this is "worldwide exchange." a recap of the headlines today. the greeks create a $35 million advertising giant, but the deal will need clearance from antitrust authorities. and as many as 45 countries. >> it's going to be delicate in its execution, but the sooner we get on to it, the better off we're going to be. a stronger yen, the nikkei lower, only add to government concern over how to bring in a sales tax hike. president obama narrowing his choices for the next fed chairman. he says an announcement will be

made in the next few months. and the eu's foreign policy chief travels to cairo for crisis talks as they crack down on supporters of mohamed morsi leaves more than 70 dead. you're watching "worldwide exchange," bringing you business news from around the globe. >> a very good morning to you. france has announced a $35 billion merger of equals to create the world's biggest advertising agency. it will trade in both new york and london. morris levy and omnicom share the role of ceo for the next 30 months after which the publicis will be chairman. speaking after a press conference in paris, he told cnbc the deal would benefit everyone. >> there is no one weak partner,

and there is no one who has financial difficulties or anything of the like. so we believe that this will be a great operation for all our people, our clients and our shareholders. >> publicis shares are closed. they won't open until 2:30 london time. shares have been trading higher on news the two confirms could attract clients from the two merging companies. earlier we spoke to the coo who suggested that the acquisition isn't the way forward. this is his reaction. >> the m.o.e. doesn't make much sense, and it's counterstrategic because publicis, the combined company, will have a lower proportion of digital and a lower proportion of fast-growth markets. they said for years that they didn't want to get involved in that scrum, and now in one fell swoop they are. having said all that, i think it's a tremendous deal for

publicis and all credit and bouquets to maurice levy for having engineered this. >> now, our colleagues in the states will have the first interview with the ceo at 10:10 eastern today on "squawk on the street." at the same time, another rival posted higher net profit on revenue for the first half of the year. it expects a slight decrease in organic revenues in the third quarter. that's compared to the previous year which got a boost from the london olympic games. jc decaux shares we'll take a look at a little later. likely to be president of siemen's following a board meeting this wednesday. let's get more. is there still a chance he could fight for his job, or do you think it's a done deal? >> well, it looks like more or

less like a done deal. he's still threatening that he does not want to leave his job unless the head of the supervisy board will leave as well. otherwise he wants to have a forced election on his position, on his person. but it does not look very likely because the supervisy board convened over the weekend for an emergency meeting. there the vast majority, according to sources reported by reuters was in favor of ousting him because he is not looking back at the legacy of operational success. actually last week's profit warning was the fifth under his reign, and that was a bit too much or a bit too much for the taste of those supervisory board members down this munich. on the other side, peter allegedly speaks about a conspiracy against him inside

the company according to him because the then to become ceo joe kayza was not very much on good terms with him, and he claims that this profit warning last week wasn't really necessary and that this was pushed by the head of the supervisory board and as well by joe kayza in order to get rid of peter loscher. so it is more like a drama story going on in munich. but the likelihood of peter loscher surviving that, very low, ross. >> catch you a little bit later. thanks for that. and we told you about where we stand with that stock, just up 0.25% in france. right now we've seen a stronger yen, weaker nikkei. let's bring you up to speed with the asian markets. hi. >> reporter: thank you, ross. a tepid start of the week with

asian stocks trading in the red. and the in nikkei 225 finishing lower by over 3%, extending a four-day losing streak. china markets also let led the losses in the region. the shanghai composite dipped below the key 2,000 level. weaker by 1.7% today. investors also worried that beijing's plan may prompt banks to tap the markets to raise the fund. as a result, banking shares in some of the property plays as can you see from the first row, they took a beating. but it was a sunny day for those solar panel makers as they rallied actually after the eu and china reached a trade deal over solar panel on terms favoring beijing. it surged up by 10%. in japan, nomura tumbled by about 5.7% today despite reporting a strong profit growth. this as markets are more

concerned about declining trading volumes. and a stronger yen as ross just mentioned that it took a toll on exporters, especially automakers. mazda lost despite a strong profit outlook. and mitsubishi motors tanked 10%. no such worries for rivals hyundai. the south korean automaker has extended its 11-day winning streak, up another 2% after it reported strong earnings last week. and kia motors also ended marginally in the green. back to you. >> all right, thanks very much for that. we'll catch you a little bit later. here we are just an hour and seven minutes into trade in europe. we're weighted to the upside, around about, what, 6-3, something like that on the dow jones stocks 600. the ftse 100 last week. in fact, right now we're up about 0.13 of 1%. the ibex up over 5%.

the cac up about a quarter, boosted by publicis this morning as well. now, it's a light day today in terms of data, but what a big week we've got coming up, the jobs report, meetings from the fed, other data including pmis, manufacturing pmi,s. ahead of all that, fairly contained in terms of market sentiment. portuguese yields just back below that 6.5%. as far as the dollar index, a lot of caution surrounding the dollar as well. dollar index down five-week lows at the moment. and euro -- sorry, dollar-yen, 97.96, down at this one-month low. the aussie/dollar a little lower, just below 0.93. and euro/dollar, 1.3269. now, the indian rupee also is a

tad weaker ahead of india's central bank decision tomorrow. currency likely to be the focus after hitting a lifetime low of 61 per dollar earlier this month. it's lost more than 8% of its value versus the dollar this year. today the prime minister of india is meeting industry leaders to discuss how to deal with the issue. and here's the rupee at the moment, 59.37. let's get more. patrick, nice to see you. let's kick off with the rupee. the finance minister has come out this morning and said the weakness of the rupee is down to what he calls speculative attacks. is he right? >> no, i don't think so. look, i heard that as well. look, i think the weak rupee is a necessary part of the policy mix in india. we've got, you know, triple deficits. we need easier monetary policy, tighter fiscal and a combination of that, we need a weaker rupee and we expect it to stay weak

for some time to come. >> is it going to get back below those record lows? >> look, i think it's going to bounce around these levels i think betweenal and 61 over the next two to three months. but i don't think we're going to see a sharp selloff in the rupee as we have seen the last few months. we characterize the rupee really as being an early adjuster, the market has realized that this is a policy mix that india needs. the reserve bank has cut rates as they should earlier this year. so this is a natural conclusion of that rather than expecting we're going to see another precipitous decline from here. >> let's move on to the yen. the bank of japan governor saying qe is working well. not a huge boost to dollar/yen. is the yen at the moment actually more a victim of people trimming dollar positions ahead of a pretty big week? >> well, look. i think that's certainly part of it. the dollar has been under pressure for some weeks, as you mentioned before. what we saw in japan today, this concern over, you know, some

delay or some watering down of the consumption tax, indeed bank of japan governor kuroda, holding the course on monetary policy. it requires policy coordination in japan as well. if there's a concern that these three arrows of reform that the abe government is pushing aren't going to be pushed quite as hard. then there's a commitment from the others that perhaps there's monetary easing would not be as strong either. we're starting to see some profit taking and concern on that. and that's been reflected very well clearly. >> what's our range, then, patrick for dollar/yen? >> well, look. i think a very broad range is 95 to 105, but that's not particularly brave. i think the breakdown was pretty significant. we could test out -- we're i believe now to the high 96 range. and we could see that in the next couple of sessions.

we expect out of that that the dollar will get some support, and that could be in tandem with recovering dollar/yen back towards 100, 102. >> how are we positioned ahead of all of that this week? >> yes, absolutely. huge event risk. most of it in the back end of the week. the dollar's been sold off quite aggressively the last few weeks. we expect they would not be, as suggested in an article last week. so we could see profit taking on that ahead of time. we expect the dollar to come out of it, you know, on balance. you know, looking better. we've got pmis as well. europe has looked better in that regard. i think if we look forward, the dollar is the place to be. we expect very soon before that, we're going to start to see the dollar recover. >> good to see you. thanks for that. have a good evening. also on today's show, japan's leaders have been touting the benefits of

abenomics. we'll have the latest from tokyo in 20 minutes. could market turbulence hit the carrier? john strickland will join us with analysis. president obama is getting down to business on tuesday for the fed chair, ben bernanke. we'll bring you the latest from washington in the following hour. and a busy week for housing data. we'll check in with the author of "foreclosure nation" from ft. lauderdale at 11:positive cet. plus, thousands of muslim brotherhood supporters have begun marching in egypt despite a warning from the military after deadly clashes over the weekend. we'll have the latest for you from cairo after this break.

egyptian supporters have begun marching toward the headquarters risking new confrontations. violence escalated over the weekend, killing at least 70 people. yusef joins us from the egyptian

capital with more. yusef. >> reporter: well, ross, again, the atmosphere very, very tense this morning. you mentioned some of those marches are gaining momentum. now, the anti-national alliance which is basically an alliance of those supporting ousted president mohamed morsi put out a statement saying that they would go ahead with marches that would also include comments throughout. they probably, after the conclusion of evening prayers, and also are planning to host a million man march for tuesday. and all of this comes as the political impasse continues to widen. you have the military and the government, which are clearly losing patience with the situation. comments from the egyptian minister of interior saying that they would press ahead to break up the sit-ins and on the other hand the pro-morsi supporters saying they will not budge until their president is reinstated. also, perhaps showing what is at stake, the eu foreign policy chief, katherine ashton, in

cairo for talks with various political leaders. she is going to try to mediate between the forces. it is not clear whether she is coming to the country with a plan in hand. we'll have to wait and see whether she's going to be able to turn it around. what is clear is that tensions are higher. you mentioned the death toll over the weekend. this is the highest it's been since the ousting of the former president, mohamed morsi. but despite all the violence, ross, just a quick note on the markets. because if you look at the past 30 days, we've seen a rally in excess of 13%. the market just soft at 0.7% in sunday trade, really taking the violence in stride. and that may come as a surprise because historically when events of violence like this occurred, the market would fall quite significantly. that hasn't happened. the rally is still holding strong. and some stocks, heavyweight stocks like private equity giants citadel capital gaining 5%. there's several explanations to that. it is perhaps general confidence

in this interim technocr technocrat-filled movement to steer the country out of trouble. but whether they will be able to do that remains a key question. what is also visible is that the country or the administration is becoming increasingly unpatient. and that, of course, may have consequences for further escalation of violence. ross. >> all right, yusef, thanks for that. more from him later on in the show. back to corporate news. and we kick off with ryanair. helped by extra charges for passengers to reserve seats. the low-cost airline also maintained full guidance. the cfo said despite headwinds in some european markets, he's fairly confident. >> unfortunately the green shoots of recovery in countries like spain or italy. but our business is still doing well. we still expect profits to grow,

fares to rise into the second half, and we've agreed to return a billion euros to shareholders over the next two years. >> john strickland, director at jls consulting. good to see you. i've seen the forecast from ryanair described as it's another typically cautious comment. we suggest don't listen to what they say. watch what they do. is that right? >> i think all things being equal, it probably is cautious. we tend to see this every year. guidance is up to 570, 600 million euros. that's not much of a growth compared to the last year. this first quarter is perhaps unusual in that we've seen falling fares. we've become used to ryanair fares rising in recent times which has been perhaps a deliberate ploy to offset fuel costs. although the fares have gone down, as you highlighted there. revenues are rising rapidly, going up in excess of 25%, more than a quarter of the company's total revenue. given that we're moving into the

key earnings period, we're in that period now, we should expect some rise in results. >> what has happened with the early summer bookings? >> well, they did sound a small note of caution. late in yields are coming under a bit of pressure. if you're booking at the last minute on ryanair, the fares are that much higher. ryanair will exact its shares. >> you actually have good weather here in the uk. they might have lost out. a lot of people might have said, i'm not getting on a plane. >> i think that might affect the last few bookings. they were more or less acknowledging because we've had bad weather in parts of northern europe. a lot of people got fed up and booked. those bookings, people can't refund them. so they're going to go. it's true. there are always those last-minute speculative

bookings. >> what's the outlook, nevertheless, for ryanaramide yum term. >> it's still very positive. we had a big aircraft order from them a few weeks ago at the paris air show. some of those are going to replace those already in the fleet. some of the older ones will go back. they're talking about growing passenger numbers to over 100, 110 million in four or five years' time. >> that's an extraordinary number. >> exactly. the fleet will be over 400 aircraft. and we're expecting later in the year negotiating with boeing for at least another 200 of the new boeing 747 max, which is a more fuel economic air cost. >> that's what it's all about, more efficient aircraft. >> nor efficient in terms of fuel burn, high capacity, high productivity and been quoted to an american newspaper, over 600 aircraft in the fleet as we move into the 2020s. >> how does that compare to easy jet, their competitor? >> easy jet just revised up

their year-end guidance between 450 and 480 million pounds. the scale is a bit bigger for ryanair. the two are both juggernauts. they have different models. easy jet focused more on business travelers. ryanair more on discretionary travel and secondary airports. but both are profitable in a way that the legacy airlines would just love to even get close to. >> you mentioned aircraft. a&a has had another problem with its dreamliner fleet. it canceled a flight after a warning. the plane was on the ground at the time. passengers were routed to another flight. a&a shares slipped ahead of the earnings release tomorrow. your view of boeing and their dreamliner problems. >> well, all new aircraft do get problems. the 787 has perhaps got proportionately more because of different technologies, different systems, different manufacturing processes. just taking one of those on its

own would have been quite a mouthful to swallow without indigestion. to do all three, boeing does acknowledge. in hindsight, they perhaps would have done loss. the aircraft is supremely important to boeing. it's a key part of the company's strategy, as it is those airlines who have it in service. there really has to be now the maximum effort to get to the bottom of the problems to overcome these problems and really work in confidence. that effort started after the grounding after the batteries. >> does this help airbus and their own plane in this segment? >> i think they benefit maybe from being second to market inasmuch as they have a slightly more cautious approach to the design of the 50. it's bolted onto a metal frame rather than baked into a unit like boeing has done. when we heard about the lithium battery problem, boeing said we won't use it at least in initial models. and the market for this segment is well in the 4,000s. boeing has to get up to the

market to really resolve the problems if it's going to assure it gets the maximum orders. >> it's going to change its name to airbus group. will that help? particularly targeting sales in asia, will that help them, do you think? >> it probably doesn't mean to anybody out in asia. airbus and boeing are the two known entities and markets in asia. airbus has a manufacturing plant in china for the a320. both companies need this market in the future. if the name helps -- >> it seems to make sense. >> top of mind. absolutely. >> we don't talk much about the defense side anyway. >> absolutely. >> john, good to see you. thanks very much for joining us. john strickland at jls consulting. french food giant danone, results were boosted by strong demand for baby milk in china. weak sales in europe weighed on the operating margin.

nevertheless, the firm still reiterated its 2013 forecasts growth of at least 5%. the shares up 2.75% in paris. now, just when you thought london's burger craze couldn't get any stranger, the world's first test tube burger, yep, this is one made entirely from meat grown in a lab. it's going to be served up in the british capital next week. the five-ounce patty which costs 250,000 pounds to produce is made from 3,000 tiny strips of beef grown from stem cells. professor mark post pictured there, i presume, is the brainchild behind the burger. he says the project is designed to help address growing demand around the world. saying it could be the most important burger ever made for global hunger. we want to know, would you eat it? join the conversation and get in touch with us. e-mail us worldwide@cnbc.com.

would you volunteer to eat the world's first stem cell burger? it is going to be eaten, by the way, cooked and eaten next monday. i'm not sure whether it will have relish, whether it will have fries or what are those horrible green vegetables? what is that? gherkin. what is the point of that on a burger? anyway, would you want to wash it down with gherkin or not? let us know. still to come on the show, the bank of japan governor says a planned sales tax shouldn't hurt economic growth. but prime minister shinzo abe, is a rift brewing in tokyo? we'll talk about that when we come back. [ male announcer ] i've seen incredible things. otherworldly things. 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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these are the headlines from around the globe. a $35 million advertising giant, but the deal will need clearance from antitrust authorities in as many as 45 countries. >> it's going to be delicate in its execution, but the sooner we get on to it, the better off we're going to be. poor earnings and a stronger yen combine to send the nikkei lower. president obama narrowing his choices for the next fed

chairman. he says an announcement will be made in the next few months. and the eu's foreign policy chief travels to cairo for crisis talks as a crackdown on supporters of mohamed morsi leaves more than 70 dead. a little bit of news out of the uk. sme lending growth in june is the strongest since the series began in april 2011. this is all part of some consumer lending figures that we've got out. net mortgage lending, the highest since april 2012, mortgage approvals in june, 57,667 versus may's 58,000. so slight decline. net consumer lending, up 1.5 billion versus may's 1.2 billion. it was forecast at 1.3. actually, consumer lending a little stronger. sme a little stronger. mortgage approvals down from the

may figure. we'll talk more about the uk a little bit later as well. meanwhile, european equities, they are up the beginning of the week. not by a huge amount. the ftse is actually flat. the ftse down 0.3%. bond markets, a massive risk averse week. central bank meetings, the fed, the bank of england, ecb, plenty of data, pmis and the jobs report at the end of it. no one really wants to get in the way of that. the index down at five-week lows. dollar/yen currently at 97.96. let's talk about japan. shoppers are spending more. june's retail sales climbed 1.6% from the same month a year ago after little less than analysts' forecast. recent economic data in the country has improved steadily,

prompting some to highlight the effectiveness of abenomics. kuroda said a retail sales tax hike is needed, and it won't kill economic progress. the bank of japan governor said it's important for the government to get its books in order to show that the central bank isn't monetizing cabinet spending. his comments come as prime minister abe's review, the government wants to soften the blow to the economy. a final decision is expected in august. joining us with his thoughts, miles branchle at pimco. miles, good to see you. >> good morning. >> how much does it matter what they do with the sales tax? >> i think it's quite important. it's about the pace of fiscal tightening in japan. and what you've seen, getting a cyclical recovery. there are concerns that this -- no one wants to repeat the mistake japan made before by

hiking its skuconsumption tax. that's why you see these articles of abe has a menu of options going forward. one of which is dragging out the increase in sales tax. the other, obviously, is you could have some supplementary budget that softens the economic impact of the sales tax hike in april. >> is there concern -- how much concern should investors have about the structural reform program? >> this is the key for long-term sustainability in japan. what you're seeing is a cyclical upswing. you've had a weaker yen which clearly is positive for the economy. inflation's beginning to pick up partly because of the yen is weaker. you've got better sentiment. in order to get sustained improvement and inflation rising on a sustainable basis, you clearly need real wage growth which requires structural reforms to occur in the economy. so that's the key one. mittically, it's the most challenging because it requires abe to take on the vested interest. >> yeah, which is going to be difficult.

where does that leave sort of japanese bond valuations? >> they're uninteresting. they're not very attractive when you look at other global markets. the tail risk is much greater because abenomics has such exceptional policy measures. so we don't think japanese bonds are very attractive. we think the front end of the curve is probably the best place to be because we don't anticipate any rate hikes any time soon in japan. but on a global basis, we don't think japanese bonds are that attractive. >> how much is japanese monetary policy going to be affected by u.s. monetary policy? >> i think that main channel is going to work its way through the exchange rate. let's say the u.s. is going to taper at a faster rate than the market expects. i think the main channel you'll see is the yen moving. and if necessary, i should think that the bank of japan would reiterate and come with additional quantitative measures in order to try and keep their bond yields low. but japan is, you know, it's got

a very large captive domestic market. and so of all the major markets, i would expect that bond market is least correlated with the treasury market. >> yeah. there's also this sense, wasn't there, that when we started on this, i guess people were front running it by sending the yen to nearly 104 against the dollar. this thought that japan would invest more overseas. i'm wondering if the opposite is happening. because if they see the nikkei get a boost, they might pull investors to put it back into the domestic market. >> that's the objective of the strategy. if you weaken the yen, you make japan a more competitive place to make stuff. but you have to think about currencies. there's two sides of every coin. you look at what's happening in korea. korea would need to respond to a stronger yen. you saw that last year with korea talking about fiscal stimulus and monetary easing. so i think this is the difficulty in using your exchange rate as the tool for a competitiveness gain is that other countries do respond. >> all right. miles, stay there. we'll come back to you.

plenty more to talk about with miles. stay with japan. financial earn rgz continue to reap the benefits of the trading boom. strong numbers as well today from mitsui. more from tokyo. hi. >> reporter: hi, ross. abenomics fueled japanese financial institutions. they posted today a 144% increase in net income, largely from brisk sales at its securities operations. mitsubishi ufj, yet to come, but the nick ray reported last week that the combined net income of the companies likely increased by more than 20% thanks to booming sales at mutual fund operations. but with markets and trading volumes still fluctuating, it's

unclear if they'll be able to keep up the strong gains. they said its net income reached $2.9 billion in q1 alone. that's already half its annual forecast. yet it kept its outlook unchanged. over at daiwa securities, record level thanks to a 60% jump in sales led by japanese stocks at its domestic operations. that's all from nikkei business report. ross, back to you. >> have a good evening in tokyo. just how much will earnings season reflect on the policies of shinzo abe? go online at cnbc.com. you can read why investors are closely watching signs of life in the corporate sector in the country. don't forget, you can follow us on twitter @cnbcworld. in asia tomorrow, india's central bank makes an important policy decision. investors will want to see if the rbi lends any more support so the weak rupee. and japan releases june data

including household spending, jobs and industrial output. corporate earnings are due from softbank, mitsubishi and ana. taiwan's htc also hands in its second quarter report card. a $35 billion of equals to create the world's biggest advertising agency. the group will be called publicis & omnicom group. they share the role of ceo for positi 30 months. speaking after a press conference in paris yesterday, the ceo of publicis told cnbc the deal would benefit everyone. >> there is no one weak partner, and there is no one who has financial difficulties or anything of the like. so we believe that this will be a great operation for all our people, our clients and our shareholders. >> that was in paris yesterday. joining us on the phone from

paris right now is david jones, the ceo of havis. i thought i saw something about you saying something about pigs and flying. does that mean that you were surprised? >> i was very surprised by the merger. i think, "a," it was one of the deals most unlikely to happen in the industry. i don't really see how this benefits the 130,000 employees who come together, all the clients. and i think that's the bigger and the broader issue. i think it's clearly a very cleverly constructed deal. i think it makes huge sense for the two currency and works for them, but i think you end up making two people happy and 130,000 and many clients concerned and destabilized. i think the other thing, you know, is in a world where

technology has so dramatically changed our industry, the whole scale argument has disappeared. if you think about it, instagram have 32 employees and run 140 million users on a difficultly basis. facebook has 5,000 employees and they run 1 billion users daily basis. the old world of needing lots of bodies everywhere, that's not the future. it strikes me it's very much an industrial age merger in a digital age. so i mean, i think it will be interesting to see how it all plays out. you know, my surprise, really, is just because of the impact on clients and on employees, in two companies who are doing very well. neither of these companies were broken. you know, they were two of the best companies in the industry. and i'm not sure when you put them together, you know, they will continue to perform to those levels. we will see. >> yeah. clearly, there's huge integration risk in putting these two cultures together. you also seem to be alluding to the fact that this -- this is

something that solves maurice levy's succession problem. >> yeah, but, i mean, i don't think that was a massive problem in reality. i think you have a similar succession question with wpp. there's plenty of talent in the industry, and i'm sure they could have found someone to go and be the ceo. it's also an expensive way of finding a new ceo. i don't think it's about that. i think there's a couple of individuals who believe they're doing something quite significant and interesting. i think the question is do their clients feel like that, and does their talent feel like that? there's plenty of articles written over the years about how mergers don't make huge sense. if you add into that the fact it's merged into a people business, it's hard to find a single example in our industry of a merger where a company is better afterwards. two of our biggest clients globally we won because of mergers or acquisitions done in

the industry and clients who then fell out of those mergers and acquisitions because they were unhappy. and i think if you look at talent, particularly because of the way this has had to be done, it's been done in secrecy. >> just picking up on that, are you actually in some ways excited by the opportunity that this may offer to you? if you look at the overlap of clients, omnicom of apple, samsung, renault, pepsi-cola, you know, playstation, there's so much overlap there, i mean, presumably some clients will not want to be in the same stable. is that offering the likes an opportunity? >> yeah, i mean, i think it absolutely does. and i think certainly there's talk of antitrust. you know, we would have absolutely no issue whatsoever with this deal and will not be looking to stop it going through because we think, you know, it overall will have a benefit for us. i think the other thing is you have two very different cultures. you have omnicom who have been very hands off from a holding

company perspective and publicis who have been very hands on. it's the omnicom agency group and ceos are suddenly treated in the way the publicis ones have been, they're not likely to stick around that long. >> still looks like a very good deal tofor publicis. >> yes. because you've got two companies of different size and scale. omnicom quite a lot larger than publicis and taking an equal share. you know, i still think that our business is incredibly simple. it's about keeping your clients happy and delivering for them. and it's about having the best talent. and i don't think by making a company twice as big, you actually, you know, none of our clients are saying to us, we want you to be bigger, and we want to be a smaller part of your overall company and less important to you. a key thing for our clients, we want you to be faster, more

entrepreneurial, more agile, the world is moving much faster. they're not saying we want you to be bigger. and when you get bigger, you become more complex, more bureaucratic. i think the -- you know, the deal in the way they've engineered it and constructed it is incredibly clever, and i think that's testament to that they're both very smart, talented ceos. i think in the long term, there may be cost synergies, but i'm not sure any of their clients will think this is a great thing. >> we'll see what happens. it proves you never know what's going to happen in the world. thanks for that. david jones, ceo at havas. our colleagues in the states will have the first interview of maurice levy and john wren. they'll put forth some of those points david mentioned there. that's at 10:10 eastern. banks are in focus this week. barclays set to announce on tuesday how it will meet tougher

rules on capital. it needs to meet a minimum ratio of 3%. "the sun" is reporting it's considering a 4 million pound rights issue. lloyd's expected to report solid results on thursday that should pave the way for the british government to start selling its 39% stake in the bank. analysts are forecasting first half profit would have doubled and the government will start to sell shares in september or october. as far as those stocks are concerned, you can see barclays up 17%. lloyd's up 42%. and it's the most talked-about transfer of the summer which doesn't involve a footballer. who's going to become the new ceo of rbs? it appears the board is looking to promote internally. the british government will have to sign off on any appointment. investors will looking for clues on the successor when the bank reports on friday. rbs shares down 3% today.

we're also expecting a big week for european earnings. tomorrow out with anythingfigur. diageo on wednesday. and on thursday, lloyd's takes the lead. finally, we close the week with those numbers from rbs, as mentioned, and intesa san paolo. stephon, what can we expect from the likes? >> reporter: good morning, ross. we are expecting a sharp improvement in terms of net profit for the second quarter. for instance, we are expecting net profit to increase by 940%, almost ten times higher than the profit we had a year ago. there's an explanation for that. last year the bank set aside a huge amount of money, some significant to cover potential

loss losses against its main rival expected to report an 87%. does it mean that the crisis is over for the spanish banks? jonben obviously not. a couple of issues still on the road for them. we've seen at the end of last week plenty of spanish lenders reporting a sharp increase for the second quarter. they're less exposed. usually you have lower nonperforming loan ratio than smaller lenders, but the trend should be the same. that's an issue for these banks. the second question mark for them is a potential review of their quality assets from the central bank. the european central bank. and even if they don't believe in this, this could lead to some higher provisions for the spanish banks. so that's another issue for them. and last but not least, there is a question mark this week for the shareholders of this bank

because recently the bank of spain asked the lenders not to pay out more than 25% of their profit in cash dividend. that is much lower than the usual dividend payout ratio. which means that perhaps, ross, the shareholders also will be the next victim of the crisis. >> we'll see. stefan, thank you for now. still to come on the program, as greece secures its next aid tranche, we'll hear from our guest who says the eurozone crisis is far from over. more from miles in just a few minutes.

speculation about barclays and its capital position. they say -- and capital raising. they said they're in discussions with the regulator regarding its financial capital management plans, and they will update the market alongside the interim results. to remind you, they are due tomorrow, the 30th of jewuly. the stock down 3.13% on concerns they'll be selling shares to raise capital. meanwhile the imf and german parliament will vote later

today. over the weekend, the chancellor rejected talk that his government was hiding the real cost of greek aid until after the elections. speaking on national radio, he said europe does not take into consideration election days in individual countries. and the italian economy will bounce back in the third quarter. according to the country's economics minister, speaking to an italian newspaper. he added the government is also pressing ahead with selling estate properties to cut its debt. italy's treasury is aiming to raise up to 8 billion euros. we've got those results. miles is still with us as well. miles, what stage are we at the moment of the european financial -- eurozone financial crisis? >> well, you know, to put it in the churchill parlance, i think we're probably at the end of the

beginning. we've gone through the massive contagion, the massive uncertainty as foreign capital has left the periphery. the ecb has acted to stabilize. and importantly, the local banking system is using it to help stabilize sovereign spreads. but we're far away from the end. that's because we still don't have sustainable reforms that give you confidence that the eurozone is a stable economic entity. that's because we don't have a single monetary policy. you've got fiscal policy that remains pro-cyclical in a recession, the economy deteriorates. the pressure is on for countries to reduce their fiscal deficit rather than support the economy. and what we've seen is that because things are stabilized, as we've seen in the past, the political momentum behind the reform process is stalled. so you see that clearly with the banking proposals that actually fall short of really -- of

mutualizing banking risk and creating a federal eurozone banking system. so in the meantime, the issue really for europe is growth. and we've seen some good news in the sense the economy is stabilizing, but our outlook is for a very, very weak recovery. and that weak recovery isn't enough to lower unemployment which means that political risks remain very high on the agenda. >> what does one do after the spread narrowing from last year? and then obviously a bit of a widening again induced by the federal reserve in the states. what does one do with peripheral debt? >> i think you've first got to distinguish between those that you think are solvent and those where you think, you know, risks or restructuring risks are much higher. and clearly you demand a much higher risk premiums where you have demands about their solvency. for those where you think it's solve end, we think it's time to be reducing the amount of risk you've got on the table. spreads are back to basically the types they were from 2011 when had the crisis began. so we think it's time to be

taking some chips off the table there. >> i presume you mean spain and italy. >> yes. >> and portugal would be at risk. >> portugal, i think, is a bigger risk. the debt load is much higher. the growth outlook is much weaker. the fiscal deficit remains very high. it's got the worst parts of italy and spain together. and clearly portugal's on a program and the question is whether they can regain reliable market access by the time that program finishes in june. we're skeptical about that, not least because portugal is in any major government bond index. it doesn't have any base to help support the market. and if they don't have a program, the question will be, if there's a second program, what will be the political demands be, and to what extent will they demand private participation in the program. at a minimum, i'd say you should expect that domestic banks would be required to roll over their debts. but falling well short of what we've seen in greece.

more about extending maturities and trying to write down the debt. >> miles, good to see you today. thanks very much for joining us. just a reminder what's on the agenda stateside, pending home sales for june. the report also kicks off a busy data week. second quarter gdp and the policy decision out on wednesday all wrapped up by july non-farm payrolls. still to come, the president is expected to nominate a successor for ben bernanke in september according to his administration. that has calls. we'll discuss the various candidates, plus lots of other things in the second hour of "worldwide exchange" right after this. e? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel.

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you're watching "worldwide exchange." here are your headlines from around the world. agree to credit $35 million advertising giant, but the deal will need clearance from competition authorities in as many as 45 countries. the ceo of rival havas has just told us that he has no antitrust objections to the deal. >> we would have absolutely no issue whatsoever with this deal and will not be looking to stop it going through because we think it overall will have a benefit for it. another selloff in japan as poor earnings and a stronger yen combine to send the nikkei

lower. government concern over to how to bring in a sales tax hike. president obama narrows his choices for the next fed chairman, saying an announcement will be made in the next few months. and the eu's foreign policy chief travels to cairo for crisis talks as a crackdown of mohamed morsi leaves more than 70 dead. you're watching "worldwide exchange," bringing you business news from raround the globe. france's publicis and omnicom have announced a merger of equals to create the world's biggest advertising group. it will be called publicis omnicom group. maurice levy and john wren will share the role. speaking after a press conference in paris yesterday, maurice levy told cnbc the deal

would benefit everybody involved. >> there is no one weak partner, and there is no one who that is financial difficulties or anything. we believe that this will be a great operation for all our people, our clients and our shareholders. >> publicis shares are currently closed on the paris market. they'll open at 1530 cet. havas trading higher on the news as it could attract clients of the two companies. >> the m.o.e. doesn't make much sense, and of course it's counterstrategic because publicis, the combined company, will have a lower proportion of digital and a lower proportion of fast-growth markets. as omnicom has said for years that they didn't want to get involved in scrum, and now in

one fell swoop, they are. having said all that, i think it's a tremendous deal for publicis, and all credit and bouquets to maurice levy for having engineered this. >> and the coo of havas, david jones, told me he's got no issues surrounding antitrust concerns. >> we would have absolutely no issue whatsoever with this deal and will not be looking to stop it going through because we think it overall will have a benefit for us. >> stay tuned as well. our colleagues in the states will have the first interview with the ceo of maurice levy and john wren at 16:10 cet, 10:10 eastern on "squawk on the street." bringing you up to speed with where we stand with the futures right now. remember, the dow just up 0.1% last week. we've had still about one-third of s&p 500 companies to report during this week. right now futures indicating a

slightly lower start for the dow. we are some 29 points below fair value. around about three points below fair value for the nasdaq. the s&p at the moment just around three points below fair value. 68% of firms reporting so far have beaten estimates on the s&p 500, 56% have beaten revenue forecasts. as far as european equities are concerned, another mixed day. but we are to the upside at the moment. ftse 100 up 0.25%. the ibex was a real standout last week. the spanish market up 5%, better expected data and unemployment. and the cac up about 0.40%. on the bond market, such a big event-risk week. we've got data, pmis from china, europe and of course the u.s. all topped off with the employment report in the u.s. at the end of the week. so not much incentive really to get ahead of all that in terms of positioning. treasury yields.

portugal yields are lower, below 6.5%. ahead of that, the dollar index down at five-week lows. dollar/yen has been up five-week lows as well. the yen, 97.91. take a look at euro/dollar. 132.92. pretty much where we finished last week. that's where we stand right now here in europe. let's bring you up to speed with the first trading day out of asia. weakness over there. we have the update for you from singapore. >> reporter: you're right, ross. plenty of caution in asia ahead of the fed's meeting later this week. jap japan's nikkei was the big loser, extending a four-day losing streak. mitsubishi motors tanked near l 10%. elsewhere, nomura holding lost despite posting a decent profit as investors are more concerned

about declining trading volumes. but its real estate arm closed in the green thanks to healthy condominium sales which supported its earnings. the stock gained 1.7%. and robotics, manufacturer of fanuc also finished higher. the company did post a 36% fall in its quarterly operating profit, but investors liked the fact that orders are creeping back. and in china, beijing moved to conduct an audit all banking stocks and property developers. there are also worries that they may tap the markets to raise more fund. and the three hong kong listed mainly banking majors lost about 1% in today's trade. but chinese solar panels actually, they did very well today. this boosted by news that china and the eu have reached a deal on their trade dispute. back to you, ross. >> all right. thanks for that. joining us from new york for the next half hour, chief economist at the cambridge group. all part of nielsen holdings.

thanks very much indeed for joining us. it's very early this morning, i know. let's kick off in asia. huge concerns about chinese growth. it will be instructive to see what we get from the manufacturing pmis this week. what's your own sense? you've been doing a survey of how consumer spending might hold up there despite chinese growth. >> thank you, ross. it's a pleasure to be here this morning with you and the audience. nielsen is a global measurement company. and we collect information and provide insights about what consumers watch and what consumers buy all around the world. we've been doing the consumer confidence survey globally since 2005, and now we are in 58 countries. and your impression about china is quite opposite because as you know, there's this structural change that they're trying to accomplish there in terms of moving towards more of domestic consumption. what we are seeing in asia is consumer confidence is relatively quite high. including in china and despite

some of the issues concerning slowing growth there. but in some of these places it's starting to tick down a little bit. >> yeah. what's going to happen? i mean, is this trend to a greater consumption-driven economy, is that going to happen no matter what, or is it under threat? >> i think that when we look at it in the short term, ross, you are always going to see there are going to be some ups and downs. and especially right now there's concerns about china slowing. if you look at the average person that's there within china, they have to balance a couple things. one of them, of course, they have aspirations as part of this growing middle class with additional organization. but at the same time, because of the one-child policy, as we know in china, they've also got to be thinking about their parents and their grandparents. and unlike in the u.s. or in

developed economies generally where we have the social security net, they don't have quite as much. and so they also have to balance that with savings. so it's going to be an interesting transition to see how that comes out and what policymakers will be able to do about it in china. >> yeah. the threat is clearly -- if you have more earnings, you just boost savings. >> it's definitely there. and certainly at nielsen when we do various kinds of surveys in china and other parts of the world, you see that savings is right up there at the top. it's very much a concern. they do have these aspirations. you do see lots of consumer kinds of goods. the growth rate there is quite healthy in many of these areas. but at the same time, you see that is really uppermost in their mind. how do i save for the future? >> yeah. there are some economists that suggest the biggest threat to china, they might suffer more of a japanese experience.

it's a weird thing to talk about when you talk about growth rates of over 7%. in the '70s and '80s expansion and then a hangover large savings rates and deflationary problem. is that actually a big risk for china? >> it is definitely one of the concerns that you would want to see going forward. is that slowdown going to take place dramatically and this transition that's taking place from going away from stimulus-type programs in china towards more of, you know, depending less upon exports and more upon the domestic consumer. but china is, in many respects, in quite a good place. they've got strong policies. they've got very good, you know, trade balance. they've got very good reserves. and so they have a little bit more time, a little bit more of a luxury in being able to do these kinds of transitions which necessarily are going to take -- it's not going to be something that happens overnight. it's going to take three years, five years and even ten years or more.

>> we're going to talk about the u.s. fairly shortly. but clearly, with china pegged to the dollar -- and there is this view -- i know the dollar-index is down, there is a view the dollar is going to get stronger. how much extra pressure, unwanted pressure, is that going to put on the country? >> yes. the dollar has been getting somewhat stronger. i think in china, quite recently, they had the -- it was getting stronger. i think it's part of that transition that the chinese are going to do. you're going to see a little back-and-forth with that. i think the longer trend is that the chinese economy are making policy moves to try and make sure that it's less dependent upon exports. and so in that respect, you know, whatever happens on the margin between the dollar and the yuan, it's going to make some difference. but perhaps not so much in terms of what else the chinese

policymakers are going to do. >> stay there. get a cup of coffee. we'll come back to you fairly shortly, talk about some of the aspects of the global economy. italian six-month bill auction results. 8.5 billion euros. the yield is back to the levels we last saw in may, 0.799%. it was over 1% at the end of june. the ratio just over 1.5 versus 1.36. we'll take a short break. in corporate news investors are cheering the possible ousting of the ceo. we'll bring you the latest in frankfurt right after this. ♪ [ 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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a recap of the headlines. teaming up to form an advertising giant. barclays says it will update investors on its position when it reports earnings tomorrow. and a down day for japanese equities as a higher yen and weak earnings affect sentiment. meanwhile, siemen's in focus. peter loescher could be ousted following a board meeting this wednesday. annette has been following the story for us. he's got quite a lot left on his contract, doesn't? i four years or something, and

he's vowing to try to fight and stay in his job. what is going to happen? >> reporter: it's very likely he'll be ousted even though he wants to fight the decision, he wants to have a critical vote. if not, the head of the supervisory board will leave, and he has no intention to leave. and peter loscher's likelihood of succeeding in such a vote is extremely low according to media reports over the weekend. there is a vast majority of members of the supervisory board for him to leave his job. honestly, the legacy in operational terms wasn't great. the share price was rather depressed, and profitability compared to general electric, its biggest competitor, is almost half of it. while ge had a profitability ratio of 15% last year. siemen's only posted roughly

9.5%. so there is a big gap to close. and peter didn't succeed, even though he made a lot of acquisitions, but there were a lot of write-downs because he underestimated some sort of market developments. to be fair, it is quite hard to be on top of every single market siemen's is operating in, but the new ones, the potential ceo is said to be in a better position to do so, ross. >> yeah. we'll see what happens. but as you say, the markets are betting that he is gone. do we know who the replacement might be if he does indeed go? >> reporter: yeah, nothing is really official, ross, so far. the name we're hearing over and over again is joe kaeser. it's clear that he's interested in taking that position.

they're not really on the same sheet all the time regarding those issues. now, he is most likely the one who will be elected on wednesday to head siemens is peter losher is really ousted from his job. >> nice to see you. catch you later. just when you thought london's burger craze couldn't get any stranger, the world's first test tube burger, yep, it's made entirely from meat grown in a lab is going to be served up in the british capital next week. it's a five-ounce patty. it cost 250,000 pounds to produce because it's made from 3,000 tiny strips of beef grown from stem cells. this man is the brainchild behind the burger. he says the project's designed to help address growing demand around the world for food. not necessarily for burgers. but stem cell-grown meat is an attempt, of course, to deal with issues over high demand for

protein. which means it's an incredibly important burger. it's going to be cooked and eaten next monday in london. so would you actually eat it? e-mail us, worldwide@cnbc.com, tweet me. would you eat the world's first stem cell burger, and would you need some relish with it? some gherkins or cheese on top to help wash it down? let us know. let us know. still to come on the program, investors have shifted focus from earnings to a slew of reports. we'll talk about it when we come back. reminder, european equities are up on the first trading day of the week. advance is outpacing decline right about 6-5 on the dow jones industrial average. [ male announcer ] come to the golden opportunity sales event and experience the connectivity of the available lexus enform,

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the committee has until this friday to decide. hedge fund billionaire steve cohen didn't let advisers stand in the way of his fund. apparently he threw a party over the weekend, just two days after federal prosecutors announced the charges. according to one source, the party had been planned before those charges were filed. and it included a delivery of $2,000 worth of tuna from a local seafood store. as far as the agenda stateside today, pending home sales are due at 10:00 a.m. new york time. it's a big week with second quarter gdp data out on wednesday and july payrolls due out on friday. chief economist at the cambridge group, part of nielsen's holdings joins us now. doctor, thanks for sticking around. such a big week for the u.s. this week. but i wonder if at the end of it we'll be any clearer on the tapering debate, if i can call

it a debate. >> yes. that's a good question, ross. you know, at nielsen when we do the global consumer confidence survey, certainly one of the countries that we look extremely closely at is what is happening in the u.s. the overall trend there is that it's a rising consumer confidence. when you look at other economic kinds of indicators, you see that core inflation is actually below the fed target. and that should provide them with some additional amount of scope in order to continue the monetary easing if they wanted to do that. i think the fed has also said that -- this is my understanding of it -- is that they are going to watch how the consumer develops, how the private sector develops and the economy as a whole is progressing. but certainly with the inflation numbers, they should have some amount of leeway and some flexibility about their policy. >> what is the biggest driver right now for consumer confidence in the states?

>> i think that what you're seeing out here is that, you know, we're looking simultaneously at a number of different measures. i think there is something that you would call as a wealth effect. you're seeing the stock market subpoena, home prices are up. so that makes people more confident, consumers more confident, about going out there and spending. you're also seeing on the labor market side that, you know, the job market seems to have stabilized. unemployment claims are going down. and so people are being more confident about jobs, about the security of their job and maybe getting a different or a better job if they're looking for that in the job market. those, i think, are the biggest drivers. on the flip side, what you are seeing is that it's not as if real incomes are going up that much more or that they're spending more on their credit cards. those things are developing quite slowly. so right now it's more of an increase in confidence about housing and about jobs that's driving consumer confidence. >> we don't necessarily want people to spend more on their credit cards, though, do we?

>> no, we certainly don't need that, ross. i think it is a good thing that they are being somewhat careful with that. you are seeing some optimism, which seems to be getting a little ahead of even in terms of the amount of disposable income they're getting. i think it's being driven by what you're seeing on the jobs front and with housing. we are actually seeing, when you compare that with retail sales, we're actually seeing something that we would call as -- what we would call as a tradeoff economy. so people are saying, you know, my car is ten years old. it's time that i have to change it. but at the same time, my income is in that high that i can both increase my spending on cars, car sales have been quite strong in the most recent quarter. and at the same time, i can manage all my other expenses on groceries, on rent and other things. so people are making these tradeoffs, and we are actually seeing some of that in the data. >> auto sales have been very strong. so clearly people have been trading in old cars. so if they don't have the money for it, how are they paying for

it? where are they making the savings elsewhere to pay for those car sales? >> oh, yes. it's really part of that tradeoff that i was referring to a little earlier, ross. it is that you're seeing things like, for example, if you look at the most recent retail sales report, you are seeing that some of these more durable goods are going up. but people are cutting back or they're spending much less on groceries, they're spending much less on general merchandise, more of the consumerable kinds of items. so they are making these choices and saying it's time that i'm feeling a little more confident. it's time that i went out and spent some of those things that i've been delaying for a long time. but at the same time, i've had to cut back somewhere else because i'm certainly not increasing my credit that much. and my income is starting to rise, but again, it's not such a big jump. >> good to see you this morning. thanks for joining us. chief economist at the cambridge group. and still to come, we'll tell you the pulse of the u.s.

housing market. author of "foreclosure nation" will join us from florida in just a few moments. as we do that, a reminder where futures are trading right now going into the break. and they are implying a negative start for u.s. equities. there's a long way to go.

i'm ross westgate. here are the headlines from around the globe.

a $35 million advertising giant, but the deal will need clearance from competition authorities in as many as 45 countries. the rival has told us that he has no antitrust objections to the deal. >> we would have absolutely no issue whatsoever with this deal and will not be looking to stop it going through because we think, you know, it overall will have a benefit for us. barclays responds to reports of pending rights issues by saying it will update investors about capital plans when it reports tomorrow. and president obama narr narrowing his choices for the next fed chairman. plus, the eu's foreign policy chief travels to cairo for crisis talks. violence leaves more than 70 dead. you're watching "worldwide exchange," bringing you business news from around the globe.

all right. if you've just joined us, welcome to the start of your global trading day. futures right now indicating a down start for u.s. equities, although there's a long way to go. the dow last week just up about a percent -- a tenth of a percent. the s&p at the moment is two points below fair value. the nasdaq at the moment is two points below fair value. the dow at the moment is currently 18 points below fair value. about one-fifth of the s&p 500 companies are reporting earnings this week. it's a big week with the fed, the bank of england, we've got q2 gdp as well as the employment report. ahead of that, investors cautious. european equities have been firm. european equities are up. ftse is down slightly. the cac is currently up 0.5%. so head of this big week, what are investors to do? here's a recap of some of the

thoughts we've already had on the channel today. >> in the european markets, we've seen vivendi on friday, carlos probably is going to take a more aggressive attitude to the rump than he would have had after the sale. i think the equity market does have a bit of m&a which the credit markets would view nervously because they don't like changes of ownership. >> that high-yield environment hedge must come through -- i believe will come through the note. you'll start to see an increased demand as well as issuance back to fixed or whatever it might be from the investor's perspective of a floating rate product. >> you actually look at, you know, some markets, the last two weeks we've come too far. so the likes of italy and spain, we think we could see 50 to 60

basis points by the end of september, with both italy and spanish ten-year yields because of bonds. a bit of too much good news is now being discounted. >> right. u.s. pending home sales data will be released at 10:00 eastern. expecting a modest increase in june. this after pending home sales soared 6.7% to hit a six-year high in may. joining us from ft. lauderdale, author of "foreclosure nation." sherry, good morning to you. thanks very much indeed for joining us. have we peaked in this cycle of home loan growth? >> well, home loans are down now, as we know, in part because of recent interest rate jumps. but also that's a seasonal issue. and the biggest issue, of course, is inventory here in the u.s. expected to be more of a temporary issue, though, as sellers get off the fence, comfortable with home price increases, and buyers get more comfortable buying. >> yeah.

i mean, it's difficult to talk about one market because there's so many different states and different areas. but what is your general consensus? as we saw that little spike up in treasury yields and mortgage rates as well, does that have a big negative impact or not? >> well, not really because rates are still at historic lows. lower than any time other than in this past decade. so we're still doing good as far as interest rates go. and of course, you have to live somewhere. so it's a matter of renting versus buying. again, the biggest problem here in the u.s. is still inventory. but we're starting to see some of those foreclosures work through the system. many of the states are changing their foreclosure laws so that we can get more of that inventory out in the street. and of course, as prices go up, ross, we're seeing the big investors having less of an appetite because they're just not getting the returns they had hoped. we know some of these big funds that were buying homes in order to rent them are finding

themselves with lower returns than they expected in large part because they're just not able to turn around these homes as quickly as they hoped. they can't renovate them and get them back on the market. and so their purchases have significantly slowed down. >> yeah. although presumably as prices go up, that just helped with the foreclosure sales coming back online. what supply impact does that have? >> well, a big -- it's a big issue. one of the big issues that's been holding a lot of buyers out of the market, in fact, has been financing. about 20% of the folks who were approved during the bubble would not be able to get a loan today. but we're starting to see more of what used to be called the subprime lenders entering the market. in fact, the assistant deputy for the consumer financial protection bureau that helped to write a lot of these new stricter loan laws, the qualified mortgage laws and so forth that take effect in january has actually now gone into a business and intends to be offering loans to folks who don't normally qualify.

so that's very encouraging to a lot of americans who have also sat out of the market because they just simply thought they couldn't get approved. >> yeah. if getting a loan is getting tougher, it just all plays into this debate about what the future of fannie and freddie should be as well. what sort of guarantees and what sort of market we want. what do you think should happen? >> well, we've got the push and pull. basically, all of these proposals are very similar. they just vary in how quickly the government should get out of financing and where the government should remain ultimately in financing. but the ironic thing is -- and we've got proposals pending in the house and senate now -- that vary on that spectrum of those issues. the ironic thing is that the change is happening anyway even without government. so, for example, we're seeing the cost on fha loans going up. last month fha announced that borrowers now have to carry mortgage insurance for almost the life of the loan in almost all instances where that only

used to apply nmuntil a borrowe paid down their equity. fha is restricting reverse mortgages which are mortgages that older americans generally get for their homes. so we're seeing the private market getting into financing even more, whether or not congress makes its decisions on these issues or not. >> does that mean we're getting back to sort of 100% financing coming back? private markets getting involved again? >> the private market is. that's correct. and you know, there's an interesting turn, too. now that fannie and freddie are making money, remember fannie mae made about $17 billion last year and freddie made about $11 million, congress is not so eager to cut off that gravy train because that's revenue that the u.s. government can really use. and within the last couple of weeks, we actually had a lawsuit filed by investors who are objecting now to the fact that the treasury stepped in and delisted their shares and pretty much forced them out of any profit from these giants.

and we can expect more lawsuits as the gses continue to make money. we've got hedge funds now lobbying congress to go back and put fannie and freddie in their original condition, make them independent of the conservatorship. sometimes you have situations where real life is stranger than fiction, and no one could have predicted these things. >> go back to the future. okay, shari, stay there for a second. although ben bernanke's term ends at the end of january, plenty of speculation on who's going to replace him. morning, hampton. what's happening? >> do yhow you doing, ross? it looks like september is looking to be a big month for the fed. not only are they setting their taper target, but president obama saying over the weekend that's the earliest he could announce a successor for fed chairman ben bernanke. janet yellen and larry summers are emerging as the two

front-runners. now, congressional democrats have been circulating a letter praising yellen and former vice chairman of the fed also endorsed fellen. blinder wrote, quoting now, i can't say that janet yellen is tan and rested. she has been working far too hard for that, but she is certainly ready. now, one person who didn't reveal his preferred choice for the position this weekend was treasury secretary jack lew. take a listen. >> chairman bernanke has been extraordinary and remains an extraordinary fed chairman. i'm going to keep private any conversations that we're having with the president on the question of when and what kind of succession there should be. >> now, with the president and congress facing a september showdown over both the budget and the debt ceiling, it's highly unlikely we'll get an announcement on ben bernanke's successor until october at the earliest. ross? >> all right. okay.

hampton, thanks for that. that's the latest from washington. shari, you heard hampton's report there. who would you like it to be? >> you know what? is it really doesn't matter because i think the government is going to keep, in terms of housing anyway, the government is going to keep interest rates about where they are for some time. and we've got a long way to go before interest rates really affect housing affordability. rates would have to go up 7% at least at this point in order to make housing unaffordable for americans. we're still 25% below where the prices were at peak. so i don't see the appointment in terms of housing making a real issue, at least for the next five, six years in the future in terms of housing at least. >> okay. shari, thanks very much indeed for that. good to see you this morning. shari olefsen joining us from ft. lauderdale. i'm sure the weather's very nice. barclays has confirmed it will update investors on its

capital plans when it reports earnings tuesday. the british bank needs to plug a 7 million pound hole to meet a minimum target rate. "the sunday times" reported that the bank is considering a 4 billion pound rights issue. barclays is currently down 3% today because of that. meanwhile, media giant cbs and time warner have until 5:00 p.m. new york time to decide on fees. cable provider time warner doesn't want to raise prices which could drive -- it does not want higher costs to lead to low margins. while cbs relies on fees as a key growth driver. both companies also report earnings later this week. and still to come, egyptian supporters of the ousted leader mohamed morsi vow to fight on as violence between rival groups escalate. we'll bring you the latest from the streets of cairo. yusef is there and will join us right after this.

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weak earnings hit sentiment and in global news, egyptian supporters of ousted leader mohamed morsi have begun marching towards cairo's military headquarters, risking new confrontations ahead of the pro-morsi million-man march which is set to take place tomorrow. this follows escalation of violence over the weekend as rival groups clashed in the streets of cairo which saw killing of at least 70 people. yusef joins us with his report. yusef. >> reporter: well, ross, it was one of the worst incidents of bloodshed since the uprisings began to june positiv30. a lot of the clashes were not only centered in cairo but alexandria where we understand violence is still ongoing between unidentified gunmen, in many cases representing islamist extremist parties and the military. of course, all of this comes in the context of a widening

political impasse between those supporting the muslim brotherhood and ousted president mohamed morsi and the rest, if you will, which includes the secular opposition, it includes the government, it includes the military. and it doesn't look like they're making progress in mediating or overcoming their differences. katherine ash thon, the eu foreign policy chief, is in cairo to talk with all the parties. it's not clear whether she has a plan ready to resolve those differences because the muslim brotherhood and their supporters, they are defiant. they're saying they're not going to budge and stop their sit-ins until president morsi is reinstated. and the government, on the other hand, is clearly losing its patience, signaling a wider crackdown, that they'll be pushing to break up these sit-ins. we are also getting an announcement from the anti-coup coalition, if you will, or alliance that basically indicates that tomorrow we may be seeing attempts to materialize a one million-man march in support of ousted president mohamed morsi. but in light of all these

developments, if you take a look at the local market, it's trading slightly to the down side. but that really clouds a quite interesting picture. over the last 30 days where you had all these ups and downs and for the most part really downs, the market has rallied over 13%. and in part that may be due to a strong technocratic government, a pone perceived as strong. it goes towards the $12 billion that will help this country navigate the months ahead. >> thanks very much. that's the latest from cairo. u.s. equities managed to close out the week with strong gains. we'll get views from the cme right after this. [ male announcer ] come to the lexus

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france's publicis and omnicom have announced a $35 billion of equals to create the world's biggest advertising agency. the group will be called publicis omnicom group and will trade in new york and paris. maurice levy and john wren will share the role of ceo for the next 30 months after with the publicis ceo will become the nonrequiem ceo. >> we would have absolutely no issue whatsoever with this deal and will not be looking to stop it going through because we think, you know, it overall will have a benefit for us. >> there's a lot of sharing of clients or competitive clients there which is the feeling of the likes havas and others. as far as european equities are concerned, the ftse 100 up 0.3%

despite the fact we saw yields on a six-month t-bill auction fall back to levels we had in may. as far as the agenda is concerned stateside, today pending home sales for june out at 10:00 a.m. in new york. a slew of results out with the likes of anadarko petroleum, express scripts. it's about the rest of the week. a huge week for the states. second quarter gdp, and july non-pharma payrolls. let's bring you up to speed with the futures ahead of that. and they are indicating slightly negative start at the moment. the s&p is currently nearly 4 # points below fair value. joining us -- a good way to start the week -- michael gurka. michael, good to see you. look, huge event risk this week. i'm not sure many traders would want to get in front of it. will we be any the wiser, though, by the end?

>> well, ross, we're going to have to let that pan out. again, it would not be remiss to at least explain that the pessimism creeping into the market right now is warranted just because at least on the jobs front, things don't seem as rosy as the market had at least anticipated last month. and for those reasons, we've had some commodity scenarios with brent and wti going inverted and then coming back, which was a little leery. and then, of course, the selloff in gold that has now been greeted by, you know, kind of a swath of buying opportunities right now. and with that being said, if you break down that commodities play, it seems as though that the anticipation is that would probably be more disappointment than better optimism by the end of the week. and again, that normally comes out to the fed in how, you know, that view is looking right now. and for most at least i think chairman bernanke is confirming as he could be without, you know, scaring most. but again, i would be more remiss to not make it look as

rosy as it might seem. >> what do you make of the way gold and oil have traded? have we hit sort of the top of new ranges or not? >> probably. i mean, we really found some excellent support just below 12 on 1200. and from that point forward, we started seeing volume pick up which is i think more important than even the price itself. and that's why i'm starting to think at least that it we get this next push higher, it's going to be a pretty safe bet that you'll see nice support above those levels. to return back to the 1500 handle, watching the market get ahead of themselves, we'd really have to see something with china or at least what i've been watching, the australian dollar start to break down even further before gold starts to catch that vacuum off that move. >> yeah. not much people calling for a rebound in the aussie/dollar. what about the u.s. dollar? trading at five-week lows. there is a general perception it is going to strengthen, much

dependent on the fed, of course. >> and again, there's always been this bias that the fed would like to see or at least economically here a little softer dollar for those support scenarios. i would have to say at least that the euro has started the week here against the dollar with very strong footing. and i think a breach even of this 134 area is really going to start making the market on edge because, you know, again, that would be very surprising to see it start to break away from these areas. it's more inclined to see the dollar strengthen. that would be more a narrow range, if anything. >> besides all that event as well, i mean, i know you like to follow the commodity complex, too. and the softs. where are we -- i don't know whether you saw this. we saw this -- we've got this burger that's going to be eaten and being coulded in london. it's made out of stem cells. i don't know whether that's going to get you wired in chicago or not. >> well, you know what, ross? to be honest, there's nothing

that's going to stop technology from trying to make better products no matter what is across the board. and at least here in chicago where the meats have been a samele for well over a century, those kind of scenarios genetically, even when we started to look at what corn and some of the hybrid seeds were starting to do into the market right now, i don't think this is going to start any panic by replacing or seeing lower demand because of that. it will be significant if we start seeing something that is really affected by the public and actually endorsed. >> yeah. i don't know whether you're volvo volunteering to be the first person to eat it, but it is going to be here. michael, good to see you. as i said, there is a 250,000 pound hamburger made from stem cells of a cow. it's going to be served up in london next week. we asked you whether you would be the first person to eat it. ricochet tweeted, having swamped restroom stalls and dishes in microbiology, he'll pass.

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good morning. get ready for a very busy week. we are about halfway through earnings season, but that means there's another half to go. in regard to corporate commentary, the markets will be paying close attention to the economy in the coming days because on the agenda, a fed meeting, a first read on second quarter gdp, and the monthly jobs report on friday. plus, we have quite a few deals to discuss this morning. it's monday, july 29th, 2013. and "squawk box" begins right now. >> let's get ready to rumble! ♪

>> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew is off today. let's start off with this week's economic calendar. we have big numbers. today pending home sales and the dallas fed survey. tomorrow, the fed begins a two-day policy setting meeting with a decision announcement that is expected on wednesday. also tomorrow, the s&p case schiller home price index, consumer confidence and housing vacancies. on wednesday, in addition to that fomc statement, we'll be paying attention to adp employment report and the advance reading of second quarter gdp. a lot of economists expect gdp to come in less than 1%, but the government will also issue a special release of revisions going back to 1929. so that could make the economy look slightly better. government hasn't issued major revisions since 2009. then on thursday we get the weekly jobless claims, manufacturing pmi, ism