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. better than expected numbers from european blue chips including novartis. positive earnings outlooks from u.s. tech giants ibm, e-bay and qualcomm. smartphone tablet marketers power the world's big jegest ch makers. >> media reports say credit

deutsche bank and hsbc are being investigated over alleged libor actions. okay. so another show is under way this morning. >> you already had quite a busy day. >> kind of fascinating to me that this new launch of an exchange in london, in new york you had nyse and london will have more direct competition. >> what they will do, they will get companies that are already listed in europe and get them to come. >> easier to do it that way. >> so they get another pool of investors. something big has already start this morning. >> what do you mean? >> the opening championship. >> with golf. okay. >> under way. tiger tees off in 40 minutes.

>> we'll bring that to you live. >> the lower house of parliament is due to vote on the spanish bailout. >> chinese banks boost lending in july. they plan to subsidize overseas development. we will find out where the money is flowing. >> spain is looking to set up their paper. we'll hear from one strategist that says the spanish curve has been too steep. >> london is the stage for major stock exchanges fighting for the major listings. we'll get the report from the battlefield. >> and we'll break down the earnings season with s&p capital iq at 11:30. what companies have big expectations in the second quarter and what do they think will be the trend. >> second quarter results from novartis have come in ahead of

expectations. the group warns the strength of the u.s. dollar could rise by 4%. profit in second quarter dropped 7%. akzonobel cited specific concern of risk of recession in europe and delayed u.s. housing recovery. joining us for the first half of today's program, director of strategy. i was reading our headlines this morning. would you have noticed there wasn't one macro story, all sort of micro corporate news. i can't remember when that happened the last time. >> a lot of it is quite positive which goes to show how far expectations got downgrade in the last few months. we're in an earnings season. earnings season is more macro.

every quarter you get less correlation between stocks than periods in between earnings season. >> if we were to include the big macro headline of the morning it would be what's happening with the german parliament, this idea they are going to support the spanish bailout and so i guess this fits in with what you're saying with the broader theme news here being positive but the european one being a key swing factor. >> the summit was quite pivotal. they focused on financial system support as opposed to sovereign support. having made that decision the catalyst is just implementation. ultimately probably surprising to at least media expectations or beating expect jaguarses -- expectations in europe. >> how short is short term? bear in mind that clearly spanish borrowing levels are taking on sustainable -- unless

bond yields go back down, we still got a major problem. >> yeah. i'm talking two to six months. quite short term. >> what i was wondering about, we've seen so many negative headlines on the earnings front especially coming out of -- i'm thinking about kingfisher this morning. so, does that support your kind of broader view here that maybe we're turning a corner? >> we just published our out look data. there's such a battle for growth out there between regions and sectors. not a growth crisis. expectations particularly in europe and emerging markets got so weak it won't be that hard for expectation stocks beaten. in the u.s. it's different. they have not suffered their growth downgrade cycle like the rest of the world. u.s. versus europe and large cap and small cap in u.s. is where we've been focusing most because growth success priced at

different levels in different markets. >> do you think the u.s. looks more vulnerable. >> in the short term. when you look at the small caps much higher valuations and high growth assumptions, coming in to a fiscal cliff, elections, we're a bit worried that the russell 2000 has a very limited upside. >> great. jerry fowler stays with us. biggest banks are under investigation for attempted libor fixing. the newspapers say the probe is centered around deutsche bank, hsbc, socgen and c agricole. that's the suspicion so that's why we have the investigation to begin with. it's about collusion. >> not necessarily collusion. there were two different things happening. specific traders within

barclays. >> original investigation was into, was the wholly bore rate. >> no. it was into whether individual banks in the first place trying to rig it at all. having established that are they colluding. central bankers will debate how borrowing rates are determined. meeting in switzerland on september 9th. the chair of the financial stability board has raised the prospect that libor may have to be abandoned. find out more on how libor can regain its credibility go to our website at cnbc.com. >> japanese banking lobby head said no involvement by japanese banks in the manipulation of libor at all. >> you have to wonder about tibor. not japanese banks but banks manipulating the japanese interlending bank.

>> e-mail us at worldwide@cnbc.com and you can, of course tweet us at cnbcwex. if you have any questions for our guest host, send those our way as well. yeah. meanwhile european stocks hit a session high. weighted to the upside. as far as stocks are kwernd, ftse 100 closed up 1% yesterday. we're up eight points. the ibex but around .68%. electrolux stock is up higher.

exceptionat weather patterns being impacted. as far as treasury yeeltsds are concerned, sort of where we were this time yesterday, really unimpacted by the testimony from ben bern. retail sales coming out of the uk in 25 minutes. spain, this is what i was talking about as well. spanish bond yields around the 7% mark. unless we get spanish yields down substantially have we solved anything as far as the crisis? big focus today, spain auctioning up to about 3 billion worth of bonds on two, five and seven year, we expect yields to be more elevated than the last time we had these auctions. euro pretty steady. currently just below the 1.23 level. aussie dollar is up, 1.0470. some thoughts central banks are

rediversifying. euro sterling still below the 18 mark. .7842. let's bring it up to speed what happened in the asia trading day. tracey is with us in singapore. good morning, tracey. >> good morning. asian markets widely gained today on the upbeat u.s. economic data. hong kong shares rose more than 1.6% after better than expected u.s. housing numbers and corporate profits led to strong gains. markets climbed as the shanghai come possible set added .7%. volume was very heavy too as a matter of fact the highest for the shanghai board since the end of may. tokyo stocks are about .8% higher helped by strong gains by wall street overnight. tech stocks outperformed.

volume still thin. south korea, more than 1.5% led by gains in tech, autos and ship builders. electronics climbed 4%. elsewhere in the australian market touched a two month high after investors grew more confident about the global economy and india sensex tracking gains higher about .6% despite a big hit to its largest carmaker over worker unrest. angela merkel is expected to secure a majority vote in favor of berlin's contribution to a bailout of spain's banks. the german chancellor looks set for a bumpy ride in the preceding debate from opposition politicians and rebels within her on coalition. silvia wadhwa is back in berlin. good morning. >> reporter: a lot has been made about the bumpy ride that angela merkel will get. there's more of a debate going

on, the social democrats the opposition has to begin posturing to position itself to next year's elections because at the moment they kind of slinking behind angela merkel's position. it won't change the vote. a lot of confusion. unjustifiably because i've never thought there was any need for confusion about direct bank aid to the banks, circumventing the sovereign or the sovereign being liable. we had a discussion with the parliament undersecretary of state and he said quite clearly there is no agreement for direct banking aid to the spanish bank. we have an agreement and he passes on whatever aid there is to the banks. the present agreements that will

be the same story under the esm so don't hold your breath for direct banking aid any time in the near future. if we were to get it we would need not only another vote in german parliament, there would have to be a vote in both houses of parliament where they could agree to such a thing at an eu summit. a long way to go for something like dreekt banking aid. by the same token, they were confident we can deal with spanish problem right now and that the institutions do work. this is what he had to say. >> european institution can work, they can deal, for example, with the spanish request, so we are able to act, does not actually reflect the time when the german constitutional court will decide. my perception of what the debate is that they will not make a vote against europe, they will look from there from the national perspective whether budgetary rights are accepted

and something like that. but i don't expect an anti-european vote by the german constitutional court. >> let's pick up on that. constitutional court is september 12th that you told me they are going to decide. he's fairly confident about that. do you think that confidence is justified? >> reporter: well, i think when you talk behind-the-scenes it's more hope than real confidence for many of the politicians because so far, of course, the constitutional court whenever it came push to shove they said yes, but. but they did say yes. it's not very helpful that we have to wait for another couple of months. it's not very helpful, it's on the same day as the dutch elections. that doesn't do well for our friends in the netherlands and fighting their own european debate which is not dissimilar from what we have in germany. it was a bit unclear yesterday what the constitutional court will do.

on september 12th, they zion the temporary injunction which means they only decide whether the president will be allowed to sign up on present legislation. of course that is sort of prejudicial for the main cause if they stop him there signing that legislation we're sure the esm will be in trouble if they let him sign the legislation we can be fairly confident the esm will go through in some shape or form. >> silva, thanks very much for that. she's saying curb your enthusiasm. global investors seem to be looking at this today as the glass half full. >> the politics in germany moves steadily in direction of financial system stability. draghi has done a good job of suggesting fiscal response, the fiscal response has been forthcoming and that will allow the ecb to be more loose, more supportive of the financial stability as they see more

political agreement. >> they can be more supportive but the question is can they be aggressive enough? are they barred from doing the kinds of things out right bond buying that would have a more direct impact? >> i think the ecb will have a lot of latitude when they are ready to move. there needs to be more financial integration first of all. more fiscal integration later. >> what's interesting here we talk about all of this, but the fact is spanish bond yields are still at 7%. we'll have auction today. yields are higher. unless they come down we've made no progress on anything because that's frankly as far as i'm concerned, the yields tell me everything. >> i guess that's fairly true. i guess what's more important is that for most of the sovereign markets in europe that are in trouble, they will actually have less of a direct impact on the financial system which is really what needs most support right

now. so long as there's a break between the spiral of soft arena and financial institution. >> built. if they can produce some financial stability in european there's a chance they can sort themselves out or receive much more support without it being crisis driven. this will take time. europe will go steadily towards a solution that will take several years. >> we'll talk more about that. good to have you on. >> pick it up for the time being. goldman sachs chief said this is the century of the bricks. his comments came at the economic club in washington yesterday. and that makes us wonder whether lloyd will be right. do you think emerging markets will provide better returns for investors and generally speaking will this be their century? get in touch with us on "worldwide exchange".

e-mail us at world orlando or e-mail us @cnb c.w. ex. top chip makers report stellar profit. the fund may not last into the fourth quarter. we'll have more when we come back in just a few minutes.

a number of other earnings. nokia is expected to post their results. they will need to sell some smart phones. shares have fallen by over 60% so far this year. qualcomm's third quarter profits are up. the phone chip maker is cutting its fourth quarter expectations. company sees a very strong december quarter. qualcomm stock last night closing up just under 3%. ibm second quarter profits rose 4% beating forecasts but revenues fell short of estimates for the fourth straight quarter. still big blue is raising its

full year earnings outlook and that alleviated some concerns about weak tech spending. ibm saw strong june and confident about the current quarter and its shares there responding in 2.5% to the upside on that report. >> tmc has managed to deliver impressive earnings. the world's biggest contract chip maker report ad 16% rise in net profit to $1.4 billion in line with expectations. the company was helped by its advanced by its chip making technology. it allows tsmc to make smaller chips with more capacity particularly in the smartphone and tablet market. jeremy, thanks for joining us. good numbers from tsmc. but they are downgrading the general market for the second quarter. what are the implications of

that? well, there is no industry that's immune from the macro slow down but i think the good news is demands for smart phones continues to be strong and as you can see from indications from qualcomm, new drivers are coming in 2013. there's hope for the industry is that the inventory correction will be short and very mild and see a recovery of growth sometime in the second quarter of next year. >> where are we in the cycle? people look at tech because they like it, it's an early indication of where the broader business cycle is heading. what message do you see from this sector? >> i think the cycles have become shorter. there's a dampening effect on the sector almost every second half the year. the product cycle is the one we should focus on. we're having once in multidecade

change to a different kind of personal executing, different kind of device that's smartphone and tablets replacing the pc. this is a trend, a replacement trend that will dominate a lot of the technology investments and the semiconductor spending in the years to come. so i think the message from tsmc is clear. investments in leading edge technology or demand for leading edge technology continues and as long as that's the case the future is bright for semiconductors especially for the leading players. >> southeast big tech companies are showing this weakening revenue group but improving profits. what's driving their ability to control costs so well? >> well, you are seeing the fruits of investments, obviously, in india and leading edge manufacturing capabilities. the largest players like samsung, tsmc benefit from

increasing scale. their performance in top line is gaining larger relative to some of their smaller peers. as you can see to good performance or exceptional performance for some of the strongest players in the industry. but at the same time relatively weak players will also, i think, have relatively weaker performance. >> is this still an industry that's kind of overwhelmingly driven by apple and what that company is doing up and down the supply chain? >> it seems that way sometimes. as you can see with the innovation and new products that are coming through obviously there are many efforts not just at apple to produce products consumers will buy. samsung especially in asia is the leader in the smartphone space and will continue to be so, especially if you look at the new range of galaxy products. if you look into the next year in particular not just apple story but the android phones will sell well and you'll see

that coming through, i think especially jot just samsung but other manufacturers as well. >> thanks for that. jerry sticks around. >> china is strengthening its trade ties with africa and it's backing it up with a new $20 billion commitment. more details next.

these are the headlines from around the world. better than expected numbers from european blue chips. novartis boost stocks in early trade. >> positive outlook from booibm e-bay and qualcomm. >> smartphone tablet helps boost tsmc to its second highest quarter profit. >> deutsche bank and hsbc are being investigated over alleged libor investigation.

retail sales coming out in a few minutes. >> quick note here in the uk gross mortgage lending dropped back to 11.9 billion british pounds. this was june, 11.9 billion compared to 12.2 billion in may. as for retail sales? >> june retail sales up 1.1%, up 1.6% on the year. weaker than forecast. they forecasted a half percent, 2.2%. the rain hitting food sales. we heard earlier, of course, as well from a number of companies, but particularly from kingfisher which talked about the exceptional weather patterns affecting the short term, also seem to be the same thing affecting the uk retail sales.

also, we have to see -- >> these figures too have such mixed signals in the uk. on one hand we're getting a stronger employment report but then weaker retail sales report and then here's a report showing car production is up 14% year on year. so it just seems as though there's not a consistent message. >> no. they say the jubilee, no evidence that the jubilee boosted retail sales but wet weather depressed food sales. it brought forward some seasonal clothing sales. >> and umbrellas. >> what's fascinating, you mentioned car production, the difference between uk versus france as a car producer. we got a lot more a lot of overseas carmakers, great britain is there, eu car manufacturing center. >> especially if sterling were to appreciate more against the euro. the euro is making that hard. >> let's show you those retail sales numbers. sterling taking a dive.

ftse 100 eased up marginally. the cac and ibex there abouts. >> across the board in bonds we're seeing some evidence of higher yields in these peripheral countries. spain ten year, 6 policy 84%. italy down to 5.90%. the bund and gilt benefiting, 1.22 and 1.5% respectively and we're watching to see how the debt auctions in spain and france affect that trading later on this morning. china's government is busy at work boosting growth domestically and abroad. tracey has more details. focusing their efforts on africa. >> china's big four banks,

issued $7.9 billion in new loans in the first half of july. according to the official shanghai journal. it allows easier access to credit and signals that banks have really started financing for government infrastructure projects. in another move to boost the sagging economy, beijing has start ad program to subsidize loans for chinese companies looking to expand abroad. the ministry of finance says it won't stop company's interest payments on overseas loans and subsidies can be as much as the benchmark lending rate. overseas investments soared more than 48% in the first half of 2012 to over $35 billion. africa adding to china's global investment spree the president is offering $20 billion to

african countries over the next three years. it will double the amount pledged back in 20 o09. the eu has rejected china's checkbook approach to doing business with africa, a major supplier of raw materials to china. ross, back to you. we hear regulators in the eu expressing concern that china is writing checks in africa. should we be concerned? is it better than us writing a check? >> it's hard to really comment too much on exactly what china is doing. i'm not an exert on the region. there's so much negativity around chinese growth prospects because people are looking at fundamental data, not realizing there's plenty of opportunity for intervention. china is trying to stimulate more activity for its domestic

ability in foreign markets. >> looking at an interesting stat. this idea that china is this big state-controlled country. the uk government spending is 50% of gdp. >> is that true? >> in the uk? >> the in uk. >> about 49%. and in china it's much lower. so actually in some ways -- this is perception. of the government involvement in the economy in what they can do. >> a lot of government involvement particularly since the crisis began. developing economies that are free market. >> yeah. they can't intervene in the right way. just reminder about our trade links series, every week we look

at how the financial crisis is affecting trade. that's every monday at 10:50 cet. indian lawmakers have voted for the country's next president. the announcement is due on sunday but pundits have already picked their favorite. we have more live from new delhi. who will it be? >> reporter: it's going to be very significant for india and the government. clearly, despite all the months of scandal and bad news, the fact is that the prime minister will emerge stronger after this election because it's just going to be congress candidate who is expected to win with a large majority and that will also in some ways strengthen the hands of the government because the opposition will continue to be in a disarray of sorts and not be able to come up with any winning propositions or candidates. on the economy front what we

really foresee is once this election is over and the new president is fixed, the government of the day will be able to go ahead with some pending reform and take several crucial position which have been posed. remember the congress supported the congress candidate but a couple of days fact fell back in line and that's likely to happen with other decision-making that the government is planning in the days and weeks to come. >> okay. thank you. >> one person killed and many others hurt. production has been suspended in india as angry workers fought with management. the union accused them of anti-worker and anti-union activities. i want caused the firm over half a billion dollars in loss

production. see how the impact this is having on maruti shares. down more than 8% at the moment. pretty remarkable. suzuki motor shares for their part close, if we can pull up that share price -- maruti suzuki motors, all coming together for me. down more than 8% for are the morning. in the latest sign of struggle in japan's auto sector nissan is outsource production. we have this story live from tokyo. >> reporter: hi. renault has cut production and nissan will raise production by consigning tens of thousand of units annually. it hopes to benefit from south korea's free trade agreements with europe and other countries as well as the recent

depreciation of the yuan. nissan president will visit south korea tomorrow to announce the deal. meanwhile toyota chairman of japan's automakers said the yen against the dollar will be tough on the sector even if it weakens to around the 80 yen level. toyoda is concerned that falling sales after government subsidies for eco friendly cars end next month. that's all from nikkei business report. back to you. >> thanks very much. we're just getting some more news out of syria. clashes erupting marry the syrian government headquarters in damascus after rebels attacked. what's happening is now we are getting clashes in damascus. a lot of people considering maybe the end is getting closer for the assad government.

right. we're just looking ahead to this spanish auction. peter chatwell joins us now. peter, thanks for joining us. what sort of yield are you expecting? we got up to 5 billion where auction is one, two, five and seven. where is your focus? >> my to discuss on the amount sold. i've seen there's been a really, quite a big perception already in previous sessions. so for example the yield on the october 2014 it pushed quite close to the top of recent ranges, about 5.5%. it's been a really large range from 4.5 to 5.5, say over the last month. so, really what i would look at here is whether the yield continues to come down because what's happened this morning is that those yields have hit a high and over the last say 20 minutes they've come quite a lot

lower. the market is indicating that these results are fairly good so let's just see if the results corroborate that. >> we'll have to see. out of all the maturities which one is going to be most indicative for you? >> i think the 2014, the october 2014. >> okay. why? because that's the -- in some ways -- why the shorter term borrowing? more important than the longer term borrowing? >> when you got yields so high the short term rate is really indicating a lot of stress to have a short term rate, 4, 4.5, 4%, that's normal. clearly expectations of default in there. if we see a big improvement like we've seen a big improvement in short term deals in the core markets then i think that would signal that there's actually some slight improvement or at least perhaps some of that demand for core yields is

starting to make its way up into the perry fipherperiphery. >> unless we see lower yields in spain have we made any progress in the eurozone debt crisis. if they stay where they are, what does that suggest? >> you got to look at a longer term trend. the trend for spanish and italian yields over the last month, month and a half, as they chop around at the top end of the range over the last year. distressed levels. so you got to see that makes some sort of significant improvement before you can draw any conclusions about the progress made by europe. >> peter, it's kelly. i wonder if the french auction won't be more telling to some degree and in your view how should we think about french debt. it germany light or is it italy light? >> it's been treated by the

market as very liquid core paper but actually paying a dean yield. germany light i would say. whether that's correct or not on fundamentals it's open to debate but also, you know, the demand for french paper has been so strong that it's brought belgium paper really rocketing down in yield. i disagree to that, to a certain extent. so that's why i think there's an opportunity opening up today which is to buy french debt and to sell french debt just because i'm thinking that this big convergence of yields and big moves we had at the front end will see some profit taking. >> real quick. what practical limits will negative yield impose on buyers across the globe? >> across the globe they don't actually have too much of an impact because it's all relative to your policy rate. i guess there's that transmission. of course, we can all understand that it's relative to the policy

rate but does the retail investor understand that. so do money market funds suffer? >> 1.3 a million, 1.04 and 548 million in the 2019. that's up to their three billion total. 2014, bid to cover 1.9. last auction was 4.3. >> much bigger amount sold here. i'm not sure the bid cover is perhaps -- i don't think it's a sign of weakness. >> the yield 5.302%. this yield was 4.48 on june 7th. >> yep. the important thing to look at is secondary market was up 550, 560 earlier on today. it's an improvement relative to where expectations were at the start of today's session. >> today spain is saved?

>> no. there's been some demand, perhaps a bit more demand than was expected and we got to wait and see if any other investors pick up on this positive result and pick up on the general theme of spread compression, yield convergence, and maybe we see some buying of periphery. >> your quoting a good result because they raised the money they were targeting and yields a bit higher in the june auction, lower than what they were in the market this morning? is that success based on the relative performance? >> absolutely. this is a relative thing. the thing i point out is that we've not really broken this trend of ever rising peripheral yields. you got to look for the yield on october 14 to break below 4.5, 4.30 before you start looking at any significant improvement. >> it's perhaps notable they are auctioning off longer debt.

do you expect that to come in even though the results are better than expected they are still selling longer term paper at unsustainablely high? >> yes. last time around they did the ten year. ten year. tens, fives and so on, they are all yielding about 6%. it's a very flat yield curve. that's the real problem here. the market is still trading, this market largely with defaults still very at the front of its mind. so to change that, there still has to be some structural measure occur within europe and no sign of that. although we've seen a good auction and seeing some yield compression and so on whether or not this is not the structural change in the spanish market. >> it is worth pointing out the initial reaction bund futures gained some losses. >> so maybe these results are

weaker than was expected. >> who enjoys it not us but we'll continue. probably has more to do the point peter is making, ross, the question it raises for the sovereign sustainability funds to the actual people showing up at auction. >> here's the key point. do you still think we're heading, peter, towards a sovereign bailout? what are the chances of sovereign bailout in spain at some point? >> i would say there's been no measure made from policymakers which has got a clear path to implementation which averts this risk. so i think that the market is probably right at the moment and if anything i would argue that we should have a slightly flatter spanish curve. so it would be a curve that's taken into account price risks to a larger degree. it's really up to policymakers and perhaps at the end of the

day it's going to come down the ecb to continue to support and keep this market functioning. >> which they haven't been doing. >> no. >> the spanish problem is not so much debt at the sovereign level. if you can stabilize the financial system without it meaning more government debt spain doesn't need a sovereign bailout. we may be heading in that direction because of their structural issues. >> peter thank you. just worth pointing out ten year span issue yields back over 7%, euro down session lows posted that spanish auction. right. let's just get back to jerry and your key trade here. you basically are buying calls on eurozone equities and selling them on russell 2000. >> our outlook is growth battle. we're expecting it to be a significant battle around the expectation and reality for growth. not a crisis but expectations

are being priced differently. >> the u.s. will suffer. there's a lot of money in u.s. markets and the u.s. is likely to be area where growth expectations are probably priced a little bit too elevated. this is a combination of a few things. short term prefers for europe over the u.s.. long term prefers for small caps over large caps. and particularly focusing europe on the dax which is really not the european index. these are big global companies that can finance themselves much cheaper than they should to. and they are benefiting from a very cheap currency. germany is the biggest free riding economy in the world and the companies in germany are benefiting dramatically because of that. their valuation of the german market is under ten times qe. it's growth assumptions are not -- >> as long as those german companies are trading away from western europe and the rest of

the world. i thought those comments we had from diamond this week were key. western europe car sales are off. the rest of the world is great. >> global growth is slowing but no problem. u.s. growth will be quite low. you still got decent amount of emerging growth. you want to do it through call actions on the back side because things could get nasty in europe. also worth highlighting this is a relative value trade seeing upside in those russell 2000. >> relative value should be the logan of the next decade. jerry fowler, thanks so much for your time this morning. let's do a quick check of the agenda for asia tomorrow before we head to break. apple fans in china will get their hand on the popular ipad when it goes on sale in the mainland. thailand banks report second quarter earnings. and in india reliance industries

will announce first quarter earnings. now platform in london. we hear from both companies on how they plan to win the battle of the bourses coming up. .

nyse. can you say it? >> i say nyse because i'll screw it up if i spell it. >> nyse launched its london platform. the group plotted its first euro tunnel from the rival. earlier i spoke with the president of nyse about the plans to gain a foot hold here in london. >> we are assure clients what we call domestic issuers that are listed on our domestic markets. we're looking to access vibrant market and go a natural path. they still access our book which is one value we have which could

be international investors looking for an alternative but still want to listing london because that's a great financial center. >> but london stock exchange ceo told cnbcerlier the group will rise to the challenge. >> we've always welcomed competition. this is what makes london great that diversity of offering. i do know that they launched their new listing platform in london two years ago. this is their first listing. but we think it's appropriate that even in that case, securities essentially french owned and retail traded that a london listing would help. >> euro tunnel did it this morning. what they had they used to be company with, a holding company with two separate structures. now brought it into one structure and still have a london listing. they have sterling denominated

shares and euro denominated shares. but now all the stock are denominated in one currency. i don't know how many other companies there are like euro tunnel. >> that's the question. what's the future of this exchange. how do they think they will continue? >> the key thing is they announced it at the end of july of 2010. it takes a while to get it going. clearly they were side winding in developing this platform. they were trying to tie up with. deutsche. from what i was saying, they got the feeling that maybe the next few companies that come on this platform will be companies already listed on euronex who want to attract investors in london and the way to do that is to go on this london platform.

>> it's interesting, shares will be euro shares. >> euro shares. you'll have this currency trade. >> we'll go break. just want to leave you with this news. the htc has filed a claim against apple. not just stock exchange wars but patent wars. we'll be breaking nokia's second quarter results for our european viewers. ross will. stay tuned for in depth analysis and market reaction. [singing] hoveround takes me where i wanna go... where will it send me... one call to hoveround and you'll be singing too! pick up the phone and call hoveround, the premier power chair. hoveround makes it easier than any other power chair. hoveround is more maneuverable to get you

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welcome back to "worldwide exchange". i'm kelly evans. >> i'm ross westgate. these are your headlines from around the world. better than expected numbers from worldwide blue chips. boost stocks in early trade. >> positive earnings from ibm, e-bay and qualcomm. sentiment lifted stock nokia. second quarter losses when it reports later today. >> european stocks are put under the rate fixing microscope. credit agricole, deutsche bank

e. and hsbc are being investigated ov over libor manipulation. we'll bring you up to speed with ear lie market action. first another auction result from spain. we had an early one from spain where we've seen the reactions sending spanish yields higher. france selling three year. bid to cover three times. sold 2.6 billion of the july 16th. average yield half a percent. on the 2017 the average yield .86%. france, we're seeing this convergence between french yields and other core yields illustrated at the end of the chart there.

still investors are pretty happy to snap those up. maybe they still have high yields, of course, on commensurate german auctions. so that will still give us some indication where investors go. we're getting lower yields in france, high yields, auction yields in spain still. >> indeed we're seeing the market reaction here. if we take a look at u.s. futures pretty muted. investors remember trying to figure out whether to get too spooked about those early spanish results. french auction indicating demand still strong for safe assets. there's green across the board for u.s. open. not a huge move upwards. dow pointed higher by 30 points. nasdaq by 10 points and s&p 500 by 2 or 3. let's get a sense of what kind of session we're handing off.

up .35%. people trying to make heads and tails of these european auctions. closer look at some of the european bourses. ftse 100 is up just under 10%. dax up .3%. ibex in spain is managing to put in a gain of about .25%. >> it has certainly been knocked back since the results of tspan auction. they are looking to raise 3 billion worth of spanish debt. 2.98. that wasn't so bad. yields were higher across the board in june. 5.3% was the two year and actually two year as we heard getting most of the interest because unless you get the short term borrowing costs down that's a sign of continued stress. the reaction of as we saw higher yields on the auctions across the twos, fives and sevens it

pushed the ten year yield higher. maybe move on to the other bone. i'll show you what happened with the spanish ten year bone. back over 7%. spanish just below, 6.98. yields are still unsustainable. the market is thinking at some point spain will need a sovereign bailout and that's what prices would suggest. ten year yields in germany, 1.2%. show you where we are with treasuries. not much reaction. yields right now below 1.5%. where we were this time yesterday. back to the currency markets. the aussie/dollar right here 1.04. over a 2 1/2 month high against the u.s. dollar. euro/dollar is 1.2270 above that sort of, the three low we hit 1.2162 last week. tracey has got more details for us on what's happened in asia

overnight. she's with us once again from singapore. tracey? >> that's right. great day to be wearing red nicely contrasting with the wall of green. asian markets widely gained today on the upbeat u.s. economic data. hong kong shares rose better than expected, u.s. housing numbers in corporate profits led to strong gains for riskier sectors. he july contracts on friday helped push the markets up. volume was also very heavy. the highest as a matter of fact for the shanghai board since the end of may. tokyo stocks are about .8% higher. tech stocks outperformed but trading volume was very thin. south korea the kospi rose 1.5% led by gains in tech, autos and ship builders and bellwether

samsung electronics climbed. banking stocks capped the index. elsewhere the australian markets capped a two month high after investors grew more confident about the global economy. sensex tracking gains higher half a percent despite a large head to its largest carmaker maruti suzuki over violent worker unrest. >> as officials probe whether we can trust rates like libor, they are still quite important to the financial system and ibor continues to fall to new loss. we had the three month which is a new benchmark in that contract or rate for 0.4 8%. just under .46%. we sink lower and lower. these rates which key off the interbank lending rates and

european rates continue to just sink as investors look for any return in this environment. nevertheless veteran investor and leon cooperman sees upside on equities as the economy struggle tolls rebound. speaking in new york, cooperman gave his view on what to buy and to avoid. >> stocks are cheap against inflation, cheep against their own history and against inflation rates and allowing for slower secular economic growth and allowing for higher interest rates teen me it's good to buy something that's discounting, less optimistic. u.s. government bonds are to be avoid, in my opinion, they are very unattractive asset class. buying u.s. government bonds is walking in front of the steam roller to buy a dime. not a very advisable policy. >> joining us for more is alan capper, head of credit strategy

at lloyd's banking group. broadly speaking where do you see value at the moment? >> interesting point made earlier that stocks are cheap. the only trouble is value is not necessarily where products are cheap. value is where they are expensive. investment grade where it's expensive right now and i think it gets more expensive. >> you're not fighting these trends. you're sort of saying these are powerful trends that are here for a reason? >> absolutely. ideologically one should never commit themselves. my sense is the momentum here has a very, very good fundamental value. >> we've seen some corporate borrowing at incredibly low rates and you just have to wonder if people getting in now aren't getting in at the wrong time? >> this is the logical issue i would use that would i put money to work in equities right now

given growth is slow, the data deteriorating rather than improving and capital structure. the investment grade, less now than there were a while ago and fund will come out further from investment grade. there's a fixed amount to invest. it has to go somewhere. it may be expensive but get more expensive still. >> is it reflective, the price in some areas does it matter? because i mean just look at the way yields are on the core government debt, negative two year auction for german bills. in actual terms it may look experiencive but compared to where else you go is that -- that's the other comparison. >> i agree with you. weight of cash hitting the market. saving is going on. pension saving will go up this

year because of the various reforms taking place from october. pension saving goes up. the money has to find a home. now we do know uk asset managers are putting less into equity. they can put less in skill because of low yields. >> the other thing, of course, is there's still a safety first mentality as well, which means, you know, investment grade rather than high yield. >> the interesting debate is high yield. i prefer investment grade and the dynamic surrounding investment yield is more possible ten because of quantitative easing. however, a lot of investors they have yield targets they have to make. investment grade doesn't reach the yield targets. as a result many are getting forced into high yields where in my mind it's getting risky because the growth outlook isn't that favorable.

>> how much of divergence is there between sort of high quality and the next level down? >> i think really the question at the moment very high quality, quasi sovereign. they are more like sovereign proxy. however for the rest of the market in my view i wouldn't say it's cheap but there's still some decent spread to have. >> weekly jobless claims around 8:30 eastern. forecast to rise to 15,000. at 10:00 july philly fed survey. another busy day for earnings. morgan stanley, travellers, verizon, blackstone, southwest airlines report and after the close we hear from microsoft, google, amd and chipotle. >> there is a chipotle in london. one, i think and i have been to it because i'm a huge chipotle

fan. goldman said this is the century of the bricks. his comments came at the economic club in washington yesterday. do you agree? get in touch with us. century of the bricks? e-mail us at worldwide@cnbc.com or tweet us at cnbcwex. >> do they go well in the post? after the break we'll discuss libor, investigation into rate rigging, taking yet another turn.

welcome back to the program this morning. these are your headlines. positive earnings and outlooks from u.s. tech giants ibm, e-bay and qualcomm. >> nokia shares rise. results due at the top. hour. >> european banks are put under the rate fixing microscope. if you just joined us a reminder if you're a golf fan the open is under way, tiger has teed off, he birdied the first hole. he's just under one par.

lee westwood was in but dropped back. it's under way. >> roy mcelroy is he in? >> yes but not teeing off until later today. >> that's when i'll be watching. >> moving on, some of europe's biggest banks are under investigation for attempted libor fixing. "new york times" newspaper said the probe is centered around c agricole, socgen, deutsche bank and hsbc. >> in a meeting in switzerland on september 9, the chair of the international financial stability board has raised the prospect that libor may have to be abandoned as a result of the fixing scandal. there's much more only bore and other interbank fixing rates on our website cnbc.com. >> president of ftc toaway in on the libor scandal.

>> another point we should have more transparency and more regulation for our industry and important to see that both sides. oceans, despite all the regulation in u.s. and europe, capacity has increased in all asset classes and almost every where and we just need to don't try to control that and bring more transparency. it's about transparency and integrity and investor protection. we need to get that done. >> alan capper is still with us. alan, you're a credit guy. how important is libor. help people understand what the rate really is and what any changes to it could mean. >> libor is the benchmark that we use to price credits off. we price as swaps plus x. so to that extent it's kind of an important rate to us. what's interesting is the comments about libor and this is true for regulation for the industry as a whole, that by

regulating more volatility will come down. >> if you make this more reflective of actual trading conditions it would have to be more volatile. >> the reason why volatility is so high, lack of certainty about the future economic outlook and when there's high uncertainty volatility goes up and secondly investors all trying to achieve the same thing. when there's that consensus mode and that sense of creditors going tighter and all moving in the same direction volatility will go higher as well. >> there's one thing that's worth mentioning. this was always called the daily libor fix. >> so the fix is in the name. >> it was called the libor fix. it was a rate that the banks got together and decided what the rate was. so, i know -- just saying it's kind of interesting that's what the name officially is.

>> it raises the question where do we go from here. >> happens if the ecb continues with this policy of low interest rates and that drives rates negative because i think the markets have never really got their heads around tissue. when you do short term rates it's negative. the reason it's key it becomes very difficult to short bond. you are paying the interest away in order to short. >> maybe they wouldn't mind that so much. okay. we got to jump. alan capper, we'll have more with you coming up after the break. but first two former treasury secretary from different sides of the political aisle agree on one issue the fiscal cliff. we'll have what robert reuben and hank paulson have to say on the matter after this. [ man ] ever year, sophia and i use the points we earn with our citi thankyou card for a relaxing vacation. ♪ sometimes, we go for a ride in the park.

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♪ ♪ [ male announcer ] what's the point of an epa estimated 42 miles per gallon if the miles aren't interesting? the lexus ct hybrid. this is the pursuit of perfection. welcome back to "worldwide exchange". let's take a look at how u.s. futures are pointing. we've moved a little bit higher in the last couple of minutes. the dow jones industrials average implied higher by 45 points. the nasdaq nearly 13. s&p is contributing two points. >> spanish auction results. bore roger costs rise in auction of medium term debt. stephane is in madrid.

raised the amount they wanted to but run us through the yields. >> reporter: price is extremely high, record price since the creation of the euro and for the five year maturity even the highest yield. the average yield for the two year maturity rose to 2.5% up from 4.3%. for the five year maturity we're now at 6.45% and for the seven year maturity, 6.7%. it's clearly unsustainable in the long term and raising, again, spain's access to the market and also fueling speculation about spain needing bailouts, sovereign bailouts on the long term. the finance minister claimed the bond market was not working properly in europe because of the slow and complicated decision-making in eurozone and repeated spain was solvent and

would not need bailout but when you see the yields of course the question mark is still there. over to you. >> thanks very much. two former u.s. treasure secretaries are weighing in on the bangers of the so-called fiscal cliff. speaking in new york robert reuben who served under president clintoner and hank paulson who worked for president bush says the crisis needs to be avoided but congress and white house should start talking about issues critical to fiscal growth. >> under those circumstances and of all the appreciates that exist in a post-election party two parties in congress will come together and work to seek common ground to address the long term fiscal outlook of this country which i said is unsustainable, dangerous and even today is having substantial effect by undermining confidence. >> i know they will ultimately come together and address them. the only question do they before the crisis or after the crisis? but if they don't there will be a crisis. >> okay.

there will be a crisis. strong words there, alan capper. the question to you is how concerned your about the fiscal cliff. how much does u.s. economic weakness play into your sector allocation views? >> right now we're not immediately concern. the reason we're not immediately concerned is just the technicals in europe look good. however once we get into q4 this is a non-issue. >> technicals in europe look good. what do you mean? >> they look good because bank of england is carrying out qe3, keeping rates low and excess demand for credit. the problem in europe we face is that since we know well in advance there will be negative news flow in the u.s. in say december and november which kind of mirrors what we saw in europe june will be a tough month you'll see the selling come in about two months before hand. i'll get agitated about the market probably as early as october. >> interesting timing from the u.s. election cycle where the

event is this first week in november. >> that's where i think we start to get concerns. i want means the rally in europe will start to run out of steam. we might see a correction wider. ultimately the european markets will decouple from the u.s. in part because most european investors are very, very focused upon the european market and not looking for opportunities in the u.s. >> what does it mean for high yield, like the junk bond market great yields. should investors be more wary. >> high yields in the u.s. are expensive. the bargains more to the extent there are any bargains are in europe. the trouble again this is a technical, funds are being pushed out of investment grades. investors are mindful they need 2%, 3%, 4%, to get returns like that they can't live in investment grades. they move down the credit curve. the fundamentals don't validate that trade.

it's a concern. absolutely. >> still to come big blue isn't suffering from the blues. ibm issued not a bad outlook for the rest the year as this cheery view gives a report card when we come back.

welcome to "worldwide exchange". if you're just joining us i'm kelly evans. . >> i'm ross westgate. these are your headlines from around the world. . >> better than expected numbers from european blue chips including novartis. >> earnings from u.s. tech giants like ibm and qualcomm. >> positive momentum lift shares in nokia despite forecast of hefty second quarter losses when it reports later today. >> four european banks are put under the rate fixing microscope. they are being investigated over alleged libor manipulation. okay.

welcome back to the program with a special good morning for any u.s. viewers who may just be joining us or late night for those on the west coast who are still tuning in. dow jones industrials average have moved higher. pointed up by about 45 points. nasdaq 1 points. s&p 500 throwing in a couple of points. cnbc ftse global 300 shows we had a flat trading session. up .4%. steadiness at the pop popped higher after weak uk retail sales. european markets for the most part are still holding in the green. we've seen the ftse 100 up .17%. dax up .4%. the cac is up .13%. ibex 35 out of spain is now added to its gains from a little bit earlier, now curving back to levels closer to the open up

about .33%. >> we had guests telling our viewers what they should be doing with their money. here's a recap of some of those thoughts. >> high yield currency in g10. we're in a low yield environment so naturally you're not going get the yield you used to be able to get five years ago. >> looking short term for europe to come off further. looking for it to dip towards 1.20. wouldn't be adverse to picking it up over the next two or three months. looking for euro/dollar to go back to 1.35. >> you want to do it for call auctions on the dax side because things could get nasty in europe but also worth highlighting this is a relative value trade, relative upside in russell 2000,

small cap domestic companies in the u.s. some thoughts we've already had on this morning. if you just woke up. the open is under way. >> the other u.s. open as tennis fans like to call it. >> the golf championship. and tiger has teed off. he birdied the first hole. he's one under. mcdowell is one under as well. anyway. under way and tiger birdied the first hole. >> we're keeping an eye on it. >> we're keeping an eye on some corporate earnings. second quarter results at novartis ahead of expectations. the strength of the u.s. dollar could trim full year earnings and sales by as much as 4%. core profit dropping 7%. net revenue down 4.

akzonobel warns times will get more difficult because of rising material costs and slowing global growth. they cited specific concern of recission in europe and delayed u.s. housing recovery. >> ibm second quarter profits rose 4% beating forecasts but in a pattern we've seen, revenues fell short of estimates. still big blue is raising full year earnings outlook. unlike many other companies ibm says it saw a strong june and is confident about the current quarter.responding. qualcomm's third quarter profits rose on strong revenues. it's cutting its fourth quarter outlook due to an inventory correction ahead of the launch of several new devices. the company sees a very strong december quarter and its shares responding up to almost 6%. e-bay second quarter figures doubled by a strong performance

from pay pal. their core bissau good growth in business. pick up and expect mobile transactions to double this year. e-bay stock in frankfurt are up. american express profits are up. revenues missed forecast as pace of card spending is slowing because of a drop in consumer confidence. amex still benefiting from low delinquency and charge off rates. seen as a gauge of the affluent set. they have issue cards with big disposable incomes. amex stock in frankfurt down. joining us now is senior manager at s&p capital. alan capper is still with us. christine first out to you. as earnings come in what are the broad themes emerging so far? >> s&p capital i.q. we're viewing the second quarter as a turning point. as with you know we had eight

yaerts of double digit earnings growth and last two quarters were very strong. for this quarter we're looking at growth to be down 1.5%. if we do come in, end the season with that figure it will be the lowest growth rate we've seen since the third quarter of 2009. that's what seven of the ten sectors coming in the red. that's the first time we've seen that many sectors come in negative since the second quarter of 2009. this is a lot different than the last few quarters we've been bragging, a lot more bearish. >> i would love to know what's happening on the revenue side. we're seeing this pattern where companies come in and manage to meet their earnings falling shy on revenues and top line growth. is that weaker than usual? >> i mean absolutely. we're looking for revenue growth of about 4%. that's the blended expected growth rate. that falls shy of the historical growth rate. companies beat about 62% of the 77 companies that have reported

beatings. beat on the share front. 60% have missed revenues. so we have 62% beating earnings, but only about 40% beating revenues. there's a bit of a disparity there between earnings and revenue reports. >> you said this quarter looks weaker. looking at the macro data that's degrading as well. what do you think about next quarter and the quarter after that? in other words is this the beginning of a new trend? >> well, i think so. at the beginning the year, if we looked throughout 2012 we expected the first half to be very weak. we were looking at low single digit great for the first and second quarter and in the second half the year is where we would see higher single digit growth and double digit growth. since then we've seen analysts drawback specifically on the third quarter at one point they were expected to be up 7% now analysts are expecting third quarter growth to come in only at 1.7%.

even that strong fourth quarter number has been drawn back bathe. we were looking for 16% at the beginning the year. we're looking for 12.5%. weak macro data in retail sales, unemployment, a whole slew of negative data have forced analysts to pull back on the second half the year that they were originally expect took so strong. >> which sector will weigh us down more >> seven are negative. two biggest laggards, materials, they are expecting to be down 13.7%, energy expected to be down 1.6%. within the materials it's the metals and mining industry. that industry alone is expected to be down 38%. we saw alcoa coming out last week although they matched estimates, they did come in down 80% year-over-year and we're expecting six more companies in that sector to report negative year-over-year growth and with

energy it's about lower year-over-year natural gas prices, the oil gas and consumable fuels driving down that sector. >> we'll have more from christine in just a bit. alan will stay with us as well. but still to come on the show, german lawmakers are expected to give the green light to spain's banking bailout later today. we'll be live in berlin after the break. [ female announcer ] the next generation of investing technology is now within your grasp with the e-trade 360 investing dashboard. e-trade 360 is the world's first investing homepage that shows you where all your investments are and what they're doing with free streaming quotes, news, analysis and even your trade ticket. everything exactly the way you want it, all on one page. transform your investing with the e-trade 360 investing dashboard.

e

e. welcome back to the program this morning. there's been calls for some time saying the euro is heading to parity against the dollar. that hasn't happened yet maybe it's heading to parity against the aussie dollar. it's a fresh record low. levels of 1.18 to the aussie dollar as you can see there. also at a record low against new zealand's dollar and so if you live in one of those two countries and want to visit the greek isles now just may be your chance. if you want to join the conversation here on "worldwide exchange" you know how to get in touch with us. send us an e-mail to worldwide@cnbc.com. tweet us @cnbcwep. we continue to focus on

what's happening in yields. two set of auctions today out of france and spain. yields continuing their compression this morning. people see values, getting pretty low. focus on spain. and we saw the ten year in reaction this morning back over 7%. spain today raising 2.89 billion looking for 3 billion. two year yield cash market is 5.4. auction yield 5.3%. on the five year this morning 6.45 is what they hit in auction. that's the highest since pre-euro 1990 for raising five year money today so still elevated yields. in fact getting higher and unless we start getting those yields down people are betting there will be a sovereign

bailout for spain which means we haven't improved dynamics. angela merkel is expected to secure a majority vote in germany's contribution to spanish bailout. she could face some backlash today from rebels within her own coalition and the opposition. silvia is in berlin and joins us. nice to see you again today. this vote is, you know, as you said this week, should go fairly smoothly. i suppose it's where it leads with us the constitutional court verdict in september. >> reporter: yes, certainly the next constitutional court so to speak but what ongoing debate following from when angela merkel came home from the last summit which left everybody a bit confused, especially about is this sovereign liable for it, is it not. we heard from the finance

minister say there should be no confusion. there's a lot of confusion and a lot of arguments that angela merkel's own party and opposition party saying you don't keep us informed every step of the way and that's why we don't feel we're in the loop and that's where the aggravation comes from. we want to talk with our guests here who is finance policy spokesman for the greens one of the opposition parties. thanks for joining us here this morning. you heard what i just said about the afwra aviation about the feeling of lack of information, lack of being informed on time. these are discussions you also in the budget committee yesterday? >> this is part of the discussion. one is, as you mentioned, who is actually liable for the money that has to be spent on the rescue of spanish banks, and i think here the debate is a little confused because if the

risk of the spanish banks put too much burden on the spanish budget, then that causes a problem for the eurozone as a whole because spain at the moment has what 7% interest rates, not the means of carrying its own debt burden alone. so i think we should focus more on the economic realities than on the strictly built question because the end what counts is if spain can get back to finance itself. >> reporter: there's clearly a little bit of a fear of old moral hazard in there. if we keep bailing out the banks directly and also of course the liability could come from just supporting the banking sector without having the sovereign in on the vote so to speak that does cause its problems. wouldn't it make a lot more sense call a spade a spade, we

have to go via the sovereign, that means we should put spain under some bailout regime or is it simply a fish that's too big to swallow? >> well, that would cause problems for the esff because then spain would no longer be one of the guaranteeing countries. that's why this way of help for spain was chosen. it's very important to look at the creditors and owners of the spanish banks carry a large part of the losses. and until now the way the spanish authorities handled that crisis put too much risk on the taxpayer and left the creditors or the owners untouched. and so that's why one of the reasons why the spanish debt load grew so quickly. our focus, therefore, we want to

limit the burden for the spanish taxpayer so to make sure that spain can hand tell crisis alone and doesn't need additional help from the other european countries. >> what does that mean ultimately? hair cuts for private correctedors? -- creditors. >> you have to make sure that those -- that they cover the losses. that's what hybrid capital is for and it should be realized. then we should cover secured bonds because the debt burden for spain is too heavy. >> seems the ecb moved in that, moved in some sort of sentiment, in the case of ireland and spain as well. is that the feeling you're getting? >> there's a change in the ecb position but my fear is in the case of spain that position will not be decided for how the spanish banking problems are

handled because in the memorandum of understanding there's no clarity on winding down the banks so it will be very difficult to secure unsecured bonds. >> many questions answered, more questions are thrown up. that's all for us for the time being. >> as we head to break i want to remind you of the headlines this morning. positive earnings and outlooks from u.s. tech giants ibm, e-bay and qualcomm. >> nokia shares rise despite forecast of heavy second quarter losses. results from the company due at the top of the hour. four european banks are put under the rate fixing microscope. we'll be right back. 

welcome back to the program. a reminder where we're

positioned. futures are moving a bit higher. dow is pointed up nearly 50 points. nasdaq by 13 or 14 and s&p 500 nearly four points or about four points there as well. let's take a quick look on what's the agenda pap busy day. tons of earnings. jobless claims at 8:00 eastern. philly fed key one to watch given the behavior of that index last month. existing home sales leading indicators. we'll be waiting for morgan stanley in particular this morning, travellers, verizon, blackstone and southwest before the opening bell. after the close it's off to microsoft, google and chipotle. joining us again is christine shore and alan capper. christine, morgan stanley, what are we expecting this company to say, what's the message broadly been from financials at this point? >> like you said, morgan stanley

out at about 7:00 this morning is when they will report. they are looking for earnings per share about 33 cents and that's down about 50% from earnings per share a year ago quarter. they are looking for revenues to be down 20%. they are looking for revenues of 7.5 billion versus 9.3 billion. i would say some of the other banks, bank of america beating earnings. goldman sachs beating by a whopping 46 cents. jpmorgan also beating by a large amount last week. financials are in pretty good shape despite what the original analysts estimates were. dweefrd financials the industry itself was expected be to down by 20%. followed by capital markets down by 8%. many companies are beating by a large amount. like we discussed before they are beating on the revenue side. bank of america beat by a penny the other day they missed revenues by a billion. be interested to see at 7:00.

>> one interesting thing that's fascinating right now is the trend in the stock market is clearly quite strong and technicals look really good yet what you're saying sounds fundamental lui rather negative. when do i sell? >> well, i mean, yes. you're right. there's sort of disconnect here between what the stock market is doing and what we're seeing amongst earnings. one area in particular is we're expecting the information technology sector to be up about 5% year-over-year growth but as we see they are not doing so else in the stock market. we're also seeing those companies, although they are expecting to be strong throughout the second half the year, not many of those companies are beating, only about 59% of tech's are beating and with only about 45% beating on the revenue side. so there is a bit of a disconnect. it's just whether or not companies can continue to cut costs as they've been trying to do this quarter. but in some places it's not as

successful as we're seeing many companies missing refer news, they are still able to beat earnings estimates by trimming a little fat they can get off their balance sheets. >> christine short, alan capper thank you very much for all of your time on the program this morning. >> good to see you both. another stock that will be reporting fairly shortly. nokia shares trading higher. despite expectations of deep losses and weak sales. thanks gentlemen for joining us. what's interesting here, this is a company that shares are down 84% since the launch of the windows strategy. what possibly could they say today that's going to make things better? >> there's not a great deal say except trust us it will get better in the end. they are stuck in this tragedy.

not a great deal they can do. looking back it looks like it would have been a better strategy to go with a mixed approach go with windows and android, one of those two platforms might have taken off for them. the biggest thing they've done wrong this is the second year where there's a good reason not to buy a nokia windows phone. last year they said they will move to windows and that killed all the sales for while. this year microsoft said all those windows phones you got they will not run the new version so that's a pretty good reason not to buy a phone at the moment. >> we'll say good-bye to our u.s. viewers. our european viewers can stay with us. we break nokia's numbers. stay tuned for much more in depth analysis and market reaction. >> in case you want an update on the golf, two under after five. >> see you tomorrow for everyone but europe. >> yeah.

good morning. sharpen those pen sills. earnings are about to hit the tape fast and furious today. on the economic front weakly jobless claims top the calendar plus exclusive access to the rare conversation between two former treasury secretaries, robert reuben and hank paulson, two different administrations, one serious warning fluror lawmakers. it's thursday, july 19, 2012. "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on