next week i'm on vacation. it will be back to normal this time on monday. >> yes, this is true. and at some point i'll take a holiday. i don't think it's going to be any time soon.

anyway, let's get on with it. we're going to continue our live coverage from madrid where the government has decided to back the debt of the country's ailing regions. and we'll head out to mumbai where better than expected numbers from tata consultancy services. the ceo will tell us how his company is managing under tough economic conditions. we'll get goldman sachs' view on how the olympics will boost the uk economy. and we'll speak to the ceo of monix to find out how much the percentage of u.s. investors investing in asia has declined. the answer to that question and more in just under an hour. and we'll speak to a banking analyst in new york to preview, of course, those jpmorgan numbers. he says the stock is a buy at this level and expects today's report to provide closure and stability for the bank. well, the world's second largest economy has grown at its slowest pace in three years. china's second quarter gdp rose 7.6% hurt by weak real estate

investments and falling demand at home and abroad. retail sales and factory output growth also slowed in june. markets, though, rose on the back of the data as investors were relieved the figure wasn't worse than expected. joining us now is our guest host for the hour, jeff lewis, global market strategist at j pchpmorg asset management and a global economist there. jeff, first to you. you know, we know that china has a funny way of coming in right on the nose sometimes with statistics. so what do you think is really going on with the economy there? >> well, i think the thing to focus on is not the year-to-year rates but the sequential rate. and the sequential growth rate may be a little inaccurate. there are no official figures. it's estimated by various brokers. that improved from 6.4% to 7.2%. and maybe rather than focus on a single particular statistic, if we look at the data overall,

then overall this data suggested stabilization or some modest improvements but also suggested the initial effects of policy measures taken over the last three to four months are now starting to come through. so i think that's why the market has been encouraged, as we were. these figures are really as good as one might have expected, i believe. >> do you agree with that analysis, that the figures taken as a whole represent some kind of stabilization and that the policy changes we've seen recently are beginning to bite? >> yes, good morning. i would agree with that. i do think that we have seen the bottom. we have for a long time been saying that the first half, q2, in particular, should be the bottom for chinese data. you have policy measures coming through, inflation is falling fast, giving the chinese authorities more room to do more easing, not just on the monetary side, through more reserve requirement ratio cuts but also on the fiscal side. and you're beginning to see those numbers start to feed through in your infrastructure

spending, in retail sales, in the growth numbers that you've seen for the month of june. and we continue to expect that the second half of this year will be more positive, and that's why our overall growth rate for 2012 remains s 8.5%. >> given that you seem to agree, how do you recommend that people allocate funds around this, then? is it time to get exposure to china and emerging asia, or is it time to have a little more faith in the global growth picture and the picture in terms of some of the more developed economies? >> well, i think that's a difficult question because whether the asian markets are going to start to rally is going to depend as much as anything on global investor risk appetite and whether the money starts to move back to this region, and that's unfortunately still hostage to events in europe. but my point would be even if markets don't start to rally immediately, i think now that fears of a hard landing in china

should start to diminish rapidly. so this is a good point to be moving overweight. indeed, we have overweight, china already in our portfolios and just waiting for the market to rally later in the year. >> when you sort of look to at who benefits if china has bottomed, as you say, goes well beyond china itself. who else here potentially stands to benefit most? >> i think generally, of course, it would be a very positive development for the global economy in total if china did recover because you do need an engine of growth. we know that the u.s. economy is slowing down. we know that europe is slowing down. you have easie ining from pretth all the developed countries. and of course china being able to maintain that rate of growth would be extremely useful not just for the immediate asian neighbors that are quite sensitive to chinese demand, according to our analysis, their sensitivity to china is as high as the sensitivity to the u.s.

also for the other commodity producers within the middle east or in africa or latin american regions. clearly a positive sign for global growth. >> the ins and outs of these figures are probably worth a closer look as well. we've been talking a lot on this show this week about rebalancing, rebasing the chinese economy, trying to spur the domestic demand as the fundamentals of the economy begin to shift slightly. what do you take away from these figures? the retail sales growth which is well above concerns as well that points that you've highlighted, does that show that this economy is now maturing? >> definitely, they've had the policy now in place for a little bit of time to support domestic growth. if you look at the last five years, the net exports has contributed almost nothing to chinese growth. it's always been a really function of investment and consumption growth.

and i think that will continue to be the case. china continues to be one of those few surplus countries which is seeing itself as reduced, and it's actually taking policy measures to actually increase domestic spending. and i think that will continue. and then second half, again, with europe looking the way it does and with the u.s. slowing down, exporters are not going to play a role. it's really going to be domestically driven. >> okay, thanks very much for joining us on that this morning. jeff, of course, will stay with us. in the meantime, let's talk about italy. moody's has downgraded by two notches. moody's new rating puts italy just two levels above junk status. the agency warned a further downgrade could take place if there's difficulties implementing reform. now, italy will attempt to auction up to 6 billion euros of government debt today. results due in roughly an hour's time. jeff, let's come to you on italy. we did have in yesterday's

shorter-term debt auction sharply lower average yield than we had last time around. we should have, i guess, taken it as a positive. then we get this move today to cut the rating. what do you think the fundamentals of the italian economy look like right now? >> well, i think the fundamentals of the italian economy are probably in better shape than those of spain. it's much less reliance on overseas borrowers to fund its government's debt. it doesn't have its factors in primary surplus. it doesn't have the large budget deficit either. and in particular, as you've just touched on, it's the sho short-term government yields in conjunction with the longer-term ten-year yields that investors should be looking at. if that inverts, that will tell you investors are becoming pessimistic about the chances of inviting some kind of bailout for that country. but in fact, we now have a positive spread. we have the two-year shields are

much lower than the ten-year yields which is as it should be. so that's quite encouraging. as for the moody's downgrade, i think in terms of the country risk analysis, they're probably justified in doing that. it didn't have a huge effect when the u.s. sovereign rating was downgraded last year. in fact, treasuriesiestinue to rally. the problem is here, of course, that any european government which applies for a bailout, then i think it does get downgraded as it will lose its sovereign rating. so i think moody's are probably justified in macro economics, taken the measures they have. the problem is, of course, that some foreign investors will be prohibited from holding italian debt in their portfolios if it loses -- if it gets downgraded to junk status and right now it's two notches away. certainly an interesting

situation. >> okay. jeff, we'll leave it there for now. we'll be back with more. first, want to bring you figures out of spain and ones that don't necessarily show a ton of strength. the ecb reports that spanish banks took up about 30% of all gross borrowing from the central bank in june. in fact, that size rose to 337 billion euros, up by about 50 billion euros from may. so again, underscoring the degree to which spanish banks are looking to the central bank for help. the spanish government has agreed to back the 17 regions. madrid will assume budget control in some regions with deficit targets said to be tightened in 2014. stephon pedrozzi joins us from madrid. how did the government afford these measures? >> reporter: it's necessary. they don't have any other choice because in spain, the central government spends only 20% of the public money. the regions which have really a lot of power spend around 30% of

the public money. so it was crucial for the government to reach an agreement with the regions to cap their deficit for this year and the next coming years. the budget minister yesterday met with the head of the 17 economic regions, a target of 1.5% of gdp for this year but lowered the deficit target for the next year to 0.7% of gdp instead of the original plan which was 1.1%. potentially it means more austerity measure for spanish people. the regions in charge of the health care system of education, and recently some of them had to reduce the number of teachers, the number of doctors in hospitals, increasing the waiting list in public hospitals. so it was crucial to reach this agreeme agreement. probably more in the next austerity announcement but this time from the regions themselves. >> thanks very much for that. now let's get a check of

global markets. >> the equity markets here in europe, a bit of a sigh of relief after the chinese gdp data came in in line with expectations. we've had a raft of data. pretty much as has been expected. the european markets are up overall. a fee decliners. managing to add on near ly 0.4%. we have gains for the ftse, nearly half a percent higher for the dax, the cac 40 up and the ibex down 0.8%. so on to the markets, the bond markets, where we are checking in on these yields. now, we have seen yields very elevated, particularly in italy after we had the downgrade from moody's by two notches. compare this to ireland where the troika has been assessing

the progress of the irish government in implementing various reforms and cuts. and they have had a favorable outcome from that saying the island is making good progress towards the goals that's been set. and we saw ireland come back, the ten-year yield, 6.22%. so the yield distinctly below the yield in spain. we're looking at 6.72%. back above 6% for italian debt as well. 6.06% right now. and in the uk, just give you a flavor of some of the very low yields we're seeing, 1.52% for the ten-year uk debt. i do want to bring your attention to the german market as well where we, of course, are seeing the safe haven play. and in the two-year, negative yield. check this out. 0.040%. so that's the short-term german debt. and it has switched around. and this is a record level we're looking at right now. the three-year barely positive on the yield. the five-year, looking at

extremely low yields as well. 0.297%. and the ten-year, 1.226%. so really giving you a flavor of how the perception of debt in spain and italy, for instance, compares to that in the safe haven german trade. so on to the euro which is languishing below 122 on these mounting concerns about the eurozone crisis. we are seeing money flowing out of the euro and into other safe haven currencies. for instance, 79.27 is where we stand on dollar/yen. dollar/swiss franc, 0.98. on to the commodity markets, then. we've had all sorts of factors playing into the oil markets this week. we had the threat of norwegian oil stoppages because of an industrial dispute in that country. that seemed to add a bit on to the oil price, brent in particular. it did also drag up nymex for a

while, too, which has been averted. geopolitical issues as well. we are looking at gains of nymex of 0.48%. brent is at 101.70, a gain of 0.6%. in the grains, continuing hot, dry weather in the states has supported the grain complex as a whole at these high levels. up by another 0.8% for wheat and 1.2% for corn. you definitely need to keep an eye on the forecast for that weather in the states to get a handle on what's going on in the next couple of weeks with the grain complex as well. let's check in on the asian market action. plenty of green around today. tracey chang has all the latest. >> hi there, becky. finally a decent trading picture for the weekend. asian markets are recovering a bit today as investors breathe a sigh of relief that china's gdp growth was worse than expected.

volumes still remain very thin on concerns over corporate profits. and mainland chinese markets show little change ending flat after a week of declines. chinese banks were lifted by better than expected june lending data. tokyo stocks also snapped the longest six-session losing streak to end flat. and over in south korea, the kospi finished about 1.5% higher, also breaking a five-day losing streak. chemical stocks rebounded on the chinese did gdp data and the australian market also got a boost from chinese figures. and lastly, the sensex also up 0.4% as well. back to you. >> thank you for that. it's friday, the 13th, as you may well know. and later in the show, of course, we'll be joined by a guest who set up a fund based entirely on superstition. so do you have any superstitions specifically related to the markets or investing, and have they made you any money?

e-mail us or tweet us@@@c nchus. analysts try to put a number of on the cost of the libor scandal. we'll be back shortly. don't go away. go ♪ ♪ i want to win [ breathes deeply ] ♪ this is where the dream begins ♪ ♪ i want to grow ♪ i want to try ♪ i can almost touch the sky [ male announcer ] even the planet has an olympic dream. dow is proud to support that dream by helping provide greener, more sustainable solutions from the olympic village to the stadium. solutionism. the new optimism.™ ♪ this dream

welcome back to the program this morning. timothy geithner urged the bank of england some four years ago to make changes to the setting of libor. a memo sent from the then new york head made six recommendations to prevent, quote, accidental or deliberate misreporting of the rate. becky, tim geithner, now, of course is u.s. treasury secretary. >> certainly is. now european authorities to step up their investigation into possible manipulation. reuters reports it's yet to find concrete evidence of any of the country's banks disclosed inaccurate rates. we want to get back out to our guest host, jeff lewis of jpm asset management. really trying to take a first stab at the impact of libor, litigation and fines across the

industry. comes out with something like a 400 million hit per bank for the 16 banks potentially on that panel this year for regulatory risk, 400 million maybe over the next couple years for litigation risk. how material in your view might continued fallout from this libor probe be? >> i think what is unfortunate is that this is going to take up a lot of energy from banks' management. it's going to take their eye off the ball perhaps when it comes to expanding their balance sheets again and taking up lending opportunities. so from that point of view, it is unwelcome. it's obviously an issue which is going to drag on for some time. although it has to be said at the moment the thing which is holding back the banks is lack of demand for credit rather than supply side issues. where we know that the u.s. banks have actually been a lot quicker than the european banks to deliver and to strengthen their balance sheets to strengthen their capital ratios

ahead of basel 3. so it's more weak demand for credit that is the problem in the u.s. i think the u.s. banks balance sheets are a lot healthier. but this is an issue which could actually restrain the banks. and as we know, the links between the bank and the nonfinancial sector are crucial in a modern economy. >> yes, they are. and we'll, of course, be listening at jpmorgan's conference call later this morning to see what specifically they say about the issue. let's move on, then. the billionaire co-bosses have been charged in a bribery investigation. rafael, the number two official, has also been charged. the probe is hong kong's biggest corruption case since the agency was formed about 0 years ago. now, raymond is denying any wrongdoing in the case. the charges come a day after hong kong's development secretary was arrested on suspicion of corruption. now, shares of hong kong listed

tumbled on a report the fbi is investigating its sale of computer parts to iran. possibly efforts to obstruct a probe by the department of commerce. the report comes from the website smoking gun. so tcs, india's largest software exporter, much stronger than its rival. we have the details live from mumbai. over to you. >> reporter: thanks very much for that. if you go to the numbers, tcs has managed to beat expectations. we were expecting 2.5%, but on the top line by about 3%. revenues coming in around $2.72 billion versus around $2.64 billion. around $589 million, up around 2.8% on a quarterly basis. aside from that, the key point to note was the margins. margins came in at 27.5%, down by just 20 bases points.

why is that important? considering the fact that the company actually had to face several including higher costs and the fact that they factored in rate hikes last quarter, we have actually managed to maintain margins at a fairly steady level. aside from that, strong around 5.3%. the main key point to note really was the fact that the management seems bullish despite the fact that the global environment is relatively challenging. so what you see is that yes, things are volatile at the current scenario. and yes, clients are slightly cautious, but tcs's clients have seemed to adapt to the situation. let's hear what the ceo of tcs had to say on the overall environment and most importantly their clients. >> it doesn't matter whether it's the company's based in europe or companies based in the u.s. fundamentally, in today's context, they are operating under a tougher macro. and they need to -- they need to

work on becoming more efficient and also see how they can use newer technologies. and that's what we're working on. >> that was the ceo and md of tcs talking about the overall environment of clients. what they have working for it is really the broad-based concentration as far as its focus is concerned. despite the fact that financial services has been tepid for the overall industry, it's grown by 5.3%. telecom which is relatively sluggish has grown by over 7%. others including retail, pharma, manufacturing. jobs reports have been interesting. our geography showing positive growth. the only area that was an issue was india, but overall tcs has clearly managed to go across the issues that they had been facing on a global level. >> thanks very much for that. and we'll keep an eye on all of that going forward.

still to come on the show, are you afraid of friday the 13th? there is a name for that, by the way. after the break, we'll talk to a guest who started an investment fund, though, based on superstition. stick around.

you're watching "worldwide exchange," bringing you business news from around the globe. >> welcome back to the show. china grows at its slowest pace in three years, but investors take comfort in fresh economic data that's mostly in line with expectations. italy looks to sell up to 6 billion euros in debt after moody's downgrades the rating to two notches above junk status. spain takes us up 30% of cash, another sign that lenders are still struggling to access funding. jpmorgan reports second quarter results this morning, but the bigger event may be when ceo jamie dimon faces investors to shed more light on the bank's trading losses. there seems to be some relief around that the number out of china, that the big gdp figure that everyone was looking ahead to was not a negative

surprise. i don't know if that's a double negative i just used, but that seems to be what's going on today. the ftse is higher, the dax by 0.5%. the cac and the ibex, and declines, but we have seen increasing concerns about the peripheral eurozone economies represented, and the bond market action today, kelly. >> exactly. take a look across the space. the ten-year in spain, 6.75%, nosing back up. the litly at 6italy at 6.05%. no surprise, 1.23%. we heard becky earlier talking about some of the even lower negative in some cases rates that we're seeing across.

1.52%. >> yeah, that two-year in germany, negative 0.04%. pretty low. >> yes. and lower by the day. that's what's extraordinary. >> let's look at how this is playing out with much tension clearly on the euro/dollar which is just dipping below 1.22, right on cue. it has been below 1.22. 1.1298 is where we are roughly. for instance, euro/sterling is 0.7906. dollar/yen is 79.30. and the aussie dollar against the u.s. dollar. the u.s. dollar up by 0.3%. yesterday we saw that moving in the other direction after disappointing jobs data. the aussie dollar, 1.0166 is where we stand now. happy friday the 13th. i'm not sure if that's appropriate. maybe happy friday the 13th. anyway, it's friday the 13th. and here are some pictures of

scary stuff just to make the point. i'm not too sure i'm scared of that cat. it looked quite cute. historically friday the 13th has been a slightly positive day for markets. however, current trends have been spooking markets as the last four have been negative. our next guest started a fund based on a trading algorithm according to collective beliefs such as the western fear of the number 13. joining us is the manager of the superstitious fund project. start with -- tell us why this project came about. you've just graduated, so this is part of your studies. what were you studying? how did this come into being? >> i think mainly on two parts. i was researching superstitions a lot, how they emerge from our private sector and affect the world we live in in very surprising ways, but also technology like the implications of technology, especially

algorithms which are quite controversial. >> so you set up a superstitious fund. what superstitions are built in, and how does the algorithm work to turn this into a trade? >> it looks at two beliefs, numerology and astrology. it has the fear of the number 13, for example. and full moons, solar eclipses. so it starts to short the market when it sees these indicators. but it also connects its own patterns in the same way we connect patterns such as lucky stocks or lucky underwear. it starts to generate its lucky numbers, then it starts to trade again using this as new logic. >> it sounds fun, but there is a real logic. it reminds me a little of the george soros reflexivity thing. we create our own reality. if people behave superstitiously, why not capitalize on it? >> exactly. like my mum's takeaway, loses 30% tonight, it will lose 30% in profits. and the american economy loses around $800 million every friday

the 13th. >> does it? yet we're showing the performance of this fund. it looks to me like it's a little under water. >> yeah. it's recovered slightly from the past month. so it's around minus 5% right now. >> what do you think accounts for that? >> i don't know. >> superstitions, presumably. and so what happens now to the fund? because it's not set up in the traditional way that a fund is, by a traditional fund manager. obviously this is very different. how long do you continue this project, and where do you think you're going to take it? >> the experiment -- this experiment's going to last for one year. so it started on june the 1st and will finish next year on june the 1st. i think the fund will carry on i think a different algorithm experiment. and awaiting a new experiment as well. so that's going to continue. >> the minimum investment is two pounds, i believe. >> yes. >> it's pretty much open to everybody. >> and there's no charge. >> being 25 years old yourself, what's next for you? >> i'm not sure. i just graduated two weeks ago.

i'm going to keep that open for now. >> the world is your oyster. what kind of interest have you had? obviously to come on cnbc which is presumably a highlight. >> definitely. >> what kind of interest have you had from the financial community? i know you've been flying around, telling people about this project. >> it's been fantastic. i met up with an investment firm, invested quite a bit and sponsored it as well. >> gdp? >> gdp capital. and it's been quite nice to be involved in the finance sector because it is also art and design project as well. so it's nice to talk to, you know, this type of audience. >> it's great to have you on the program to talk about it, especially on friday the 13th. >> thank you. >> fund manager for the superstitious fund project. appreciate it. so imf chief christine lagarde, she said she was satisfied with the progress athens has made so far. >> well, first of all, i'm very

pleased to see that there is now a coalition government in greece because that was longed for, and we had to wait weeks and weeks for the second elections to be had so that the country could have a government and we could have a partner to discuss with. second, we are, you know, doing things in a very processed-oriented way because it has to be methodical. and it cannot be rushed into, oh, we need more time. we need more money. financing. no. it has to be, first of all, what is the exact situation on the ground. what has been done? what has not been done? what is the cost of the shortfall? what additional measures will be needed? and that's, you know, the principle of doing enough fact finding so that we can assess whether the country is on, off, massively off track and what the responses could be. third, i'm quite pleased to see

that the greek authorities are aware of the fact that they have to demonstrate their determination to own, adopt and implement the program because i think that's a quit pro quo that was not necessarily in place previously. now, that change of attitude, i think, was warranted, is welcome, and will help have a better dialogue with the authorities. but i think it is way premature to discuss extension, to discuss additional financing, and, you know, first of all, it's a new mindset. it's a proper fact-finding exercise. and then a discussion with the authorities to see how, with their new policies, their new strategy, the situation can be accommodated. >> well, let's get back out to jeff lewis, global market strategist. jpmorgan asset management who is still with us.

jeff, what do you make of the efforts of greece to recover versus, say, ireland? we were mentioning the troika has been over in ireland taking a look at the situation there and has a pretty favorable impression of how they're doing and their efforts to get back into the markets. >> well, the two problems are different in very many aspects. i mean, greece's problem was it simply borrowed too much when it was able to access finance at the german rate of interest. ireland is suffering from the aftermath of a very severe property bust after an excessive housing boom. so they are somewhat different. they both have a long way to go. and i think the question marks are over what length of time they should be allowed to adjust towards a more sustainable set of macro numbers.

and i think in greece's case, people are still worried that even with this latest bailout, its public sector debt to gdp ratio is still forecast to increase to something like 160% by 2014. and yet the economy is in a deep recession. so more than anything, i think the periphery economies require some kind of growth boost from the rest of the eurozone. and that's what we need to see recognition of that from the core economies. fiscal austerity alone is not enough. the smaller economies are between a rock and a hard place. they really don't have a lot of alternative. but there's a question over the rate of the timing of fiscal deleveraging. >> right. geoff, thanks for that. we'll leave it there because, of course, we're following developments in italy after moody's downgraded the country last night, perhaps not a huge surprise to investors, but nevertheless, italy's business association head is now saying that italy is much stronger than

moody's evaluation suggests. so a bit of national pride there. meanwhile, by the way, this is a very telling piece of information as well. the italy statistics office had to delay the final june cpi release that we were expecting earlier in the program. why? because of a strike. that will now be out shortly and we'll bring you the information when we have it. just a day after south korea's central bank jolted the market with an unexpected rate cut, meantime, they have come up with yet another surprise. this time slashing the 2012 gdp and inflation forecast for a second time this year. rhie young-lim joins us. what does this tell us about how the economy is really doing? >> well, it doesn't look good. the central bank downgraded april's gdp production of 3.5% to 3%. now, this figure is even lower than the estimate by the imf. the bank of korea also lowered next year's gdp forecast to

3.8%. the deputy governor says downside risk outweighs the upside factors as exports look weak against china, europe and the u.s. a private consumption is also looking sluggish on the back of a growing household debt and the slumping market. market experts say all of this signals more room for another rate cut in the next few months, especially as the bok slashed this year's headline inflation to well within the central banks' target ban. import prices for june also posted their sharp et fall in 27 months. of course, easing inflation pressure. back to you. >> thanks very much. now let's get a quick check on what's on the agenda next week. on monday, they'll release foreign investment figures. the country is also expected to hold a bond auction. india, meantime, will post its june whole sale prices.

peugeot shares being hit after the group posted a 13% drop in first half sales. now, the ceo has asked the government to lower labor costs for french carmakers. peugeot says it's losing about 200 million euros a month, and it's announced a plan to lay off 8,000 workers. meanwhile, opel's boss has stepped down just two weeks after presenting a plan to return the company to profitability. parent company general motors has seen $14 billion of losses over the past 12 years at its europe arm. gm's vice chairman will serve as acting chief of european operations while the company searches for a permanent replacement. kelly. infrastructure fund manager highstar capital is allegedly in advanced discussions to buy veolia's. reports suggest it could be worth as much as $2 billion. it would help veolia strengthen

its balance sheet. they have a debt pile of 14.7 billion euros. and at maker rovio entertainment has successfully launched a follow-up to the smash hit angry birds series. so much for that sophomore slump. the finish media company has launched amazing alex, a physics-based puzzle game where players solve problems and even create their own levels. the new franchise became the number one paid iphone app in the u.s. on the first day of its launch proving that this business, at least for rovio, is no one-hit wonder. it's not easy to come up with these games that just catch the public like that. and they've done it again. >> this is a disaster for my domestic life. >> why is that? >> serious disaster. the husband. >> does he have an angry birds problem? >> oh, my word. i'm going to have to find a new husband now that we've got amazing alex. anyone that fancies marrying me, write into the show. >> based on twitter, i think there might be one or two people willing to step up. >> you have to be over 6'5" to

start with. i do not like angry birds or any of those other games because it's getting reli inting ridicu. our next guest says the olympic games will provide economic as well as sporting benefits. but have cities like athens been forgotten too easily? we'll get the answers coming up next.

welcome back to the program. earlier we asked if you have any superstitions investing, superstitions, that is, around friday the 13th. one viewer tweets us, and i love this, i only invest with companies with ceos called paul. i'm up 14% year to date, unilever, diageo, nestle. we'll have to go back and verify whether the strategy will work. if you have superstitious investment strategies of your own, we want to hear about them. e-mail us or tweet us @cnbcbex. now, the final countdown is on. and with just two weeks to go to the olympics, athletes and officials are expected to begin arriving in london for monday. however, fears are mounting that london's infrastructure isn't ready for such a major event. a key motorway remains closed, and one of the country's top mobile networks has suffered a

24-hour blackout. meanwhile, 3,500 security officers have been implemented. maybe it's not all bad news. the games could provide a much needed boost to the economy, in fact. that's the argument from kevin daly, uk economist at goldman sachs. i began by asking him if britain would actually benefit economically from the olympics. >> we find there is quite material benefits, economic benefits, from the olympics. in the short term, we think the boost will be 3.4%. the longer-term benefits are less tangible in nature and therefore more difficult to measure. but we think they're also pretty significant. >> what is it that generates the lift? is it just spending by all of the people coming to visit and coming to the olympics? >> in the short term, there's a significant amount of output from the production of the

olympics itself. there's also additional tourism. but then to set against that, as we have done within our estimates, there are tourists who otherwise will avoid the uk because of holding the olympics and disruption to businesses. >> well, and a lot of londoners themselves are getting out of town for it. >> absolutely. nevertheless, the net benefits in the short term are positive, and on our estimates and in the long term, there are, of course, benefits from the promotion of london and the uk as a location for investment and tourism. >> is it enough to get britain out of recession in the third quarter? >> in and of itself, i mean, we think the growth in q3 will be pretty strong, absolutely. there's also the additional benefit from the working effect from the jubilee holiday. so actually growth in q3 in and of itself will be pretty strong. in a broader sense, will the olympics proil a very substantial boost? we think it's material and

positive. that positive, probably not. >> some have said maybe this is a self-stimulus. the government saying it's all about austerity, but spending on the olympics, and is that actually a way of supporting growth? >> well, given that it was five years ago that these plans were set out, they would need a great deal of foresight to look that far ahead. no, we wouldn't see it as a stimulus. >> you mentioned the longer-term benefit of the games. you think back to at nenz hens 2004, and it's hard to see any long-term benefit. what's different about britain? >> on the whole, previous studies suggest that generally the benefits are positive, although there is a lot of variation within that. athens, montreal were relatively bad-run olympics. but then set against that, you had good olympics such as los angeles, atlanta and also beijing and barcelona. barcelona probably being the biggest beneficiary from holding the olympics. >> what do they do right? >> it's really the organization

beforehand. and that has been pretty well managed in the uk. and it's relative to at least the 2007 budget. the infrastructure projects, the building of facilities has come in on time and under budget. >> importantly, i'm sure what happens with those facilities afterwards has a lot to do with how much the region benefits. >> absolutely. and there has been a significant emphasis on looking at the legacy of the games. so planning for the use of the facilities after the games, the sale of the living accommodation, the sale of the facilities themselves which in previous olympics such as the athens olympics that you mentioned, i don't think were quite as well planned for. >> lastly, there is a correlation that you guys have discovered. or a way, i guess, to predict how many medals britain might come home with, and that is? >> absolutely. a lot of people wonder, you know, looking at the business or

economic implications misses the point of a sporting event. what we have found is that the average medals premium from hosting the olympics is 54%. >> wow! >> so you win, on average, more than 50 rs mo% more medals whene the host. if medals are your currency, that's a pretty good return on investment. >> that was kevin daly, uk economist at goldman sachs. becky, perhaps indicating that there could be a benefit here to britain beyond the headaches that people are bracing themselves to put up with. >> it's a shame that everyone's braced themselves for headache before it's even started. >> or getting out of town altogether. >> maybe it will be fine and good fun. >> are you going to parts of it? >> i am totally going. i'm excited. swimming, athletics, and that's just what i'm competing in. >> multitalented. >> not really. let's get a final thought now from our guest host, geoff lewis is with us, global market strategist at jpmorgan asset management. thanks for spending time with us

today, geoff. let's get your best trades right now. how are investors best set to make money in this environment? >> well, they certainly will not make money if they stay out of the markets. they certainly will not make money from cash or bank deposits. and they'll make very little from developed markets sovereign bonds. so they really need to be moving up the risk spectrum if they're too risk averse to consider for the longer term, then there's still many good opportunities in reits, multiincome strategies in emerging market debt or corporate credit. so those are the areas i think they should be looking at. but as i say, if they stay out of the markets, they will get a zero return. we've had a lot of bad news. investor sentiment is lightly positioned. and the leading indicators are turning up a little bit. so i would favor incrementally taking risk. that would be my advice at this

point. >> geoff, what would be the catalyst to increase that risk that you think investors should be starting to get back into? maybe data points or moment in time that you think we should be paying close attention to? >> well, i think it will not be a single data point. what it could be is, say, the economic data becoming less negative in the months ahead. the economic index is now starting to become less negative. and don't forget, markets can start to rally not on positive economic news but just on the economic data becoming less bad. >> sorry? >> we're looking at the el muno on the wires right now. >> geoff lewis, appreciate your time and thoughts this morning. if i'm a bit distracted, pretty extraordinary comments we're seeing from the eu's

anti-competitiveness -- eu's competition chief. he wouldn't be anti-competition. he would be for competition. in any case, he's looking into, quote, suspected cartel arrangements involving financial derivatives that were linked to libor including possible collusion. that's what really caught my attention from the eu chief there. okay. now we're going to take a look at jpmorgan. a quick reminder as we wait for the company to report earnings just in a couple of hours' time. as to when and how this whole difficulty with its trading operation first began. it goes back to april 5th. that was when news of the london wail was reported in "the wall street journal." there had been reports elsewhere as well. jamie dimon dismissed the report about a week later.

of course, a month after that it turns out that the company has a $2 billion loss from the position. jamie apologizes. the cio who oversaw that unit, ina drew, retired just four days later. within a week, stock buybacks were halted at the firm. and, of course, more recently, we've heard jamie dimon testifying before senate on the matter and reports that losses could be as much as $9 billion. that, of course, is what we're waiting to hear from the company when it reports earnings later this morning. and we'll have a more detailed preview just after the break. ddd#1

welcome back to welcome back to "worldwide e exchan exchange." china grows at the slowest pace in three years, but data that's mostly in line with expectations. italy looks to sell up to 6 billion euros in debt. spanish banks are still in dire straits as they take up 30% of all gross ecb cash in june. another sign lenders are still struggling to get access to funding. and jpmorgan reports second quarter results this morning, but the bigger event may be when the ceo, jamie dimon, faces investors to shed more light on the bank's trading losses.

okay with a good morning to our u.s. viewers who may be just joining us. we've got some green behind me for a change on this freaky friday the 13th. the dow jones industrial average pointed higher, 12,535. and the nasdaq higher by about 5 points and the s&p 500 trying to eke out a gain of 1 or 2. this comes after an overnight session that's been a little mixed. we've seen the ftse 100 at .04%, the xetra, 0.6%. >> it really does tell the story. we've seen lots of fluctuations there. but it's really when we look at the yields where we begin to be able to distinguish between some of the different markets within

europe and how investors are feeling about them. i want to bring your attention to what's going on in italy. there have been several points about the italian markets which have been of note, particularly the state of the ten-year across in italy. if you remember, we did have shorter-term debt auction yesterday in which the yields came off very sharply since last time around. the two-year is now at 4.1%. 4.8% for the three-year in italy. 5.47% for the five-year. and the ten-year, back over 6%. on the italian ten-year debt. so those yields back up over 6%. across in asia, though, we have seen a fairly positive day of trading. let's get out to tracey chang in singapore. and lots of data to start with, tracey. >> that's right, becky. we're doing pretty good here in asia for friday the 13th. overall a decent trading picture to kick off the weekend. asian markets are recovering a bit today as investors were relieved that china's gdp growth was worse than expected.

hong kong shares rose but volume still remained very thin over concerns of corporate profits. mainland chinese markets showed little change with the shanghai composite ending flat. chinese banks were lifted by better than expected june lending data. and tokyo stocks also snapped the longest six-session losing streak since early april to end flat today. south korea, the kospi finished about 1.5% higher. also breaking a five-day losing streak. chemical stocks rebounded on the chinese gdp data. and the resource-rich australian market also got a boost from the chinese figures. up about 0.4%. major financials helped the index up. and lastly, the sensex reversed earlier gains, now down about 0.3%. >> thanks very much for that. the world's second largest economy has grown at its slowest pace in three years. china's second quarter gdp rose 7.6% from a year earlier hurt by weak real estate investments and falling demand at home and abroad. retail sales and factory output

growth also slowed in june. markets, though, rose on the back of the data as investors were somewhat relieved it wasn't worse than expected following figures earlier this week. let's welcome ceo of monex group joining us now from tokyo. oki, curious first of all how people globally are allocating their money right now. are they beginning to look at china, perhaps signs the country could be bottoming out and wanting to get more exposure? >> well, we recently did a global survey to our japanese investors as well as hong kong investors and the u.s. investors. and their views are quite mixed. and it's not really clear view among the global investors as far as we see. and as you go to china, there is very limited chinese stocks and assets that foreign investors

can invest into so that people are still calculating and searching for where to -- where they should put their money into. so it's still kind of confusion going on among investors globally, i think. >> just let's get into some of the details, then. it's interesting that between the japanese and the u.s. investors, the change in views on europe was little changed. but this very divergent view between the japanese investors and the u.s. investors on asia. so just to get into the details, amongst japanese investors, those choosing asia, among u.s. investors, those views declined by 7 percentage points. what were the factors that played into that divergence, then, specifically? >> well, i think that every

regional investor has got -- how do you say -- a different view. like in the states, i think they are very bearish on the euro crisis. and they think they have already concluded that it's going to be quite a big problem. so they don't worry too much about the euro anymore. they don't try to put money into euro, but they don't worry about the euro because they have created their view on the euro already. and meanwhile, for example, in japan, there are still many -- through the survey, the answers, for example, euro, is that the japanese investors have not decided, have not concluded their view on how the problem will become. so they don't have to be necessarily very bearish or

neutral about euro, for example. so that they're very concerned about it because they don't have a formed opinion yet. so i think investors worldwide have very different viewpoints these days. this is, by the way, very different from our survey in the past. this is the first time we saw the huge divergence in the views of the investors across the world. >> okay. we'll pick up on that in just a bit. jpmorgan reports second quarter results at 7:00 a.m. eastern. it's forecasting 76 cents a share on revenues of just under $22 billion. at 7:30, ceo jamie dimon will face investors, expected to shed more light on the bank's trading losses and how much they'll impact future earnings. analysts will also listen for dimon to reveal if and how much compensation jpmorgan will claw back from executives including

the chief investment officer in whose unit the losses occurred. "the wall street journal" reports three london cio traders including bruno, the so-called london whale, have left the bank. the trustee overseeing the bankruptcy of the unit of the futures broker pfg best wants court permission to retain some staff to keep the business operating. "the wall street journal" says he wants to keep 57 employees including peregrine. let's get back out to oki. i know that you don't feel qualified to talk specifically about this case, which is fair enough, but these kind of issues can only mean ever-tightening regulation surely for the financial services sector as a whole. how should investors take this? how should investors rethink their money and where it sits in financial services when they look at cases like this and think forward to what it means for the outlook for the sector?

>> well, it is true that there need to be more regulations. but i think investors should be aware that those regulations do not change the economy or stocks or companies' value. yes, you know, those kind of tighter regulations will probably cave the investor's appetite to take risk. and so that probably the share price may have some negative inference. but as i said, regulations has got nothing to do with companies' valuation. so i think those kinds of situations will create interesting buying opportunity for some stocks or some assets. >> oki, thanks very much. stick around, if you would. we'd like to come back and have another chat with you later in the show. do make sure you tuned as well because we'll be discussing in

depth jpmorgan's trading losses and what's expected out of today's numbers. that's coming up in just about 20 minutes' time, kelly. in the meantime, it's friday the 13th. and we were asking if you have any superstitious trading tactics. my favorite comes from one viewer who says he invests in companies with ceos named paul. let us know. worldwide@cnbc.com or tweet us @cnbcwex or kelly underscore evans. or i'll take it. still to come, spanish banks borrowing from the ecb hit a new record level in june. we'll head to madrid for the latest just after the break.

the results of the italian debt auction are out, and this time around, it was a three-year debt that italy was auctioning off. so they have sold 3.5 billion euros of this three-year government paper. the yield coming in at 4.65%. now, that represents a drop in the yield since the mid-june auction. and it's the lowest since may. so 3.5 billion euros of three-year debt coming in with a yield of 4.65%. that's down from 5.3% in mid-june and the lowest since may. the bid to cover on that coming in at 1.73.

just checking in on what this means for the italian curve. we're looking at the ten-year now, back below 6%. 5.935% on that benchmark italian ten-year debt. after yesterday's one-year auction, which we saw the average yield coming sharply lower as well, this three-year auction yield is down for mid-june and bringing the ten-year down with it. >> we've actually seen the euro turn around on this as well, trading positive on the day. so people clearly seeing some sign of -- some reason to be more exposed to risk this morning as a result. >> we'll see how long that lasts because every time we get a bit of relief, something else comes along and we see that reflected again in the yields. >> that's right. if you're just tuning in, these are your headlines. china's growing at the slowest pace in three years. >> moody's cuts italy to two notches above junk. >> and jpmorgan is expected to shed more light on its trading losses when it reports second quarter results.

well, the latest in a growing list of japanese issuers to sell a dollar bond. it offered $1.5 million in its deal. borrowers are making the best use of cheap swapping costs. six japanese firms and banks have now sold an aggregate $11 billion in bonds this week alone. analysts say dollar/yen currency swaps are attractive given improved sentiment over europe's debt crisis since may. the asset value of japanese mutual funds, meantime, jumped in june thanks to a combination of factors. strong inflows into etfs, the yen's recent fall and a recovery in global share prices. the rebound comes after japan asa saw a drop of $50 billion. they have been buying etfs to support japanese shares through its asset-buying scheme. still with us is oki matsumoto.

oki, whose flows are most important, is it bank of japan or retail, the little guys, too? >> well, i think japanese investors are getting really, in a sense, fed up with the lower rate. but there have been somehow worried and deployed their money into cal tap markpital markets. but i think the government started making good decisions. that probably allowed investors to start making some investment. they started coming out into capital markets, i think. >> oki, if it's going into etfs or stocks potentially in japan, does that mean it's coming out of fixed income? does it mean it's coming out of government bonds? >> it has to. it's coming out of, you know, deposit. so there will be some flow from

jgb into etf or even not only japanese -- it doesn't -- it's not coming to japanese share market yet. it's more u.s. shares or other parts of the world or japanese etfs from deposit. it means from out of jgb. >> and that would, of course, raise questions about who's going to keep buying those bonds going forward. but oki, it does seem as though there's plenty of global interest in japan. so the italian government now reacting to the decision by moody's to cut its rating by two notches. remember, this leaves italy's rating just two notches above junk. and we have had comments coming out of the industry minister saying that moody's rating cut is unjustified and a misleading decision. so unjustified and misleading according to the ministry minister. they have still got a way this auction of thee-year deet with sharply lower average yield from

last time. >> if anything, he should point on that because it's hardly unjustified when basically the market reacts to the downgrade by saying yeah, we already knew this. so it's a tough thing to argue. but again, those auction results perhaps could inspire some confidence if that's what he's looking for. taking a look there again, of course, at the ten-year. 5.921%. that's the yield. still to come on the program, imf chief christine lagarde speaks to cnbc on how to solve the eurozone crisis. we'll be right back. ♪ ♪ i want to go ♪ i want to win [ breathes deeply ] ♪ this is where the dream begins ♪ ♪ i want to grow ♪ i want to try ♪ i can almost touch the sky [ male announcer ] even the planet has an olympic dream. dow is proud to support that dream by helping provide greener, more sustainable solutions from the olympic village to the stadium.

solutionism. the new optimism.™ ♪ this dream ♪

♪ ♪ ♪ [ 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. welcome back welcome back to "worldwide exchange." let's take a quick look at how u.s. futures are pointed ahead of the open and ahead of that key earnings report from jpmorgan. we see green arrows across the board. dow jones higher by 40 points, s&p by about 5 and the nasdaq by 8.5. now, of course, let's also show you what's happening in bond markets, specifically in italy's where after a relatively successful auction of three-year paper there, yields are falling. the yield on that three-year now 4.64%. the ten-year at 5.9%, becky. we're watching, of course, that 6% threshold that it was above but now coming back in. >> back below that level. we also have some comments, too, on the moody's downgrade on

italy. which has seen moody's cut their rating on italy to just two notches above junk at this stage. we've had some comments coming out from the industry minister saying that moody's rating cut is unjustified and a misleading decision. now we have the italian treasury undersecretary coming in with some comments as well saying that the evaluation -- talking about the evaluation of the political risk saying it's overdone. that the moody's rating is not based on strong economic reasons and that even with stronger cyclical downturn, italy will respect the structural budget balance target as well. so i think we're just seeing an example of some of these italian politicians weighing in, trying to back up their own case. but the case is backed up by the debt auction as well. >> and markets have made the case long before them. meanwhile, i'm picking up my little bits here off the ground that just fell. you heard that.

>> not bits of you. it's bits of equipment. >> i'm having a classic friday the 13th at this point. all the bad luck. i must have walked under a ladder or something on my way to work. >> is it that black cat they kept showing on the camera earlier on. >> it's true. it's crossed my path. >> several times. yeah. in any case, we'll continue to keep an eye on the yield curve there for you. spain's ten-year's actually still higher for the morning. but imf chief, christine lagarde, has reiterated saying that the fiscal unions seem like the logical approach. speaking to our reporter in bangkok, lagarde hinted that political union may be in europe's future, but they stopped just short of fully endorsing it. >> when we say we know what should be done, we assess. we put our best brains and economic analysis to it. but we are in uncharted territories. let's face it.

a currency union of that nature, of that size, at that degree of development, is fairly unprecedented. so when we say currency union, to be completed and supplemented by banking union, by fiscal union, it seems the logical approach and the logical journey for a zone to be strong and to be sustainable. but it takes a lot of effort, a lot of willingness to compromise because in that particular case, we're talking about 17 sovereign member states, 17 different parliament, 17 different supreme courts, 17 different governments and ministers of finance and 17 leaders and 17 populations. that share a common destiny, that share a common currency, but that are under different financial pressures from the markets and that are a different level of development and level of competitiveness.

so it's a difficult journey to charter and one where i hope the leaders and the economists will be able to meet intellectually in order to develop an implementation of a plan. >> are you saying, though, that ultimately political union is possible or not? >> political common determination and willingness to compromise is necessary. yeah. >> spanish banks borrowing from the ecb has hit a new record high, signaling a protracted difficulty in accessing interbank lending. the country's lenders took up 30% of all gross ecb borrowing in june. stephon has been in madrid for much of the week and tracking how the story is developing. stefan. >> reporter: 365 billion euros from the ecb in june, it's 40 billion more euros in may, and it's a record level since the creation of the single currency. this huge amount clearly reflects the liquidity problem

that spanish banks are facing. they have trouble to lend money to spanish banks, especially with the debt crisis getting bigger. the government is counting on the bailout plan for the banking sector and deep cleaning to restore confidence. we got yesterday the details regarding the schedule of this bailout. the esfs will receive a first payment of around $30 billion euros by the end of the month. it will be kept in reserve for urgent need for the spanish banks. but the largest chunk, 45 billion euros, will not be paid until mid-november. over to you. >> okay, stefan, thank you very much for that. let's get out for another quick chat on the european situation with oki matsumoto, who is the ceo of monex group. when it comes to interest in the eurozone debt crisis, oki, do you see any indications that investors are beginning to think

there's opportunity in europe from depressed levels or that this is truly a kind of lehman moment? >> well, it seems through our survey, the investors in japan and hong kong continue to be very worried about the euro situation. but we didn't see that kind of concern, a big concern, from u.s. investors. it's kind of interesting. i think people started thinking that this problem is going away. and as a matter of fact, trading below 6%, it strikes me that this entire problem, although lagarde says it's uncharted territory, you don't want trading below 6%. it tells me that the problem is about to be -- not about to but it going global, i think. investors need to start thinking more constructive to the european market as well.

>> oki, thank you very much for coming to speak to us today.sum. jpmorgan will kick off a busy week for bank earnings. we'll tell you what to expect just after the break.

welcome back to "worldwide exchange." if you're just tuning in, i'm kelly evans. >> i'm becky mead. these are your headlines. >> china grows at its slowest pace in three years, but investors take comfort in the data that's mostly in line with expectations. jpmorgan reports second quarter results, but the bigger event may be when the ceo faces investors. italy passes the moody's test as it successfully places $6 million bonds at two lower notches by the ratings agency. taking up 30% of all gross ecb cash, another sign that lenders are still struggling to access funding. >> you're watching "worldwide exchange," bringing you business news from around the globe. >> good morning on this friday the 13th. and if you're just tuning in,

let's remind our u.s. viewers as to where the market is pointed this morning. we do see green here. the dow jones higher by about 35 points at the noemoment, the naq by 7 and the s&p 500 by 3 or 40. we've seen slow gains. let's look at what's happening across europe. earlier when we checked in on spain, it was down. it's now slightly positive for the day, holding at 0.02%, a level of 6631. paris is up 0.4%. the dax up to 6467. and the ftse is up 0.6% here in the uk. this may have something to do with italy, successfully placing that debt at auction despite a downgrade from moody's. you can see it's happening across the curve. we saw this initial bout of relief. now that's being tapered off a bit. 5.991%. the ten-year is very quickly back up near the 6% level that it was over earlier this

morning. so becky, kind of a mixed message from stocks and fixed income this morning. it will clearly take more time to figure out exactly what kind of mood they want to leave into the weekend. >> we get respite momentarily and then quicker than you know, back up to those levels which show those more concerning the markets. let's leave it there and think about how we can make money in these markets. that's what we're all about here at cnbc, of course. here's what some of the experts have been telling us on the channel this morning. >> i see oil as a source of funds right now in the commodity complex because the supply picture, the expectations of qe, all of this is embedded in the price already. >> france, funny enough, we believe france is actually one of the most intriguing -- french debt is one of the most sbrle m

intriguing asset classes. >> it's the short-term government yields in conjunction with the longer-term ten-year yields that investors should be looking at. >> all right. well, the other big story of the day, of course, is jpmorgan. the financial firm is due out with second quarter results in just about 90 minutes' time. while it's often seen as a read-through for how banks are doing more broadly, there will be particular attention this time around on what happened in its chief investment officer's unit -- chief investment office, that is. this is the unit that lost anywhere from maybe 2 to perhaps upwards of $9 billion. and just a quick reminder of the time line, what happened jurg jpmorgan's second quarter as this played out. there were press reports back in early april that this unit was reporting major losses. initially jpmorgan and chief executive jamie dimon dismissed the report only to have to turn around a month later as those losses built to acknowledge that they existed and that it had been a serious error.

cio ina drew resigned. jamie dimon was called before senate to testify about it. and more recently, we've heard that losses in this unit could be upwards of $9 billion. what's clear, though, is that anything within that estimate will probably not spook investors too much. it is probably priced into shares even though analysts have something only in the range of $4 billion to $5 billion. they're extending two hours to address all of these issues. joining me is len bloom of westwood capital. on the line is eric oha at s&p capital iq. len, first to you, what do you expect to hear from jpmorgan this morning? >> well, i think that jamie dimon is going to do the best that he can to explain what happened with these trading losses. and, you know, when he appeared before congress recently, he really didn't say that much.

it's really interesting -- going to be interesting to see how much he can say today because you've got plaintiffs lawyers waiting to file class action suits here, and he probably has to be a little bit careful as to what he says. but what we really want to know, what the street really wants to know is what went wrong. what is wrong with jpmorgan's policies, procedures and controls in reporting that something like this could happen? and what have they done to repair it? the stocks lost -- it's not the $5 billion or $6 billion worth of trading losses the street's concerned about. what the street's concerned about is that almost $39 billion worth of market value, jpmorgan's stock has lost since the story broke. and jamie dimon really is protecting his reputation here because since he took office,

took over the reins at jpmorgan, the stock's down 10 mr%, has ha huge loss, and this is a very shocking kind of sloppiness. it's really the only way to explain how a bank that's supposed to have risk controls in place can take such a big loss without knowing it. >> are these the kind of themes that you're going to be looking for when we hear from dimon today? >> sure. the other things that we'll be looking for is the libor scandal, which could have potential to be even bigger than what happened with trading losses. and we want to hear something from them. we have checked our records from 2008. and we'd like to have some r reassurance -- i know it's very difficult for them to say anything because it's under investigation. but i think investors are very, very concerned about how the libor scandal will affect the large u.s. banks. and then as far as the large

trading loss, we'd also like to hear about the potential resumption of share buybacks. clearly the board has to meet and decide on that. but we would like to have some color on that before the board meets. and then we'd also like to see loan growth and net interest margin because jpmorgan is one of the largest banks in the country. they're the bellwether, and we'd like to see, what is the health of the u.s. economy in terms of loan growth? >> and erik, you still keep a buy rating on this stock, i understand. what would prompt you to change your mind on that front? because you obviously have some concerns here. >> well, it's trading at about eight times our forward estimate, which is not that different from the street consensus. and relative to historicals that is attractive, jpmorgan is usually traded in the nine or ten range. and because there's so many

moving parts here, we would have to see many things go wrong to change our opinion on this stock. in other words, if the trading loss is much worse than expected, if the libor scandal, same thing, gets worse, i'm also looking at mortgage repurchases. i expect them to be stable. the liability right now is about $3.5 billion for future mortgage repurchases. if there's stability there, if we're seeing some loan growth, if we're seeing the end of the trading losses, i think it's a buy. >> len, we also have a really busy week next week, too, with various earnings from big u.s. banks and financial institutions. just a quick snapshot for viewers of what we're expecting. citigroup monday. tuesday, goldman sachs, for instance, bank of america wednesday. it's going to be a busy week in the sector next week as well. first morgan stanley.

what are you expecting in terms of the read-through on the sector as a whole once we get into next week? >> mm-hmm. well, i think the sector as a whole in te t of earnings, one, i think we're going to see reduced investment banking and trading earnings. i think we're going to see debt valuation adjustments. those are always disappointing to see just because they exist. you know, it's just an accounting entry. it has nothing to do with the profit of the bank. we're probably going to see some loan loss releases which, again, are just a paper entry and have nothing to do with what banks do day to day. we might see some shrinking margins. we'll see a pickup in income from originations of mortgages. and i think those are the elements we're looking for. you know, when we talk about banks, we've got a bifurcated markets. we've got the big banks which

really aren't banks, huge financial super markets that do every financial product there is and have gotten away from banking. and then we have the smaller banks that are really banks and add to an easier analysis because they do what the american taxpayer wants them to do, safeguard consumers' deposits and make loans to american households and consumers. but thebig banks are in -- have so many tentacles. they've become increasingly opaque and much bigger and very difficult to even get a grasp on what they're doing. so the quarter-to-quarter analysis for a big bank really depends on was trading good this quarter? will debt value adjustments being taken this quarter? and then you just run it through the matrix of banks and see who has different exposures in different areas. so it's really become less of a banking analysis. >> yeah. >> and more of a multivariable analysis for these giant banks.

>> okay. len, stay with us for a bit longer, if you would. len blum stays with us, managing partner of westwood capital. thanks for coming along. u.s. banks equity analyst at s&p capital iq. still to come on the program, tracking the libor scandal. newly uncovered documents show u.s. treasury secretary tim geithner pressed uk regulators on reforms to set the bank's borrowing rate, that back when he was the head of the new york fed in 2008. we'll discuss where the investigation may go from here next.

[ feedback ] attention, well, everyone. you can now try snapshot from progressive free for 30 days. just plug this into your car, and your good driving can save you up to 30%. you could even try it without switching your insurance. why not give it a shot? carry on. now you can test-drive snapshot before you switch.

visit progressive.com today. welcome back to the program. welcome back to the program. earlier we asked if you had any trading superstitions. and lee caldwell from pennsylvania has tweeted, "there's a serious research paper on whether people called michelle buy more michelin shares and so on and so forth." if you want to join the conversation here, or if you think that's a prudent investment strategy, let us know. you know how to reach us, e-mail us at worldwide@cnbc.com. becky? we did see a bit of respite for the italian debt, but it didn't last long at all. we have a successful auction of three-year italian debt with the average yield falling from last time around. that did give a bit of respite for various points along this

curve. but now having dropped back below 6% on the ten-year italian debt, we are back above 6%. in fact, 6.03% is where we are on the ten-year italian debt. similarly, we may see the euro pick up, but now back below 1.22. after we had a moment of calm, it looks like the concerns that prompted moody's prince, to cut their rate of italy by a couple notches. >> that's right, becky. thanks for that. you're watching "worldwide exchange." if you're just tuning in this morning, these are your headlines. china grows at its slowest pace in three years. italy's borrowing costs fall despite a two-notch downgrade by moody's. and jpmorgan expected to shed more lights on trading losses when it reports second quarter results in just about 5 minut25

minutes' time. tim geithner urged the bank of england four years ago to make changes to the setting of libor. a memo from the then head of the new york fed made six recommendations to prevent, quote, accidental or deliberate misreporting. kelly. and morgan stanley is among those trying to put a figure on just how much banks could be on the hook for all of this. let's ask len blum what he thinks. len, morgan has indicated something like for the average bank $400 million this year for regulatory settlements, maybe $400 million over the next year or two for litigation risk. you know, not huge numbers but clearly significant. what's your view? >> well, i think that the real cost of this horrible thing is the lack of confidence and erosion of trust that's going to be caused. this is just -- the words can't describe how disgusting this is. clearly we've got a fraud at barclays. and to the extent that we start seeing collusion and that other

banks work together to set libor or if regulators knew something and didn't look at it, this could turn into a huge scandal of massive proportions. it is actually -- if it's not criminal, it's horrible. and i think it's really just the fallout of the confidence of the industry. and what it will do for regulation going forward and hopefully all the people who knew about it or had anything to do with it will no longer work in the industry. >> okay. len blum, managing director -- managing partner at westwood capital. thanks for your thoughts this morning. and still to come on the program, it's friday the 13th, as we mentioned. so will markets be able to shake their recent streak of bad luck? i don't know. cross your fingers. we'll preview the trading day ahead. that's next. ♪ ♪

♪ ♪ [ 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. 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.

welcome back to the welcome back to the program. well, china's gdp grew by 7.6% in the quarter from a year earlier. in the second quarter, that is. even though this was expected, it's the slowest rate of growth since the first quarter of 2009. tracey yang has more on this story. tracey? >> that's right. analysts are expecting this number may be the bottom for the year since gdp growth is likely to pick up in the third quarter thanks to beijing's stimulus measures and china's official target for gdp growth is 7.5% this year. many analysts see the number as the minimum acceptable level of growth for the chinese government. and although policymakers are expected to open the taps on both monetary and fiscal policy measures to revive growth momentum in the second half of 2012, officials from beijing have so far downplayed concerns saying growth between 7% and 8% is still relatively strong in global terms. back to you, kelly. >> okay, tracey, thanks very much for that.

let's take a look now at some of today's other top stories. britain's takeover panel has ruled that the battle for oil explorer cove energy could be headed to auction. the air show has wrapped up and u.s. playmaker boeing has come out on top, winning 50% more new orders than archrival airbus. you wonder how much you can read into this, though. they get orders all through the year, right? >> they do. and the whole idea that you can win, come on, there's more than just that bilateral competition, although we know it's what investors focus on. >> indeed. app maker rovio has enjoyed its success with the follow-up to angry birds. amazing alex. we know someone whose household will be downloading it. >> definitely not for me. not too happy about that story, i have to say, from a purely personal point of view. "forbes" has published its list of the highest paid celebrities under 30.

and 22-year-old pop star taylor swift tops the list with a $57 million paycheck. >> that's incredible. even more incredible to me sometimes is to be reminded that taylor swift is only 22 years old. and she's had, it seems like, such a long career to be so young. >> these got another eight years to amass more fortune before she's out of the under 30 list. >> that's true. let's check in on european markets and look at where we're trading. the ibex is back in the red, just down slightly, 0.03%. better action in the cac, up 0.4%, the ftse up 0.6%. let's take a look at what's on the agenda today in the u.s. the june ppi, that's producer price index, is out at 8:30 a.m. eastern. and it's expected to show a drop of 0.3% on the month, an increase, though, of about 0.2 ds wh0.2%

when you strip out food and energy. just before 10:00, the report on skur consumer sentiment. and dennis lockhart speaks about the economy. dell will also hold its annual shareholder meeting in round rock, texas, at 9:00 a.m. of course, so much of the attention is going to be on j pchp morgan's earnings call on not only its own business but more broadly. u.s. futures still in the green, decidedly so in the case of the dow jones industrial average, pointed up about 40 points. the nasdaq up 7 or 8 and the s&p 500 by a couple of points, too. >> interesting, when we last economiced in on the european markets going into the futures there, the european equity markets have actually strengthened since we've been on air, the start of the u.s. trading day. even though we've seen concerns about peripheral europe heightening as we've gone through the show. so more concern about peripheral europe. higher yields on the ten-year in italy, for instance. and yet the equity markets reflecting a bit more optimism.

>> which perhaps should leave people just with that let's just watch this and see what happens because we're not seeing necessarily the relief you'd want to see across the yield curve there in order to support more of a rally later today, but we'll see what happens. >> the two-year -- german two-year, negative, 0.04. >> and now the austrian two-year negative. the pressure there continues. >> yes, indeed. plenty to keep us busy. it's good for us. honeywell ceo urging business leaders to press congress and the white house to agree on solutions to the u.s. debt problems. writing in today's "financial times," gridlock is hurting the economy. he says it creates uncertainty for companies had it comes to hiring and new investment. also, that could lead to years of slow growth or even another financial crisis. jpmorgan reports second quarter results at 7:00 a.m. eastern in just about an hour's time. the bank is forecast to earn 76 cents a share on revenues of just shy of $22 billion.

at 7:30, jpm will hold a two-hour investor call. ceo jamie dimon is expected to shed more light on the trading losses first revealed in may and say how much they could impact future earnings growth. analysts will also be listening for dimon to talk about if and how much compensation jpmorgan will claw back from executives in charge of the chief investment office where the losses occurred. "the wall street journal" reports three london traders including bruno exil, the so-called london whale, have left the bank. you see shares up about 0.5% and trading in line with how the rest of the market is doing. wells fargo will also report second quarter results at 8:00 a.m. eastern. in some ways this strong u.s. bank may be more of a re read-through for people than jpm. we'll see. plenty to parse through. >> it's been great spending the week with you. thanks for watching. >> now "u.s. squawk."

good morning. today's top stories, jpmorgan after weeks of speculation about the london whale and that trading loss, the bank's going to face the music. we'll find out a lot with quarterly results including information on just how large the botched trading losses actually were. china posting the slowest economic growth in three years, but in line with forecasts. the news offsetting some worries that a slowdown in china could undermine fragile global growth. plus, italy tests investor appetite in a key debt sale after moody's downgrades the country. it's friday, july 13th, friday the 13th, 2012. "squawk box" begins right now.