hello and welcome to today's "worldwide exchange." these are your headlines from around the world. chris swiss rallies. >> disappointing earnings from intoll refuel concerns about weak global concerns for pc sales, backed up by dutch equipment maker. eriksson says it sees a slowdown in choin that and europe. and ben ber nandy heads back up to capitol hill.

welcome to today's show. part two of mr. bernanke today. >> i'm riled up, but i'm riled up about the interest rate on excess reserves. >> only one option out of four. >> i can't believe he mentioned it again. i would like to understand the basis for cutting that rate further. it comes after the european central bank deposit rate. we've seen the impact of that on money market funds and distortions there. >> i'm slightly more excited that they might go down the lending route, achlgtla bank of england. >> let's hope congress on listening in. india's latest cpi figures show inflation slowed slightly

in june. we'll be in mumbai to find out reaction. we'll get the latest bank of england minutes. any hint on the future of monetary policy in this country? instant analyses from a senior broker. guest host for the second hour has just spoken to someone to become mitt romney's running mate. we'll get the latest from u.s. campaign trail. buy whatever the fed buys, whatever that might be as we chief to fixed income strategy at wells fargo advisers at 11:15 cmt. shares in credit suisse are trading higher after they boost by 15 million francs. and carolyn is with us, she's on

set. >> it would be handy if you were in zurich today. >> it would have been handy but you never know when the companies prerelease. credit suisse was slated to report those earnings next thursday. today because of what it is trying to do, it's trying to dispel downs about its capital levels. let me give you a little background because last month credit suisse bank came out in national stability report and criticized credit suisse about feeble capital levels saying it needs to raise capital levels. we saw shares trading at a 20-year low. we saw significant declines there. and credit suisse over the coming weeks has been trying to reassure investors about its capital levels came out with a statement saying second quarter was profitable. today, we've got that prerelease as a second quarter net profit numbers. net profit second quarter, up

3.6% at around 800 million swiss francs. the real focus will be on additional 15 billion swiss francs in capital that kelly point out. some 8.7 swiss francs will have an immediate francs. 3 million swiss francs will be given out in contingent convertible bonds and taken up by investors in the middle east and asia. the second quarter saying they do show resilience with regard to the private bank. private banking net new assets came in at 3.4 billion swiss francs. they say these are good results given the tough market results and placed themselves above the fray in terms of capital level. a very positive reaction from the market and analyst community this morning. we'll be speaking to credit

suisse's ceo. >> are we -- who's doing that? >> i'm hoping to do it. >> all right. i wasn't sure. >> ross want to be involved. >> you want to be involve, okay. >> we'll bring that to you. that's terrific. you can see the shares are in the news this morning. we want to bring in guest host, steve bryce. steve, good morning -- well, good afternoon to you. your initial thoughts in the news out of credit suisse here. bank-specific or can we read across more broadly? >> bank recapital sdmrakapcapit hot topic in europe. those it's important for them to do so. we have more concerns in the

periphe periphery. any moves to build capital in europe in banks is a very positive development. >> steve, some focus given credit suisse will be using contingent convertible bonds, a new asset class that came about after the financial crisis. cred credit suisse, i think if capital falls below 7%, that would convert this debt to equity. this is a bit of an unchartered experiment. what do you think of that as a way to raise capital levels? >> it's an interesting way of doing it, it can be more expensive but a great class for investors. we've seeing a lot of interest from investors. you have the supply coming on board, the demand as well. it's something we'll see more of going forward.

>> steve will stay with us. carolyn will run for now. thanks very much and we'll keep an eye on the credit suisse story throughout the morning. dow jones, spanish banks total bad loans are increasing. 155.84 billion in may. bad debt is now just 9% of the total loengz in may. that may have implication as well for the amount of money that must be put into spnish banking sector. swedish bank posted a larger than expected net profit thanks to wider lending margins. the ceo told us the condition is coping with current conditions. >> you can say we are adjusting our whole new business model to the new normal, which is lower growth, very low interest rates and all these new requirements on bank, regulation and so on.

i think the fundamental think is to make sure we run the bank more efficiently in terms of funding and liquidity costs. >> swedbank has seen profits drop, but better than expected. the ceo had this so say about the guidance. >> the depth of the crisis in the real economy are starting to show here. but in light of that we'll still moving ahead and we are able to reprize, become more efficient. i'm happy with the p & l. >> asml has beat forecasts for the second quarter,ing thanks to growing demand for gadgets such

as smartphones and ipads. roe new and net earnings missed analyst for second quarter. intel shares down 1%. the cut in growth revenue had been expected. steve, that's interesting. asml doing okay because of tablets. intel not doing so well. that's probably because tablets is taking over from pcs i presume. what is the long-term outlook? >> yes, people more mobile, both in the western world but also particularly in asia as well. so people are on the move all the time, trying to get information traveling from city to city to office to office. that's the trend going forward and going to be a key factor. what's also interesting, we're

seeing increasing signs now of different companies reporting profits from china as being slower. we've seen significant developmentin developments, comments coming out from premier wen about the labor market. that's important when we're looking forward to macro economic policies. looks like they're getting more concerned so maybe we'll get accelerated response in the coming weeks and months. let's remind you where we stand at global markets. an hour into trading day in europe. a little more than five to -- 5 to 4 dow jones. dax was just up 12 points. the ftse is only up 6. cac up 0.75, but just upgrade in bad loans.

the focus post-bernanke, more testimony today, did he leave the more policy? and out of the statement it was whatever anybody wanted to read into it. treasury data, record low monday coming back up. 1.44% which equaled the record low. up now to treasury yields, but immediately after that yields went up to 1.15%, back below 1.5%. bank of england minutes when they decide to launch their qe. uk yields at the moment below 1.5% so matching ten-year treasury yields. in spain yields around the 6.8% mark. clearly unsustainable in the long term. german ten-yearing, 1.22%. 1.14% is what we hit on june 1st. aur low/dollar, 1 .2275.

dollar/yen steady around 7 mark. minutes suggested no more feed further policy easing and sterling/dollar on the 1.56 mark. keep your eye on the commodity mark. corn, we have the worst drought in the u.s. since 1956. we uls have russia now downgrading crop because of drought conditions at the moment. corn 762. people people think we'll be going up to 1.85 a bushel. gold did rally slightly after bernanke. brent after bag riglies. nymex, $8 8.9. asian trading day, tracey has

the update out of singapore. >> asian shares were mostly low after ben bernanke painted a bleak picture for u.s. economy. financial shares as they finish out 0.4% and property plays were weaker after data showed another year on year decline in home prices. in hong kong stocks fell more than 1%. new details from the ongoing money laundering probe emerged. nikkei turned lower trading down 0.3% as the strong sentiment in the region and a result the kospi finished 1.5%, dipping below the 1800 support level as foreigners continue to net sell, now seven out of eight sessions, on global gross worries. asian fell as of top miners fell

to multiyear lows. billiton dropped to lowest close since march of 2009 and tinto more than 3%, the weakest in over three years. ross, back to you. >> thank you. kelly? >> go to our website where you'll find an article in which hugh hendry says we're only single digit years away from a crash that will give investors the opportunity much a lifetime. do you agree with his call? if you want to join the call on "worldwide exchange" or let us know what you think, get in touch with us. you can contact us by e-mail at wor world @cnbc.com or fwetweet us. >> plenty of things to talk

about. te telecom sector tells us which stocks are being shorted in the sector.

ericcson reported weaker than expected second quarter profit. next guest is taking a dim view as telecom as a whole saying only six companies will raise dividends this year. joining us is research director at datamonitor. the likes of bp and talk talk have done pretty well in terms of stock performance. are they attracting shorts or others? >> it's not bp or talk talk. it's the big telecom networks. we're expecting price plans to go down and european union is bashing roaming charges. deutschetel and kpm and

telephonet telephonetica. >> at&t has a yield of 7% or 8%. they're quite cash intensive. they have a huge infrastructure spending and the income is capped by regulators. >> those dividends people shouldn't rely on getting those payouts. >> you can't sit there and go 8% or 7% yield is brilliant and a nice defensive company will go bust because you have to say to yourself because if they're cutting their dividend, vodafone says it's going to raise there's and it's okay. it's a complicated sector. >> people also often watch a value guy like carlos sim, they see him willing to buy in there. >> he's much wiser. maybe he thinks it's a distress

play. they're trying to spin off part of their business. i think german business might sell into '02. lots of moving parts. mergers, lows have come down to a few small players in every country. maybe it's time to unscramble that. could be a restructuring play. >> the interesting thing is, we've also seen is that the network equipment maker, lucent coming out with that warner earlier this week because these guys are often -- you say they have higher costs and also cutting back on money they're spending on infrastructure as well so it's feeding through the chain. >> exactly. lieu se lucent -- nokia is the big one, 14% of people are short. any good results or slowdown in bad new -- >> nokia and r.i.m., are they in the same basket?

>> exactly, same basket. these were or maybe there's some good businesses in there, maybe they'll have a huge rebound at some stage. people are pretty relaxed and they think next stop is -- >> is there a point, just as principle, get so much that stock becomes a buy? basically anybody that's short is already in? does that work -- work like that? >> yeah, short-term momentum traders like to buy into heavily shorted stocks on result, if they think the result won't be that bad. the other thing is takeout candidates. if your a company that has -- your share price has fallen enormously everybody knows your results aren't great, and you have a massive short base and someone offers you -- >> nothing like a short squeeze to get an explosive move up in a stock price. >> exactly. get you talking and tweeting and excited and keeps you going through the summer, i know. >> we've seen about a 20%

underperformance of telco, how far do you think it can go from here? do you see another 20%? >> we don't pay to give investment advice, just show what short sellers are doing and institutional investors are doing. i don't think it will go down enormously more but certain stocks to watch out for. >> what's your own view of the sector, steve? steve, what's your own view? >> we have a neutral rating in europe at the moment on teleco. we think it's going to be margin pressure and see that dividend being cut. it's half of one and six of the other. >> thanks. >> date tomonitor, now a market company. >> yes, of course. what's in a name?

>> do we say market or datamonitor -- >> market. it's all about market. >> india's annual cpi eased slyly in june but food prices continue to head higher. what does this mean for the country's policy? >> like you mentioned the cpi, consumer price index for june 2012 which is not very high, came in at levels around 10.02%, 3.36% it recorded in the previous month. headline and optically it will look lower on a month to month basis but the but it came in on a very high base effect which we saw in june 2011. it was because of higher housing prices which basically saw a resultant base effect for this time around. so actually it's actually quite

a fair number because it's coming in at 0.2%, double digits, despite having a high base effect. most analysts were working around with levels of 10% or 10.5% for this data point so it's come in line with expectations but definitely weak. just to put things in perspective, the ibr has been putting a lot of emphasis on cpi data going forward and they'll possibly look at this quite key leader in terms of the ibr policy which meets the end of this month, on july 31st. wpi data came out, around 7.25% expect and most analysts are expecting that mostly economists that cpi would remain high because if all possible from the monsoon and higher food prices. >> thank you very much for that. curious what steve bryce, our guest host, makes of this. better news here on the

inflation front for india, offering relief or still reason as an investor to be concerned? >> i think the latter. it's not going to give any wiggle room to the rbi to cut interest rates. we hate to see measures outside of the rbi's areas to ease food pressures. that's obviously we reached focus on what the government is going to do with regards to allowing foreign ininvestments in the retail sector for tessco and walmart, it's, to bring inflation down and give the rbi room to maneuver. >> i wonder, there's a report in the wall street journal that perhaps india's statistic coming into doubt among investors? do you believe what you read in these headline figures? >> you take what you can get in india and china.

read between the lines as to wheets goi what's going on 37 when the picture is quite weak as it is now, industrial production is weak, a decline and slight recovery in last month's data, it's clearly stagflation. that's not a positive environment for either bonds or equities. we assume it will turn around at some point in the next six months, but for now it's best to be on the sidelines. >> steve, we'll have more with you to come on the program. stick around. our next guest says the uk faces a long road to recovery. find out why as we bring you breaking jobs data and the latest minutes from the bank of england.

here are the headlines. chris swiss stocks rally after they raise capital prices by 15 billion francs. a cautious outlook from sml. > ben bernanke heads back to capitol hill after a gloomy

outlook for the u.s. economy. right now we turn our attention to the uk. we'll get minute after the last meeting when the uk decided to offer it over four months and latest unemployment rate. let's bring you up to date with exactly what they've been saying this morning. you know, this takes a while to come out. july minutes. they voted 9-0 for the bank of england rate action. 7-2 for the 50 billion. dell and broad bent voted against extra qe. 7-2, 50 billion. they thought other policy initiatives were enough. the bank of england talked about this new lending scheme as well. mpc sees ornishtives, adding to qe compelling. majority erroring on the side of more qe.

they say near term outlook weak weakened, further margin, opec capacity to open up. but the surprise is two there who didn't vote for it. i actually thought they might be people voting for more, not that didn't vote for any. what are your thoughts? >> it's difficult to keep using the same weapon when yields have already moved a long way down. your bang for your buck, you know, if you take it very seriously, you would have to buy of the whole of the guild market. i think this situation of spreading it over four months is more market purposes and often against two doing it at all. you've had other stimulus coming in from the bang of england. this will see take up. what you want to do is get to the heart of the matter rather than -- they've achieved with qe that's been done so far, what they intended, to push gilts

down to a point where other asset classes are more attracti attractive. >> i'm not sure they've done that as much as global growth concerns but yes, yes. >> they've added to it. >> the unemployment data. claimant count up 6,000. we were expecting unemployment benefits, claimants to rise 5,000. the ilo three-month unemployment, down 65,000. so the rate, 8.1%. that's the lowest unemployment rate since last july. the employment level of 29.4 million, the highest since november 200. >> which you think would be -- it would suggest market -- >> they focus more on qe than employment number. >> exactly. >> the problem in the uk is a

growth problem. it's not necessarily such a problem with employment. and obviously the private sector has been doing pretty well. the risk from here is that the public sector will come under more pressure because of the widening out again in the deficits. obr last week produced numbers that said 17 billion potential extra shortfall. that puts a lot of pressure on the coalition. that's where the problem lies. it's not so much in jobs because the private sector has done extremely well. >> the unemployment level highest since july, but more people in this country, but unemployment highest, inflation falling down, theatericly actually, and that's is where the pressure has been, that means consumer spend spending might be better than where we thought it it would be. >> my theory is it's better not to stimulate consumer spending. what you really want is to

create real growth of making things and selling them abroad, but -- >> any growth although the moment is better than no growth. i mean, you know, with -- >> you'll take what -- exactly. i don't disagree with you. beggars can't be choosers and you'll take what you're given. i think the doom and gloom and bank babing is overdone and there are signs of light out there. the u.s. in particular their ability to manufacture now has increased. they increased by 500,000 jobs in the last four months. and you're seeing a situation where it's actually possible for them to compete against chinese manufacturers. so i think the u.s. picture is better than everyone feels, but obviously you got this cliff of the tax increases and spending being cut, which is threatening the economy in the u.s. so all the attention is on that rather than better factors. >> let's show you european

stocks ahead of the u.s. open. back to session highs. dax up 0.5%. i presume gilt yields have gone higher in core markets. >> we're seeing ten-year gilt, that rate slipping a little bit, 1.49%. signal from equities clearly more supportive from the news out of bank of eng left hand. ten-year from germany 1.3%. spain is moving higher, 6.76% there italy below that 6% mark, 5.96%. >> on the currency market we saw reaction to the pound weakening. as far as euro/dollar is concerned, 1.2280. aussie/dollar is back over the

1.03 mark as well. ben bernanke admitted the libor system was flawed during his regular economic update in the senate yesterday. he's expected to field more questions in the house later today as congress prepares to widen it's probe of u.s. banks that sit on a libor panel. meantime, fresh report suggests u.s. banks could deal with rate fixing. in the range of $35 billion for global banking industry. jpmorgan stands to pay $35 billion and citigroup could face $3 billion. let's get more on the libor scandal as it continues to widen from anthony gibb. they say granted, it's speculative but the losses we're looking at, is the fallout going to be more in items of the individual banks that were taking part or is the fallout more going to be focused on what

do we do about libor going forward? >> libor was a theatrical index anyway. it's difficult to say where it traded anyway because it didn't trade. it's a three-month index that all other forwards were based on. you can't really complain. the principle of how it worked is having 16 inputs. the lowest four and highest four are always knocked out. if bash claz were always putting in a higher rate than everybody else, and probably being more honest, to be fair, they would get knocked out. they weren't really facting to the man in the street with the mortgage. >> we're expecting to hear it was a lot of other banks who may have been low-balling that rate. >> yes. if you're low-balling the rate you're low-balling it too low so depositors have look loosing out. it's the likes of warren buffett and money fund that have a big complaint because they've been

cheated by not being paid more interest. the banking system was broken so no banks were lepding to each other and the worse the bank's credit was, you could take the -- >> the more they were going to pay. >> barclays were fairly high on the list. the 1th most profitable bank in the world. pretty sound institution. and they were having trouble borrowing and being more honest about it because they were a stronger institution. the weaker ones were the ones sailing, sure, everybody want to keep this rate down so they were putting in ones that were too low. >> now we well know the flaws of this system, are we seeing other banks around the globe, where do we go from here? libor is a rate written into contracts? trillions of derivatives are based on. do you mess with libor itself or move the system to a i different benchmark. >> i think the problem is overregulation, overcomforting to -- i mean, there's no buyer

beware left in the world. banks are not allowed to do this or that. they have to tell you, they can't make any money, get banking for free. thiscy crazy idea. have you to have a working banking system. that's how the capitalism in the western world works. so, the idea you keep overregulating and doing the job -- regulators didn't do the job when they should have been doing it, from '06 to 2009, 2008 is when they should have been regulating. they were doing absolutely nothing. >> well there might are been a financial crisis going on at the time. >> the financial crisis, you can pick up "the final times" and self-certify a mortgage, if you have a $30,000 income, ublgd borrow 500,000 pound, 25% house value and with the excess you could buy a bmw. that's in the uk. that's not greece. >> anthony gibbs from advantage

capital markets, thank you for your thoughts this morning. australia's bench mash has been attracting attention. bbsw reference rate, less potential for manipulation because rates are based on where the paper is trading in the market instead of the estimates submitted by bank. paper trades instead of one group may be difficult to replicate elsewhere. you sit there as an investor. what does this neen for where we make profits and what we do with our money? >> i'm actually not sure it makes a whole deal of difference. it shows that banks are being extremely regulated and that's, you know, a trend not going to go away for a long time. from our perspective, we're still under weight financials pretty much across the globe,

particularly in the western markets. but in terms of the actual outcome of these things it's probably not going to make a huge difference, to be honest. >> stick around. a little more on this as well. south korean regulators are inrest gating the top four banks into rate-fixing. we have details from seoul. tell us more about what's going on in south korea. >> reporter: well, kelly, officials from south korea's have visited the four largest banks as part of an investigation into interest rates on certificate of deposits or cds have been artificially elevated. they resident likely to reveal serious manipulation of interest rates. many believe the probe is aimed

at easing concern rates on home loans. the country with the highest debt levels in the emergency, setting up 80% of the gdp. banks refused to comment so far on the investigation. >> we also know the south korean market was briefly jolted by this unexpected announcement from north korea. what can you tell us about this? well, the markets were jittery, down 1% after he warned they had a very important announcement to make at noon but shares recovered after a state media reported north korea leader will be marshal of the country's army, essentially sealing his position as top commander of 1.2 million strong military. some analysts believe there could be a shakeup in the organization aft

organization. >> thanks for all of that. in japan, the earnings power of troubled power utility tepco could take another hit as japanese government gets set to forego rate hike. tepco wanted to hike household power rates by more he final stages of deciding rate increases to go into effect september 1st. consumer affairs agency wants tepco to shrink it by lower labor costs and passing on cost savings. scaling back the rate increase would be somewhat of a relief to households, analysts don't expect it would be enough to spur spending by consumers already bracing for a sales tax hike. for tepco, lowering the rate increase may hurt its earnings

outlook. in light of the situation, the nuclear compensation fund is looking to postpone a public fund infusion for tepco. main lenders are also considering holding off on loans, which tepco needs ahead of a debt rollover deadline at the end of this month. >> thanks very much. the hits keep coming for that firm. japan's largest online retailer rockatan will launch their own e-reader. india's parliament will elect the country's new president. and tmse will be among those reporting second quarter results. we'll take a short break. we'll be back out in madrid as latest figures show bad loans, almost 20 years in deposits dough claned by 5% year on year.

welcome back to the program. you'll find an article by hugh

hendry says we're only single digit years away from a crash that will give investors the opportunity of a lifetime. do you agree with his call? he also says u.s. treasury yields will keep heading lower. if you want to join the conversation here on the program, get in touch with us. you can e-mail us at worldwi worldwiworldwid worldwide @cnbc.com. our ongoing trade link here on "worldwide exchange," each week we look at how the financial cries is affecting global trade and what impact it's having on how you do business around the world. every monday at 1050 central european time. for more you can check out the website tradelinks.cnbc.com. mean while, greece lo's coalition cabinet will look to

meet demand from creditors. july 24th in time for review by the troica. italian prime minister says there are serious concerns for sicily that he sought confirmation that governor plans to step down. sicily, a special ought mouse status has been criticized for overspending. > draghi expects any changes in policy to be reflected in ireland's bank rescue. bad loans at spanish lenders has reached the highest in 1 years. stefan joins us for more. what's happening to deposit as well? >> reporter: they're sh ripging again, according to the bank of spain. the level of private deposits

have deposit held by banks shrank by 5.7% in may. 7.4 billion euros have been withdrawn from spanish banks in one month. nonperrming loans is getting closer to 9%, the highest level since april 1994 and getting closer to record level of 9.15% which was reached just 20 years ago. spanish banks of 150 billion euros in loans, which repayments are more than three months overdue. you know, it's caught my attention this morning that finland has been able to get this deal done, where it's going to get collateral from spain. i wonder if you can tell us how significant this move is, and if it was generally unexpected. when it was first reported people were skeptical the finns

would get this. >> it's possible to do it with finland because contribution from finland to banking bailout is quite limited. the country managed to get collateral worth 770 million euros, about 40% of finland's total share of the loan. it's due to be paid in cash and will be invested in top five countries in the eurozone, what finland indicated yesterday. finland's parliament is due to discuss the spanish bailout program on thursday. and will vote on that bailout program on friday. of course, things would have been much more complicated if germany, for instance, would have asked for clatd rals for its contribution to the european banking bailout but given the size of finland and given the limited size much it's contribution, that was possible from spain. >> thanks for all that. just got some note out of

f fiat. they suspend production for august. due to sector -- what they call a sector crisis. we'll continue to monitor the situation as well. for august 31st. it's not for whole of august. it's for a week. >> i wonder if workers can take that week and enjoy -- >> there are sections of august when there are very few people working in italy as well. we still have traditional blocks of holiday. >> the auto sector has that traditional summer shutdown. >> what they were saying about western european countries as well as the rest of the world. >> i was joking about workers take a real holiday. a lot of people especially workers there need that money. it's going to have wider effects. >> just because they shut the

plant doesn't mean they don't get paid. >> but this goes back to whether they can afford to -- >> i doubt they shut the plant and say -- >> i'm sure it does, especially for fiat. >> steve, that's another example -- talk about western european car markets contrast to what they're earning in the likes of china and elsewhere. i suppose now investors have to decide we're at the bottom of this global synchronized slowdown or whether it's going to get worse. you -- where do you work out where inflexion points are? >> i think forred daus-- in terf ranking we're closest to states so we think we'll see a recovery coming through, we're seeing can growth already. probably fairly soon. in china we're seeing maybe towards the tail end of the third quarter, say, september

and october. more of a u-shaped recovery there. maybe the comments we've had from premier wen may bring that forward or make it more of a sharper recovery if stimulus comes through more. relatively benign in the short term. obviously, europe is still in recession and data is getting worse and worse. and i think so further to your comment on spain and greece, el et cetera, i think the key challenge is it's difficult to find good news out of europe. we're getting to a tipping point if authorities don't step up to the plate pretty soon and make some real progress on some policy actions, then things could get quite messily. that's where our real focus is going forward. >> right. steve, i'm just looking here, taking a closer look at this news out of fiat, i'm wondering

what a sector crisis really means. we had a guest yesterday saying there is significant overproduction in the auto sector. producers are effectively making cars at a loss. as we pair -- auto sector is one of the strongest places, and i wonder if this tells us more about underlying weaknesses more broadly. >> absolutely. in the states the auto sector was starting to recover but we're seeing problems in china. china auto sales will increase on the big scale but even there we're seeing a little soft patch and overproduction going on. we clearly are in a soft spot for the global economy. we would not be projecting that too far into the future but we wouldn't also be arguing for a v-shaped recovery in the auto sector for some time. we need to see the european situation stabilize, confidence coming back. europe is a global issue, of

course. so people are holding back on purchases of large fumz at the moment. until we see that and possibly the fiscal cliff being discussed and progress being made, we won't get a full recovery. >> what do you tell people to do with their money? >> to be honest, we are overweight global equities. thet a very difficult sell at the moment. given what's going on. but we've seen huge value. two things we're watching for is monetary stimulus which focused on ecb and also a turn-around in the u.s. economy. those are the two stimulus we see, or catalysts we see for improved economic -- or equity market performance. overweight u.s. stock level and china from a stimulus perspective there. our over favorite asset class is high-yield bonds.

>> steve, chief investment strategy, thanks for all your time and thoughts this morning. still to come, ben bernanke heads back to the hill for another day of ril grilling. will he give us more hints on the economy? also coming up later on cnbc, coverage of the second annual delivery iing. key note speaker, timothy geithner. check highlights throughout on the cnbc.com. still to come, though, we'll have more thoughts for investors right after this. ddd#1

welcome to w"worldwide exchange." >> thaez are your headlines. chris swiss shares rally after they unveil plans to raise capital base by over 15 billion francs. refueled concerns about pc sales backed up by asml. ben bernanke heads up to capitol hill after sketching a gloomy outlook for u.s. economy but offer offering few details about the fed's pledge for further action. most policymakers voting for

stimulus, but two said they weren't in favor. sterling has fallen on the news. welcome to the program on this wednesday morning or afternoon or evening, depending on where you're joining us from. let's take a look at where futures are pointed as we prepare for the u.s. open. we have red although the losses don't seem significant at least as we stand here today. dow jones industrial average pointed lower by 12 point. the nasdaq by one or two. very same thing happening for the s&p 500. kind of just sitting at these closing levels from u.s. cnbc ftse global 300 shows what's going on, up a quarter of a percent on the index. this comes after we actually had weakness across asia, following comments from ben bernanke in front of congress yesterday saying he has concern about the

u.s. outlook but not necessarily giving further measures. despite weakness, european shares are holding up a little better. as we take a look across the region, green. ftse up 0.4%. dax up 0.5. cac up more than 1% in france and ibex struggling to join the rest of the party. flat to marginally higher. >> better than an hour or so ago. we'll see how that trend is ahead of the u.s. open. bond yield, german not far away from the 1.44. spanish, 6.74. they were higher earlier on. in the long item, unsustainable levels. ten-year gilt yields, up slightly. two members decided not to vote

for additional qe. the compromises, maybe it was over four months, standard three months for the purchase. they said they wanted to look at other measures to get the economy going. unemployment data in the uk, total employment now at the best level since november 2008. suggestions here the uk olympics having a big impact because unemployment levels in london fell by 50,000. many of that is a temporary boost from the olympics. we'll find out. treasury yields, a big bounceback. we hit 1.44%, equalling the record low. you can see, back below the 1.5%. on commodity markets, corn very much in focus today on top of the worst drought we've seen in 50 years. russia suggesting that they're going to have problems with

wheat as well. corn down slightly, 759 on december contract but most saying it could go up to 8.50 a bushel. spot gold slightly lower. brent and nymex slightly weaker today. nymex at the end of june was at $77 a barrel, currently trading at $9. big gains in the last few weeks. that's markets in europe. what about asian trading day? tracey with the updated out of singapore. >> well, investors here, sentiment turned sour after ben bernanke painted a bleak picture for the u.s. economy. asian markets are mostly lower today but hopes for more central bank stimulus capped losses. property plays were weaker after data showed another year-on-year decline in home prices.

index heavy weight loss more than 2% as new details from money laundering probe emerged. very strong yen sours sentiment in the region. kospi finished 1.5% lower, dipping below 18,000 support level as foreigners continue to net sell on global growth worries. top miners sank to multiyear lows saying it will cut prices for key commodities exports such as iron ore. bh billiton dropped slowest and tinto hitting the weakest level. indian market gaining strength, up 0.5%. a little news out of gm. they named the new cfo for the

opel unit, and vw executive, lohscheller. we've just heard fiat, is suspending production at one of its plants, owing to the weak environment, saying it wants to avoid expensive and useless -- >> 21 days? >> yes. >> useless and what? >> useless and expensive stocking of vehicles which is one way of saying no one wants more cars. ben bernanke is back on criminal in front of the house financial services committee at 10 a.m. eastern for day two of his semi-annual testimony on the economy. he expressed gloomy outlook before a senate panel tuesday saying gains in the u.s. labor market will likely be frustratingly slow. he said the fed is prepared to take further action but didn't get super specific on what, how or when. >> we've looked at a range of

possible tools, mostly again involving the balance sheet and communication. the committee meets in a couple of weeks and we'll be discussing those tools. he we haven't come to a specific choice at this point. but we are looking for ways to address the weakness in the economy should more action be needed to promote a sustained recovery in the labor market. bernanke did tell the senate panel the best way to help the u.s. economy would be to remove the threat of the so-called fiscal cliff, that is, combination of expiring tax cuts and automatic spending cuts that may be triggered in january. automatic tax hikes, that is, and spending cuts. joining us is guest host for the next hour, james, money and politics columnist for american enterprise institute and cnbc contributor. good morning. thanks for getting up. we can so how dark it is behind you in the u.s. capital.

tell us about this fiscal cliff and potential for congress to come to come sort of agreement before the end of the year to stave it off. >> well, i think what you saw on capitol hill at the hearing, i think you'll see it again today. two pockets of desperation. democrats are very desperate for the fed to move sooner rather than later to give this economy a boost from the election. i think -- obviously, i think the chairman is desperate for washington to do something. i think he'd prefer not to act to boost the economy. i think he wants to see congress do something about this fiscal cliff, but everything coming from capitol hill right now leads me to believe that no help is coming before january 2013. i think it's become much more acceptable to just, hey, let's just see what happens, wait until new congress in january and try to deal with the problem then. i think that will rattle markets and really be a depressant on the economy between now and january. >> it's remarkable.

we're coming up on the jackson hole meetings in august. seems like the last several years this meeting has been well timed to have world central bankers come together and discuss what they can or should or might have to do. do you expect any big news out of that event or do you just except the fed to be more proce proactive given the scenario you just laid out. >> what i would love the fed to do is explore alternative policy options which they've been talking about. they've been hinting at. i'm not sure we'll see them yet. one of the more interesting ideas is the fed needs to do something better on xhuction, maybe talk a bit more about targeting inflation, talking about targeti ining nominal gdp. that would be a big move. i would love to see that coming out of jackson hole. but i think what the fed would do, washington act, remove this huge wave of uncertainty.

if washington did nothing, all this fiscal contraction set in, we're talking about pushing the u.s. back into a recession when unemployment is already at 8%. unemployment over 10%, the last thing we need right now. >> the fed is taking sort of ang ecb stance here, which we're not going to act because we need to see politicians. i wonder out of the other options they outlined which bank they followed. the ecb cut deposit rates to zero and could do that on excess reserves or follow the bank of england, of course, with the discounted, get credit easing and get money flowing direct to the economy. out of those two options they laid out, which would you favor more, following the ecb or bank of england? >> the problem with the ecb route is you're also worried about dropping that rate and affecting the money market funds. i think the chairman is worried about that.

i really think sort of the political atmosphere surrounding bernanke, which he's worried about sort of the institution of the federal reserve. he leaves in 2014. the fed is not held in particularly high regard by american voters. certainly not held in high regard by the republican party where this sort of ed in the fed movement is gaining steam. i think bernanke wants to be extremely careful about moving -- about any unique, interesting, creative policy options right now and would like to see washington act first. we might not have washington acting. a lot of these scenarios about the impact of this fiscal cliff on the economy, a lot of the previous scenarios assumed we would see some sort of fed easing. you won't see dramatic fed easing to offset that huge wave of contraction that could be headed toward the u.s. economy. >> stick around. good to have you on the show.

plenty more to come from you. coming up, coverage of the second annual deliverying alpha conference in new york, hosted by cnbc and a unique meeting of the minds and brings together some of the best known hedge fund managers as well as educational and political commentators. you can check out the highlig s highlights -- what is that, delivering alpha.cnbc.com. on our website you'll find hugh hendry says we're only single digit years away from a crash. in an interview with "the financial times" where he says he expects u.s. treasury yields to keep sinking. join the conversation here on "worldwide exchange" and you know how. send us an e-mail to worldwide @cnbc.com or tweet us @cnbcwex. you can reach us directly at.

credit suisse, investors cheered a plan to raise extra capital.

welcome to the program this morning. these are your headline. chris swiss unveils plans to raise capital base by over 15 billion francs. disappointing earnings from intel. and ben bernanke heads back up to capitol hill today after sketching a gloomy outlook for the u.s. economy. a number of earnings in focus in europe. ericsson reported lower than second quarter. on the other side, asml, dutch equipment maker beat estimates in the second quarter. mainly thanks to growing demand for gadgets such as tablets and smartphones. contrast with intel a little bit. and nordea getting a boost,

swedish bank posted a larger than expected increase. it warned eurozone financial crisis may weigh on the area and demand. swedbank, up 1.15%, results better than expected. the group has, of course, warned about the risk of recession in europe. planning on keeping costs down in response to the crisis. some of the numbers we've reported today. a surprise report from credit suisse. >> that's right. shares in the company are trading higher after the bank says it will boost capital base by more than 15 billion francs. joining us for more on this is can dirk beckter. we see shares up in the range of 5%. is it the capital raising or what's primarily responsible for the rally? >> i think it's the end of uncertainty. after the comment from the swiss

national bank about credit suisse weak capital ratios, there was speculation they may need to raise capital. they may be as diluted and triggering the really. >> the ceo said he doesn't believe the company has material issues related to libor and that whole mess. do you agree? >> it's difficult to say. what we know is there was collusion by banks that many banks were involved in this. credit suisse must have been one of them. difficult to say how much they contributed to this whole manipulation. i would be surprised if they were completely without any guilt. >> meanwhile, credit suisse is obviously sort of going -- taking these steps to allay concerns of regulators but you mention in your notes, what are they going to do to please the shareholders?

>> i think the regulators will be very happy when we've seen some statements from the s aechd b today. for shareholders this is very bad news because many of the steps credit suisse has taken today will reduce the future revenues of the selling part of the assets, especially cutting costs, which will probably reduce some revenues. at the same time, they are increasing capital so i can't really understand why they still believe they can make a 15% roe. they've only made 12% now and now we're facing a period of probably lower revenues and higher equity. i don't see why this should be 15%. it's probably going to be much lower than that. >> certainly. we've already seen other institutions taking that figure down. can you share your thoughts on contingent convertible bonds. is this a wave, a sound way for banks to raise capital or still a lot of questions about going about it this way?

>> as long as credit suisse, the other banks find buyers for this, i think this is a credible way to raise capital. we've seen there are been lots of demand, not so of pricing, especially for credit suisse. i think this is a very good way to bolster capital ratios. >> we've seen response in shares this morning. thanks for joining us on the program today. and still to come on the show, the race for the white house. doesn't appear to be losing any steam during the early dog days of summer. president obama and mitt romney continue to attack each other's records. we'll handicap their odds for taking the oval office this fall next. ♪ ♪

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welcome back to "worldwide exchange." let's take a look at how u.s. futures are positioned ahead of the open. dow jones pointed lower by 32 points currently and the s&p 500 and nasdaq both by about four. this, of course, keying off weaker trade sessions in asia, but some strength here in europe, especially of late. keep an eye on that throughout the program. mitt romney has taken his fight against president obama to the king swing state of ohio today. yesterday in pennsylvania the

republican candidate accused the president of believing the federal government is more important to a healthy economy than u.s. workers and entrepreneurs. after courting campaign donors in texas, president obama is expected back in washington today before a two-day visit to florida later this week. still with us is james from the american enterprise institute and, james, if i can call you jim, can you talk a little about the campaign trail. there's been a lot of rhetoric but really here, what are we seeing in terms of the likelihood of, say, mitt romney to be able to take president obama's re-election bid from him come fall? look, if you -- if all you really knew was the state of the economy right now, which looks like last year, gdp growth of 1.7%, unemployment around 8%, that is looking like what 2012 will be. i'm worried that's what 2013 will be. if that's all you knew, you

would think this president was in big trouble and his approval ratings have been unable to get above high 40s, 47, 48%. if i'm the white house i would do exactly what they're doing, which is to try to make mitt romney unelectable, disqualify him, tell voters, listen, this guy is not a guy you want as president. you may not be thrilled with me, but mitt romney is a guy who -- he's kind of a coldings vulture capitalist, outsources job, disqualify him and make him unelectable so people don't have a choice. i think the obama campaign is really doing exactly what it should be doing. though i would say, i would not pay real close attention to any polls before the first presidential debate in october. i would pay attention to the state of the economy. i'd pay attention to the president's approval rating but the romney/obama match-ups will be plenty fluid. >> there's a lot to be done

between now and then including mitt romney's pick of a running mate. you spoke of paul ryan, whose name is floating around here. who do you think is on the short list? what will it reveal about the romney campaign? >> well, if he should go for some longshot pick, then you could reasonably assume they're worried. i think a longshot pick would be somebody like marco rubio of florida, who conservatives love, would excite the party but he's not super experienced. i think given the state of the economy it's not going to surprise me if romney goes with a pick that's going to do no harm, someone who's a plausible president. somebody like senator rob portman of ohio. i think somebody like former governor tim pawlenty of minnesota, even bobby jindal, third on that list, a two-term governor from louisiana. you know, they're all

experienced, all very plausible presidents. and i think paul ryan, probably nobody understands fiscal issues in the republican party better than paul ryan. and romney has a lot of paul ryan's agenda as part of his plan. i would be surprised if it wasn't one of those four gentlemen. >> jim with us this morning, thanks very much. let's get a quick check at some of today's other top stories. finland reached a deal with spain to receive collateral in exchange for bailing out banks. >> we'll get bilateral deals in a pan-european rescue plan. >> we thought they were floating this and now they have the cash. >> i'm interested to know. japan's highest profile hedge fund has been dethroned by insider trading. even at his best, he had about a billion under management, which if you're the best known hedge

fund manager, i would assume it would be better than that. >> sometimes the best known aren't the biggest or most successful although he clearly had some of that. another king dethroned, italy's mozzarella king. he's been arrested on suspicion of links to organized crime in the naples region. >> i don't think there's any surprise about rumors of organized crime in naples. >> but whenever you see a story like this, sort of in this day and age, it brings it home. >> they have problem with rebels and --. >> that's why you avoided mozzarella? >> yes. >> i haven't and nor do i wish to. average housing prices in china were flat in june for may. that may not sound great but ended eight straight months of decline. >> some of the regions are showing a small increase from a year earlier. maybe it's the rate cuts. maybe it's just a sense that policymakers will be more -- >> i think it's just one month trend.

>> i like that theory best. still to come on the program, we'll bring you the latest on intel. plus u.s. corporate reporting second quarter numbers today. fixed income strategy right after this.

welcome back to "worldwide exchange." if you're just tuning in, i'm

kelly evans. >> i'm russ westgate. credit suisse plans to raise capital base by over 15 billion francs. backed up by cautious outlook from asml. ben bernanke heads back up to capitol hill today after sketching a gloomy outlook for the u.s. economy but ofshing few details about the fed's pledge for further action. two policymakers voted against having additional stimulus from the bank of england but still a possibility of cutting rates. welcome to "worldwide exchange" this morning. let's take a look at where u.s. futures are pointing as we creep closer to the u.s. open. a bit better tone than we saw the last time we checked in.

dow jones futures are pointed lower by about 23, 24 points. nasdaq by four or five. the s&p 500, about the same amount. a bit of a mixed trading atmosphere overnight. asia looking a little weaker, but europe has been largely in the green. the ftse 100 up 0.3%, roughly the same with the dax. cac is up out of paris. ibex in spain is lower after flirting with gains and losses last time we took a look. ross? >> meanwhile, plenty of guests already on cnbc today. just a taste of what some of them suggested we should be doing with our money. >> i want the fed to go long because it will benefit from rally from qe3 and also the economy is relatively stronger than other economies.

>> the most defensive areas to spend would be software, normally that's where you see the biggest productivity gains and that's where it is at the moment, cost reduction, also cloud and data center. new notikia, 14% of shares are short. nokia is sort of a bankrupt business. interesting ideas. euro has been weaker. not necessarily against the dollar but 11-year low against the swedish crown. we hit about 121.62 last week, 123. it was still very much swinging around really on what u.s. policymakers are going to do. >> absolutely. it's all relative. it's all in the fight to be the weaker currency. ben bernanke's testimony yesterday failed to send a clear

message to markets. central bank chief left the door open for more quantitative easing but stopped short of a specific road map. >> one of britain's best known hedge fund managers is taking a long bet on the u.s. economy, warned bad things lie ahead for global markets. hugh hendry told "the financial times" -- nice picture of hugh. >> arms crossed. >> he told them financial markets are single digit years away. that could be anything from one to nine. from a 1930 style crash that will present investors with opportunity of a lifetime. east more worried about u.s. investors. single digit away, but u.s. is a better house. >> and also trying to fight this perception that he's only a c contrarian.

>> hugh was a very regular guest with us until his new chairman on board and said, you have to stop doing tv. >> so he piped down a little bit. he just came out with an investment letter and now this interview, so maybe we can get him back. >> he might join us. >> joining us now for more is brian railing, chief income strategist at wells fargo. we were mentioning hugh hendry's view the rally we've seen in treasuries despite record low yields. what's your view? >> i think if we move down the path of quantitative easing, you can expect interest rates to move higher as we get into a risk-off -- or risk-on environment, sorry. once those environments -- once that expansion is complete, clearly, quantitative easing has caused interest rates to move lower than they otherwise would

have. >> just look at the ten-year treasury. i know we hit that fresh low 1.44% on monday, but you compare it to switzerland, 1.48%. japan, 0.77%. germany, 1.23. sweden, 1.23%. according to those other benchmarks, you could say there's value in the u.s. ten-year. >> i guess compared to those other benchmarks you could. if you look at the fed's goal of 2%, you're making a negative return over the long run. >> as we look through result of german auction, the point of this conversation, the two-year was going for a negative yield at the auction for the first time. treasuries or government debt are just one aspect here. i mean, certainly a lot of investors are looking at corporates and saying in some cases they're in better shape than sovereigns. what's your take?

>> i think without question if you're looking for a total return objective, then you should focus on those risk-based or spread-based products, corporates, preferred, high yield, they appear to offer better value than treasuries, which are destined to, at least in the long run, underperform inflation. in the short term, it could be a better trade, but in the longer run, i don't think that's a good place to put your money. >> a quick question. you have the guys from vanguard the other day talk about -- we have until 2016 in the united states to deal with the debt problem and then we'll have a debtmageddon, whatever you want to call it, do you believe in that year, 2016, could you give me an exact date? i would love to know? >> i would love to know as well. we're watching the debt issue in the u.s. what comes out of the election cycle and new congress and what

they decide to do about the deficit is really key to the long-term outlook. that's a big unknown. if we do get some type of compromise we can begin to get at least debt growing at a pace or slower than gdp growth. i think we're still in a sustainable position where we're not going to have that debtpocalypse as you suggested but if we continue down the path of spending and low taxes combined and aren't able to rationalize that in washington, then clearly at some point i think the markets will become concerned about the u.s.'s ability to repay that debt as we've seen in some of the european countries. >> the question is whether it happens in my lifetime. brian and jim, stay with us. we'll have more on this topic in just a bit. >> and you've got a lot more lifetime left than some of us. >> i suppose that's a scary thought. credited swiss is unveiling

a plan to boost a plan. >

welcome back to the program. as we were saying before the break, hugh hendry says we're

single digit years away from a crash. he also says that will give investor the opportunity of a lifetime. we ask, do you agree with his call? jeff tweets in, we will have a big crash but now until the dow hits 15,000. so i assume that means we can ride the upside and market time this one or something. if you want to join the conversation here on "worldwide exchange," get in touch with us. e-mail us at worldwide @cnbc.com or tweet us. >> any time up to the next ten years, really narrowed it down. doesn't help me an awful lot. what has been rallying is corn very sharply in the last few days. the last three months up around 44%. today just down slightly, 763. more concerns, not only the worst drought in the u.s. since 1956 and russia as well they're downgrading their crop forecast as well because of lack of rain and droughts in that part of the

world. many traders, michael gerkasaying they're sticking with that trade and staying on it. corn weaker but many believe the trend could be intact. you're watching "worldwide exchange." these are your headlines. credit suisse unveils plans to raise capital base by 15 billion francs. disappointing earnings from intel refuel concerns about weak global demand for pc sales. ben bernanke heads back up to capitol hill today after sketching a gloomy outlook for the u.s. economy. credit suisse announced it intends to boost capital base. carolyn is with us. normally in zurich. you would have been if you knew they were going to announce this today. >> they prereleased . we were expecting the bank to come out with the numbers next

week, thursday. it was important for them to address capital fears. back in june, the swiss national bank came out and said, credit suisse needs to significantly increase capital levels because on an international basis relative to its peers and basel 3 and it needs to do more. since credit suisse has been trying to dispel doubts and fears, even two weeks ago it came out and said we'll be profitable for the second quarter, both on group level, investment banking level. again, prereleasing second quarter net profit up by 3.6% at around 800 million swiss francs. more or less in line with expectations. the focus is on new capital measures. 15 billion swiss francs in new capital measures have been announc announced. 8.7 billion will be immediate steps and will immediately boost capital levels. 3.8 billion, that is the amount for the new contingent and convertible bond taken up by

existing investors in the middle east and singapore. let me give you analyst reaction from this morning. second quarter earnings do show resilience also with regard to the private banking part. net new assets came in at 3.4 billion swiss francs. also says while credit suisse is on top of the fray in terms of capital levels. >> thanks for that. if you're watching here in europe, you'll be able to see her speaking to the credit suisse ceo brady duke at 1330 cet, around 12:30 local. an hour and 40 minutes from now. >> grab a sandwich. that will be great tv. first on cnbc. elsewhere, shares getting a boost thanks to wider lending margins. it warned sluggish -- they are

coping with current additions. >> we adjusting our whole business model to new normal, which is low growth, low interest rates and all these new requirements on banks and regulation. swedbank saw profit fall and they warned about the risk of recession in europe and planning to keep costs down in response to the crisis. the ceo had this to say about guidance. >> i'm quite happy with the p&l so far and our ability to show our own destiny for the remaining year. asml beat estimates of the last quarter due to increasing demand to tablets and smartphones. intel cut forecast amid weak spending in u.s. and europe. intel shares fell almost 1% in

after-hours trade as cut in revenue forecast had largely been expected. we'll take a short break. still to come, second delivery alpha conference gets under way. all the details on that when we come back. so uh this is my friend frank and his, uh, retirement plan. one golden crown. come on frank how long have we known each other? go to e-trade. they got killer tools man. they'll help you nail a retirement plan that's fierce. two golden crowns. you realize the odds of winning are the same as being mauled by a polar bear and a regular bear in the same day? frank! oh wow, you didn't win? i wanna show you something... it's my shocked face. [ gasps ] ♪

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coming up later today on cnbc, it's the second annual delivering alpha conference in new york. a unique gathering of some of the top minds in the world of investing politics and academia. timothy geithner is the keynote speaker and a panel with two of his predecessors, hank paulson and robert ruben. kate kelly has this preview. >> reporter: as someone who covers hedge funds i'm very excited about the lineup we have today, including a raft of

newcomers whose voices aren't normally heard on the circuit. richard perry, pete barry and andr andrew feldstein. blue mountain was in the news for reportedly helping jpmorgan. the hedge fund hasn't spoken publicly about that trade but feldstein will be sharing some investment ideas at the conference. so will leon cooperman of omega ve advisers who scored big on his bullish call. if my recent conversations can cooperman are any gauge, he'll stick with the bullish tone and provide new details on which equities he recommends now. shortly after bernanke speekdz to congress about the fed's plans, we'll have a debate on whether he's doing the right thing amid this period of super low interest rates.

with morgan stanley investment greg fleming and bruce richards weighing in. split opinions i'm told so we may see a few sparks flying. back to you. >> for all the highlights from the second annual conference, head to our website, deliveringalpha.cnbc.com. european stocks ahead of u.s. open. we're off the highs earlier on. there were some comments attributed to angela merkel suggesting the euro is going to have problems holding together. but there's some -- >> that will do it. >> there's a lot of politics involved because he's obviously trying to get -- she's sometimes trying to scare the them into action. >> ibex down 0.5%. it was in the positive territory not long ago. u.s. stands moving a little

lower. dow jones implied lower by 35 points this morning. nasdaq by six or so. s&p 500 pointed a couple of points lower as well. a quek look ick look at wha the agenda in the u.s. new house starts and they're expected to show a gain of 5%. building permits gauged to watch are expected to drop by 1%. at 2 p.m. it's the latest beige book report from the fed, may give glimpses into where policymakers are thinking. another busy day for earnings. we'll get numbers before the open from bank of america, bank of new york mellon, blackrock, honeywell and pnc. after the close we'll hear from american express, ibm, qualcomm, ebay and yum brands. brian is still with us, chief income strategist at wells fargo and so is jim from american enterprise institute. brian, first to you. what's going to be the main report to watch today, do you think? >> well, you know, we're

watching probably the beige book, look at the economy. any kind of economic data. i think critical more than anything are going to be the upcoming employment reports, both for july and august as we head into the september fed meeting. >> what's your base view, brian? what are you expecting to see happen as data plays out in the rest of this week into next month? >> well, i think the chairman is starting to lay out a consensus building within the fed. if the data does continue to deteriorate and we don't get an uptick in the employment data, you know, i think we are headed for additional easing at the september meeting. by no means a foregone conclusion. the data could point otherwise but that appears the direction we're headed. >> jim, do you get the sense around washington there are staunch opposition to the fed acting further here? there's any political pressure on the institution? >> i think there's tremendous political pressure on the institution. certainly i think republicans do not want the fed to do anything.

they believe, you know, what they've done already is too much, going to lead to inflation down the road. one thing i would like look for in this hearing today is for the house republicans to be much tougher on bernanke about the libor scandal. what did the new york fed know in 2008? when did they know it? i'm surprised senate republicans weren't tougher. i expect the house republicans to get into his grille work on this issue. >> just for the merrill lynch fund manager survey, nearly one in five fund managers view the u.s. fiscal cliff as a greater risk than the eurozone debt crisis. where do you fall on that one? brian first. >> yeah, i do view the fiscal cliff as pretty critical and are we going to get a long-term play out of washington or continue to put in half measures and kicking the can down the road? i think that's credited cal to watch to see if investors can, you know, have a long-term plan to deal with in terms of taxes,

spending and the economy in general. >> i'm more worried about the fiscal cliff but if i was a global investor i'd be more worried about the eu because they're not just talking about a recession. you're talking about a full-out depression if it should go pear-shaped. >> thanks for that optimistic tone this morning, gentlemen, but we appreciate the views, nevertheless. that's about it for today's program. coming up next, of course, "squawk box", bernanke part two. >> focus on the interest rate on excess reserves. i wish every congressman would say, explain to us why cutting this would be a good idea? >> i'm more focused on the discount window idea. >> that's why you watch "worldwide exchange." >> whatever happens, we hope you have a profitable day. ♪

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good morning. delivering alpha, not seeking alpha, delivering it. the world's most famous hedge fund managers are gathering in new york today and we are here giving you exclusive access. i could tell you where we are but -- no, we're at the pier and "squawk box" begin right now. ♪ i'm back back in a new york groove ♪ ♪ i'm back back in the new york groove ♪ >> fifth avenue. >> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick alongit