you're watching "worldwide exchange," bringing you business news from around the globe. >> hi, everybody. welcome. yes, you are watching "worldwide exchange. "monday morning. a fresh start to markets today coming off the back of weakness overnight in asia. the liquidity crunch in china really causing worries for a lot of investors out there. the business climate index just being published. 105.9 for the month of june. that's versus a consensus for 109.6. 109.4 for june. slightly shy of what consensus

forecast had been bibunot by much. just looking at some of the other things they are saying this morning. stating that current conditions stand at 109.4 in june. 109.6 was the expectation again. and we're looking at no revisions being made to may. the business climate index, 105.9 in june versus consensus forecast of 105.9 the previous month. so current conditions coming in slightly weaker than what had been anticipated when looking at the current conditions index. the expectations 102.5 versus consensus for 102. expectations slightly higher and at the same time, current conditions slightly weaker. so net/net, relatively in line forecast or relatively bang in line efo index coming through. the euro/dollar just a little higher at the moment.

1.31. current conditions slightly light, carolyn. expectations slightly better than anticipated and just looking at the overall business climate index coming through, just a little bit better than anticipated if anything. i would say it's more or less in line. we're just seeing the euro being bought up a tad against the dollar. >> louisa, thanks so much. let's get some reaction from the chief economist at the german institute for economic research. so as louisa just recapped. the efo index in line with expectations. the current conditions forecast slightly lower and we're seeing just a very marginal reaction in euro/dollar. what's your take on this? >> i think it's fair to say that it's basically a stabilization on the fairly high level. we've seen a relatively strong level of the ifo last month. in this sense i think we can

interpret this as a cautiously positive thing. a recent trend, a recent positive trend has been confirmed and that we look into a slightly brighter future than what we've seen in the rel fifly weak first quarter of this year. >> what exactly does slightly brighter future mean? >> it looks like the german economy is recovering from the weakness that the uncertainty in the euro area has induced. we have seen a strong weakness in terms of investment demand and, of course, we had a strong weakness from -- in terms of export demand from the other euro area countries. and it looks like the situation is improving slightly both on export markets actually and in terms of domesticment in terms of investment because the uncertainty is declining slightly and because the world economy is slowly improving. >> it's a very patchy recovery. if you look at the pmis last week, they point to very meager

growth of only 0.1%. the new business index and the pmis was very weak. and we're seeing businesses cutting jobs at the sharpest rate since december. that, to me, doesn't seem too rosy. >> it is true that conditions on the labor markets have -- slightly but in the end that's probably more a catching up thing because we've seen a very stable development on the labor market over the last months and series actually despite the weakness we had in the german economy in terms of production. maybe this is just a postponed reaction if you like on the weakness of demand in the winter semester in the fourth quarter and first quarter of 2012 and 2013. i wouldn't put too much weight on this first development on the labor market. i think the overall outlook for the german economy isn't that bad, despite very weak growth rate, we expect for 2013. should be around 0.4% because buthat's because the sgoort 2013

was quite weak. and the second half of the year should be already fairly good and then for next year for 2014, we actually expect a growth rate of around 1.8% and that's by german standards really high and solid growth rate. >> that would be pretty high. just want to come back to the export question because we've seen all these headlines coming out on china and we know that the german economy there is very much export driven. are you concerned about what we're seeing in china and the feedback loop to the german economy? >> of course the german economy is export driven and it cannot rely on demand from the euro area so it depends more and more on demand from other global -- from the global economy in general, from china in particular but also from the u.s., for example. u.s. has been fairly solid in the beginning of this year. so i wouldn't be too pessimistic, but i agree that there are signs that maybe the recovery in china, which is

strongly based on policy stimulus measures and in a way it's not a sustainable -- or it could not -- it could be that it's not a sustainable development and that certainly poses a risk to the recovery in germany as well because as you perfectly rightly said, it strongly depends on export demand from the world economy since the euro area will not grow for the foreseeable future actually. >> thank you so much for those insights. ferdinand there from the german institute for economic research. back over to you, louisa. >> thank you, carolina. while you were speaking, just need to get viewers up to date on what's taking place broadly speaking and what's coming up. germany's federal elections are less than three months away. angela merkel's party, their favorites to defeat the opposition, but they'll look to look on a coalition deal with the free democratic party led by

guido westerwelle. there's a price tag estimated at more than 30 billion euros. we're moving closer and closer to these very important elections. and it looks like the -- merkel's party still is in the lead, the coalition party. >> absolutely. if you look at the most recent polls, the christian democrats would get 40% of the votes. the social democrats, they are actually trailing. they'd only get 22% of the votes. their holds are at a one-year low. it's a very big gap to catch up on for the main contender. and here's an interesting stat for you, another one. if germans were to elect their chancellor directly they'd vote germany's angela merkel with 58% of the votes. and mr. steinbeck would only get

18%. a lot of it really comes down to the personality. but today, of course, we're here to listen to what the christian democrats have got to offer in terms of their ten-point program for their election, for their new campaign. and as we heard over the last couple of weeks, it's a gravitation towards the center. towards the left even. there are many socialist policies in there like spending a lot more money on families, children, mothers, on education, road infrastructure. that could be worth 25 billion euros over the next four years. she's come under a lot of fire for how she's going to finance that. and here's how she justified it. >> ladies and gentlemen, this is a program characterized by a well-balanced centrist approach. it is designed so as not to place new burdens on the taxpayer and the economy because we believe that by granting more freedom and motivating our family owned business sector as well as our medium and big sized companies, we can increase the chances of higher tax revenue as

opposed to following a path of demotivation by raising taxes directly. you'd be at risk of seeing less revenue to force our tax goals. >> so there you go. the christian democrats under no condition do they want to raise taxes to finance this. and as the finance minister reiterated a couple of times, there are still plans to balance the budget by 2015. >> good seeing you. thank you very much. a lot going on out of germany. on today's show, the bis is saying that central banks have done their goit help the economic recovery and the governments have to do more. we speak to nobel prize winner edward phelps at 10:30 cet. tune in for his call on the banks' next move. the strawberries are picked. the forecast is for sunshine. it's time for wimbledon. we speak to world number one novak djokovic and ask, where does he invest his winnings? tune in at 20:40 cet to find

out. fears of a credit crunch in china's banking system. what does mark mobias make from the spike. that takes place at 11:00 a.m.cet. and a verdict in silvio berlusconi's trial is expected today in milan. we'll cross out live to the city for the latest at 10:50 cet. as per usual, find us directly on the show on e-mail. the e-mail address is worldwide@cnbc.com. you can find us via the e-mail address or on twitter as well. we're happy to take your questions or comments. china's central bank sticking to its script, though, repeating its stance. it also called on banks to manage their lending more prudently. analysts see this as a signal the pboc has no plans to back down from its tight stance despite mounting pressure to

inyect more nun into the market. the comments caused an extended sell-off in chinese shares. midsized lenders especially were the hardest hit. you can see a whole bunch of the banks off by 10%. eunice joins us from beijing with more. eunice? >> hi. we're definitely seeing the authorities moving in and imposing some structure and discipline to the financial sector. as you had mentioned, the pboc or china central bank said the liquidity is at reasonable levels. this was the first time we heard from the central bank and the words were quite powerful. a lot of people took that to mean the government isn't only okay with this level of liquidity but it's also pushing ahead with economic reforms. that it's not going to be loosening things up, allowing a lot of cash back into the system. at least not yet. and that instead they are going to be sticking with their formula of tough love for the financial sector as well as for the economy.

>> eunice, thank you very much for that. we appreciate it. joining us on the phone now from hong kong is peter tha thal larsen. we've seen the overnight lending rates coming down but a lot of equities are still off by some 10%. and also there's still this overall arching worry the credit crunch could get worse coming out of china. >> yeah, i think what's happening really is that it's sort of a realization setting in that seems to be a pretty high level of determination amongst the chinese authorities to, you know, kind of rein in some of the easy credit that has characterized the chinese economy for much of the past three, four years. so i think that sort of belated realization that the pboc is

doing with the banks as far as liquidity is concerned and you're seeing that now also filtering through into the stock market. where clearly a shortage of liquidity and worries about a sort of slower economic growth are also feeding into valuations. >> should they be doing more? should they be more active? we're hearing from, over the weekend, reports that they are keeping a prudent monetary policy. there are suggestions the government is not going to be taking action soon and, in fact, many saying a complete lack of policy from the pboc. >> there's a lack of a public policy stance. that's definitely true but that's not necessarily saying there is no policy stance. i think what we can surmise is this is deliberate. the communication from the pboc which your reporter was talking about just now which was written before last week, before last week's crunch, it's pretty clear what they are sdoog deliberate.

they are basically saying we want these banks to worry about their liquidity more. be a bit less dependent on funding some of these assets and brace themselves for where liquidity is tighter. i think it's pretty clear sort of the direction coming from the top. the question really is whether they can do that without something going wrong. and that's the worry really is that you have rumors of banks missing payments. you have worries about kind of some of these off balance sheet wealth management products not paying out and that's really the concern is that in trying to sort of slow the whole ship down that something unexpected happens and causes a worse problem. >> peter, thank you very much. peter thal larsen, asia editor for reuters breakingviews. straight out to sichuan for

the global markets report. we're seeing stable trade to slightly lower here. take us through what's happening overnight. >> sure thing. china markets plummeted on those liquidity fears. the shanghai composite fell below the key 2,000 level tanking over 5%. its biggest one-day sell-off in nearly four years. the rest of asia not spared either with the risk of sentiment. hong kong extended a five-day losing streak and the nikkei reversed early gains of nearly 1.5% by ending lower 1.3%. and china's big strayeding partners such as australia also took a dive ending down 1.5%. take a look at the damage on mainland banks. midsized banks such as industrial ones tanked 10% to their daily limit. remember that a smaller lender tends to have higher dependence

on interbank lending while the seven-day repo rate remains at elevated levels. the pboc reluctackanreluckant t liquidity. the real estate sect norchina felt the pain with the big four property plays tanking some 8% to 10% today. investors fear the cash crunk will also take a toll on the much leveraged property counter. and australian miners also got hammered on the china worries and the fed's tapering. gold miner evolution down 10% and newcrest lost 8% to end at the lowest level in about ten years. mining manges such as rio tinto and bhp billiton also ended in the red. >> thank you for that. we are in the red here in europe this morning as mentioned. the stocks europe 600 lower by 0.7% coming out of friday's

session, looking at slightly shaky markets but still stabilizing. we're seeing a little selling here. eight fed speakers will be dominating the agenda stateside. a lot of focus will be on whether or not we continue to hear the same type of noise as we heard from the fed about the potential of eegs off on stimulus and also still a lot of focus on what's taking place with regards to a potential credit crunch continuing on from china. we're seeing the ftse, xetra dax trading down. but relatively speaking we're seeing some negativity this morning. on top of that, there still is quite a bit of focus on some of the stock specifics out there. vodafone trading higher. they've agreed to offer 7.7 billion euros per share for deutchland. they confirmed the bid saying

management intends to accept the deal. so they are trading a bit higher on the back of that. spain's troubled telefonica has agreed to sell its irish 02 business unit to a hong kong hutchison group for $1 billion as well. both those groups trading slightly lower. when can comes to the debt markets, we saw a lot of people flip flopping in the bond markets last week. today we're seeing a little selling with yields being pushed higher and the ten-year bund at 1.77%. the ten-year treasury, 2.59. a pretty big spike taking place on friday in trade as people sold out of the u.s. treasury. spanish ten-year also being sold shortly this morning. on the back of the ifo business climate index, pretty much in line with expectations. the euro/dollar flat to a little

lower that 1.31. they didn't do anything with regards to revisions in may. that could be good news because the forward looking expectations were slightly stronger than expected. greece's hoteliers are hoping for a rebound as the summer season kicks off.

welcome back. the former south african leader nelson mandela is in critical condition after spending more than two weeks in hospital recovering from a lung infection. president zuma says that mandela's healthy has worsened over the past 24 hours but doctors are still doing everything that they can to try to improve the 94-year-old's health. edward snowden is expected to try to fly to cuba today as he awaits word on whether ecuador has accepted his request for asylum. snowden, the former contractor who leaked details of the u.s.' secret surveillance programs fled hong kong for moscow on sunday. the u.s. filed espionage charges against snowden. the white house has registered strong objections to hong kong and china for letting snowden leave and they are urging russia to send him home.

ecuador's foreign minister says his government will analyze snowden's asylum request with a lot of responsibility, quote/unquote. now a florida tightrope walker, a funambulist has conquered a tightrope walk. this just looks crazy. nick walenda performed it above the river wearing no safety harness. he said he murmured prayers to jesus along the entire way. nuts. absolutely nuts. with these two men making headlines for what some see as acts of courage and others criticize as acts of foolishness, selfishness or perhaps questionable legality, we want to know what you think. worldwide at cnbc.com or on

twitter at the louisabojesen. a funumbalist, a tightrope walker. the french industry minister has launched a stinging attack on jose manuel borosa calling him the fuel of the far right party, the national front. his attack came after they narrowly lost by election. the eu is paralyzed and that it was alienating ordinary europeans by ignoring their concerns. now the greek prime minister is saying that his new two-party government won't cause a problem in talks with international lenders. this after the small democratic left party walked out from the governing coalition on friday in a dispute over the public broadcaster ert which was shut down by prime minister samaras earlier this month. greek hoteliers are girpg for the summer holidays as tourists

begin to descend on the island. they're hoping to see a rebound in bookings after tourism fell 5.5% last year. so it's super important for greece, the tourism industry. joining us now in the studio is panol, the founder and ceo of hotel brain. why do you think we'll see a bounce back in greek tourism given we're in, what, year five of a recession in greece and if things are getting better, they are getting better very, very, very slowly. >> i know in the tourist sector things are already going very well. we're in the heart of the summer. until now, not what is going to happen but has already happened we have an increase on the reservations of 10%. that it is a very nice feeling after all this tourism is going to go well.

now statistics and all numbers so as that we're going to have an excellent tourism period. we don't take things for granted. we are there. all the numbers, so things are going to go well, but we care a lot for the product and are trying to offer great rates for those who want to travel to greece. >> rates must be very, very low. i imagine they are cut prices across the board. >> you can say rates are low in comparison with the past. i think that now rates in greece are really value for money and we feel that from all over the world. they think they've made a very good deal in greece because greek hoteliers have upgraded their products, especially family hoteliers are trying to present a better product with their hospitality. everybody now in greece understands tourism is very important and i think our

product has become better over the last three years. yes, rates are very competitive. >> do you have any idea or any sense hough many hoteliers have had to close during the past years? >> apart from some hotels in the beginning of the recession in the city center, i think hoteliers still survive in greece. everybody now understands that we are a tourism country and all greeks are doing their best to present a better product. things are difficult for the greek hoteliers but at the same time, we feel that we have to make a small victory. our country is going to stand up when small victories will happen and like the prime minister said, tourism is one victory we have to win. so we are very dedicated now to what we do. >> i'm the first to say that greece is tremendously beautiful. >> thank you. >> but do you think the image of greece has been tarnished for a lot of people where if they see

austerity measures and protests and things like that every day on the front page of the papers that they choose to go to other places instead of choosing to go to some of the greek islands? >> i think that was an issue last year when we had the political situation with the double elections. we don't have a lot of protests now. things are quite calm in greece and i see from the result people are not scared at all to travel to greece. why we had some bad publicility in the past but we are looking toward the future. things now are going better. >> panos, thank you very much for being with us. the founder and ceo of hotel brain. thank you. coming up on the show -- we hear from the world's number one tennis player on what wimbledon means to him. he also tellsuous everyone needs to be market watchers, too.

>> i'm rather in a sport industry than in the stock markets, but -- >> which is a good thing. we enjoy watching you very much. >> which is a good thing, of course, considering the crisis we have in the last few years but, of course, i'm following it. it concerns my life, as most lives on this planet and, hopefully can recover. >> coming up, central banks around the world have been warned to put the breaks on quantitative easing. is the global economy ready for the blowback? we'll be discussing with the nobel laureate and economics professor edmund phelps. he joins us after the break. ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines

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you're watching "worldwide exchange," bringing you business news from around the globe. welcome back, everybody. good morning if you are just joining us. i'm louisa bojesen. current liquidity levels are reasonable, despite the recent spike in money market rates. that triggers a sell-off with's the shanghai composite posting the biggest loss in four years. stocks in europe are down in the last hour with economists pointing to mixed signals in germany's ifo release. telecom stocks getting a boost as vodafone confirms an offer for deutchland.

and edward snowden's world tour takes him from hong kong to russia and now possibly to latin america as the leaker of u.s. government secrets is seeking asylum in ecuador. hi, everyone. welcome back. good morning if you are just joining us. we've got a lot to talk about this week. a lot to talk about also on the back of a softer market overnight out of asia once again. modest gains stateside, though, on friday. and this morning we're just opening on a slightly lower note. european equities just moving a little lower within the last half an hour, 45 minutes. some people pointing to a slightly mixed bag coming from the ifo business climate index out of germany. to recap, we had a bang in line reading for the actual main figure, the business climate index. 105.9. current conditions a little weaker than anticipated, while business expectations rose by just a tad.

no revisions to the month of may. manufacturing exports, expectations increased sharply. we did initially see the euro coming down on the back of that ifo release. relatively flat euro/dollar trade. could somebobe some repositioni taking place. a lot on the agenda this week with the number of fed speakers taking the headlines. eight fed speakers all in all between now and friday to follow. and also we've got some lighter market volumes given that we're in the middle of the summer period and rejigging taking place on the back of china credit crunch worries. european markets net/net in negative territory right now. let's talk about the bond markets as well. we've seen some pretty atrocious trades taking place when it comes to the bond markets. last week we saw quite a bit of weakness especially toward the end of the week after the cleanest indications so far the fed is looking to scale back

quantitative easing sooner versus later. at least when the economy stabilizes is what they've said. also we saw the ten-year treasury note spiking, or the yield, rather, spiking on friday. you would have seen that. so we've come back down a bit on the back of that spike on friday but we're still at 2.6%. that's quite a big move. rain is expected to hamper rescue efforts for thousands stranded in the northern india state. at least 500 people have died so far from flooding and landslides and the death toll may rise significantly. prime minister singh has pledged cash for those affect chd will come from his national relief fund. south koreans have been on a global shopping spree for commercial property. real estate consultant said koreans top the list as the biggest property investors this year having spent some $5 billion in the first five months

of the year. this was partly due to tensions on the korean peninsula which spurred wealthy investors to park their money in the relative safety of properties abroad. and rio tinto is scrapping plans to offload its diamond business due to the lack of response from investors. the australian miner had intended to divest its stake in the $1.3 billion business either through a direct sale or ipo. rio now says that it's retaining the unit to generate value for shareholders. they see this as a signal that the ceo sam walsh is not ready to conduct a fire sale and they won't spin off the business unless the price is right. as usual, find us on e-mail. worldwide@cnbc.com. you can also find us on twitter@louisabojesen or@cnbcworld. we're happen to take your questions and comments. still to come -- the covers

are coming off. there isn't a rain cloud in sight for the first day of wimbledon. up next, world number one novak djokovic serves me up his hopes for the tournament. stay tuned. also coming up, central banks around the world have been warned to put the brakes on quantitative easing. is the global economy ready for a blowback? we'll be discussing it with professor edmund phelps.

hi, everyone. welcome back. i'm louisa bojesen. central banks have been told to rein in quantitative easing and focus on inflation and spearheading growth. the bank of international settlements, the bis, barns that delivering more stimulus is becoming, quote, increasingly perilous and could retard the global recovery. the bis also questions ecb president draghi's pledge to do whatever it takes to save the euro saying central banks cannot repair the balance sheetss of household and financial institutions. professor edmund phelps is the nobel laureate in economics and author of the forthcoming book "mass flourishing." welcome, professor fephelps.

i'm glad you're here. >> thank you. glad to be here. >> your forthcoming book, can you give us a little indication of what it is that you are arguing? >> i'd be delighted. it's a short history of the period of mass innovation in the west. britain, america, later france and germany from early in the 19th century to about 1940 or 1960 or so. and we didn't realize what we had. we didn't realize the sources of innovations, and then as a result of that, we made some mistakes in the west, especially europe, i would a, and we lost the key. we lost that modern economy with its dynamism and the result has been a slow down of productivity growth and lots of unsuccessful

doomed attempts by governments to try to restore employment, which is not really possible short of something very, very radical that we wouldn't want to do. so we're in a fix. politicians have made a lot of bad moves. even now there's not much understanding of what -- of the main things we have to do. there's only, with luck, a bit of symptomatic relief coming from this or that policy intervention. >> professor phelps, i was in the middle of a conversation about precisely this. the lack of innovation. the lack of, especially technological innovation over the past couple of decades. but isn't this very separate to what we still need to see coming from government that is still as important that government is on the side of the greater economy. and if that means supporting it by more stimulus then that's what we need.

>> i wouldn't want to mess up the economy further by depriving it of stimulus when and where there's needed. but i do want to say that i think in some countries, greece for sure, italy, i would guess, and maybe france, too, spending more or taxing less would be dangerous because there's already an excessive level of public debt and level of entitlements. so every additional dollar that you -- that goes into increased indebtedness and increased entitlements makes capital markets more scared and stock

prices become depressed and business investment is dead in the water. and there's an enormous toll in employment. and the little bit of stimulus to consumption demand can't overcome that central effect. >> sure. do you think now -- >> -- you can do stimulus. >> do you think now we're in the position of a lot of stimulus, do you think we're going to see a big reaction once stimulus starts to be tapered, once we start to see the federal reserve pulling back on quantitative easing? are we going to be able to support ourselves? >> okay. i think we had a little test of that in the united states in the first quarter of this year. the keynesians warn us that we're going to plunge down hill

immediately while these of us like me that take a more structuralist view think that to do the opposite thing, to increase deficits, would send the stock market into a plunge and reduce employment. well, what happened in the first quarter was we got an improvement in stock markets because the fear of endless spiraling deficits in the future, that prospect diminished as washington showed that it would take some measures, even though they were crazy, rather poorly constructed measures, but at least washington showed that it was serious about deficits. immediately share prices rose, as i said. >> professor -- >> and think that as a -- we'll see increased business investment. we've got to see that in order to get a full recovery. >> professor, stay with us just

for a moment. i just want to mention a couple of other things because the ecb policymaker asmussen says that europe needs to complete a deal with the banking unit on great urgency. they failed to agree on measures to share the cost of an eu-wide bank rescue regime. this despite 20 hours of talks. 20 hours. finance ministers are going to try to break the disagreement on wednesday, ahead of a summit of eu leaders. meanwhile, europe's reform efforts are also failing to jump start a recovery in the labor market. tens of thousands of demonstrators filled the streets of rome on saturday to protest against record unemployment. stepping up pressure now on the government to take action. that was exactly what you just were talk about, about how unemployment still is a very big issue. what would you like to see next, though, given the situation that we're in in europe.

we can't rewind the clock and can't try to do things differently. we're already in the position of a lot of stimulus and central banks backing us for the time being. what needs to happen? >> well, besides the public debt problem we've been talking about a little bit, there's also the banking problem. the banks are impaired and there's a fear of a run on the banking system in europe if there are some disasterous -- if there's some serious problems in the road ahead. so it's very important to create a mechanism for dealing with failed banks, for unwinding banks that have gotten into hopeless difficulty. and i'm afraid that the -- the discussion on that of what to do has not reached agreement. the germans are taking a very

tough line and they want to call any extension of credit to a failed bank like buying some of its debt or giving -- providing some money in any other way for it to lend. any such steps is a bailout. but it's only a bailout if the bank is later unable to repay. and it's not always the case that banks are unable to repay. look at america. there were bailouts. people talked about -- talked about it as if it were a giveaway. almost every single institution that borrowed from the u.s. government in 2008 and 2009 repaid the debt with interest. so i think we can distinguish between the bailout which is a gift with nothing to repay and

assistance in the form of, let's say, of giving them -- >> professor. >> -- like script money. like bonds that pay zero interest. that sort of thing. >> professor phelps -- >> ingenious things you can do. >> professor phelps, thank you. we're out of time. we appreciate it. thank you very much. professor edmund phelps. >> thank you very much for having me. enjoyed it. >> author of the upcoming book "mass flourishing." the japanese prime minister abe's ruling bloc won a key election yesterday. we have the story live from tokyo. >> hello. ldp won 59 seats out of 127 securing the largest number of seats in 50 years in japan's municipal elections. the result has given a vote of confidence to prime minister shinzo abe as he faced a crucial upper house election next month.

a poll by nikkei and tv tokyo held over the weekend shows support for the administration stayed strong at 66%. however, support for abe's economic policy dubbed abenomics has waned, down 7 points from a similar question posed last month. with a volatile stock market and the yen swinging wildly, 43% said abe's policies will not continue to have a positive effect on the economy while 36 said it will. and 74% said they did not personally feel any improvements in the economy, an eight-point rise from the previous poll. the state of the economy will be one of the focal points and abe vowed to bring about an economic recovery that can be felt by all. that's all from nikkei. back to you. >> thank you very much for that. now something completely different. wimbledon. the world's oldest and most prestigious tennis tournament starts today with more than 22 million pounds to be won in prize money. i was lucky enough to catch up

with novak djokovic, the world's top rated male player. male tennis player. i asked him what the tournament means to him. >> wimbledon is a very special tournament for me. it's been the one that i always dreamed of winning when i was younger. it's been a tournament that actually inspired me to become a tennis player. and i'm really happy to be here. happy to play on grass. that is the most unique surface we have in our sport. the one that has the longest tradition and history. unfortunately nowadays we play only a few weeks a year on this surface. that's what makes it very special. i guess it's always the top, you know, the top three guys that are always the biggest competitors and the biggest challenge to get to the trophy. but there are many players, great players on the tour. men's ten sis really competitive nowadays and hopefully i can have a good turn. >> are we living in a little golden age with regard to men's

tennis right now? there are so many phenomenal players on the court right now. >> it's a golden age. golden era. however you want to call it. there's a lot of champions who have won, multiple winners like federer, 17 grand slams and we don't need to spin words about his achievements and nadal who is much to his career and playing incredible tennis and then murray, myself and then there's also a younger generation of players coming up which is good to see for the sport. new faces. and being able to challenge the top players. so i'm really glad and privileged to be a part of this era. >> many are saying that the roland garros semifinal match versus nadal is one of the best games ever played in history. do you agree with this? >> i think so. i guess it would be much better if i won that match so i would talk about it with more enthusiasm. no, i'm kidding. of course it was a fantastic

match and marathon. 9-7 in the fifth set. it was definitely one of the most exciting matches i ever played in my life and against one of my biggest rivals and we played over 30 times. i badly wanted to win and wanted to get my hands on roland garros trophy, the grand slam that i'm missing. but, look, it's another great experience for me. i hope i can learn from that experience and come back stronger next year. >> you've made a little bit of money already. and we're a business channel. we talk about investing and the financial markets all day long. do you invest? >> well, i am investing, and i think everybody should, you know, whoever made a certain capital and, of course, in order to -- in order to have a great life and stable life you need to work. you need to earn your money and, obviously, it's not the biggest

part of my life. i think there are more important things in life, but i have a great team of people around me that are taking care of my finances, the family that i trust and it's much easier when you don't do it on your own. >> well, stacey alistair is the chairman of the wta, the women's tennis association. she joins me now. >> good morning. >> what are your expectations for wimbledon? >> it's going to be an amazing and exciting wimbledon championships. our game is at the highest level. serena williams is playing the best tennis of her life. the oldest grand slam champion in our history. and i couldn't be more excited for the championships to start. >> in terms of women's tennis, you mentioned serena. how much growth have we seen in women's tennis and how has that particular element of the industry changed over the last couple of years? >> it's quite amazing. this is our 40th anniversary. the wta was founded 40 years ago right here in london. so from a $1 contract in 2013,

the women are playing for $118 million. and we were predominantly a u.s.-based tour. today, 54 tournaments in 33 countries. and next year, we'll have more events in asia pacific than any other territory in the world. >> i saw that you have eight events in china in 2014 versus two in 2008. so a lot of growth happening on that front where nels asia in particular? >> we award our year end championships where the final eight players convene to end the season. and we've recently done a five-year agreement with singapore. for the wta, china is very important to us. now we see a terrific opportunity by being in singapore to build up the business in southeast asia. >> what do you find with regards to sponsorship deals? how is that changing? >> sponsorship, we've been really fortunate. when you have the most

marketable female athletes in the world, my job is fairly easy. so we've signed six new sponsors in the last three years during this crisis. our tournament revenues are growing, which means their sponsorship is up, which means player prize money is going up. so i feel very good. sponsors are being diligent. there's more rigor in the decision-making process. but we are winning that race. >> you were just saying as well because i was asking djokovic about whether or not he invests. and he said i have people who help me make those decisions. but you were saying you educate your players about investing as well. >> we think it's very important for the athletes to understand that during this short career that they have on the court, there's a long life afterwards. so we actually have programs called pro you. it's like a university for professional athletes. and every year, we have investor relation people on site. the athletes can talk. we have experts who give their time to the athletes deferred

compensation plan. it's critically important and we have a responsibility that the athletes know about how to plan and invest for the future. >> excellent. stase ethank you very much for your time. we look forward to watching public here over the next two weeks. now a verdict in silvio berlusconi's trial is expected today in milan. we'll get more from claudio after the break. still to come on the show, a supermoon may be pritenning up china's skies. up next, we ask mark mobias, is this a one off and where's the light at the end of the tunnel? we'll be live at monaco's fund forum in a couple of minutes. ly. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel,

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hi, everyone. welcome. you're watching "worldwide exchange." these are your headlines from around the world. china's central bank playing hard ball insisting current liquidity levels are reasonable despite the recent rise in money market rates. that's triggering a sell-off with the shanghai composite. stocks in europe down over the last hour with some economists pointing to mixed signals in germany's ifo release. telecom stocks getting a boost. vodafone confirms an offer for kabel deutchland. and edward snowden's world

tour takes him from hong kong to russia and possibly to latin america as he's seeking asyl num ecuador. you're watching "worldwide exchange." bringing you business news from around the globe. hi, everybody. welcome back. if you are just tuning in, thanks for joining the show. here's how the markets are faring ahead of the u.s. market open. we're called lower across the board for the dow, nasdaq and s&p 500 as well. of course, we've seen weaker trade in asia overnight and indeed also here in europe we're seeing weakness this morning, too. indexes falling quite a bit here within the last hour. some people pointing to mixed signals emerging out of the ifo business climate index for germany. the forward looking expectations part slightly better than anticipated. the current conditions weaker. no revision to the month of may. other people talking about how

the efsf has extended its loan maturities to seven years or by seven years to ireland and portugal and that could have some impact as well. the ftse off by about 0.5%. we did see a little dip lower within the last half an hour. we've come back up again in trade. still negative territory, though. the european markets, the main ones still cemented in negative territory. ftse off by just over 0.5%. xetra dax off 1%. and the ftse off in the region of a percentage point as well. now vodafone has agreed to offer 7.7 billion euros or 87 euros per share for kabel deutchland. they've confirmed the bid saying that management intends to accept this particular deal. kabel deutchland by shy 2% and vodafone up 0.25%. telefonica has agreed to sell

its business to hutchison whampoa. they are selling off assets to reduce its debt levels which peaked above 56 billion euros in 2011. both of those companies slightly off. when it comes to the fixed income markets, we saw a spike in the u.s. treasury yield on friday. i did see a print of around 2.7, more than 2.7 on friday. a number of you tweeted and said what on earth have you been drinking? i did see a print of that. before anything came back down to trade around 2.5%. we're at 2.6%. yields pushing higher as people are selling out of the debt markets. the forex markets, pretty stable trade in euro/dollar this morning. we continue to see the pattern. the dollar/yen flattish at the bit. the aussie dollar against the u.s. dollar a little lower. some weakness continuing and sterling off by 0.3% as well. but let's just check in on the markets and what happened

overnight for us. sixuan joins us. give us an account of what took place in your session if viewers are just joining us. >> thank you, louise. china's stocks dived more than 5% today weighing on sentiment in the region. the shanghai composite saw its biggest daily loss in about four years. extending a five-day losing streak. in japan, the nikkei 225 reversed early gains of about 1.5% ending down 1.3%. and china's big trading partner australia also ended the day in negative territory. and the sell-off happened after china's central bank repeated its earlier stance that current liquidity levels are reasonable. this despite the recent spikes in money market rates. and the common cent shares of midsized banks on the downward spril as they tend to have a

higher dependence on interbank lendings. quite a number of them were down by almost 10% today to their daily limit. meanwhile, china's tightening fears also spurred a sell-off in australian mining companies. bhp billiton and rio tinto lost 2% to 3% today and the fed's plan to scale back on the stimulus continued to hurt gold miners. newcrest tumbled nearly 8% to its lowest flefl about a decade. back to you. >> sixuan, thank you with the recap of what took place in our overnight session. sticking to asia, china's central bank is going to stick to its script, repeating its earlier stance that current liquidity levels are appropriate. it also called on banks to manage their lending more prudently. analysts see this as a sign the pboc has no plans to back down from its tight stance and inject more money into the markets. the comments from the pboc

caused an extended sell-off in chinese shares. midsized lenderser especially being the hardest hit. joining us exclusively from the fund fornum monaco is dr. mark mobias, executive chairman of templeton emerging markets. last we spoke was in poland at the polish stock exchange. but let's just switch gears and talk about china. what do you make of the latest spike in the money market rates in china? >> i think it's a very good move on the part of the chinese government. they want to get things simmered down and they realize there's been a lot of undue lending in places where it shouldn't have been made and they want to rein in the banks. and it's probably a very good move. >> but in terms of the stability that could be anticipated or the instability that could be anticipated, given the fears of a renewed credit crunch in china, do you think we're going

to see a real correction before we then see renewed buying? >> no, i don't think you're going to see a very big correction. we've probably seen most of it maybe a little -- a few percentage points more but i don't think you'll see a very big correction because there's an awful lot of money still out there. and the fact that they've made these moves to correct the errors that have been made in the past is a good sign it will give confidence to the market. >> goldman sachs, though, being the last of the major investment banks to downgrade their growth prospects, citing tight fiscal positions. it seems like more and more people are following this line of thinking, though, mark. >> well, i think a 7% growth is realistic for china. it could be anywhere between 6% and 8%. maybe 7% would be the position that we would take at this stage of the game. but i don't think it should be much less than that. simply because there's so much more going on in china and the

fact the government is now keeping an eye on things and not letting things get out of control is probably a very good development. >> how do you think a potential tapering of quantitative easing or stimulus would impact the chinese markets? >> a tapering of economic stimulus is probably going to have an impact globally. i mean, wherever you are, the impact of what the u.s. is doing will have an impact. however, the chinese are continuing to support the money market positions, even though they noare now tightening. the money market growth in china is continuing to rise. more importantly what's happening in china in relationship to japan is very important. because with the japan money easing, a lot of that money will find its way into china and also most particularly into southeast

asia. and that will stimulate the markets going forward. >> i always like speaking to you because you bring an element of common sense often into the conversations that we're having. i just want to bring in a couple of other issues that we're following and then we'll come back to you in a second. demonstrations continuing in brazil over the weekend despite the president's please for calm. they ignored the warnings that the demonstrations could damage the country's image abroad. we're seeing protests taking place there. protests across a number of other emerging markets as well in the last couple of months. and then i look at a list that you've compiled over various markets, mark. and you talk about the number of years the market, the particular markets were top performers. and on the very top of your list we have the likes of the turkish market. the brazilian market. the egyptian market as well. how do you rank these markets now given the protests and the

political upheaval that's taking place. >> of course, the short-term developments will be negative for the markets because it's just a development that will scare a lot of investors. but from a longer term perspective, it's very positive. because these developments show that there's an incredible amount of transparency that's coming into play and that's putting pressure on the politicians to act and act now. you've got young populations in turkey. you've got young populations in egypt. same thing in brazil. if these people are unemployed, if inflation is creeping up, you've got to be concerned because the so-called misery index. inflation plus unemployment goes up and then you have political upheaval. but i would say generally speaking, i feel quite positive about these developments because what we see down the road will be more transparency and a more open market. of course in the short term we

will all be in pain. >> in the short term then, where would you be putting your money if you want to be in emerging markets? we've seen a huge correction in the emerging markets indexes compared to the growth in the u.s. indexes, for example. >> well, if you look at where we were in february of '09 and where we are now, it's really interesting to note that emerging markets is actually outperformed s&p 500. so emerging markets are still looking very good and it's our job to look for opportunities. egypt would be one example. we are actually buying in egypt right now. because we are seeing very, very cheap stocks. we don't think the political upheaval will continue for very long. there will be changes and probably changes for the better. the same thing is true in brazil. we're looking at that carefully as well as turkey. but it's a little too early for those two markets. >> i've made notes of what you just said, mark. thank you very much.

pleasure speaking to you as always. mark mobius, looking for summery, i might add. very nice to see. >> it's very warm here. >> thank you very much. i'm using my imagination to feel what you are feeling at the moment. it's super cold in london, mark. so say hi to monaco. we'll speak soon. cnbc will be bringing you the latest from the fund forum that mark is at. the fund forum international in monaco all week. on the agenda tomorrow, some big names. the gloom, boom and doom reporter marc faber and charles beasley. tune in on wednesday for peter de proft, the director general at efama and martin gilbert from aberdeen asset management. so a fantastic lineup. angela merkel's party has unveiled its 2013 manifesto with a headline pledge to boost spending by 30 billion euros.

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you're watching "worldwide exchange." >> welcome back. i'm louisa bojesen. what credit crunch, says china as the country's central bank insists liquidity levels are reasonable. european markets slumping as a reading of the german business

climate for june fails to inspire. we're seeing rejigging across the board. the u.s. hunt continues for whistleblower edward snowden as the russian government claims it had no knowledge of his arrival in moscow. now germany's federal elections are only three months away. very soon. angela merkel's party is the favorite to defeat the spd opposition. key proposals of the christian democratic union have already been released. carolyn roth is in berlin and she joins us now. so we're looking ahead towards what's going to be taking place over the next couple of months. and also what type of changes we're going to see from within the various coalitions in germany at the moment. >> absolutely. i mean, the platform has already pretty much been released over

the last couple of weeks. it's been heavily criticized because as you pointed out, there's this gravitational shift toward the center. even towards the left with some of the policies very much socialist. what we're talking about rent control, talking about minimum wage. so many would argue angela merkel hasn't just taken a page out of the social democrats playbook but entire chapters. she's also been criticized for how she's going to be able to finance these 30 billion euros in spending for families, for children, mothers, for education research and road infrastructure. given that the christian democrats are against raising taxes. this is how she justified the plan. >> ladies and gentlemen, this is a program characterized by a well-balanced centrist approach. it is designed so as not to place new burdens on the taxpayer and the economy because we believe that by granting more freedom, and by motivating our family owned business sector and our medium and big sized

companies, we can increase the chances of higher tax revenue as opposed to following a path of demotivation by raising taxes directly. we'd be at risk of seeing less tax revenue to force our goals. >> but despite all this backlash over how this spending would be financed, even from within her own party and the junior coalition partner, angela merkel and her christian democrats party are still very popular here in germany. according to the most recent polls, her party would get 40% of the votes and even more importantly, she would be able to get a very slim majority with her preferred coalition partner, the free democrats with 46% of the votes and if germans were to elect their chancellor directly, she would get a whopping 58%, leaving her contender far behind with only 18%. >> stay with us for a moment carolin. i want to tell viewers what's happening. we're seeing kabel deutchland's

ceo indicating there's no breakup feet in the vodafone offer. they only have one viable bid on the table. they have reviewed the proposal. also by liberty global. just to recap the full story. vodafone now they've upped their offer for kabel deutchland and are offering to pay 7.7 billion euros for the company. it's an all-cash bid. liberty having confirmed their interest just this last week but it's anticipated we're going to see vodafone's offer recommended to shareholders today. now staying in germany, the german ifo business climate index has improved in june. european markets not particularly impressed by the data. we've come off quite substantially. and one of the things they are saying in the date is manufacturing export expectations increase sharply. i thing data look pretty good this morning. >> well, you know, really is a mixed bag. it's hard to say why the markets are actually selling off. there's so many jitters out

there. hard to say whether this is actually because one of the components in the ifo index was slightly worse than expected. the current conditions, of course is the one factor that came in slightly below expectations. 105.9, that was in line with expectations. the second consecutive month of growth for the ifo index and the economists i talked in the last hour from the german institute for economic research, he says this pretty much confirms the trajectory for the german economy. it's upwards but very slowly moving toward the up side and it's certainly going to be a bumpy ride for the german economy as we head into the second half of the year where it should improve. but again, given that it's so export reliant, much of it really depends on what's happening in china and in the u.s. >> carolin, thank you very much. see you soon again. carolin roth joining us live out of germany. edward snowden is expected to try to fly to cuba today as

he awaits word on whether ecuador has accepted his request for asylum. the former contractor who leaked details of the u.s.' secret surveillance programs fled hong kong for moscow on sunday. the u.s. filed espionage charges against snowden. the white house has registered quote/unquote strong objections to hong kong and china for letting snowden leave. and they're urging russia to send him home. ecuador's foreign minister says they'll analyze snowden's asylum request with a lot of responsibility. now here's a word you might not know. funambulist. i'll show you one here. a florida funambulist has conquered a tightrope walk over the little colorado river gorge in northeastern arizona. nick wallenda performed the stunt. it was stretched 1,500 feet above the river. wearing no safety harness

because that's what you do, he said he murmured prayers to jesus along the entire way. absolutely nuts. how long do you think he's been practicing? apparently he had to practice with very large fans because the wind was so strong. so you are practicing with fans. the wind to maneuver. nuts. is this real courage? what do you think? do you think snowden, what he's done is even more heroic, the whistleblowing? one of our viewers tweeted why focus on the zero or heo debate. the media should be reporting on the issues he brought up with regards to snowden. jeff tweeted, wallenda is a real hero. market traders may walk about -- talk about even walking tightropes. but he did it for real. he's not so sure on snowden. this particular viewer. but keep in touch with us. you can write us.

worldwide@cnbcwex, or find me as well on twitter @louisabojesen. or on e-mail. gosh, crazy. the tightrope walking. still to come -- does your investment portfolio have room for property? after the break, hear why u.s. real estate is all set for solid growth.

hi, everyone. welcome back. you're still watching "worldwide exchange" here on cnbc. i'm louisa bojesen. asset classes have suffered amid fears about the end of cheap money. but our next guest is saying that with u.s. companies ready to expand their property portfolio, commercial real estate is one area still primed for growth. hisam najee joins us from san francisco. welcome. i keep hearing that retail housing is an attractive place to be. why do you think that commercial real estate necessarily is going to see a pop? >> good morning. thanks for having me on the program. there 24 reasons for that. first of all, the employment situation in the u.s. continues to improve at a gradual pace. although the pace has been

disappointing. we are adding about 2.2 million private sector jobs a year. and that has been translating to a fair amount of new demand for commercial real estate. in the early stages of this economic recovery, companies had a lot of excess space so they didn't need excess space for growth. that's changed. it's no longer the case. as companies now look into the future, they are going to need much more space looking ahead than they did over the past three years. >> but how do we know that employment is going to continue to pick up? i mean, we keep hearing that we still are seeing quite a bit of weakness that we're not on solid footing yet and also, of course, the uncertainty of what happens once the fed starts its tapering process. >> sure. the outlook for jobs really is supported by a couple of different factors. we've never seen this degree of tepid drop after a serious recession. it's been a very low --

we'll still have room to catch up. we've added about -- over 6 million jobs out of the 8.7 million that we lost. so job growth so far has not been overly exuberant. the other side of it is that corporate profits are well ahead of where they were at the peak in 2007 but corporate investments are just now beginning to recover at a level where the future trend for corporate investment actually looks pretty favorable. on the interest rate side of it, it's been more of an overreaction in the marketplace over the past week or so. and interest rates really should only be going up if employment is improving, which has been somewhat anticipated but not the case yet in terms of the real data supporting it. >> where will you anticipate to see the most strength in commercial real estate than geographically when looking at the u.s. >> the markets are really in three different categories. the coastal markets, both on the east coast of the united states and the west coast of the united

states are typically viewed as supply constraint favorable markets and a tloeft foreign buyers that come into the u.s. tend to prefer these gateway markets like new york, boston, washington, d.c., seattle, san francisco, los angeles, san diego on the west coast, are examples of those kinds of markets. they really held pretty well together during the recession and that v shown pretty good economic rebound. they are the favorite markets but their yield profile is much lower because the risk profile is lower. now we're seeing the other group of markets like phoenix, arizona, for example, texas, florida, atlanta, that were hit much harder because of their exposure to housing and they are really considered the recovery market. they are showing very strong population growth and job numbers and the real profiles give you an arbitrage as an investor coming into the u.s. >> thank you very much. lance tweets in and says from san francisco? it's 2:30 a.m. he must be dedicated.

just a reminder for our viewers what you do for us. thank you very much. we appreciate it. hope you can get a little bit of sleep before the -- >> it's a pleasure to be on the program. thanks for having me on. >> thanks for staying up to talk to us. now a verdict in silvio berlusconi's so-called bunga-bunga trial is expected today in milan. claudio joins us outside the courthouse where it's taking place. >> reporter: yes, louisa. a courthouse that as you can see from behind me is blocked in terms of the front chance not being able to be used today because of the fact that security has been stepped up. passersby are very coweruous and very willing to give their opinion and nobody seems to be in the middle of the road. they're either pro-berlusconi or anti. italians are looking out today to see what happens with this

verdict. one is abuse of power and the other of sex with a minor. that's what berlusconi is being accused of by the prosecutors. five years in jail would be what he would get for the abuse of power and one year for having sex with a minor. plus a ban permanently for the rest of his life to hold a public office. what is he being accused of? the abuse of power is that the young woman who he is allegedly got out of jail, abusing of his power saying that she was the niece of the then egyptian president mubarak. now with -- by getting her out, what the prosecutor is saying is that he got her out in order for her not to speak about what was actually going on in the villas of silvio berlusconi with these bunga-bunga parties where women were paid in order to be there available to the prime minister as well as his team. now we will see what happens here. this verdict is important, even though it is just the first

verdict. this case would then go to an appeal before he'd actually ever face this final verdict. but, of course, it's important also for the political situation here. we have a very delicate balance in this government. and silvio berlusconi plays an important role. >> claudia, thank you very much. we'll be checking in with you throughout the day. just a reminder of our headlines from around the world. china's central bank playing hard ball insisting that current liquidity levels are reasonable despite the recent spike in money market rates. that triggers a sell-off with the chinese shanghai composite posting the biggest loss in four years. stocks in europe down in the last hour or so with economists pointing to mixed signals in germany's ifo release. and on top of that, also hearing that maturities have been extended for ireland and portugal. vodafone is looking to have taken the lead in the race for kabel deutchland with the bid but the german cable company says it would still closely

consider an offer from liberty global. edward snowden's world tour takes him from hong kong to russia and now possibly to latin america as he is speaking asylum in ecuador. still to come on the show -- well worth seeing. ending out a week on a high note stateside. rebounding from the fed-fueled sell-off. will we see more volatility ahead? we'll be discussing that after the break. 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. ♪

welcome back. thanks for joining us here on the show. just to recap what the markets are doing ahead of the u.s. open, we're seeing u.s. markets indicated to open slightly lower in the morning's trade. of course, we're seeing here in europe quite a bit of weakness. the weakness just accelerating here within the last hour or so. we had a mixed bag with regards to the german ifo data. the esf extending its loan maturities to portugal by seven years. markets off by right around 0.5%. our main european markets down 0.5%. a little more when it comes to some of the periphery markets in germany. in general, how do you make money in these markets? this is what some of the experts have been telling us earlier this morning. >> i think you still want to be long of dollars. that still makes sense. you still want to be long of

dollars. short of those that are leveraged off the china story. so i think you probably want to be long of north america. mexico maybe the exclusion to that. along with north mech. u.s. and canada and probably short of the leverage in asia. >> one of the biggest fears that is operating now against gold is the fear we're going back into a world of positive real interest rates. and, you know, we've had a situation as you quite rightly said where investors are following a strong trend up in gold. and it seems to me that we're down 23% or so this year. something like 40-plus percent from the highs. so the trend is very much downward. that's some serious momentum. >> clearly seeing a lot of money coming out of fixed income. that's a global mutual fund story. you look at the data, 15% to

20%. the second story that's happening is a lot of money coming out of emerging market equities. real capitulation going on and money going into developed equity. there's a rotation going on. >> there's a rotation going on. dan greenhouse, chief global strategist at btig joins us from new york. do you agree? is there a rotation going on? >> yeah, i think you've seen that so far. it's getting a lot of attention now because the rapidity of the sell-off in some of these markets has accelerated. in commodities, in gold, this has been a nine-month story. for fixed income markets, a nine-year story. the yield spike you've seen in australia, obviously the uk and the united states this morning, has really accelerated of late. but, yes, i think you are seeing a rotation into developed market equities. that's fair to say at this point. do you think the u.s. treasury sell-off has gone too far? >> oh, i do. i do. listen. i'm not going to bore everybody

with how this works but there's a couple of things that go into the bond market pricing and it's hard to envision with inflation expectations going the wrong way and growth expectations not meaningfully picking up, it's hard to envision that meaningfully higher yields and some of these developed markets is warranted. now that said, investors can take yields wherever they want to take them, of course. but i don't see why the yield in the united states should suddenly be 275 given that some of the fundamentals underpinning the united states haven't really changed. all ben bernanke did was say maybe we'll buy a few fewer bonds. i don't know that that warrants a sustained sell-off in the bond market just yet. >> i swear i saw print of 277 on friday. spiking up before coming down a bit. what do you think the end of the year target should be if we're not looking for higher yields? >> well, our house view is for 225 at the end of the year although that probably will have

to go under review. obviously a number of other houses are 250. i think somewhere in that range was always what should have been expected. we had tapering occurring in september. we have inflation picking up a little bit towards the end of the year. we have keequities continuing t go upwards. outside of 2.25, i'm not sure i'm ready to jump in that boat. >> equities. do we think the trend is going to continue? we could be looking at tapering at the end of this year. some say it could end by the middle of next year completely. is the correction going to continue and at the same pace as what we've seen so far? >> listen, it certainly could. this recovery from '09 to today has seen a number of declines of anywhere from 7% to 20% which we don't expect. something somewhere in the middle, 7% to 9%, 7% to 10% is a

perfectly normal equity market correction. we could be in the middle of one of those right now that would take us down into the lower 1500 level and from there you base and move higher in the year. i don't see why that would necessarily not occur. at the same time, for the vast majority of investors, whether this sell-off is 5% or 7% or 10%, should really be irrelevant. you should be looking at things over a three-year and five-year time horizon if not longer. for most investors, buying in down 3% or 7% in the medium to longer term isn't necessarily going to be what makes or breaks your retirement or makes or breaks whether you can take an extra vacation. timing the market has proven to be quite difficult. >> what do you make then of the latest spike that we've seen in the money market rates in china? >> clearly they are okay with it. i think from our standpoint what we've been talking to clients about is not that growth is

slowing in china. it's not increasingly, it looks like it now indeed has generally been proven that policymakers are okay with that slowing growth. so we went into the year with a view that growth would be somewhere shy of 8%, say 7.9%. that, obviously is now on the optimistic side of things. growth like three come in in the middle 7s and steadily move lower. that's a sea change in sentiment and in policy from the last couple of years where investors could always count on policymakers to come in with either mini or larger stimulus package, liquidity package to help boost growth and at least in the short term drive up asset returns. that is not the case anywhemore. they are okay with what's happening. that has to change the way you look at the investment landscape over there. >> dan, thank you. dan greenhouse, chief global strategist at btig. coming up, a big u.s. banks are trying not to get stressed out by the fed's latest round of stress tests. we look at what requirements they are facing.

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liquidity levels are reasonable. european markets slumping as a reading of the business climate for june fails to inspire. and the esfs extends its loans. well, central banks, they have been told to rein in quantitative easing and re-emphasize their focus on inflation and spearheading growth. in its latest report the bank of international settlements warns that delivering more stimulus is becoming, quote, increasingly perilous and could retard the global recovery. big u.s. banks are learning to cope with higher levels of stress these days. stress tests, that is. bertha coombs joins us from cnbc headquarters with more. we're coping, bertha. we're coping so far. >> yeah, we certainly have seen stress in the markets, right?

the fed today will meet with bank officials behind closed doors in boston to discuss the latest round of stress tests. the 18 largest u.s. banks are required to submit their own self-run test by july 5th showing how they'd fare under a severe economic shock. the fed won't critique the results but banks must make them public by the end of september. on the list of topics, residential and corporate loans and counterparty credit risks or how much banks could lose if one of their trading partners goes belly up. rise interesting rates are also expected to be on the agenda. t"the wall street journal repo " report"s banks submitted a proposal to u.s. regulators on how to pay for restructuring a too big to fail institution in the event of a future crisis. this is part be an effort to preempt tougher government rules. the plan would require banks to hold a certain amount of debt and equity to be used to prop up any failed company seized by

regulators. some might be forced to issue long-term debt. the journal says the six biggest u.s. banks may have to hold as much as 16.5% in additional capital. regulators have not responded to the proposal yet. and could reject it in favor of their own. but they have been receptive to banks issuing more debt as that can provide more liquidity for the eventual failing bank while the government replaces senior management and fixes problems. so lots on the agenda this week. >> i just wonder how we'll look back on stress tests, say, 20 years from now, 50 years from now. will we say they made a huge difference or say they've made no difference at all? one minute 7% is enough. the next minute we want 13%. it's really interesting. >> it certainly keeps people talking and to some extent obviously the banks know how to pass but the fact that they are talking about this more openly and people can see more

transparency about it has to be helpful. >> yeah, yeah. bertha, good to see you. in sunshine yellow. much appreciated. bertha coombs joining us from hq stateside. meanwhile, the pay for the chief executives of 15 banks in the u.s. and europe averaged $11.5 million last year. that's 10% less than the year before. sounds like a lot, right, but it's down. financial times research shows the fall in pay coincides with an average drop in net income across the banks. we need to take a look at some of the top tech stories making the rounds. microsoft's ceo steve ballmer is expected to unveil restructuring plans for the company next monday. all things digital reports that -- has reports that some top managers are worried as balmers consulted few people on the plans. just a few direct reports and some board members. in a shareholder letter last fall, ballmer outlined his plan of making microsoft into a

devices and services company. microsoft and oracle are expected to announce a cloud software partnership today at:30 p.m. eastern time today. oracle's ceo larry ellison hinted at the news on the earnings call last week. ballmer and mark herd are expected at the event. microsoft and oracle both slightly lower in trade out of germany. well, google has confirmed the federal trade commission is conducting an antitrust review of its purchase of waze. the $1.1 billion deal closed earlier this month. legal experts say it's unlikely the ftc would tell google to unwind the transaction but many have told the company not to integrate waze just yet. the agency would have to determine whether waze would have become a direct competitor with google maps first. facebook is saying that it inadvertently exposed the phone numbers and e-mail addresses of 6 million members to unauthorized parties over the

past year. in a blog post late friday, facebook blames the data breach on a glitch in its archive of contact information collected from its 1.1 billion users worldwide. the company's security team discovered this bug last week but facebook didn't publicly acknowledge it until friday afternoon. coming up, the u.s. markets are coming off their worst week since mid-april. will the june swoon continue the swelter just like the summer heat this week? we head to the bond pits in chicago for a preview of the trading day and the week ahead in a moment. [ male announcer ] citi is over 200 years old. in that time there've been some good days. and some difficult ones. but, through it all we've persevered,

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quote, smoothen the debt redemption profile of ireland and portugal and lower their refinancing needs. european markets having come off an early trade, recovering a little bit, but still hanging on to some losses. the ftse 100 off by 0.7%. the xetra dax and cac 40 off by a little more. most of the economy economic data will be out later on this week. today you have the monthly dallas fed survey out at 10:30 a.m. eastern time. dallas fed president richard fisher is in london speaking at 1:00 p.m. eastern about the economy and monetary policy. mark sebastian is a chief operating officer from option pit mentoring and consulting. he's with us out of chicago. welcome. what are you looking at this week? what's going to be a make it or break it scenario for you? >> well, you know, i think the ten-year note is the dog that's

wagging everybody's tail. it's really thrown all the financial markets into a little bit of turmoil here. we've got a weird situation where bonds and equities are correlating. that is not a normal market. i'm looking at economic data. i'm not sure whether good is good or good is bad. we have the vicks break 20 last week. when the vix breaks 20 coming up from below 15, it's going to break 20 again and when it does, it's not going to be a pretty picture. i really don't like everything i'm looking at right now and i think what's going on in china could be the straw that breaks the market's back. >> how do you trade? >> well, you know, i think cash is a position and if you are a typical long investor, long-term i do agree with the previous guest that at the end of the year, we'll probably be better than where we are right now but, you know if i see an accident in front of me as i'm driving down the road, i typically try and steer around it. so i personally have moved almost entirely into cash.

what i have on right now is essentially long vix. and that's the way i'd be playing it. i think you have to be very cautious. i think the next couple of weeks could be very ugly at least through unemployment next week and probably through the middle of july. >> but if you are long vix, wouldn't you be -- based on the scenario you just gave me, wouldn't you be short equities and short treasuries as well. >> well, i am sure -- i am long in increase in volatility. it's regardless of direction. underlying metrics in the s&p 500 have been increasing. we're seeing an increase to the rate of speed in either direction in the s&p 500. my general leaning is, yes, i'm bearish. you know, given a choice, i would be going short but generally speaking, i think therightpositith the right positionforthegeneral

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good morning. stocks are dropping. in china more than 5% on liquidity fears. so-called central bank of central banks. they are issuing a stern warning to all of the world's monetary policymakers. the bis arguing that low interest rates and extra liquidity needs -- they need to end or return to growth will be in jeopardy. in the u.s., bad news. equity futures are pointing to a lower open on wall street after a tough week last week. it is monday, june 24th, 2013. it's "squawk box." it begins right now. ♪ it's a cruel cruel summer ♪ >> it is a cruel summer. good morning and welcome to

"squawk box." joe and becky aren't having a cruel summer. they are enjoying some good time off today. i'm joined on the set by brian sullivan and mandy drury of "street signs" fame. a baste takeover here. hopefully we still maintain a majority position. also three guest coast hosts with us. we've got a lot to discuss with all of them. but before we talk about a little business news we have the buzz story of the morning. if you didn't see it last night, check it out. nick wallenda is successfully completing a tightrope walk across the grand canyon last night. took him 22 minutes and 54 seconds to walk the 1400-foot wire. about 13 minutes in, though, he had to stop and sit on the wire to steady himself. a scary moment there. we're sure to talk more about the daredevil. he claims the thing he wants to do