hello, and welcome to today's edition of "worldwide exchange." i'm ross westgate. >> and i'm kelly evans. these are your headlines from around the world. european earnings season under way. they are setting the beat forecast for the second quarter and warned eurozone debt crisis will take its toll. investors in china brace for a gloomy earnings season. china shares tumble after a raft of firms issue profit warnings hurt by slowing growth. and citigroup kicks off a big week for u.s. corporates as the bank reports second-quarter results before the opening bell. plus, it is inflation softens in june raising hopes the central bank will cut rates at the end of the month.

there's nothing like a reunion. >> he's back! >> i am. this is fantastic. it's good to be here. i, look, while i was away, what's going on with your guys on that side of the pond? >> the americans -- >> are they so desperate for new york to reclaim the title of lead financial center that they want to dump the bank of england, the bba, all the regulators over here over the libor? >> look, i just think we can't get new york to pay enough attention to what's going on over here. >> but is that the plan? is that, they just want to get supremacy back by dumping everybody over here in it? >> look, i'm sure people in new york, at least, in the financial industry, would love if london's reputation is hampered by everything -- >> it's tarnished. >> -- that's going on. >> we can do that on our own well. we don't need help from you. we can do that. >> that's true.

shares of spanish banks are trading low amid imposing lenders' losses on senior bondholders. we'll get the latest from madrid. >> and focus on the m&a stories, including the $8 billion bid for human genome sciences. and will kb financial win the battle for ing's asian life insurance business? i know everyone's on the edge of their seats for that one. we'll get the latest from seoul. also, we'll speak to a former special assistant to the u.s. president and get her view on the widening libor scandal as the attorney generals in new york and connecticut reveal ongoing investigations. plus, as the olympic village opens in london, we'll speak to u.s. track athlete nick symmonds, so don't miss that. it's about 11:20 central european time and we'll get his some would say controversial views. >> and we'll show pictures of the rather nasty spread sheets on the beds. did you see -- >> the spreadsheets? >> not the spreadsheets, the spread beds. what do you call -- the duve covers. whatever you call them,

spreadsheets. >> well, i just think you and nick should race across the studio here towards the -- >> he's an 800-meter runners. >> 800. you're right. >> i'll get in with my sprint start. back to corporate news. shares of swedish lenders are trading higher this morning. the group posted a better-than-expected profit in the second quarter. the impact of those results being tempered, though, by a warning from the ceos that nordic markets are not immune from the effects of the eurozone crisis. in a statement, chief executive annika said austerity measures in europe could affect the main markets. >> citigroup reports second-quarter results at 8:00 a.m. eastern, and they're expected to earn 89 cents a share on about $18.7 billion in revenue. like other banks, citi may be hurt by lower trading revenue due to the slowing global economy and weak activity in financial markets in the quarter. in an interview with the "uk sunday telegraph," ceo vikram pandit says he's looking to restore it this year.

they didn't ask to raise its dividend last month with the latest capital plan. look at how citi shares are doing ahead of that report, up about 0.7% in frankfurt. shares of china's sunnig appliance have dropped to the lowest level in three years after expecting a dismal profit in first half. and the profit warning isn't an isolated event. a raft of chinese forms, including zte and china eastern are forecasting weak results as they slow to the weakest pace since the financial crisis. joining us as guest host for the next hour is gina sanchez, director of equity at asset allocation strategy. john woods is chief investment officer at citi private bank. gina, we've got to ask you about the olympics here in a little bit. this is our unofficial olympics-themed show. but first, china. is it your view that investors haven't appreciated the degree to which the country's economy's slowing? >> well, we've been saying that for the better part of the year, so yes, it is our view.

>> so, you're doing a bit of a victory lap here. >> yes. well, that's a terrible thing to say, but yes. >> what then are you recommending that people do if not invest in chin were at the moment? >> well, the challenge right now is obviously where to invest. with china slowing, it's also affecting most of asia, southeast asia, and europe is obviously affecting eastern europe. and so, we're basically looking potentially at latin america as a way to sort of hide from where everything else is slowing. >> let's bring john into the conversation. john, latin america still would be exposed, i imagine, to china through some of the commodities linkages and what not, but do you agree with gina that china is not an attractive investment right now? >> well, we've been under weight for some time concerned about the build-up in credit, concerned about the slowdown in growth. and i think as they did last quarter, earnings will disappoint across asia,

particularly for those countries and companies impacted by china's reach. but to be fair, i suspect that all commodity prices are going to get impacted if china growth starts to slow down, and perhaps that might even include latin america. >> so, what are you -- if you were defensive, john, you'd keep that bias. >> well, you know, actually, we've seen a pretty severe beating by the market of north asian names, particularly those most linked to china, including taiwan, korea, hong kong, and particularly australia. but actually, further south or southeast specifically, towards some of the asean countries, we've actually been having a reasonably positive time of it. i mean, the markets in thailand, in philippines, vietnam, these have been some of the best performing markets in the world. for example, in the case of the philippines, we've been seeing growth tipping at around 5% or 6%. so one, they are getting more

expensive, and the market seems to be more forgiving of these economies with a more domestic, higher consumption proportion in their economy. >> gina, are the philippines the new china? >> well, i mean, i would agree that the domestic story is absolutely the story to go. if you have to go in parse countries, certainly countries where you have a higher and growing share of domestic demand are really where you have to look, because the closer you're linked to chinese buying, then that's, taiwan is right at the top of that list, then the more exposed you are, certainly. >> what about latin america? because again, i think of a place like argentina, reliant on commodities and what not. >> absolutely. >> do you have to be selective about that area? >> you do. obviously, latin america is certainly exposed to the commodity channel and exposed to europe through the banking channel. and so, it's not as though it's not exposed. we're talking sort of the lesser of all the evils here. but a country like brazil, for example, is one where you have a

growing domestic demand. but there are really no countries in latin america that are immune right now to the slowing that's happening. we're seeing a global slowing, and -- >> how bad? how serious? how severe? >> well, i mean, i'm not going to say it's severe, right? but it is enough to make markets question kind of the assumption that the emerging market could drive us out of this with a v-shaped recovery and that eventually we would see a more resilient recovery in the developed markets. we're really not seeing that. we're seeing more like the anemic recovery we were expecting. >> john, how important is the fed going to be to the performance of equities over the summer? >> well, you could even say wednesday, because i think an awful lot of risk at the moment is delicately poised, waiting for some sort of language from bernanke at his congressional testimony with a view to qe-3. my sense is, and our sense in general, is that things have to get substantially worse before

there's any likelihood of qe-3 being rolled out, and by that, i mean perhaps some further deterioration in the labor market, perhaps a flaring up of the sovereign debt crisis in europe. in other words, it may be that market expectations currently for some sort of imminent quantitative easing are going to be disappointed. and with that in mind, over these typically illiquid and seasonably weak summer months, it could be that we see a sell-off in risk. >> all right. we've got to let you go, john woods, chief investment officer at citi private bank. thanks for your thoughts this morning. gina will stick around, but now we want to, of course, check in and see how markets are doing. >> one hour to the trading day and you can see pretty much we're even stevens. as we go through the earnings season, we heard from seb earlier, sage also coming out and saying the eurozone crisis is hurting profits as well. so there is a sense the eurozone will dent earnings as we go through, this weighing on us this morning. pretty flat loss for the ftse

100, just up three points or so. the dax had a better week, up 2.3, but is flat this morning. the ibex is down 0.2%. banks are weaker today in spain. we'll get to that in just a second. before that, nokia also lower. groupon security saying they will take a hit to fail to fulfill enough staff for the olympics. g4s is down as a result. nokia down 3%. they've chopped in half the price of their lunar handsets as well. i talked to spanish banks. ecb today declining to comment on a report that draghi is imposing losses of senior bonds in spanish bonds. the spanish banks by and large are weaker this morning across the board, not by much. bianco and bank of citadel up a bit.

and bankia was down more earlier on. currencies first? which are we going with first? there we go. we'll go currencies. euro/dollar 1.2229. not far away from that two-year low we closed on friday, 1.2162, but weaker this morning. dollar/yen instead, below 79. aussie dollar made big gains on friday, 1%, post china gdp numbers, pulling back a bit to 1.0225. and for the moment, the pound is holding that line below 0.80. big week in terms of inflation data back in england, employment data and retail sales for the uk this week. that's how we stand now as far as european markets are concerned. let's go to the bond markets. german yields, worth keeping your eye on this, negative territory. we will get a two-year shat offering this week. the ten-year, 1.25%, getting back down to the 1.14% we saw

june 1st. dutch two-years are weaker as well, and that won't help the euro negative yields in germany and holland as well because there has been this recycling of funds within europe that's kept the euro a little stronger than you might have thought. ten-year spanish yield 6.1%. how sustainable is it there? will it hit 7%? that is the question investors are asking. that's where we stand in europe. tracey's got more out of singapore and the asian trading day. >> good morning to you, ross. great to have you back. well, asian markets had a pretty mixed trading day to kick off the week. china shares tumbled, losing more than 1.7%, fears over corporate profitability. several issued profit warnings over the weekend, suggesting the slowdown is hitting home and regulators looking to boost confidence have moved to slash transaction fees. also limited gains in hong kong. the hang seng index ended pretty

much flat and shares of zte corp tanked after a profit warning. and the japanese market is closed for a holiday, but the kospi inched higher by about 0.3% as bargain hunting for local investors offset heavy foreign selling. elsewhere, australia shares gained about 0.6%. mining companies rallied on china's steals hopes after beijing said it would step up efforts to boost the economy of australia's top trading partner. lastly, india's sensex is off the intraday low, trading about flat on easing hopes after its june inflation data came in lower than market expectations. ross, back to you. >> okay, thanks for that, tracey. well, the investigation into the libor scandal is widening. "the new york times" reports the u.s. justice department is looking to press criminal charges against several financial institutions over alleged manipulation of the interbank rate. this as attorneys general in new york and connecticut said they launched a probe into libor six months ago. prosecutors are investigating whether the states incurred any

losses as a result of the alleged rate-fixing. against this backdrop, european banks are already in talks to lessen the impact of possible charges. reports suggest deutsche bank could negotiate a more lenient penalty in return for cooperating with the investigation. reuters claims the german bank will act as a witness for the prosecution in both the eu and switzerland. and british bank loerdz is also dragged into the scandal. the new york federal reserve has made public e-mails suggesting they submitted false entries in 2007. the bank had no comment on the report across british media. barclays continues to feel the blowback from its role in the libor case, expected to voluntarily withdraw from a 12-member panel that sets benchma benchmarking bank rates in the united arab emirates. the central bank is due to hold a meeting tomorrow to discuss the request. gina, what is the libor scandal mean to you?

what should it mean to investors? this is a great news story, but i'm wondering actually what the bottom-line takeaway is. >> it's kind of interesting because the libor scandal brings about yet another major resignation of a bank chief, and i'm wondering how many people out there there are that actually have enough experience to actually step in to all of these bank chief roles that are sort of going to come due as folks force major, you know, bank chief execs to step down. i just, i wonder where the banking industry is going right now. >> is it too complex a job? i mean, is it actually almost impossible for a bank chief to know what's going on in some of the units? >> it is a very complex job, certainly. and you know, i think that the issues around the conflicts of interest created when you have your own kind of proprietary desks and all the issues that set up the problems with the libor, you know, with the libor rate-fixing, is we've got to make money on one side, can you help us do that by kind of doing

this other thing, right? and so, i think that, generally, the banking system is headed towards more regulation, and that's probably on the, in the long run going to be kind of somewhat negative for the industry because it means that, you know, banks aren't going to be carrying the same positions, the same liquidity, it's going to be harder for investors to match their trades. it basically says we're going to enter probably the next ten years of higher volatility, generally. we've seen volatility falling, as we saw regulation going away, and we're going to see it come back. >> well, and i wonder if it's added to kind of a long list of things driving up financials, broadly speaking. and from your point of view, is there any reason to invest in these companies or in this sector? yes, they have extremely low valuations historically speaking, but is that alone, you know, reason to get exposure? >> you know, it's a challenge. banks are obviously fundamental

to the workings of a capitalist economy, because that's how you get capital from one place to another. and so, they're not going away. it's just that their profit margins are going to fall if they have to go back to the good old business of actually making loans and collecting on them. >> well, especially if there's not a lot of demand for loans at present. this is a real challenge, though, because it's demand for loans, it's also of course the returning of rate on those loans, which we've just seen downward pressure on for decades now. it's a tough time to be a bank. >> absolutely. i agree. >> all right. we will of course be following more on the libor hearings throughout the day. later on, british lawmakers will grill former coo, barclays coo jerry dell messier about his role in the scandal and the focus will shift back to regulators. the fsa's lord turner and bailey will take the stand for questioning. meanwhile, who is going to lead barclays in the future? gina talked about have we got enough capable people? well, these are some of the runners and riders that the

indexes are talking about. jenkins is the one barclays insider who has been tipped for the possible coo job. he's not tainted by the investment bank because he heads up retail business banking, but does that mean he doesn't have the experience for running the investment bank? peter sansio, why would he want that job? he's done well for himself. as well, former ceo, oswald greubel in focus and gary hoffman, some of the names the bookies are putting up. what about the chairman role for the man who resigned and said he wasn't resigning until he found a new ceo? lord turner, tainted by the libor scandal, will he get the job? he's also in the running to be potentially the next governor of the bank of england, so the libor scandal has a big bearing on lord turner's next job. mike rake and also hector sants.

again, it's how much is going on with the previous regulator, what damage will be done to them? and nigel rudd are also names in the frame. it's a tough job we need to do. of course -- [ inaudible ] well, i know, exactly. and one you know you could do as well, but i think what we have to do is hire the next chairman first and so the next chairman is then the man responsible for the ceo. that's the way to go about it. >> it's true, but it gina's point earlier, that will take a while to get all these names in place. it's interesting that investors haven't reacted more negatively to the lack of leadership, but makes you wonder about that in the first place. in any case, with the wet weather, pressure on the g-4, as ceos, speaking of executives, increasing calls for him to resign with fears of transport chaos and the bar is set pretty low for the london olympics. so, do you think the olympics could potentially beat expectations? kind of like the earnings game, the lower expectations, the easier to top them.

are you looking forward to the games? get in touch with us. send an e-mail to worldwide@cnbc.com or tweet u us @cnbcwex or individually. >> you might find my twitter page has been quiet for the last week while on holiday. i don't like to tweet personal things. coming up, premier wen has issued a growth warning as china faces continued risk and the rebound is uncertain. more on that when we come back.

welcome back to the program. beijing may be set to launch more stimulus after its midyear economic meeting that could be held this wednesday. the state-run chinese securities journal expects a policy blueprint for stabilizing the economy in the second half of the year. now, this could include more infrastructure spending, and they're also taking a look at further tax cuts. meantime, premier wen jiabao says china's recent policies are working to support the economy, but he has reportedly warned that risks remain and a rebound is uncertain. when hinted more needs to be done to prop up growth. ben sivendorf is joining us for more. ben, would you rule out any more rate cuts or do you think it's

baked in we're going to get some more? >> i certainly wouldn't be surprised to see one more rate cut, but that's by the end of the quarter, towards the end of september. if you sort of cut any earlier, i think that would trigger alarm bells, because the economy so far appears to be slowing, but certainly is not collapsing, so it's not yet time for another rate cut. >> ben, typically, investors, even though we've been talking about these rate cuts as potentially adding support to risk assets, you usually don't want exposure at the beginning of a rate cut cycle, you want it closer to the end, and where do you think we are in kind of that progression? >> well, here's the challenge, and you raise an important point, investors need to be able to see the end of the rate cut cycle, and clearly, we're really not sure where that is. this isn't your usual deceleration in which a few rate cuts will ultimately provide a balance in kbregrowth over the few quarters. this deceleration could last a

year or longer, or it could be growth doesn't rise much beyond the 7% level we think it is heading towards over the couple of quarters. >> and how does this rate cut potentially affect a lot of the developers that are, some of whom are very likely going to be forced to close their doors or declare bankruptcy after the stimulus is now done from the last stimulus package? does this help? does this hurt? or does this just start a new round of stimulus? >> it doesn't provide enough support in the sense that the rate cut primarily benefits those blue chip state companies that are accounting for a much larger share of growth than maybe over a decade ago. if we were to provide support to developers, and if it was warranted -- we're not quite clear if it is -- then we would need to see an easing in the timing measures that were introduced on the property sector over the last year or so that have produced that significant correction, and this is the challenge for the government, would be tending to do that.

that would certainly support growth, but it would only add to the risks of an asset bubble further down the path. >> ben, is there any caution amongst private investors, as we also get a change of government, change of critical leaders? is that causing people just to withhold investments? >> i think it is, and this is the real challenge, is we're seeing that transition take place against what is a weak global backdrop. we recognize that stimulus is useful at this point in time, but ultimately, what is needed is reform to drive growth over the median term. in particular to bring the private sector back into play. the state sector has effectively suffocated the private sector over the last decade or so, but we're not going to get any sign of what the new leadership's intention is until perhaps midnext june, a good 12 months away. >> that's quite a long time, gina, to wait, isn't it? >> yeah. >> what happens in the meantime? >> in the meantime, we're probably going to just continue to weather the slowdown. i mean --

>> and ben, weathering the slowdown, what are the implications? what does that look like to you? >> well, i wouldn't be surprised to see growth bump along around that 7% to 8% rate over the next few quarters, and that would ultimately disappoint investors. >> yeah, that's for sure, and i think we're seeing some of that already, ross. bone simpendorfer, thanks for joining us with all of your thoughts. gina, again, will stay with us. if you want to join the conversation, you know how, worldwide@cnbc.com. as we head to madrid, the ec sbnk reportedly considering the possibility of imposing losses on senior bondholders of spanish banks. >> all the details in just a few moments. ddd#1

and these and these are the headlines from around the world. european earnings season is under way. sweden has set the tone, beat forecasts, but warned the eurozone debt crisis will take its toll. investors in china brace. shares tumble after a raft of profit earnings hurt by weak growth. citigroup kicks off a big week for corporates. they report figures before the opening bell. and the u.s. justice department builds a criminal

case against several banks implicated in the libor scandal as former barclays ceo jerry del messier gets ready to face uk lawmakers. last week was pretty flat for the ftse and the cac. today they are flat as xetra dax is up 2%, but it's going nowhere as well, and the ibex is marginally down. that's the start of the tone for this week. what about the bond markets? >> let's look at what's happening there. we have of course watched this space carefully, and today we see yields in spain creeping back higher. 6.7%, not quite as high as we saw in recent weeks, but italy, nevertheless -- >> still sustainable, though, right? >> 6.7% isn't exactly something you can live with long term. italy is a bit lower, but again, still over that 6% level, and gilts fell 1.53%. ten-year -- >> i think that was the june low. that's our benchmark there. the ecb is reportedly going to

support imposing losses on senior bondholders of spain's hardest hit savings bank. the "wall street journal" says mario draghi told eurozone finance ministers of the bank's position at a meeting. stefan is in a hot madrid. i was having a holiday last week and i was glancing my eye at the temperatures in madrid, and i noticed it was rather hot. how hot is it going to get for spanish bondholders, though? what is the ecb saying about this report? >> reporter: not too hopeful at the time being, because the idea has been rejected by the european finance minister at last week's meeting, according to the "wall street journal." they rejected the result because financial markets would react negatively to this potential announcement. a spokesperson for the european central bank declined to comment on this report from the "wall street journal," arguing that the central bank was not part the european bailout package. that being said, in the draft version of the european bailout

for the spanish banks, it says that the government will have to force losses on regular shareholders and also on junior bondholders. it doesn't say anything about the senior creditors for the bank. a spokesperson for the european commission confirmed that senior bondholders would not share the burden, but what about in the long-term? that's the question, because so far, senior bondholders have been spared by the prices in europe. they would be forced to take some losses only in the worst scenario, which means a bank liquidation, but for the time being, they are safe. until when? that's the question. and that probably is reflecting the negative reaction on the spanish banking sector. with that, ross, back to you. >> stefan, thank you for that. gina is still with us. good or bad idea to impose losses on spanish bondholders? >> it's a bad idea. that doesn't mean that it's not necessary, but that's going to

be very negative for the markets. >> what's worse? is it worse than to instead have taxpayers foot the bill and potentially sort of sink spain's economy deeper into the red? >> these are all lesser of all evils, right? you know, is it better for bondholders to take it than taxpayers to take it? it's kind of sinks half a dozen of the other. neither is good, but the problem is the bondholders will revolt in the markets and will actually potentially affect other countries. >> absolutely, because we saw in ireland, they tried to avoid imposing losses on bondholders. >> yes. >> but in spain, what's interesting -- i almost wonder if they're not saying they can't support this, now we're going to try to make bondholders share part of the pain with spain, but i didn't mean to run there. but unfortunately, what happens is that the case is quite different, and the taxpayer, bond holder in some cases being one and the same, because we know in many instances, it's the spanish depositor -- >> so they get a double hit in

spain. >> exactly. >> not only do i pay for the taxes, but i pay for what i was told to buy. >> i agree. this is bad all around. i don't see how this is in any way good for the markets. but again, you know, when you have huge piles of debt, your choices are somewhat limited if you can't grow your way out of it. you can inflate or default. unfortunately, we're headed the way of default and this is one way of doing it. >> the central bank can print money -- >> exactly. >> so, look, what is the time scale? because as we've talked about for the politics and the markets are running at two different speeds. >> right. >> where and when do they collide? are we going to get a fatal collision or not? >> well, i mean, we always kind of assumed it was going to be some time in the 2013-2014 time frame. we talked about the potential for a perfect storm in 2014, when china would likely slow, the u.s. would be experiencing kind of its own anemia in growth

and the eurozone would be forced to face some hard decisions. we think greece is probably going to exit. that's going to be a defining moment for europe to see if that can be done in a coordinated manner. we think it can be. we are actually somewhat constructive on that, but -- >> i noticed roger wrote that finland would be the first country to leave. >> well -- >> and i think insunuriel has t a similar position, saying finland was the one to watch. >> yeah. anything could happen. we don't know really. the newly pointed italian economics minister says asset sales could bring down italy's debt. in an interview with "the italian daily," they say each year the government could sell between 15 and 20 billion euros worth of assets which corresponds to 1% of italy's gdp. they warned the government may have trouble selling off assets, especially real estate, due to their deteriorating quality. >> india's inflation rate,

meantime, rose at a surprisingly softer rate in june, this raising expectations the rbi will ease policy when it meets at the end of the month. ekta batra has more. i'm sorry. i'm having some trouble this morning. live from mumbai. ekta. >> reporter: thanks. the inflation figure for june did come in at 7.25% versus 7.55% of the month earlier, so there has been a bit of a downtick. there was revision which came in around 7.5%, was 7.23%, so only a 25 basis points revision on the up side. now it's a mixed bag in terms of what the rbi would be working with by july 31st, because on one hand, we have the inflation pick coming down around 7.25%, but there are these upside risks to inflation which jobs have suppressed inflation because of fuel price hikes, one and two. the other big point is that the

monsoon might be a variable going forward, so there are upside risks on inflation, but there is growth which is completely flattening. just to put things in perspective, we have the iib figures which came in at a meesely 2.4%. you remember that it was a contraction for the past two months, then came in at 2.4%, indicating that the trend in terms of growth still remains extremely weak. the other data point which the rbi will be watching out for will be the consumer price index, which is basically the cpi data, which has been ticking higher as opposed to the pricing index, the wpi, which is about 10%. so the cpi will be the big factor that the rbi will be looking at quite clearly, considering it was something which they spoke about quite aggressively in the previous policy as well. so, all in all, it seems like the rbi possibly won't move on 31st of july and keep its powder dry for forthcoming data points. with that, it's back to you. >> we'll keep an eye on that, ekta. thanks very much. glaxosmithkline will

announce a deal to acquire human genome sciences. reuters claims the company accepted an offer at about $14 a share in cash. the pharmaceutical giant had previously offered $13 a share. the news agency says gsk will announce the deal ahead of today's u.s. open. this following a three-month hostile takeover battle. canada has approved gl glencorp's takeover to provide a net benefit for canada. however, the transaction has yet to be approved by china's ministry of commerce, which is expected to hold off on a decision until the end of the month. and the sale of ing's asian life insurance business may be one of the biggest asia pac insurance deals on report. analysts say the price tag could be north of $7 billion. the "wall street journal" reporting that canada's manulife and hong kong's aia group are among the bidders for the unit, and south korea's kb financial is reportedly looking to buy

ing's korean operations. the dutch financial services firm agreed to sell off the businesses as part of a bailout condition by the dutch government. rhi young-lim is in seoul with more on this part of the story. rhi. >> reporter: yeah, as you said, there are many established players handing in bids, like canada's manulife, as well as korea life. ing's southeast asia operations are especially hot in demand with the region's life insurance premiums forecast to grow in tandem with a strong economic growth. according to reuters, one consortium is set to be led by a ex-ceo and former rugby player, backed by blackstone group. other is reportedly headed by richard lee, son of a billionaire. as for ing's korea operations, there are two reported to be in the race. the local unit is noted to be worth around $3 billion and the

preferred bidder will be announced by the end of the month. for aia, the takeover would bump its number one ranking to fourth, naturally expanding its presence in asia's fast-growing insurance market. back to you, kelly. >> okay, rhie, thanks very much for that. gina sanchez is on set with us. the second quarter was such a quiet period for merger and acquisition activity globally. do you expect a pickup now? is that what we're seeing with these deals? >> well, i find it interesting, the fact that we haven't had many deals to date i've been taking as a sign that ceos are just unwilling to invest in anything other than a 0%-producing asset like cash, so this is actually sort of in that positive to see this. i think it's important to see it in the markets, and we've been waiting for this for the better part of like a year? so, these i would read as positive. >> and it's hard to see it necessarily as the starting of a renaissance in activity?

>> not necessarily, no. i don't -- there just isn't a lot of demand out there. and if you look at kind of earnings and earnings season and profit warnings, we have seen a lot of negativity coming out of ceos in terms of guidance. so, it would be hard to imagine that this would be sustained. >> is this year going to play out like last? we had a big swoon and then we got all excited, sort of the end of the quarter, and then -- i mean, we sort of -- i've seen this record now. this is the third year we're playing this record? might even be the fourth. i'm losing track. >> yeah, we've been to this movie before, yeah. >> is it played the same way? >> i think so. if anything, we've seen, for example, in the u.s., we've seen 63 out of 103 corporations guiding lower, we've seen quite a bit of cut of expectations in european earnings. i think now the expected growth rate for earnings for eps in europe is 2.4%. that's down from like, you know, quite a bit higher, 8.9% or

something like that, 8%. so really, the negativity continues. if anything, i would say that companies are probably more dependent on policy and printing presses than they are on their own earnings. >> that's for sure. >> which is rather depressing, because have we reached the limits of monetary policy and printing presses. >> presses have been running at full speed, so that's hard to say. and policies -- >> the biggest one hasn't been cracked up. >> well -- >> i mean, i think it's -- while it's clear that over the years we've seen an extraordinary degree of sort of monetary activity, if anything, lately it's been policymakers, say for example the european central bank, which you just alluded to, driving their heels which has been a positive. >> actually, i was just alluding to the fed. everybody else is currently acting, but the fed isn't. >> and everybody's hanging on, you know, the imf releases their world economic outlook later today. it's expected to show some

slowing in expectations. they're hoping that opens the door to bernanke. >> what i want to know is does the imf finally say this whole austerity thing we advocated a couple years ago -- >> oops! >> -- didn't turn out so well? we've seen all these agencies over the last couple weeks coming out and basically saying, geez, maybe more stimulus is the way to go. does the imf follow suit? >> no, that should be interesting if it does. i think everybody's just hoping it opens up the door for bernanke to announce something. he's going to do his monetary policy report on tuesday, and we'll hear on thursday what happens. >> that's for sure. and now all traffic may be known as the fear to dreams, but it seems the stock market could meet with mixed reviews. a suggestion u.s. investors are luke warm about the prospects. their high levels of debt are attracting concern. the club is hoping to raise 64 million pounds by listing now on

the new york stock exchange. it had been thinking of going to asia six months or so ago. >> what's the old trafford theater dreams going? >> that's the title. the football ground, they say it's the theater -- >> oh, the name is old trafford? i know, i'm exposing such naive -- >> no, old trafford is where it is, so it's called the old trafford stadium and they nickname it the theater of dreams, because when you go there, you watch stuff you couldn't imagine. >> well, hopefully, the ipo won't have so many parallels to that, but we'll keep an eye on all that. meantime, let's look at what's on the agenda in asia tomorrow. mining firms rio tinto and fortescu metals. the bank of australia will release minutes from its policy meeting and gm's south korea union unit are set to strike for more pay. this week we'll hear from the eu trade minister, who says his biggest concern is the legitimacy of the eu. we'll find out why after this.

welcome back to the welcome back to the program. earlier, we asked for your views on the olympics and whether you think the event will be a success or a failure, given some of the headlines about security concerns and the generally,

perhaps low expectations heading into the event now. paul writes in about the controversy surrounding the team usa uniforms, because they are china-made, rather than u.s.-made. raufl lauren has already sought to calm the backlash, saying he would manufacture the outfits for next winter games in the u.s., but paul of course says "has no one noticed that the design of the uniform looks more french than usa? maybe a cowboy hat or baseball cap would look more made in usa?" better than a beret. well, paul, i'm not sure they're necessarily going the beret route or that we necessarily want to play up to stereotypes, but if you want to respond and let us know what you think about the olympics, e-mail us at worldwide@cnbc.com or tweet us @cnbcwex or reach us directly. eu trade minister karel de gucht says his concern is about the legitimacy of the european

union and whether it is accepted by the citizens. i spoke to him earlier and asked what is the biggest source of strength for european goods around the world right now? >> we are pretty good in exporting. we are the biggest trading block in the world. we have about 20% of the market share. we are stable over the last decade. japan and the united states lost about 6 percentage points. we didn't. we kept stable. so, we are exporting quite a lot, and also trading volume is very good. the problem is not our global balance to the rest of the world. the problem is inside europe, where you have differences in competitiveness. that's the real problem. the problem is not ourselves confronted with the world, it's inside. >> how deep is the problem? >> it is a structure problem, which means that we will have to find structure solutions for this. and the structure solution can only be that a number of member states put order in the house,

invest more, have a leaner state, and -- >> but can you do that, have a leaner state and invest more? >> oh, yes. it's even -- it's not only compatible, i think to invest more, you need a leaner state. you can spend some money only once, you know, if your state spending, official spending, public spending you call it, is 50%, there is only 50% left for the public, for the private spending. so yes, we need to be more competitive, which means investing more in business, but it also means making our structures leaner. >> what is the european union willing to do to support that taking place across europe? >> well, we are doing that. take the example of greece. we are often criticized because we are not doing enough for growth. the transfers to greece are about 4% of gdp, which is

enormous. it's twice as big as the historical marshall plan. then of course, you also have to absorb this money in the right way, do something productive with it, invest it in the right way, and we are trying to help them in doing so. i think if they continue what they are trying to do now, they will succeed, and i also believe that the population has understood this, because you have the majority in parliament that is supporting this strategy. it's harsh, it's difficult, it's necessary, but on the other hand, we also are making a tremendous effort for greece, you know? >> but you can't keep writing checks. so at some point, will the european union or the eurozone, the monetary union, have to go forward without greece? >> no. we can keep this process on track, provided that there is the necessary political support in greece, and that came out of

the elections. the greeks, in fact, choose the european rules and we're going to hold them to make it. >> do you worry that we're seeing a reverse of the integration of europe because we're seeing so many nations in their banking sectors or just in dealings with one another pulling back and turning inwards? >> i don't think so. it's true that we have problems in a number of member states -- greece, portugal, spain, italy and ireland. but not all of these member states are facing the same kind of problems. for example, in ireland it's a banking problem. the banking sector that was much too big for the size of the country. once they get that right, they have a vibrant economy. in spain, it's about a real estate bubble. once that is resolved, i see no rain why spain wouldn't be competitive. so no, no, it's feasible, but it takes time, it takes money, it's structural, it's a big

challenge, but i think we will make it. >> what's your biggest concern going forward for the european union? >> the legitimacy. it may be a very strange answer, but it's about whether people accept that we are doing this, you know, and that's also why i try to be as much in the media as possible to explain what europe is about, what we have to do, what is the challenge we have, because we need to be accepted. if we are not accepted, then over time, we cannot do our job. >> okay. just a reminder about our "trade link" series here on "worldwide exchange." every week we look at how the financial crisis is affecting global trade and the impact on how business is done around the world. that's mondays at 10:50 central european time. for more, go to the website, tradelinks.cnbc.com. >> plenty more of that. a final thought from gina with us in the studio. right now we've got negative yields on two-year notes in holland and in germany. we talk about the earnings

season here and the pressure on equities as a result. as an investor, what are you supposed to do, just put your money in corn? i mean, you know. >> well, that tends to be a bit of a volatile investment, so that could be challenging at times. we're obviously recommending an underweight to equities and an underweight to europe. that overweight we're taking actually in credit rather than in treasuries, because you can at least still get paid there. and when the markets rally, you're participating, and when the market's down -- >> investment-grade corporate or yield? >> investment-grade. we think high-yield is probably going to become a dodgier and dodgier place, so we're perfectly happy to stay up the capital structure and up quality. and so, that's kind of one of the places that we've seen -- >> banks? >> we have been avoiding banks. i mean, there are moments when you're going to get terrific rallies and you're going to get terrific declines. and so, you know, the volatility probably isn't worth it. whereas you can collect actually some decent yield. this is just a low-yielding

world. it's a terrible place -- >> but corporate credit, we've seen, especially investment-grade, rally so much that even the yields there are so low. >> they're really quite low, but like i said, this is all, you know, a really, really difficult call to make in terms of where you can invest. you know, one place we look at on a tactical basis is some of the u.s. dollar-denominated emerging market debt. that has certainly fared well over the last few weeks. >> do you think the dollar is basically going to stay strong or strengthen more? >> probably. i mean, we see continuing fear, continuing uncertainty, absolutely. that is a good call for the dollar. >> u.s. assets in general, is that the same thing, support your view that kind of you take this stability or soundness, perha perhaps, where you can find it? >> absolutely, yeah. >> u.s., i guess, being an okay house on a crummy block these days, as our guests have described it before. >> continuing the getting worse block, isn't it?

>> yes. >> paint is peeling off. gina, thanks for that. before we go, a quick word. the athletes village is open. >> it's very exciting! everybody's started -- >> the army coming back for security. are you excited? >> i am extraordinarily excited. i've certainly been hearing from friends around the world who have all been arriving all throughout the day. and so, this is -- >> and they got through okay? >> i haven't heard yet, so i'm sure i'll let you know. >> gina, thanks for that. gina sanchez, asset allocation. still to come in a few moments. >> we'll talk about citigroup's earnings preview. don't go anywhere. we'll be right back.

welcome to "worldwide exchange" this morning. i'm kelly evans. >> and i'm ross westgate. these are your headlines from around the world. european earnings season gets under way with sweden's seb topping forecasts for the second quarter but warning the eurozone direct crisis is taking its toll. investors in china brace for a gloomy earnings season. shares tumble after a raft of firms issue profit warnings hurt by slowing growth. citigroup kicks off a big week for u.s. corporates as the bank reports second-quarter results just before the opening bell. and the u.s. justice department built a criminal case against several banks implicated in the libor scandal. this is former barclays coo jerry del messier gets ready to

face british lawmakers today. 123467 . good morning and hello to our u.s. viewers who may be just waking up. dow futures, red behind me. the dow jones pointed lower by about 35 points this morning, the nasdaq by about 5 points, and the s&p 500 by 4 points, as well. now, this of course followed a strong session on friday, but the tone in markets across the world overnight has been a bit more mixed. japan is closed for holiday. the shanghai composite in china just hit its lowest since march 2009. and if you take a look at the cnbc ftse global 300, we've gone from gains to losses on the day. we're now down 0.06%. a quick look at what's been happening across europe. the ftse 100 is down 0.2%, the xetra dax about the same, the

cac out of paris down about 0.4%, and the ibex is down about 0.3%, building a little bit on its losses this morning. >> and banks have been under pressure today. we have reports that the ecb refused to comment on out of the "journal," that they recommended issuing losses on bondholders in spanish banks. now, finance ministers so far declined to go down that route. no comment. but the spanish banks are low. bankia perhaps most affected by that plan. as far as currency markets are concerned, euro/dollar getting back down towards recent lows, now 1.22. we hit 1.2162 on friday, a fresh two-year row. dollar/yen around the 79 market. aussie dollar with strong gains. trying to hold on to the gains, weaker this morning, down 1.0209, and euro against sterling is slightly weaker, 0.7553, maintaining below 0.80.

ten-year spanish yields are higher, 6.7%, below 7%, but frankly still not great in terms of long-term sustainability. finally, we have got some auctions out of spain this week. but then here we go, two-year dutch yields a negative, as you can see, along with two-year german yields as well. both of those are negative and people are wondering, if you keep negative yields in holland and in germany, whether that is going to push the euro down to lower levels, because how much will you recycle funds into peripheral as opposed to out of the eurozone. and the ten-year german 1.24%. not far away from the june 1st low. that's how we stand in europe. tracey's got an update on the asian session out of singapore. hi, tracey! >> hello, again, ross. a mixed performance for markets in the region this monday. china shares tumbled. the shanghai composite lost more than 1.7%, closing at its lowest

level in more than three years. the index underperformance asian peers on concerns over corporate profitability. several chinese companies issued profit warnings over the weekend, suggesting the slowdown is indeed hitting home, and regulators looking to boost confidence have even moved to slash transaction fees on the shanghai and shenzhen vorciss. they also limited gains for hong kong. shares in cte corp tanked 16% in hong kong after a profit warning. and the japanese market is closed for holiday today. but the kospi inched higher by about 0.3% as bargain hunting from local investors offset heavy foreign selling. elsewhere, mining companies rallied on chinese stimulus hopes after beijing said it would step easing efforts to help the economy grow, the economy being australia's top trading partner. lastly, india's sensex is, you know, down, moving slightly

lower, down about 0.2%. it was up easing hopes after german data came in lower than market expectations. ross, bablgt. >> tracey, thank you. citigroup reports second-quarter results at 8:00 a.m. eastern, and they're expected to earn 89 cents a share on about $18.7 billion in revenue. as you can see, citigroup there kicking off a big week for earnings season. like other banks, citi may be hurt by lower trading revenue due to the slowing global economy and slowing activity in financial markets. and goldman sachs on tuesday followed by bank of america wednesday, morgan stanley on thursday, mary jo jacobi, former assistant, u.s. secretary of commerce under president george h.w. bush and special assistant to president reagan is here on set with us for the hour. mary jo, welcome. >> thank you. >> first of all. secondly, we just rattled through all of these financial earnings we're expecting this week. a lot of the focus has been on barclays. and from your point of view, this whole libor scandal, is this going to blow up into a much bigger deal for financials going forward? >> i don't see how we can avoid

it. it's a big scandal. you've got disclosures from the new york fed going back to 2008. you've got deutsche turning what they're calling state's evidence in a plea for leniency. who knows where else it's going to go. i think if i had been advising barclays, i would have been torn about telling them to come out early, and hopefully, get it over with, versus coming out early and creating a bigger problem for themselves. >> i mean, they may have gotten some leniency with regard to the fine. >> yes. >> it's something like a 30% perhaps discount. >> right. >> but it's clear, and there's a great sort of tale of this in the "wall street journal" today that they thought that would save them from getting rid of their top executives. clearly not the case. >> no, they're all gone. and reputationally, this one's going to run and run and run. >> and in the u.s., do you think? >> oh, yes, because there's justice department investigations, there's attorneys general in new york and connecticut on it now. it's big. >> where does that also leave --

what did we allude to, the geithner e-mails suggesting there had been discussions with the bank of england, the british bankers association, about saying there is a problem with libor way back in 2008. and clearly, nothing was done. >> the regulators are always fighting the last war with yesterday's weaponry. and of course, businesses, financial institutions, et cetera, move on. and innovation is a whole lot quicker than regulation. so they may see a problem. they're not quite sure how to act on it. they're not quite sure whose jurisdiction it is in this country, in particular, with the triparteid regulatory environment over financial institutions. so, they're always going to be a little late coming to the table, as they are in america. >> well, i'm wondering, though, in this case, if the issue was banks low-balling libor, whether actually the view was, you know there's a problem, but actually -- >> a nice problem to thave.

>> in a practical sense here, banks saying they've got lower borrowing costs in the financial crisis is something we can live with. do you think actually that is what happened? i know it's very hard to -- >> the old montey python nudge-nudge, wink-wink, you know what i mean. >> yeah. >> yeah, who knows? it's tough to second guess both regulators and bankers. i guess in time all will be revealed, and i think we'll find the truth is somewhere in the middle between the two worst extremes. >> it's interesting, we've had this arc since the 1980s of deregulation, at least in the u.s., and to some degree here as well. and people turning around and saying, well, this is why we're in such trouble now. regardless, we're clearly kicking off a period of tighter regulation. how do you think, you know, looking back in 10, 20 years time, will we have regretted this move? >> probably, because we don't know what we're regulating, which problem we're seeking to solve, and are we creating other problems while we solve those problems? so, if you look at dodd/frank,

they're still writing the regs, thousands and thousands of pages of regulations to interpret a very long piece of legislation that nobody read when they passed it. >> this is my issue, is that we get so into the self-flagellation. and as you rightly say, we get so wrapped up into the mistakes of the past that we completely fail to understand what needs to be done today. >> which problem we're trying to solve. and i think probably, sadly, the great lesson that i take away from all this is we've completely lost any sort of premium on prudence. prudence is not rewarded anymore. if you do the right thing, whether you're a company, whether you're a financial institution, or even as an individual, you get screwed. >> how is that different than the past? >> you made money, you know. you had a safe haven for your investments. where do you put your money now? you paid off your mortgage, so now you own a property that you have nothing to bail out but the

government in the united states bails out people with mortgages that are under water. you know, where is the premium on prudence today? >> great question. >> good to have you on today. stick around. plenty more to come from you. any thousanghts or questions, tt or-mail us. a reminder, the libor scandal is widening. "the new york times" reports the u.s. department is looking to press charges against several banks, this as attorney generals in new york and connecticut say they launched aprobe into libor six months ago, investigating whether the states incurred any losses as a result of alleged rate-fixing. >> against this backdrop, european banks are in talks to lessen the impact of possible criminal charges. reports such deutsche bank could negotiate a more lenient penalty in return for cooperating with the investigation. reuters claims the german bank will act as a witness for the prosecution in both the eu and switzerland. and british bank lloyds has also been dragged into the scandal, this after the new york federal

reserve made public e-mails from barclays suggesting lloyds submitted false libor bids in 2007. the bank said it had no comment on the reports, which have been published across uk media. meanwhile, barclays continues to feel the blowback from its role in the libor case. the bank is expected to voluntarily withdraw from a 12-member panel that sets benchmark interbank rates in the united arab emirates, according to several reports. and later today, british lawmakers will grill former coo jerry del messier about his role in the scandal. the focus, too, will shift to regulators as the fsa's lord turner and bailey will take the stand for questioning. meanwhile, while that all goes on, people are still wondering, where does this leave barclays? the first to step up to the plate as we talk about the libor scandal. the ceo job, though they're putting a book on some of the names that may be in the fray. the insider, the current barclays employee most likely to get the nod at the moment would be anthony jenkins, chief

executive of the retail and business banking, so he's not tainted by the investment banking business, but at the same time, people wonder whether or not he's got enough investment bank knowledge. would peter sands be interested? who knows? why would he want to take that up while he's doing a good job at standard chartered. also, oswald greubel is named, former ceo at ubs. before you get a ceo, it's probably best to get yourself a new chairman first to hire the ceo. mark zajas has the current job. lord turner, chairman of the fsa, has he been too tainted as well by the libor scandal? we'll hear from him at the treasury select committee today. mike rake of barclays. and hector sands, again, it's the role of regulators people will look at, and that will depend to some extent what happens to the people who worked for the regulators, and nigel rudd, some of the names put before the future chairman. but i think, kelly, you have to

put the new chairman in place first because you want the ceo to be his man, the new chairman's man, right? take responsibility for that. >> and of course, we should start asking who might be the contenders to take over at the bank of england? because it's not just barclays affected. now there are all second questions -- >> tucker was basically set as the man in the frame after his testimony last week -- the week before. people are now saying, well, he's dead in the water. he used that phrase "the cess pit." has it made him stick? >> right. we'll follow that story. plenty more to come. with the wet weather, pressure is growing for ceos to resign and fears are growing of transport chaos in london. the bar is set pretty low over the olympics, so we wonder, will this beat expectations and be a success? maybe that's wishful thinking. to join the conversation on "worldwide exchange," let us know what you think about g4s in particular. shoot us a note at

worldwide@cnbc.com, twee tweet @cnbcwex or @kelly_evans or @ross_westgate. we'll look at how that shakes out. the fund-raising fight and war of words is heating up in the race for the white house, just like the temperatures across the united states. we'll bring you the latest developments when we come back. [ female announcer ] want to spend less and retire with more? then don't get nickle and dimed by high cost investments and annoying account fees. at e-trade, our free easy-to-use online tools and experienced retirement specialists can help you build a personalized plan. and with our no annual fee iras and a wide range of low cost investments, you can execute the plan you want at a low cost. so meet with us, or go to etrade.com for a great retirement plan with low cost investments. ♪

welcome back to the program. these are your headlines. citi kicks off a big week for u.s. earnings, posting second-quarter results before the opening bell. markets in china rattled by a raft of profit warnings amid slowing economic growth. and the u.s. justice department builds a criminal case against several banks implicated in the libor scandal. chinese markets a little weaker today. we've just had fdi numbers out as well. first-half fdi in china, according to the vice commerce ministry down 3% in the first half to $59.1 billion. they say the fdi, though, is likely to be flat on the year when you compare it with 2011. but investors, i think private-sector investors, kelly, are still very cautious in china until they see the new, the new

political regime in place. >> yeah, and the end of this current kind of period of weakness as our guest earlier was talking about. >> you're nodding your head. do you think there's a big shift going on here and people will be unwilling to sort of invest a lot of money until they know what's going to happen? >> you guys do this for a living. markets don't like uncertainty. and any time you have political change in the wind, that's uncertainty. now, china is not likely to change radically, like america could, but change is change, and people get scared, investors in particular get scared, and they hold on to what they have until they have a clearer picture of what's coming. >> on that note, president obama and his republican challenger mitt romney continue to trade attacks over which of them is more trustworthy. romney's campaign says the president's advisers should retract comments saying romney was at the helm of bain capital when the private equity firm was shipping jobs overseas. the obama campaign says there will be no such apology. the president is campaigning this week in the swing state of ohio while romney will be at a

fund-raiser today with louisiana governor bobby jindal. so, mary jo, is this just politicking as usual? >> it's a little bit more than usual at this stage of the cycle in that a sitting president normally doesn't go this negative this early, and he's gone very negative very early. i mean, for a campaign to accuse the opponent of felony, which is what the obama campaign has done to mitt romney, is pretty serious business, and romney has asked the campaign to either retract or put their money where their mouths are. >> to broaden this out for a second, kind of remind people, especially around the world tuning in. so, we're coming in to kind of the home stretch. maybe a little premature, but we're certainly starting to focus really on november. how have the odds shifted? what are people thinking is the most likely outcome as that date approaches? >> we've still got a long way to go. in america, the voters don't really start paying attention until labor day, which is the first monday in september, when

people come back from school, holidays, et cetera. so, it's still early. it's still far out. it's a dead heat. historically, the incumbent has had a lead, even in 1980 when ronald reagan won by a landslide against jimmy carter. at this stage of the game, carter was running ahead. at this stage of the game, h.w. bush was running ahead of bill clinton. so, who knows? but for it to be a dead heat at this stage, i mean, most of the polls are within the margin of error. >> and ross, you can understand why the obama administration becomes so concerned about market activity and any signs of weakness coming up, because they know that's not going to tilt things in their favor. >> the unemployment numbers last week were soft at best, and as a democratic pundit said, three more months of this and you're going to have a new guy on november 7th. >> i completely understand as well. i would tune out as well until the fall, frankly. >> so much noise. >> it's pointless. >> the silly season i guess is what we're in, not the home stretch. >> still noisy.

still to come on the show, more thoughts from mary jo. plus, london's olympic village is opening its doors to the rest of the world today. we'll speak to a member of team usa as we count down the final days to the big games. don't go anywhere. ♪

♪ 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

you're just joined in the if you're just joined in the states, corporate news this morning this side of the pond. the cfg has admitted consideration his position after the failure to supply security guards for london's olympic games. according to "the sunday telegraph," they appeared before shareholders to explain why the company fell short of delivering the required 10,400 guards. the british government is now drafting in over 3,000 military personnel to cover the shortfall. >> remarkable. well, the olympic village opens officially today in what will become temporary housing for more than 16,000 athletes making their way to east london for the games. heathrow airport will welcome 120,000 passengers through its gates as the olympic teams, world press and bystanders arrive. as you can tell from my co-host attitude here, londoners aren't so thrilled about all of this. >> there's a reason i just took a holiday in the uk, all right?

i wasn't flying anywhere. >> joining us on set is nick symmonds, member of the 2012 u.s. olympic track and field team. welcome! >> thanks for having me. >> how did you find the arrival process? >> not bad at all. we came in early, though, about a week ago, so a good three weeks before the games. >> heathrow? >> heathrow, yeah. they were very welcoming. >> you experienced this morning was all right. >> it was great. yesterday. it was great. they were all there, all smiling. they were nice. it was a wonderful experience. >> do the athletes, do you get special sort of -- how quickly after you get to london do people sort of come and shepherd you through this process, or are you pretty much on your own? >> very quickly. you know, they had specific links set up for athletes and credentials. a lot of the u.s. contingency, especially the track and field team, will be in birmingham and they'll welcome us there and bring us down a couple days before opening ceremonies into the village. >> okay, and the village is open today, so you know, i was talking about the bedspreads earlier, the kind of confer. >> beautiful.

>> how do you deal with living in the village because there are lots of different athletes, shapes and sizes, events at different times. >> yeah. >> is it -- how do you deal with that? >> well, i did compete in the beijing olympics and it's very hard to minimize those distractions. i was one of the last events to compete in beijing -- >> that's tough. >> you have world-class athletes finishing up early on and of course it becomes a party with 10,000 people invited. >> 10,000 very young, fit -- >> a lot of energy, for sure. >> yeah, a lot of energy. that's a melting pot. >> i know where i'm going. >> yeah. i want to talk about, because we now go into the blackout period where individual athletes will no longer be able to show their own sponsors off. and you're known because you've got this tattoo on, which you sold for what, 11,000 bucks -- >> $11,100 -- >> it's a tattoo? >> it's actually a temporary tattoo. domestically, i'm allowed to display it, but internationally, according to ioc rules, i have to tape over it. in competition, you'll see me

with tape on my deltoid, but everybody knows hanson dodge is the sponsor. >> no one else i know called it a left deltoid. >> well, we work out quite a bit, you memorize it. >> which bit is the deltoid? >> right here. i have a right deltoid for sale, too. >> now look, how important is it do you think to be able to take ownership of your own sponsor -- is this going to be the future, where athletes take charge of their own marketing and -- >> i sure hope so. we train for four years for these events and we come here and all these sponsors have helped us throughout the years -- travel, medical, housing, food, everything. they've been everything to us. and when we get to the olympics, where we can give them our return on their investment, they're suddenly not welcome anymore, and i think it's terrible. hanson dodge has helped me so much this year and i'd love nothing more than to step in front of the limelight, 3 billion people, and be able to represent them and tell the world this company's been everything to me. >> i think it's a bit extreme that they put a mark on it. it doesn't just affect the athletes, it affects basically behavior across the olympics

village. you have to use the we credit cards and go to the right restaurants. >> they put in a huge amount of money. without that, there would be no olympics. >> but does it have to be exclusive? >> it does. i was chairman of the ladies professional golf association for five years, and you cannot discount the importance of the sponsors in sports, whether it's professional or largely amateur, like the olympics are, but still, there are professionals in there. you've got to have the money, and it puts these guys who are sole proprietors of a business, and the business is them and their physical prowess, it puts them at a tremendous disadvantage with the folks that helped them get there in the first place. >> nick, i joked earlier you reminded me of track and field's jay-z, because he says i'm not a businessman, i'm a business man. and you've been so kind of aggressive, and i think in many ways trying to do the same thing, which is to build yourself as a business. and do you expect that to carry you on past these games? swrr >> absolutely. people often think, nike's a

sponsor for me and they think i'm an employee of nike. i'm an individual proprietor. i'm able to do independent contracting with a number of companies, including hanson dodge, nike. but yeah, it's very important that i be allowed to identify myself as a brand, hanson dodge creative has been helping me with that quite a bit in creating the brand that companies want to affiliate themselves with. and if i go into this blackout period where i can't continue to develop my brand and represent the companies and give them a return on investment, it really handicaps my ability to earn a living. >> just a final, before we let you go. you're coming into these games ranked sixth in the world in the 800-meters. what are you aiming -- i mean, obviously, you want to win gold, i suppose. >> absolutely. >> so, what's your preparation as you go into these games? >> it's the men's 800, a cut-throat event. oftentimes, a fraction of a second can separate winning gold medal from being dead last. >> if you can get through -- it's different from a one-off race to the preliminaries as

well because you have to have strength and endurance. >> and that plays into my advantage because it's difficult to meter your energy over three rounds, so veterans are often the ones that make the finals and win the medals. >> i was amazed, one of your teammates is 35 years old. that's wonderful. >> what's wrong with that? >> no, it's terrific! it gives us hope that we may all still be in the olympics some day. >> absolutely. >> we wish you all the best. from my point of view, i hope you get a silver medal behind a brit -- >> oh, come on! we're rooting for gold. >> and get used to the british anthem. i know there will be a lot more american anthems in the olympics, but -- >> thanks, nick, for coming on the program. >> enjoy the olympic village. >> nick symmonds, member of the u.s. track and field. investors have been reaping returns on corn, but is the growth story here to stay? we'll discuss with michael gurka, coming up. [ man ] ever year, sophia and i

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welcome back to welcome back to "worldwide exchange." if you're just tuning in, i'm kelly evans. >> and i'm ross westgate and these are your headlines from around the world. citigroup kicks off a big week for u.s. corporates as the bank reports second-quarter results before the opening bell. investors in china brace for a gloomy earnings season. china shares tumble after a raft of firms issue profit warnings hurt by slowing growth. in europe, sweden's seb

beating forecasts in the second quarter but warning the eurozone debt crisis will take its toll. and the u.s. justice department builds a criminal case against several banks implicated in the libor scandal. this as former barclays chief operating officer jerry del messier gets ready to face british lawmakers. welcome back to the program this morning. we haven't seen much movement in futures since last time we checked in, but nevertheless, the dow jones industrial average is implied to open lower by about 36 points this morning, the nasdaq by 5. and for its part, the s&p 500 lower by three or four. now, again, this comes off a pretty strong session on friday. global markets tried to carry those gains forward. japan's closed shanghai didn't have much luck with that, falling to its lowest level since march 2009. and we've seen some red now across europe as the ftse 100 is

down about 0.25%, xetra dax, same amount. 6,540 is the amount there. the cac is down 0.36% and the ibex is down 0.6%, so we have see more movement in europe to the down side since last check. >> we've got comments coming out talking about the western european car market going to shrink around about 5% this year. says global demand is actually very good. this is daimler, the owner of mercedes-benz. global demand very good, despite the weak south, but they're investing in a new $600 million in a new mercedes-benz a-class plant as well. we saw this with peugeot last week, but the western european car market, the downturn there confirmed, but the rest of the global market all right. so, what about investors in these markets? we've had a number of experts on already today on cnbc. here's a recall of what they've been saying.

>> still think there's some signs to be optimistic. if you look at the australian dollar today, it's holding up quite nicely above that 1.02 level as well, so people aren't really taking it out on the aussie today. we like the euro/dollar, if we can compare it for example to the u.s. dollar, to the core currencies, but we do not like it versus the emerging market currencies, and it's not only the euro/dollar, it's also the australian/dollar. if we had an overall portfolio, it would be overweight. we do overweight for the emerging markets, underweight the japanese yen, underweight the swiss franc. >> we're obviously recommending an underweight to equities and an underweight to europe. that overweight we're taking actually in credit rather than treasuries because you can at least still get paid there. >> well, the eu debt crisis is having a pronounced effect on

the u.s., and companies are holding back on hiring ahead of domestic tax hikes and spending cuts. the so-called fiscal cliff. that's the finding of the latest survey by the national association of business economics. about 40% of corporate economists expect u.s. gdp to be below 2% over the next year versus less than a quarter who thought that back in april and only 23% believe their firm or industry will step up hiring in the next six months. that's down from nearly 40% in april. federal reserve chairman ben bernanke, meantime, is likely to weigh in on the impact of the eurozone debt crisis when he goes before the house and senate as part of his semi-annual economic update tomorrow and wednesday. traders will be looking, of course, for any clues on the central bank's policy options to boost the u.s. recovery. joining us now for more is michael gurka, managing director of chicago-based spectrum asset management, and mary jo jacobi is still with us as well. michael, first to you. how significant are these concerns that we're hearing about the u.s. economy?

is this just more softness ahead of expectations or is there real trouble ahead? >> well, there is trouble ahead, as ross is well aware of, been bearish for quite some time and right on most of it and wrong on the others, but i think the equity markets have held up remarkably well in regards to that, and i think earnings will start tipping the hat. i'm not looking for that to sustain itself, but on the commodities side and more importantly on the economics side, the u.s. is really starting to have major concerns with growth. >> recession? >> absolutely. >> you think so. so, when and how bad? >> well, i think the end of the year, as we get near the election and with the employment scenario, it's not going to get any better. and then from there, i think that's when the real constraints start to show their head. >> it's interesting, though, i imagine you've been cautious for quite some time. perhaps the bigger surprise is that we aren't in recession, the economy isn't doing worse. we've heard groups including the eci last year calling for the recession and it hasn't panned

out. >> there haven't, but there are chances where the u.s. had the chance to take the lead and really run with the ball, and i think a lot of times, we've either known it from confidence or gdp, and from there, the employment numbers have really started to lag, and i think that's one of the scenarios that the global issues did not want to see, is that the u.s. kind of got through this. >> normally, of course, you would get, then, you would get full qe, as opposed to the twist we've got at the moment, and of course, that would provoke a reaction, particularly in chicago in terms of commodity trades. is that going to happen or not this year? >> let's put it this way, it's been priced into the market and it was priced in somewhat positively to start, and now from here, it can only be pulled out and have a negative impact. so, right now at least the market's being probably the biggest predictor of what's going to happen, have not been very favorable. finally just saying it's not necessary. it's not the too big to fail scenario where you've got to come in and let, you know, the markets and/or companies take care of themselves if they can't right their own ship.

but right now, at least, i think it's been a problem. >> what pressure do you think there is on the fed, particularly in this election year? i mean, people have always told me how you can't do much in an election year, but what's the reality? >> the reality is the fed is under a great deal of pressure, but i'm not sure that another round of qe is going to help. it hasn't really helped so far, so why do we think it's going to make a big change now? >> if anything, the more effective route might be fiscal stimulus, but you get into the same situation of the uncertainty and the election coming up, which is to say -- >> where do you get the money, you know? >> exactly. >> you can only print so much. >> stop printing money. just stop. >> and you're storing up future inflation big time. what do you do? you articulate something for the future after november 6th. >> i'm going to say, this inflation, though, people are been talking about this for four years, ever since we had the first round of qe, we're storing up inflation, storing up inflation. i look at the monetary and i

don't see any inflation problem. i see higher commodity prices, but i don't see outside of that an inflation problem. >> the measuring stick i've always used in fixed income is dollars. they go out ten years and at least right now to get off the 99 handle, which is 1% rates, you don't see a 98 handle until you see december of 2015. i mean, it is beyond flatter than a pancake. you're going to notice at least from there where you're going to start seeing inflation. >> i would love some inflation that's been generated by growth, right? >> yes, yes. >> i mean, i would love that. >> that's a much better situation to be in if you like inflation, and you know, years ago, we always said a little inflation is not a bad thing. but what happens when it's a lot of inflation? you go back to 1980. a lot of inflation, not a good thing. and a president working with the head of the fed sorted it out. >> i do think, and i know, i understand the concern, but it's almost i feel like inflation is

the concern that has distracted everyone from the fundamental underlying problem. >> right. >> and here we are -- >> yeah. >> we still don't have growth. >> i just want to talk about corn with you. take a look at where we are with the corn price, up about 40%, it's gone up 40% in the last month or so, the six months here. a lot of inflation in this asset class. it's all down to the concerns about the crop. is it now -- is the worst-case scenario in the corn price? i mean, you've been on this trade, i take it. >> yes. right now at least, as you'll see from your graphic there, i mean, front-line corn right now is deep, so you're almost three contracts out right now, but it has all liquidity, and clearly the volume. and right now at least, the biggest problem back home is from iowa, kansas, all the way through illinois, is the drought is so bad that the pollenization or the way corn fertilizing itself, it's already gone past that period. so, if there was enough rain in the next forecast for a week straight, it's too late.

so, right now they're trying to take whatever they can out of that crop and then go forward. so, it's really going to get bad. that $8 handle is massive. if we get above it, it's just runaway train, but i don't know if it gets there again. >> and if i'm right, the president is saying they wouldn't change their biofuel policy -- >> which raises a big question. is it what they said, so what does it do for the price of gasoline at the pump in the states, where a certain percentage is ethanol? >> 15% in some cases. >> it's very high. it's very high. and for the same regards, right now at least, it's not the most efficient gas out there. normal crude gets you much better gas mileage, and let's just put it this way, the e-85 or the ethanol gas is just not cutting the mustard right know. >> so, what was the final call on corn? >> it's going to knock on $8 again. it's going to make another run, absolutely. >> okay. >> all right. you're watching "worldwide exchange." we'll be back after a quick break, but first, these are your headlines. citi kicks off a big week for u.s. earnings, posting second-quarter results before the opening bell.

>> markets in china are rattled by a raft of profit warnings amid slowing economic growth. and the u.s. justice department builds a criminal case against several banks implicated in the libor scandal. ♪ ♪ ♪ ♪ [ 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. [ female announcer ] e-trade was founded on the simple belief

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approaching and it's stirring up no shortage of controversy. earlier, we asked while given some of the high-profile scandals, lately with g4s, whether you think it's possible that the games could be a success? have expectations fallen that low? paul says he's concerned about the controversy surrounding the team usa uniforms, which are made in china, rather than the u.s. ralph lauren has sought to calm the backlash, saying he'll manufacture outfits for next winter's games in the u.s., but this viewer says "has no one noticed the design of the uniform looks more french than usa? maybe a cowboy hat or baseball cap would look" better than a beret. okay, well, that's paul's view. doug from virginia says one up side to ralph lauren's olympic uniform design that all the nay sayers are missing is that they are environmentally friendly. they allow the uniforms to be recycled into air france steward/stewardess uniforms" after their short olympic lifespan. okay, our viewers bringing the

humor today, ross. >> i think though complaining the blue wasn't quite right, the blue was more of a french flag blue than the stars and stripes blue. so, that's probably where they've got it wrong. thanks. thanks for your tweets as well. we return back to spanish banks today, in the red as you see. down 2%. bba down a percent, bankia down 3% today. one of the reasons is reports that the ecb suggested imposing losses on senior bondholders of spain's hardest hit savings banks. this was in the "journal." stefan's been looking at this report and joins us for more from madrid. no comment, i guess, from the ecb on this. what are the implications? i suppose it depends whether the finance ministers agree with it or not. >> yeah. officially, the ecb doesn't have its work to save because the bailout package for the spanish banking sector has been negotiated with the finance ministers from the european union, but still, it looks like the ecb wants to reopen the

debate. deutsche, should senior shareholders, bondholders, sorry, should take a loss in case of a very negative scenario, that's the idea. it's been rejected by the finance minister because financial markets would react extremely negatively to this potential announcement. and a spokesperson for the ecb declined to comment on this report from the "journal," arguing that the central bank was not part of this bailout package for the spanish banking sector. in the draft version of the bailout plan, it says that the spanish government will have to force losses for shareholders and for junior bondholders, but it doesn't say anything about senior bondholders. a spokesperson for the eu commission confident that senior bondholders would not share the burden as part of this bailout package for the spanish banking sector. so far, in the european crisis, they have been spared. but once again, according to this report from the "journal," it looks like the ecb would like

to reopen the debate on that point. would it be a good or bad idea? i'll leave it to you. >> all right, thanks very much for that. and still to come on the program, citigroup is in the spotlight. reported second-quarter results in just about two hours time. so, will the bank mirror comments from rivals jpmorgan and wells fargo that we heard on friday? we'll preview those numbers and get an outlook on the rest of earnings coming up after this.

[ 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. quickere's a welcome back. and there's a quick look at how we're pointed for the u.s. open this morning. red across the board. not hugely negative, but still pairing back some of the gains that we saw on friday, certainly. so, let's see if anything on the agenda today can turn that around. june retail sales are out at 8:30 a.m. eastern, and they're

forecast to rise 0.2%, 0.1%, though, when you exclude autos. the imf gives its world economic outlook at 9:30 a.m. eastern. it will be interesting to hear what rhetoric they use around stimulus and austerity. may business inventories are out at 10:00 a.m. and on the earnings front, charl charles schwab, gannett, jp hunt and contributeas all world. >> and citigroup reports second-quarter results at 8:00 eastern, forecast to earn about $18.7 billion in revenue. citi may be hurt, though, by lower trading revenue because of the slowing global economy. finalchael and mary jo as well. what will citi give investors today? >> it's the middle of the month, middle of the week,dle of the year. this is the kind of market that starts to trend and really show you where we are going forward and i think citi will show they had the chance to at least run with the ball with lower rates and massive revenues and they're starting to drop it, and i think

the financials will drag the market with it. >> what do you mean they had the chance and dropped it? >> i mean, too big to fail was a gift, and citi was one of the many recrip cants of that and they grew the bank and the numbers show it. but from there, if you had a long-term forecast which was lending and invigorating the economy, this is the type of scenario right now in the year where the growth forecast would really be self-sustaining, and it's not. >> i think, though, any bank right now westbound happy to kind of lend. the question is whether anyone's showing up at the door. >> well, again, if you take away the proprietary trading, it's really a struggle, and that's the whole point. why would you take that away? it's just necessary in the bank environment and they're getting clipped at the knees for that. big mistake. >> mary jo? >> you know, nobody wants to borrow because nobody has confidence. and you can't lend money if you don't have borrowers. the bank of england can release

more, be more qe in the u.s., and if there's no borrowers, there's no market. >> the bank of england can get a chief executive sacked. >> yes? >> why can't he tell them to lend? >> you tell me. i mean, where's the leadership? call him into a room and say, gentlemen -- i don't know if you saw too big to fail in america -- >> yeah. >> but he called him into a room and said this is the way it's going to be. it didn't exactly work out the way he hoped it would, hank paulsen, but -- >> they have come out with these lending programs now that seem aimed at trying to do that, the bank of england, and look to as potentially a model for something others can do. michael mentioned this point about cleving off proprietary trading being the worst thing to do right now. do you agree? >> yeah. i mean, we can't have the pendulum swinging back and forth. glass seeingel's good, glass-steagall is not, let's impose it. give us a regulatory climate and we'll operate in it. >> it's a controversial

position, though. a lot of people think that the mega bank model is not a good banking model to have. >> that's the liquidity the market needs and has to sustain, and to have that absent, i know it will go into other, you know, forms, but right now at least i just don't agree with that. >> biggest event for investors this week? we've got the clash between earnings and bernanke and any other data we get out of europe. >> you might laugh at me, but look at the initial claims. i mean, every thursday, it's going to be, absolutely, every thursday you're getting another barometer, and i will put a lot of credence to that in july, for certain. >> you've made kelly happy. >> made me so happy it's my favorite indicator. i look forward to it always. >> you're almost going to cry, aren't you? >> i am. >> affirmation. >> the jobless claims. >> mike, good to see you over here. are you coming down to the olympic village later and checking in? >> i just wish i was as fit as the guests you have on here. look at the studs you have on here! >> it's all about the left deltoid. michael gurka, mary jo, thank you as well for joining us. that said, we're going to go work out. coming up next is "squawk box."

and we'll be back to auction off our deltoids tomorrow. >> see you for now.

good morning. earnings season. ready to shift into overdrive this week. today's headliner -- citigroup. a less-than-stellar outlook for the u.s. economy. why forecasters fear fewer u.s. companies are planning to hire. and fed chairman bernanke prepares to be back in the spotlight. if you can't beat them, join them. i'm just going to say bernanke from now on. it's humphrey week. "squawk box" begins right now. ♪ good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin, all together for the first time in about three week