hello and welcome to today's edition of "worldwide exchange." i'm ross westgate. >> and i'm kelly evans. these are your headlines from around the world. the u.s. jobs report is front and center while they're expected to pick up the pace but it may still not be enough to make a dent in overall employment. china's second rate cut in a month fails to lift asian markets, sparking fears the slowdown may be worse than feared. and second-quarter profit is set to rise thanks to smartphones, but concerns on europe are still weighing on its outlook. >> and europe is not the only problem. imf chief christine lagarde warns some of the world's major developing and emerging markets

are slowing. okay, so, we're off to the last trading day of the week. we finished with a bang, and what a week it's already been. >> i'm going to start calling this show "anchor exchange." >> yeah. >> it's finally to be back here, the two of us hanging out, just like old times. >> it is. i like it, i like it. and do you like the uncoordinated/coordinated action yesterday that didn't get anybody going? >> that's what to me was quite amazing, that you had such action from so many global central banks and markets still went, eh, we want more. >> markets are high this morning. >> spain in particular. >> planning to get through, as well. >> and coming up, we are live from seoul with details on samsung's record quarterly performance. and one of the stocks today that is in focus is listed as a buy. find out what other names he's

bullish on. tokyo is where christine lagarde is meeting with the japanese government as finance minister azumi warns the state will run out of money unless lawmakers act fast. and of course, it is all about jobs, jobs, jobs. going to the u.s. open, we'll speak to the ceo of a recruiting giant and find out what sectors are seeing some growth. that starts from 11 cet. first, chinese markets tried desperately to stay above waters as investors questioned the effectiveness of the cut. the pboc cut 31 basis points to 6% and cut deposit rates. if it doesn't affect mortgage rates as part of property curbs. real estate developers and fixed investors could benefit from discount. that describes why property players saw pretty strong gains overnight but financials skidded on fears it would hurt banks'

net interest rate margin. heez are the big four banks today, losses, but not major losses, and icbc is the biggest, down about 1%. joining us, shan jang, china economist at barclays. first of all, second rate cut in a month from china. do we take that as a positive or should we be more concerned that they're more concerned about the weakness? >> well, i think we have already been reporting, observing the weakness over the past three months, especially after the may data release, and i take it actually as a positive sign. it shows that the government is committed to stabilize growth. >> that's not sort of the market reaction we got. >> no, certainly not. it's just not enough for -- it's

just not what the market wants. the market is looking for more in terms of the rrr reduction and more immediate fiscal stimulus. >> so, are we going to get that, do you think? >> yes, absolutely. see, one of the issues with the rate cut is that a lot of this money will go to state-owned entities. it's not going to go to the midsized exporters, who are the guys that really push the chinese economy forward, and those loans to soes are really fairly inefficient loans. so the chinese look at the supply of money out there going out in loans and their shunted soes, which is a safe loan, but it's the midsized exporters who are really going to impact the chinese economy. >> jian, are we going to get the moves tony's suggesting, because you think we're going to get more rate cuts as well? >> well, first of all, i think i agree with the guest that the effective of the monetary policy

at this moment i think is questionable, especially regarding whether it's able to boost demand sufficiently, given the general weak sentiment. obviously, we know that it helps to reducing financial costs and also helps the more leveraged sectors. on the other hand, we do see continued policy easing, particularly with the rrr cuts, and we expect another one this month because the general liquidity conditions will remain tight in the month of july. >> tony, just wanted to ask, too, about reports that china basically is, its demand for commodities, for equipment even, reflects more its collateral needs to keep financing as opposed to actual strength in demand. >> it could. i think, you know, one of the positives you see in china right now is that the labor market is tight, so a lot of the talk about commodities piling up and

the slack demand for commodities i think is offset by the labor demand. >> hmm, the labor of course being the key part of this, as costs continue to rise there. china, of course, has to try and move towards domestic consumption, helped by wage gains, while at the same time not hurting its competitiveness. is it successfully navigating this transition? >> i think, you know, china is still competitive and it will remain a cost-competitive place for probably the next five to ten years. we're seeing productivity in china has almost doubled over the last five years. wage gains have started to fall in line with that, but what you've seen on the wage gains side is even some of the municipalities in china have started to ramp down their wage gain expectations for the coming year. so, while the labor market remains tight, wage inflation will come down a little bit because of a lot of the kind of competition and the slowing economic demands domestically. >> jian, just a final one to

you. what growth rate do you think the government are targeting and are they going to hit it? >> well, i think the two interest rate cuts in the months confirms that the government continues to target close to 8% growth, and we continue to believe that growth has likely already bottomed in q-2 and will pick up gradually in the coming quarters from q-3, but that being said, we also do not expect a sharp rebound in growth, because clearly, most of the policymakers we speak to think that china needs to tolerate a bit lower growth for rebalancing and transformation of the growth model. i think that is still at the back of the mind of most of the policymakers in china. >> all right, thanks for that. have a good weekend. jian chang from barclays, tony sticks around. despite china's growth concerns, washington says it will file a complaint with the wto, accusing china of imposing import duties on more than $3

billion worth of u.s. automobile exports. this affects 80% of new american cars shipped to china, including in ohio, where u.s. president barack obama was on the campaign trail. >> americans aren't afraid to compete. we believe in competition. i believe in trade. and i know this, americans and american workers build better products than anybody else. so, as long as we're competing on a fair playing field instead of an unfair playing field, we'll do just fine, but we're going to make sure that competition is fair. that's what i believe. that's part of our vision for america. >> wto, he's on the campaign trail in a manufacturing state. >> are you suggesting this is more politics, ross, than -- >> i, i -- >> than policy. >> i'm just saying maybe it's presidential. >> the president used the issue to attack his rival, mitt romney, who's opposed the government's multibillion dollar auto industry bailout. let's get more from tony on this. you heard ross, is this politics

or are there real teeth to this policy? >> i think agree with ross, it's a lot of politics. the cars that are imported to china from the u.s. are the higher-value cars. the guys who can afford those cars can afford a little bit of extra import duty, if this does get imposed. but i think it's making a lot of something that's relatively small. >> yeah, okay, tony. where does this leave relations, ongoing relations, as we go into, you know, this next presidential election? >> ongoing relations with china. well, if you look, a lot of major chinese manufacturers are actually joint ventures with american auto manufacturers. so you know, the american manufacturers see both sides of it. guys like gm and other guys who are in china. so where does this leave relations? i think it kind of leaves -- if you look at the xu jinping regime that's coming in and you look at the domestic issues in china, i really think there are

more domestic issues in china than there are international issues. so, i think there will continue to be pretty good relations in china. it all depends on what happens in the south china sea. if things in the south china sea heat up, it will make things very, very complicated for u.s. relations, and you really never know what's going to happen there over the next few months. things have been heating up between the philippines, and every so often, there are some vietnamese issues in the south china sea. so, i think that's the one international issue that could heat up. i don't think it's necessarily a trade war. i think it's more political. >> tony, stay there. don't go anywhere. we want to remind people, of course, there's more than just stories out of asia going on this morning. it's jobs friday. it's payrolls friday in the u.s. at 8:30 a.m. eastern time, about 1:30 p.m. here in london, we'll get the may -- no, i'm sorry, the june jobs report. who can keep months straight anymore? forecast for 100,000 jobs added last month. that's actually up a little bit, given some of the more positive data we've seen in the last couple of days, and certainly it would be an increase from the disappointing gain of just

69,000 jobs we saw in may. so far, though, this pattern of a summer slowdown is playing out, unfortunately, as we've seen in the past. so, the real question becomes whether this june report pivots to show more growth, more acceleration in the u.s. economy this year, or whether we succumb to yet another period of slowing growth that could put more pressure on financial markets. the unemployment rate, of course, would even with 100,000 jobs added, unlikely to drop any further, 8.2% there. tony, how important is the u.s. jobs report today? >> it's very important. you're going into the high campaign season, so this jobs report sets the tone for the next couple months of campaigning, and it gets even more shrill and more important as the campaign progresses. but i think this is really the first one that people are seeing in the high campaign season that make a difference. so our outlook is for about 120,000 jobs. we're seeing a sizable increase this month. there are about 135,000 private sector jobs that we see being

created and about 15,000 public sector jobs that are being eliminated. so i think it's definitely a step in the right direction, but you know, you're still not at the 200,000, 250,000 jobs that you need to be seeing on a regular basis to be making an improvement in the unemployment rate in the u.s. >> that's for sure, tony. appreciate your thoughts on that. stick around. we'll be back for more later in the hour. >> great. thank you. thanks. >> now let's get up to speed with where we are. just an hour into trade for the european stock markets. we are weighted to the down side around about 6-4 advances out-paced by decliners. the ftse 100 yesterday had the best of it, up just eight points. bank of england extending its easing program. just down five points ahead of the employment report. the xetra dax is down 7 points. the cac 40 down over 3 points. and the ibex is down at the

moment. we'll get to spanish in a moment, but u wanted to show you bund yields. ten-year are back down 1.37%. ten-year treasuries ahead of the employment report yielding at 1.6 and 1.58. what we're seeing is spanish yields today go up above the levels that they were before the eu summit. so ten-year spanish yields at the moment 6.83%. we did get up to 6.9%. spain is coming out this morning saying there is now a deadline for local government firms to balance their books by 2013. no future measures as well. they're going to be talking about that as well this morning. but here's the key as well, irish debt still trading significantly below spain at 6.26%. italian debt has been over 6%. euro/dollar down to a five-week low in the course of the last 24

hours, 1.2364. just above that at 1.2385. we hit that sort of two-year low june 1st. the dollar/yen is insteading. aussie/dollar is falling. at the moment back below 1.03 at 1.0271. it's important to point out that the euro has been at record lows against the aussie and other commodity currencies. euro/sterling 0.7975. we haven't been able to break below .80. the question is if we're able to do that that's where we stand now as far as markets are concerned in europe. let's recap what's happened in the asian trading day, last trading day of the week. tracy is in singapore. hi, tracy. >> hi there, ross. well, i'll tell you, despite easing measures from central banks around the world, asian markets mostly traded to the down side. the shanghai composite, though, is the big out-performer, adding more than 1% in the trading session, but major banking

shares dragged the hong kong market lower. the hang seng index just tucked below the break-even fight. and the nikkei inched lower as political uncertainty over a bond bill dampened the mood and analysts say easing actions from overseas central banks now puts new pressure on the boj to follow suit. the kospi lost about 17%. samsung electronics shares slipped 2% after record q-2 profit but saw longer-term worries over europe. the australian market ended slightly lower ahead of the u.s. jobs number release for june. last lastly, india's sensex showing some weakness, tucked just below break-even as well. back to you, ross. >> thanks, tracey. i'll pick it up from here. is there any way of escaping ibor? it isn't just london that calculates rates by polling banks to ask them what they're borrowing money at. singapore, tokyo and a dozen

others use similar methodology to set their benchmark rates. now that this methodology is called into question, what is the new measure going to be and how will it affect the trillions of dollars of products priced on these benchmarks globally? to join the conversation, get in touch with us. shoot us an e-mail, worldwide@cn worldwide@cnbc.com or kel kelly_evans. >> instead of asking the banks what they thought to borrow, we'll actually go with the rate that they can borrow. novel idea. now, the euro takes a beating as comments from ecb president mar mario draghi fails to uplift investors. we'll talk about that when we come back.

some of the corporate stories we're following. samsung smartphones are expected to ring in galactic profits. that's what it says, after the south korean giant's second quarter. europe's ills may prove to be the trouble spot. we have more from seoul. what is galactic? how big is galactic? >> galactic is pretty big. i guess that eludes to galaxy power, the smartphone series.

because it was precisely the sales of these galaxy smartphones that was behind the record-high profit forecast. as samsung estimates, q-2 upping profits somewhere between $5 billion and $6 billion, a whopping 71% jump from last year. and the figures for each division, analysts believe about two-thirds of its operating profit to be generated from this mobile division. but if you take a look at shares of samsung electronics, they closed lower by around 2%, part of this from profit-taking moves as well as revenue estimates which came in below the average street forecast. analysts say the softer than expected revenue figures reflect weaker global demand for products like tvs and pcs, especially in europe. looking forward -- well, going forward, q-3 still looks impressive for the mobile unit, but the legal battle with apple may be something to watch. with u.s. restrictions on its

galaxy tab and nexus smartphone in place. ross, back to you. >> okay, thanks for that. the greek government has shelved plans to renegotiate its second bailout after lenders warned they would reject the request in the absence of greater reform. greece's new finance minister told the "financial times" that athens must focus on existing budget targets before seeking changes to its package. the admission comes after troika officials this week pushed the country to stick to the terms of its original bailout. and italy's cabinet approved an extra 4.5 billion euros in spending kug ining cuts for thi allowing the government to scrap a planned 2% increase in sales tax due to come into effect in october. the budget review will also produce annual savings of more than 10 billion euros in 2013 and '14. meanwhile, following yesterday's rate cut, ecb president mario draghi admitted that the slowdown is affecting poor countries.

>> we see a weakening basically of growth in the whole of euro area, including the country or the countries that had not experienced that before. so, that in a sense, now we can genuinely say that this measure is addressed to the whole of the euro area. >> and so the euro noticing heavy losses over the last 24 hours. 1.2390 is where it currently stands. we got down to a low and recent the recent multiyear low we hit on june 11st, but it's been down against some of the currencies like the aussie dollar. jane is a strategist. jane, a bit of sell-off yesterday. obviously, people hadn't priced in the deposit rate cut and they maybe didn't like the outlook. what happens now? >> well, i think really what the ecb did yesterday, particularly cutting the deposit rate, just potentially means a different set of parameters when you look at the euro, because what we've been looking at mostly for the last couple of years has been

political risk. and obviously, that's still out there. but now what we've got is a zero deposit rate, and that really means that the euro is more likely to be used as a funding currency than before, and we're not accustomed to that. we considered generally the u.s. dollar, the yen as funding currencies in times of good risk, but now we're looking at the euro. and what we saw yesterday afternoon was the euro underperforming just about all of the g-10 currencies, the exception being danish, where they made the deposit rate negative and also the swiss franc, which is also trading under a different set of parameters given its 1.20 floor. so, the euro has been undermined. i think people will be looking at that zero deposit rate and thinking, why do i hold the euro? why shouldn't i divest back into the aussie, back into the swedish? and that's what we saw yesterday afternoon and this could be an increasing trend over the next few months, too. >> yeah, jane, there's sort of the good witch, bad witch, get euro weakening and the bad euro

weakening. the bad tends to be the days where it's eristoff, sell euro, sell everything. are we reaching a phase of better euro weakening, where the currency has fundamental reasons for going lower, but that can actually support risk? >> well, see, again, you've got to separate, as you say, the political from the rate view. the rate view now is more negative than it was, but it is quite possible, of course, that the lower rates and the lower deposit rate, too, will help the real economy in time, but that's going to take a little while to get back. and if we listen to the rhetoric from draghi yesterday, he was really quite negative, talking about the downside risk to growth, the downside environment in the more core european countries, too. so there's nothing particularly from the economic side now which is particularly supportive of the euro either. so, yes, maybe there's a bit less political risk than there was two weeks ago, but i think most people fear that that could re-enter into the euro/dollar again over the summer. so right now, there doesn't seem an awful lot to make you want to buy the euro.

>> jane, this is tony nash from singapore. quick question. will this stimulate lending, given what's happening with the euro, given what happened yesterday, and given the pretty dramatic turn with the ecb members, meaning in may nobody wanted to lower the rate and by july it was unanimous? will any of this stimulate lending and is there a demand for any sort of investment in europe? and how would that affect the euro? >> again, it's a very difficult question to answer. no one really knows the answer to that question. it will take hindsight really to work out that. and it's very similar to the uk right now, the bank of england promising that there will be cheap money for its consumers, for small businesses, but many people say, well, there actually isn't an awful lot of demand. of course, it's different in the eurozone and it's different in one country to another. yes, on the margin, cheap credit will help investment, but in a recessionary condition, where

there's an awful lot of austerity, there will be a lot of people that just don't want that credit. so again, it's very difficult to answer that question and know what the effects it will have. >> jane, briefly, how do we trade through the employment number? >> oh, well again, if the employment number is good, probably in this environment it will benefit the dollar because there is less reason to hold the euro, it will also benefit the canadian dollar and i would still be looking at the margin, on the periphery, i should say, of the g-10 and looking at currencies of the canadian dollar. that could do well. >> thanks. have a good weekend. get a drink of water. and coming up, we'll get investment calls and the corporate credit market. grab your coffee for this one. mark kiesel of pimco sees opportunities in the energy sector. find out why right after the break. [singing] hoveround takes me where i wanna go... where will it send me... one call to hoveround and you'll be singing too!

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and here are the headlines from around the globe. the u.s. jobs report front and center. while it's expected to pick up the pace, it may still not be enough to make a major dent in overall unemployment. china's second rate cut in a month fails to lift asian markets, sparking worries the slowdown there may be worse than feared. samsung electronics'

second-quarter profit is set to rocket to new heights, thanks to sales of its galaxy smartphones, although concerns over europe are still weighing on the outlook. and europe is not the only problem. imf chief christine lagarde warns some of the world's major and developing economies are slowing. all right, we didn't need christine lagarde to tell us the world was slowing. we could just look at the central bank reaction. june output ppi in the uk down minus 4%, up 3.2% on the year. that monthly rate the lowest since november 2008. fairly good news for the bank of england, as they said inflation was coming down, so they'll be happy to see that. output, annual ppi, the lowest since october 2009. january output ppi's forecast minus 0.3% and the end rate 2.4%. input producer prices running at minus 2.3% on the yen, the

lowest since september 2009. it was forecast, though, to be a little less, even weaker than that minus 2.6%. uk june crude oil input price down 9% on the month, minus 10.4% on the year. so, the fall in oil prices, kelly, having a major impact on the drop in inflation rates. so that's, you know, it's an ill win. the weak global economies have reduced the oil prices -- >> it takes a position. a recession or significantly weaker growth to get energy costs back in line these days. unfortunately, central banks can't drill their own oil or manufacture it. >> no. and sterling/dollar on the back of that hitting the session high 1.3537. and euro/sterling, we're down 3 1/2-year lows. and we haven't been able to maintain a break below 80, but 79.50, somewhere around there, that would be the three-year low, currently just below it,

0.7976. stocks are pretty cautious ahead of the employment report. slightly weaker yesterday, the cac down about 1%. right now we're down to 1.2% for the ib yex. markets are key. >> look what's happening across the space here. credit default swaps, cbs, that is, credit default -- okay, let's move to bonds. ten-year spanish bond yield 6.84%. this is the one to keep an eye on, moving higher throughout the morning. italy at 5.59%, so still below the 6% level. no surprise, bonds faring better at 1.64 and 1.67 respectively. what i meant to say was cbs for spain, italy and germany are inching higher as well. all right. there is huge growth in the corporate credit market due to a large moveout of sovereign debt, according to our next guest. to get exposure to this, he says you should invest in growth industries that include energy,

gaming and a u.s. housing recovery. he's mark kiesel, global head of corporate bond portfolio management at pimco. mark, good morning. so, what's your favorite call right now? >> well, i think you definitely want to invest where the growth is. i think the move into credit will continue. the fundamentals of companies are relatively stable in contrast to governments which are deteriorating. there's a huge amount of cash on the sidelines. i think it will continue to move in to credit. credit offers investors now 4, 5, 6% returns with roughly a third of the volatility to equities. so i think it's very compelling on a risk-reward basis and we'll likely see continued flows into global credit. >> you mentioned energy, you mentioned u.s. housing recovery. what about financials, especially in light of all of this news about libor? >> well, i think with financials, you want to stick with u.s. and emerging market banks. you want to be selective. the reason why the u.s. banks make sense is it's really an

indirect play on a housing recovery, if you think about what banks own. they basically own mortgages. banks have among the highest net interest margins in the u.s., basically about 2.7% to 4%. they have very high capital positions and very good profitability. to give you a sense, pretax, preprovision, the u.s. banking system makes about $200 billion, so that's a tremendous earnings power to offset write-downs. and what's happening is balance sheets are actually improving. so, what's happening is profits are picking up. in an emerging, it's even better. you have higher capital positions in companies like santander brazil and bankhomer in mexico, the largest bank in mexico. so, there are very select opportunities out there, but i think you need to stick with some emerging market u.s. financials. >> we were just talking about the fall in oil price, and we spent a lot of time talking about share of gas and stuff. is there an investment opportunity there in credit? >> yeah, and you've got to be very careful, because the

commodity prices are coming down. gas is obviously at lows in the u.s. oil's come down because of the global slowdown. what you really want to own right now is pipeline companies, because pipeline companies are less commodity price sensitive. they're more directly related to volumes. what's happening in the united states, obviously, you've seen the drilling. oil production is up about 8% year over year. it's hitting new highs in the u.s. also, gas production's up about 12%. so all that gas and oil is traveling through the system and is going through pipelines. so, pipelines are benefiting. a company called plains all-american has a great mix of assets benefiting from crude oil. so we like those assets. they're hard assets and they're relatively stable. >> mark, this is tony nash in singapore. i'm curious about your housing and construction play. what we've seen in the u.s. is that over the past couple years you've had nice gains in housing, but really that's a base effect of the previous

years, and it's really reverting to a need. are you seeing, are these companies really getting themselves in order or is it a demographic play or where do you see the action? >> well, like you said, i think it's very depressed. housing starts are nowhere near 1.5 million. we're looking at 700,000, so we're basically recovering off a very low base. the good news is that housing prices in the u.s. are down about 30%, 35%, 40% real. so housing's very cheap on an international basis. the u.s. is "on sale." and what's happening is inventories are coming down pretty significantly. the shadow inventory's coming down, new home inventories are at 50-year lows, and existing home inventories are at 7-year lows. so basically, if you go out to buy a house today, there's not as much inventory, and i think prices are now starting to stabilize. when you talk to the homebuilders, you talk to the paper, the lumber companies, they are seeing a pickup. and so, we are going to see

actually a positive contribution to growth in the u.s. economy, probably about 0.4%, and that's good in the context of an overall relatively weak economy. >> mark, finally, any signs in your sector of frothiness, given just how much money is being pulled out of sovereign bonds and maybe heading into the corporate market? >> yeah, that's a very good point. i mean, the fact is that rates are very low right now and credit spreads have come in. so the all-in cost to borrow for corporations is very slow, and so you're seeing a lot of visserance, more companies come to the market, tap into this demand. you're seeing a lot of issuance from emerging market companies. issuance is up 8% to 12%, depending what market you look at. investors need to be very selective in this environment. we see the global economy slowing. we think the fiscal cliff is going to be a big issue. china's slowing and europe is heading into recession. so, now's the time to be defensive and be very selective. >> all right. mark kiesel there, global head of corporate bond portfolio

management at pimco. lots to chew over, mark. we appreciate that. >> thank you. moving on, though, over in japan, the finance minister is warning the government could run out of money by the end of october if a key bond bill isn't passed. yuan azumi is calling on the opposition to cooperate to avoid putting in spending curbs to avoid halting salaries. it could affect the fiscal year ending next march. >> azumi meantime expressed hopes that japan's economy may grow more than 2% this year, telling the nikkei the target is possible if downside risks subside. the finance minister says domestic demand is doing well but the strong yen continues to pose problems. >> azumi's comments coincide with those of japan's prime minister, yoshihiko noda, who told imf chief christine lagarde the japanese currency's one-sided rise does not reflect market fundamentals. >> and lagarde, who is in tokyo, says the imf shares no

disconcern. she says the yen is overvalued as a result of europe's debt crisis but also warned of a worsening outlook on a global scale. >> over the last few months, the outlook has regrettably been more worrisome. many indicators of economic activity, whether you look at investment, at employment, at growth, at manufacturing, have been slowing down in some corners and significantly deteriorated in others. >> more now with guest host tony nash, who's still with us this morning. tony, let's talk about japan. it's unusual and some ways extraordinary to hear a finance minister say they'll run out of money. is the routing of jgbs finally going to happen? >> it's the japanese fiscal cliff, right? i think we know there will be some agreement in the end, and it's going to alarm markets a little bit. but i think what's interesting

about the japanese economy is, you know, we actually see about a 2.4% growth this year in japan, so we're a little bit more bullish than the finance minister. and we see about 1.8% next year. what's happening in japan is japanese companies are truly, truly globalizing their supply chains. they realize they have workforce, they realize they have cost issues. so they're really stretching out their supply chains around the region, thailand. some of them are even looking at myanmar, indonesia, other places. so japanese companies are doing that as a way to counter the appreciating yen and to be able to sell goods at a better value on global markets. >> tony, when we had a guest on a couple months ago, he said japan had about five years before the debt became a worry. do you agree with that time frame? >> i'd have to look more closely at it. i don't necessarily disagree, but i think as you see more

people retiring in the workforce and those workers are buying jgbs, once you have more and more people retiring, they have to start selling. and so, that sounds about right on the time frame where things start to get a bit worrisome. >> all right. we'll leave it there for the time being and have more from imf chief christine lagarde's comments in tokyo in the second hour of the show. stick around for that. let's give you a quick check of what's on the agenda in asia on monday. japan is out with first-quarter current account data at about 2:00 central european time. china, meanwhile, is expected to show june cpi and ppi, that's consumer and producer price index data, roughly at 3:30 central european time. most economists expect to see tamer inflation there in the wake of the latest interest rate cut. and south korea is also out with producer price figures for june. and we'll take a short break, but still to come on today's show, co-head of equity research shares views on transport stocks. are they a play ahead of the london olympics?

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there's just a few weeks left until the london olympics,

and our next guest sees the transport company stagecoach group, which will run buses for the event and infrastructure giant feravial, will have opportunities. scott evans, no request, co-head at espirito santo investment bank. >> you don't know that. >> that's true. somewhere we have a common welsh ancestor or something. >> we do. >> there is a lot of moaning actually over here about the london olympics, but there are investment opportunities that you see. >> yeah. i would say putting transport companies such as stagecoach down as an olympic play would be pushing it to the extreme. i mean, stagecoach really is a best-in-class operator for transport companies in the uk. >> so this isn't about the olympics for you. what's the story, then? >> for stagecoach, it's a number of things. you've got strong growth potential in the u.s. with megabus. you've got, coming up, you've got the rail franchise business for stagecoach as well. you've got a business which has

been relatively recession-proof and has operated much better than peer groups such as national express or first group, and it remains one of the sort of best-in-class operators as a transport company. you could say, yes, there will be a short-term, short, small impact from further transports and passenger growth within the uk during this busy period, but i think overall, it's much more of a longer-term -- >> performance up 12% in three months at a time when the boardboard y boarder broader market has come down. of course, it owns baa. baa at the moment will get a lot of flack with the government. i mean, three-hour queues coming in to various airports for the olympics. i like the fact you're calling a buy whilest this is going to get all this sort of heated debate. why? >> well, i think the issues of queues that you throw are relatively minor issue in the longer-term growth story for its trophy assets, bba.

clearly, three-hour queues and seeing that on television is not really that helpful, but a lot of that is being addressed, being addressed by both the immigration authorities and baa itself. i think we have to put things in a broader context. there are multiple airport operator. they have obviously under pressure to sell and they have sell edinboro for a better price than anybody expected they would get. i think the overall valuation of their portfolio there, of course, has gone up. i think for them, one thing that, some people may say it's risky buying the spanish construction company, given what's happening in spain, but only 7% is managed construction. this is about a play on trophy assets and infrastructure in canada, in the u.s. and the uk with baa. >> i want to go to sell here, which i think is unilever. unilever to me is a very steady, cash-generative consumer products company that is achieving a lot more growth now in emerging markets, in those developing middle class areas of

china and india. doesn't matter what happens to those economies, people are going to buy more products. >> couldn't agree more with what you said. however, it's more of a short-term issue. it's about going into the third quarter and what's happened in the second quarter because of pricing. you've had a new management team coming in. you've done a good deal in terms of getting growth and pricing, pricing and volume. going into the second, third quarter, one of the issues has been food. their food business is already seeing a slowdown in the growth rates of both pricing and volume, and there is a good chance we come to the next set of results where we'll see zero growth on the food side of the business. that may end up being the catalyst or start of the catalyst for unilever to divest its food business in general. i think one thing you have to remember on the food business, it's very local, very local brands, and it's very developed market focused. if you look at the personal care and household products, that is what you're talking about, the global emerging markets brands.

>> i'll tell you, they haven't so much getting britain in the last few months. >> they have not. >> i know that for sure. >> i think you should buy makers of aspirin and coffee and the other essentials that are going to get most of us through the day-to-day daily events. >> and the old umbrella maker doing well. >> ice cream sales will be poorer around europe. >> ice cream is a big profit contributor. >> you've got ben & jerry's, a lot of brands which will not have done particularly well in the uk or across europe over the last quarter. >> if you had one iced lolly, what would it have been? >> iced lolly? it's the phrase. i have not. >> exactly. i'm not surprised, right? the weather hasn't been particularly -- quickly, the car dealer -- >> a car retailer and distributor, quite unique business. simple story. it's very cheap. management are always very cautious. their core markets, australia,

russia, uk, continue to see strong growth in new car registrations. you've got a business which has gone from net debt to very highly cashed yen. we're seeing good volume growth in the distribution business, especially within singapore, australia and markets like that. continues to be strong. i think it's a very cheap stock. >> okay. thanks for that. scott evens, no relation apparently, but you never know. moving on, a u.s. judge has ordered jpmorgan to explain why it won't hand over several internal e-mails to the federal energy regulatory commission as part of its probe into energy market manipulation. jpmorgan has released some e-mails but redacted some others. they are investigating how they bid on contracts to provide power in california and the midwest. the judge has given jpm until next friday to respond. meanwhile, yahoo's short list of candidates for its new ceo is down to just two names. reports say the competition is

between the current interim ceo ross levinsohn and hulu ceo jason keelar. levinson took over in may after yahoo ousted scott thompson amid questions about his resume. he's seen as the front-runner. yahoo's board also reportedly tried to speak with former aol ceo jonathan miller, now the chief officer at news corp., but he declined out of respect for his friendship with levinson. yahoo in afterhours, or actually in frankfurt, sorry, is just off slightly this morning, not a whole lot. >> the focus, though, shifts now, of course, to the big jobs report. it's payroll friday, and that report is due out at about 8:30 a.m. eastern time, so shortly after lunch here in london and across europe. the pace of hiring is expected to improve from the past two months, but it's still seen as sluggish. forecasts call for an increase of about 100,000 in non-farm payrolls, up from 95,000, given a better-than-expected adp report on private-sector hiring thursday, showing a gain of 176,000 jobs for the month. still not enough to make a

serious dent in the unemployment rate, which is expected to hold steady at 8.2%. let's get more from tony nash, our guest host this hour, from ihs global services. tony, what implications are there if the u.s. unemployment rate doesn't start to drop quickly? >> well, there's obviously the economic implications and credit market implications, but there's also political implications. i think really the down side to the forecasts that are out there are the forward orders from their reports over the last week, which were pretty weak. i really do think that's the cautious. the adp report, which has its issues, came in positively, but i think the forward orders that came in last week really do put an underline of caution under some of these forecasts that we're seeing. >> it's a great point. in fact, the stronger jobs data this past week, adp, even improvement in jobless claims sort of gave the lie to the batch of data that meanwhile showed a slowing momentum in the u.s. economy. so what's your view? what's really going?

>> well, i think it's, you know, it's a global issue. i think, you know, you saw, obviously, the ecb and the pbc ease yesterday. we've seen the renewal in the twist, we've seen a number of other kind of issues happening on the monetary side. the question is when some of this fiscal policy pushes through. that's a real issue in the states with the fiscal cliff, and you know, bernanke keeps telegraphing to congress, hey, look, you guys need to do something on the fiscal side. monetary policy can't save anything. and the question i guess in europe is are you going to start seeing more fiscal, i guess stimulus, in the age of austerity? i think that's highly doubtful. so, i think what we're seeing are reverberations globally of this. so i think we're really in, you know, the potential for a trough. we're definitely stalled in the recovery. >> yeah. i mean, look, three central bank rate cuts and more qe and markets didn't react at all. i mean, they went negative.

what does that tell you? >> well, there's more to come. and this is it. you know, the markets are waiting for the more to come. the markets know that those cuts weren't what needs to happen, and the markets know those cuts weren't the only ammunition that the central banks have to spend. so you may see some interim activity, you may see some other things happen. i'm quite certain you'll see more announcements from china over the next say four to six weeks. you'll see another rrr reduction. you'll see more fiscal announcements as a way to get things moving. >> just a couple other stories to get your opinion on. bosh & lomb, the "wall street journal" reports that they may go public again. it was taken private back in 2007 after contending with product recalls and accounting problems, but it's been beefing up its product line, mostly recently buying istafarm pharmaceuticals for $500 million. and asia's ipo markets may be

seeing signs of recoveries. one of shanghai's biggest offerings of 2012, citic heavy with a modest gain, while the miner has pulled in hong kong's second biggest float this year, despite being priced at the low end of its range. reports suggest malaysia's ihh health care is also seeing good investor demand and india's reliance communications is going ahead with the $8 billion offering in singapore. tony, what do you gauge here? it's been a pretty dicey ipo market. are things going to look any better or not? >> well, i think you know, as we said earlier, you have to be very choosey in this market. i don't necessarily think it's a frothy ipo environment. i think you know, companies like reliance are very, very interesting for people, but you'll see some, say malaysian or hong kong or chinese companies go public that aren't necessarily desirable, and as you said, they're going to be

priced at the low end of their margin. so i think it really all depends what the company is and you have to very much be a stock-picker. >> tony, how much momentum has gone to asia, malaysia specifically, and is that just a quirk this year or a longer term trend? >> i think it's, you know, i think it's a temporary thing. i think there is a lot of renewed investor interest in malaysia. i think despite kind of a lot of the negative sentiment on malaysia, there have been real efforts there to combat corruption and build political institutions, so we have, you know, we have an election coming up there in a couple months time, and it will be interesting to watch whether or not you get another crack at it. so, but i think from the corporate side, yes, you've seen more activity in malaysia and you've seen malaysian companies be incredibly competitive. some very well-run companies there. >> tony nash, managing director at ihs global services, we'll leave it there. you heard ross, his comment, say watch out for more action out of china over the next four to six weeks. >> yeah, exactly.

there's one thing on ipos i still think is fascinating. pulled plans to ipo in asia, now is planning here in the states. >> you have to wonder if the states lured them or to what extent they did. >> i don't know. they're owned by the glazers, but i thought it was interesting. there was this whole thing about -- >> momentum shifting to asia. >> -- momentum shifting to asia and investors and the market tying in, and then things change. >> i think the u.s. is still kind of seen as the place to debut, if you can, just given the media attention and everything, but -- >> just not a la facebook debut. >> right. >> still to come on the show, we're going to be back in tokyo. christine lagarde is meeting with the japanese government. all that and plenty more. >> stick around. ddd#1

welcome to "worldwide exchange" this morning. i'm kelly evans. >> and i'm ross westgate and these are your headlines from around the world. the u.s. jobs report front and center today. while hiring is expected to pick up, the pace may not be strong enough to make a major dent in unemployment. china's second rate cut in a month has failed to lift asian equities, sparking fears that the slowdown may be worse than feared. samsung's second quarter profit thought to rocket to new heights thanks to the galaxy smartphone. still, concerns over europe weigh on the long-term outlook. and europe is not the only problem. imf chief christine lagarde warns that some of the world's major and developing economies are slowing.

all right, good friday morning to our u.s. viewers who may be just tuning in. let's take a quick look at what's happening with markets behind me. red, as you can see across the board, although not a huge move here. the dow jones pointed lower about 12 points for the open, the nasdaq and s&p by a couple of points as well. this keys off kind of a mixed backdrop overnight. here's the cnbc ftse global 300 to give you a sense of what we've seen, gyrating between gains and losses and all coming out to a lower trade here by about 0.1%. let's look at vorcese across europe as well. ftse 100 down 0.15%, despite a batch of producer input and output price data showing some softness, some relief there potentially coming down the pike towards consumers. xetra dax down 0.3%, crack 40

down about the same amount and the ibex in spain down as its bond yields creep back up. >> markets unimpressed by three central bank rate cuts and more qe from the bank of london. it's caution as well ahead of the employment report. two-year bund yields, kelly loves this, currently negative at the moment, yield minus 0.66%. ten-year bund yield itself down 0.37%, not quite on the level we hit june 1st. the gilt also slow 0.1637%. and whilst those are going lower, no surprise to see spain higher, 6.916%, the highest for the session so far today. back above where we were before the eu summit. italy back over 6% as well. and here's ireland in bailout. they did raise some money,

significantly. actually went back into the market for the first time since the bailout, 6.29%, lower than spain is currently getting on its yields as well. currency markets, euro/dollar's been down at five-week lows. right now 1.2389. this morning we got down to 1.2364. the multiyear low recently is 1.2288, hit june 1st. the yen's pretty steady. aussie/dollar back to lows of yesterday, 1.0265. euro is down at record lows against the aussie, weakened substantially against the likes of the canadian dollar as well, some of the other commodity currency, swedish currency. euro/sterling here, 0.7969. we're not far from the 0.7950 mark, where that would be a 3 1/2-year low, so not far away from 3 1/2-year lows on euro against the pound. that's where we currently trade right now in europe ahead of the u.s. open. but what about asia today? tracey has the update for us once again out of singapore.

tracey? >> good morning again, ross. well, over here in asia, investors for the most part have shrugged off these easing measures from central banks around the world. asian markets mostly landed in negative territory, but the shanghai composite is a big out-performer today, adding more than 1% in a choppy trading session, but major banking shares dragged the hong kong market lower. the hang seng index finished just a tuck below the break-even point. and the nikkei is lower over fears over a bond bill dammened the mood and now they put pressure on the boj to follow suit. kospi lost about 0.9% on heavy selling. samsung electronics fell after record q-2 profit, but saw longer-term worries in europe. the australian market ended slightly lower in quiet trading ahead of u.s. jobs numbers released for june. before i go, let's check in on india's sensex, showing

weakness, dipping further now down about 0.3%, back to you, ross. >> thanks, tracey. let's turn now to our top story, the june u.s. jobs report is due out in just a couple of hours time. 8:30 a.m. eastern, to be specific. the pace of hiring is expected to improve from the past two months but is still seen as sluggish. forecasts are calling for a gain of about 100,000 in nonfarm payrolls. that's up from about 95,000 earlier in the week following some better-than-expected reports from adp on private-sector payrolls and have improvement in jobless claims as well. still, even that pace wouldn't be enough to make a serious dent in the unemployment rate, which is expected to hold steady at 8.2%. joining us for more is gary berdeson, ceo of corn ferry international. you know a bit about the job market yourself. what are you seeing? how would you describe conditions? >> well, i think that everybody is on the edge of their seats and they're waiting for a lehman brothers moment. i mean, it's truly across countries, it's across industries, it's amazing. >> so the companies you're dealing with are specifically not hiring because they're

worried about another lehman kind of moment? >> absolutely. absolutely. the ceos i've met with just here in europe over the past three weeks, it's amazing the stories. energy companies. everybody's operating from the same playbook, you know, uncertainty is certainty. and we've got to break through this. >> what is the lead, what is in their mind, the lehman moment that they're waiting for? what is it? >> you've got a transition in china. they've now cut rates, which is good, but that's going to take about a year to work through the global economy. you've got a potential leadership change in the united states. you've got a fiscal cliff in the united states. then of course, you've got here where everybody's kicking the can forward, which will probably happen in the united states as well with the fiscal cliff. >> so, actually, it's not just one -- >> it's not, no. >> it's a global -- >> absolutely. >> -- issue. and is no one deciding there's -- what we're saying is no one is deciding, and showing some weakness. if you're strong and big, there's opportunity to go and invest because you know at some point things are going to turn around, and when they do, i'll be the bigger player.

you're suggesting no one's doing that. >> nobody's doing that, but that's -- >> why? >> because it's human nature. you know, boards today are incredibly conservative. you know there was this train wreck three years ago, and there was this mad dash for cash. everybody remembers that. if you look at american companies today, they're sitting on $1 trillion of cash. we're sitting on a lot of cash. so boards are -- >> is cash now, is that just the new normal? is there ever going to be a time when we run cash levels down, or actually boards for the next decade -- >> there will be when politicians go after those cash levels. that's when it will happen. >> yeah. >> i think this is a decade of readjustment. i really do. the fact is, western consumers consumed too much for a couple decades, and we simply spent more than we should have. in the united states, we're spending $4 for every $3. that is not sustainable. >> so, if i came to you and said i need a job, where's the opportunity right now, given all of this and all the difficulties

you mentioned, what would you tell me? >> technology, social media, number one. i mean, companies are scrambling to try to sell goods through social media, through the internet. that's absolutely hot. life sciences is good. take the united states. 20% of the economy will be in health services. so we're all getting older, we're all going to get sicker, all right? those two places. by the way, not financial services. >> yeah. >> it's a disaster. >> on the social media side, you said everybody's trying to sell through it. do companies actually understand anything about it or how to do it or how to harness it, or is it still, are they still feeling their way? >> everybody's feeling their way. but it's a tremendous opportunity. if you're a ceo today, ceos are borderless, and you're looking -- there's a real fight for growth and relevancy. so the question is how do you drive that growth? and the truth is, there are fewer levers today than there were a decade ago.

one of those levers is to look to emerging markets that have emerged, whether that's through the internet or being there physically. >> okay. you talk about we're in the midst of an invisible recovery. we'll get on to what you mean by that. plenty more to come from you. washington, meanwhile, says it will file a complaint with the wto' cuesing china of imposing import duties on more than $3 billion worth of u.s. automobile exports. the duties affect 80% of new american cars shipped to china, including those in ohio, which is where the president was on the campaign trail. >> let me tell you something, americans aren't afraid to compete. we believe in competition. i believe in trade. and i know this, americans and american workers build better products than anybody else. so, as long as we're competing on a fair playing field instead of an unfair playing field, we'll do just fine. but we're going to make sure that competition is fair.

that's what i believe. that's part of our vision for america. >> the u.s. president used the issue to attack republican rival mitt romney, who opposed the government's multibillion dollar auto industry bailout. i'm sure there's absolutely, you know, just coincidental that that wto filing happened while the president was campaigning in a manufacturing state, kelly. >> yes, purely so, ross. i don't think we should read any politics into this, of course. if you want to join the conversation here on "worldwide exchange," get in touch with us. shoot us an e-mail at worldwide@cnbc or tweet u us @cnbcwex." we're getting interesting replies to our conversation earlier on libor. you can reach us direct directly @kelly_evans or @rosswest gate. >> don't miss out. next, our guest says middle east tensions will keep oil prices fairly steady. more in a few moments. ♪ multi-policy discount...

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yes, you are. welcome back to the program this morning. these are your headlines. it's all about jobs today. a pickup is expected, but will it be enough to make a dent in the unemployment rate? china's second rate cut in a month fails to lift asian equities, sparking worries the slowdown may be worse than feared. and galaxy smartphones are set to push samsung's profit to

new heights. concerns, though, about europe linger. imf chief christine lagarde says she shares japanese prime minister yoshihiko noda's concerns about the strong yen. she says the japanese currency is overvalued as a result of europe's debt crisis. kaori ann joji is live in singapore with more. >> they will revise the outlook. that is the message from christine lagarde, the managing director in tokyo for the next couple days. she wouldn't say more, just to say the economies globally are tilted towards the down side. but enough time for the markets to position themselves ahead of this quarterly economic report that the imf releases, and the next one is coming up next week on the 16th. everyone from the prime minister to the finance minister to the central bank governor, they all wanted her take on how to prevent the fallout from the

european situation from denting the japanese economy even further. but here's what lagarde said europe needs to do next. >> implement, implement, implement. it's difficult when you have 17 sovereign states who are trying to do that collectively, and the next stage, in our view, will be the fiscal union, which has to also supplement the monetary and the banking union. >> and what about the series of rate cuts that we got yesterday? how's this for a little bit of cander? >> i don't know whether they coordinated action. maybe they did, maybe they didn't. monetary policy is a necessary component of a policy mix that must also include other elements, such as macroeconomic policy, including fiscal consolidation, including growth-enhancing measures, such

as structural reforms. i mean, all of that is tied. >> she was full of praise for the japanese government's recent decision to raise the consumption tax to try to rein in on their fiscal debt position, but this praise was watered down a little bit by comments from the finance minister of japan, jun azumi, who warned the government could run out of money by october if he doesn't get the green light to issue debt financing bonds. but japan in a very different situation from much of europe, as you know, because the bonds are financed locally. 90% of the japanese debt is financed locally. but as we have a hung parliament here, any kind of political decision, as you know, takes a very long time. >> i'm curious, too, from a u.s. or london perspective here how much to make of these comments from the finance minister. they seem pretty extraordinary, but what is she really trying to accomplish politically by drawing attention to this fact?

>> i think it's a clarion call more than anything else and trying to get the opposition on board. i don't think there is any immediate threat of not being able to issue these debt financing bills, but it is a clarion call, because as you know, japan is running a huge debt-to-gdp ratio of over 200%. what they need is a 90 billion yen budget this year. and about half of that, 38 billion, is coming from the debt financing bonds. so, unless a bill is passed in parliament that gives him the green light to issue those bills, of course he's going to be in a precarious situation. i think right now it's a very political situation, especially because there are many defections from the ruling party after the rise in the consumption tax. so, i think this is more of a political issue rather than a pure fiscal crisis. >> just finally, everybody talks about the impact of the strong yen there. i mean, there doesn't appear to be anything that any policymakers could do about it. do they just have to lump it for the moment?

>> it's an interesting question. i think if there was an answer for that, a lot of people would be happy here. but i think you also have to remember that most corporations are doing very, very well, despite this environment. so even though you have dollar/yen at 79.89, euro/yen is below 100, today 98.94, a lot of companies are expecting record profits this year. with exchange rate, we tend to look at dollar/yen, because it's the liquid pair, but for corporate japan, the more pressing issue is the euro/yen, because when you're talking about dollar-based manufacturing, a lot of the manufacturing is already taking place in the dollar-based economies like the u.s., but hedging in the eurozone is far less. so i think when we talk about the absolute currency, the real risk, at least from the ceos i speak to, is the euro/yen rather than the dollar/yen right now. >> okay. >> that's a good point. >> good stuff. thanks for that. great to see you out of tokyo. i know it's late there on a friday night. >> that's true, that's true. hopefully, we will not be here

at that time. still to come on the show, it's all about jobs, jobs, jobs as we go into the open of the u.s. markets. we'll continue our analysis of that report coming up throughout the show and we'll get a view on oil, next. how big of a concern is the situation in norway? we'll find out. what makes the sleep number store different? you walk into a conventional mattress store, it's really not about you. they say, "well, if you wanted a firm bed you can lie on one of those. we provide the exact individualization that your body needs. wow, that feels really good! once you experience it, there's no going back. hurry in now for our lowest prices of the season. save $300 to $1000 on selected sleep number bed sets. final days! sale ends sunday. only at the sleep number store, where queen mattresses start at just $699.

welcome back to the program. let's check in on u.s. futures

as we await that key jobs report later this morning. red across the board, although the losses aren't huge. dow pointed lower by about 18 points and a couple of points there for the nasdaq and s&p 500 as well. let's also take a look at what's happening with oil prices. of course, this coming into focus yesterday in particular. there is the brent price there, below $100 this morning, down by about 1%. that might, though, be yesterday's trade. well, anyway, neil atkinson will know. he's director of energy, research and analysis at data monitor. and neil, brent all of a sudden jumped into focus yesterday, said forget what's happening with central banks, it's norway you should be worried about. >> well, i don't think we should get too worried about norway, because -- >> remind us what's happening. >> look, there's a strike, essentially. the oil workers are striking over changes to their pension rights, and they've essentially gone on strike. the oil companies have decided to lock the workers out, which they're legally entitled to do under norwegian law -- >> which means they stopped

production. >> well, it takes several days for that to happen, but unless something changes by about the middle of next week, tuesday or wednesday, a very significant part of norway's production will shut down. but this is where the government steps in, because over the years, there's been loads of strikes in norway. this isn't the first time this has happened. under norwegian law, the government has the right to step in and order the strike to end and order the workers to go back to work, at which point production will then resume, negotiations will resume and there will be some sort of settlement. so, it would be a major, major surprise if the whole of the norwegian oil production were to be switched off -- >> it took brent, though, from sort of 95, 96 back over to 100 bucks before the trade. >> it wasn't just the norwegians. yes, it did spook the market because the markets look at this thing and think, hey, we're going to have no oil from norway in the middle of next week, and that's a very, very sort of understandable knee-jerk reaction, but there are other factors at play as well, and our old friend, middle east tension,

has reared its ugly little head again just recently with the second tranche of oil export bans from iran with iran doing a little saber-rattling in the middle east, exercises. >> how important are they? >> export getting on for 2 million barrels a day, mainly to europe but quite a lot goes to the far east these days. hardly any goes to the united states, so that's not a particularly important factor, although there's no doubt that norway is important. but for the reasons i outlined in the very beginning, i think it's highly unlikely that the strike will be sustained for any significant period of time. >> well, gary here may know where you can find some oil workers, or where norway can. >> yeah, what is the discovery in the united states, you know, 3 trillion barrels or whatever it is? how real is that and what kind of impact is that going to have? >> it's real in that it's a discovery. what now has to happen is for there to be a proper assessment of what the recoverable reserves are actually going to be. it's not just a question of

discovering vast amounts of oil or vast amounts of gas and, hey, you can produce that. you have to understand what the recovery rate is likely to be. >> right. >> but there's no doubt whatsoever that the recovery rate will be significantly higher than we've been used to in previous years, where it may only have been 15% or 20%. with improved technology, better knowledge, we're getting recovery rates of 30%, 35% in some of these newer discoveries. there's no doubt that the united states is going to be an increasingly important player over the next five to ten years on the oil and gas supply front. >> we saw uk data today, june crude oil input prices down 9% for the month, 10.4%, the biggest monthly price fall since december 2008. very beneficial in terms of the inflation numbers. what happens now on that story in terms of lower prices helping everybody? >> well, average prices in 2012 so far are only about $3 a barrel higher than they were in 2011. we're still actually paying

higher average prices so far. we've seen prices fall from a high, where we were just short of $130 a barrel down to very near to $90 for brent. i believe that middle east tension is here to stay for another period of time. it seems to come in sort of waves, you know. we have bad times and it goes quiet, then it comes up again. but what's lurking behind all this and why i find this so hard to call these days is what you were talking about, actually, a few moments ago, about that phrase which is stuck in my mind, people waiting for a lehman brothers moment, the eurozone story rumbles on from crisis summit to crisis summit. they think they've solved it this time or reached some kind of stage, but it never seems to stick. and yes, you're right, there are a lot of worries out there. and if the economic story does finally tip over the edge, which seems to be what you were suggesting, then demand prospects for oil, and indeed many other commodities, will

weaken and the price could well fall again. >> neil, good to see you. >> thank you. >> thank you for joining us. director for energy research analysis at data monitor. still to come on "worldwide exchange" -- >> the latest on barclays and the libor scandal and jpmorgan's alleged energy market manipulation. stick around.

welcome back to "worldwide exchange." if you're just tuning in, i'm kelly evans. >> and i'm ross westgate. these are the headlines from around the world. it's all about the jobs report today. while hiring is expected to pick up, the pace still may not be enough to make a major dent in overall employment. elsewhere, china's failed to lift asian equities as the slowdown may be worse than feared. samsung electronics' second-quarter profit is set to rocket thanks to sales of its galaxy smartphones, but concerns over europe weigh on the longer-term outlook. good friday morning to those in the u.s. who may be just joining us. a reminder of where we're trading this morning as we wait for that key u.s. jobs report, in the red, but not aggressively so. the dow pointed lower by about 15 points for the open. the nasdaq and s&p 500 also sitting lower by a couple of points.

not a lot of movement here, but let's look at what's happening in europe as we get ready for that handoff. ftse 100 is among those markets also in the red, down 0.16%. this despite some relief on the producer price front that could offer some relief to consumers on the way in a couple months time. xetra dax is down more, 0.3% same for the cac out of paris and the ibex is down as spain's borrowing costs are climbing back towards that 7% level. italy, i believe, is also trading back above 6%. >> so back above the levels before the eu summit, which is the key point. of course, this comes in the wake of three central banks cutting rates yesterday and the bank of england adding more qe, and the markets went, huh? what are you supposed to do if you're an investor? this is what some of the experts have already told us this morning on cnbc. >> i think there may be better opportunities in some consumer sectors where valuations are relatively low. but at this point, we don't

necessarily see the upturn yet. it's, again, probably more of a long longer-term investment. >> i think the euro stock is sort of the bet in the middle, if you like. you're capturing some of the germany and some of the recovery opportunity and you're getting a reasonable discount, about 20% below the long-term. >> if the employment number is good, probably in this environment will benefit the dollar because there is less reason to hold the euro, also benefit the canadian dollar and i think i would still be looking at the margin or on the frifery of the g-10 and looking at currencies of the canadian dollar. >> all right, some ideas already today. >> yeah, lots to talk about. the pboc's surprise rate cut may not have had the desired immediate effect on equity markets, though. we've seen red across the board continuing into this morning, ross. and tracey chang has more.

tracey. >> that's right, kelly. the pboc's surprising rate cut failed to cheer investors in the region, but the move actually triggered fears that economic indicators set for release next week will most likely underwellm. and china's banks reacted very negatively in the trade since rate cuts are expected to hurt their profitability. the pboc will allow banks to price loans at 70% of the benchmark rates from 80% previously. the changes could squeeze the minimum spread between rates on loans and deposits to as little as about 1.2% from 1.5% previously. but chinese profit stocks were higher, out-performing the broader market after the rate cut. while the changes don't affect mortgage rates as part of the property curbs, real estate developers and big state-owned enterprises can benefit from the new, lower floor price for loans. but beijing has insisted that strong property curvbs are stil needed. back to you and have a great weekend, guys.

>> thanks, tracey. you, too. >> our guest host is gary, author. detailing the nonreaction to the pboc. we're seeing the ecb cut ranks, bank of denmark cut rates. uniformly very little positive reaction, which brings us back to the points we were making about why everybody's so pessimistic. if monetary policymakers can't inject a sense of wellbeing, what are investors looking for? they're looking for political leadership here. >> well, they are. there is -- people are kicking the can forward. and in the united states, the same thing's going to happen with this fiscal cliff. we're lacking political courage. i mean, the left is becoming further left and the right's becoming further right. the truth is, there's been many people that have been left behind. so, you have this 1% and 99%, you have this circus around the banks. that reflects society today.

and people are deleveraging and they're not spending money. >> we hear a lot about uncertainty in the u.s., but it's used to either point the finger at politicians or point the finger at europe. are people, are your clients in the u.s. not hiring because of uncertainty? and what specifically, uncertainty over what specifically? >> when you die. i mean, you don't even know when to die, the tax rate's influx. china has a huge impact on the world's economy. i lived there last summer for three months. there is no question they had to cool things down. it is very good news that they're lowering rates. that will trickle through the world's economy. it will take 12 months or so -- >> the way this works is, is that, okay, yes, it is good news that they're lowering rates as you say, but the reaction has been, gee, they've done it twice in a month. we didn't expect that. things must be really bad. >> well, people were expecting it, right? people were expecting it. there's a reason why they did

it. >> weren't expecting two rate cuts in a month. >> no, but intuitively for several months we've seen signs that it's been slowing in china, for sure. >> you mentioned earlier that people weren't hiring, they were bracing almost for a lehman moment. i want to make sure, is that just people in europe or in the u.s. and around the world, too? >> no, it's broad-based. look, ceos today -- i'm a ceo -- we're not looking to hire and then innovate. we're looking to innovate and then hire. and there's this real fight for growth and relevancy today across the world, across industries. >> who wins in -- i mean, if everybody's looking to innovate, where are the winners out of it? who benefits from that desire to innovate? >> i think people that are bold and that invest in wintertime, and that's why i'm here, actually. to be counterintuitive. we think there's a tremendous opportunity here in europe. that's why i'm spending three months here. >> let's get much more on that. gary will stay with us for a few more minutes.

but first, we want to just update you on a few more stories we're following this morning. uk politicians have agreed to launch a parliamentary probe into the banking industry aon the back of the rate-fixing scandal. the house of commons signed off on an inquiry by a vote of 330-226, striking down calls from the opposition labor party for a more serious and perhaps more lengthy judge-led investigation. meanwhile, barclays chairman markus agius and bank of england deputy editor paul tucker are due to appear before a parliamentary committee next week. lawmakers want to clarify whether any government officials pressured barclays to manipulate rates during the financial crisis. the issue isn't just causing waves in london, however. the global probe has reached japan, where rbs has pulled out of the panels that set tibor. this is japan's version of libor. it's the tokyo interbank offering rate. and in hong kong, ubs and citigroup earlier withdrew from the u.s. hibor panel, which is hong kong interbank offering

rate, this after an investigation found evidence of attempted manipulation of rates there. ross, we've seen, again, this similar practice before. it's not just london. and given that these products across the world, mortgages, derivatives, what not, are all cued off these rates, i think underscores how difficult this problem is going to be. >> and there's two sides, prefinancial crisis and post financial crisis. a lot of focus is what's happening post financial crisis, and someone may actually come out and say, you know what, we were trying to get rates lower, and that would have been to the benefit of everybody to generate confidence. now, it might have been wrong, but i wonder where someone's going to come out and say it was the right thing to do. >> no, but the problem is, there are people actually saying that, saying, look, what's so wrong with trying to lower these rates, or if they were higher -- but i almost feel like that's fine, but at the same time, the fact that the markets sprung up around these rates and was keyed off something like libor, that there was implicit faith in what that meant in the first place, not to mention that, you know, decisions about nationalizing banks were being made based on what those rates represented, there were other implications

beyond, as you rightly point out, maybe keeping borrowing costs lower for some people. >> what's your view on this, gary, this whole thing? >> it's a political spectacle. it's a circus. i mean, the truth was, three years ago there was a mad dash for liquidity. and you know, hindsight's 20/20. it's great that everybody's finger-pointing now, but the truth is, you know, businesses collapsed! i mean, we were on the verge of a real crisis. i had friends taking cash out of banks, it was so bad. >> but the point is that these rates, if they reflected what banks were truly borrowing it, would have reflected no trading going on, especially uncollateralized, but they would have been significantly higher, making corporate loans, uk mortgages, you name it, significantly more expensive. >> no question. >> so, what are you upset about? >> the finger-pointing. i think we've got to stop the finger-pointing. it is all over the world. you know, there has to be a common purpose here.

and to use this as a circus is not productive at all. to anybody. >> there was an extraordinary debate yesterday in the house of commons between the finance minister and the opposition treasury minister. and if they put the same amount of passion into trying to get some growth into the economy, we ons wouldn't have an issue. >> no question. i was at 10 downing street two days ago after the prime minister went through that torturous thing -- >> prime minister's questions? >> and yeah, there's no doubt about that. it's sport. it's actually sport. and somebody needs to focus on the actual solution. >> absolutely, given how much is at stake in particular. let's take a quick look at today's other top stories, though. japan's finance minister is warning the government could run out of money by the end of october if a key bond bill isn't passed. >> politics in japan as well. >> and jgbs do nothing. >> exactly. meanwhile, one of shanghai's

biggest offerings of 2012 has managed a modest gain in its trading debut. there are some ideas giving way. >> a couple. italy's cabinet has approved an extra 4.5 billion in euros in spending cuts for this year, given their gloomy outlook for growth, not sure this is going to help, but it's required to get them more money. >> it has meant they're not going to raise some taxes, which were going to be fairly unpopular, so they're looking at slicing the cake in a different way. and hbo is dropping its plans to make a film on the rise of fox news channel. why did it take them so long to realize they were competitive owners and maybe that wasn't a bright idea? >> they said their interest in cnn would make it too auk waernd uncomfortable -- >> they didn't know that when they first proposed that? how long ago that was. >> it's bizarre, it really is. still to come on the show, jpmorgan under pressure over an investigation into energy market manipulation. we'll have all the details next. ♪

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welcome back to the program. earlier, we asked if you think libor has to go, and if so, what should replace it? jose luis has tweeted us from texas, saying a common worldwide libor would help markets see and understand credit products

better. that, of course, doesn't necessarily answer the question as to how the libor rate should be calculated or set in the first place, but of course, there are certainly many around the world causing confusion. if you'd like to join the conversation here on "worldwide exchange," send us an e-mail at worldwide@cnbc.com or tweet us @cnbcwex or reach m me @kelly_evans o or @rosswestgate. >> i like that. let's move away from the french, the very bad french, but stay with the bank execs. thanks, kelly. a u.s. judge ordered jpmorgan to explain why it won't hand over several internal e-mails to the federal energy commission as part of its probe into energy regulation. they turned over some e-mails but redacted others, citing attorney/client privilege. they comment on that.

the judge has given jpmorgan until next friday to respond. and coincidentally, next friday is jpmorgan -- is when jpmorgan is going to be one of the companies that reports earnings next week along with wells fargo. let's go backwards in the week. after the bell as well on wednesday, chevron and marriott. and of course, we kick off earnings week or season on monday, and that starts off with alcoa after the bell. we haven't heard an awful lot of companies preannouncing or coming out with warnings, so we'll be interested to see how this earning season's going. kelly. >> thanks, ross. you're watching "worldwide exchange." if you're just tuning in, these are your headlines. it's all about jobs today. a pickup is expected in the u.s. payrolls report, but will it be enough to make a major dent in unemployment? china's second rate cut in a month fails to lift asian markets, sparking worries the slowdown there may be worse than feared. and galaxy smartphones set to push samsung's profit to new heights. concerns, though, about europe

linger. >> yahoo's still looking for a new ceo, but apparently, the candidate list is now down to just two names. reports say the competition is between the current interim ceo, ross levinsohn and hulu ceo jason killar. levinsohn is seen as the front-runner. yahoo's board reportedly tried to speak with former aol ceo jonathan miller, now the chief digital officer at news corp., but he declined over his friendship with levinsohn. yahoo trading marginally off when we last looked at it. gary burnison has a book, "the twelve absolutes of leadership." when you're looking for a new ceo in this climate, somebody like yahoo, what would you advise? what qualities do you need? >> the number one is cultural

dexterity. that comes screaming off the page. >> explain what you mean by that. >> well, the world's population is 7 billion. and two countries represent almost 50%. two-thirds of the world's middle class is going to be in asia in 20 years. so as you look out, america's not in the center. and you have to tap that consumerism. and today, ceos are borderless. so, you need somebody who can motivate, manage a workforce across these artificial lines on maps called borders. that is absolutely number one, first and foremost. clearly, you know, people, they're going to have a vision and they can innovate, that's up there, too, but cultural dexterity is absolute. >> and the ability to deal with jet lag, it sounds like you're saying is a key element of that position. >> the ability to meet people where they are and move them to where you want to be, that's critical. but that's what's wrong with this entire debate, is that

nobody's facing reality. you know, this mask of uncertainty is becoming reality. >> no one's -- we talked about this. i don't see anyone painting a vision and saying what we want, this is what i think we want, how do we get there? >> that's exactly right. that's what you would do as a leader, right? you would say this is the horizon, this is the common purpose, guys, this is the ten-year plan, you know, here's what we're going to have to do to get there. nowhere is that happening. >> china, that's happening. gory, we'll have more with you in a little bit. still to come on the show, too hot, too cold or just right? how will investors trade today's jobs report and what kind of payroll number will it take to move the needle? >> we'll be back at the bond pits in chicago right after this.

ahead of the u.s. open and the unemployment report, europe stocks a little weak.

spanish bond yields nearly back to 7%, above the levels we were before the eu summit. 6.9% is where we stand on yields. if we switch it over, we'll show you. a bit of a delay on that. i can also tell you, two-year bund yields also are negative. >> there they are. >> 6.973. >> it's amazing climbing back towards that 7% level. let's quickly check now on u.s. futures. should we do that? there they are. still down across the board, not a ton of movement there. everyone pretty much sitting on their hands as we await the key jobs report this morning. so, speaking of that report, let's get thoughts from ben l k liechtenstein, president of tradersaudio.com, who joins us now. ben, what's the whisper number? >> actually, it's way above what people were looking for. we're hearing about this 90,100. whisper is now 125. so we could see a strong, positive reaction to that number. the s&ps right now have been

toying with this level, this 1350 to 1400 level it was a big balance that formed there, i think on march, april and may, and we've really had a hard time getting up above that. but if you look at the unemployment data, that's really, again, all focus, all eyes on that. if you look at the graph of the payrolls, you're seeing that from may into january we saw a nice run-up from, you know, again, around 70, 80, up into almost 300,000 level, and then we've been coming off the last five months since. so we're starting to see this bit of a pattern towards the trending downward, and that's concerning. again, everybody's like, well, we could see 100,000 today, 90,000, much better than last month. last month was a dismal 69,000, and that was the worst we had seen since may 2011. so again, all eyes on the number, basically, right now. >> that would suggest, though, that anything shy of about 125,000 is going to be a disappointment, even if it isn't triple digits. >> well, keep in mind, though, recently, disappointing numbers

have actually provided strength for the market. i mean, we're at a key upper level here in the market. again, as i mentioned, while we have of yet to get through that 1350, 1400 level of any real conviction, a lot of traders are dumbfounded that we're actually at these upper levels now, considering the concerns and uncertainty in terms of the domestic market here and jobs data and economic situation across the board. but basically, what's been happening is if we get the dismal type, 69,000-type numbers like last month, we see that rally because traders are starting to think there's going to be some sort of stimulus from the fed behind because of the fact that, again, the economy's just having such a hard time getting started. >> how big would you rate the chances of full qe, ben? >> well, i think that if we see a number, you know, a major disappointing number today, we're going to be a lot closer to that, but i think we inch our way closer, and that's why the stock market's rallying, basically. you know, the fed has clearly pointed that they're in this low

interest rate, create wealth effect type environment, and we continue to see that. the bond's holding around this 1.50 level and we're watching, but i think the most important thing that we're watching right now is gold, and gold now creeping its way back down towards that lower extreme. again, we were talking $1,500 to $1,900 over the last, you know, it's been a solid year now. now as we watch gold, it's quickly working its way back towards that lower extreme. so, a test is probably imminent there. but again, you know, a lot of traders are eagerly awaiting this number. keep in mind, too, though, i heard you mention it for traders to be out there, that we also have earnings next week. so in the shadow of this number. >> and focus will quickly shift there. ben liechtenstein, president of tradersaudio.com, thank you for your thoughts this morning. >> thank you. >> we want to get a final thought from gary burnison, who's been with us all hour. lots of interesting thoughts, gary. jobs report. what final comment do you want to make? >> there won't be a standing

ovation today. i think that the next couple months and the equity markets are going to be rather slow, and i think we'll see good news in the fall, i do. >> what's the good news in the fall? >> i think there will be a little bit more certainty. i think that there will be a sense of optimism and -- >> will the u.s. election generate that? >> we'll see. it depends on who you're backing. >> one way or other, you get the outcome -- yeah, something behind that smile. we're trying to figure out what it is. gary burnison, thank you very much for your thoughts. "the twelve absolutes of leadership," talking about yahoo, and of course, he's looking for opportunity across europe. >> yeah. >> maybe the only one. thank you very much for tuning in everyone this week. more for the jobs report. we'll preview it on "squawk box" coming up. >> that's coming up next. the u.s. open, that all-important employment number. for now, good-bye from us. have a profitable day. >> see you monday.

yep. the longer you stay with us, the more you save. and when you switch from another company to us, we even reward you for the time you spent there. genius. yeah, genius. you guys must have your own loyalty program, right? well, we have something. show her, tom. huh? you should see november! oh, yeah? giving you more. now that's progressive. call or click today.

today on "squawk box," july jobs, june jobs that are reported in july. >> this is such a huge number that it's one of the things that takes our eyes off europe, luckily. >> and jim o'neill. >> still talking about potentially being the head of the central bank of england.

good morning. the countdown is on to the june jobs report. the numbers will arrive as they do at 8:30 a.m. eastern time. the ceo search at yahoo may now be down to two candidates. and oil prices tumble on demand. concerns today is jobs friday. it's july 6th, 2012. and "squawk box" begins right now. good morning, and welcome to "squawk box" here on cnbc. i'm michelle caruso-cabrera along with joe kernen and steve liesman. andrew and becky are off today. let's get you up to speed with this morning's top stories. yahoo's ceo search is reportedly down to two names. the competition is said to be between current interim ceo