanks for that. patrick, let's pick up with you on that. they want to invest in europe but only those exposed to asia, which is probably a good strategy. if you pursue that strategy, where do you go? >> certainly there are many

sectors like luxury consumers which are willing to expand in asia. in this direction they would find good opportunities. we have to keep in mind, the environment is very difficult because all this political issues. on the side, companies are very, very strong health, very solid margin, strong balance street. obviously opportunities to invest. it would make a lot of sense. i'm sure they could find opportunities in consumer, retailing, luxury sectors. >> what is the right timing for that? temasek, investors like them would need to get in right at the bottom but they'd like to be somewhere near the bottom. where does the timing work? >> frankly, the next 12, 18 months might be the right timing. because we are certainly somewhere, not very far from the bottom of the european crisis.

we see the step by step resolutions are coming on one side. a couple of quarter was very bad, very bad figures. we are suddenly the next one, two years might be absolutely typical for them. >> what would be the key metric for you that investors should be looking at to just gauge if we are close to the bottom. yesterday we we're looking at the is services pmi numbers, they looked bad, still in contraction territory. what are the figures you would focus on? >> to be frank i'd like far more to the company coping with the economics. what is the return on equity. we see companies which is resilient, even if we are going to minus one in gdt, let's keep in mind, we have the zero best in forecast for europe and gdt. frankly it might go to 0.5 or

minus 1. they would buy a good company willing to have exposure in europe. >> still to come on the show as london adds another skyscraper we talked to an expert about the state of the real estate market here in europe. [singing] hoveround takes me where i wanna go... where will it send me... one call to hoveround and you'll be singing too! pick up the phone and call hoveround, the premier power chair. hoveround makes it easier than any other power chair. hoveround is more maneuverable to get you through the tightest doors and hallways. more reliable. hoveround employees build your chair, deliver your chair, and will service your chair for as long as you own your chair. most importantly, 9 out of 10 people got their hoveround for little or no cost. call now for your free dvd and information kit.

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you're watching "worldwide exchange," bringing you business news from around the globe. here are the headlines from around the dplob. europe's main siene tall banks get ready to support the economies. the ecb should cut its benchmark rate to a record low. and banks under fire once again is moody's downgrades barclays outlook and lawmakers in the uk vote on putting lenders on trial one day after bob diamond is questioned on his knowledge of rate rigging. singapore's temasek has its eye on resources but says select opportunities in europe could still be in the cards. volkswagen trades higher after the german carmaker says it will complete a takeover the porsche much earlier than expected. so the focus is winding up

for both the bank of england and the ecb, both of them due to take action today. that's certainly what we're sort of pricing. european stocks ahead of that, pretty flat and cautious. the u.s. returns to trade today as well. with a lot of data stateside and kbxt beccy we have a spanish stock market. >> this is what's going on, though with the ten-year right now. the bund yield is at 1.45%. in spain, 6.54, in italy, 5.82% and the gilt at 1.69%. the irish yields fell below the spanish yields. it was the irish debts on the

periphery of europe which seems to get the most benefit from the eu summit. it will be interesting to see what happens. >> what we might do is take the italy quote out. i know it's important to look at it. we might take it out. >> the flags are similar. that wouldn't make it too much different. >> just a different way around. an ongoing dispute in norway is taking a toll on the crude output production has fell by 0%. second round of talks between oil sector unions and employers failed to produce an agreement. they are expected to meet today to discuss whether to escalate the industrial action which according to union leaders could now last for weeks. and brent is back to over $100. what do you do with oil at the moment, as an investor this is?

>> we ask why they're like this over the next few quarters and why. surely is goes down. given the economic slowdown across the globe would be -- currency which at this stage is not -- then we'd be very, very careful. >> we gave you a snapshot of what's going on in the bond markets. let's get into this in more detail. the treasury selling up to 500 million euros in three-month bills. those will come at about 11:30 cet. they dropped below those of spain for the first time since july of 2010. >> spain is likely to see its borrowing costs rise.

the selling debt maturing in 2015-'16 and 2022. looking to raise up to 3 billion. they say it is unlikely to bring down yield significantly. they are expected to discuss further austerity measures. interest rate strategies. good morning to you. what's more important here, the yield that we see or actually how they managed to sell the full desired allotment? >> to a degree, it is almost academic. we know it's way above 6% but it's no really at the extremes. it's not the november of 2011 or the recent -- relative to bunt. >> what would be a result then on those metrics?

>> well, i think just on the amount, let's assume the 3 billion gets sold and whether or not the market has to sell off afterwa afterwards. i think that would be the biggest indicator. i expect at these levels, bearing in mind last week's eu summit, it will still be for close in short positions. i'm not too con convenienced in the short term there's much upside in being short here. but still, i don't think that this is also a time to enter a long position, really. i'm still very cautious, still looking at putting on more structures such as flattening positions. >> yes, good morning. since last week we had disappointing figures on spain. do you think there is a reason it might -- the auction today? >> i don't think so. i think anything on the fiscal

side, anything on economics has really long been baked into the price. we have a lot of bad expectations in the market. and i think going forward it's a question of debt sustainability. for the mark tote change its opinion on the debt sustainability we'd have to see spectacularly good figures from the economy or some really type of tax receipts. i don't think too much of this is looking at the macro picture. >> we have ireland dipping its toe back into the markets. how much should we read into the results of this small action today? >> i think what's -- an expense tags is that the three-month bill gets sold at somewhere around 2% and the 500 million will get sold. that's all we really know. this is a bailed out country re-entering the market.

this is symbolic, this first auction. it's happening at a small tenor. let's hope they enter the market smoothly and continue to improve in the bond market. there's still a very long way to go before the bond market has improved to the sort of levels where we like to see them entering. >> indeed. many people we've spoken to says this is stage managed at this point anyway. peter, they do obviously have ambitions to get properly back into the bond markets, so in the not too distant future they can fund themselves. looking at the economics, the fundamentals of ireland at the moment, how likely is it they will be able to get back into the bond markets in time to avoid needing more bailout money? >> i think that is possible. i mean, to me it looks like the market is much more favorable with regards to irish debt. "a," it still retains its investment-grade rating. still in the government bond indices. it's still available.

it's still on the watch list of most of the institutional investors. secondly, they also managed to get some growth in recent quarters. so as long as the economy doesn't take another downturn, we still have growth to factor in in terms of its debt sustainability, i think they have a chance of re-entering the market. and it appears to me also the credit ratings agencies still appear to be fairly optimistic with regards to ireland. it does look good it's just a question of not getting too excited by entering the bill market. the difference between the bill market and the bond market is quite significant. >> peter, thank you for that, peter chatwell. moody's has changed barclays stand-alone rating from negative to stable. that follows the resignation of the ceo and the coo earlier this week. this just one day after the

former barclays boss bob diamond apologized to uk lawmakers after more than three hours of grill. he said he was sad about the reprehensible acts of rate fixing that forced his resignation. kelly? >> the key question going forward is what happens next? will there be a parliamentary inquiry into libor, into culture or a judiciary inquiry? i just spoke with a member of treasury select committee and a liberal democrat, why are his views important? the lib dems is the minority party in the ruling coalition with the conservatives. it would take the lib dems siding with the labor party who want a judicial inquiry if they're they're to overcome today. lib dems sound like they'll go with the conservatives on this

and pursue the parliamentary route. take a listen. >> the judicial inquiry route is used when we want to know what's happened. in this case we actually know what's happened. we've had a full finding and we have shed loads of evidence. we have various papers from the u.s. justice department and we have a fraud office looking into it. this is not about what happened. we know the fact. this is what about are politicians going to do about it, what legislation do we have to change? we have two bills, one in parliament, one coming shortly. we need to know how to change financial services in banking. that's a job for politicians. >> i understand there's some concern to the judicial inquiry could drag on for years. the one into the iraq war, for example, is still open. if you need to do financial reform, the parliamentary inquiry could take 11 weeks. >> it could be as long or short as we choose to make it. what i hope is it would be a

short inquiry reporting by the end of the year. i think it is very important to be assisted by a top team so they can do the sifting, maybe even lead some of the questioning. i think there are a lot of things it can be done to make sure it's incisive. i don't think we need a judge taking two years to tell us what we already know. >> the shorter route could also drag on for some time. the debate will start behind me in parliament, the session at least, within an hour. the debate beginning midday hon done time and a vote expected around 5:15 london time. that's a little after noon eastern back in new york. at that point it's most likely what comes forward is a vote yes for this parliamentary, this political debate. we'll have to watch other financial institutions to see how nervous that makes investors. >> it's ross, kelly. good to see you there. what we are not much clearer on

here who knew what when in terms of the regulatory authorities, whether that's the bank of england, the fsa, the british bankers association or indeed members of the government? what are people down there saying about how far, how wide ranging any investigation needs to go? >> ross, it's interesting. hello. miss you back there in the studio. it's interesting to hear the rhetoric in particular. they were the ones in office during this period in question here when barclays went trader misbfr. that was 2008. why would the labor party want a broader investigation? what they want is an investigation into banking culture. that's kind of a convenient way, perhaps, of deflecting attention from what really should be the focus, which is to what degree were regulators complicit or overlooking their duty, not doing enough with libor to fix it and make this rate more trustworthy. that's a great question, one you hear conservatives trying to put

back on the labor party saying you should have done more on this. it's a convenient sort of football for them in that sense. those questions still haven't been answered. if the focus of the inquiries is on banking culture, i fear they're going to miss the point. >> okay, kelly, thanks for that. i'll talk to you more. we have spanish bond auctions out. i know you hate to miss those. they sold 1.2 plus 1, plus 747. that's nearly the 3 billion they were looking for. the 2015 bid to cover 2.3 a. 3.2 versus the last auction of 3.3. on the metrics we just heard peter talking about in terms of the total amount they're selling, and the bid to cover, not to battle. the smallest amount they raised was in the ten-year. the maximum yield on that,

6.505%. 6.1. it is a sharply higher yield from the june 7th on the ten-year. 6.5% pretty much matches where we are in the cash market. the yields actually are just nudging down a little bit as we go through the results of this auction as well. let's just bring in patrick. your reaction, patrick? 6.5% is the yield they're paying in auction on the ten-year, 6.12% on that. 747 million euros. across the three issues they raise the least on the ten-year. bid to cover was fairly healthy at 3.2. >> all of these are quite on the kosher side. there are still many question marks hanging around spain. they would say expansion of collateral on things like this. at the enof the day, the crisis is still there. these figures reflect -- the second question, it will not have precisely the answer but

who has been precisely buying and subscribing to the auction? the question mark is local banks, international banks, is it investors? and this would be quite interesting. >> this one of the issues, of course, the germans would have problems with sort of a fold, a banking bailout. it's -- what you can get, of course, you can get all your country's banks to buy your debt and then ask the rest of europe to come in and bail out your banks, which is a round about way of getting everybody to buy your debt. >> exactly. exactly. this is why at the end of the day having proper european institution with banking -- i don't think treasuries would make sense. maybe we're not so far from this. >> we got the average yield starting to come through on the 2015 bond, the average yield 5.086%. which is dropped from last time around. it was 5.43%, roughly. on the 2016, 5.536%, which is

creeping up from the last auction. and that ten-year bond, across in spain, the average yield is coming in at 6.43%. which is an increase. 6.43 this year versus 6.04% last time on the ten-year. 3406ing up there. the total amount came in just over 3 billion euros. >> if my rough back of the envelope calculation was right. >> it was. well done. >> there was a certain amount of pressure when you have to add it up. >> adding three numbers together is tough. >> it's difficult, let me tell you. >> without a calculator. and not enough fingers. >> right. just to show you where we are, the yield reaction, let's show you the curve. we have it on the wall there. let's make a cut of that. the yields are -- i reckon they are higher sense the result of the spanish auction. move on to the ten-year. there's the three and the four.

2015, 201. the ten-year is 6.55%. that's high yield than we were before the auction announcement. let's move on. volkswagen has stepped on the accelerator announcing plans to purchase porsche two years ahead of target. i'm groaning when i say two years ahead of target. this saga has been going on endlessly. what's happening? have they found a loophole, a tax loophole? >> reporter: oh, they have. they've been digging for it and they have found it indeed. the deal has been going on since 2009. actually perhaps even since 2008 when quietly porsche was acquiring vw shares to then jump on vw, then the whole deal turned sour. it went exactly the other way around. yes, the big announcement, only about 45 minutes ago we had the press conference by vw and porsche. the takeover is possible because there is a tax loophole whereby

now volkswagen doesn't need to pay 1.5 billion euros worth of taxes because this takeover is not a merger and because of that it is under a restructuring law here in germany. that means that no taxes athe that amount at least will have to be paid. taxes need to be paid and the cfo announced they will be significantly higher than 100 million euros. compare that to 1.5 billion. the math is much more favorable now. at the press conference we got confirmation there will be annual synergies of 700 million euros. they will be affecting porsche as well as vw. second quarter by the way, ross, is very well indeed. in europe, the eurozone debt crisis is starting to affect a little bit the market sienement. >> patricia, thanks for that. still to come, we hear from the executive chairmanen of a

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you're watching "worldwide exchange." europe's tallest skyscraper, the shard, is set to open in

london. but some data suggests the completion of tall buildings are usually followed by economic downturns. earlier we asked if you think the shard predicts doom for the uk economy. one viewer e-mailed to say i believe the tall building and the olympics work hand in hand to predict gloom and doom for the economy, which is a shame. they're both things i'm personally quite looking forward to. we appreciate all of your views. if you want to join in on the conversation, get in touch with us a couple of ways by e-mail, worldwidecnbc.com or follow the show @cnbcwex or contact us directly, @rosswestgate or contact me @beccymeehan. >> are you looking at my joke? maybe that's what you're doing. the pharmaceutical company

to cut up to 2,000 jobs in france. the company is facing tough competition from generic drugs. they have declined to comment but a spokesperson said a meeting would take place today. and the irish carrier is being pursued by ryan air. patrick, right now, you've talked about not touching commodities we see where the debt markets are trading at the moment. equities, what's the breakdown? >> we would recommend to be very careful on u.s. equities.

the economic slowdown is far worth. >> that's interesting. a lot of people, some in the states are saying they want to go back home. home is where they want to invest, home, u.s. equities. >> it's maybe what they did previously but what we've had in the last few weeks has been disappointing figures in the u.s. u.s. stocks are quite expensive. earnings -- we see the results, will be disappointing. and europe is relatively cheap. on one side there is positive news coming from the european crisis. on the other side, the economic slowdown in europe but it's already priced in. i would recommend -- >> you're saying we've priced in a lot of bad political economic news in europe but we haven't priced in the united states. and balance of risks right now

is worse in the united states? >> we had in europe a worst-case scenario priced in. what i've seen from last week is a nice move. i think that leaves less worries about this. earnings will be trimmed back in europe. as european valuation are relatively low. it's a big calculation. but if you have to be in equities, be in european equities. >> investment grades and high yields across the world as far as i can tell, run us through your rationale here. >> even if the economic crisis is coming, the state of european companies or international companies are very good. the balance sheets remain quite healthy.

the recent default remains. we find good value in high yields. we are positive on high yield with equity is very low. >> would you distinguish between any of the regions around the world when you look at that rationale? it seems to be pretty overarching. >> the point is we are, overall we are seeing the economic slowdown they are facing shock them. it will be suddenly very, very painful. we have to keep in mind, there's a bubble that's been boosted by negative interest rates over the last ten years. the bubble will burst before getting any better. >> patrick, thank you very much for that. let's move on and just tell you what we can expect from the agenda in asia tomorrow. imf managing director christine lagarde is speaking in tokyo today. she'll hold a press conference and seminar with japan's finance

minister, 6:00 cet. look for galaxy smartphone sales to boost profits. >> and also still to come, the bank of england europe and central bank are getting ready to reveal their latest moves. will they deliver on sending rates to record lows? more analysis right after this. ddd#1

welcome to "worldwide exchange," i'm beccy meehan. >> and i'm ross westgate. europe's main central banks get ready to support their waning economies with the ecb expecting to plunge its rate to a record low. banks also, moody's down grade barclays. and u.s. traders return from their holiday with jobs data in focus. adp jobless claims and the ifm services index bring nervous

anticipation ahead of friday's nonfarm payrolls. you're watching "worldwide exchange," bringing you business news from around the globe. if you're just tuning in, thanks for joining us here on the show. a quick look at how the markets are shaping up today, coming back from the holiday yesterday across in the states. hope you had a great time if you were off celebrating yesterday. the markets open on a flalt footing. lots of anticipation of what's going on around the world in central bank action here. we do have jobs data today and tomorrow stateside as well. ahead of that, it looks very much like markets opening very flat today. that's the expectation at this stage at least. let's look elsewhere. the ftse, cnbc global 300, telling a story of wait and see, really. we have seen a bit of fluctuation, overall up marginally. on the european markets as well,

again, very flat for many markets as we look ahead to what we can expect later. the cac is up by 3 points, 0.5% higher for the dax, the ftse up by 1.3%. very muted action as we wait for the bank of england and the ecb rate decision which is coming out later on. >> we'll look ahead to see how we're trading on the bond markets. a few numbers to be aware of, gkn completing the purchase of volvo. it's been a long, drawn out process. stock up 12%. volkswagen and porsche, talk about long processes, they have found a way to get this merger deal done. it was porsche trying to buy volkswagen, then it was volkswagen trying to buy porsche. they found a loophole. finmeccanica, up 6%.

se se seemeins may be interested in one of their items. let's just remind you, these results came out over 20 minutes or so ago. the yield on the ten-year was high. what they're paying on the ten-year this morning was 6.43%. in a previous action, 6.044%. the bid to cover was okay, 3.2. we also saw actually on the three-year here, the yield with 5.13%. they did rise on the six-year, the four-year as well. they went from 5.35 to 5.53. they did raise the 3 billion in total across those three yesh they were looking to raise.

a sharp jump higher in the ten-year. if you want to gauge the success otherwise of the eu summit you have to do it by whether you get sustainably lower yields in spain. at the moment, the answer would be no, we're not. euro dollar steady ahead of the ecb, 1.2506. will they cut the deposit rate? if they don't there may be no impact on the euro dollar. probably also in the price for the pound, 1.5573 against the dollar. the euro can't break below 80 against the pound. commodity mark lets we have a strike talks have been stalled. that's pushing brent back over the $100 a barrel mark which we hit yesterday. nymex, pretty flat at 87.60. that's where we stand right now in markets in europe. the asian trading day, well, for that news, tracey jones us once

again in singapore. tracey? >> good morning again, ross. asian markets had a mixed trading day ahead of the key central bank policy decisions out of europe. the greater china markets went in a couple different directions. there's fresh speculation that the next trip for banks could come as early as next week. the shanghai composite fell more than a percent, it's lower commodity prices, its shares in energy and material sectors. the hang seng reversed earlier losses to finish up about 0.5%. and shares of a sportswearmaker rallied. the index lost about 0.3% on the yen's renewed strength. and another market in the wait and see mode that is australia's asx 200. little change, down 0.1% amid very thin trading volume. lastly on the sensex, showing

de-siene strength up about 0. 5% at the moment. back to you, ross. >> tracey, thank you. a bit of breaking news for you, in the form of a statement coming out on the asset protection scheme. cast your minds back a couple years and you may recall the asset protection scheme is this insurance policy set up by the government here on the uk on bank's riskiest assets. this came in the post-crisis bailout. it's saying it's set to make 5 billion pounds without having to pay out on those schemes. it decided not to enter the scheme, lloyd's. rbs, also saying it plans to exit by the end of 2012. the asset protection agency which runs that scheme set to make 5 billion pounds. ross? >> auction out of france, slightly high yield for the key ten-year. interesting, the yield on the

seven-year has dropped from previous auction. france is talking about new measures for its budget as well. they are also raising taxes on foreign owned property in case you're interested. the ecb expects to go to a record low of 7.5%. sylvia is in her regular monthly post outside the ecb in frankfurt. it's regular when they're not moving around, sylvia. here's the deal, most people suggesting that this 25 basis point cut is a done deal. does it get extended to the deposit rate and what difference if it's not? >> reporter: yes. the 25 basis points, it's as close to a done deal as you can have with the ecb and certainly with draghi. he did say to discuss the possibility of rate cuts. he didn't quite say it in so many words but it sounded like we weren't quite ready for it yet. we all left with a strong

feeling, okay, next time around it's going to happen, especially in the light of the data, the economic data that's come out of the eurozone, also out of germany. the data softening pretty much across the board and draghi said last time around, the downside ritzings were somewhat increasing. yes, 25 is ba is point -- basi pretty much a done deal. i'm being careful. the market hopes some market participants saying 25 basis points could be disappointing, they should cut by 50 basis points. i said a while ago, get real. it's not going to happen. if they cut by 50 basis points that means their finger is on the panic button. that's not going to happen. there's a 50/50 chance they do. >> sylvia, thanks very much. this reminds you that rate decision is at 1:45 cet, 12:45

london time. we'll have it for you on cnbc world. if you're in the united states, you can watch us instead of the other regular programming. >> so much an offer on cnbc. >> there is. choice. >> endless choice. we have the bank of england today, no change expected. there's an overwhelming expectation for a fresh injection of qe. an additional 50 billion pounds stimulus is predicted taking total guilt purchases to 375 billion pounds. joining us now is lance roberts, ceo and chief economist street talk advisers. we're running through some of the expectations for the bank of england and the ecb. how exciting about the prospect of more stimulus, more support from both institutions on this side of the world. is it going to make any difference to your view of how the yaureurozone and europe in

general can weather the current situation? >> certainly right now anything will help at this point. the problem coming out of the last summit meeting there's been a lot of, kind of speculation that this is almost a done deal. if you look at what came out at last meeting, it was great on detail but long on action. and most things have been put off until next year. with the eurozone already pretty much in recession or getting there rapidly when you talk about germany, some support on terms of quantitative easing or lower interest rates will certainly help try to smooth out that problem momentarily. >> so what does that mean for an investment stance then? >> well, i think here, we talked about this last time i saw you here, ross, we had this june rally and stocks all across the board. the real problems come up here in july and august. august is a very weak month historically. i still think there's some

possibility, upside through the month of july. august, september will get very difficult because i think by that time, we're really going to see the impact of the weakness and the eurozone as well as start to see some pressure coming out of spain as well as italy in erm its of yields. i thought it was interesting. yields rising on the spanish bond yield, with this announcement out of the eu, those should be dramatically lower here. >> lance, there are still plenty of companies across europe if we keep the conversation to this part of the world for now, plenty of companies that are doing a good job, making stuff, selling it at a profit. and yet there's so much caution over the macro picture. do you think there's a risk that investors continue to overlook the kind of positive microstories across this region? >> well, look, when you're investing, this is the thing. we talk about the macro picture all the time because it is such a main driver. in today's world as opposed to where it was say 30 years ago, we know we're so globally

interlinked now between the united states and europe and china and each move just affects each country so quickly that we've never seen before. but yes, in any market as investors, it is about the microstories ultimately, because no matter how bad an economy is or how good one is, there's always stocks that will do better or worse depending on what's going on. companies are specific entities. yes, as always, we're talking about the macro market, it's important to understand most stocks in general move or fall with the overall markets. but yes, those microstories are incredibly important to pick out. it's those diamonds in the rough look looking for to make good long-term, solid investments. >> more to come from houston where it's earlier than normal if you're on the east coast. appreciate you being with us. let's remind you, a full day on the u.s. agenda today.

at 7:00 eastern, imf's report. at 7:30, challenger job cuts. 8:30, weekless jobless claims out there, expected to drop by 1,000 to a total of 385,000. and then at 10:00 a.m. eastern, the june ism services index is released. looking for a reading of 53, down around 0.5 point from may. beccy. the shard set to open in london. some suggest the opening of tall buildings are followed by economic downturn. one of you e-mailed in says i believe the tall building and the olympics work hand in hand to predict gloom and doom for the economy. if you want to join in on the conversation, a couple ways to get in touch with us, e-mail,

worldwidecnbc.com or follow the show @cnbcwex or contact us directly, @rosswestgate or get in touch with me directl directly @beccymeehan. head along to twitter and let us know what you think about that. still to come, we hear from the executive chairman of the jamir group in dubai. more when we come back. and there's lots of cool stuff happening with progressive mobile. great! tyler here will show you everything. check out our new mobile app. now you can use your phone to scan your car's vin or take a picture of your license. it's an easy way to start a quote. watch this -- flo, can i see your license?

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these are your headlines. ecb expected to cut its benchmark rates. moody's downgraded barclays outlook after bob diamond gets a grilling from lawmakers in london. adp jobless claims, the imf services, jobless claims, all ahead of nonfarm payrolls.

access middle east gives an in-depth look at the region's global am decisions. yousef is hear to tell us about it. what's going on? >> we're very excited. a lot of work has gone into this new show. as much as the arab spring may have changed some of the dynamics of this region it's still a part of the world that has a lot to offer to investors. it is of course home to the world's most powerful sovereign wealth fund and it has a demographic that's attractive for investors across different industries. you mentioned we'd be speaking to the movers and shakers in this part of the world, get insights and see how they are approaching this part of the world but at the same time see what they're doing when it comes to expanding beyond this part of the world. their global am bigs and plans for expansion. that becomes quite clear in tonight's episode where we sit

down with the ceo of the jumeirah group, the premiere luxury hotel brand. we're seeing an increase year-on-year in tourist arrivals and expenditures. dubai in the eye of jumeriah is more of a center for a global approach. have a listen to what he had to say. >> the strategy first was dubai. it was the platform. dubai was the foundation of everything we do. the hotels here in dubai are owned by the jumeriah group as part of dubai holding. these are our prime assets of the group. we decided having achieved what we needed to achieve in terms of how we perceive worldwide as a hotel group, dubai is a fantastic international destination. people are coming in all the time. a big awareness begins to grow.

we came up with the concept that we would like to grow as a global luxury hotel brand. >> that's gerald lawless. remember to tune in, we are going to talk about so much more, including dubai's economic success and struggles they've had as well with some of the debt crisis and the debt restructuring we've seen. we'll be looking at china and the group's plans for betting on china's growth. most of their properties are being developed there. we'll see you there, beccy. i hope you get a chance to tune in. >> i'll have to record it, yousef. i'm in bed at that time of day. i'll record it. >> i have a hard time believing that. >> i'm so boring. i go to bed so early. i will record it and watch over the weekend. thanks so much. europe's largest building will be unveiled in london tonight. stay tuned as we speak to an expert after the break. ♪

♪ ♪ ♪ [ male announcer ] what's the point of an epa estimated 42 miles per gallon if the miles aren't interesting? the lexus ct hybrid. this is the pursuit of perfection. if you've just joined us state side, good morning to you. hope you had a good fourth. the shard will be unveiled in london today.

some have linked the unmerging of tall buildings to economic hardship. britain is currently in a double dip reception -- reception? recession. i don't like to say the word recession. there may be a correlation between recessions and skyscrapers but what is the impact of the eurozone's stability on the real estate market? peter is chief economist for amir at cbi. because of the long lead in time is it quite common for iconic buildings to be completed in the middle of a downturn? >> the long lead times that you have with large buildings means getting the timing right in relation to the market is extraordinarily market. i wouldn't say it was an automatic consequence that buildings get launched into difficult market conditions, it can happen. as it happens at the moment, we don't have a significant supply of readily available new grade

"a" space in central london, so in that respect you wouldn't say this development was arriving at an inauspicious time. >> what is right now the impact of the eurozone debt crisis on the commercial real estate market? >> on the economic side, clearly the general slowdown and recession in some parts of the eurozone is impacting on occupational markets and they are tenning to slow in line with economic trends. in the commercial property investment market, i think the key impact that we're seeing is an intensification of the polarization of the market that's now being trained for the past two years. by that i mean the crisis is pushing investors towards greater caution, which is either by avoiding specific eurozone markets, typically those with the biggest sovereign debt risk problems and/or concentrating in general on lower risk assets. we're seeing a concentration of

investment activity into prime property with securing markets in northern europe. that effectively is the dominant trend in the market at the moment. >> here in the uk, it seems to be very much, london and the southeast, is markedly different from the rest of the uk. you can see that traveling around the uk when i go to my hometown, half the shops are boarded up. here in london it's very different. do we see some of the trends elsewhere in europe or is this specific to where the uk economy is working out during this recession? >> the polarization effect is evident in the uk. the london market is demonstrating very different dynamics from the rest of the uk. reflecting in part its position as a global financial center, also presently its attractions as a safe haven. and the fact that it's outside the euro is an additional attraction. london is special in our london

context. london accounted for over 20% of all the commercial real estate investment purchases in the whole of the european markets. the other thing we're seeing in london that we don't see in other european markets is it's still a magnet for global. we have global investors from brazil to china focusing on london. >> what's your overview of real estate progress in the states as an investment class right now? >> well, i'm so glad you asked me that question. as i was listening to your guest, i wanted to ask him as well, in the united states what we're seeing right now is, we're seeing a small little bounce in residential real estate. and, again, we're seeing it on the low end, the investment side of the market, people scooping up homes to turn them into rentals. on commercial real estate side here in the u.s., we're seeing

resergence of weakness there. also things like the architectural buildings index has been, kind of seen from seens of weakness which are early indicators that we may be coming into a rough patch. i was wondering if your guests have seen the same thing in europe? >> as far as better quality assets, that is tending to hold steady. lesser quality assets, secondary property is general is on the slide at the moment across most european markets. >> peter, good to see you. thanks for that. more to come out of houston as well. also still to come on today's program, we'll break the results of ireland's first bond auction since the country requested a bailout. back in a few moments.

welcome to "worldwide exchange." >> if you've just joined us, here's a reminder of the headlines from around the world with beccy meehan and ross westgate. the ecb expected to cut its benchmark rate to a record low while the bme injecting another

50,000 pounds. lenders are put on trail one day after bob diamond gets questioned about his nation of rate rigging. and jobs data in focus today, adp jobless claims, the ifm services index. nervous anticipation ahead of friday's nonfarm payroll report. if you're just tuning in, thank have you very much for watching the show today. appreciate your company. ahead of the open in the states, if you were off yesterday enjoying the celebrations, good to have you back at work today. we are expecting markets to open fairly flat. there are events markets are looking ahead to, which we're in a wait and see mode. the european central bank and the bank of england rate decisions out later and we have important jobs data particularly in the next couple of days as well.

all ahead of the certain nonfarm payroll figures. we are expecting the u.s. markets to open on a pretty flat fooding today and the european markets as well. the ftse is pushing up by 15 or 16 points. the dax up by 0.6%. the cac almost entirely flat while the ibex and spanish market down by 0.6%. how do you make money in these markets then? here's what some of the experts have been telling us this morning. >> then it's in highly volatile energy prices. from an investment point of view, gold, oil, copper, all these things look interesting, because they declined a lot. >> in the short term the only one we really like is gold. we would do buys of gold at the

moment. copper, energy after the recent short covering rallies since friday, this for us is an area you'd be looking to get shorts back on. >> very strong balance sheet, i'm sure you can find equities in consumer, retail, luxury which would even expand further in asia. >> those are the trades of the day. in corporate news, moody's changed barclays rating from negative to stable. this is just one day after the former barclays boss bob diamond apologized to british lawmakers during more than three hours of

testimony. if you missed what happened, here's a reminder. >> when i read the e-mails from those traders, i got physically ill. it's reprehensible behavior. >> appearing calm under pressure at a uk parliamentary hearing, former barclays ceo bob diamond condemned the behavior of a group of traders who manipulated libor lending rates. pushed by mps as to whether officials at the bank of england or within the government knew what barclays was doing, as suggested ahead of td ofearing by this memo released by the bank, mr. diamond seemingly backed down. >> i think what's interesting is my reaction to that note was appreciation of paul tucker in doing his job. what he was trying to tell me is, bob, there are ministers in whitehall who are hearing that barclays is always high. that could lead to the

impression that you are not funding yourself. >> in other words, diamond feared that what paul tucker was telling him was that barclays could be nationalized. so what did happen? well, diamond pound the finger at jerry delmesea, the bank's coo who also resigned monday. diamond insisted he had no knowledge of that misunderstanding. >> you're in charge. you're paid bonuses, 20 odd million a year in pay and bonuses. you're the man in charge. the buck stops with you. you're telling everyone that you've got to be judged on how we behave when no one is watching, complete transappearancecy and you can't work -- if you can't work with trust and integrity, you can't be on your team? you're saying all of that, you're getting paid these huge bonuses but you haven't seen any of it.

you must have been grossly incompetent in your job during this period of time if you weren't complicit in this. >> is there a question? >> okay, that was the testimony yesterday. kelly is outside the house of parliament. we'll get there in just a second. ireland has re-opened the market. the bid to cover ratio, 2.8. the yield, perhaps lower than we thought. it's more of the significance that ireland are now back raising money publicly. the irish ten-year is yielding less with its bailout than the spanish ten-year as they plan a bank bailout. let's get back out to the libor fixing scandal. kelly, did you have some kind of irony in mind on july fourth that you were going to spend independence day standing outside the british parliament? >> i more appreciated the irony

of seeing bob diamond getting grilled in front of the treasury select committee and there were plenty of fireworks on his fourth of july holiday. i promise to leave those puns behind for yesterday. i want to give people who are tune into this story a reminder of what we're talking about. we're talking about benchmark interest rates, whether we're talking on what's going on behind any in parliament, by the central bank to set rates, it's all the same things. some of the borrowing costs are set by central banks. some of these benchmark borrowing rates are not. libor is one of them that was not. it was set by a panel 6 banks that was submitted by what they said they could borrow money at from each other. banks were falsely submitting what they were borrowing at especially during the financial crisis. this comes back to barclays. the first of the banks to come involved and comes forward gets

slapped with a fine for doing so. they said they felt they had the okay from regulators to defend themselves. in any case, that has all led us now, today, down here in front of parliament where just now behind me prayers are being as the session opens. the next line of business will be a debate on whether to move beyond and open a parliament inquiry, ross. that's what the conservatives want to do. that's probably going to be the outcome of the vote at 5:00 p.m. they have the ruling coalition, the liberal democrats, who by all indications will vote with them. the labor party wants to see a harsher inquiry, a judicial one, explore bank culture, potentially bring to light some of their own involvement but more importantly focus on bank culture. that's probably not going to happen, they don't have the votes. bottom line, we move forward.

we know we're going to hear from paul tucker at the bank of england. this all comes back to these global benchmark borrowing rates that affect everyone, from households to companies, are paying for credit. >> i hope you're having your cups of tea and cue couple kerr sandwiches. >> yes. >> thanks for that, kelly. house committee report finds the former countrywide financial bought influence by giving discount loans to members of congress, staffers, government officials and executives at fannie mae. countrywide specialized in subprime loans at the heart of the foreclosure crisis. the report says some of the discounts were personally ordered by the countrywide ceo, mozilo. the report named six current and former members of congress who received loans.

lance roberts is ceo of street talk economists. he jones us now. can the u.s. market finally draw a line under these issues? >> not yet. you know, the problem is, we're still dealing with a lot of these issues, of course, it's very interesting when you look at really kind of what's the evolution of this whole mortgage mess that started back in 2007, is that we've had everything from the u.s. government involved in terms of rewriting mortgages and helping support underwriters of mortgages, you know, recently we just settled with the 50 attorneys general across the state, forgive outright fraud and theft in a lot of cases. this is still an ongoing process. there are a lot of things that have not been discovered, not been brought to light yet. this is still something that we'll be evolving through for the next five to ten years, probably as we try to work through this mortgage bubble that we've had here in the

united states. >> lance, thank you very much for that. we have to leave at this point. thank you very much for being part of the show today. lance roberts, ceo and chief economist at streettalk advisers. >> thank you. let's draw your attention to the oil markets right now. we have been tracking a story about norwegian strikes, the threat of strikes. there have been various talks between the norwegian unions and the oil industry over pensions. it's conflict over pensions which is plaguing the industry in this part of the world which is the eighth largest oil exports. this is an issue that's been pushing the oil price higher. we can see a spike with brent up over 2%, $102 in fact. statoil is preparing to hold production on the norwegian continental shelf related to this. this there will be a shutdown or lockout from july 9th, monday, july 9th, at 2400 hours for

between one and four days to shut down that production. and the shortfall in production will be around 1.2 million barrels apparently. so statoil preparing to close down oil production on the norwegian continental shelf as a result of that strike. >> just pull up nymex as well, to see whether it's pulling nymex. it's not directly affecting numbers. is it pulling nymex higher as well? yes, it is. okay. we'll take a short break. still to come on the show, we'll be out in frankfurt ahead of the rate decision. more when we come back.

europe's tallest skyscraper, the shard, sets open in london. some suggest the completion of tour buildings are usually followed by economic downturns. earlier we asked if you think the shard predicts doom for the uk economy. one viewer e-mail said these so-called indicators are far-fetched and useless. many people confuse correlation with causation. i will submit these indicators are pretty fun. if you want to join in the conversation here on "worldwide exchange," do get in touch,

contact us by e-mail, worldwide@cnb krt. come or twitter, follow the show at cnbcwex or contact ross and i directly. ross is or you'll find me me @beccymeehan. iels on ten-year did rise today. and yields on the cash market 6.55%. symbolically, rirl has re-entered the market a short while ago they raised only 500 million euro's worth of t-bills. look at this, irish ten yield,

6.24% compared to the spanish of 6.55%. the ecb will be acting on rates today. sylvia is outside the ecb headquarters and jones us for more. bill bond yields tell us if we're getting closer to a resolution. spanish yields suggests not. how much more work does the ecb have to do. >> reporter: i don't think the ecb can do an awful lot aboutiels. they have to play that field across a few connors. they keep short-term rates as low as possible, hence we are expecting another rate cut today, maybe even for the deposit rates. they can keep the fixed rate with pull allotment. keep pumping money into the short end of market and hope to

instill enough confidence that the banks start lending to each other. that, of course, helps the yields into deeper space. unlike the u.s. where this turnaround from the lehman crisis was much easier, where companies and industry refinances itself largely through the capital market, in europe, in most countries in europe, it's completely different. the money throws are different. the industry, the big companies if they don't go to the market directly via bonds or shares themselves, they refinance themselves via the banking industry. if it climbs up, then of course we get into credit crunch territory. the ecb could, of course, start buying bonds as if there were no tomorrow, iterally. we know that's not on the agenda. we always said we're not aiming at yields. we're only aiming to smooth the market when we have disorderly conditions. i wouldn't hold my breath for a bond buying program. >> thanks for that. a team led by roger have been announced as the winner for

the economics prize. it's abouten awarded for providing the most credible solution to the question of how an orderly exit from the eurozone could be managed. the cash price 250,000 pounds. i'm hoping that with 250,000 pounds coming their way, the fizz will be upgraded from ordinary bubbles to another champagne. >> are you going? >> i've been invited. >> i have not been invited. >> okay. you need to speak to them more. >> maybe i do. maybe i'm not just cool enough, quite possibly. investors gear up for friday's nonfarm payroll data. a preview ahead. that's coming up next.

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let's give you a look at what's on today's agenda. 8:15 we'll get the june adp employment reports, 8:30 weekly jobless claims are out. then time for a quick cup of tea and 10:00 a.m., the ism services index is released. >> it's more like coffee. >> tea if you're english, i suppose. u.s. retailers report june same-store sales today. flooding in the southeast from tropical storm debby and the power outage on the east coast may have dampened results. thanks for coming along. so what are your expectations of what we're going to learn about the status of the jobs picture in the states as a result of this data?

>> we think we're in a transition period. the job growth coming off the deep recession of '09 was that americans didn't buy houses and didn't buy cars and had the money left over to buy clothing and big macs and lattes and a trip to disneyland. we're making the transition to employing people building cars and houses. there's a bit of a gap in between those two layers. they're coinciding with a reduction in government employee and federal and state and municipal. we're in this kind of difficult transition period where the job numbers are a little weak. but we think it's just a transition to much stronger job numbers over the next two or three years as we build a lot more houses and cars. >> over the next two or three years, when did z that kick in, bill? is the focus now on the u.s. summit? i dealt with the uplying problems. i may have well dealt with it in

terms of market sentiment. is global investment sentiment on the u.s. economy rather than europe? >> think of the trouble the president of the united states got into from saying that the private sector is doing a lot better than the public sector. he was telling the truth. the private sector is doing dramatically better. let me just give you a few an deck dotal examples. homes are selling very quickly in seattle, phoenix, scranton, pennsylvania and other places around the country. so homes are selling. inventories are way down. home builders are building. it takes 6 to 12 months from ramp up. remember, housing starts worth 320,000 were last year in a 315 million person population. that is such a deep depression in housing. it's going to take 6 to 12 months to ramp that up.

if you back out the loss of jobs at the municipal level we're doing fine. in fact, the united states is paradise compared to the rest of the world. people should not upestimate the recovery that will make. i would remind everyone in may warren buffett said when housing comes back, you'll be shocked how much unemployment drops. >> that's all we have time for. thanks for joining us. bill smeed, ceo, smeed capital management. fourth of july tradition, the annual nathan's famous hot dog eating contest, joey chestnut, is that his real name? he took the title again for six years. he. >> thanks very much for watching the show. "squawk box" is coming up

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good morning. back to work. the u.s. markets set to re-open after the july fourth holiday. the focus remains across the pond as the ecb considers a rate cut. former barclays ceo bob diamond apologizes to british lawmakers but puts the blame on traders and regulators. and the search for the elusive god particle may be over, the subatomic world may never be the same. steven hawking owes this other dude $100. it's thursday, july 5th. "squawk box" begins right now.