you're watching today's "worldwide exchange." i'm ross westgate. mining stocks in europe, the biggest crush in japan, the nikkei down more than 7%, its biggest drop in more than two years after the ten-year jgb hit the 1% threshold. the hsbc flash pmi hits a

low back into contraction. also, we'll have an exclusive interview with ben broadbent in an hour, just 30 minutes after the latest breakout of the uk gdp. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> all right. it's connect to your global world. plenty to get through today. we kick off with fresh data out of the eurozone. the eurozone may flash manufacturing pmi, 47.7, a smidgen higher than the consensus reuters poll of 47.2. it was 46.9 in april, sko still contracting, but a bit better than we might have thought. the flash composite job, 47.3. that is down at a three-month low. nevertheless, u.s. sterling just

a little bit firmer. joining us is royal dawson. market, the firm that helped compile that number. it's slightly better than we thought. still in contraction. what's the key take away here? >> i think the key take away is that we're still in a downturn. this is uging that the eurozone economy, that session will extend into a seventh consessive quarter, one of its longest since the euro came into being. manufacturing services, both sectors are contracting, albeit at slow rates. what we saw is germany is still very much around the stagnation mark, france very weak. the rate of contraction, that would still be a drive on the gdp numbers in q2. >> how much is france and what that will do to the whole view? >> it isn't very much a concern here. it's the second largest economy in the eurozone.

all these economies point to the eurozone. france is obviously one of the big economies, therefore, would be a big demand of the group. especially the weaker periphery. now, if france is in recession, it's not going to play that role which puts a lot of pressure on germany. >> that's the latest bit of data out here. elsewhere around the globe, everyone has been looking at the extraordinary performance of the nikkei today, extraordinary for the wrong reasons. carrie will join us in just a second. they go down 7% finishing on the session low. kaori, just explain what's going on in this session today and why, more importantly. . >> hello, ross. this can only be characterized as panic selling. there were a number of factors that started pushing down the equity markets. there was, of course, concern about the comments from fed chief bernanke. there was a concern that maybe

the governor of the bank of japan didn't say more to lay some of the concerns by market players about the recent volatility in the jgb market. and things started to get really rocky when the ten-year jgb yield hit 1% and that hasn't happened in one year. the government is partially true, explaining this as a correction to the recent trends we had in the equity market. but you have to take into effect what the meaning of a 1% jgb yield. that means that the yield has tripled in this month alone, and when you consider that banks, particularly some of the regional banks that haven't felt the impact of abe-nomics at all are holding 40 trillion yen worth of japanese paper continuing decline in japanese bond prices translates into huge paper issues for many of these corporations who have not been able to make money on the

traditional banking model which is lend to go smaller enterprises because they haven't felt the impact of the recovery. as a result, these major banks went into free fall in the afternoon session, as you can see there. when you take a look at some of the smaller regional banks, then you have the ripple effect on some of the property plays that have been the derlgs of this uptrend and then towards the end of the session, you had creative volume spiking and at the end of the day, you had record trading volume. in a nutshell, it was a panicking move that set into the equity markets in the few hours ahead of the close. >> all right, kaori, thanks for that for now. plenty more to come from tokyo. the selling has fallen through here to europe. the dow jones 6 of 00 just ten stocks in positive territory at the moment. as far as the bourses are concerned, the ftse 100 started the day just 90 points away from its all-time high. right now, i'm afraid it's moved

further away from that. let's show you where we stand over here. right. okay. we split them around. 1.68% is where we stand at the moment. it hasn't quite worked, either. there we go. 11.68%. cac 40 down 2%. the ftse mib down 2%, as well. we talked about the banks being sold heavy. utility, food and beverages down heavily. that's partly due to the data out of china. we'll come on to that. bank resources certainly impacted by the weaker than expected manufacturing pmi out of china and banks down for those reasons and financial service that's kaori was just talking about in japan, as well. brent is down, not a lot, about 1% at the moment. 101.53. gold slidely firmer, but it is 1377, a long way. copper down, as well. that's the impact of the china

pmi. bond rates, we talked about this, as well. u.s. treasury yield, 1.98%. this move was started back up in treasury yield and caused a back up in jgb. 6.9% at one stage early today overnight. you see yields coming back down as we got into a safety made, as well. ten-year jgb is 0.86% after striking over the 1% level. we'll talk about that a little bit later. on the currency markets, show you where we stand. dollar index initially after the bernanke comments mended the dollar index got bid up to a three-year high. dollar/yen, 103.74. but you can see the whipsaw that we've had, 101.85 is where we stand at the moment. aussie, though, continuing to be sold off, 96.27. we've been down to near 12-month lows on aussie/dollar, .9608.

sterling down, as well. 1.5053. euro/dollar, 1.2865. pretty contained on that. the rest of that asian session, chloe joins us out of singapore. >> hey, ross. certainly very volatile ride that we had in the asian session. and much of it really began as kaori highlighted to us as jgb futures were briefly suspended. ultimately, the damage report is very clear. china added another negative layer to the story at a time when a lot of investors were fretting over when does this happen? some were saying it could happen in the mid-june fed meetings. as you can see, the flash hsbc china pmi not looking good, the fact that the number went so low, the 50 threshold for the first time in seven months. it was a seven-month low. the new orders of index, that's falling to an eight-month low.

credit supply is ample in china, especially at a time when you have weak growth in u.s. the u.s., looking patchy. there you go. especially as the nikkei, a lot of people exited out of the japanese equity market and we saw huge gyrations in the japanese bond market. fund managers were saying the telling signs were there especially as we saw fund flows coming out of japanese into south korean bonds, as well. overall, this is the damage report that you see, especially with the s&p/asx 200 closing down 2%. the kospi seems to be one of the better performers off more than 1.2%. take a look at china. the shanghai composite for much of the day was hanging on to a smaller gain. ultimately, succumb to selling pressure. the hang seng off 275%. the big issue as we look ahead is that yesterday we had a $1 billion ipo. today we had another ipo in south hong kong's largest 1.8

billion sinopec engineering and that didn't go too well, as well. glut of supplies coming, a resumption of ipos. ultimately, it looks like it could be a very volatile ride as investors try to contend with what is a fair value of government bonds especially when the u.s. is crossing 2%? >> that's the discussion we're having on the show. catch you later, chloe. let's remind you what is happening with that hsbc china pmi number. the flash, above 50 for the first time in seven months, now 49.6. hsbc blames weak orders for the dips saying china's domestic demand wasn't strong enough to offset the weakness in external demand. >> if you look at the new orders number, for example, we had the new export orders fall for the second straight month. total new orders fell for the first time within the flash reading. if you focus more on the number

itself, it's just a touch below 50. so while it does ignore a challenging few months, it doesn't mean that we're going to see the economy go into outright contraction necessarily rt fo second quarter. >> and we'll get the official may pmi reading out on june the 1st. robert is still with us. rob, we heard there challenging economy. what does that mean in terms of the numbers? >> well, what we're seeing is we're seeing that number fall slightly below 50. this signals that the china manufacturing sector which is very important to the broader chinese economy, that's probably going to have a weaker growth outcome in q2 and a weaker than expected q1 outlook. what does the global know needs? the global economy needs the u.s. to hold up and china to maintain its engine. >> and domestic demand, everyone

has been looking, how can we get more domestic demand? >> it's suggesting the domestic market is weak and this has to do with the fact that the china economy is slowing. we're seeing that export order very weak, as well. this is a knock on effect from slower global economic growth. that has an effect on the global domestic economic picture. they're expecting companies to slow further, declining levels which hits the domestic economy, as well, and job lows which hits consumer demand, as well. >> one more question with you. let's remind you what's happening in global markets, it's followed a volatile session on wall street with the dow s&p 500 posting their biggest drop in three weeks after ben bernanke's testimony to u.s. lawmakers and the release of meetings of the fomc's last meeting. steve liesman has more details. >> it was a day of confusing comments from the central bank and investor concluded there

would be less help for the economy than it previously thought. the day began with comments from federal reserve chairman ben bernanke. >> a pre matumature tightingen monetary policy could lead interest rates to rise temporarily, it could carry a substantial risk of slowing the economic recovery and causing inflation to fall further. >> but later, bernanke responded to a question saying, well, on second thought, the fed could change policy and pretty soon. >> we are trying to make an assessment of whether or not we have seen real and sustainable progress in the labor market outlook and this is a judgment that the committee will have to make. if we seek continued improvement and we have confidence that that is going to be sustained, then we could -- in the next few meetings, we could take a step down in our pace of purchases. again, if we do that, it would not mean that we are automatically aiming towards a complete wind down, rather, we

would be looking beyond that to see how the economy evolves. >> if that wasn't enough, later in the day, the fed released the minutes of its may meeting saying a lot of the members of its rate setting committee believe the fed should reduce the amount of bonds being bought as soon as june even though there is no agreement on if that should happen. ultimately, the consensus seems to be that the fed is going to take its foot off the accelerator sooner than believed as long as the u.s. economy produces job growth. back to you guys. >> all right. that was steve. meanwhile, james bullard will be here in our london studios for a whole two hours starting at 8:00 cet tomorrow. get your questions in now. join the debate and do it on twitter at cnbc world. rob, do you agree with that final wrap from steve, that the consensus is the fed is going to move -- appears that it might move earlier than the end of the year? >> well, one of the things which the fed has been very good about

during this economic crisis, so on and so forth, has been that they're clearly signaling what their intentions are. to built out a message talking about the potential of reducing these asset pitches suggests maybe they are seeing if they can do that and those numbers consider that, as well. so, yeah, it is looking likely. >> rob, thanks very much indeed for that. we'll take a quick break. before we go, we want to know, qe, friend or foe? would i in. e-mail us. worldwide@cnbc.com, tweet @cnbcwex or direct to me, az rosswestgate.

trillion bank ers around the world weigh qe. we'll be joined by ben broadbent about why he's holding steady on asset purchases. also in paris, the imf chief christine legarde has a day in court facing allegations she misused public funds as finance french minister. and the ceo of netjet will join us from zurich at 111:30

cet. plus, africa is on the rise. now is the time to invest in the continent according to david matta. he'll join us at 10:45. clearly, all the focus is really on the global asset prices. the ftse, after being 90 points away from the all-time high down 1.7%. 2.4% losses for the xetra dax which is pulling away from its record high. the cac 40 down 2.2% and more for the ftse mib all following a 7.3% drop on the nikkei today. joining us with his thoughts, andrew sutherland, director of asian sales trading at kim ang security. andrew, thanks for joining us. is this all spooked by jgb yields going above 1% and then the correlation between the yen and the nikkei? >> i think a lot of it was that and a lot of it came from

overnight with the reversal that we saw in the u.s. markets. you know, we had bernanke before congress and a lot of what he had was very encouraging to the markets. and then we saw the minutes from the previous fed meeting, which really underlined that not everything was quite such plain sailing at the fomc. there is dissession rising there about tapering, when it should take effect, and i think that probably started worrying investors. and then we saw the reversal again in japan today. >> it's a huge reversal. so what's happening? what's been the big squeeze? >> well, i think you have to take into account that, you know, japan even after a 7% reversal like this that we've seen today is still up nearly 40% this year and probably up nearly 100% year on year. so it's really probably just the froth of the top of the market. but it just goes to show how the fast money reacts quickly. people that have run, you know, with the japan rise just taking a little bit off the top here.

and waiting to see whether the boj is really going to step in and try and calm the bond deals. it's very difficult at this stage to see exactly what they're going to do because they didn't really mention it in their statement. they just said they were going to monitor it and the monitoring comment came in the press conference afterwards. that's really what's concerning people in the short-term? >> how did you calm? how would you calm bond yields? because they're buying even more of them, right? i mean, they're becoming more of the market. the other thing is, actually, if you want to get rid of deflation and reflat the economy, bond yields need to rise, anyway. >> well, this is the big problem and this is really why we saw such a sell-off in the banks. realistically, are they going to continue buying into this whole scheme that we're seeing? and that is the key thing

because, you know, now the government is the only game in town. the banks having got an ax to play in it which is something historically last year's results was one of their key drivers of profit. so it's going to be very difficult. >> if you deepen the yield curve, normally it's quite about for the banks, but is that swamped by the fact the hit they take on their holdings? >> it's also the fact that this historically for the japanese banks has been a very good earner for them. the rest of their lenning policy hasn't been that effective. most of these japanese companies are holding cash. they don't need to borrow money from the banks 37 so that's another avenue for the banks that is not going to go well. we also saw the property developers which have recently run very well taking a hit. again, it's difficult to see w

how -- you know, whether japan is going to continue buying into the housing market with these concerns hanging over the market. it's almost like to date a lot of what we've seen on the abe-nomics has been very much about confidence and words. now we need to actually see, you know, proper policy coming into force that people can really -- you know, the fundamentals that people can hang their hands on. >> give us an example. what would that be? >> well, the problem i think is the fact that it said it's going to print all this money. it's trying to inflate the whole economy there. but effectively, a large part of it is favors. they're going to need to see better yields going forward in order to supplement their income. these are people that are 60, 70 years old. it's difficult, really, to see what the central bank is going to do and that's really what the

market's really asking is for them to step tlup and tell us how to tell us how he's going to fashion this in the short to medium term. >> andrew, thanks for joining us, andrew sullivan joining us from hong kong. meanwhile, in the uk, a major police operation is under way after a man was hacked to death on the streets of london in a suspected terror attack. two men were shot at the scene have been arrested in connection with the murder. the bbc says senior government officials have confirmed that the victim was a member of the armed forces. footage has emerged of one of the suspects hold ago machete and knife and making political statements. this clip contains graphic statements. >> these people will never be safe. remove your governments. they don't care about you. they will get caught in the streets. when we start busting our guns, not the average -- like you. so get rid of them. tell them to bringous streets

back so we can -- in peace. >> joining us now from east london, nbc's annabel roberts. annabel, what's happening today? >> good morning. those two suspects spend the night under armed guard at hospitals. here at the scene, there is a lot of activity going on behind me. you can see the tent where the main forensics are centered. a number of police have been walking up to the site here the morning. of course, the main question facing investigators today is whether or not these two were acting alone. the sense of shock in this community is great. i think the brazen nature of this attack, two men killed this man in broad daylight at a busy road intersection behind me that is, of course, currently closed. they then waited 20 minutes or so until police arrived and during that time, they were

talking to bystanders that were filming this. the big concern is this attack could trigger retaliation effects up and down the community. this community here is a very mixed community. obviously, similar communities up and down the country, there's a concern that there could be violence. here last night in woolwich, there was a demonstration, but nothing of too much trouble. >> annabel, thank you for that. still to come on today's program, we have the latest breakdown in gdp numbers due to confirm stronger than expected growth for the first quarter. we'll be hearing more about what should happen with policy from ben broadbent. he see on the monetary policy of the bank of dymond. he has a vote. a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel.

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the headlines from around the globe. a sea of equities amid fears the fed will pull the plug on qe sooner than expected. mining stock tess worst hit in europe. the nikkei down more than 7%, its biggest drop in more than two years after the ten-year jgb yields fight through temporarily the 1% threshold. china not helping, either. hsbc flash pmi hits a

seven-month low falling orders forcing backtrack into contraction. and we'll talk to some of the uk, as well. we'll have an scloout exclusive interview with ben broadbent. the latest breakdown of gdp is due now. we're going to get the breakdown of gdp. up 3% on the board. let's bring you that absolutely now. and white i wait for it to happen, first quarter gdp up 3% unchanged from the first estimate on the year. up 3.6 of%, unchanged, as well. we get a bit of a breakdown. the q1 household expenditure, up 0.1% on the quarter. business investment fell 0.4% on the quarter.

q1 employee compensation up 1.2%. construction was revised to minus 2.4% quarter on quarter firm. minus 2.5, a slight tick up. and the services unrevised at plus 0.6%. melanie sterling just rallying on that after the session lows. melanie baker is a uk economist at morgan stanley and joins us now. i don't know what you make of the breakdown which i've just run through, but where does this take us as we go into the middle part of the year? >> it's a little disappointing, i guess. numbers were weaker than we were expecting. 0.3% on the quarter. it has a good number in the context of 2012. so as we head into the second

quarter, the moment the data looks consistent with small positive growth at the moment. >> yeah, look. we saw the public sector it was a record for april yesterday. retail sales much weaker than expected. retail sales, it's difficult to determine too much from one month's data. >> that's absolutely right. we had a really nice run in the uk of good data. and the data in the last couple, as well as the retail sales, there was disappointment creeping in there. i was really expecting 0.1% growth on the quarter for q2. but at the moment, if you look at the broad data into the pmi, it suggests that perhaps it's becoming a big stronger than that to our forecast currently. perhaps the surprise, as well,

that there were still three members of the bank of england despite the fact that we saw in the inflation report growth better than expected and inflation coming weaker than had been expected, as well. that helps with those easing policy. what do you think the bank is going to do, particularly when mr. carney comes in? >> look, our central case is that they won't do very much at all. we think that the uk will recover for more this year, the second half. there's a bit of a pick up in growth. in that context, the banks aren't easing now, we don't see them easing in the second half, either. i think when carney comes in, we don't see them there for the majority for qe. we may see changes something on the communication side. >> melanie, i'm got ben broadbent joining me on the set in about 30 minutes. what would you want to know from him? i'm going to get you to do my job for me.

what would you want to know from him above all else? >> i think what does he see the main risks and particularly how he sees the exit from the monetary policy easing. >> good. i'll ask him that. and i'll frame it as your question, as well. thanks very much for that, melanie baker uk economist at morgan stanley. very handy. very handy. we have that exclusive interview with ben broadbent. he's played down the significance of the return to growth. more reaction from him at 11:00 cet, 10:00 london time. dollar/yen, extraordinary swings during the sector on just today. we got up to a fresh 4 1/2 year high of 103.74. you can now see that we're at 1100.92, down over 2% during the session.

so the initial reaction post bernanke comments was the dollar even higher. with saw europe spiking even higher. so a pretty big move on that. we've also had more comments coming out now from officials in japan, as well. the finance minister coming out and saying it's important to carefully watch the financial market movement and we've got the ministry finance down. the bank of japan is making it responsive to the market, maintaining is the most important to stabilize bond yields. he's not going to comment now on those daily market movement. no surprise, though, that european markets today after that nikkei and what's going on elsewhere are down heavily. the ftse 100 up nearly 2.6% losses for the german and french markets. the ftse mib down 2.8%. take a look at other bond

yields. we saw treasury is kick around there at 1.97%. as you might expect, bond yields are coming down a bit. we talked about the dollar/yen, back where we stand at the moment. sterling/dollar, firmer post that gdp number and the aussie/dollar has been -- maybe we'll switch into the aussie/dollar for that for later. 9.08. it's down near 12-po lows for the aussie. not helped again by the chinese pmi data as commodity currencies being sold off today. talking about commodities and currencies, africa is often been described as the ultimate frontier market. according to our next guest, though, now is the right time to invest. we'll find out why when we come back.

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goldman sachs is now the most bullish broker on wall street according to a new report. they raved the company's 2013

s&p to 2014% growth. oppenheimer is the second most bullish broker. it has a forecast of 1730 for the s&p 500 this year. economists at citigroup no longer believe greek will leave the eurozone this year or next. he did reiterate there's a high chance greece will exit at some point, but now not in the near future. tomorrow, all eyes will be back on japan, the nikkei, to see how td it spopdz to today's plunge. but the key information coming from a speech from the bank of japan chief on the future of asia in tokyo. and nissan is recalling more than 840,000 globally because of a steering wheel glitch. it includes models of the microcompact car.

no accidents or injuries have been reported as a result of the problem. the carmaker declined to estimate the costs of the callbacks. ford is driving away from the land down under. it's closing two plants in australia and will no longer produce vehicles as of 2016. ford cited currency losses and slacked demand for its cars in australia for reasons behind the move. around 1200 workers will lose their jobs. and the labor shares bucked the down trend in hong kong today after lenovo says its profit nearly doubled. analysts attributed better than expected performance to lenovo's bold deals in the pc sector and its swaray into the smartphone business. hong kong is making its comeback, two deals worth $1 billion each has been completed in the last week.

galaxy securities closed up 6% on its debut. sinopec engineering weaker than 9%. emily chan has this report from hong kong. >> it's a big day here at the hong kong stock exchange with the listing of hong kong's largest ipo sinopec engineering. yesterday, the closure of the hong kong market was closed. this morning, we had two opening ceremonies from sinopec engineering and dow securities. the performance of both of these stocks will be closely watched potentially for ary viefl of hong kong's ipo market. prior to these two being ranked number 13 globally. just over $1 billion. you add to that 1.1 billion from yesterday and 1.8 billion from today and that will psh us up to number three behind the u.s. and brazil. galaxy securities saying they

were satisfied with the market fulfillment and they're positive on the china market, which should bode well for their business. and at sinopec engineering, they're expecting to see stable growth in the next three to five years. that is the latest here at the stock exchange. back to you. >> meanwhile, hsbc's latest flash pmi slipped below the level of 50 for the first time in seven months. it came in at 49.6 for may. the new order subindex fell to its lowest level since september, which suggests weaker external demand for china, as well. we might get a clearer indication when the official pmi come out on june 1st. joining us for more, alistair thorton. he's on the phone from beijing. alistair, good to see you. thanks so much indeed for joining us. how much do you think would this data shake chinese policymakers? they've been pretty sanguine about the slowdown we've had.

>> well, yeah, i think the broad rhetoric coming out of beijing at the moment is quite rightly a focus on reform rather than on stimulus action. so we saw that the first quarter numbers are disappointing. i think that weakness has extended into this pmi reading. we're expecting going forward for that weakness to continue. we're not expecting a grand stimulus response and we've long knowing this. we always knew the recovery was going to be weak, very fragile, and i think that's exactly what we've got. >> will they ease off on reigning in credit growth sthp. >> it's a bit of a dilemma. you have total social financing jumping up 60% in the first quarter, but only being able to get sort is r sort of 7%, 8% gdp growth. there's a problem there in the credit transmission channel.

there's a lot of arguments coming out saying there's probably going to be a lag in activity. this pmi today suggests that that's not the case. so the problem there from a policy perspective is is you start to reign back on credit issue, you start to have an impact on the downside of the gdp growth. i think what is meaning is while this isn't a giant house of cards that's going to collapse this year, we don't see any sort of financial implosion. something is clearly wrong in the growth model and that needs to change and that means reform, reform, reform. >> and the then is, it's a slower burn. how do they reform that while they try and implement that? >> as you know, when the economy slows, it has an impact on all the sectors. now, if one of the sort of

raises light over the fight despite the slowdown. labor markets remain fairly tight. part of the reason behind that is this long-term demographic shift. we hit the so-called lowest turning point where there's a drawdown in the amount of surplus labor that china has. that's obviously an upward pressure on wages. but nevertheless, over the last couple of months today and some of the subindexes, they're starting to have an impact on the employment situation and that will obviously be fist and foremost in the minds of the government going forward. sfwh what's your forecast on gdp inspect. >> we're currently on 1.7 for the year. >> we're fairly confident that with the amount of credit in the economy and the government's focus on the large scale

infrastructure projects, that they'll be able to hit 7.5. >> all right. alistair, thanks for that. alistair thorton joining us from beijing. he works for ihs global insight. we have a spanish auction result. they've sold 1.58 million euros in the three-year, 1.4 million euros in the five year and 1 is.52 billion in the 2026. the yield for the three year 2.44, a slight tick up from the last auction, 3% for the last auction and 4.5% for the 2026. again, a tick up from the previous auction, as well. so yields at auction for spain just now ticking up. we've had a whole year of them coming in lower. we're now starting to see those auction yields tick higher. if you've got any thoughts or

comments about anything on today's show, there's a lot going on, e-mail us worldwide@cnbc.com. imf chief christine legarde has just arrived in paris for the questioning over misuse of funds while running for office. it stems from 2007 involving a business tycoon through arbitration. stephane is outside and he joins us now. stephane, just remind us of the details of this and what sort of questioning madam lagarde will receive. >> first of all, ross, we've just been told that there won't be any lunch break for christine legarde. she's being questioned in the building behind me at the second floor of this building. basically, prosecutors would like to know why christine should not be -- with a special

businessman when she was finance minister. they also want to know why she does not appear against this arbitration decision nearly $500 million in 2008. whether she took the position herz or if she was asked to do so by the former prime minister. after this decision today, we will know if christine legarde will be placed under formal investigation which will pave the way for a later trial. for christine legarde, the acquisitions could be heavy and she could face up to 150,000 euros in fine and up to ten years in jail. for the first states, also, it could be abdomen embarrassment. a rm toer head of the imf quit in 2011 over a sex assault scandal. so if christine legarde would have to step down from the imf

position, that would be embarrassing for her. in the short-term, it's an uncomfortable situation for the government because the finance minister pierre must be concerned to a newspaper that christine legarde still has the support from the french government for the job at the imf, but in the meantime, the government is considering to appeal this arbitration process that was set by christine legarde. so in the short-term, it's an uncomfortable situation. >> the facts, as you present, they suggest nothing too untoward is going to occur. they're going to question about why it was referred and the way it was. how long is this question or this trial going to go on for, this investigation? >> for the time being, the hearing could last until late tonight or perhaps until

tomorrow. if christine legarde is placed under formal investigation, then we would have a trial over the next 12 months. so potentially christine legarde is not facing any risks to her job at the imf until next year. regarding this battle, it's been going on for a long time. he's akres cuesing credit of defrauding him. then resold it for a much higher price. that's the basic of that under the french stake. that's the reason why christine legarde chooses arbitration. this is what she told to the arbitration xt last year and what she's doing to explain

again to the prosecutors today here in paris. >> thanks for that. meanwhile, francois hollande and angela merkel are getting together today as they try to unseat merkel in september elections. hollande will deliver a speech around 12 cet. he will leave early to meet with the dutch prime minister. >> you can see this morning, european equity markets are down heavily following the sell on the nikkei. and a big swing last night in the ftse 100. the ftse 100 started the day 90 points away from its all-time high down 1.8%. xetra dax down 2.6%, 2.4% loss for cac 40. the ftse mib down 2.7%.

as far as bond yields, 1.98% at the moment on u.s. ten-year jgb now yielding 0.8%. gilt is lower, as well, 1.85%. currency markets, the swingest swing, dollar/yen, up to a fresh 4 1/2 year high. it's been a big swing down now 2% on the day. euro/dollar has been pretty steady. saucy is the other one worth looking at. 96.59. down near fresh 12-month lows against the greenback. hewlett packard second quarter profits down 38%. revenues fell 10% shy of estimates on declines in all its businesses except printers. personal systems, which include pcs are down 20%. hp management to cut costs and hold the line on pricing, but

the ceo meg whitman is cautious on the global economy. she thinks europe is a challenge and china appears to be slowing down, as well. hp is projecting full quarter and full year earnings above analyst forecasts. and shares did jump after hours 13%. they're up 95.%. jpmorgan is redeploying hundreds of workers to help the bank resolve its regulatory issues. "the wall street journal" says the number of people devoted to that task is expected to double by year-end. >> a new oversight and control group will be dealing with regulatory issues.

and house of representatives has passed a bill declaring a presidential permit isn't needed to approve the nebraska legacy, the controversial keystone oil pipeline. it would hook up oil transporting around 830,000 barrels a day. it needs presidential approval because it crosses a border. that decision has been pending with the obama administration since 20308. the bill is likely to face failure in the senate and president obama has promised a veto. a reuters poll will suggest rates will remain unchanged, but a rate cut could come later in the year. the rand falling to a four-year low ahead of further labor

unrest in the mining sector. the london listed asset firm faces earnings up 18%. it did hit results in sterling terms. the group's ceo said earlier he was confident about investment flow. >> we believe that it should be sustained and we believe we are penetrating our markets. a lot of cross collaboration across our organization which we've been working very hard on. so we believe that we should still be able to see good net inflows. meanwhile, on other multi national corporations continue to step up investment across the continent. the ceo was optimistic about growth potential relative to the rest of the world. >> the major portion of our operating business is in emerging markets and we've seen very strong growth, for example, in africa or latin america. in the developed markets, such

as europe and the united states, we have, in fact, managed to grow at the end of our operating profit. so we are growing in those markets, simply not at the pace that we have in our emerging market operations. still to come, the second hour of "worldwide exchange." we'll be joined by the bank of england policymaker ben broadbent. he's seeing playing down the significance of the first quarter. he'll be joining us for an exclusive interview. this as we have a sea of red for global equities today. the nikkei down over 7%. wild swings on bond and currency markets, as well. plenty to talk about in the next hour. we'll be back in just a few moments. [ male announcer ] what?! investors could lose tens of thousands of dollars in hidden fees on their 401(k)s?! go to e-trade and roll over your old 401(k)s to a new e-trade retirement account. none of them charge annual fees and all of them offer low cost investments.

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you're watching "worldwide exchange." nikkei is down nor than 7%, its biggest drop in more than two years. jgb yields spiking through the 1% threshold. china is not helping, either. the hsbc flash pmi hits a seven-month low with falling

orders. and the private sector slumps in europe, but weakness in manufacturing suggests manufacturing will remain. but coming up in a few moments, we'll be joined by ben broadbent. he'll join me on set after the latest gdp confirms a return to growth in the first quarter. all right. if you've just joined us stateside, a very good morning to you. we're facing a volatile day here for global asset prices. we saw a softer close after a big swing for u.s. equity markets last night. we were up one point in the dow calling down 80. right now, futures are suggesting we're calling about a hundred point plus loss for the open for the dow at the moment. the nasdaq is currently calling 30 points lower.

the s&p 500 currently calling down 18 points at the open. show you where we stand with the ftse cnbc global 300, off nearly a percent at the moment. the ftse, down nearly 2% as you can see we're down 2%, nearly 3% lower for the xetra dax. the cac 40 down 2.5%. the ftse mib down 2.8%, as well. take a look at the sectors. you can see nothing in positive territory. banks off 3%. the sharp high yields in japan saw a big sell-off for japanese banks. basic resources down 3.3%. chinese manufacturing pmi contracting again as we've seen a sell-off in basic resources, also impacted by that the biggest seller down 4.3%. a quick look at commodity markets, as well, brent and

nymex both down, 1.4% for nymex. 1.25% for brent. dollar/yen has seen the biggest swing on the currency market. dollar/yen, we got to not long after we heard from mr. bernanke, up to 103.74. now down to 101.15. fwhooefb a 2% fall this morning for dollar/yen. and weir tracking lower. the saucy/dollar is being impacted by the chinese numbers that we're down at a 12-month low at the moment, 0.9665. let's show you where we are with the nikkei, as well. this is where we currently stand after 7% in today's session. that's the really big mover. kaori joins us for more in tokyo now. >> hi, ross. this kind of loss we haven't seen since the days after the march 11th disaster since the

fukushima nuclear reactor explosion. it's been a long time since we've seen this panicked move in the equity market. it was pretty much a free fall throughout the afternoon session ending on the session lows on extremely high trading volume. trading volume had been kicking up, but today it hit a record high. what's problematic about this and there are lots of factors that triggered the sell-off. the comments from fed chief bernanke, then the comments from kuroda who didn't go out of his way to aplay the concerns of the volatility of the jgb market. that may not seem like much, but when you consider that it's risen from 0.3% at the start of the month and when you also consider the fact that japan is heavily indebted and more imminently a problem for japanese government who hold most of the japanese government bonds. and why this is problematic is because they're facing a huge

paper loss at a time when the traditional business model for banks here, that is lend to corporations and get the margins off of that has not been working. there is no sign of a pick up in bank lending, particularly among the regional companies and small and medium sized enterprises are still the bulk of the japanese economy. but on the flip side, when you consider that the market is up 45%, top performer globally this year, when you consider the japanese economy is growing at 3.5% the first three months, the best among the g-8, yes, things were getting sloppy and the economics ministry trying to say he's not going to comment on day-to-day movements, ross. >> and i think the context is the important thing. let's wrap up the rest of the asian session, as well. chloe joins us from singapore for that. chloe. >> ross, very interesting to know how nikkei futures just a short time ago briefly closed

below 14,000. where did we close? 14,483. let me expand a little bit. kuroda is going to speak at a conference tomorrow ahead of a boj meeting in what they're calling a thorough discussion with the jgb market participatants next wednesday. very interesting how we saw these huge moves in the bond market and we continue with commentary that the boj is taking robust moves and the impact that it's had right down through the asia pacific spectrum. they really, really need to say something beyond the fact, beyond the usual rhetoric that we understand what the investment community wants. so very interesting moves today. the china pmi at hsbc's flash pmi number, that didn't help, either. new orders index, that's always been a perennial problem in recent months. the overall flash pmi was at a seven-month low.

another interested tidbit was that we saw a shaky employment picture. that was a bit of a problem. as china continues to move from a labor intensive industry in the services, the fact that china is undergoing a shaky employment picture, output is growing. last month, industrial output gained 9.3%. so the pressure is definitely on the government to do something, to create more services-related jobs especially as there is a lot of social discontent. let me quickly and on this we also -- let me quickly end on this. we also had a report saying that the country may remove the floor for interest rates by next year. that impacted the financials in greater china, especially at a time they're already struggling with thinning net interest major yens. a lot of concerns as we had a very punishing session in the equity markets today. back to you. >> chloe, thanks for that. this comes after a volatile session on wall street with the dow and the s&p 500 faced their biggest drop in three weeks.

and the release of minutes from the fomc's last meeting which suggested a number of members expressed willingness to begin tapering by june if the jobs recovery continues. at the same time, bank of england policymakers remain divided according to the may meeting of minutes which were out yesterday. three policymakers still voted to boost asset purchases by 25 billion pounds. six others voted to hold steady amid signs that the economy is making a smaller, sustained recovery. this is the first quarter gdp out early this morning confirmed the british economy expanded by 0.3% in line with the flash forecasts. still, the central bank has warned growth risks remain and a worsening eurozone crisis could be a potential impediment. joining us on set for the next half hour is ben broadbent. he's one of the members on the bank of england's policy committee. he voted to hold the asset

purchase program and joins us scloout exclusively. before we drill down into sort of bank of england process, there's a lot going on at the moment over the last 24 hours. mr. bernanke, you were saying that his employment data might be a case for tapering sooner. we saw a big spike up in yields in japan on the back of treasury yields movement. and this is despite this central bank buying an awful lot more of the market. what's your take away here? are we seeing the risks of qe in terms of the problems in managing it when we get moved around and people think about exites and what's going on? >> i don't get any cycle when you get to the point where there's a possibility that the easing and monetary policy begins to reverse itself. markets will be uncertain a little bit jittery. i don't think that bernanke said anything that's surprising or

very different from what he said in the past which is that even the economy in the united states can strengthen and if unemployment falls further, then they would reduce the rate at which they're easing monetary policy. so i don't see his remarks as so particularly surprising. japan, of course, has in a different position and is in the midst of what amounts to a big monetary experiment. so i think we could see the volatility in the context of what we saw earlier, an extremely strong rise in equity markets over the course of the last few months. >> it is extraordinary, though, in japan's case, when they started, 0.3% yield on the ten-year and they trickled up to a percent. as the bank decided to buy more of that market, now, part of qe,

you won't be able to move out into other asset classes. you don't necessarily want to upset the apple cart. is that one of the issues? >> possibly. other central banks including ours are less familiar with this policy than they are with conventional short-term interest rates. but we're trying to help growth in the economy and are looking at cost of capital in the private sector firm, households. and i think the equity markets and the private sector bond market are much better indicators of that and that the government bond yield rises, you know with a few basis points central central centrally while at the same time equity markets are rallying.

>> when you look in the uk and if it is fed is considering, what are the risks, what is the path to exit for the bank of england? what are the risks associated with that? >> well, some of the similar risks, but i would essentially get the same as bernanke, which is that it all depends. we're not precommited happily to any particular path. at the moment, the economy is growing a little bit, but it is still below potential. and there is still a case of having extremely easy monetary policy. all bernanke said is we need to slow the rate in which we're purchasing government bonds. so i don't think we're yet in that position. >> have we reached the limit of

conventional/unconventional policy, if i can put it like that? >> yes. >> the bank of england, is what we've done proven that we need to repair impaired credit channels? actually, we need to be more imaginative. >> i don't think qe has suddenly become ineffective. and that's not the reason why the bank and the treasury loss at the lending scheme. but it is the case, as you suggest, that if the banking system is still impaired, then you may want to think of other w ways others, as you say, conventional, unconventional monetary easing and that's what the upper left is trying to do. >> it has been expanded, but do you foresee a vision to that program or -- >> no, no, we're just -- i mean, the --

>> it's still relatively young and we've just extended it, so give it a shot. and we'll have to see how that does, obviously. and it's like qeo like asset purchases, any decision will be taken in the context of the economy. >> and the expectation with a new governor coming in. >> yes. >> and what's your own view at the end of the day, the governor just has one vote on our economy. but what is your own view? there's a lot of expectation about what mr. carney was where he wanted to take policy. >> we'll see. >> have you spoken, too? >> i have spent half an hour talking to him, which was very interesting. but until he actually arrived, i don't think i know any better than you do. >> you had half an hour with him that i haven't had. >> yes, but as you said, this is a committee so i'm not going to -- we'll have to see how it

works out. but i'm very much looking forward to it and we have a formidable reputation and i think it will be very interesting. >> good to have you on. stick around. plenty more to come from ben broadbent. remember, the bank of england's monetary policy committee. the central bank watch continues here at cnbc. we'll be joined by james bullard. he'll be joining european "squawk box" as guest host tomorrow. before we go, we want to know, qe, is it friend or foe? weigh in and e-mail us, worldwide az cnbc.com, @cnbcwex or direct to me, @rosswestgate. we'll take a short break.

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pushed yields up. then we saw weaker chinese pmi data and that added to things, too. and it's also because stocks are up at pretty much fresh record highs up, as well. still with us exclusively, ben broadbent of the bank of england with me in the studio. good to have you. we've seen -- in the recent data. we saw an inflation report, growth forecast are better than we thought. inflation numbers are have come down. do you view that -- there's two ways to view that. one is that, okay, we don't have to do more now. or you could view it as inflation going down. we have more to do. >> ultimately, we target inflation. and we also have a remit that allows us to pay consideration to upward growth.

and we've been in a very different position quite a few years of seeing weak growth even since the end of the recession. and the bottom target, inflation. so what happened in the last few months which allowed us to make the changes you suggest, you point out, is very welcome, obviously. it's only a recent thing and the movements both the upward division in growth forecast and the down division in inflation are relatively small. so i don't think the implications for policy of those particular changes are that big, quite honestly. but you're right and, in fact, both things matter. you know, we've been trading off for the last year precisely that judgment as to, you know, to what extent can you support

growth while inflation is above target? and, you know, you've made the same consideration. as you say, maybe you feed to do a little bit less than you might have thought to support economic activity. on the other hand, you're also less worried about inflation. these are relatively small changes. >> you mentioned the remit at the beginning. because of the weakness in growth and the higher inflation, there's been a lot of talk about, you know, credibility. >> yes. >> of the bank and, actually, should we have a bigger change in remit to reflect what is actually going on, which is clearly, you know, we can meet inflation and would it kill the economy. and how are companies with the credibility inflation when clearly actually the the focus has been on not making things worse in terms of growth? >> well, it's been on both, i would say. it's been on both and that is always a judgment you had to

make. it's been a much harder judgment in recent years because we've had all sorts of production, higher commodity prices, increase in direct taxes that have pushed up inflation and done nothing or indeed pushed down output and there's been a particularly difficult judgment to make. but it's always the same sort of judgment and the revised remit i don't think radically changes the way in which the inflation target was always judged by the mpc pb it makes it clearer than that tradeoff exists and that you are making that judgment. and it is precisely the risk of some dislodging of inflation expectations. set against the possibility that you're entrenching economic weakness 37 that's where the decision has to be made. >> how about eu forecasting now?

>> well, if anything, i'd say i see marginally more upside risk than downside. but the truth is, there's a lot of mass on both sides because these are very important. as we pointed out, the mercy of good as well as bad in continental europe above all. and so you wouldn't expect me to say anything else. >> do you see that as the biggest risk? >> the biggest single risk, yes, i think so. and what has hap happened, again, in the last few months is very welcome in that respect. and i will view the improvement in equity markets and then the price of other risky assets over recent months at least in part as a judgment that some of the

more extreme events that had been priced into markets last summer had in the eyes of the market at least become a little less likely. and that's a good thing. so it would be wrong to imagine they've gone away completely. >> and the latest bout of global activity, we've got money flowing into all sorts of classes, particularly commodity. and it hasn't happened this time. are you comfortable actually that it has been impacted globally on inflation -- not on inflation, but -- >> i think it would be wrong -- look, qe like any other monetary policy has an effect on asset prices. i do not think myself that the bulk that we've seen in the last six to nine months is simply because of monetary policy. and i say that precisely because as you point out, it's affected different asset markets very differently.

it's not been a rising tide for all folks. so even in this country you pointed out that the bond yields have gone up in japan, they haven't really gone down here, except for the peripheral parts of europe. and equity markets have rallied and commodity prices have gone down, and gold particularly. and that looks to me with the slight retraction and reward. and the results of monetary easing. but probably part of it is due to monetary easing. and to that extent, i don't think it's unwelcome, either. it's just the way monetary policy is meant to work. >> how much of an eye do you keep on the pound? and if the pound weakens substantially, there is an inflationary impact on that. i know you're not necessarily

computing it, but, you know, do you want this change depending on the level of sterling? you have an eye on it, so how do you respond to it? >> well, to some degree. the exchange rate is a price in the financial market and the right level can change all sorts of reasons. i don't think there's any single number which you look at and say it goes below this, it's bad or indeed if it goes above it it's bad. and i then dictate where it should be and usually also where it goes. so i don't think there's any single answer to the question is it right now. we've had a hard time rebalancing the economy has been slow and export growth has been slow. >> everybody is trying to do the same. do you think whether there is a -- do you think there is a competitive devaluation process going on? >> no, no, i don't p i think that certainly in this country

in europe, monetary policy is focused on our domestic target. and as i said, there are any number of reasons why policy can change around. sterling fell in my view principally because domestic demand looks like it's going to be weaker in this economy. it's been on average our trading partners. i don't think it's because we've been easing monetary policy. they think it's as a result of monetary factors that sterling fell. and even in japan, if it is the result of monetary policy, the weakness of the yen, then one has to remember what's happening to inflation and the reason for that is monetary stimulus is not directly to val the currency, it's to try and get some inflation back into the country. >> good to talk to you, them. thank you very much. we've enjoyed having you on. you're welcome back any time. thank you very much. >> thank you. >> ben broadbent, policy member

of the bank of england. that interview will be on the web a little later. still to come on the show, the entrepreneur and investment summit is in europe. who is investing $1 million in the start-up? we'll find out as we focus on the wealth creators. let's remind you where futures are trading ahead of the open today. we are right now forecasting 100.4 on the dow at the omit.

all right. we're into the last half hour on "worldwide exchange." it's a sea of recollect in equity markets. mining stocks are the worst hit here in europe. the big flush came in japan, the nikkei down more than 7%. it was the biggest drop in two years. we saw ten-year jgb yields spike through the 1% threshold. china is not helping out its investments, as well. the hsbc flash pmi at a seven-month low, falling orders putting that measure back into contraction. and the private sector slump, better in europe. the weakness suggests that the contraction is going to stay. plus, the bank of england policymaker ben broadbent discusses qe in an exclusive cnbc interview. >> i don't think qe has suddenly become ineffective. and that is not the reason why the bank and the treasury

launched the funding lending scheme. >> you can see here ahead of the u.s. open, a sea of red on the dow jones stocks 600. just around ten stocks only at the moment that are actually in positive territory. we just bounced off the session low, about 2%, nearly 3% fall to some of the european indices. when we started this morning, the ftse 100 was just what was it? it was just above 90 points above fair value. how does this translate into u.s. futures right now? the ftse 100 currently down 2% at the moment. the xetra dax off 2.5%.

the ftse mib down 2.3%. the cac 40 down 2.6%. that means we're looking at a 1100 point loss on the dow at the open. the dow at the moment, just over a hundred points below fair value. the nasdaq at the moment is some 29 points below fair value and the s&p 500 at the moment is down some 16 points below fair value after a big swing yesterday for the dow. then down 80 points towards the close, as well. let's show you some of the other breakdowns here. commodities weaker because not only have we been looking at the bernanke comments from the sell-off in japan, weaker pmi data out of china not helping out. that means we have brent off and nymex, as well, down about 1% each on those. spot gold is slightly higher, 1385, a long way from the original 2,000. and copper off 2.3%, too. let's show you where we went with that nikkei session, as well. down towards the close, we hit

the low point and triggered, of course, by initially by the jgb, which was caused by a spike in treasury yields, as well. kaori has more for us in tokyo. kaori. >> thanks, ross. this highlights the dichotomy facing the central bank of japan here. on one hand, they're on a grand experiment of super easing policy and trying to reflat the economy. yet at the same time, they don't want a spike in jgb yields, primarily because they have a huge debt burden, the japanese government, and the other reason for that is because japanese financial institutions are such big holders of jgb. so there has been a lot of talk about this in a matter of three weeks. you're looking at japanese financial institutions, banks in particular, carrying a lot of

paper losses at a time when their bread and butter business, which should be lending, hasn't picked up despite abe-nomics. so that is why you're seeing a massive sell-off in the japanese banks. if you relined a little bit even pre-bernanke, you have to remember that the japanese equity market is up 45% this year. when you date back to negative when this new government looks like it was coming in place, the market is up 70%. and we're seeing equally phenomenal rises in the dollar/yen, as well. and at the same time when you're getting an early report card on abe-nomics, showing that some of the things are starting to work in terms of pushing up growth, people are talking about a possible correction. i think it's fairly interesting that the japanese government posts this move is very, very tight lipped. this is the government that was ebb ofly trying to talk up the dollar/yen a couple months earlier, saying they're not surprised by the movement, they're fought going to comment on the day-to-day movements.

but the fact that financials, the fact that real estate is pulling back is a sign that perhaps some of the froth is coming off. i talk about froth, but more than 45%. this is a economy where retail sales are flat, but they're saying that 30,000 watches at the main department store here in tokyo, sales are up 25% over the last thee z mop the. >> kaori, thank you very much for that, an extraordinary day for japanese investors today. we'll talk about net jet, it has planned tos up 70 new usair craft, bringing in 70.6 billion over the next decade. one plane was launched this week. netjet plains to have pioneered the concept of ownership.

he expects netjets to come nate the sector. >> can't match the breath of our operation, the service, the safety, the precautions that we follow. so it's not a deal -- it's not like the airline business. there would be nobody come in in any view that is in the fractional ownership business and has any kind of success. >> joining us for more, jordan hansel. nice to have those comments from mr. buffette. i just wonder, how, how much of a competitor with austerity measures and companies trimming budgets, how much of a competitor traditional airlines are at the moment. >> ross, thanks for having me, first and foremost. we'll see a little bit of competition, but we're truly a unique product. privatization is so much better than the commercial, we're still performing it at a level we're

pleased with. >> what's the key to staying ahead of the pack? is it you have to constantly reinvest in fresh aircraft? >> i think that's a large part identity. and these aircraft that you were talking about a moment ago are all signature series aircraft. they're specific to us and the original equipment manufacturers are working with us to design them and we're tweaking them beyond that want we'll be unique in the marketplace. >> what will make them unique, john? >> a whole number of things. the main things you worry about when you fly is cabin quiet, is the humidity higher, is the altitude lower? all of those things we've improved upon, we've put in premium sound systems and flight entertainment systems one cannot get anywhere else. we think they're a distinct product. >> wa do you have to do to get a company to become a new customer? how do you prove the value of proposition for them? because everybody -- the world has changed. and every dime counts.

>> well, we show them what we do is offer them flights to give them firsthand knowledge of that. frankly, from that point on, it's not difficult to demonstrate our proposition. >> why? >> because they can do things with us they can't do with anyone else. we have the highest safety standards in the industry, the highest service standards in the industry and the efficiency gains they get operating through someone like this far outstrip the costs they might incur. >> what's the growth market for you? i mean, we've been looking at the chinese data. it's a little weak. but i'm presuming the sort of people you're looking at won't be impacted by that. how do you roll out the model into emerging markets like china? >> we're excite bd china, as you may know. we've been expanding our business there. recently we helped to be operational at the beginning of next year. and we'll start again at the market you think is right for us and we think they will be here and we're ready to operate and we're excited about it. >> finally, how are you hedging

out fuel at the moment? >> well, we don't hedge. the fuel price has been relatively reasonable of late. we haven't seen any reason to change our operating model to date. >> thanks for speaking to us, chairman and ceo of netjet. still to come, hp starting to see the first of meg whitman's recovery. mission a for a final go. this is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers.

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european equities down in the red at the moment. the dow is called down 100 points at the open. we'll look ahead to that in just a few moments. right now, we'll check in on hp. could be one of the lone stock standouts today amid what could be that red. it's up with the earnings report and outlook. se seema has more for us in the states. >> theater. hewlett packard posted another sharp drop in profits. revenue fell 10% shy of estimates on sales declines in all of its businesses except printers and printing supplies. personal systems, which includes

pcs dropped 20%. hp did benefit from cost cuts in the company's ongoing restructuring program, but on the conference call, ceo meg whitman says hp needs to be more efficient and perform better against the competition. europe remains challenging and china appears to be slowing down, as well. hp is projecting third quarter and full year earnings above analyst forecasts. investors liked what they heard overall. hp shares jumping 13%. up 49 bers on the year. if you include wednesday's after-hours move, hp is up 6.2% since whitman became ceo on in september of 2011. versus a 9.8% for apple and a 4% decline for dell. david faber has an exclusive interview with meg whitman from hp quarterbacks at "squawk on the street" at 9:00 a.m. eastern. ross, you won't want to miss it.

>> we certainly won't. thanks for that, seema. now we're going to talk about start-up quill, auto uk company that just got ads 1 million investment to continue the global roll out of its platform. joining us is the founder and ceo of quill, a uk tech company which is good it's going global. you help frame products and services. >> yes. traditionally, internet retail business throws up a lot of products on their website and there's been no story around those products to help frame the sale for the consumer. so i think the internet and technology providing huge choice, but what they now need to do is help create that choice so the consumers can make informed decisions whether they're buying loans or shoes or swim wear. >> and you haven't seen the

writers in the cloud who helped to put that concept together? >> we're introducing a worldwide flat platform of writers. we have over a thousand writers in our debate and the cloud sits around a proprietary technology platform that we built and the combination allows us to reduce content for our clients very quickly and at a lower cost which is particularly difficult for them to do internally. >> so your staff in the clouds. >> yes. >> that's a unique use of the cloud. >> and they're emerging in other sectors. so trying to tap into two of the experts on particular topices and bringing them in. many of our clients are in seasonal sectors or they have command for content on cyclical topices and we can create clusters of writers whether it's in gaming or fashion or travel. >> and you started, used your own money for a series a funding to help with the rollout. usually it's a uk tech company and there's a series of uk tech

companies that's been hardtory launch in the united states, oop it's been starter to deal with funding. zoe grow them. what right now is the environment like as a uk entrepreneur? >> i think, obviously, the start up level, i think there's still a -- i don't buy the argument that the uk is not an enterprising economy. when i'm out and about, i see a huge number of people. in fact, record numbers of people that want to start businesses in the uk right now. i think the funding environment is definitely more challenging than in the u.s. but i think it's beginning to change. and i guess the round that we've just completed now where we have most of the money has come from second or third time entrepreneurs, those people are coming through into the uk now. they've been in existence in the valley for a lot longer. i think that uk system grows, then second or third time entrepreneurs are investing in businesses like mine and i would hope to do the same when i get to that moint myself. and that's creating a much richer funding retirement. >> and with the uk tech companies in silicone valley?

>> i think we're still perceived as being a little bit behind the curve and likely to be smaller. and there are actual ream limitations on operating in a market significantly smaller than the u.s. so we have to expand partly why we've adopted into international position so partially exchange as soon as possible. >> thank you for that. tomorrow, the fellow of the interviewer summit takes place in the uk. i will be there and we'll bring you a start-up special on monday's "worldwide exchange," the world's creators. right now, equity markets bathed in red as investors look at the end of qe and chinese data disappointed. the index in free fall. and bank of england policymaker ben broadbent tells this program that qe is still effective for the united kingdom. ♪

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ralph lauren reports fiscal fourth quarter results before the opening bell today. the retailer is forecast to earn $1.30 a share on revenue of $1.7 billion. thanks very much indeed for joining us. look, what are your expectations for ralph lauren and what are they -- how are they performing against the competition? >> first of all, greetings from jerusalem. i would say my expectations for ralph lauren continue to be bullish. we think they're performing terrifically against competition around the world. it's a small business in china so there versus many other luxury and upscale brands are larger, they're performing well off a small base in the united states where there are a core resource of department stores.

they're doing very, very well. we expect to hear very good news this morning. >> how would you compare them to the likes of coach and michael koors we're hearing from, as well? >> well, we just -- i saw that both companies, coach and mic microkoors are brands that speak directly to consumers. amazon is not an issue for them, which is very important to investors. these are all brands that can speak directly to consumers and consumers will buy it directly, will buy them directly from department stores and no one has to worry about amazon coming in and sort of crushing the business or compromising the business. in terms of how they're performing, koors has enormous momentum. it seems like they can sell to just about anything is a broad lifestyle brand. ross is a broad lifestyle brand across categories and up and down price points from dem &

supply up to purple label. coach sa slightly different story, more narrow at this point. but, of course, the company is working hard to broaden the types of categories that it sells. >> it's been wonderful to talk to you. i'm afraid we've been squeezed by the rather large market sell-off we've had today. hopefully we'll get you back. faye landers joining us in jerusalem. u.s. futures right now been forecasting a 100 point decline for the dow at the open. the dow and s&p 500 posting their biggest drop in three weeks. it all comes after ben bernanke's testimony to lawmakeres and release of minutes from the fomc's last meeting, which suggested a number of members are willing to taper qe by june if the improvements continue. but ben broadbent told me there was nothing dramatically new about the fed starts. >> i don't think, as i read it,

bernanke said anything that's surprising or indeed different from what he said in the past. which is that even if the economy in the united states strengthens, and if unemployment falls, there have been -- they would reduce the rate at which they're easing monetary policy. so i don't see his remarks as technically surprising. >> nevertheless, that's not the interpretation we got. as to where we saw treasury yields pushed up, that pushed jgb yields up through 1%, the highest in over a year, which meant they tripled in a month. and then the nikkei, as a result, fell 7%. joining us is his reaction, chris long view at longview economics. >> basically, i think markets are looking for an excuse to take profit and we've just created it with these comments. to be honest, i thought ben's comments were slightly more

relaxed than they might have been. the q&a with bernanke, i thought he might clear the possibility that they may be tapered back. and, of course, it all depends on the data. but at the moment, the data has been recently robust. lots of our models are very extended to the upside, suggesting you should be taking profit, indeed. last week we started to trim that exposure because it's been such a strong run in the last four weeks, but this year, as well. and the nikkei is up 735% since november. and that's a big move. >> in anybody's, right? >> yeah. so, you know, i think this short-term psychology has possibly been broken a bit more. >> with the dollar, we saw the dollar index initially heading up to a three-year high. dollar/yen got bought on the minutes back of bernanke and then there seemed to be a

rethink. >> there was a whole rethink throughout yesterday, overnight. and the question is for yen, no longer a safe haven. it used to be a safe haven, what is it now? and, of course, the positioning is so extreme, you can get profit taking very quickly and that can reverse quite quickly. >> how much of the positioning is to blame for these? there's a lot of people across the short yen, long nikkei and a reversal, i suppose. >> that's right. and to be honest, i think this is what we've seen with the nikkei, of course. it's 75% run. the yen, everyone was in that in trade. so it's pretty -- you get sharp moves when they reverse and i think that's what we're seeing. >> quickly, should we now have an expectation of a tapering move beginning in september? >> i was going to give you bernanke's answer to that on the data. we'll see what it does. more interesting, i think you'll see markets move in the next few weeks and the markets move back to the 50-day moving average. >> chris, thanks for that.

the story continues on "squawk box" up next. try and have a profitable day. good-bye for now. ♪ ♪ ♪ ♪ ♪ the new blackberry z10. with time shift and blackberry balance. built to keep you moving. see it in action at blackberry.com/z10

good morning. u.s. futures are pointeding to a weak future at home. it's thursday, may 23rd, and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin.

and the main catalyst for today's selloff in the global markets are fears of fed tapering. we're going to talk about chairman bernanke's comments yesterday and the minutes from last month's fomc meeting that came yesterday afternoon. those things both added up. before we get to that, though, let's get right to the charts and see what happened while most of us were sleeping. here is the big news. the nikkei down 7.3% to be exact. hang seng and shanghai were weaker within as well. but the big news that's be about what ben bernanke said and about what this signals for the federal reserve from here is the tapering is to begin as early as next month. take a look at what's been happening in europe in the early trade for some of these. you'll see weakness across the board here. everybody down by just about 2%. the ftse off by 2%. the cac and the dax off by stronger amounts. the dax is off by 2.75%. our colleagues in london are standing by with more, but first let's talk about the fed.