today's edition of worldwide exchange." i'm ross westgate. >> and i'm kelly evans. headline headline. >> spanish unemployment hits its highest levels. >> we're sorry, the words from the chairman of barclays pledging to repair the bank's reputation from the libor scandal. >> samsung electronics shares power up on a record quarterly profit thanks to a surging smartphone sales and upbeat

outlook. >> wall street doesn't like facebook's earnings. shares slide on continued worries about the company's growth prospects. okay. so this is it. this is it. >> the big day. let the countdown begin. i'm so bummed. we're referring to the olympics. the opening ceremony at 8:12 p.m. at 8:12:00 a.m. they were doing the ringing of the bells. i missed it. i really was looking forward to hearing it. >> and the torch is making its way down the last journey, down the river thames, one of the locks at the moment. because it started this morning at hampdon court palace.

shrouded in secrecy who will light the flame. >> there are odds who might light the flame. the route from the last part of the river to the olympic stadium is kept as a secret. are your going to be going or watching? >> i might sneaking in. >> might you? how are you going to sneak into the opening ceremony? >> might be sneaking in. >> keep an eye out for ross at the opening ceremony. >> i can't speak about it. >> i'm sworn to secrecy what my role will be. besides all of that, there's plenty of other thing on today's show. london olympics kick off tonight. here's what i was told about the games. >> korean tech giant samsung posted a record profit. we'll speak to an analyst who

expects that growth to continue. >> we go to washington, d.c. for a preview of u.s. gdp. how much will growth have slowed in the three months from june after first quarter. >> facebook fails to impress wall street. >> did i not ahead of facebook float. >> you were very skeptical. >> that was on record. >> that was on record. we have to go back and show people your level of skepticism. >> i'm just saying that. >> duly noted. a lot of people were excited. >> unemployment in spain has risen to the highest level since current records began. the jobless hit 24.6% in the second quarter and it's the worse reading since the spain

returned to democracy. stephane is in madrid. we'll be with caroline in one second. these figures came in a touch better but the country's economic situation continues to deteriorate? >> reporter: a bit better than expected. it's not as worse as we feared. 4.6%, up from 24.4% at the end of march. below the average forecast of 24.85%. that was the forecast at reuters. second quarter is usually good for spain because of seasonal jobs. this year it did manage to upset the negative trend of the spanish economy. the economy slipped into recession for the second time in two years and widely expected to remain under recission until the

end of next year at the earliest. the unemployment rate in spain will don't rise and rise over 26%. that's the forecast. young people and unqualified people have been the most impacted by this rising unemployment rate. plenty of young workers lost their job in the construction sector as a result of the real estate bubble burst. young people leaving cool today in spain are not able to get a job if they don't have proper qualification. the youth unemployment rate is now over 50%. one young people out of two in spain has no job. two consequences of that. the first one is the rising black economy because plenty of young people have an activity even if it's not an official job. second consequence plenty of young people are leaving spain to go to other countries like

germany. 70% of them say that they would like to leave spain because of the economic conditions. ross. what are you going to do tonight? are you the one? >> i'm just not allowed to say stephane. >> that was the handing of the torch. >> reporter: he's been away for a while. we received plenty of mail asking where is steve sedgewick. >> his father's business is from the east end. he's a fan. i have it on good understanding he has a key role. >> does he? >> we'll keep an eye out for steve as well. >> you may not recognize him. but look. >> sources indicate you may have

more facial hair. >> stephane thanks. we'll talk to you a little bit later. measures taken by spain will support the country's autonomous regions. caroline has now moved from valencia to mercia and joins us again. what's the situation and how are they tapping this new liquidity fund? >> well, the situation here is clearly equally bad. because the president of the regional government here indicated in a newspaper interview over the weekend that he too may tap the liquidity fund to cover its financing fund for the second half the year. financing needs for the third quarter stand at around 430

million euros and he may ask for 200 or 300 million euros. it may not sound much especially when you compare that to the refinancing needs of catalonia and valencia. if you look at the small size of this region because it's one of the smallest regions in all of spain it's massive. also if you look at the debt levels and the deficit to gdp ratios over the last year, those are enormous. the deficit to gdp was at 4.3% last year. three times the target. this year the target is 1.4%. nobody believes this region can meet that target. i should say, though, this region is quite creative about getting revenues in. the reports out there that the region is selling boat slips, parking spaces for boats to get more revenue. >> you're going to reoffer that region? that's the one i would want to make sure i get to, work out

what the story was. >> see, i was pushing for it. but that region anti-asked for a bail out so i can't go. >> i think surely, you should go there to find out why they haven't asked. if you haven't asked for a bailout what are you doing right that everybody isn't. okay. >> clearly the one. then she can pop down. >> they don't have liquidity problems. joining us for the next hour is the managing director, tony. let's kick off with these draghi comments yesterday. we saw a sharp reduction in bond yields post those comments. is he going to do anything or not? >> you know the markets continue to give eurozone leadership the benefit of the doubt. we saw that in july after the meeting. we saw that after draghi's comments. the real question is when will

that happen and in what form will that take. we haven't seen that take form yet and conveniently european leadership is on holiday for the next two or three weeks. we're in the same position we were last year at this time as leadership went on holiday. there is an urgent conference mid-holiday for people and then they have to make some real decisions mid-august. >> so, this rally that we've had in the last 24 hours you wouldn't place too much in it? >> well, i think it's kind of a sigh of relief rally. not a rally based on any fundamental decision been taken bus there's no strategy for it. we haven't seen too much kind of formative thought around the banking activities that are happening coordinated at the eurozone level. we haven't seen much in terms of support. you continue to see spanish banks on the earnings call say hey here's how much, you know, we don't own this much spanish

debt. we're trying to disown spanish debt. there's really -- you see the private sector backing away from the sovereigns. you see the ecb and national infighting i guess at the european level and i guess what you don't see, i guess the biggest, single biggest vote of confidence that your eurozone leaders have is a strategy. as you have the leadership on holiday you have the second and third tier guys in command and so many are going out and giving opinions on the eurozone situation. most of the guys in the markets don't really know the difference between an undersecretary and some sort of minister and all these other guys. >> interesting point, tony. i wonder sort of moving away from what he did or didn't say yesterday to what the ecb in your view should be doing now. how serious, obviously is the situation and what should they be doing to tackle it?

>> sure. we've been covering this two to three years now and what we've been saying for the past year if not the year and a half the ecb needs a statement that they will backstop the sovereign issues. this is what the u.s. did whether you love it or hate it. it's what they did and it calmed the markets for an extended period of time. the ecb has to come out and make a statement they will backstop the markets. what you have now inch by inch statements that they will cover something here, they will cover something there, this week everything will be okay, then you don't hear from people for two weeks. it contributes to the volatility in europe. if you have a very coherent backstop statement with some dramatic action it would provide breathing room for change to happen. >> tony, we'll leave it there

and be back with more in a bit. greece's leaders have agreed in principle the additional cuts needed to plug the most of the euro budget cap. further talks will take place on monday in order to find the remainder of the savings. the prime minister is set to meet with troika officials. european commission president said now is the time for real action from athens. >> the key word here is deliver. deliver, deliver, deliver. the main issue is implementation to deliver results. to maintain the trust of your piers and international partners the delay must end. words is not enough. actions are much more important. following my meeting with the prime minister i'm reassured

that this delivery will happen. in return i have been unequivocal that european commission will stand by greece. that was the words, of course, in the last 24 hours. european stocks big rally. just seeing that eke out here. rear now weighted to the down side around 6-4. decliners out pacing positives. ftse 100 down eight points. be dax up 2.24%. the dax 44% gains now flat and big boost in spanish bank stocks and italy the ibex trying to

build and come back from its strongest start up 6%. >> asia continued in the rally. the nikkei up 1.4%. flat for the shanghai. hang seng up. bond yields is where we saw the big reaction from draghi's comments. this morning with the two year in spain, yielding 5.46%. remember we nudged 7% just three or four days ago. the ten year at the moment 6.83. we hit, of course, 7.75 on the high. this morning we started around 6.96. down 10, 11 basis points on the day so far as far as spanish bond yields are concerned. compare that with italy in terms of the rest of the bond markets maybe we can move that on. have we have the rest bond markets? there we go. ten year yield still going down.

6.05%. that's the low for the week. ten year treasury hit 1.38%. fresh record low. 1.44 is with we stand. bund yields moving further away. 1.32% is where we stand. that's the market reaction in the last 24 hours. we're starting to see it eke away. let's show you where we are on the currency market. euro/dollar, 1.22. u.s./sterling. that's where we stand as we look ahead towards the u.s. start to play later and that gdp number. >> ross, what's interests is a lot of economists is hoping we're looking to the olympic games. they are thinking if enough media attention is focused on this convenient investors will get a little bit of reprieve. in any case who do you think

should light the flame at the opening ceremonies tonight? believe it or not there are actually odds of some of britain's biggest betting houses as to who might show up to light that torch tonight. if you want to bet there or tell us here who you think it will be or should be. you know how to get in touch with us. e-mail us at worldwide@cnbc.com or cnbcwex.com. >> it may not be an individual. we had olympic games as in greece by the bow and arrow so it may not be a particular individual it may be a mechanism. still to come, can the u.s. block the sale of canada's next into china. that's what we'll talk about as soon as this break is over.

yep. today we're focusing in on barclays. shares trading higher today up 4.29%. the bank impressing investors with its first half figures. let's look at those numbers. barclays beat estimates with an underlying profit of 4.2 billion pounds. the bank also said its sovereign exposure to spain, italy,

portugal, greece and cyprus fell 22% in the first six months the year. additionally, the results overshadowed by the british banks admission that the ultimate cost of the libor scandal remains uncertain in a statement the chairman said we're sorry for the issues that emerged over the recent weeks and recognize we have disappointed our customers. stay tune, we'll have plenty more in the show. we'll take a closer look at the results. >> first want to bring you a couple of news flashes. one just out on the tnkbp lawsuit in russia. a russian court has awarded more than 100 billion rubbles in damage. it awarded more than 100 billion

rubles in damages and the ruling to take effect 30 days after, in 30 days or following an appeal. as we know with these things, several round ever appeals can be very likely. we'll keep an eye on the share price. extraordinary comments from banko. more investors are throwing in the towel. chinese seasnook has asked to take over nexen. nexen is a canadian oil company anf its assets are in the states. u.s. democratic senator charles schumer is asking to block the

deal. heineken is giving it's singapore conglomerate more time to consider its offer. they asked for another week before deciding to sell its interest. there's been no other offers for its 40% steak in the beer maker and heineken is a beverage sponsor of the olympic games. more from tony nash. we've seen some deal making activity pick up a lot across the border action. do you expect local interest to trump seanook's bid? >> no. i think seanook has learned a lot from 2005, and it was really kind of a hand fisted bid. they way over bid for unical in 2005 but didn't consider any of the soft power elements it.

i think what's happened since then, there's been a lot of negative ads in the states about chinese companies taking over u.s. assets, companies tried to buy small technology companies in the states. and it really hasn't worked out well. chinese have been very so fist ti equated their lobbying efforts and develop a soft power presence in the states and europe and krn. will this go through? i don't know. i think it's probably likely. the canadians are very much behind it. mostly because cnooc said it would leave its north american headquarters in ottawa, in canada. >> we'll keep an eye on that. thanks very much for that. yep. the countdown is nearly over. the world's eyes are on london tonight as the ceremonies kick

off. a billion people are expected to watch. the sporting events have started. the women's football. >> meanwhile companies sponsoring the games are pulling out all the spots to make the most of their moment in the spotlight. will it be to the detriment of the olympic spirit more broadly and smaller businesses riding the coattails of the world's largest sporting event. >> reporter: with the price tag of more than 9 billion pounds the london olympics haven't come cheap. but it's unlikely the games would have ever gotten off the ground in the first place without the sponsors. visitors will come for the sporting spectacle and bear witness to the biggest branding exercises in olympic history. companies like visa, samsung and adiddas have sponsored the

games. in return they get rights to the olympic brand from the logos to olympic rings. >> they want the highest possible level of exclusivity. >> reporter: tough enforcement by the so-called brand police in and around the olympic venues. >> we've been restricted to put up the olympic flag up because of branding. >> reporter: dutch brewer heineken is the sole supplier of beer. "fish & chips" will be off limits. unless you opt from mcdonald's. soldiers drafted in to provide security have been put to put their lunches in clear plastic bags. but tough stance on branding has

given boost to one nonolympic sponsor. these bags are selling in the thousands. whether it pays off for olympic sponsors is still to be seen. >> nbc, of course, sold billion dollars in advertising around the olympic coverage. >> they paid a little bit more than that for the games so still trying to come out on top as a whole. nothing to sneeze at. still to come, samsung's record profits put apple's to shame. will the tables turn once apple's new iphones hit the shelves? we'll be right back.

and these are the headlines from around the world. spanish unemployment hit the highest level since the country emerged from dictatorship. we are sorry, the words from the chairman of barclays, pledging to repair the damage to the bank's reyou federation the libor scandal, beating expectations with a 4 billion pound first half profit. >> samsung has a record quarterly profit. plus wall street doesn't like facebook's earnings. shares slide on continued

worries about the company's growth prospects. meanwhile the draghi inspired rally is running out of steam. less than 24 hours. the ftse 100 down now after solid gains yesterday at 1.3%. xetra dax is down. ibex is trying to post some gains. >> you can see the sputtering as we look what's happening with bond yields. the italian ten year is back above 6%. the spanish ten year 6.78%, still a touch lower on the day. the german bund is a little bit lower as well, the gilt too, that would suggest some bid for safer assets. 1.33%, 1.48%. >> euro/dollar hit the best overnight. 1.227. it's now flat slightly under water for the day.

i in south korea, kospi index got a boost from samsung electronics. it punched in record quarterly profits thanks to its galaxy line of cell phones. >> reporter: yes. it was precisely this galaxy power that helped samsung post a record. its net profits swelled 48% higher from last year. main cash cow division, i.t. and mobile unit generated more than 60% of the overall revenue alone. galaxy sold 10 million units globally 50 days into the launch and samsung expects demand to pick up by another 10% in q3. analysts expect samsung smartphone sales to be nearly double apple sales of 26 million. hybrid smartphone and pcs set to be out as early as august which

can put a damper on apple's iphone 5 launch. profits track decline a bit but panel division managed to stay there in the black. back to you. >> thanks very much for that. joining us for more is mark newman senior analyst. mark, thanks for joining us. samsung at the moment is getting it right. what's the key thing for them? >> well, there's two things, really. the majority of the profits coming from smart phones these days, and semiconductors also generate a lot of the profits historically. semiconductors are in a bit of a trough which is positioning the company pretty well for strong, even more profit growth in the second half of this year and into 2013. specifically to your question on

the smartphone side what they are getting right, they are getting lots and lots of different options out there at all different price points, all different screen sizes, lots much different options and letting the customer decide which is very different from the apple strategy of just giving the customer just one choice. the iphone 4s. these days giving choice to the customer works because you got smart phones being adopted all over the world. now people are starting to enjoy larger screen sizes which samsung is being good at providing up to 4.8 inch for the galaxy s3 and different price points which help to enable growth not just in developed markets but also in developing world where they are providing up to $200 price point. so it's about execution and

semiconductors their technology edge they got which enables them to get ahead of the rival. >> we had an analyst who said apple has been way too slow in expanding out in china and risk going the way of rimm in that country. do you see that? >> well, i canned talk too much about apple, perhaps that's partially true also for samsung, in fact, we've seen a little bit of weakness in q2 for samsung also in china. on the call today they didn't talk about that. what we've learned recently in the low end segment samsung has had a lot of problems competing with local chinese makers. i'm talking about the sub $200 price point smart phones. in that area there's a lot of competition from local players. so in the high end, samsung is

doing pretty well. that's partially timing having lots of products available and keep introducing new product so obviously the customer has lots of choices but in the low end samsung as little bit, lost a little bit of steam in the last couple of months but i think what i've heard with the new products coming out they will be picking up again in q3 even in the low end as well. >> have smart phones turned from kind of a cool device to a commodity device with this? it seems that for the past few years they were great to have and apple has been a market maker and as samsung comes in and commodityized this and made it affordable is that part of what's happening we see the pc of smart phones? >> you know that's an interesting question because quantity sometimes seems like an ugly world in the technology

world. obviously, you know, commodity tends you won't make a lot of money. so if anyone can make money in a commodity business it's samsung. i would say that the low end smart phones now are becoming much more commodity because there's not that much differentiation there in the low end. it's very much enabling the best specs for the lowest price and samsung has a big strength because they have the highest scale in the industry. but in the high end, i wouldn't say it's commodity at all. you look at the margins, samsung and apple are getting in the high end smartphones, its probably around 50% gross margin that samsung is getting for the galaxy s3 and apple is higher than that for tern phone. high end isn't a commodity.

customers are paying quite large dollars, quite high prices, $700 or so for high end smartphone, and it's costing nowhere near that much to make. that's not really a commodity at the high end. low end that's probably fair. >> mark newman senior analyst for global memory consumer electronics. thanks for your thoughts this morning. tony will stay with us. a bit of breaking news regard to telecommunications company zte. u.s. treasury secretary timothy geithner is being urged to investigate the chinese company for selling surveillance systems and banned u.s. equipment to iran. full story available but we'll continue to see if zte share prices which don't look very affected by this at the pomt shows more of a reaction as investors digest the news. meanwhile plenty more earnings besides barclays.

eads up nearly 7%. coming out with numbers and figures that were better than expected. raising its outlook after posting their numbers. uptick in airbus numbers. renault's stock up 4%. sticking to its earlier forecast despite slump in demand hit profit. the oil major, total has a 1.5% rise. anglo-american down 3%. less positive story here for the miner. it saw the profit slumping 40% in the first half. speaking first on cnbc, it was

warned the cost outlook remains unpredictable. >> the market is very volatile. it's uncertain. on the other hand our mission is to be on the low end of the cost curve and virtually all of our businesses are in that position. so we can ride out whatever the market presents to us. >> meanwhile japan's latest core cpi data shows the economy is mired in deflation. the unexpected 0.2% dip is the result of weak energy prices and slower income growth. data is expected to add pressure on the boj to ease monetary pressure. sales were up for the seventh straight month. so to help us pair this data let's get back to tony nash. deflationary report on one hand.

retail sales are up. unless it's all volume, what's going on in japan? >> well, in japan you have a weak labor market. not a high unemployment rate necessarily but it's really low labor growth, labor growth and labor demand. one of the other issues is sluggish income growth. you don't have the income growth to grow retail sales, to grow some of these other elements of gdp. i think that's really what's happening. early in the first quarter of this year we had a quarterly gdp rise of over 4%. a base effect resulting from issues in 2011 around the earthquake and we had some fairly strong growth early in this quarter. we're looking to around 1% for the rest the year. yap is back to normal expectations. >> i guess that raises the question can the retail sales trend continue if the deflationary trend also continues, which there's sort of two signals fighting each other

and i wonder which to you is the truer tell. >> you have to look at things like japan is a fairly sizable consumer economy. and when you look at retail sales in japan, you look at retail sales in the states they've been down three months straight. it's a real issue. so do you do that through spearmon taxpayer policy which is what the europeans and the americans are doing and japanese have done obviously for the last what 15 years. so there are some real issues there and there are issues in kind of strengthening that labor market and strengthening the value out of japanese employees so they can make more money. it's a productivity discussion which across asia productivity is a major discussion. >> great point. we'll pick up on that in just a second. stay with us because speaking of

labor market troubles, productivity worries, in greece prime minister is meeting with troika officials right now this as leaders have agreed to additional cuts feeded to plug the national budget gap. july gentleman chatterley has been following the story for us in athens. julia, can they shake people down and come up with some funds? >> reporter: they haven't been able to find them so far. 10 billion euros we estimate that they've come up with and the meeting will continue on monday to try to find those. in the medium term -- >> looks like we lost her sound. we'll work on that and try to get it back. always a trick, ross when we're going across the globe like that. a pledge by ecb president, mario draghi to do whatever it takes to preserve the euro provide boost to global equities and has driven yields back down a bit. speaking at an investment

conference in london to mark the beginning of the olympics he called yesterday for faith in the euro project. >> the euro is like a bumble bee. it shouldn't fly but it does. euro was a bumble bee that flew very well for years. now something must have changed in the air and we know what after the financial crisis. so the bumble bee will have to graduate into a real bee and that's what it's doing. >> i think -- >> do you like that >> extraordinary. take this metaphor and have so much fun with it. it's not justified to talk about this mystical reason why the monetary european union was fine for a time and why it's no longer. you can clearly identify what happened.

>> it will provide the sting. >> this is the question. what do you think will the ecb provide the sting? e-mail us at worldwide@cnbc.com or tweet us at cnbcwex.com. >> watch out for a five year ltro, he's tweeted five year ltro. i'm not sure an ltro is what he's looking at. and angela merkel at that conference, not necessarily the bumble bee the distortion in bond prices are breaking the transmission mechanism and got his thoughts on what he might mean by that. >> mario draghi has changed the profile and the face of the ecb which is now a much more responsive, more active, more important, more resolute player. but, again, he has a framework. he has a mandate. he has certain limits of the

institution has, the founding fathers put on the institution itself. now there are certain ways in which can one can interpret. there's flexibility within mandates every where, et cetera. but what he said is please, there are other players out there, they are called sovereign countries, they are called ministers of finance, they are called political leaders. don't ask the ecb to do all the homework and i think it was a call to share and i fully support it. >> up don't think he's trying to find room in the existing mandate which is leverage the ecb balance sheet? >> from our point of view that would be extremely desirable. we've been saying that again and again and again. why? i think they proved with the funding of the banks, with the trillion that they injected in the banks for the funding of the 1%, three year money, they

stabilized the funding of the banks when it was threatening to go into a collision course it reminded us about 2008 all over again and they stopped it. so that's the muscle. that's the bazooka. the balance sheet is there. you need to go elsewhere for support or money or whatever. but the question is, yes, can you fully use it? and i say yes, we should find ways in which we can. >> is knit eactivitiable spain will need a full sovereign bailout? >> no. this is the whole point. the substantive point is it's not necessary. it's a solution to which we should not force a country like spain which has already taken all the necessary steps and all the necessary policy decisions, no we should not push it into a solution, which is not necessary, which is not efficient, which is expensive when basically what we need is table to help countries that perform to stabilize their

yields. we have no system to reward virtue. we have no system to support good policies. we have no system from text countries that are performing but that are under market pressure. we're very good at penalizing countries that do things wrong or procrastinate. but we don't do anything to support good policy. >> he's in fiery form yesterday. today china's top ceos will be at the same conference. they will be talk cross border investment s investments. we caught up with them and whether they view europe as a challenge or more of an opportunity. >> we do feel that great britain compared to what's happening in the south europe is much better

shape. we do see -- there are synergies for chinese companies to invest in great britain and bring opportunity back to china to help china grow. >> overall speaking a big challenge all over the world including china because we can see like chinese economy is growing slower this year than last year. but we also think that there's opportunity for the world to redo the business. >> if you see in europe there's a lot of talent but i do believe china we offer great opportunity especially for service sector. >> all right. let's give you now a look on what's on the agenda in asia next week. earnings season goes into full year. on monday we'll watch for mitsubishi motors and sumitomo

earnings. hk's hang seng bang reports and japan's june industrial output data report. >> keep it coming. also still to come up with caught up with the mayor of london and how prepared the city is for the games. >> we'll be right back.

we're just hours away from the lighting of the olympic flame at the opening ceremonies in london tonight. earlier we asked who do you think should light the torch, who would you pick to light fit you were in charge. chris has tweeted us. it will be david beckham but should be bob geldof. big name here in london. in any case david beckham is responsible for bringing the torch to london in the first place. betting houses around london have odds on otherathletes. we'll see who do you think should do it. leapt us know e-mail us at worldwide@cnbc.com. tweet us at cnbcwex.com. or of course reach us directly

at kelly evans. >> boris johnson the london mayor has been talking about how prepared the city is. >> london is as ready as any city has ever been in the history of the olympic games and all the signs, i've got all the stuff i'm getting from the army, police, everybody involved in protecting the venues is going very, very well. i'm just worried that i'm not going to worry at the moment i suppose is the honest answer. very tense moment but so far i'm cautious. >> boris out with his new hair cut. >> is that different? >> short. yeah. i like the slightly more care free. >> he still has the look in tact. the shaggy hair, the blondeness. that's just trimming around the

edges. >> let's get a final thought from tony before we let him go for the weekend as well. tony we've already seen the draghi-inspired rally is running out of steam. euro/dollar is lower, stocks are losing steam. maybe you were more negative, tony. what happened -- we got the gdp number coming out of the states today. just focus on that. if that's weaker than we expect what happens next? what happens with the fed next week? >> well, okay. we're looking at about 1.2% second quarter growth and we're looking at two for the full year. so if it's lower than that which i think would be pretty hard, i think you do start to have accelerated discussions about what kind of stimulus you can put into effect. difficulty is, you know, if you do say qe3 right now so many

analysts out there asking what's the point what does qe3 do. qe 1 was effective. there was a real benefit. qe2 the benefit was questionable. so there really are some questions out there right now saying first what is qe3 look like? there's some statements out from the san francisco fed governor two days ago saying we need to have some sort of not really unlimited qe3, or qe but extended qe that doesn't have so much drama around the announcement. that's dangerous. you need to have very discreet definable programs so people can understand what you're getting out it. if there's a qe3 it's probably to focused on mortgage backed securities. >> tony, real quick we're seeing the bund is back the ecb might buy bonds directly. is this rhetoric in your view or

do you listen what they say? >> there are so many people sitting at the table in europe that you really don't know who to believe and this is part of the communication tragedy i was talking about earlier. there's not a lot of credibility to these statements that are out there. you look at what draghi said about keeping the eurozone together, doing whatever it takes. how much credibility is there? >> tony thanks for that and all of your thoughts this hour. appreciate it. tony nash managing director at ihs. >> we'll be right back.

hampt

nexen. welcome to "worldwide exchange." if you're just tuning in i'm kelly evans. >> i'm west. these are your headlines from around the world. spain's jobless rate hits the highest level since the country emerged from dictatorship rising to 24.6% in the second quarter. >> we're sorry, the words from chairman of barclays pledging to repair the damage from the libor scandal after beating expectations with a 4 billion pound first half profit. >> wall street doesn't like facebook's earnings. shares slide on continued earnings on the company's growth prospects. >> samsung shares power up thanks to surging smartphone sales and upbeat outlook.

thank you for tuning into "worldwide exchange." good morning to u.s. viewers who are just joining us. you're watching these markets, trying to digest a lot of the news flow in the last 24 hours. dow jones fighting to turn to the green. we're still down two points so far for the open. nasdaq is implied to open by four. take a look what's been happening across the globe overnight. the cnbc ftse global 300 is up now, 0.15% to about seven points. we were higher earlier in the session as asia stocks in particular were keying on grounds from the u.s. hoping these comment from mario draghi yesterday would indicate a more firm commitment to solve temp u's debt crisis. this morning between the

analysts saying don't read too much about this and the bund saying it still doesn't support broad bond buying a look at the european boards shows the tone. ftse 100 down .3%. ibex 35 in spain which was in the green just the last time we checked in is now down 1.6%. >> as you pointed out we heard today developers are now beginning to throw the towel in the spanish property sector. >> that's the nub of the problem. >> what's that doing for yields because we saw such a big rally in peripheral yields yesterday. two year in spain still down 5.51%. they nudged up from the lows this morning. we were nudging 7% earlier this morning. take a look at the ten year. 6.92. started around 96. we were 11 basis points lower when we started.

the enthusiasm has continued an hour or so ago in the european markets yielding out a little bit. we're positive on the session for 10 year gilt. ten year treasury at 1.47%. ten year bund yields at 1.131%. euro/dollar, we're negative. aussie/dollar up. earlier in the program we brought the breaking news a russian court ruled against in the tnk-bp lawsuit, awarding more than a hundred billion rubles. the corporate decision is a

corporate attack should be cancelled and said the decision seriously damages the reputation of the rusan legal system. ross talk about an escalation there of a corporate dispute. >> we'll get more on that and more on the markets. this is it. this is the day, folks. >> this is the day that -- the olympic torch travels into the olympic stadium. >> here it is. it's on the barring. currently carrying the olympic flame down the river thames. at the moment there might be somebody in my home. i'm not quite sure -- are they down there moving their way through. they are following all the way down the river thames and we don't know how they are going to get to the olympic stadium or, indeed, how that flame is going to be transferred. >> all part of the secret. >> all part of the secret. >> that media are promising to keep to the extent they may have any information trying to keep it a surprise for people. >> so anyway that's all very

exciting, of course. what's less exciting and turning back to the real news is spain has the highest level since current records began 36 years ago. the jobless rate 24.6% for the second quarter worst reading since the country returned to democracy. spain's economic minister insists spain is solvent and will not seek a state bailout despite growing international concerns the country will be forced to do so. >> greece's leaders have agreed in principle the additional cuts needed to plug most of an 11.5 billion euro budget gap. agrees's newspaper says further talks will take place on monday in order to find the remainder of the savings. the prime minister is said to meet with troika officials today. yesterday ec president said now the time for action from athens. >> now 23 hours since the ecb

president mario draghi pledged full support for countries. to we have it or don't we have it? no. okay. we don't have it. i think we all know what he said. but what did he mean? that's the key point. our apologies for the confusion. when he talked about the market not functioning properly, the transmission mechanism not working that's within our agreement and we'll do something about it. did he mean, was he saying we might be opening the door there for more bond purchases or was he saying the being market is fragmented and the way we deal with that is we provide liquidity to the banks as need you want. >> they are signalling they will step in and intervene in the bond market.

the underlying question is why is the financial system fragmenting? not because of the ecb but because of actions of government. everybody has been saying government has to step into the fill this void and make things right. they have been making it wrong. draghi has been very clear, consistent and correct that they can't fix this problem now i want comes down to then people say was it or wasn't it a shift in policy. the initial knee jerk reaction is it was. people are now saying no he said this isn't new. what's your view? has there been a change in policy? >> there's a change in signal, right and they will step in at some point but it won't solve the problem? >> more what? more ltro. >> s&p as well. >> or a full qe program? >> a lot of acronyms flying around. could we try to avoid some of that's terminology. explain to people what they might to here. >> the three basic options are

they can do a little bit of securities market program buy some bonds as they've done in the past. that will help a little bit. provide more liquidity through these long term financing operations, extraordinary ones as well in the regular course of financing. that will help. they can do in principle, i guess, if they really are convinced that it will help and that it is in their mandate they could do quantitative easing and take a big chunk of the assets out. that will be small and it will come late and not be enough in our opinion. it's not going to be a full fledge uk or u.s. stock qe because at the end of the day that's a quasi-fiscal action. there's all kind of constraints. >> is that about what we thought the discussion was. if he uses the phrase the transmission mechanism is

breaking down therefore i can take any action i feel fit to break, to fix that and that's the point. it's in their mandate. clearly there. the question is he saying that to justify any actions he may take? >> well, i think they are trying to move things in that direction but they are legally constrained from doing so. >> does that matter? >> i think something has to happen to make people convinced in the ecb and the rest of the world and in germany that they can go down that route. the ecb can problem avoiding all these bridges to nowhere. it can provide bridge financing to a fiscal union. will thereabout a credible road map to that destination? maybe. i'm not convinced. >> the bund is adding to a bit of the risk move. it's coming out and saying it still doesn't support government bond buying directly, creating

perverse incentives. it is a hard line. is it politicking. do we need to see a change in tone from this group or from germany more broadly before investors feel like okay this will move forward? >> the way i would interpret it is there's a good cop/bad cop going on. germany is playing the bad cop. it has to the keep whatever support is there for the financing support for the countries that are in trouble going it has to tow a hard line. temp cb has to prevent the whole thing from tipping over the edge. our view of it is there's at that lot of noise positive and negative. the big picture is they will stay on the brink of crisis, only way to split the difference between the different actors involved. >> as we watch for more market reaction, still though there's other news. facebook swung to a net loss in the second quarter its first as a public company. it was due largely to higher

costs from employee stock compensation. it did match earnings forecast. management also didn't offer any guidance although the ceo said facebook will continue to invest heavily in mobile apps. >> mobile is a huge opportunity for facebook. our goal is to get everybody in the world and we expect 4 or 5 billion people with smart phones. >> facebook shares fell more than 10% after hours. you can see this morning down 10.7% after hours, is that. the stock lost a third of its value since the ipo in may. amazon second quarter profits dropped 96% as the online retailer don't spend heavily to expand its operations. revenues did rise 29% but both profit and sales missed analysts forecast. margins though at least are showing the right kinds of moves. amazon said expenses are growing faster than revenues and that

trend will continue pinpoint does expect another operating loss in the third quarter. shares were down initially after hours, but ended up about 1% and in frankfurt adding. there might be some positive stands. >> starbucks up 19%. missed analysts and it's own forecast. u.s. traffic started to slow in june and that trend has continue this month. the ceo says this is a macro issue pointing to weaker consumer confidence. starbucks is cutting its fourth quarter outlook and may close unprofitable stores in europe. dock is down 10% in frankfurt trade as well. so what about the agenda in the united states? today the first estimate on second quarter gdp out at 8:30 eastern. growth forecast to rise 1.3% slowing dpourn 1.9% growth in the first quarter.

at 9:55 we get the final read on july consumer sentiment. expected to be down more than a point. chef von, merck, dr horton, newmont and kkr report before the opening bell. >> we've been asking who do you think should light the torch. who would you pick if you were in charge. if you want to join the conversation here on "worldwide exchange" get in touch with us at worldwide@cnbc.com or tweet us at cnbcwex.com. >> save the secret. >> save the secret. not that we know. i don't think i could keep it if i knew. not in my nature. >> coming up next, barclays admits the full cost of the libor scandal remains uncertain as it impresses investors with first half figures. more when we come back.

all right. just ahead, we had a small t-bill out of italy. the average yield on that 2.45%. it is lower than the 2.95% that we had on june the 27th.

bid to cover ratio, got 13 billion in bids on that offer. italian treasury borrowing cost falling at the six mobile auction and probably helpful from draghi's comments whether you believe what he said or not or you believe the interpretation of what he said. >> 10 year still above 6%. a reminder if you're just joining us on "worldwide exchange" these are your headlines. spanish unemployment hit the highest level since the country emerged from dictatorship. barclays says it's sorry for the libor scandal. and facebook shares slide on continued worries about that company's growth prospects. meanwhile plenty of earnings out of europe. raised its outlook after second quarter figures. numbers boosted by an uptick in

airbus orders. renault better than it's com patriot. stock up nearly 4%. total the oil make just over 2.2%. post ad 2% rise in the second quarter. firm said new project start ups in other areas including the gas leak but there's a decline here. anglo-american stock down nearly 4% today. the miners saw profit slump 14%, falling commodity prices hit earnings. speaking first, the ceo cynthia carroll warned the cost outlook remains pretty unpredictable. >> market is very volatile. it is uncertain. on the other hand, our mission is to be on the low end of the cost curve and virtually all of our businesses are in that position. so we can, we can ride out whatever the market presents to

us. >> barclays shareholders are cheering the bank's latest quarterly results this after it post ad profit of more atlanta 4 billion pounds in the first six months the year. barclays admitted that ultimate costs of the libor scandal though remains uncertain. in a statement the chairman said we're sorry for tissues that have emerged over recent weeks and recognize we have starting pointed our customers and shareholders. i'm confident we can and will repair the reputational damage done to our business. >> we got a comment out of the bank. there were ideas that given the banking license to the sm, the bank is saying giving a bailout fund banking license would be de facto financing of governments and that would be fatal and prohibited by european treaties. less problematic for the esf to buy them than the ecf to do so.

the key point here is there was a little bit of an uptick. >> this was so interesting. it wants the ecf to buy bonds but with the esm these rescue funds don't have the resources to do this on an unlimited basis unless they have a banking license. but they say we don't want to do that. >> the bank doesn't want to have unlimited buying because germany to the extent germany -- germany wants to keep the pressure on. germany must keep the pressure on. >> we're at a fatal point in the existence of the eurozone anyway? >> they probably -- they must see that the risk, the down side risks are catastrophic. they must see that. the issue is every time there's been some hint of significant financing, monetary financing from the ecb or a meaningful bailout the pressures come off and everybody has relented whether it's the ltro, the s&p,

the deals they've covered in the past. >> if greece leaves the eurozone, you can't help expect the spanish bank, italian bank whatever. we're at that pressure point already not just -- there are no good choices here basically. >> i totally agree, and i think -- that's what i'm saying. we'll stay on the brink of disaster for quite a long time and there will be a greek exit. only a matter of time. there will be a full blown spanish bailout of the sovereign not just a credit facility. it's only matter of time. that's the kiss of death for spain like for the other countries. so this process is going to continue, it seems to me for quite some time. for many months if not years. >> we'll see if these countries have that much time. >> just a reminder, the bundesbank said giving a license would be de facto. it's prohibited by european treaties. >> still to come we'll remind

you that the london olympics kick off with tonight's opening ceremony. find out what london mayor boris johnson told ross about the games. we'll be right back. [ male announcer ] drive a car filled with as much advanced technology as the world around it. with the available lexus enform app suite, you can use opentable to make restaurant reservations. during the golden opportunity sales event, get great values on some of our newest models. this irsuit of perfection.

the countdown is nearly over. the world's eyes are on london tonight as the opening

ceremonies kick off. a billion people are expected to watch the spectacle and the sporting events have already started of course with the football tournament. >> meanwhile companies sponsoring the games are pulling out all the spots to make the most of their moment in the spotlight. will it be to the detriment of the olympic spirit and to the smaller businesses who are trying to ride on the coattails of the world's biggest sporting event. tom mckinsey went to find out. wroip a price tag of more than a 9 billion pounds the olympics have not come in cheep. without a cash injection from the world's biggest corporations it's unlikely the games would have ever gotten off the ground in the first place. fans will witness the biggest branding exercises in olympic history. companies like visa, samsung and adidas have gotten the rights

the olympic brands from log zwros olympic rings and determined that they will be the only ones using them. >> they want the highest possible level of exclusivity and i think they would put a bee in the air of low target physician they felt somebody else was encroaching on their patch. >> reporter: tough enforcement by the brand police in and around the olympic venus. >> we've been rerestricted to put up the olympic polygamy up for branding reasons. >> reporter: i want means anyone looking for a traditional english pint at the games is likely to be starting pointed. dutch brewer heineken is the sole supplier of beer. "fish & chips" will be off limits unless you opt for mcdonald's. teen soldiers drafted in to provide security have been told to put their lunches in clear plastic bags so they don't bring in nonolympic brands. but it's given a boost to one

non-olympic sponsor, this tongue and cheek take on the games is seeing his bags sell in the thousands blp it pays off for olympic sponsors is yet to be seen. >> so much. a lot of talk about whether you can wear t-shirts with coca-cola written on them. >> the brand police are quite remarkable and clear plastic bags to make sure people aren't bringing in nonsponsored in. >> a faux paus from mitt romney. he questioned how ready london is to host these olympics. this is what the mayor told me about that very subject. >> london is as ready as any city has ever been in the history of the olympic games and all the signs i got all the stuff i'm getting from the army, the police, everybody involved in protecting the venues is

going very, very well. you know, i'm just worried i don't have enough to worry about at the moment. i suppose is the honest answer. this is a very tense moment but so far i'm cautious. >> he's worried he doesn't have enough to worry about with his new olympic hair cut. slightly shorter in the back. >> i think he's going to be quite popular and this has helped his popularity and his name recognition with the american audience. >> still to come on "worldwide exchange," a preview of facebook numbers, head back out to spain and hone in more on the esm doesn't want to give out a banking license. >> more ahead.

welcome back to "worldwide exchange." i'm kelly evans. >> i'm ross westgate. these are your headlines from around the world. u.s. economy plodded along in the first quarter. today's gdp figures may show growth slowed in the first four months. >> wall street doesn't like facebook earnings. shares slide on continued worries about the company's growth prospect. >> we're sorry the words of

barclays chairman. they beat expectations with 4 billion pound first half profit. >> samsung electronics shares power up on a record quarterly profit thanks to surging smartphone sales and an upbeat outlook. all right. let's check back in with u.s. markets as we draw closer to the open of trade back in the states. the dow jones industrial average implied to open lower by three points. the nasdaq same thing three or four points to the down side. s&p 500 also in the red a touch this morning. we haven't seen too much movement here. what we've seen is more movement across the globe as first the rally in asia keying off the u.s. yesterday have started to lose steam. stocks in europe taking a bit of a hit. ftse 100 down a quarter of a

percent. ibex 35 in spain is interesting to watch now down 1.81% after being in the green. has a lot to do with people waking up, trying to figure out whether ecb president mario draghi signaled any change in policy and also taking into account germany's bund pushing back on governments riding into the rescue or ecb or esm riding in to the rescue and buying bonds. >> that contradicts what was said. today we get the first glance at how the u.s. economy performed this spring. the first estimate of same quarter gdp is due out at 8:30 eastern. forecasts have been cut dramatically as economic data has weakened. consensus is now for a growth rate of 1.3%, down from 1.9. joining us is the u.s. economics

editor at economist. a cnbc contributor. still with us is our guest host. thanks for joining us. what's your own estimate of what's happened in the second quarter and how we might react to it? >> i think we might do a little bit better than 1.3, maybe 1.5. when we big in the details it will be a disappointment. you'll find exports which have been a reasonable contributor thus far in the recovery are turning into a drag because you've seen champion joining europe in the slow down room. the other thing that will be disappointing how much of that contribution will come from inventories. the big question mark is the extent to which cause people to mark down for the second half. people are looking for growth around 2%. the story of this year is people keep marking down their current quarter numbers as the monthly data comes in week. with the fiscal cliff still hanging over us that stuff gets

worse not better. it seems three months ago that there was all this talk about how the u.s. was finally in the verge of a self-sustaining recovery. >> choi. just another head fake. it's really disappointing. you can point to the rise in gas prices if you had after some of the saber rattling with iran but the increase wasn't enough or sustained enough to explain how bad things got. you have to point to how bad things are in europe. also concerns about the fiscal cliff here in the united states are starting to weigh on people. when i went through the fed's beig ebook it was surprising how many contacts that were talking to fed people in preparation for that book cited fiscal policy uncertainty as a reason for not hiring or investing. >> there are these growing fears the u.s. economy will have to face this fiscal cliff in january. this of course in reference to when tax hikes and automatic spending cuts take effect if congress doesn't reach a new budget agreement. it's made many companies hold

off on expansion and hiring. >> it's really not stopping us considerably from hiring or expanding, but i'm probably not going to make that next investment until i know what that's going to be and i'll probably look at what are 2013 performance is likely to be and be more cautious than optimistic, not on earnings as much as deployment of capital. >> i think we're on a collision course with time if the leadership in washington doesn't address the fiscal issues, and, in fact the consumer confidence that's being fractured across the country. >> a lot of concern there from business leaders and we heard greg talking about it. tuning the fiscal live is a significant factor here in the u.s. slow down? >> absolutely. what we're looking at is a u.s. economy and a world economy where the private-sector cannot carry the baton itself.

t as emerging markets slow down the real question is the united states heading into a double dip as we go over that fiscal cliff. >> what's the likelihood? >> the likelihood is high. not a probability yet. we'll get some form of qe3 soon. probability is rising. >> do you think the probability is high. >> i think we will get qe3 soon. if it's not next week it will be in september. you know, bernanke's remarks both out of the june press conference and his testimony a few days ago suggest to me the default opening is to move unless things get better. they have gdp growth tracking well below their last forecast. no improvement in unemployment expect this year. inflation numbers are still, are projected to be below their 2% target. in fact that's another thing

i'll be looking at in this morning's report. what did the gdp deplater did. what did the courtroom price index do. especially with the gasoline prices coming down in the last few months. >> against that backdrop the u.s. presidential race is entering its final sprint. sun will mark 100 days until the election. with the economy front and center, president obama and mitt romney continue to run neck and neck in the polls. cnbc chief washington correspondent john harwood has been tracking over what the candidates hope to achieve. >> the u.s. presidential election is 100 days away and no closer to knowing the outcome than we were weeks ago. spleebding republican challenger mitt romney 49% to 43%. that's precisely the same finding we saw in april as romney was wrapping up the republican nomination. the strategic battle lines are

clearly drawn. on issues president obama's running as a champion of economic fairness will tax the rich in order to help the middle class and protect medicare. romney's executive at bain capital has sent jobs overseas. romney casts himself as someone who would create new jobs and bring down the deficit without raising taxes. he said president obama's lack of private-sector experience makes him incompetent at accelerating economic growth. on personal issues president obama seeks to exploit the fact most americans like him and don't know much about romney. on geography, both sides are focused on the same group of a dozen or fewer battleground states. the candidates only have a couple of major openings to move the polls before election day. one is romney's selection of a vice president selection running mate and next is republican convention in tampa followed by the democratic convention in

charlotte. the october stretch run will be defined by the three presidential debates. with the number of undecided voters shrinking, economic growth and job creation may tip the balance. in washington, john harwood, cnbc. >> quick question back out to greg from "the economist." from an investors point of view what's going to be the impact in terms of economic performance if, for example, mitt romney manages to take the election? >> i think the first thing that investors will be focused on is exactly what does happen to the fiscal cliff because remember the election is decided in the first week of november. the cliff happens on december 31. and then the new president isn't sworn in until the end of january. if you have the cliff happening while you have a lame duck obama in office, you know what's his incentive to extend all those tax cuts he's sworn over and over again he'll never do, what's his incentive to delay the sequester when the whole point on putting that thing in place was to for the republicans

to compromise. you flip back to the republicans, they got the white house, they got the house of representatives, odds are in a wave election they will have a senate. what's their incentive to compromise with obama. in that kind of situation you have a lot of speculation for a few months all that fiscal tightening will be allowed to happen. it will depend a lot on the extent to which obama and his transition team and the republican leadership can reassure the markets that they have a plan very quickly after inauguration to retroactively undo any of that tightening that happens. >> greg, stick around. more from you. we got more from german government spokesman from the finance ministry. issued a statement regarding the situation. we'll do all in its power to do whatever is that. more importantly they are saying that they have received no application from spain for the

esf to buy bonds and they have said the discussion about esf bond buying was purely splaektive. >> the treaty doesn't envision a license. coming up we'll head out the madrid as they comments throw a spin on markets this morning. stay with us. [ female announcer ] e-trade was founded on the simple belief that bringing you better technology helps make you a better investor. with our revolutionary e-trade 360 dashboard you see exactly where your money is and what it's doing live. our e-trade pro platform offers powerful functionality that's still so usable you'll actually use it. and our mobile apps are the ultimate in wherever whenever investing. no matter what kind of investor you are, you'll find the technology to help you become a better one at e-trade. the heart of every innovation. wow. that feels really good! and now, sleep number

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welcome back. the olympic flame will be lit at the opening ceremonies in less than 12 hours time and that made us ask who should light the torch and who would you pick if you had your way? brian tweets in to say he thinks the surprise olympic flame lighter will be bob diamond. another says i'm hoping for keith richards to light the torch but he wouldn't make it up the stairs. i fwoeg differ by the way. if you want to join the conversation here get in touch with us. send us an e-mail to worldwide@cnbc.com or tweet us at cnbcwex.com. you can reach us directly at kelly evans or ross westgate. ross? >> just remind you if you just ed us these are the headlines. spanish unemployment hit the highest level since it left dictatorship. barclays have better than

expected results. facebook shares slide on continued worries about the company's growth prospects. unemployment in spain has hit the highest level since current records began 36 years ago. jobless rate hit 24.6%. stephane pedrazzi is in madrid. can you tell us about the reaction there. i guess the figures were a touch better than expected. >> reporter: but still there's some very negative figures for the spanish economy. direct consequence of the recession, the country slipped into recession for the second time in two years and widely expected to remain under recission until the end of next year. economists believe that's the unemployment rate in spain will don't rise quarter after quarter to go over 26%. it's the average forecast. also the direct consequence of

the recent austerity measures, if you remember, the government made more flexible, the labor market more flexible making it easier for companies to get rid of some employees. the government itself knew it would increase unemployment rates but believed it absolutely is necessary to have growth in spain. >> stephane, thank you very much. >> the recent measures taken by spain will support the country's autonomous regions but challenges remain. caroline is in the region of murcia. how big is their challenge? >> it's huge. murcia's contribution to overall spanish gdp is very small. unlike catalonia it's not a make-or-break region for the spanish economy. murcia has no access to capital markets it depends on the treasury to refinance its debt and that's why no surprise

really its president has recent leadership indicated that its r newly created liquidity fund to cover its financing needs for the second half the year. they stand at around 530 million euros. its debt level last year was at 2.8 million euros and that level not very small but on a relative basis this is a massive debt pile. >> other news out this hurricane warning which is having a market impact the bund is back, giving a banking license to the eurozone bailout fund would represent a de facto financing of government and a fatal move and against eu rules and also says it would equal monetary financing this morning and bond buys by the ecb would violate the mandate. >> greg is still with us. they join us on a morning where ross we're getting flashes the european bailout fund and ecb are providing coordinated action in spain and italy. this is the newspaper citing

sources. greg out to you. a lot of fast-moving events in the last 24 hours. what's the message do you think to glean from all of this >> draghi's speech we may look back and see that as a game chaerng. we were looking at the move august which was pretty distressing when you think about the policymakers go to the beach and we wouldn't learn until september whether the german constitutional court would allow the esm to go forward. as you guys have been pointing out, they haven't acted in the last three or four months. what i thought was interesting about that speech yesterday was the reasons he sort of cited as rationale for why the ecb might intervene. there was the usual statement we need to sort of like deal with bond markets so our monetary policy works. then he added an intrigue line. also if investors have this fear of convertibility which is a euphemism for euro exit.

when i heard that i said he's basically saying there's a bunch of investors who think wrongly that the euro is about to fall apart. that's an excuse for us to act. >> well, i think that's probably correct. i think the question is what is going to be the quality and quantity of the action. you know, i think it's true that it has changed the game in the sense that it's arrested the collapse but i don't think anything fundamental has been changed. >> there's two things happening this morning. kelly just talking about the newspaper saying the ecf could buy italian debt. this report about the ecb and the bailout funds working together. the bund is coming out and saying no banking license for the rescue funds literally at the same time, only limited government bund buys. it would violate the mandate. we're getting two separate reports. they are not quite opposite, but are we developing a big split in

the ecb. >> reconciling this amounts to there's some bond buying with available resource in the esff and when the time comes from the esm. it will prevent the whole thing from falling patient but won't take us back from the edge of the crisis because they are not big enough to solve the problem. >> thank you both very much for these discussions. ross we're seeing the italian ten year bond back below that 6% level. coming up we'll follow these moves. facebook's growth is slowing. we'll see just what to take away from their first earnings report next. stay with us.

facebook swung to a net loss in the second quarter, its first as a public company, largely due to higher costs from employee compensation. excluding earnings matched analysts forecast. for more we're joined by nicholas. stock down to its lowest level since they floated. they are under intense pressure to deliver results and to say what they will do in the mobile space. what can they do in that? >> in mobile space they are working on something called sponsor stories, an ad you see in the news feed, something they are very excited about. can't offer a lot of detail. that's the problem with facebook right now is that they are supposed to be this huge growth story but their growth is not very impressive. they are getting to the level where google a company that's been public for eight years now and has $40 billion revenues is

starting to grow as fast as facebook and that's not acceptable and that's why you're seeing what's happening. >> is the growth rate at facebook materially different from what they said it would be before they listed? >> no, it's not different. look, in the wall street analysts came out with estimates that were basically what facebook told them to say. so, no. there is this very big difference between what people thought would happen with facebook and what's happening now. we people thought it would be the next google and that's looking like a laughable position at this point unless something like sponsored stories can take off. >> got a price drop. nothing materially changed in the business. it got a price drop. >> the price is wrong. actually looking at -- one thing to think about. facebook stopped growing in europe because of the economy and listening to you guys talking about it, going forward if the u.s. economy wilts then

facebook will go. it showed that already in europe. >> ross people taking a look at that but a difficult to look through a lot of the other market action. we're following these headlines. >> just remind you before we wrap up the score box this morning we have the bundesbank saying we can't give the esm a banking license, can't get bropd bund buying. it's against the rules. >> then the ecb and european bailout fund are preparing to buy spain and italy ace debt. market reaction have moved from positive to negative and now positive again. >> it doesn't contradict the bund. a lot of mixed messages coming out. we got say good-bye. "squawk box" will pick it up right now for you. >> pass the torch. >> we'll pass the torch.

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good morning. today's top stories we got a market moving economic stat and it's going to be released on our watch. you're going to get a first read on second quarter gdp and then we got earnings central, facebook unveiling quarterly numbers for first time as a public company and it's bad news. the results were anything but liked by investors. get it? it's friday, july 27th, 2012 and "squawk" begins right now. ♪ good morning, everybody. happy friday and welcome to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin and steve liesman. joe is off this week. our news