go to stamps.com/tv and never go to the post office again. exchang exchange". >> central bank has more room to ease policy further. >> twrstrike up the band. alcoa leads the parade of results down wall street. >> over the libor scandal widens. a parliament hearing about the rate rigging and media report suggests barclays could be broken up. >> price war between airbus and boeing takes off as the aerospace giants battle it out over commercial jet orders.

this is nice. >> it is nice. welcome to the program. you're not ross westgate. >> i'm not. i'm a distinct improvement over ross westgate if you can agree. >> hope ross is not tuned in on his holiday. >> hope he's not. we're friends. maybe not any more. i'm in for the week. so we have five straight days. he'll come back refreshed and ready to go. >> plenty to get through today so we'll get right to it. >> on today's show we're live in brussels where eurozone finance ministers will be live in spain calling on leaders to follow through on their agreements. >> we're live in farm bureau.

we hear from the ceo of raytheon. >> and how myanmar is opening up to investment opportunities. >> also apart from alcoa we'll be getting numbers from the likes of chevron and jpmorgan. earnings insight from boston who says financials are highest and energy the lowest for the quarter. >> and there's fresh evidence that the slow down in the world's second largest economy is continue. china's consumer price and if affiliation fell to the lowest price showing growth at 2.2% year on year. consumer prices stayed in deflation mode. economists say demand is weakening at home and abroad. china set to release more key data including june figures tomorrow and second quarter gdp figures on friday. joining us now nor is associate

director at taiji. walk us your biggest concern. >> clearly it's the eurozone and the united states, but just briefly on china you mentioned that the inflation data there was relatively slow. not necessarily. inflation itself, inflation or deflation doesn't really show necessarily how much the economy is growing or contracting. i mean certainly we know anyway that the purchasing managers index has been or producing price index as been going better. in part that's due to a drop in commodity prices so doesn't necessarily show you that the economy itself is slowing that

much. in manufacturing as we know the figures for june were just about 50% but still that's not contracting either. in the u.s. who can be surprised that there's some issue with manufacturing growth, there's a lot of going to europe and united states. in june the service sector numbers, they were very strong and in fact you had the number coming in at 67.7, fastest growth in three months and 43% of the chinese economy is a servicing sector and that shows you really more how the domestic economy is doing and it's doing reasonably well compared to the u.s. and europe. what worries us most most european countries are bankrupt and so is basically the united states. many warnings about this. we don't think there is any possible fix for the eurozone crisis, even if germany wanted to bail out everybody else, germany and france they don't have the money for it, italy is far too big, spanish ten year

bonds about 7%. so that's what others us and we think actually the central banks may turn up the prices in order to prevent an armageddon. >> wet gel more into the europe story. let's tick with china. things not so bad in china from what you say. markets seem to be expecting more moves from the authorities in china to support growth. from your perspective, those it looks like you aren't anticipating that will be the case. what do the authorities do now in china? >> well, now i mean it is true that there's some slow down as mentioned particularly in the manufacturing sector it's not all rosy and fantastic in china and how could that be if the eurozone is as bad as we think it is and it will get worse. inflation numbers and in the case of the producer price index, the deflation numbers,

yeah, they certainly give the china government room to move for the stimulus if that was needed unlike in the western countries where there's a lot less room. on the banking sector, reserve ratio of the chinese banks are still far, far higher than those in the west and there's a lot of room for the central government to put those down and stimulate the economy that way. by the way, talking about the banking sector and the rates there, we've seen a bit of liberalization but the profitability of banks because a lot of the banks, the profitability of the chinese banks came out recently of the 1,000 major global banks, we have actually had 29.3% of the profits of those banks were chinese banks so they are really still relatively strong. we think the stock market is quite good relative to property market because the stock market might support the property.

>> we'll come back to these issues very shortly. do stay with us. >> another twist to the libor scandal, british bank could be split in two. a report says the board is considering a spinoff of the investment banking unit which would see the businesses listed separately on the new york stock exchange. the political story behind the rate fixes affair took on a new dimension. the "financial times" published a confidential report by ubs which advised the labor government to reduce the libor at the height of the financial crisis. >> today uk lawmakers will tell the central bank what it knew. paul tucker will be testifying. detailing a conversation with the boe's deputy governor. >> they have promised to take

further action. michelle plans to widen abuse. and they could face criminal proceedings. the u.s. department of justice is also investigating alleged rate collusion. let's get back out to martin. martin, we have got plenty of problems in the financial services sector as you outlined a few moments ago. what dimpbs do you think looking at the macro picture what dimpbs does this scandal overly bore make to all of this? >> well, it's another reason why you prefer owning chinese banks over western ones. they are so much criticized, the chinese banks, asian banks generally maybe less but the chinese banks everybody loves or hates them. when you look at their standard of ethics over western banks,

modern democracies of the world and there's a lot going on with that and it's not just about the libor money relation. this whole notion that the banks can gamble in good times basically as much as they want and then they take all the profits in the form of huge bonus and when things go bad they get a tax bailout. if one wants to fix this problem you have to do something like a straight bailout policy. right now that's the way to rig markets and gold markets all things going on. the ethical standards aren't as high as one would usually see. whereas most of the asian banks they do normal money lending, deposit taking and normal money lending and less gambling. >> equity markets across europe

are lower. ftse 100 lower, dax and similar move for the cac and ibex in losing 4.4%. let's look at individual stocks. michael page is down 4.5%. michael page came out and said they have seen their second quarter profits lower and they see a challenging third quarter as well. as far as they are concerned in the recruitment in the legal services, financial services sector the market uncertainty is causing problems for companies and for their recruitment plans. seeing a tough time ahead over at michael page and hays as well. so on to the government bond markets. this is what's happening right now. the bund yield 1.3%. in spain, levels over 7% again. so much for the eu summit a

couple of weeks and the positive impact on yields. we saw yields dropping back, back over 7% for the ten year spanish debt seen as unsustainable. italy over 6%, 6.13% on the all the jan ten year and 5.18%. in the commodity market different factors play. brent is trading up by .4%. brent is being impacted around $99 a barrel. take a check on these labor talks across norway for some of the oil workers this they had three round now of failed negotiations and it looks like this increasing threat of more strike action is having a very significant impact on the oil price. norway is the eighth biggest exporter of oil in the world and the possibility now the total

shutdown of norwegian oil production is lending support to brent and upside pressure to the nymex. we have a bit of an impact from the china data as well, expectations for the stimulus pushing oil prices up too. across the grain complex in general where we've seen near record levels for the grain complex, swhaet up by 2.2%, corn up 3.6%. much of this is weather driven. we had this three week of extreme hot weather in the states and that's pushed prices right across the grain complex a good deal higher. wednesday another point to watch out for. crop reports are due and pay attention to the weather forecast. we've seen a bit of respite in terms of weather stateside but not enough to have a negative impact on the commodity prices over there. let's look across asia where we see plenty of negative

sentiment. lots of red across the asian equity markets 2.4% lower for the shanghai composite. japan data in focus. let's go to tracey chang who is standing by. tracey? >> that's right. good morning to you. dismal start to the trading week. asian markets already rattled by friday's weak u.s. job reports. and asia's top economies are unable to escape the global slow down. cpi data stoked fears that it could be softening. investors staying on the sidelines ahead of more data out of china this week. hong kong slipped more than 9% after the company's founder quit as chairman. the company lost 40% of its value year-to-date.

tokyo stocks closed down 1.4%, k japanese manufacturing figures triggered fears about a weak economy. the kospi finished at a one week low as investors sold technology, refineries on fears weaker consumer demand in the second half of this year. elsewhere, australian shares down 1%. pressured by losses in resources sector. india sensex is down by 1%. back to you. batch of good news. the spanish prime minister has urged the eu to move swiftly to enact measures. europe has reached a crossroads and that it must now proceed without hesitation. the euro group is meeting today in brussels to discuss the details of bailout for spanish

banks and review the findings of a initial finding into the cypriot economy. caroline, good morning. what do we expect? >> as ubs pointed out a thrilling meeting which will decide nothing of substance. he's quite cynical. most market participants would agree. finance ministers are left a tricky task and that's to put more flesh on the bones of what was decided ten days ago at the eu summit and there's a sense of urgency. so, kelly, some of the key questions that will have to be addressed in what form will it take and how will it be

implemented. how flexible will the esm be both with regards to bank recapitalization and bond buying in the secondary markets. there is a growing sense that this esm is nowhere going to be as flexible as maybe italy and spain were hoping to it be because the conditionality attached to it is going to be a lot stricter than actually expected. back to you. >> thanks. we'll get into that discussion about cyprus later. we have the manager of capital economics, just been awarded a prize on proposal how best to manage a breakup. eurozone. congratulations. welcome. i was trying to do the british pronunciation instead of the american version. anyway, who better to have on the program today as we await this next meeting of the euro group ministers. your baseline forecast is that the eurozone in current form

can't continue to exist. >> yep. i think the problem that they face is really pretty much insurmountable. to keep the system together what it's going to need is the northern core countries will have to accept responsibility for the debts of the southern peripheral countries. it's not impossible but when you think about it not really a very appealing prospect. >> neither is the breakup of the eurozone which would trigger deflation and add to the problems of heavy debt loads. >> that may be true but what do politicians do when they face two unappealing prospects? what they don't do is take bold radical decisions. what they do is deliver fudge and mudge and we had that for the last year. >> they have to don't fudge, don't they because this is a political, a political purpose. this is in the aftermath of the second world war, for instance. political turbulence in europe

in the meantime. they can't allow the eurozone to fail for economic reasons when there is more to be gained by sustaining it for political reasons. >> don't agree. would you have said the same thing about the soviet union in some people did. the point is that there are times in history when the existing structures are just totally inadequate and politicians have to rise to the challenge and be statesmen. this lot won't. they can't see what they put together is a dog's breakfast. >> the trouble for europe is it doesn't come together to form a political union, it won't have any leverage or bargaining power with china, india, rue sharks united states, germany and france by itself are not powerful enough or as powerful as they would be as the european union wanted. >> for a start one talks about breaking up the eurozone, that doesn't mean the same thing as breaking up the european union. the european union can be there and would be stronger without the euro in its current form.

i don't think the world is all about power blocks negotiating. that doesn't butter any parsnips. let's take singapore. why is singapore successful? is it because it's a huge country marketing on the world stage on ecall terms with the u.s.? no. it does things properly. it works hard. it saves. it invests. believes in education, trades and does all the right things. europe does all the wrong thing. >> as we watch spanish bond yields climb above 7% we're back towards reaching a crisis point, perhaps. what is the most likely outcome today or this week. is there any reason to believe that ministers will be able to act to get those yields back down? >> i don't know. i suspect what we'll see we'll see something come out of this meeting. if you look at the history of the crisis since its beginning it's pretty clear what happens are these meetings, people are skeptical.

leaders come up with a deal in the markets. that's pretty good. so the yields come down. after a few days or week they look at the detail and think not so good and the yields go back up again. i suspect this is the same. >> let's let our guest host in here. martin, you had a question? >> yeah. i just want to ask roger, you were talking about a northern bloc and southern bloc that the eurozone should be split up. my question is giving the deficit of france, the budget deficit and they are not going to meet the deficit target and the french banks basically have lowered not only greek debt, six times more than italian debt if you let italy go a lot will have to be written off. so my question is would you include franks in the northern bloc with germany and netherlands and finland? i hope not. >> fascinating question. as a matter of fact, i'm not recommending that the southern countries form a southern bloc because i think they are

different one from another that they would be better off having their own monetary policy. a northern bloc i could see the point of. your question about france is critical. france spot to in the same position as the southern countries but it's not germany. you point to its deficit, pretty uncompetitive against germany and in many ways culturally and institutionally it doesn't fit with germany. i would recommend that it stays out of the northern bloc and has a new french franc and could be the leader of those countries that used to be in the eurozone whereas if it stayed with germany it wouldn't be. most importantly, however, i suspect the french establishment wouldn't think about this, there would be a knee jerk reaction, we got to stick with germany they made that decision in 1931 when they stayed with gold and it would be a disaster. many years of weak growth for france. >> thank you.

now greece's new coalition government won a vote of confidence in the early morning hours. they warned recession will be deeper than expected. he called for an extension of the deficit cutting plan. kelly? >> thanks, becky. barclays divided. a report suggests the bank could split in the wake of the libor scandal listing its banking unit separately in new york. is this the right way forward for the bank? what do you think. if you want to join the conversation, e-mail us at worldwide@cnbc.com or tweet us @cnbcwex. now officials are making the case for stronger policy action in the wake of sluggish job

creation. is more qe on the horizon? stay tuned we'll be right back.

welcome back to the program. two top fed officials are making

the case for quantitative easing. in the wake of friday's disappointing job report, charles evans told a conference in thailand he backed the fed's move to extend operation twist but would have preferred more action. at the same conference boston fed president said qe3 is now possible, of course depending on future data. still with us are martin and roger. roger, first to you, your outlook on the u.s. economy as weak. do you share the concerns that we've just heard from the fed officials? >> sure. the u.s. is much better shape frankly than europe. i don't think it will be heading back into recession. but it does look to me as though we're going to see qe3, not like it's done an awful lot of good. there's not much more in the locker. >> would you perhaps see fiscal policy pursued? >> fiscal policy is dangerous in

the current situation. maybe a bit can to be done but there are limits because u.s. debt is rising quite fast and there's a risk at some point or another, the markets might take fright. i meet a lot of investors in europe saying why are people worried about the european fiscal position because the u.s. position they say is are worse. >> same people who would have expressed concern about yap 15 years ago, 10 years ago, 20 years ago and haven't come to bear. >> japan is different. they have massive international surplus for a start. the u.s. doesn't. it's a net debtor. >> the u.s. wean itself off quantitative easing, they are in recovery. if they get more qe now, what happens if there's a genuine downturn and things get considerably worse? >> then you do even more qe, qe4, 5, 6, 7, all the way.

i don't see the limit. the real limit is inflation. if inflation looks like it's picking up, there's a serious concern and you're stoke an asset bubble then you have to have a limit to qe. >> so you start reacting when you see a bubble it's too late. >> look at the evidence. bubbles don't appear out of nowhere. they emerge. where are the asset prices that are being massively bid up apart from government bond. government bond are, the prices are too high the yields are too low. >> roger, thank you so much for joining us this morning. hope to have you back. >> we have martin stick with us as well. so, we are going to go for a quick break. still to come we'll hear from the ceo of raytheon and find out how the change in defense spending is affecting the aerospace market. please stay with us.

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welcome back to the show. chinese inflation was more than expected giving the central bank more room to ease policy further. >> earnings season gets under way in the u.s. as alcoa leads the parade down wall street. >> ripple effect of the libor

scandal widens. paul tuck certificate due to testify in a parliamentary hearing about his knowledge of ratified rigging and barclays could be broken up. >> a price war between airbus and boeing takes off as the aerospace giants battle it out over commercial jet orders. okay. working on my pronunciation. we'll get to that report in just a little bit. we want to show you this morning spanish bonds, why? because the ten year is climbing back above that 7% level, 7.11 the latest quote. you can see italy moving higher through that 6.17% level. bunds and gilt faring better. it's remarkable that a couple of weeks after people thought european leaders got ahead of this one not so much. >> i'm surprised. it happens every time.

we have a summit, get a bit of respite and then everybody remembers nothing is fixed and we get back to the levels as before. >> the best that can be said is expectations are so low maybe they will surprise us. but then again maybe not. >> we're discussing the important business of the spanish bank bailout. the euro group today will be making a few personnel decisions. they will vote on the successor to mr. euro. review candidates for the top job at the esm. permanent successor to the temporary bailout fund and a vacancy on the ecb executive board. for more we have caroline from brussels. >> a lot of very important positions up for grab. let's kick off with the euro group president. he's leaving the job after almost 8 1/2 years. first of all he's been ill. but then he said it's too much because he's the prime minister

of luxemburg. then there was this opposition that the new french president essentially seems to be out of the running. now it seems like he'll do this job for a couple more months until the end the year. but in return for that he wants his friend, the central bank governor of luxemburg to get the seat. here in brussels nothing works without conditionality. it doesn't address the question who will take on the top euro group job. maybe the estonia finance minute certificate may do it. back to you. >> i doubt we'll be hearing bob

dimon's name. a note for your diary, ecb president mario draghi will be addressing the european parliament's committee on economic and monetary affairs at 2:30 central european time, 1:30 here in london. stay tuned for any headlines out of that. in japan sluggish orders in may is calling the recovery into question. we have the story live from tokyo. >> reporter: yes. japan's current account surplus dropped 62% from a year earlier to 2.7 billion dollars before seasonal adjustment. while the fear was less than half of what "the economist"s predicted it dropped for the 15th straight month. the strong yen was partly to blame. separate data showed many machinery orders dropped 15% from the previous month. the double digit fall significantly underperformed

expectations for a much smaller 2.6% decline and came after a decent 5.7% gain in april. but the government played down the numbers citing tecing technicalities. bank of japan is not too concerned. back to you. >> meantime japan's prime minister says the government is considering another extra budget for the current fiscal year that end on march 13. with us is martin. martin, we've discussed just now the outlook for the u.s. economy but over in japan what's your view as to how they play out the rest the year?

>> just briefly let me make a quick comment on the u.s. because you mentioned how it compares to euro. some say it's worse in the united states. i would say yes that comes pretty close. the former comptroller of the united states, the guy who orders the books of the u.s. was in charge from 1998 to 2008. he said in an interview, we're two years away from where greece was when it had its debt crisis. u.s. treasury, it was mentioned the yields have very low yields. u.s. treasurys is one of the biggest bubble out there as well as germany because those economies don't look much better. in japan, yes, they have a similar government debt problem although they have a few other better factors like household savings and other things. certainly you don't want to own any government bonds particularly not long term in any of those countries because

there's a lot of risk of inflation ain't rates are is going to increase. >> martin, talk being about bonds, martin talking about bond bubbles, by what you're saying, japan's would seem to be the worst of any of them. is it in any danger of bursting soon here? >> well, definitely. you wouldn't want to hold japanese government bonds. that's pretty clear. i don't know which one is worse. japan has some reserves. they still got, let's say an industrial base unlike the u.s., much of the industrial base has been going overseas and japan is quite well integrated, there's china and most of the exports of china are going to japan. china looks reasonably well. as we're going into a deepening of this crisis and as the major countries have funding problems then i think investors will think twice about where the safe haven is and then we might see

actually a traditional safe haven of those countries, government bonds becoming higher and gold, commodities, stocks becoming the new safe haven as inflation rises. >> interesting. martin, we'll leave it. south korea, asia's fourth largest economy also showing some signs of losing momentum. we have a closer look at the june data. >> well the prolonged fiscal crisis in europe is keeping lid on prices in many asian kris. june ppi in south korea, biggest monthly drop since the lehman crisis. weaker global economic picture brought down crude and commodity prices worldwide. this sets up an interesting backdrop to the bank of korea's policy meeting thursday. they kept rates at hold of 3.25%. june inflation hovering at three

year low in june. that could change especially in the wake of rate cuts from the ecb and the pboc last week. back to you. >> on that note let's take a look on what's on the agenda. china releases its trade data. taiwan's tech companies tsmc post june sales figures. japan is out with its consumer confidence index for june. that's at 7 cet. we'll talk to the first british trade delegation to go to myanmar since sanctions were eased. do stay tuned, we'll be right back.

welcome back to the show. so the first british trade delegate to visit myanmar since the trade sanctions were eased arrive today. the mission made up of more than 20 british businesses are being led by the chairman trade ambassadors group. we spoke with him last week and asked him what they hoped the achieve. >> i look upon i want as a mission to a, discover where the help can be, but also to supplement them on a number of skills that are obviously lacking.

and to amplify on those skills we obviously know that in order for them to make the transition to cope with foreign investment they will have to have a corporate structure. with burma it's based on british law so helping them with what we've done over here with corporate law, for example, skills are another area where we can support them, health, education, those sorts of things. helping them with their path forward, i think, is where britain is at its strongest. >> you're taking a number of companies to the country. >> we're taking nearly 30. >> how do you decide which ones are the right ones to go on the trip. >> it's those that supplement the skills that we think are required and we got in addition to the ones i've already mentioned, we got funds who are interested in investing in emerging markets which will be helpful. we got retail bankers. we got people in the expiration

strir. >> what does it take to make a sustainable business? >> gosh, if everyone knew the answer to that we would all be very rich. i've been in business all my life. i think what business people want is the opportunity. and i think also they want very little government interference once that opportunity has been created. i see it as sort of front of house manager, if you like. hopefully creating opportunities. but also creating a relationship at a government to government level. not so that it is intrusive to businessmen creating their activities but can compliment. >> how much does this process then also beg down the democratic changes that are happening in the country? how important are two things? >> well, i don't think sanctions

would have been lifted unless there had been a democratic process, and as you know they were lifted in april as a result of the elections having taken place and being successfully carried out and great compliment to all sides that those happen. therefore, it gave us the opportunity to start trade relations again. >> is there a hope that, as you restart trade, it reinforces the change in the political agenda? >> well, i think that we're not trying to reinforce change. we're merely -- what we were trying to end force democracy. that process is happening. it should take its natural course if it's an orderly democracy. and people will be looking very closely as to whether it is. >> british delegation isn't the first there. if you're not the first are you playing catch up? >> well inevitably we're not the first because there are other

people who have applied the same sanctions that europe has and not the first european delegation to go there. but british business and britain have a lot to offer a country and i think it's more the quality of what you're offering, the quality of the offering rather than being the first through the door. and i think britain has so much to offer the country, and i know because we're meeting ever senior administrative level the right people because they want to do business with britain. >> when a is it as you travel around the world to many different countries what is it that people say why they want to do business. what's the thing that makes britain stand out from any other country? >> there's three fundamental thing. first, the rule of law. which is so important for british business or for business to start that they understand there is a safety net. secondly, transparency and the

british way of doing business has to be and is very transparent. and i think people enjoy that. thirdly, which is good management, we speak english. english now is the global language. >> just a reminder about our trade links series, every week we'll look how the financial crisis is affecting the global trade and the impact on how you do business. for more get on the website at tradeli tradelinks.cnbc.com. okay. the international air show is under way and phil lebeau joins us from the event which showcases the latest invasion and defense technologies. he's on the ground. this is a an every two year event. what can you tell us?

>> the interesting thing about this event this year there seems to be real split in the at the entrepreneur of defense versus commercial. a lot of enthusiasm. on the defense side everybody realizes we're in an environment where around the world it's tighter defense budget. our next guest is the best person to bring in on this, the ceo of raytheon. do you look at this and say it's too hard to say. >> right now we're facing tighter defense budget time but at the same time world events drive these things and things change rapidly where we are right now we're positioning, a lot of us are repositioning our portfolios to meet the new environment. for the most part defense budgets are still fairly strong. >> i know you're in a quiet period. investors are always worried when defense budgets tighten that profitability is going to shrink for the defense companies and shrink at a moment's notice.

how confident are you that you can grow profit over the next two or three years in a tighter defense budget environment. >> every cloud has a silver lining and quite honestly there are opportunities even in a tighter defense budget. one of the nice things about raytheon is our balance and portfolio where we have a domestic, about 75% of our sales and about 25% comes from international. so the international market is still staying strong. >> even as we talk we have some of the helicopters coming in here to land. is the focus now given the tight defense budgets focusing more on technology upgrades for existing platforms, existing aircrafts and ships that are out there or is it more of saying let's plan five, ten years out? >> well, as you noted, one of the nice things about this company, raytheon, is we make equipment that can go into new products whether ships or airplanes or tanks or submarines

or whatever. we use that same development we can do top grade oversystems. we design it so it can fit in the older systems or new systems and that want allows us to meet whatever the customer's requirements are. >> more rotation? >> absolutely. you know, there's a shifting towards upgrading older equipment and carrying it longer which is great for us as a company. but also we have new product. our patriot anti-missile systems and anti-air missile systems or still be purchased and purchased around the world. >> where are you more bullish? >> right now both middle east and north asia are pretty bullish. the rest of the world is strong but not as strong as those markets. >> tom cullugan ceo of raytheon.

when you talk to the defense folks here while it's clear we're in a tighter budget environment there's optimism they can grow. we'll be talking with more defense leaders at the farnborough show. >> it's the commercial side where we will see more pinch as global economies suffer. everyone wants to know what airbus and boeing is saying. what's the impression you're getting so far? >> they both think demand will stay strong despite what we're seeing in the economy in europe and questions about whether or not a slow down in the chinese economy will affect the overall strength or future strength of commercial air travel. the feeling from both boeing and airbus is that we're not in a bubble in terms of these orders received for narrow body planes it will continue and more importantly, guys, they think

unlike the late '90s when they struggled managing profitability as production increased they think they can be profitable and grow profit margins as they increase their production schedules over the next couple of years. >> phil, i'm just looking at this story here out of greece about how they are selling airbus jets for $40 million. i think it's striking that this farnborough show is taking place. >> well, yes. you got problems with greece, problems with india. a lot of people are looking at the backlog of orders from india. are we looking at a swiss cheese environment where there's holes in the production schedules and then you have a huge backlog in china as well. so i think a lot of people are looking at that and saying can boeing and airbus maintain that schedule and even those outside of the company say yeah despite those concerns it's there.

we talked with the ceo of airbus, we'll have some of his comments later on during "worldwide exchange". >> airbus ceo comments later and then at the top of the hour 7:00 a.m. in the u.s., he'll be speaking, phil will be speaking with the ceo of boeing. >> great to get those views. let's look at brent crude, inching up. norway may be forced to shut down it's oil facilities. strike by 7,000 offshore oil workers is set to continue after talks hit the bufrs. the company's labor ministry says it has no plans to put an end to the strike despite having the power to zo. let's get some final thoughts from our guest host. martin, we spoke to you before. you've been down beat enough that you have suggested buying

oil, meat, guns anything that keeps you safe when things get bad. you have been down beaten and into focusing on gold saying that really the safe haven plays have been overdone. are you still that negative? >> very, yes. but not necessarily negative on other commodities investment. you know, i'm not saying you should hold your food at home, food and guns at home although in certain countries that might come in handy just for worse case scenarios. i'm not advicing to do that. there are great investment opportunities in many commodity markets even in the general emerging markets quite good opportunities to be ahead in the equities because we think, number one, the emerging markets fundamentally look better than the western markets, have much less of a sovereign debt crisis. as mentioned as these western

countries and the eurozone go deeper and deep near to crisis i think the only thing they can do is print, die or print or facing a banking collapse or armageddon or default of italy will wreak havoc. they do need to print and that meeds higher inflation. that may prove to be a better bet than the bonds that are traditional safe hey convenience. >> some emerging markets offer good investment markets. which emerging markets do you think still are worthwhile getting into now? >> well, number one, if you do consider china still an emerging market even though it's the number one world economy by 2016 to 2018 depending on who you ask, it's going to be the number one economy, china is one place we do like. still has appreciation potential. economy is still relatively strong and while the housing

prices we agree they are quite high and possibly in a bubble, certainly on the high end in relation to the income of the population, but the stock market is really trading at quite cheap valuations. you own chinese stocks but there's inflation risk because stocks represent real assets. >> no one can get more information in a short period of time than march tan, associate director of teiji. still to come on the show, record breaking half for etfs. we'll talk to blackrock what's driving interest in these funds. stay with us.

welcome back to the program. if you're just tuning in i'm kelly evans. >> these are your headlines. >> chinese inflation calls more than expected in june. >> strike up the band earning season officially jets under way in the u.s. as alcoa leads the parade of results on wall street. >> the ripple effect of the libor scandal widens. boe deputy head is few to testimony about his knowledge of rate rigging while the media reports suggests barclays could be broken up. >> the price war between airbus and boeing takes off in farnborough. they battle out over the commercial jet orders.

with a good monday morning to our u.s. viewers who may be just joining us. let's look at the position for the trading day. a bunch of red. dow jones would open lower by 50 points. nasdaq pointed lower by about 10 points. s&p 500 lower by about six or seven. this course keys off a somewhat somber mood across the rest of europe. ftse 100 is down half of a percent. the dax less than that. ibex out of spain 1.72%. it remind me what we saw last week. >> fairly steady at these levels with these half percent decline for most of the markets. individual stocks have been moved to the down side

particularly in the recruitment space. michael page is one of the big recruits. michael page came out with some negative and joining hays. that's the way the logic here is shaping up. michael page came out and said its quarterly figures have dropped for the second quarter and sees a challenging third quarter ahead as well. its market particularly financial services, legal services, accounting that kind of thing, they are all seeing lots of concern about market uncertainty out there, that's delaying or complete stifling as far as hiring in those sectors. let's look at what's going on in the bond markets as well. we've seen a great deal of concern about the peripheral bond market. let's look how low the safe hey convenience are. the german ten year limit is 1.3%. high n-creationly concerning for

the ten year in spain which after the last eu summit did drop back to more sustainable levels but now back above that 7% level. 7.1%, in fact. these levels are seen as unsustainable. not just spain. we've seen the italian debt as well popping up a ten year in italy, 6.15% right now. compare that to here in the uk where the ten year gilt is 1.56%. that's the picture across the bond market, giving you a quick snapshot too of what's happening to the european debt market. also what's happening in asia where so far today we've seen declines across the region as well. loads of red on the equity map for the asian markets. we had data in china. the composite down by 2.4%. 1.2% for the south korean markets. nikkei down by 1.4%. significant loss coming through here. let's go to tracey chang.

>> hi, again. certainly not a very pretty picture. asian markets already rattled by friday's weak u.s. jobs report ended in red compound that asian's top companies can escape the impact of a global slow down. china's stock index hit lower. there's fears that china's domestic demand could be softening. investors are staying on the sidelines ahead of more key data out of china. the hang sang is off by more than 1%. tokyo stocks closed down 1.4% as well falling below the psychologically important 9,000 level, weak japanese machinery order triggered fears about the country's economic recovery.

>> we are joined this morning by our guest steve cohen from blackrock. hello to becky here who is with us standing in for ross this whole week. he's on holiday something which i guess you and i will have to make time for at this point. >> i'm going next week. >> so, you were? we won't tell anyone where. >> that's why i'm particularly cheerful today. >> so we'll have steve cohen here to talk us through some exciting developments in the etf space. these are exciting products for investors. how popular are they for this year in what's a tough environment for stocks. >> they've been very popular. we've seen the first half as being a record month or record six month period for inflows and $105 billion of inflow into etfs. the uncertainty around markets, considering how volatile markets have been, how much fluctuation

we've seen. the sheer amount of cash, sitting on sidelines. very positive period for signs for the industry. >> these products now exist for all kind air fare sets not just stocks. where has the money been going. >> it's fairly broad based. the key driver we've seen this year that differentiates this ear is equity. now we're seeing fixed income where investors are looking at fixed income broadly so they are looking for safety as you mentioned. they are looking for income. in addition to that we're seeing etfs become much more of a common way for investors to think how they get those exposures. >> have you seen any change in those patents since the last round of eu summits that we had?

any kind of hint from the patents that you see that we are going to get more stability coming back into the eurozone? >> we did. in june coming up to the eu summit and with the meetings with the fed, we saw strong inflows. june was the best month on record for european equities since last october which is quite surprising considering how markets have behaved. inflows ahead of the summits. we've continued to see those inflows since. the challenge now is that we've seen peripheral yields back up to where they were pre-summit levels, we're seeing that impact equity markets as well. the question is for these inflows follow through and follow on we need to see more signs of stabilization and the question on investor lips, with the summits out of the way the central bank meetings out of the way what's the cat tloift get markets going again.

>> i still wonder and worry a little bit about etfs when we get to the doushlgs triple leverage products that are now there. if you hang on to these things for more than a day at a time you can get burned. how do you recommend people if they have a strong position or a view they want to take, how do you recommend they do so? >> it's difficult. our focus on our shares is not so much on those products because of the risks that you mentioned earlier on and that's something that investors need to understand and they need to understand it's something that in terms of the structure, the products and the way they deliver those exposures is important to know how it will work what are the time horizons over which it works. they can be used but you got to be careful in how you use them. >> do you see people flocking to these shorter term products so they can express leverage view? because they seem to have gotten quite popular over the years? >> they got popular over the last couple of years. what we've seen in the last six

to nine months investors want to move back towards more stable, physical based or easily understandable synthetic products and that's bean shift back towards quality and transparency and that will continue while markets remain the way they are. >> okay. steve cohen, thank you very much for your time this morning. so let's give you a lock on what's today agenda in the united states. quiet day on consumer data. san francisco fed president john williams speaks to a joint conference of oregon, idaho banking association just before noon. a couple of things coming up on the agenda but of course we are very much looking to the start of earnings season as well. becky, thanks much off to been following the story of barclays all morning and today we're asking the question barclays twided? a report suggesting the board

could split the bank in the wake of the libor affair listing its banking unit separately in new york. is the right way forward? what do you think. join the conversation here at "worldwide exchange". shoot us an e-mail at worldwide@cnbc.com. reach us directly at kelly under score evans. >> beijing may have little choice but to ease aggressively. how much stimulus is too much stimulus. more coming up next.

you are watching "worldwide exchange". welcome back to the program. these are your headlines. chinese inflation cooled more than expected in june. >> deputy governor was the the only bore fixing scandal. >> alcoa kicks off q2 earnings. so in china tamed inflation data could mean the central bank is not done yet. tracey chang has more. >> that's right. chinese consumer inflation cooled to 2.2% in june from the year before. that was below economists

forecast of 2.3% while ppi data also underwhelmed. with inflation no long an imminent threat to the chinese economy beijing should have more scope to stimulate growth and chinese policy makesers seem to be echoing the view. more aggressive efforts were needed to support growth. he said china's economic situation is generally stable but faces relatively huge downward pressure. most exist the july cpi to fall. the idea of deflation have sounded crazy a couple of years ago. now it's becoming a creeping concern for some market watchers. today's inflation report kicks off a week of major data releases for the chinese economy. all eyes now are on china's second quarter gdp growth out this friday. back to you. >> thanks very much. >> let's take a look now at today's other top stories.

norway's offshore oil strikes continues as negotiations stall on early retirement plans. >> eighth biggest oil exporter. >> we'll see what that does to oil prices. >> on monday reports spanish region will default on its debt. causing more headaches. >> not just the federal government there, living social, peter griffith said sunday telegraph could float next year on the nasdaq. that was the ceo that was talking about that. keep an eye on that. we'll see how it does. >> more successful than facebook. >> and roger federer secures his second wimbledon title. but andy murray sheds tears. >> anyone who has played a sport you see him in that moment, he

was holding it together so well. you almost wanted them to just take the camera away and let him have a second. it was a cathartic moment. >> emotional man. as a proud britain, the men's double title. amazing story. wild card entry. >> partnered with a danish entry? >> they said we'll give this a go. next thing you know they are in the finals, wayne trophy and first such win for britain where a woman won the wimbledon. >> i wore a tennis dress today to celebrate. >> perfect. >> we'll have to look for the wall later to see if she's wearing tennis shoes. still to come we'll head back out to farnborough. phil lebeau talks to the ceo of airbus on what kind of orders they are looking to fill.

stay tuned for that. ♪ ♪ ♪ ♪ [ 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. ♪

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good morning. >> reporter: a lot of attention is to dounsd commercial side of the business, commercial and defense. on the commercial side it's all on the aerobody market. we talked with the ceo, the new ceo of airbus about his confidence in the fact that all of these orders we're seeing for narrow body plane is not a bubble. here's what he had to say. >> i'm very confident it's not a bubble because we have very cautious ramp up. right now we're producing 40 a month and reaching 42 and stabilize it at 42. so it's a 5% increase. the market requires more. we're just limiting ourselves because of a superply chain constraint, especially for small size companies where the figure will fall. >> that brings up the biggest concern those suppliers. would you like to see that

consolidation in the tier 2, tier 3 group. do you think those larger suppliers will buy the smaller suppliers? >> yes. we're promoting that and we believe with further consolidation. however we already have strong players with us. >> given the complexity on what you have going on with the neo w-the xwb coming in 2014, the repair of the cracks for the a380, are you worried about profit margins? >> no. i think profits will increase. this is about achieving the challenges as you mentioned, of course. but we have capabilities to do that. >> so the profit margins will be there even as the ramp up and complexity of what's is going on over the next couple of years increases. >> if we do a decent job yes. we'll increase profitability because it's in our backlog.

>> couple last questions first one being you are based in europe. very familiar with the european economies. how concerned are you that this drags on five, six, seven years and it ultimately does have an impact on the bottom line? >> well, as a european i'm concerned. however as airbus our market is largely outside of western europe. we have about 15% in western europe. we won't be affected by the crisis. what counts is the growth at world level and this is why we're very successful, especially in asia or middle east. >> being based in europe what's your feeling about the outlook. your confident that the steps that are being taken will ultimately lead to some solution relatively soon wane couple of years sore it even hard to predict? >> it's hard to predict. whenever there's a crisis in 2006, what didn't we do? we integrated further. so if europe takes a slide i'm

confident that we'll finally be competitive. >> we talked with you when you opened the plant in mobile. this is just the beginning of furthering your presence in the north american market? >> we were already strong and procuring $12 billion every year from u.s. suppliers. this flag is well placed. it's probably a first step but let's do it step by step. we need to produce 320s over there and develop them to our u.s. customers. we're deliked with the announcement. >> the ceo of airbus talking about his confidence in that narrow body market as they ramp up orders for the a320 neo and move towards production. they are ramping production of the 320 model not just the neo but the a320 model.

at this time the narrow body market we thought it would be appropriate to bring in the ceo of bombardier. you are confident you can break that monopoly between airbus and boeing. >> i don't know we're breaking it. we're entering the segment. we feel that segment has not been well served over the years. we have a product that's optimized for that segment. we think we have the right product to serve our customers. >> up have an order you announced within the last few days for over a billion dollars and yet you're not telling us who the customer is. obviously it's their prerogative to cooperate quiet. why not come out and say this particular carrier has said we're endorsing it. >> it's the carrier decides. sometimes they do it for competitive reason, sometimes

they do it because they want to announce it on another show. when we sign a contract with a public company we have to disclose and we do what our customer wants to do. >> you have the small segment, 100 to 150, 160 passengers on that plane. is that an area that is just opening up, isn't it, in terms of markets developing and airlines realizing they got to go with smaller planes in order to meet that demand? >> we feel looking at our market forecast in the next 20 years there will be demand for 7 the hour aircraft. we would like to get 70% of that market. >> we have a competitor at the low end because they can't do more than 10 says. boeing and airbus that have down sized the larger aircraft. like i said not really optimized for that segment. >> when you look at that global market where are you most bullish right now for that small

narrow body plane. >> the u.s. will be the number one market then china will become the second market europe being the third. >> ceo of bombardier joining us on a day where he doesn't say they will crack the monopoly but they think there's room to play in that lower end. narrow body market. guys, back to you. >> thank you very much. just a reminder that phil will be speaking with jim mcnerney. >> still to come we preview the start of the earning season in the u.s. many companies are blaming the global economic slow down. we'll get an inside line from a top analyst. >> as we head to break let's take a look at how bonds are trading this morning because watch that spanish ten year, 7.104%. that's the level to watch.

welcome back to "worldwide exchange". if you're just tuning in i'm kelly evans. >> these are your headlines around the world. >> strike up the band, earnings season et cetera under way in the u.s. as alcoa leads the parade of results down wall

street. >> chinese inflation cools more than expected in june giving the central bank more room to ease policy further. >> the ripple effect of the libor scandal widens. paul tucker is due to testify in a parliament year hearing about his knowledge of rate rigging while a media report suggests barclays could be broken up. >> airbus looks east. ceo tells cnbc he's not worried about the eurozone crisis, the playmaker targets growth in the middle east and asia. well it's red again this morning or this afternoon depending on where in the world you're tuning into the show. thank you for being with us. the dow jones industrials average ready to start the week in the red down by 50 or 60 points for the u.s. open. nasdaq would be pointed down by about ten points. s&p 500 by eight or nine.

this follows, of course, the weak u.s. jobs report friday that similarly spurred a bit of a risk off mood in stocks and tension that we're seeing across the eurozone. here's the cnbc ftse global 300 down .4% this morning and pretty much straight line from open until now pointing lower. across the continent we can take a look at what individual boards are doing. ftse 100 is down .6%. moving lower. dax down .3%. cac down .66%. ibex is the one to watch. >> so, how do you make money in these markets? here's what southeast experts have been telling us this morning. >> we're looking at an annual average growth of, you know, 15%, 20%, albeit it's a very

small market right now. something like 2% of overall growing to maybe 4% or 5%. but still very strong growth rate. >> identify been looking at ten year bunds and ten year treasuries. i like the u.s. because that's a market that's lagged. >> from a risk perspective i think i probably will short the commodity currencies, the australian dollar so maybe worth looking at the australian dollar and japanese yen. >> let's keep you up to date on spain. eu ministers will grant spain one more year until 2014 that is to meet its 3% deficit target. this is critics an eu diplomat.

let's see how that's impacting yields because we mentioned earlier the spanish ten year is back well over 7% again. back to the pre-eu summit levels. these levels are seen as unsustainable for spain to continue to fund itself. looks like they could have a little bit more room. seems no respite to the borrowing costs for that country. >> just a quick look here germany is auctioning six month bills not a ton of movement in the bond markets this week but they did cover a ratio of 1.7 for the six month bills with an average yield that's, in fact, negative. negative 0.0344% on that. of course that's just slightly positive yield the last time they did it and reflects how

badly investors are looking for anything that's something, something like a safe haven. >> exactly. >> return of that capital. the u.s. earnings season officially kicks off when alcoa reports second quarter results after the "closing bell" in the u.s. today. the aluminum giant is forecast to earn just five cents a share hurt again by low metal prices. overall for the s&p 500 are forecast to drop 1% from a year earlier. that figure according to s&p iq. many companies have warned many blaming europe which accounts for 15% of total sales for the s&p 500. joining us now is john butter from boston. john, good morning. are you guys seeing an outright decline in earnings? >> well, at this point, we're not seeing an outright decline. we're actually expecting growth of 3%. however this would be the lowest growth we've seen in about three

years and also important to note most of this growth is coming from just one company, bank of america. they are only expected to report a small profit this quarter, they are having an unusually large contribution to the overall growth rate. if we exclude bank of america, it drops down to decline of 2%. >> john another sector which is impacted by one company is tech. we've talked a great deal in the past year or so how tech has outperformed. apple has this huge impact in how the sector as a whole looks. let's put this into some perspective if we look at apple separately to the rest of technology how do you see those trends working out? >> yep. similar to what we've seen in previous quarters, apple is the largest contributor to growth. we're looking for 3% growth. if you remove apple that growth rate drops down to a decline of 2.5%.

tech is one of those sectors being impacted by the weakness in europe and emerging markets. they drive a large portion of their revenues outside of the united states. one example that we've seen oracle in which the company generates about 30% of its revenues out in europe and in europe the some saw a decline of 7% of revenues. outside of apple the tech sector is not expected to have a strong quarter. >> when we look ahead to third quarter, to fourth quarter, both in terms much guidance and potentially to revisions as we're starting to get in the house how might those the direction of those impact trading? >> i certainly think the markets will be focused on guidance going ford particularly for the fourth quarter in 201. we've seen this every quarter but this quarter it's particularly important because if you look at the expectations, third quarter is expected to be another weak quarter in terms of earnings growth. expected to see 2% growth. for the fourth quarter analysts

are looking for about 14% growth with double digit growth in a number of sectors. we've just stoortd see that number come down in the last month or so so i think it's something the markets will be focused on. again, i think there's this belief out there there will be a recovery in the fourth quarter and we need to see what companies are saying to see if they either confirm that or start to take their numbers down as well. >> john, just run us through your thoughts on how revenue versus costs is shaping up for this period as well. do we continue to see cost increasing for these business? >> we've seen an interesting trend this quarter where seven of the ten sectors in the s&p 500 are expected to see higher revenue growth than earnings growth. usually that'ser to way around. in past quarters that could have been atrit justable to higher commodity costs. however since those costs have come down, net over the course of the quarter, you know, companies are seeing costs in other areas whether increased

marketing, some labor costs and one example of is that nike where they had 14% growth in revenues but a 6% decline in earnings and again they cited increased sg and a costs. so companies are seeing increased costs coming in to the second quarter. >> john, all that said it would then seem profits for this cycle have peaked? >> well, you know, that's one of the other reasons we're seeing lower growth there's that, the comparisons are getting more and more difficult. you go back to the early part of this earnings cycle, comparables are easy off of '08 and '09. but the index is looking for 104 per share. $105 for calendar year 2000. even though that number has come down we're still in record territory in terms of corporate profits for the year. >> john butters out of boston

for us. if you take out bank of america, you know, the earnings growth rate -- the growth disappears from earnings it becomes a decline. >> one business that can just affect the whole trajectory. apple with tech. >> last time apple was a legitimate story. in any case still to come on the show this morning reports suggest eu ministers will grant spain one additional year to meet its 3% deficit target. we'll bring you full details after the break. [ man ] ever year, sophia and i use the points we earn with our citi thankyou card for a relaxing vacation. ♪ sometimes, we go for a ride in the park. maybe do a little sightseeing. or, get some fresh air. but this summer, we used our thank youpoints to just hang out with a few friends in london. [ male announcer ] the citi thankyou visa card. redeem the points you've earned to travel with no restrictions. rewarding you, every step of the way. 

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visit progressive.com today. another twist to the libor scandal. british bank barclays could be split in two. a report in the uk "sunday times" newspaper said the board is considering a spinoff of the banking unit and see the business listed separately on the new york stock exchange. the story said it took on a new dimension over the weekend. the "financial times" published a confidential report by ubs on ways to reduce the libor crisis. >> paul tucker will be quizzed about a memo sent by former

barclays ceo bob diamond detailing a conversation. diamond was careful about his description of communications with the bank of england before a parliamentary committee last week. >> the note from mr. tucker says that he felt your libor returns could be low. doesn't it? >> he felt that our libor rates relative to the other 15 -- >> could be relatively low. >> yeah. >> why then on page two of your note to this committee yesterday did you say you don't believe you received an instruction? >> i didn't believe it was an instruction. >> so what was it? a nod and a wink? >> europe's financial services commissioner promised to take action. he says he plans to widen market abuse laws to include libor and that anyone found have rigged the rate could face criminal proceedings. the uk office opened a criminal

probe on july 6th while the u.s. department of justice is looking into collusion. >> secretary vince gable has urged barclays to show restraint. the outgoing ceo could see a multipound package. cable urged the bank to take a fairly strict view on the issue while admitting the government had no control over the pay out, you don't need direct control to put political pressure certainly on some of these institutions when they think about how much dome pen said outgoing ceos. >> a lot of political pressure around this whole story. we have coalition governments in uk and coalition falling out over various issues. various issues on health care and all the rest of it. i want seems that various politicians on each side of the coalition grabbing on to bits of this story and trying to make them their own. vince cable is a member of the junior party in this coalition,

so very much in his interest politically so make out to be a very strong voice in this whole story. >> barclays has a tough battle to win the pr effort. i'm looking at the op-ed in the financial times where there's a pop shot at bob diamond. martin taylor is one. names you hear names circulated as someone who could come back and lead barclays, he's on the vickers committee which i understand over here tasked with similar financial reform. >> i'm not sure how reasonable it is to write about an incident that took place in 1988. not quite cricket. >> cricket? i love that. but it is remarkable. i think it does, perhaps, indicate that he's distancing himself from bob diamond if he's to return to barclays. >> who else will be drawn into

this whole saga? >> not even just about libor, it's the way these rates are set globally. much more to come. >> earlier on the show we asked you what do you think about reports that barclays could split up. a tweet from david said if barclays splits off the investment part of the bank it could make creating a vision for each less broadly focused entity easier. what do you think? e male us at worldwide@cnbc.com or @cnbc.wex. >> and your pronunciation farnborough. we need to pronounce it in the english sense of farnborough, not farm bureau. >> phil lebeau has been bringing us plenty from the air show. i'll work on that pronunciation.

press reports suggest spain could be given extra time to reach its 3% deficit target. reuters news agency claims euro group finance man sisters will give madrid until 2014 to get their public finances in order. caroline is in brussels for that meeting. >> well, that 3% deficit to gdp target to be met at 2013 was ambitious to start with. and i guess it's only sensible to see that being pushed back by one year to 2014. but if the euro group offers more leniency to spain it's fair to assume it may do that with regards to other eurozone countries and it's worth noting the greek finance minute certificate will make his first appearance at the euro group today and i don't think he's going to get a big welcome party. he'll have to break news to his fellow eurozone finance ministers that greece will need an additional two years to meet

its fiscal target under the second bailout package and safe to assume maybe greece will get those additional two years. expectations go into the euro group meeting are fairly low but investors want to get a little bit more clarity. specifically how soon can the permanent rescue fund the esm recapitalize banks directly and how quickly can it buy bonds in the secondary markets. back to you. >> thanks. i want seems appropriately kind of grim and dusky in the background of her shot. >> very badly lit studio. i have to say that. it's awful when i'm in brussels. >> maybe the bad lighting. >> she looks amazing in bad lighting. she's more amazing in real life. a bit jealous. >> you're watching "worldwide exchange". >> alcoa kwix off second quarter earnings season. >> chinese inflation cools more than expected in june.

>> spain is set to get an extra year to reach its deficit targets.

president obama expect told call on congress today for one year extension of the bushera tax cuts for families making less than $250,000. white house official says the move could cushion the u.s. and have an impact on higher taxes. the bush cuts will expire january 1st. part of the so-called fiscal cliff that includes automatic spending cuts. the head of the international olympic committee is not loving it. he tells the "financial times" he's questioning whether fast food and soft drink companies like mcdonald's and coca-cola should be allowed to don't sponsor the games.

his comments come amid the growing obesity problem. mcdonald's has sponsored the olympics for 30 years. >> my sense is tingling. must mean a lot of people went to the movies watching the web slinging hero, the amazing spiderman. the movie is a we boot of successful spiderman trilogy. it's made $140 million since opening last tuesday. $340 million worldwide although, becky, to be sure a little bit shy of the success of its predecessor. >> looks like a lot of fun being spiderman. >> does have andrew garfield. >> i'm a bit biassed. this is was going on with the market action down across the board. the ftse down a third of a

percent. in spain, the ibex down by 1.4%. let's give a look on what's the agenda today in the u.s. quiet day on the economic front. may data due out. san francisco fed president john williams will speak to a joint conference of the oregon, idaho and nevada bankers association before noon. it's all about earnings and the u.s. earnings season officially kicks off with alcoa's second quarter result. it's set to earn five cents a share hurt by low metal prices and a reminder of where a position is just ahead of the open, red across the board and for more, director of portfolio management altima. how important is earnings season going to be?

>> well, hear obviously on the chicago cme floor what's concerning is the overall s&p outlook and as you know growth has been really been cut the last couple of weeks going into this earnings season. right now we expect sort of a flat line but with all the growing concerns with the spanish yield now topping 7%, that's why you're seeing that large opening downfall in the s&p futures this morning. >> yeah. chris, just remind viewers what you're referring to, there we got headlines out of the euro group meeting, saying they will give spain an extra year to meet its deficit targets but in some way reminding investors how precarious spain's position is. do you expect this kind of risk off sentiment to dominate the week? >> i think that risk off is going to really concern the markets. i think the s&p futures really are strong indicator with what's

going on with everything tied to the libor conspiracy as well as with over $500 trillion of aset ofs tied to that number. you have weak earnings expected besides bank of america. what i think the s&p futures is really going to indicate this next week is something that we are going to carry over as trading firms here in chicago over the next quarter and that's to be really wary. fourth quarter's outlook is supposed to be better. expectations are being cut. but i believe this week is a week of duck and cover. >> we had some data out today from china and japan which showed a weakness on the asia side and gdp number coming out from china at the end of the week as well. many investors are looking to this part of the world to keep growth going. if that's a flawed thinking what

does that mean for the u.s. market? >> the u.s. market, i think, will continue to be a flight to quality. you'll see the ten and 30 year yields here at the cme continue to fall. i believe the stock market does have legs but we won't get to that fourth quarter. remember last year, july, august, how volatility, you know, we got above 30 there for a while. you'll see that carry it over. the s&p could get below 1300 in a matter 2005 weeks. >> we'll leave it there. director of portfolio management at altimus capital this morning. >> stay tuned to cnbc. in just an hour's time "squawk box" will bring you and interview of jim mcnerncnerney. >> thanks for watching. >> bye.

good morning. today's top stories earnings season officially opens for play today. check out that piece in the "wall street journal". investors fear it's going to be a tough one, 42 companies that you probably know the names of have already warned of lower than expected results. euro finance leaders are meeting in brussels. their job put last month's plan to save the single currency bloc into action. this should be fun. check out the spanish yields today. and forget the mail. computers users could be waking up to trouble this morning. we'll have details on a rogue virus and the fbi's attempt to stop it. it's monday, july 9, 2012 and "squawk box" begins right now.