welcome to "worldwide exchange". i'm becky meehan. >> i'm kelly evans. these are your headlines. >> bank of korea surprises with first rate cut in over three years. brazilian counter part lower its benchmark rate. >> bank of japan keeps its buying program and sends yields to a fresh low. >> persia launches a first fresh. axes 8,000 jobs. >> aegis is the gainer.

it's a great deal for shareholders. >> this provides industrial shareholder base for aegis, great combination, first communications group born in the digital age. i think it's great news for our shareholders and very good news for other stakeholders. thanks so much for joining the show. already, no time to settle in. let's bring an update. we have the iaea coming out with some comments saying that they see weaker economic growth suggesting a possible oil market ceiling. that could be some nasty supply surprises. look out for that. oil demand seen growing in 2013 but on an anemic economic

recovery. the iaea says the fundamentals have eased in 2012, but opec output cut to 30 million barrels a day would have an impact on this situation as well. so, global oil demand at 90.9 million barrels a day in 2013 is the projection, 2013 the iaea sees global oil demand at 90.9 million barrels per day, oil demand growing by a million barrels a day in 2013 versus 2012. it suggests weak economic growth will propel oil demand fractionally, though. they believe in the second half of 2012 that they see a need for opec oil to average 31 million barrels per day while they also say that iranian oil output is falling in june to near 22 year lows as well. bringing back info use supply

disruption that they are pointing out. let's just get a comment here from the head of research at orient financial markets. thanks for coming along. the iaea talking about oil demand. we get a read through sort of the global economic picture as well, talking about this muted recovery in global economies in 2013 and a very small increase in oil demand from 2012 into 2013. does that square with your global view of how the economies are likely to recover? >> yes, pretty much. i think what we've seen from china, what we saw korea today in terms of rate cuts, the japanese are holding steady because they already are at zero rates and not a whole lot more to do but the central banks certainly tend to agree with the assumption about the global slow

down and it's inevitable under those circumstances that oil demand will go down. certainly from our part of the world here, there's no question that the amount of oil that we expect to be consuming for the remainder of this year and 2013 is not going to grow by any substantial amount. >> okay. thanks for that. that was just a quick flavor of his view of the world. well get back to him for the rest of the views we're tracking for you. on today's show, aegis cut its sales forecast. >> we'll also be live at the farnborough air show. find out why the international aircraft leasing company has chosen boeing. >> the libor spread east. we'll speak to nikkei in tokyo after the report of japan

dropped barclays. >> also in that story has the short fallout hurt london as the financial center. we'll speak to one of the city of london's policy chairman coming up at 11:20. >> we'll get the buzz from sun valley, idaho where top tech executives are rubbing shoulders with the world's biggest investors. in a sign of the global slow down is raising real fears south korea's central bank made a surprise 25 basis point rate cut. first time they cut rates in more than three years and we have more from seoul. a rate cut supposed to fuel risk appetite but we're not seeing that stock market over there taking it so well. >> no, not at all. the kospi closed 2.2% lower. korean yuan lost ground against the there are. the exporters took a beating on

this 25 basis point cut. many fear the korea economy faces headwinds from china and u.s., the bank of korea cited weaker than economic forecast as the main reason behind this move. exports accounts for high of korea's gdp is at risk. cpi climbed last month. bok governor said the rate cut will not affect consumer prices this year or next year. he also said lower interest rates will help the korean people ease their debt burden. household debt in this country stands at 74% of the gdp. this is among the highest in the region. remember the bok is slated to release its full year economic forecast tomorrow.

many believe the central bank will trim its current 3.5% growth projection this year. back to you. >> the bank of japan is standing pat on its policies sticking to the view that recovery is under way. it refined it's audiotape set buying program but made no change to the total size. the yield on ten year jgb hit a nine year low. 0.77%. this on news that the bank of japan is buying fewer short term securities. some remarkable levels that we're seeing here. is your own view that this move can keep going. can we keep seeing fresh lows here on ten year yields? >> this really started in april when the bank of japan really reacting to the exchange the

rate, the yen exchange rate started very aggressive asset purchasing program. and since then the yield has continued to drop. whereas the bottom there, who knows. the bottom, i guess, now we've seen for two years in other places in germany, even in france recently a negative interest rate. so i wouldn't forecast the negative interest rate for ten year paper in japan, but clearly there's still the possibility of it dropping further. the other thing that drives that is the fact that, you know, japanese companies continue to repatriate their earnings from abroad and japanese firms are by far the largest investors worldwide in assets abroad and they have to bring them back at some point and monetize them in local currencies.

>> the other central bank action we had, brazil has cut their rate to a record low of 8%. central bank said risk to the inflation outlook remain limited. analysts says this indicates more rate cuts could be in the cards. >> the amount the banks have with the ecb has dropped by more than 50%. the deposit facility dropped to 2,500 billion euros. this after the ecb cut its deposit facility rate down to zero last week. i personally think this is the biggest story of the morning if not the month. what's interests field goal you see all of a sudden banks who put money on depot swit the european jan central bank getting zero they will put that money elsewhere. they are not getting that quarter percent as they were before. we're seeing short term safe haven paper everything from germany to other northern core

european debt yielding fresh loss, also seeing comments this morning out of the ecb trying to defend this move that did take people by surprise last week, quoted on the wires saying the big drop in deposits is actually a good sign and it should push banks to lend and not dump funds. european central bank will put it throughout the real economy but this codis interrupt short term funding markets. >> it's hard to find somewhere safe to put their money. >> we've seen jpmorgan, goldman sachs, blackrock suspending inflows to their money funds by saying we can't compete any more. it's going to hurt returns for people who are already in them. this is definitely the place to watch this morning. you've heard a bit of my rant. what do you make of what's going on? >> yeah, sure.

no, i agree with the ecb comment that this is a positive sign but i don't think it's got much to do with fact that the ecb cut rates. i think it's got to do with t memoranda of understanding. i think it has the potential of actually being a real turning point in the crisis. >> i'm sorry i don't understand the link between that and this sharp move we've seen this past week in overnight deposits. >> the overnight deposits basically simply reflect ad situation where banks that have been getting money through ltro, et cetera, don't lend it out

because they have no place to put it. there's a lot of risk involved. if the overall, the overall sense of risk goes down to that extent they are perfectly willing to then use the money rather than putting it back into the hands of the ecb and that's where the link is. there's understanding in europe at this point. >> i don't mean to interrupt, while that's a contributing factor to everything going on here no doubt to see a drop like this in one week coming after the ecb cut this rate, i just think it's probably the more important overriding factor here. >> well, all right. i think that's arguable, but basically the one new thing that we have seen is this fact that the equity holders, the preference shareholders and

subor d subordina temp debt holders in spain, that's a positive sign. >> we'll be back with more. first we want to check in and see how markets are doing. becky? >> market action is shaping up to be a negative day of trades. certainly pretty obvious we have more decliners than gainers. that's reflected in the stoxx 600. let's move around and see a bit more of the market action. the ftse 100 is down by .66%. nearly half a percent lower for cac. the spanish markets are down by 1.3%. ibex is losing 80 points. bucking the trend, aegis is

stand out gainer on the european markets up by over 45%. now this is a uk marketing company we heard this morning that dentsu will buy this marketing group for 3.2 billion pounds. the premium to yesterday's close was 48% so we're seeing the shares of aegis moving up. we're seeing a feed cross into some other companies, havas up nearly 6%. and carrefour up by 5%. this is europe's biggest retailer, one of the world's biggest retailers. came out with second quarter sales that fell by 3%. they have seen tough times in their business in italy and

spain. these are the names we speak about, suffering from austerity. very sluggish performance in the french market which is a crucial part of their business too. however, speaking on the conference call the cfo said they are very comfortable with the guidance and performance but represent ad drop in sales pretty much in line with expectations. no surprise surely on that front and that is helping the shares of the company. now, on to the forex markets. euro dollar is trading lower. 1.2228. increasing concerns about the eurozone debt crisis and how this is shaping up currently. down by just shy of .1%. putting off any further action on the easing from this time around, plus the aussie dollar

is trading at 1.016. down by 0.8%. employment report looking negative compared to the surprise we got last month. we're seeing an impact there. euro/sterling looking at .7903 for euro/sterling. on to the bond markets and this is how the picture is shaping up. very low yields on the ten year bund. we mention ad moment ago, kelly was just speaking on this topic about how hard institutions, investors are having to work to get any return when they are looking for safe haven assets. the ten year bund is now at 1.25. just shy of 1.26. very low yields on that front. in spain and italy there we're looking at much more elevated yields and much better picture than just a few days ago.

6.5%. 5.7% in italy. and the gilt uk ten year debt is 1.55. let's move on the asian market. looking across the region for a quick snapshot and we have gains of the chinese markets of just about half a percent 2.2% low for the south korean market where we had a rate cut. so obviously having an impact. let's get out to tracey chang who is in singapore and can update us. >> good morning. asian markets just can't catch a break. widely down again today. china's shares turned higher. but hong kong shares tumbled due to weakness in china.

and japan's nikkei posted a drop after seeing only minor tweaks to the boj's easing strategy. the kospi closed 2.2% down despite a rate cut. foreigners extended their selling spree for a fourth straight day. australia, the market didn't survive the selloff, sliding about .7% after an uptick in employme employment. sensex is weaker down by 1.3%. becky, back to you. >> tracey, thanks very much. >> let's check in on what's going on over here. social media stocks now firmly out of favor. what do you think? if you want to join the

conversation here on "worldwide exchange," e-mail us at worldwide@cnbc.com or tweet us @cnbcwex. becky? >> shares of india has been hit hard on disappointing sales outlook. we'll ask the ceo how to grow in tough economic times. we'll be right back.

this morning. let's turn our attention now the latest news out of farnborough. irish aircraft has announced a $2.3 billion commitment to boeing. a avalon ordered boeing's aircraft bringing their total fleet up to 135 planes. we have ceo of avalon on set with us to discuss this decision. why boeing? >> well, as we sort of move forward with the development of aircraft, airlines all over the world are looking for more fuel-efficient aircraft. and the boeing 737 max really

delivers that for airlines, so we have very strong conviction that this aircraft is going to be in big demand on a global basis. >> how much of a difference does it make for you when you project your cost out to have a little bit lighter weight aircraft versus boeing's rivals? >> it's the fuel efficiency. fuel is about 40% of an airline's operating costs. so even a 1% saving over a year is very significant dollar saving for airlines. sony innovati so any innovations will support us. >> how much negotiating space is there in a deal like this with companies like boeing. do you go back and forth? these are big orders. there are group discounts. so how much of a negotiation is this process? >> well, i think in many ways it's more art than science as always and i think timing is important. it's been a quiet air show

relative to last year and so generally we like to buy things when the list of buyers is short which means you can be opportunistic and get a good deal from the manufacturers. we've been in discussions with boeing since september of last year but the real negotiation probably really happened in the last week as it got closer to the show. >> list price of 2.3 billion. how much did you pay? >> well, we got an attractive discount. these are confidential numbers. boeing don't like those net numbers displayed. >> how much of a discount did you get for this versus previous deals? you getting better value over time or paying more? >> that's a good question, right and it depends on the scale of the order. it depends on the scale of your business. when we started avalon in 2010 we executed an order with boeing for 12 aircraft and the price for that would have been x. now it's 35 aircraft order you get a better price because you

get economies of scale. >> obviously aircraft leasing company. i'm interested to know how the end demand, if you like, is shaping up. what kind of pattern your seeing in companies that come to you and what kind of orders are they trying to fill? how does the end demand look? >> the end demand looks varied and diversified globally. from our perspective taking a ten year horizon because that's our planning horizon we see very significant growth demand in asia. we see very significant replacement demand in the united states because the u.s. fleet is one of the oldest in the world. and we're now seeing that cycle of replacement in the united states. europe probably is the lowest demand part of the world over the course of the next ten years. >> passenger or cargo? >> predominantly focused on passenger. cargo has grown twice the rate of passenger travel over the course of the last two years.

cargo is a very cyclical industry. directly tied to gdp demand. >> how bad have conditions gotten >> tough. debt capital markets is the toughest i've seen it in 20 years in the industry particularly the french and german banks have retreated significantly. the u.s. capital markets have continued to support. and we think that will be an interesting opportunity fours. >> fascinating perspective into everything that's happening across the globe. thank you for your time. still to come we'll talk soft commodities as a persistent drought in the midwest threatens to keep prices high for some time to come. stay with us for more.

banks slashed the amount of cash parked in the ecb by 50%. central bank officials optimistic optimistic about boost in lending. >> bank of korea has the first rate cut in three years while the brazilian counter part lowers their rate to a record low. >> bank of japan the weeking its bond buying program sending 10 year yields to a nine year low.

>> and a fresh round of cost-cutting. 8,000 jobs are cut after it warns of a loss at its auto you to when. >> so spanish miners another public sector workers have reacted angrily to a 65 billion euro austerity package. police fired at rubber bullets at protesters in central madrid. stephane pedrazzi is in madrid. stephane, it has to to be done? >> reporter: yes, of course people on the ground here are wondering what is the reaction of these new austerity measures. it's absolutely necessary. 65 billion euros. it's exactly what's needed to bring back the public deficit from 8.9% of gdp last year to

2.8% of gdp is the target for 2014, in terms of this it makes sense. in terms of real economy there's an increasing number of people not only trade unions but some economists here on the ground who are wondering if too much austerity in the end will not gentlemen march diocese the economic recovery in spain. the spanish economy is already in recession and that it's likely to remain in recession until at least the end of the next year. bear in mind also the unemployment rate in spain is now close to 25%. it's even close to 50% if you look at youth unemployment rate and also bear in mind that the black economy is rising in spain. increasing number of people who are officially unemployed but they are in another activity without paying tax and the risk if you increase the rates is reducing the unemployment benefit is seeing portion of

black economy rising. it's nearly one-third of the spanish economy so yes there's a danger, that's the remedy actually, not the cure but kill the patient. >> thanks for that. let's get a comment on this topic. spain is moving in the right direction now isn't it, could there be some opportunities for investors in this part of the world with prices depressed and a plan now in place? >> well, absolutely. i mean i give you one example. for example, the pork prices in china have collapsed because the whole food chain for pork is problematical. so chinese companies may be saying okay fine let's learn from the spanish and create some good, you know, style pork. there's going to be a lot of

interest from china, from other parts of asia, from japan as well with the high yen of actually investing of private sector investments in spain and elsewhere in europe and i think that's where the future has to lie. i think -- i agree with these miners. if you increase the v.a. t., any increase at this point is wrong. cutting government jobs cutting expenditures is the right thing. but if we fix the banks and at the same time get private-sector funds flowing in from elsewhere then there's a possibility. >> thanks for that. we'll come back in just a little bit. first want to bring you this news as well. christina fernandez just managed to avoid a george bush pretzel moment. the president accused the paper

of double standards over its reporting of spanish economic woes compared with argentina's 2001 crisis. she criticized the challenged finance minister. >> translator: european union put spain on the fuselage. look at the bald guy. you know eu has intervened with the central bank and you have that bald man pointing with his finger. it reminded me of things i'm telling you it almost upset my breakfast. i almost choked on my toast. it reminded me of times of intervention. >> let's bring you the update on peugeot. thousand of job cuts. comments coming out from the french prime minister saying the industry minister will be presenting an automobile aid plan to the government on july the 25th. so the french government is now getting involved in this

situation saying that there will be on july 25th a plan presented to the government to support the car industry in france. also comments though from the ceo of peugeot saying the possibility of a french government taking a stake is not on table. but we'll expect something on the 25th of july. shares of peugeot are tracking up by 3.3%. let's move on to other market action around the world. particularly looking at stocks. let's look at corn and soy. record highs for corn and soy. right across the grain complex in fact in the past few weeks as we've had this very hot, dry spell across the states which has caused problems for the industry for the crops and has an impact on supply. wheat is currently up by half a percent, corn is up by 1.5% as

well. let's check in with aaron fits pa trick. we've seen the grain complex looking very troubled just in the past few da. give us the outlook how this weather impact is affecting crops. >> this has been a severe drought. worse drought in u.s. midwest since 1988 and having severe yield and also area harvested implications for the moment primarily corn and soy beans. >> so how should investors play this? how long should they expect this situation to persist? >> well as you mentioned we're just off of record highs soybean prices earlier this week. corn at the moment is within 40 cents of the record highs we saw

last year and even though we're at these extremely high price levels the outlook over the next seven to ten days continues to look hot and dry. when we look into a little bit longer term weather forecast the conditions do not look like they are going to improve for these crops so even though we have such high prices at the moment without significant rainfall across the entire midwest we continue to see that the yields in the area, the total production of these two crops are at severe risk and we continue to see that potentially higher prices are in store for us if these weather conditions do not improve. >> okay. question, i think from our guest host. >> hi, from hong kong. >> hello. >> hi, from hong kong. question. soybeans are very much in demand, very much imported here in asia and of course higher prices are not necessarily what we would like to see but wouldn't countries like brazil, for example and others in latin america be able to jump in and

won't the united states growers have to be quite careful not to lose longer term market share? >> well, i think in this case it's not whether or not the u.s. farmers want to lose market share, they simply are, i guess, in the case of corn at the moment because of the short falls in production, i think this is probably for the asian import situation more of a soybean story really. we had soy beans last season so the largest year-over-year decline on record because of the severe drought in south america. now we're coming in to the northern hemisphere growing season where asian and other key soybean import countries were expecting to have a rebound of soybean production in the u.s. doesn't look likely. we've never seen a severe drought impact the south american and north american harvest markets. we have a strong draw down on

stocks and have an impact on china as china imports two-thirds of the world's soy beans. already in the u.s. more than one-third of this crop that's going to be harvested in september is sold so very strong export demand, china trying to displace the short fall in the american crop. >> it sounds almost like a crisis. at the same time i wonder as we look at some of the price action in corn, in soy those jumps that just look so elevated, you know, is now really the time if you were to play this as an investor that you want to jump in here and be long? >> we have seen prices pull back a little bit in the last full days here with corn and soy beans. in our opinion given the weather outlook we continue to see a pull back in prices we still think there's a buying opportunity especially if we see corn maybe pull back under $7 per bushel in the short term. same thing with soy beans if they drop back around that $15 range because of the severe

outlook in weather. we need a significant shift from this drought situation which is something we're not seeing in the weather forecast. at the moment soybean demand rationing is not something we've seen. we've seen a bit of it more in corn but certainly there's still production risk at that stage. a little bit of pull back in prices we've seen in the last few trading sessions and certainly if this doints short term we'll consider that a buying opportunity. >> the supplies are so important right now and every where else it's been more about demand weakening and while food may be somewhat immune from that and food into fuel another source of demand, is at any time broader -- if you were to take at that global macro picture ultimately one that's not or less supportive? >> sure. i mean food is certainly something that is not as impacted by what's going on in the broader economy.

whether we're in a boom market or recessionary environment people still need to eat and this is something that continues longer term to drive demand for ag commodities particularly when you look at the emerging markets as incomes there continue to grow. people are adding more protein to their diet. this is a longer term trend that continues to support food demand and soft commodity prices despite the broader macro environment. >> thank you. we'll leave it there. appreciate your thoughts on that this morning. the commodity futures trading commission is set to approve the so-called corzine rulemaking executives of futures brokers accountable for customer funds this just days after the collapse of pfg best. reports say u.s. regulators are probing while pfg used a small accounting firm that operate from a home to audit its books. that should have raised red

flags. it's drawing comparisons to other high-profile fraud cases. u.s. regulate ors including the sec in manhattan's district attorney's office are examining jpmorgan's sales tactics. "new york times" says the move comes after financial advisors claim they felt pressure to push the banks own mutual funds over competitors which in many cases were cheaper and offered higher returns. jpmorgan is not being accused of wrongdoing and shares of the company which of course have been hit a little bit lately are down another .2% in frankfurt trade. >> the federal reserve bank of new york outlines its discussions with barclays and potential libor problems. the documents show new york fed took prompt action as early as 2007 to push for libor reform. the documents are being published under pressure from u.s. lawmakers.

it appears the libor fixing scandal may be proving costly to barclays after the uk bank was dropped from a japanese bond deal. we have more. >> hi. japan bank international corporation has excluded barclays from its new dollar backed deal. this is the first large scale business deal that the british bank has lost since its involvement in the libor rate fixing scandal came to light. they announced today it has appointed bank of america and merrill lynch as their managers. barclays is on the list when they startedrted prepare the del in may a month before the libor scandal hit the media spotlight. barclays officials suggest that the move is unique saying that it stems from the conservative nature of japanese companies, especially government affiliated ones. that's all from the nikkei

business report. back to you. >> thanks very much. japan's denstu has agreed to buy aegis. the combined group will become the leader. dentsu has agreed to pay almost a 50% premium to yesterday's closing price. shares up 45% so perhaps leaving some room for doubt in the deal. earlier the ceo of aegis spoke first to cnbc and said the deal much as good one for shareholders. >> this provides industrial shareholder base for aegis, great combination. first communications group born in the digital age. great news for our shareholders but very good news for other stakeholders. >> india's industrial output grew at a stronger than expected pace in may. up 2.4% from a year ago. we have more on this from mumbai. last time it was surprisingly weak figures now surprisingly

strong, perhaps? >> well, actually it's a mixed bag. this number has been strong. a lot of positive coming in from manufacturing which is up 2.5%. we had mining too which was down which was a contraction but less so than the contraction earlier. all in all electricity was up. consumer durables was up which contributed positively. now the negative surprise came in from the fact that the april figures were revised negatively. remember that had shown a flat growth last time. that was revised to a contraction for the april figures. that's a bit disconcerting but

economists have put forward a view they don't go by it as solidly as they used to because it used to defer a lot in terms of revision of figures. there's a bit of disconcerting views coming in from "the economist"s that maybe they don't look at it so aggressively going forward. inflation comes out on monday and then we follow that up with the policy by the rbi on july 31st. inflation is expected to be the big figure we're looking at. >> let's give you a look at what is on the agenda in asia tomorrow. big day in china. at 4:00 cet we're expecting second quarter gdp figures. june sales, fixed income and industrial output. a big focus of attention globally tomorrow. singapore also set dome out with second quarter gdp a couple of hours earlier and free trade

talks between south korea and vietnam set to begin in hanoi too. >> i want to bring you some comments we're getting from italy's economic minister. first help to spain will cost italy or increase italy's debt by 6 billion euros. he says the country will not need toish more debt as a result of that. he also says the bank of italy's forecast of minus 2% gdp growth should be respected. and also talks about separately here the outlook for growth going forward. i want to remind you this morning that italy's national statistics body said it's being crippled by government funding cuts and have to stop issuing statistics as a result and becky that's one way to stop, stop a crisis, you know. maybe won't be in recession if we don't know how bad the figures are. >> if only it worked that way. >> the statistics are not

issuing statistics. anyway let's talk about what we should expect on this show. still putting out tv. plenty more to come on the show too how cheap are u.s. equities, chief investment officer of legg mason will weigh in after we come back. we'll be right back.

chevron be expects to report higher quarter profits. chevron reports full results july 27th. marriott second quarter profits rose nearly 6%. revenue still slid. the hotel operators had higher group books in america and europe. the company is cutting its full year estimates. is raising its earnings outlook. looking at the shares they are down by 2.5% but this chart shows where we're going dwreer date and still up in the german listing by 34%. it seems that the gloomy data we've been seeing out of

china has weighed on the outlook for u.s. earnings. that doesn't mean u.s. equities aren't looking attractive to many investors including this guy. our portfolio manager of legg mason. where do you see the value in u.s. equities right now specifically? >> well, you know, the question i always ask is, you know, what has to happen to make the prices right? there's several sectors in the u.s. that are prizing zero growth and in many cases negative growth. the three sectors that fit that profile are technology, health care and financial stocks. again, there's a lot of reasons in the world to be pessimistic. i agree. i read the papers. when you look at future growth expectations many great global brands, global companies in the u.s. are priced to shrink over the next several years and that's a very low bar to jump over. but just a few things go right and there are some things going

right in the world especially in the u.s., those companies can do actually pretty well. >> you point out many companies are cash rich. what does this mean how you expect those cash rich corporations to behave as we see the optimism that you expect coming through? >> yeah. it's a two edge sword, great question. two edge sword. there's over $2 trillion of cash in the u.s. and building at 200 billion a year because the cash level is at a high level. on one side even though investors, retail and institutional investors aren't buying u.s. equities the companies themselves are buying equities. the shares outstanding are shrink. we're deequalizing. companies themselves are the marginal buyer.

you're seeing deals done every day. i think that's going increase over time. that's a risk too. you want to make sure that companies are doing a good thing with the cash not all well, some will be wasted but that's over a $2 trillion pile of cash that's growing that i think in many cases will be put to use and right now is being used to buy back cheap equities. >> sam, what areas do you think have the most value right now? where do you think people should get exposure at the moment? >> well, you know, there's two areas and i think less controversial but in technology, you know, there's still a lot of innovation going on in the u.s. bringing the mobile internet with smart phones with companies like qualcomm and apple that are growing but yet aren't priced for much of that growth if any. that's exciting pap lot of the cloud play, big data which emc and others, that's coming, those are real growth drivers. health care, similar thing. people get excited about emerging markets consumption

growth. u.s. health care has a lot of exposure to those areas and will be growing. again what we ask ourselves when we look at these distinct growth drivers are we paying for it? in many companies you don't have to pay any growth premium, you don't have to pay for that option. it's pretty amazing for us that companies that are growing today are priced to shrink. it doesn't make sense in our estimation. >> one sector that does seem to shrink is financials. do you think like this sector? >> yep. i do. that's the most controversial one. mutt ironically, financials are actually even for this q2, for the u.s. earnings part of it is an easy compare but the fastest growing sector in the market. consistently financials have been one of the fastest growing sectors in the last two years np will contribute a lot. so despite the terrible sort of fundamental outlook that's discounted in these names many

below book the earnings recovery that's been going on as credit has been improving in the u.s. is very powerful. >> bold call there on financials. thanks for your time this morning. we want to get a final thought from our guest host this hour. what's your best trade idea right now? >> yeah. my best trade idea, i think we are not of the opinion that china is going to experience a hard landing. our expectation for tomorrow for the gdp is around 7.8%. we think that domestic demand has a good possibility there, so we are looking at investing in the domestic sector in china. chinese banks at this point have really been beaten up. there's a lot of opportunities there even if banks run into trouble, the chinese government has the foreign exchange reserves of $3 trillion to

recapitalize smaller banks if that should actually become necessary. so we think that that's the direction to go. the other area in china is the property stocks. there are some stocks, i can't mention the individual stocks but the property sector as a whole i think is something you should be looking at. >> all right. thank you so much for all your time. head of research at orient financial markets. still to come on the program, wait and see on qe3. nice little rhyme. fed policymakers still divided over stimulus. we'll discuss over the break. don't go anywhere. you'll be singing too! pick up the phone and call hoveround, the premier power chair. hoveround makes it easier than any other power chair. hoveround is more maneuverable to get you through the tightest doors and hallways. more reliable. hoveround employees build your chair, deliver your

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welcome welcome to "worldwide exchange". if you're just tuning in i'm vance van. >> i'm becky meehan. >> banks slash the. a cash parked at the ecb by more than 50%. >> preemptive action from central banks. bank of korea surprises with first rate cut in over three years while its brazil jan counter part lower its benchmark rates to a record low. >> bank of japan sending ten year yields to a nine year low. >> peugeot axes 8,000 jobs as it warns of a first half loss.

all right. good morning to u.s. viewers who may be tuning in. i apologize for clark. we have red behind me. the dow jones average is pointed lower, nasdaq lower by about 16 points there. ten actually if i can do the math properly. s&p 500 is pointed lower by seven points. here's the tone across european markets. weakness in asia. disappointing figures out of australia regarding job growth. surprise rate cuts out of korea failing to lift spirits. ftse 100 is down three quarters of a percent. the dax is down. the ibex 35 in spain, no surprise on a daily basis is the under performer.

>> called color blocking. not clashing any more. currently. i don't know about these things. that's what they say. let's talk about the other market action. forex, euro/dollar down. mounting concerns about the situation across europe. dollar/yen, boj just holding pat. the weeking its easing policy but not injecting much into market. dollar is down by 1.4% against the aussie. disappointing employment data. surprise to the upside. previous round of employment data in the australian market. this time disappointing. aussie dollar is down against the u.s. dollar. concern on overreliance on the industrials and the reliance on china.

euro/sterling .7895. bond markets increasingly low yields. ten year looking for safe haven on the part of investors. ten year in germany is 1.25. spain we have been concerned about these levels, we're still elevated. well below 7% right now. 6.5% roughly for the ten year debt in spain after those austerity measures that were announced this week which cause ad great deal of constellation. italy, 5.7%. so, again, elevated but still off the highs we've seen. here in the uk very, low 1.55% is where the yield is on the ten year debt in this part of the world. across asia let's see where the equity markets are taking us and we have the rate cuts in south korea which is having an impact on the equity markets as well today. south korean markets down by 2.2%. 1.5% lower. we have the boj as well coming out with its results in the

japanese session too. up, though, for the chinese market by half a percent. let's get a run down of those factors and more with tracey chang who is standing by in singapore. tracey? >> thank you. i should wear less red these days. asian markets are widely under water again today. the shanghai composite only one landing in the green. china shares turned higher by midday. hong kong shares tumbled due to weakness in china exposed consumer names. shares of jewelry tanked 8% on dismal quarterly earnings adding to fear that domestic demand will hurt corporate probability. nikkei posted its biggest fall dropping below major sport at a 25 day moving average after seeing minor tweaks to the boj

easing. foreigners extend their selling spree for a fourth straight day. australia the market did not survive the selloff. they lost of a an uptick in unemployment rate. quick check on india sensex weaker as well down by 1.5%. kelly, over to you. >> investors are flocking to the safety of u.s. treasury bonds in droves. they've taken the yields to their lowest ever 1.49% yesterday in an auction of $21 billion of ten year notes. that auction came an hour before the release of fed minutes showing mormon tear easing but not quite to the degree that markets were expecting. bill gross says u.s. unemployment will be higher next time this year. pimco co-founder tells cnbc that's partly because the fed's monetary policy are increasingly

having less impact. >> interest rates move down towards the zero line it's not necessarily positive but has negative implications as well. business models, money market funds, pension funds, are all imploding. so there's a negative twist to the twist which i don't think fed policymakers are factoring in. >> bit of breaking news for you on the italian bond auction which was at 12 month t-bills ahead of an important auction tomorrow. so we'll get a good read on how the markets are viewing the italian debt at the moment. the 12 month t-bill average yield, 2.697%. now that compares with 3.972% on a similar auction on june 13th.

we're seeing yields dropping a fair bit since then. the bid to cover ratio on this t-bill auction 1.55 as opposed to 1.73 last time around. they are selling across italy, hopeful of 7.5 billion euros of those 12 month t-bills. >> joining us now is president of mercadian management asset. having heard a little discussion about flight to safety, flight to liquidity how would this impact investing for the remainder the year? >> listen, people are already kind of freaked. you see that in the reality of the yield on the bond. it's the safety trade. people are there not necessarily because they want to be but because they have to be there in their mind. no one wants to get no interest rates and that's what people are getting on inflation adjusted basis. what bill gross is saying is right on the money that these

near zero numbers are really taking the power of the fed to really affect things out of their hands. more and more we're looking at the dysfunction on capitol hill and politicians are running out of people to point fingers at at why things in this country can't get going. i think as you look at things for the rest the year you go back to the story i see here month after month, this uncertainty is having a huge negative drag on the economy and investor psyche. most people for the most part as it relates to individual investors have sold their equity position down to the point that i say they can sleep at night and just kind of waiting for this nest to muddle through. not a gate time for savers. >> it certainly isn't. and people may hate this trade that nevertheless don't dominate. what are you recommending to clients. can you find any value in equities or do you stick with the trend? >> oh, no. i actually think there's a lot of value in equities.

if you look at corporate cash levels are at 60 year highs. forward pes are at the low end of the range. so i'm recommending to clients that are looking for yield to look for, i know it's boring, high dividend place, stocks that play out nice and you can get some that are nicely over 3% and hide out there and you get some inflation protection in some of these better balance sheets. when you look around the world, many corporate balance sheets are better than any of the sovereign balance sheets anywhere you look. so i think that there's a lot of places you can go but not that original model we were all told, you know, when you get older subtract your age and reserious it. that's what percentage you should be in bond and stocks. that's going out of the window. what's being financed on the back of seniors. another place where people have saved their entire life are being asked to make a sacrifice which is we'll pay nothing on

your savings after you did everything right and saved monthly for your future but now that you're there we won't pay anything on it. it's forcing information take equity risk so you have to be there. you have to find the safest balance sheets and largest companies and companies with good track record and manage these rough waters. >> let's move on to other central bank action. south korea's central bank 25 basis rate cut today bringing its key rate to 3%. this is the bank of korea's first cut in three years. bok said it's trimming rates because of a bleak outlook. the bank of japan is sticking to the view that recovery is under way. boj fine tuned its 879 billion dollar asset buying program but made no change to its signs. >> banks deposited with the ecb overnight has dropped. i want dropped to 225 billion

euros from 808 billion previously. ecb cut its deposit rate last week to zero. they've warned of significant funding strains to banks and for the short fallout in the global financial system. there's this whole area of money markets and what's happening in these interbank funding markets haven't been understood by most investors. how concern are you about developments here? >> i think at some level it's a positive. if they won't get paid any money to park it at the fed, maybe they will lend it to companies that nitd. grant it you have to have an appetite from end therer to want to haste. part of the problem is so much money is implodeed into these huge sovereign institutions to park because the fear trade is on every where. so i think if they can't get knigit will force more risk into the marketplace. that's kind much what we need.

we need money to start circulating instead of being parked. it's kind of a double edged sword there. >> we'll leave it there, ken. >> let's give you a quick check on what's the agenda on the u.s. jobless claims are out at 8:00 eastern. also at 8:30 may import prices and at 2:00 p.m. july federal budget statement. john williams is in portland, oregon this afternoon to speak about the economy. >> groupon shares hit the lowest level in history at least since their ipo yesterday falling to a level of $7.77. that of course is well below their ipo price of 20. our social media stocks are they out of favor? if you want to join the conversation let us know what you think or respond to anything else you've heard on the program so far this morning, evening or afternoon. e-mail us at worldwide@cnbc.com

or tweet us @cnbcwex. >> well still to come on the show the mystery buyer who spent nearly $120 million at auction for an iconic painting "the scream" is finally named. find out who after this break.

. welcome back to the program. these are your headlines. banks cut at that point of cash parked at the ecb by more than 50%. >> preelmive action from other banks both brazil and south korea slash rates. >> italy's borrowing costs drop. yield falling to lowest level since may. the commodity futures trading commission is reportedly stoet approve the so-called corzine rulemaking executives of futures brokers accountable for customer funds this just days after the collapse of pfg best. u.s. regulator are investigating why they used an accounting firm that operate from inside a home. that should have raised red flags.

it's also drawing comparisons to other high-profile fraud cases. bernie madoff use ad tiny auditor based in a strip mall. ken, what is the practical short fallout of the pfg case likely to be in. >> the practical short fallout is we all remain nauseous we can't seem to get a handle around watching the store, watching the piggy bank. here's yet another example of a company that ran major amounts of funds basically as you said through a strip mall accounting operation. i think these are the types of red flags that people have to be looking at. it's no longer okay just to ignore the custodian risk, if you will and you use that term very liberally, custodian risk, because you really need to know where your capital is. you need to make sure the statements are coming from a

recognized organization. you want to make sure it's double and triple checked and you don't that have leisure of not really understanding how are you custodians are doing their accounting which does favor the large custodians. here's an example of where big is probably better. it's another story to cause more people to have more fear there's a boogieman every where. the markets did not need this. >> that's for sure. snoous u.s. regulators are looking at jpmorgan's sales tactics. they felt pressure to push the bank's own mutual funds over competitors fund. the "times" said the probe is in the early stages and j.p. morgan is not being accuse evidence any wrongdoing. looking at the shares of jpmorgan they are down on the german listing. this is the three month chart over that period down by 15.8%.

of course the key earnings report tomorrow morning expanding their conference call to two hours to handle questions people may have. still to come the libor scandal the continuing to have implications around the globe. but has it hurt london's reputation as a leading financial center? we'll put that question to our next guest. stay with us. ♪ ♪ ♪ ♪ [ male announcer ] what's the point of an epa estimated 42 miles per gallon

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welcome back to the program this morning. let's take a look at how we're positioning for the u.s. trading day. red arrows across the board. dow jones implied lower by 60 points. s&p 500 by seven, nasdaq by 16. a negative mood from asia and europe. world's leaders and thinkers have descend on sun valley for a current. several deals have been hatched at this glaerg including comcast deals of 50% by our parent company nbc universal in 2009. we travel out west. we track the latest news, rumors and speculation on the ground. >> it's day two at alan and company's 30ual media mogul fest where the big story is the standoff between viacom and

directv. viacom pulling 17 channels from directv a couple of days ago. both executives are here. viacom says there haven't been any problems negotiating other deals. directv said they are optimistic but not close to deal. >> we're pretty far apart at the moment. they are looking for billion dollar increase over five years compared to the half a billion years we pay them right now and that's just something that our customers can't afford and it's certainly we don't think a fair deal relative to the largest competitors. >> we made a proposal to them that we thought was more than fair for a double digit increase in their rates. and they rejected it. >> of course those two executives will have a couple more days to rub elbows and see if they can reach an agreement. focus turns to another big deal that could get hatched out here and that's the potential sale of

60% of activision blizzard. it remains to be seen whether there's even a lot of interest in activision stake but it begs the question of the health of it, how many other assets it will have to sell and what its credit status is right now. of course that further begs the question about overall health in europe, macro economic weakness those questions will be posed to the prime minister of italy when he appears later in the week. i'll send it back over to you guys. >> that will be an interesting juxtaposition. yahoo! holds itsual shareholders meeting today at 11:00 a.m. eastern. the board may give an update for the search for a new ceo. meeting comes as new data shows yahoo! loses market share. 13% of the market it has down from 16% a year ago falling

further behind google and microsoft. groupon shares tumbled to a new low yesterday. shares are down more than 40% over the last three months alone and 60% since the firm's ipo last move to. the comscore data showed visits to the site was down from 2011. to you, the question that we want to ask is, is this groupon specific? do we start to worry about social media sites more broadly. have valuation become far too stretched? >> i thinknk there's a valuatio issue because people are pricing the anticipated revenues that you're going have. almost in some ways reminds me of the late '90s where investors were paying for eyeballs the big theory the companies just had to attract eyeballs and the market would monetize eyeballs.

there's more and more local competition to groupon. i live in bucks county, pence and there's a local company called spin saver that gives you local bucks county deals and those types are things are popping up all over the place. so you're seeing more and more competition. the great thing about the web is also the bad thing, easy entry and early to market ones have domination only to an extent. then all of a sudden easy to enter spread out the playing field and very hard to maintain value unless you keep something cutting-edge. very difficult. >> certainly is. let's talk about what's going on earnings front. marriott earnings are out. revenue still sliding. the hotel operator saw higher group bookses in north america and europe. they expect weakness in international markets. the company cutting its full year estimates.

raising its earnings outlook. the stock looks like this in the german trade down just by over 2.5%. this year-to-date chart shows gains over 34%. ken let's go back out to you. what your looking for in this earnings season? what kinds of things will come out this time around? >> listen, i do think the pace is slowing a bit. we're seeing that every where. you're starting to hear talk of asia slowing way more. months ago it was talk about europe, europe and now it seems that everyone is conceding that this slow down is happening on a global basis. but the reality of it is that we're going start see earnings get weaker. companies have done a great job in getting lean and mean and managing that bumpy earnings road. i expect company to have a healthy earnings season because so much what's going noun is baked into the cake. to say it's not news is down

playing it. executives at companies or good executives have seen this company and are very prepared for it. is what you see in the employment story. that's why employment gets so hard to get going. companies are sitting on this cash, don't want to employ it yet because of the headwinds we're seeing now. >> ken stick around a bit longer if you would. we will go for a quick break. more to cobble the show including we'll bring you the latest on the libor scandal and reveal the name of the buyer that paid more than $100 million for "the scream."

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welcome back to "worldwide exchange" this morning. if you're just tuning in i'm kelly evans. . >> i'm becky meehan. here your headlines. >> banks at ecb cut deposits. >> central banks around the world, bank of korea has a rate cut in over three years. >> italy's borrowing costs dropped at a sale of 12 month bills with you all the action yield falling to its lowest level since may.

okay. a quick reminder what we're seeing with u.s. futures ahead of the u.s. open. the dow is pointed lower by 60 points. nasdaq by about nine. s&p 500 seven points lower. coming off weakness in europe and asia. weak data, employment data out of australia. surprising rate cut from the bank of korea has failed to lift the market's mood. ftse cnbc global 300 is down. ftse 100 now down a little bit less than .7%. dax .7% down. still a pretty negative picture across the board. the big question how do you make money in these markets? here's what southeast experts have been telling us so far this

morning. >> we're in for yields to run a bit lower in core markets. any pullbacks there are to be bought and we like flat curves across the major markets. that seems to be the way of things at the moment. >> several sectors in the u.s. that are pricing zero growth and in many cases negative growth. in the three sectors that really fit that profile are technology, health care and financial stocks. >> chinese banks at this point have been beaten up. there's a lot of opportunities there even if banks run into trouble, the chinese government has the foreign exchange reserves of $3 trillion to recapitalize smaller banks if that should actually become necessary.

back to china again. getting these gdp figures out tomorrow so we can stop wondering what will happen with china. get on with the rest of our lives. >> unfortunately that's not what will happen. it will be about what the next set of figures say. same thing with earnings season. never about the results. people are looking ahead. >> always earnings season isn't it? >> that's true. >> let's move on. we have a few more stories i want to cover for you. the federal reserve bank of new york set to release documents tomorrow outlining its discussions with barclays over potential libor problems. documents show the new york fed took prompt action as early as 2007 to push for libor reform. the documents are being publish under pressure from u.s. lawmakers. >> japan's bank for are international cooperation have dropped barclays from a b.j. bond deal. the rate fixing scandal is

taking a toll on the british bank's business. reputational risks were behind the decision. bank of america, merrill lynch were the lead managers on the bond priced wednesday. so has libor scandal hurt more than barclays reputation? what about london's reputation as a leading financial center. joining us now is the policy chairman for city of london corporation. the lord mayor has said he's shocked by the behavior of traders. how much of a blow has this been for london's reputation >> a blow. big blow for barclays. blow for banks. a blow for london. >> that doesn't leave much room for doubt there. >> there's a question of how much. this is not isolated. it wasn't barclays. it was other banks. not just london either. it's bad for danki ibanking ind around the world. but it's having an adverse

effect on reputation. >> do you see people changing business, changing where they are located. what's the practical, even though we can wring our hands, what practically speaking do you think the short fallout will be. >> we won't see people leaving london because of this. the problems are clearly within barclays banks, within other banks as well and what people see is action to deal with those problems. not a question of location. it's a question of culture and working practices within the banks. >> does it really matter what the general public thinks about libor, bar clans the reputation of the city of london. it may make an unpleasant headline in the newspaper but when businesses come to do business in london they don't really care what the general public think about barclays and their shoddy behavior, they care about london having this cut and thrust and the spirit and all the rest of it. there's little impact on that from this? >> businesses aren't going to be deterred from doing business in

london because of what has happened with barclays but does reputation matter? are people concerned? yes. people working for banks are concerned when everybody gets criticized for what's being done by a small amount of people. >> even if they are make money? >> even if people are making money they still value their reputation and that applies to barclays and other banks as well. a key priority is to get rid of the problems, deal with them effectively and build up the reputation again. >> does london need to move beyond finance and can it? >> finance is a critical part of the london economy. but it's just a part. there's a lot of other critical parts of the london economy and london is a huge great financial center and a great capital city. it's rapidly expanding because of finance, because of the creative arts, because of even manufacturing and tourism. all of those together makes london a great place for people to come and do business. >> what can the city of london

corporation do? >> they've done their best to facilitate discussion, bring people together, raise issues, make sure that there's a proper forum for debate. you've quoted the lord mayor and we're finding that people really are concerned about what's happened, they want to be involved in finding a solution, and we want to move on and get finance off the front pages on to the business pages, playing its essential role in helping the economy develop and grow. >> all right. we'll leave it there. thanks for coming by and sharing your thoughts as we don't figure out, becky, what the wider short fallout of all of this libor fixing may be. >> more breaking news. the government debt markets. here in the uk the ten year gilt auction pricing at a record low yield of 1.719%. that's the result of the ten year gilt auction. record low yield of 1.719%.

>> still to come on the program we're going to be live in madrid where resentment against the government's plan for more austerity keeps growing. some astonishing pictures to show you. all the details after the break. 

welcome back. earlier we asked you if social media stocks were going out of favor. social media stocks will lag behind the economic recovery curve out of favor now, but in better times look for record earnings. other tweeters felt like social media stocks were our generation coning the older generation into thinking there was value. if you want to join the conversation get in touch with us. e-mail us at worldwide@cnbc.com or tweet us @cnbcwex. >> very soon the olympics indeed. some last problems with security. with these big orders and deals, g4s is good news but g4s is really suffering in today's

trade. it's down 1.7%. earlier the stock was down by 2.5%. there's been media reports of problems getting enough applicants to the security position through the necessary acridation ahead of the olympic games. they are cutting it very fine because we only have days to go. as a result very media reports out all over the british press suggesting thousand more troops are being drafted in to help provide security for the olympics when they set up -- we have 3.5,000. g4s has 9,000 additional staff trained to get through this application process and can't get them through fast enough. huge numbers of people, kelly, that they are trying to get on the ground to look after the security for this massive event,

what started out i guess as a very positive story for the company. causing a few problems today. >> a reminder you're watching "worldwide exchange". banks cut the amount of cash parked at the ecb by more than 50%. preemptive actions from other central banks both brazil and south korea slash interest rates and italy's borrowing costs drop at an auction of 12 mobile but the auction yields falling to its lowest level since may. spanish miners and other public sector workers reacted angrily to a 65 billion euro austerity package. police fired rubber bullet s at protesters. stephane pedrazzi is in madrid and has more. stephane. >> reporter: there's a growing concern in spain after the announcement yesterday that too much austerity might kill the economic recovery, the concern

came not only from trade unions but also from some economists here on the ground. even if the plan announced by the spanish prime minister is the right one to reduce the deficit, 65 billion euros of spending cuts affects hikes in order to bring the deficit from 8.9% gdp to 8.2% of gdp in 2014. it makes sense in terms of budget deficit reduction. in terms of economic recovery there are some growing concerns which seen miners demonstrating yesterday evening in the streets may have drid. there were some clash with police. some economists are pointsing out the spanish economy is in recession and likely to remain recession until the end of next year. so definitely spain needs some growth incentive measure. the unemployment rate is at 25%. also that the black economy in

this country is getting bigger, latest estimation say that at least one-third of the spanish economy is not off tax with the risk of hike of v.a.t. for black economy is getting bigger and bigger, hence the demonstrations we've seen yesterday. >> thanks very much for that. christina fernandez managed to avoid a george bush pretzel choking moment. the argentinian president accused the paper of double standards over its reporting on spanish economic woes compared to reporting on argentina's 2001 crisis. she also insulted the finance minister. >> translator: european union put spain on the fuselage. look at the bald guy. you have that bald man poingt with his finishinger and seeing that picture. it reminded me of things i'm

telling you it almost upset my breakfast. i almost choked on my toast. it remindeemin me of times of policy intervention. >> pretty incredible moment there. where she's kind of vaguely insulting the spanish prime minister by calling him the bald guy and i guys if you're an argentinian it's perhaps a moment where you feel national pride. i'm not sure how that kind of thing goes over. >> she has a great head of hair. points out this guy's lack of -- it's a bit low. >> it is a bit low. there are a lot of people in argentina who feels as if she's running ramshod. >> she's playing a political game. she can curry some favor back home and i want adds to her personality and her patriotic fervor. so she's playing a domestic fiscal game. >> let's take a look at today's

other top stories. french carmaker peugeot will cut 8,000 jobs and close an entire plant after posting a loss. >> the french government will come out with this program to then industry as a whole. japan's dentsu is snapping up british market firm aegis for 2.3 billion pounds. another theme of japanese companies buying the european footprint. something we've seen several times. >> one consequence of the strong yen. we'll see more of this. the mystery buyer that bought the iconic painting "the scream" has been revealed. the buyer, new york billionaire leon black. >> that's where i have all my multipound art works. rock legends the rolling stone celebrating the band's 50th

birthday. still very strong. >> still going. in fairness. >> they are pretty strong. >> all right. still to come on the program, wall street needs a lucky charm like a horse shoe or a four leaf clover as markets run their losing streak to five days. that's the longest stretch in six weeks. can we turn the tide today? we'll preview the trading day next. stay with us.

european markets are trading down. each of the index losing ground. >> let's take a quick look on

what's on the agenda in the u.s.. weekly jobless claims are out at 8:30 a.m. eastern opinion they are expected to drop by 4,000 still to a high level of 370,000. at the same time we'll get may import prices. later in the afternoon the july federal budget statement. san francisco fed president john williams will be speaking in portland, oregon this bampb the economy. u.s. futures are red, ecohing what becky was saying. so joining us now is lou green strategist at the drw trading group and lou what do you think? do you buy into this market on the weakness? >> i don't know that we're learning anything new, particularly new this week and i think there's a lot that we have to know how europe will play out, the fed will play out. this is more of a trade. we're chasing europe around and

sort of a continuous loop one after the other. i don't think there's anything here as far as putting on a position i would do at this moment. >> what your recommending? what are you doing with client funds? >> i don't have any clients in that regard so i don't recommend anything as far as a trade. there's a lot of uncertainty right now, in particular in regards to europe and how that's going play out. they have not really given us a credible plan as far as the future path of the euro and whether they are going to move towards a fiscal union or not. as a result businesses will treat at least the european periphery with kid gloves and therefore the economic activity we'll have there will deteriorate from here until as planned as far as the future goes. we don't have any certainty that all nbc of the currency union will be there in a year or two. as a result of that businesses are playing it at arm's length. so as a result that makes things very difficult to put any kind

above signatures on even here in the states because so much of the earnings of s&p 500 companies come from abroad. >> ken, would you share that level of caution that lou just explained to us there? >> well, i think a level of caution in this market is warranted. the news this week is more news for the trader. the individual investor, to answer your question before, i mean this is just a continuance of the same narrative. the devil is in the details and traders look for some news to make a trade but what's going on this week or any of the headlines about slow down around the gle is really news to the individual investor. they know it. they are dealing with it. >> lou, strengthening dollar, favorable sign or potential for trouble? >> well, in regards to the u.s. stock market, the dollar is strengthening against the euro and goes back to what i was just

talking about as far as the uncertainty with europe. you look elsewhere and the dollar is not particularly strong against the australian or the yen or things like that. so, the dollar, to me, the strengthening of the dollar versus the euro in particular, is a signal of concern once again and that's not necessarily bullish on the stock market. >> ken? >> listen, i think a strong dollar or just a weak euro? i think that you're going to see the euro don't slide and people start to bake that into the cake. is at it positive thing, probably not but where we're going. >> lou, lastly, if i were to give you my money at this point in term of where to place it around the world, as a strategist where do you see opportunity? where are there areas that actually you do like? >> well, you know what? really, making a recommendation on a trade is not something i do.

i think there are trades out there. i think that, for instance on a trading basis the yields on treasuries are probably going lower from here. but, you know, as far as any kind of investment you have to play it very fast and loose. >> ken, last word to you there. 1% on the ten year, is that where we're headed? >> it certainly feeling like that at the moment. it's hard to see that we have that much room to the ceiling because we're banging our head against the ceiling in the bond market, but it wouldn't surprise me but i don't know if i'm calling for 1%, maybe 1.1 to 1.2 range. >> thank you very much for your thoughts on the program this morning. becky, thank you for handling all of this while ross is gone. he'll be back monday. >> one more day to go. thanks for watching the show. that's it for today, i'm becky meehan. >> i'm kelly evans. see you tomorrow.

good good morning. today's top stories pulling the strings, evidence that the ecb rate cut is having an instant impact on bank lending. jpmorgan now roughly 24 hours away from releasing quarterly results. we might have one of them little clocks, i think. what do you think? >> we should get a little clock. >> as we wait to hear about the london whales trading loss which can be quite a bit more than the initial 2 billion. some are asking if the new york fed got jpmorgan wrong and jobs in america traders bracing for the first unemployment claims data since that disappointing june employment report last friday. it