you're now watching "worldwide exchange." i'm ross westgate. the headlines today, japan's nikkei delivers its best performance in three weeks as prime minister shinzo abe's third policy arrow emerges. reports just plans to diversify the country's massive state pension fund. european stocks rise afterthe dow records its biggest gain in a month. the federal paper is bond buying sooner than expected. investors now eyeing another set of central bank features today. first quarter profits jumped

with the group's sounds pretty cautious. >> you're watching "worldwide exchange." bricking you business news from around the globe. >> all right. another day here on "worldwide exchange." a very good morning to you. plenty to get through as ever. joining the demonstrations, one of turkey's major unions has called a two-day warning strike in protest at a government crackdown. this follows four days of violence. a new book calling for portugal's euro exit is taking portugal by storm. we'll speak to the author at 10:30 cet. we'll be joined by the chief operating officer of telephenomenon ka as the firm unveils the findings from its biggest ever global survey. a new generation of young

entrepreneurs that highlight the importance of technology, but warns it can widen the gam between rich and poor. more than $1 billion to hedge funds with north america increasing its piece of the pie. we'll find out why europe is losing rank. first, another day for japanese investors as they wait for prime minister shinzo abe's third policy tomorrow. he will direct the country's $2 trillion public pension funds to ramp up investment and equities and overseas assets. the government will reportedly set autopsy panel to review the idea next month. abe is expected to announce plan toes create special economic zones to help improve competitiveness. and he's not normally known for his optimism, but speaking to

cnbc, nouriel roubini gave his endorsement of abe-nomics. >> actually, i think abe-nomics is not just a monetary and fiscal stimulus, it's increasing nominal wages to boost consumption. if they do the first two not followed by the structural, it would be good growth this year and a slumpback again. if they do all these things, and it is likely they're going to do them, then deflation is going to stop, the stock market will go up. >> that was nouriel roubini. joining us, richard gibbs. thanks for joining us. it's indeed the pension fund reor tare re reorentates where it invests, what impact is that going to

have? >> it's almost like directive lending, really. this is directive investment. it's picking winners in many cases and that's the way it will be seen. really where the rub comes is whether or not businesses themselves can be encouraged to invest more indeed in that capital spending. we've seen the biggest decline in capital spending by firms since the tsunami and the fukushima incident. we need to see businesses deepening that capital side. now, nominal wages rising, that's good, but we've got to counter a rapidly aging population, as well. >>. >> when he talked about third hair row, i presumed it means structural reform. what other issues, what other things may come under that umbrella? >> tax reform comes into that, as well. what you need, tax incentives for businesses to invest for them to utilize that cash on

their balance sheets. they're just like the u.s. corporations, they're carrying record levels of cash, warehousing capital for a couple of decades now. so we really need, i guess, ex ill rated depreciation allowances on the investment side and that needs to come through the tax reform side of the economy. you need to look at actually increasing the consumption tax at a time when you want to increase consumption, not discourage it. >> wa about reforming things like the labor market and land use and construction, areas like that? >> it's going to be reformed because this is a fairly closed economy in terms of labor market growth through population growth. while we had the prohibitation on long-term immigration on japan and a rapidly aging population, it means that the dependency ratio is being stressed even more than in western economies and as a questions of that the productivity list he we need to see are unprecedented and that is going to need some innovative

and radical structural reform, labor market reform on that side. >> is he going to wait, though, until after the governor house elections or will he go into those with him trying to get a mandate? >> my spishon is he probably will wait. he's fairly conservative at the end of the day. obviously, he's been playing to his kie constituentes and that is business from an ldp's perspective and that's gone well at the moment in terms of the financial market response. as i say, on the ground or in the board room, the response is not as good when you look at that first quarter capital spending or expenditure data not positive at all. and also, when you look at the -- obviously the price data that's coming in, we still have japan in the gripts of deflation, albeit some winding in those deflationary pressures. >> stay there, richard. we'll come back to you in just a second and talk about the rba.

meanwhile, get ready for japanese stock markets to rally again. experts telling cnbc's prime minister abe it could prompt investors to re-enter. find out why online. and we'll talk about this, as well. the rba kept rates at 2.735% as expected. it says there's room to trim rates again as inflation appears benign and is likely to stay within its target for the next two years. richard, where do they go from here? >> i think they did a good job of defining the agenda the way they want to define it. my friends and former colleagues have done well in that regard. but i think where they go from here is looking closely at that inflation data as it comes in. they said that again in the last paragraph of the statement, that that does provide them with

scope. also, the demand indicators as they come in. that means the unemployment rate, seeing how much that rises in the next couple of months. obviously, the june inflation data in late july. all of that probably setting us up for another move on rates in australia as early as august of this year. >> as early as august? that will take him to a fresh record low of 275%. is there a chance of them going lower than that? >> look, we suspect they will go lower than that. for some time now, we've had a base forecast or a central case forecast of a 2% cash rate for australia. that would be, as you say, new territory, but it would be a recognition of the reality that's out there in terms of the global interest rate environment that interest rates are really not heading up in a considerable way in australia and it's easing that global system. >> stay there, richard. we just got new car registrations out for germany.

down 9.9% in may. this is according to the kba. staying in europe, the ecb is apparently helping improve access to cheaper loans. the own review from the central bank of the problem thinks that the blockage in lending is in the result of weakened bank balance sheets and would not want direct intervention in the sme borrowing process. how disappointed would that be if they don't come up with their own sort of lending scheme? >> this is a disappointing approach. it's disappointing if they haven't moved to that. mario draghi saying that the euro area is start to go recover and that the monetary measures to date are proving to be successful. at the end of the day, the industrial structure of euroland is such that it is fragmented. it is going to require some form

of directed lending, which is what we're talking about. the germans think they don't want that, but on the 22nd of september, they have an election looming and i think the political risk now of the euro land air or region economies continue to go stumble along in this protracted recession is probably going to prove to large for them, too great, so we are going to see i think in the next couple of months a move towards what has been referred to really as directed lending. >> do you think the rally that we've had in equities is really just predicated on liquidity and central bank sort of injections? it is. what this highlights is the khasm between economic activity and what has been going on with those liquidity operations and

those unconventional monetary policy operations of the central bank. and the fact that that's what's been driving valuations, that's what's been stretching those earnings multiples. and at the end of the day, what people are trying to test now with the tapering strategy is what the base case looks like in terms of earnings and real economic activity when you start to remove the cool-aid as it's been called or all of that very cheap money or free money and liquidity that's been in there. >> richard, thanks for joining us today, richard gibbs joining us from sydney. the european commission is proposing to give itself powers to wind down struggling eurozone banks, despite concerns from germany that such a move would require a changed eu law. according to the financial times and the "wall street journal," the single proposal would allow mechanism toes shut down banks using funds from a special pot.

the commission is due to publish full plans later this month. ahold boosts share buyback after reporting first quarter operating profit of $416 million euros. the group, which operates u.s.'s stop and shop said comparable sales in the u.s. were up 1179% from a year ago. but in an interview on cnbc, the ahold ceo has warn thad consumer spending remains under pressure on both sides of the atlantic. >> we see on both sides of the ocean and more, of course, in europe continuous pressure on consumer spending. so that's why we continue to remain cautious on the economic environment. wells know that the super market business is also the first thing where customers will start spending more.

so i hope that recovery will take place because we'll findly, of course, also be better for all of us. >> meanwhile, in europe, we're over an hour and 12 minutes to the trade today, weighted to the up side 8 to 2. advancers outpacing decliners at the moment following a softer close yesterday. down 0.75% for european markets. the dow up 138 points. last night the s&p up 9 points, as well. this is where we stand at the moment. the ftse retrain tracing it, we're pretty much just getting yesterday's losses back. the ftse up 0.6%. xetra dax up 0.75%. cac 40 up 0.7% and ftse mib up 1%, as well. 4.09% in italy. ten-year treasury yields,

2.1354%. how many funds are nursing losses in the month of may on this rise of bund yields and treasuries. 2.032% gilt. on this level, can they back up even more? pretty well day for the dollar yesterday, particularly post the ism number. we saw dollar/yen, one stage down to below 99. you can see this morning back up to over 100. but extreme volatility. that applies to the aussie/dollar, as well. sterling/dollar goes up to 1.53. 1.5291% is where we stand at the moment. this was this view that in a sense the ism number was sea was maybe suggesting that we would get a delay in tapering. we had comments out a little later that that would happen. so let's find out what's going on in asia overnight, as well. joining us, chloe is in singapore. hi, chloe.

>> hi, ross. interesting to see dollar/yen crept back up to a hundred for most of the asian session. it was sitting below that. a lot of that has to do with the huge move that we've been seeing. interesting to note after another day of choppiness, the market decided to close up a little bit over 2%. remember, we've been talking a lot about the third and final sound from shinzo abe. how do you get growth going in a country that has been in a deflationary mode for 10, 20 years. now maybe investors have too much of their hopes up because this process, even as the japanese government try toes throw in the kitchen sink strategy and alongside throwing out the kitchen, as well, this is going to take time. tomorrow, we might get a litmus test of how the bond market vigilantes rate mr. abe's plan. today we had a ten-year bond auction. demand a little weak. it will be interesting tomorrow that there's going to be a 30 or super long auction in the afternoon. so that is going to be post mr. abe's announcement.

remember, the key problem in the japanese market has been that super longs have been selling off. another crux of the puzzle might be the china story. growth continues to dominate. we got spooked by the hsbc flash pmi and the final pmi would slip. today, growth stocks continue to slip. there seems to be a lot of concern gripping the steel sector. the extent of the slowdown and a lot of overcapacity seems to be quite pronounced to the extent that the steel industries average profit is only about 7 cents per ton and comments continue to come out even from the top chinelea chinesemaker e bao steel that second and third quarter there needs to be a lot of capacity cuts. how that translates into australia could be interesting given where australia stands and certainly no surprise that the rba kept the door open for easing. but not much reaction in terms of the market or at least the australian dollar at least in the asian session. back to you. >> thanks for that.

the sign that the turkish prime minister has rejected calls for his resition nation. istanbul saw the worst of the clashes with investors attempting to storm the prime minister's office. he added that the protests had been organized by extremist elements. where are we going with this? it seems rather surprising about the strength of these protests. >> they are. i mean, people are saying here that the gooft has shut itself in the foot by imposing a controversial plan, reconstruction plan in the hard of the city. and then unleashing police violence against peaceful demonstrators. that really opened up the

frustration which was out there against the government. and tens of thousands are on the streets. and they are still on the streets. initial attention down to some extent, fuel tess process not just in istanbul and elsewhere. it's a democratically elected government. but it has enacted in military in the past few years. intolerance towards criticism. the anger exploded in a way they didn't see, really. >> this is what reports of the excessive use of the force and the initial demonstration. what exactly, though, is now the motive for further demonstrations?

this will probably have better growth than russia. >> yeah. the initial growth was part clubbing people who said we don't want the demolition. later, other groups joined. some of them are ultra nationalists who despise the government for making stoppages. some hard core communist groups and some of them are violent. so there are definite geologic groups. it would be wrong to think that everybody out there for liberal causes. but it is ultimately the government that needs to calm them down and start thinking a few steps back. some members, like the istanbul mayor and the vice prime minister did that. the prime minister has a defiant

style and he believes that he should always stay in there uncompromising. and that unfortunately fuels fire. it's likely somebody will still win it, but this has hurt their image and made the country less manageable. they will either tone it down or remain defiant. >> we're now goingdem strakzs. if that's the case, how will that add fuel? >> well, left wing unions are going to have -- in the same area, but it's now allowed

because of the construction and that has turned into another clash, too. my estimate is that royalties will calm down ultimately and the government will take a lesson and move forward. don't expect a regime change or follow up with the government in turkey. that was against the leadership. this is an elected governm being in power for ten years and making some controversial decisions. in a sense, it's to occupy wall street movement rather than the tahrir square phenomenon in egypt. but it is getting a little concerning because if the taupe, the style, and resentment on both sides. >> thanks very much indeed for joining us, journalist and author mr. akyol. still to come, foreign investment is accelerating growth, but the country's poor infrastructure looks to keep it

in the slow lane. coming up, the latest report from myanmar. i want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪

how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪

myanmar's lack of infrastructure is proving to be something of a challenge. poor quality -- is making it difficult to transport people and goods. can myanmar live up to expectations? martin soonh has this latest report. >> the promise of the land of the golden pegodas, a population of 62 million people and a land mass that is southeast asia's second largest. >> myanmar is a strategic location. it connects china, india and all the rest people know. the logistics are huge. >> but travel around the country and that infrastructure deficit is evident. how badly does myanmar need more of everything, especially infrastructure? believe it or not, take a look behind me. this is the very first fly over to be built in myanmar ever.

the government is improving its airport infrastructure, targeting the star construction of the new airport this year, adding to the current three international airports in the mandolay, yangon and naypyidaw. and the numbers do justify. >> they grow between 24 to 30% last year. >> but one issue that is politically and economic sensitive is land rights. myanmar's ethnic minority groups mistake up a third of the country's population. and gaining access to these areas is key to connecting the country. >> you cannot help development without peace. >> as myanmar continues its

transaction from dictatorship to democracy, failure to make progress on peace would slow down the progress that's made since undertaking a series of bold, political and economic reform. that opening up has encouraged development of new special economic zones, which the government hopes will be part of its master plan to boost foreign direct investment. these industrial zones are strategically located. dahwei, kyaukphyu and thilawa with clear water works. as far as ports go, this is pretty rudimentary, not much to look at. but it's changing fast. within a year, it will be built out, much bigger, more money with the help of $200 million of japanese aid. further south, though, at another deep water port, dahwei, things are different. talks are absolutely stalled between myanmar and thailand.

still, patchy, uneven progress is better than no progress at all. which has been the case for the last 60 years. martin soong, cnbc, myanmar. martin soonh reporting a week from now. we'll keep our eyes out or that. meanwhile, we've had more information out from the prime minister of turkey regarding his positive talks with president gul to resolve the protests. we'll get more on that in the next half hour or so. for those of you craving an extra sugar rush with your morning coffee, dunn kin down i couldn't tells is rolling out this. yes, it's a breakfast sandwich. it's coming out on friday. if you want to work out what that is. that is fried egg and bacon sandwich by a glazed down i couldn't tell. and apparently it's only 360 calories, which is less than the

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japan's nikkei delivers its best performance in three weeks. reports suggest he wants to diversify the country's massive state funds. the fed will pay for its bond buying stimulus and investors expect. registrations of new car necessary germany hit a red light. figures for may show an almost 10% fall from last year. and turkey's prime minister says he's had positive talks to try and resolve protests that have rocked istanbul for five days. >> after falls yesterday, we're clawing back those equities on the european indices.

sfardz bond markets are concerned, yields fairly contained, fairly steady. italian yields 4.10%. another bit of better than expected data out of the uk, serlg rising as uk construction pmi has moved back into expansion territory. the construction pmi, 50.8 versus 49.4 in april and better than 49.6 and it follows, of course, better manufacturing pmis yesterday, as well. so just another bit of uk data that is surprising to the upside. we have the bank of england meeting this week, the last meeting from the current governor mervyn king. despite recent market moves, prime minister shinzo abe is set to push forward with his economic growth strategy. tomorrow, he plans to unveil the third arrow of on his reform.

we have more on that story from the nikkei. >> focused on creating special economic zones and tax cuts to help support growth. it's reported the government would pull more than $2 trillion will direct japan's public pension funds to increase their investment in equities and overseas assets. most of the proposals have been on japan for a period of time. many resisted because they would lose jobs by deregulation. abe has delivered on two fronts, fiscal stimulus to give the economy a boost and pushing the boj to take aggressive easing measures to end deflation. many investors want to see concrete steps for deregulation and structural reform from the prime minister. the joef all program is expected

to be approved by kap cabinet on june 14th. back to you, ross. >> have a good evening in tokyo. the world's biggest chemical company, basf, has pretty big plans for asia. it's going to a hiring spree by 2020. the company wants to increase its r&d stock in asia and it is now mining plans for a second asian research hub. the asf launched last year and if all goes well, about a quarter of its global research activities will be carried out in this region. the country is exploring financing options to stay afloat. this downgraded its earnings outlook for the first time in months. the softwaremaker rejected

offers from the past. it's a far cry from over 30 aussie dollars over six years ago. in china, angry relatives protested outside a slaughter house that caught fire on monday. the president has called for a vigorous investigation. it's reported that 120 people were killed by the fire with another 70 injured. it's one of china's worst industrial disasters in years. it had workers trapped in a building where only single exist was available. the world economic forum in each asia kicks off in myanmar and australia will release its first quarter gdp data. now, portugal's two biggest

labor units have called for a new general strike against austerity. union leaders have accused the prime minister of destroying welfare benefits from portugal under the troika dictatorship. and joining us from lisbon, jal feriero, the best selling author of why portugal should leave the euro. this is an economics debate. "fifty shades identify gray" is off the number one spot in portugal's best selling list. thanks so much indeed for joining us. how much support do you think you're attracting for yao view? well, it's still a minority of opinions that favor the exit of the euro. but, however, the important thing is that people are

debating now the possibility of the euro. i think it was previously almost a double. in this, i think it's important. >> do you think there is either -- is there a middle ground between -- because people will say, look, you've got to take the austerity of the euro. is there actually a third way? >> no, i don't think so. the euro has had a devastating effect on our economy. our economy is -- well, competitive economy. and euro with a strong currency and in the past 10, 15 years, our economy has suffered the effects of this currency. and what happened was that there was a shift from the production of durable goods to nontradeble

goods. and that means we have large deficits. this is something that is not positive for us, at least in my opinion, to correct inside through zone. because the perspective is that the euro continues to be a strong currency around the world. and so the problems will come away. the austerity policy is not working because it -- of course, it's domestically meant, which we can consider the necessary because of the foreign service. however, it also makes a decrease in investment and what we need these productive investments in tradeable goods. so they are on the way to incentive investment in the tradeable goods is to, from my

point of view, evaluate the currency which, of course, we cannot do inside the euro. >> that would, of course, cause a huge inflationary shock in the country. >> yes. it would cause inflationary shock, no doubt about that. but not by abdomen solution. i think is some 30% of depreciation would be enough. and this has a direct impact in the consumer price index. >> isn't there a danger here that just having this debate will pause those -- will pause investment into the country from overseas? >> no. i don't think so. because at least as i see the things that -- the assumptions in portugal, i think that we have much higher chances of --

than to have groekt if we leave the euro. inside the euro, and the austerity policies, we can arrive and we probably -- to have a default and things like that. so i think the best way to create conditions for growth and for paying our debt is to have a positive shock on our export sector. and so this can be obtained with appreciation in the currency again. >> would you change your mind, joao, if there were significant steps towards a proper fiscal and political union in europe where -- and germany was going to allow reflationary policies and there was going to be a common euro bond and shared fiscal responsibility? would that change your mind? >> well, that is a big if. i don't -- i don't believe that this will happen.

but even so, as i see the proposals of the commission in so-called eurozone, even they are there positive measures, i think that the ways to an overcentralism in europe and overcentralism is never good for -- such as portugal. so i don't -- first, i don't believe that this will happen. second, even if this happens, probably this will mean reinforcement of the powers of the center of europe and this will fought be -- fought be positive for us. >> okay. we'll see how -- we'll see what sort of support they get. the discussions out, joao fer rare ra, thank you very much indeed for joining us. investment firm ja po na is offering to buy outstanding greek sovereign debt.

it's well below current market values. some investors have been left scratching their heads over the move as the u.s. firm is not known as a player in the government debt market. now, in the latest on the french online companies, the french minister has attacked amazon accusing the retailer of creating a quasi monopoly. stephane has more for us in paris. >> hi, ross. it sounds like deja vu, a large internet companies knows perfectly that it's sometimes difficult to work with french authorities. this time, the minister is targeting amazon's commercial strategy, accusing the online retailer of dumping practices to create a -- and a policy situation using, for instance, amazon for being a destroyer of book shops and she's considering a ban on free postage offers to make amazon less competitive. but i'm sorry for the prime

minister, but it's not totally accurate. in france, the price of books is set by the editor. the retailers only can apply a 5% discount maximum so you can't really have a dumping situation when it comes to books price not with such a tight legal frame. i think it's reflecting, ross, once again, the difficulty, the trouble that the french economy has to adapt itself to the new global internet giants once again. the french government wants -- well, sees only the competition, but doesn't want to take into account the jobs that are created in france. for instance, amazon, if you remember last year, the group opened a new platform in the east part of the country with 500 job creation and at the time it was integrated by the french industry minister. so that's typically from france and you see only one side of the coin. >> yeah. fair point. stephane, thank you. thank you.

still to come on the show, five days of violence in turkey. but our next guest says market losses have been relatively muted. so should you hold or retreat from turkish assets? we'll get into that when we come back. we went out and asked people a simple question:

how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪

new car registration necessary germany, for the month of may on the year, compared to may last year, down nearly 10% for new car registrations. which is not a terribly good figure. it did have an impact, of course, on auto stock webs as you can see. daimler is one of those biggest hit, although it's now fairly flag. volkswagen down 1.3%. porsche off 0.6%. bmw outperforming once again. at the same time, may u.s. auto sales jumped 8.2% year on year. analysts say strong sales on the memorial day weekend as well as widening consumer confidence helped. phil lebeau has the full story. >> here in the u.s., may auto sales coming in slightly better than expected with the industry sales peace expected to come in at about 15.2 million vehicles.

when you look at the different automakers in the u.s., all were up about 1 is% to 2%, greater than what the street was expecting. leading the pack, nissan with an increase of 24.7%. we saw double digit gains from ford and chrysler and positive sales coming in from honda, gm, toyota, really, across the board. all of the auto eshg maes reporting better than expected number peps what were driving those numbers in the month of may? it's primarily the strength of the pickup market here in the u.s. in fact, the share of pickups being sold for the overall market up about 1% compared to last year, coming in at about 11.5%. ford leading the pack there with its f-series pickup truck seeing the best sales for the month of may since 2005, ford selling more than 70,000 f-series pickup trucks and gm saw strength in trucks as well as chrysler. all of the automakers say the strength in pickups is coming from small businesses here in the united states, that pent up demand. they've gone a number of years without replacing their work

trucks. now they're starting to do that. gm seeing huge strength in the number of companies coming in and replacing between one and four trucks. sdwroefr all, may auto sales coming in at a pace that's going to be expected to be around 15.1 to 15.2 million. the expectation is the industry here in the u.s. is still on track to register sales at 15.5 million fort year. that's the story with may auto sales. back to you. now coca-cola has started producing its products in myanmar. martin caught up with the chairman and started asking about the group's investment plans. >> what we are earmarking now for the next five years, that will help grow our business. we're operating a vep ewe facility today, production plant, factory, in partnership with the pedia group, which

we're very happy and honored to partner with both for the short and long-term. within a month, the there will be a second planned operational here. so that will give us two production facilities in the country and we're looking obviously to expand that also into the future. the $200 million five-year investment will generate direct employment for people. the first year we should have about 1,000 people on our payroll. in our business, for every one job we directly create, there's about another ten jobs created in the supply chain for the company. supply chain means provision of bottles for us, labels, closures, crowns, cold drink equipment, distribution equipment, all of those advertising agencies, all of that combined. so we should, by five years' time be able to create economic

empowerment and livelihood for 20,000 people in the country. >> how does this compare to '88 and '89. you were in vienna, the berlin wall fell and you were in charge of capacity along a huge a. of land. you opened as many as 20 plants in as many months. >> but this is small. it's 60 million people and it's a wonderful opportunity for my company, our brands, and it's a wonderful opportunity i think for the people of myanmar who are going to join the world community and it will be -- myanmar will contribute to the creation of middle class for the next decade. i think it's a very exciting future for the people in myanmar and i think 62 million new consumers is very exciting for us. >> here in myanmar, per capita -- are extremely low. you're coming in with a premium

brand, a premium product and facing competition, local competition which in some cases sell for a tenth of the price. how do you fight? >> that's why we're investing here in local production. how business is a very local business. when we create the infrastructure, like we're doing here in myanmar, inaugurating a brand new facility here, a new plant that we -- that we'll bottle coca-cola after 60 plus years here, we believe that that is the way forward. that gives us the advantage of understanding local needs with local partners like penia, setting locally, distributing locally and that's why we will be competitive, but also grow our leadership position in the nonalcoholic ready to drink

market. >> all right. kent talking to martin soong. istanbul saw the worst of clashes with protesters being met with tear gas as they attempted to storm the prime minister's office. before heading off on a trip to north africa, the anti-government protesters says standing arm in arm with tromp. he added that the protests had been organized by extremest elements. the deputy prime minister has said that we will get further details of the discussions he's had with the president to resolve those protests, those details should be released in the next five minutes or so. meanwhile, the best 100 day rebounding up as you can see 357%. now, for those of you craving an extra sugar rush with your morning coffee, your search would well be over, apparently. duncan down i couldn't tell sess

rolling out this, yes, this breakfast sandwich on friday. if you're wondering what that is, that is a friday and bacon sandwich by a glazed down i couldn't tell? dunnky down nut says it has less calories than it does on the turkey melt. apparently, though, they have tested this sandwich in massachusetts in april. must be the place to test this sort of thing. and they got a lot of buzz about it on the web. they're always looking for new creations to generate excitement. taco bell says its dorito locos tacos led to an 8% spike in sales last year. we're asking would you eat this

did you thi dunk yiin donut combination or ? i would just prefer egg and bacon and a traditional -- or something with some ketchup. but anyway, who knows. it may even take off. as we head towards the second hour of "worldwide exchange," european equity ves bounced and clawed back most of their losses from yesterday. up 0.r5% or a little more. stim to come, one survey secretaries equity valuations will meet their highs of the month. will it finish? ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients

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japan's nikkei delivers its best performance in three weeks. prime minister shinzo abe gets ready to fire its first policy arrows. he wants to diversify the country's state pension funds. european equity res up after the dow records its biggest gains in a month. fears subsiding the fed will taper its bond buying sooner than expected. registrations of new car necessary germany hit a red light.

figures for may show an almost 10% fall on the same month last year. the news hasn't helped the likes of daimler or volkswagen. turkey's prime minister says he's had positive talks with the cup's president to try and resolve protests that have now rocked istanbul for five days. >> announcer: you're watching "worldwide exchange," bringing us business news from around the globe. >> if you've just joined us stateside, welcome to the start of your global trading day. the doe was up 9 points yesterday at the close. right now, we are trading below fair value. the dow is currently some, what, 36 points below fair value. the nasdaq at the moment is some 5.5 points below fair value and we are around 4 points below fair value for the s&p 500. the ftse global 300 has been up for the day, up 0.3% as you can

see. european stocks yesterday down around 0.75% on average. we've tried to claw back most of those losses. we are getting towards the low for the session, currently up less than 0.5% for the ftse. the cac 40, the ftse mib up nearly 0.8% at the moment. as far as bond markets are concerned, gilt yields up 1.20%. treasury yields, 2.13%. italian yields region slightly lower, but over this 4% mark, 4.10%. as you can see on the currency markets, what a wild day for the dollar we've seen in the last 24 hours. of course, post the ism, dollar/yen, we got down to 98.86. that was about a 4.5% drop from the 103.74, 4 1/2 year high we were at at the end of may. and then we saw the fed speak come out and say, look, maybe tapering will be a little later if the dollar rallies again.

aussie/dollar, 0.9655. sterling/dollar, 1.5287. another good piece of economic data today, construction pmi again coming in better than expected following the manufacturing pmi yesterday. there's a whole series of data in the uk which has consistently beat the forecasts. euro/dollar, 1.3071. we had got over 1.31 during the late european session yesterday, as well. meanwhile, let's recap what happened in asia today. chloe cho has this report. >> a mixed session here in asia, despite the positive handover from wall street. the nikkei closed up more than 2% after another day of choppine choppiness, this ahead of abe's firing as the government paused looking at japanese equities and overseas assets. much remains to be seen, whether the so-called third arrow will calm market jitters.

the key is that it's shifting investment from the private market and into bond yields. showdowns measures continue to grip greater china, as you can see. triggering worries about tightening, especially after recent property data showed prices picking up and no surprises coming from the rba today. that was chloe. just recap what we've had out in terms of producer prices in the eurozone, eurozone april producer prices down minus 0.6% on the month. minus 0.2% on the year. that monthly fall is the steepest since july 2009. the annual fall is the first since february 2010. they were seen down 0.3% on the month. they've got that 0.6% fall. so with that, probably give us the ecb more room to take further action, should it so desire, as well. before the currency prices

helping. all right. let's talk about u.s. equity markets. equity allocations reaching a six-year high last month, according to the may aaii survey. at the same time, bond holdings fell below 19% for only the second time in 13 months. there's been widespread belief that bond yields will prompt investors to substitute out of bonds into stocks. this rotation is a continuing concern. joining us with a recap is james buckfield, global equity strategist. good to see you. >> hi. >> thanks for joining us. >> kind of fascinating what's going on at the moment. but we've sort of gathered last friday better economic data. we're seeing it negative now for stocks. yesterday, you've got weaker

ism. but then there is this view pervading that it's much more about what the fed will do with tapering and weaker data may mean we get more tapering later. >> and that's why equity markets tend to be rising when there's poor economic data and falling when there's good economic data. our view is actually that bernanke will move towards trying to prevent deflation rather than causing some sort of bubble in the equity markets. and subsequently, there is grounds i think for an argument for tapering, but it's unlikely to occur, given where core pc levels are, which are particularly low at the moment. >> where does that leave us ahead of the employment report? this week, then? i mean, do what we want is a number like last time, which is an okay number, but nothing stellar. is that what's best? >> it's unlikely it's going to hit the -- if you want real growth, it's likely going to be sort of 150,000. not fantastic, but just probably okay, as you say.

>> and look, after this run, this big run up that we've had, i mean, should we now be expecting actually a few months consolidation? >> well, it's quite possible. what we do think the fed is going to remain commented on, the story behind tapering, if you look at the counsel for tapering and the number of articles written by tapering soared recently. that could pervade the idea that the fed may tighten and enough to create some sort of correction. but we believe longer term equities will continue to rise. >> does it concern you that we've got equity allocations at a six-year high according to this? >> well, the aaii, the american association of individual investors is just one proportion of investors. i can tell you a lot of our clients still have a large amount of cash. and are fed up with receiving such little yields, such a small amount and bank deposits. so they are still looking to try and get some form of yield.

and one of the only places you can get that now is equities. >> yeah. and talking about yield, we've got treasury yields, you know, sharp rise up 2.13% is where we now stand. and there's a lot of funds sitting on losses for may from the bond allocations. how does that now play into the mix? >> well, certainly if you look at equities versus bonds, that relative trade versus yields, that run up to, say, 2.1% on the u.s. -- does suggest you be more cautious on equity yields or equities on the very short-term don't look so attractive. but, yeah, we are not positioned that way. we have been underweight. >> all right. another choppy day for japanese investors, as well, as they await for prime minister shinzo abe's third policy getting that tomorrow.

several reports are that he's going to go and direct the pension funds to ramp up investment in equities as well as overseas assets. the government reportedly set up a panel to review the idea next month. abe's expected to announce plan toes create special economic zones to help improve competitiveness. and in an earlier interview on cnbc, nouriel roubini gave us his view on japan. >> actually, i'm reasonably positive about japan. i think ache-nomic sess increasing nominal wages to boost consumption, structure reform is going to be announced now and trade valuation. if they do the first two, the monetary and the fiscal not followed by fiscal tightening in the structural, it will be a good growth of year this year and a slump back again. but if they do all these things, which is likely, then deflation is going to stop, the yen is going to weaken, the stock market is volatile, is going up. even with this correction, it's

50% higher than abe-nomics. >> what do you think? what happens now for japanese investors? >> it's a decent buying opportunity. if you look at some of the policy in the third arrow that you were talking about earlier, some of them not mentioned so far, women-nomics. that's the idea that women, 75% of them do not go back to work after having their first child. if you can somehow cut the child health care red tape, a lot mover women could go back to work on. that would boost the jobs market. it's been discussing creating some form of isa, as well. that will be a good boost essentially to equities there. and much of the fed -- the third arrow is about cutting business red tape in general. so we see that as quite positive. i know inflation reports are still negative, but if you look at the second derivative,

inflation is starting to attract towards zero. so that does suggest that abe-nomics is starting to work. >> and we've got the upper house elections coming up. do we have to wait a little longer, really, to get policies flushed out? >> yeah. i think for the of these reforms, you have to wait. it's potential, though, that they could implement some of the smaller bonds. they're talk about better medicare for ex pats. it's a small one, but maybe to test the cabinet, that could be pushed through prior to the election. >> james, good to see you. thanks so much indeed for joining us, global equity strategist at kutz. the ecb is apparently backing down on plans to help the region's sme, greater access to cheaper loans. it was suggested today that the bank reviewed the problem and thinks it's a result of weakened balance sheets and would not warrant direct intervention in the sme borrowing process. at the same time, the european commission is proposing to give itself power to wind down

struggling eurozone banks deexcite concerns from germany that such a move would require a change to eu law. they both say the single resolution proposal would allow shutting down banks using funds from a central pot the. the commission is due to publish its full plan for banking unions later this month. and u.s. regulators are going to that you take action to tackle the too big to fail issue. it's been voted to propose designating certainly nonbank firms as cyclicly important. the california didn't name the companies involved, but aig prudential and capital ge says they've been notified if the counsel dernls they're systemically important, they would have to take part in stress tests, comply with higher capital reemen and write living wills. the company has 30 days after the vote to contest the situation.

>> we've got trade deficit figures out at 8:30 eastern. the gap in forecast has widened to nearly $4.1 billion. the kansas city fed president esther george speaks at 1:30 and dallas fed president richard fisher will speak at 8:00 p.m. as for earnings, look for dollar general and mattress firm. we'll talk about dollar general a little later in the program. plus, dunk yiin donuts's say slam is going on sale at the end of the we'll. ♪ [ engine revs ] ♪

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i was embarrassed to have anyone see my shingles. the rash was on my right hip, going all the way down my leg. it was very, very painful situation. i'm very athletic and i swim in the cold water in the ocean. shingles forced me out of the water. the pain level was so high, it was like fire. and i was thinking like, i wish i had that cold water i could go in it. the doctor asked me "did you have chickenpox when you were a child?"

i'm very healthy and i do all the best things to keep it that way. all of a sudden i got shingles. it was so hard to accept that pain, it became unbearable. and a recap of the headlines. fears that the fed is about to taper off qe has helped european stocks rise in early trade. and german new car registration fails to get into gear in may, down nearly 10% on the year.

general motors and aig are set to rejoin the s&p 500 this year, both of which were bailed out during the financial crisis. they'll be added to do benchmark index after the close on thursday. in december, the u.s. treasury announced it was selling its remaining stake in aig. taxpayers made a profit on that bailout. and treasury mans to exit gm next year but is expected to lose billions on the automaker. gm up 3.3% along with aig today. meanwhile, zynga is cutting 18% of its workforce. the founder and ceo says the

cuts are necessary to move forward and are part of zynga's strategy to become more competitive, particularly in the mobile sector. the company has warned of a bigger than expected second quarter loss, citing weak bookings for its gains, which include farmville and mafia wars. shares are down 70% since the ipo. fitch has cut illinois's credit rating by one notch to a minus. the move comes days after state lawmakers left the capital without addressing a huge public funding pension crisis. illinois has the lowest rating of all u.s. states while it struggled with an unfunded pension liability caused by years of skipping or cutting back on payments to retirement programs. the governor says he's not surprised by the downgrade and plans to meet with democratic lawmakers today. for those of you craving an extra sugar rush with your morning coffee, your search might just be over, according to

some. dunkin donuts is rolling out this sandwich in the u.s. on friday. it's a fried egg and bacon squeezed between two pieces of a blazed down i couldn't te ed do. it does have 20 grams of fat. fast food changes are always looking to generate excitement. taco bell says it had an 8% spike in sales last year. we're asking, would you eat this? how interested are you? would you like it with bread? there we go. would you like your egg and bacon wrapped in a glazed doughnut or would you prefer it

with bread? let us know. e-mail us, worldwide@cnbc.com, tweet @cnbcwex or direct to me @rosswestgate. if you just got up in america, is that the first thing you think of having? still to come on the show, michael jackson has topped the charts. apple has begun launching -- apple began launching desktops when hairspray was mandatory. it still is. the generation known as the mellenial. we'll find out what they think their future holds in a big new study when we come back. ♪

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joining us. what is the significance of the millenia to businesses? why is it so important to understand them? >> in our opinion, you cannot understand the future of on our industry without understanding the millenias. talented people that have natural access to technology. >> how are they using this technology in terms of their media consumption, information and entertainment? >> well, the main characteristic of the millenia is that they want to be connected anywhere anytime. they're an online generation. so they want to be able to access internet at any time and any place. mainly through smartphones. 25% of them have access through their smartphones. we need to understand that their lives is going to content, going to internet, going to media. therefore those that have natural access to information,

to business, to education, so it's their life. >> which means as far as media is concerned, the vast majority of credible news coverage, developing news stories or even entertainment is down via the internet now more than it is on tv and almost nothing on sort of in print and magazines. >> for the like and natural access to anything is online and namely markets. they don't care. they don't care neckly about the print. they don't care necessarily about the traditional view. they do it online. >> how do they feel about, you know, the economy? what do they tell us about what's going on in the economy? >> one of the things that we have learned in the survey is that millenia are highly concerned about the economy because it affects their future. the most concerning part of the

future is economy. the only two exceptions are latin america and -- so they do believe before they access to their future evolution to the future of job unemployment. therefore, they are significantly concerned. but at the same time, they are optimistic of their own capabilities to overcome those capabilities. >> wa do you think is going to be the biggest driver for the global economy? >> well, they think that it's a piece of bad news overall. they think that they need to be involved in solving those issues. and at the same time, they are self-confident that they can be the drivers of their own future by having their own business. so 68% of them believe that they have the opportunity to create their own business for the teacher. >> what a fascinating, we always think technology, social media and mobile communications is actually closed the gap in parts

of africa and developing worlds with the west and the developed world. there seems to away view here that they don't necessarily share that. >> in their opinion, 75% of them believe that technology is a great opportunity for the future, but 60% of them -- almost 69% of them effectively believe that technology in the gap between rich and poor people. so this is a call for action. because they do think that technology can close that gap, but it's not actually closing that gap today. and therefore it's closed for action, technology to close that gap. >> thanks very much indeed for joining us. fascinating study. plenty more on that online, as well. still to come on the program, as more u.s. investors join the $1 billion hedge fund cut, find out why european firms are losing out mujs the the big spenders. we'll take a closer look at the

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you're watching "worldwide exchange." a reminder of the headline. japan's nikkei delivers its best performance in three weeks as prime minister shinzo abe gets ready to fire his third policy arrow. he wants to diversify the country's massive state pension funds. european equities rise. the dow records its biggest gain in a month with fears the fed will taper its bond buying efforts soon. and registrations of new car necessary germany hit a red light. figures for may show an almost 10% fall on the same month last year. the news has hits the likes of daimler and volkswagen. plus, tackling too big to fail. u.s. regulators may -- nonfinancial firms opening them up to extra scrutiny and oversight. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe the.

if you've just joined us stateside, a very good morning to you. after the rally we had yesterday on the u.s. stocks, looking at a slightly more negative open today. we are trading below fair value to the s&p at the moment. some four points below fair value. the nasdaq at the moment is five points below fair value and the dow is currently some 34 points below fair value. it follows a rally we've got here in europe. but that's only because we closed lower yesterday in europe. we tried to claw back those lows. the ftse 100 is up 0.4%. xetra dax similar amounts, as well. 0.8% for the ftse mib. up around 0.3% at the moment for the cac 40. new car registrations in germany fell. a bit of a contrast from what we got from u.s. auto sales yesterday. what are investors to do? here is a recap of what some of the guests on cnbc have told us today. >> despite the weakness of the

last few weeks, what you haven't yet seen is real money investors capitulating on the em. they're trying to hedge away some of the effectes and they're retaining their core polz positions. wa worries me on a six month, 12-month view, maybe slightly shorter term with that is what happens when that real money starts to bustle? that i think will be quite dangerous. >> a number of the things they've pointed to has been problems for china are actually opportunities. one is the environmental segregation of the country. you know, we are playing a lot of environmental plays, waste treatment, clean water, efficient technology plays. these are opportunities. those stocks are doing very well at the moment. >> valuations particularly in the u.s. are quite high, highest they've been since 1990 been whereas for the cyclical

sectors, the growth sectors is quite attractive. so at least in the u.s., is cyclical sectors and the growth sectors and that also explains what the next leg of the market is going to be. it's going to be the revaluation in the growth sectors and at the same time you do have to have the unwinding on the income side. >> and we're keeping our eyes on ongoing unrest in turkey, as well. the deputy prime minister says everyone is hoping to restore peace and calm in the street and he's been speaking to the president today and the government respects your position demand, too. he says those protests started with legitimate reaction. the government was criticized for their -- what some called an overreaction to peaceful demonstrations about plans to redevelop parts of the parks in istanbul. the deputy prime minister now says marginal groups are hijacking the rightful protests and we'll keep our eyes on that. the main turkish stock market index has rallied back today.

we'll get into that a little bit later. mean wile, the equity allocations almost reach a six-year high last month according to the may aaii survey. at the same time, bond holdings fell below 19% for only the second time in 13 months. this comes as major institutional players have been stepping up investment hedge funds. according to a recent survey, 176 firms currently allocation $1 billion or more to the asset class up to 150 in january of last year. but the rise has been largely concentrated in north america, which accounts for nearly 67% of the $1 billion plus pull. this is europe's contribution ves fallen. joining us for more is amy benson, hedge fund products. good to see you. >> good morning. >> thanks for joining us. wa does that tell us about the more investors are allocating over 1 billion in hedge funds than they were six months ago? >> it shows the comfort in the

asset class is increasing across the globe with more investors allocating more money, the large public pension funds, mainly out of the u.s. driving the sides of the industry higher as they put more money to play in the asset class. >> in the last year, you would have been far better off actually just going, you know, long on an etf or something. because the indices have done so well. >> but we're seeing investors putting money to work in hedge funds, other than reasons than pure returns. >> really? >> yep. they're looking to diversify their equity holdings. particularly pension funds aren't looking for outside returns. they're looking for lower volatility funds, stability of returns and asset protection. so there are pension funds. the hedge fund can be attractive investment. >> if it is a proper risk adjusted -- >> risk adjustment in terms. >> yeah. >> even though equity funds have outperformed hedge funds over the last year, we are still seeing an appetite for hedge

funds for those risk adjusted returns that they can offer. >> how different are investors in -- u.s. investors in hedge funds from those in europe? >> largely, broadly speaking, very different. we see a much more conservative investor base within u.s. and the u.s. u.s. investors tend to be much more -- in what they're doing with their hedge fund investments and much more willing to take on -- >> is it easier for paengz fund to invest in a hedge fund than it is in europe? >> within europe, we see more conservative pension funds, looking at london, for example, only nine out of the 32 pension funds invest in pension funds at the moment. within europe and the u.s. you would see that at a much higher level. it's just a conservative type of investors in europe. they're much more cautious than their u.s. counterparts in general. >> we're working our way through which is going to apply to hedge funds and fund managers, as well. how much is that putting off

u.s. money coming into hedge funds or are u.s. hedge funds expanding over here? >> it's definitely a wait and see at the moment. with u.s. hedge funds looking to launch your market within europe, they are holding off until the director is launched and written into law. and it's definitely having a knock on effect. we will see lower inflation to european funds this year. we're seeing launches within europe, as well, so far. so it's definitely having a big effect within europe. >> and finally, what's happening with funds? what's the different between fund funds in europe and the u.s.? >> we've seen big differences between funds in the u.s. such as europe. european fund to funds have a difficult 2008. u.s. have declined in assets since that time but there's been a recovery over the last couple of years. assets within europe still declining. the u.s. have been much quicker

to change their business models, become much more institutional and really what clients want out in the states. >> basically, the u.s. hedge funds are doing a lot better. >> at the moment, yes. >> right. amy, good to see you. thanks very much for joining us. okay sxp on the programming note, make sure to tune in "worldwide exchange" tomorrow. we'll be speaking to the chairman of oak tree capital. that's an exclusive interview, 11:00 cet, 10:00 london time. that will be 5:00 eastern. and still to come, u.s. regulators are set to put some financial firms turned microscope, subjecting them to extra scrutiny if they are deemed systemically important. we'll get the details of the new rules these companies could face in just a few moments. you will never survive the running of the bulls...

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u.s. financial regulators are taking action to try and tackle the issue of too big to fail could have implications for few financial firms. courtney reagan is at cnbc hq in the states. hey, court, tell us more. >> hi, good morning, ross. it's good to see you. well, financial stability oversight council is a group of regulators chaired by treasury secretary jack lew has voted to propose designated certain

nonbank firms as, quote, systemically important. that means they're so big they could destabilize the markets if they fail. companies who receive such a designation would be subject to tighter oversight by the fed. the move, which was several years in the making could help close several regulatory gaps that led to the financial crisis in 2008 and give life to the dodd frank reform law in 2010. eight firms have been identified as systemically important. it didn't name the companies, but aig, prudentan, ge capital say they've been notified. aig is a big surprise as it was a major nonbank contributor to the financial crisis. if the council determines they are systemically important, they would have to take part in the stress tests, comply with higher capital requirements and write living wills. companies of 30 days after the council votes to contest the designation by requesting a

hearing. the council will then have 30 days to hold that hearing. prudential says it's considering whether to request a hearing while aig and ge capital declined to comment. well, there are several key questions remaining, including how designation would affect the market perception and business in the named companies. but that hasn't completed its proposed standards and it's unclear how much additional capital the nonbank firms would have to hold. metlife's ceo, whose company is expected to be named as systemically important as the capital requirements force them to pull back from some capital intensive products such as variable annuities. so a lot of these financial organizations are going to have to work to adopt standards, ross. we just may not know exactly what they are and who those companies are. some decisions may have to be made, but other things may be made completely out of their hands. back to you. >> we'll see what happens, court. good stuff. have a good day. meanwhile, good to see you. thank you. meanwhile, a recap of the

headlines. the nikkei bounces back as prime minister abe prepares to -- its third policy arrow. it appears that the fed is about to taper off qe4. helping european stocks rise in early trade and german new car registrations failed to get into gear in may, down nearly 10% on the year. mean wile, protests in turkey have continued into a fifth day today. the deputy prime minister has said everyone is hoping to restore peace and calm to the streets. they may start an investigation into the handling of the initial protests. it was the criticism of the handling of initial peaceful protests about developments of park space in istanbul, which has led to a wider -- turkish deputies were told not to use gas except for self-defense. those initial days were

described as being rather heavy handed. what is interesting, of course, is this did impact turkish assets yesterday. today, the bist 100 is up by around 3%. so joining us with his thoughts is tim dash, head of emerging markets at standard bank. good to see you, tim, thanks so much indeed for joining us. this outbreak of violent demonstrations have spread to other cities has raised questions about the political stability of the turkish government. what does it do for foreign investors at this tim moment when there's been a broadish figure, a review of sort of emerging market investment? >> well, you're right. the time is pretty inopportune. we saw u.s. treasury driven off last week across emerging markets. turkey doesn't need another reason for investors to pull out. i think one that's that's interesting is positioning in turkish assets. we've seen a record inflow of

portfolio over the last year. the stock of holdings is about $145 billion record high. so they're pretty vulnerable against the back drop now. >> if there is going to be an outflow of funds out of turkey, where is the risk? i know banks -- external funding has gone up. although the government's requirement for foreign bonds has reduced, hasn't it? >> well, i mean, i think if you look at positioning, foreign investors got into everything, equities, local debt, euro bonds, they're pretty much about everything. and valuitions are pretty much at the top end up until a couple of weeks ago. so i mean, it's ripe for a correction. in terms of the financing position, having shorts on the debt liabilities due around $155 billion. pretty high.

central banks got about 135 billion reserves. it's been trying to defend the currency over the last couple of days. they're kind of okay at a market point of view at the moment. >> if there was to be an exit, how much you would need to trigger a deeper crisis? >> it depends how long it goes. i mentioned 135 billion of fx reserve has doubled over the last year and a half with its unorthodox policy response of the central bank. but that's probably not enough. when domestic confidence goes, the locals start pulling money out because they're worried about domestic politics. >> and just briefly, looking at emerging markets, even the mexican peso haas hit in the last few weeks as people -- how much is the debate over fed tapering and the rise in bond yields impacting sentiment towards emerging markets generally? >> it should be central at the moment. for me, it's what goes in goes out, a huge qe driven inflows into emerging markets in the

last two to three years. policymaker res struggling to manage those inflows. and now with the fed tapering off possibly a lot of that money is beginning to leave. it's not a flood yet. people are beginning to figure out what the u.s. treasury is trying to do. but i mean, i think at one point, currencies will adjust. they are adjusting. currency adjustment creates fundamental problems across the emerging markets. structurally, countries don't have a lot of external debt, a lot of external liability. most emerging markets will be fine. a bigger problem will be fund managers wol be suffering pretty significant, you know, negative returns on that to get these inflows to accelerate. currency adjustments should help them. >> good to see you. thanks very much indeed for that. still to come, dollar general is set to report first quarter results. an earnings preview and the take on the health of the u.s. consuminger coming up next. [ male announcer ] i've seen incredible things.

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european stocks are up today, 0.5% to the ftse 100. 0.3% to the xetra dax. a little more for the ftse and a little less for the cac 40. we've got april trade deficit figures due out at 8:30 eastern. kansas city fed prettiester george speaks about the economy at 1:30. dallas fed chief richard fisher will be talking about monitory policy at 8:00 p.m. ahead of all of that, u.s. futures are a little softer right now. we are currently nearly 4 points below fair value for the s&p 500. the nasdaq at the moment is about 3 points below fair value and the dow at the moment is some 30 points below fair value.

but they have come off their lows, as well. ahold has boosted a share buyback plan by four times to 2 billion euros after the dutch retail giant reported 460 million euros. that's above reuters forecast. the group, which operates u.s. grows herb giant and stop and shop said comparable sales in the u.s. rose 1.9% from a year ago. ahead of dollar general reporting its first quarter results today before the opening bell, the discount retailer is forecast to earn 71 cents a share on $4.24 billion in revenue. the company has recently started to offer tobacco products as well as selling everything else from food to household products to try to entice shoppers to visit more often. patrick mckee, senior equity analyst joins us now. patrick, a very good morning to you. thanks for joining us. is this new strategy they're launching of selling everything

including tobacco, does that make the stock more attractive to you or not? >> well, it does. it drives sales per square foot so it makes the store more productive. there is negative impact from margins for aeding let's say tobacco because it is a lower margin product. but the net result is an increase in store productivity. that is reflected in valuation in retail stocks. it's a very important metric. >> yeah. what is it will the core dollar storl customer. how does that compare with some of the others? >> it's certainly much lower income. the core dollar store customer earns -- lives in a family that earns $40,000 annually or less.

so much more value conscious, lives paycheck to paycheck so to speak and is looking for deep value and convenience and tends to smoke a little bit more, too. so that's one of the reasons the dollar stores are adding tobacco right now. >> look, you've got a -- you've still got to maintain a buy in front of the results today. so was going to be the key in these figures for you? >> well, i think the primary focus, as always with retail stocks will be the same-store sales number. i'm looking for dollar general to report 3% growth for the first quarter and i'm looking for that number to accelerate as the year progresses and as this tobacco initiative gains more transaction and some other initiatives gain more transaction and as the comparisons ease. about a year ago, the company was generating mid single digit same-store sales growth. basically, i'm looking for them to return to that level this year and i'm hoping to hear indications of that on the

conference call this morning and see that to some extent in the results, as well. i'm looking for eps up 10% year over year. i'm a little over the street and part of that is the margin assumptions that i'm using in my model which reflect this tobacco initiative which is a lower margin initiative. >> okay. patrick, good to speak to you today. have a good day. patrick mckeever. and earlier, we were asking you what you thought about dunkin donuts latest offering. a new egg and bacon squeezed between two places of a glazed doughnut. shaq tweeted that it doesn't look as good as his system. suzi tweeted she's surprised it's only 260 bit of calories. and becca tweeted her local cav aye tried a krispy kreme burger didn't go well with sugar blaze.

that doesn't surprise me. thanks very much for your comments and for watching. that's it for today's edition of "worldwide exchange." "squawk box" is coming up next. have a profitable day.

good morning. today's top stories, the global markets. green arrows in europe and asia overnight. now the bulls hope to make it 21 straight up tuesdays. tuesday. remember was been happening for the dow? as i just said. again. tuesday. june 4th, 2013. "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on

cnbc. i'm becky quick along with joe kernen and michelle caruso cabrera. andrew ross sorkin is off today. we're going to start things off with the markets. stocks actually starting the month off with a winning session. the dow gaining back much of the losses that it's made on friday. you can see up about 138 points. it's a gain of nearly 1%. but the bears might take note that the blue chip index has been down in seven of the last eight junes. since 2000, the year 2000, june is actually tide with september as the dow's worst month of the year. today, of course, is tuesday. and as joe mentioned, that's been good news for the bulls for the last 20 session necessary a row. the dow has ended higher for the last 20 consecutive tuesdays and that makes the longest streak in history. i think by several weeks. i think we started saying maybe three weeks ago it was the longest winning streak ever. so we'll see what happens today. at this point, if you want to check out the futures, you'll see that at least at this hour, there are some modest red arrows. down 2