you're watching "worldwide exchange." i'm ross westgate. a recap of the headlines from around the globe. u.s. expected to report a fourth straight month of solid job gains in july. another encouraging sign for the still sluggish economy. tough time to take over for new rbs. ross mckeown. shares sink near the bottom of the ftse despite the bank's pretax profit. the cfos told cnbc that the former prime minister has no influence on the company. >> we are a normal company.

we have normal shareholders. the relationship between the company and shareholders is a normal relationship. and the largest automaker reports strong profits in the quarter thanks to sales and a weaker yen. welcome. we're into the last "worldwide exchange" of the week. on today's show, political unrest in egypt spooked many investors, but the country's finance minister has told this channel he's confident conditions will improve. yousef will join us with that exclusive interview at 11:45 cet. profits surged on a weaker yen, but can abenomics keep the currency trend in track? we'll talk about that in 30 minutes.

motorola and google take the wraps off their first flagship phone, ebb terntering the crowd smartphone space. we'll talk about the phone's wow factor at 11:20. with the u.s. jobs countdown on the way, payrolls will surprise to the upside, patrick o'keefe joins us from cnbc's u.s. hq in the next hour. first of all, earnings to look at. intesa sanpaolo is expect to reveal numbers around lunch time. rbs is reported to report to the number of the first month of the year. they're expected to reach a core capital ratio of over 9% by the end 2013. also announced that ross mckeown

will be the new ceo. axa posted a fall in the first half the year, hit by restructuring cost. stock up 3.5%. and allianz saw its second quarter net profit up 27% from a year ago, which beat forecasts. german insurers also confirming its target for operating profit of over 9 billion euros this year. earlier on the channel, the cfo said he was not concerned about the bond outflows in june for its pimco unit. >> most people are focusing too much on this top fund bill as mana managing. pimco is more than one fund. this fun mad makes up 15% to 20f the total. when we compare it year over year over 12 months, we had actually capped our old -- fairly stable under um, but

close to 100 billion euros in this time, and that shows also the shift of support and the true strength of the pimco organization, which is not limited to managing the fund. >> shares have fallen sharply this morning after the italian broadcaster reported a fall in the first half profit, but the group says revenues rose 4% in july. it comes as the italian supreme court upheld a jail sentence for silvio berlusconi who owns mediaset. julia has been in milan and joins us for more. hi, julia. >> we talked about a lot of these things, actually. we talked about the influence of silvio berlusconi over the current performance of the company. i'll bring that later on in the show. we did talk about the outlook for the business. this is crucial. i'll give you a very quick perspective of what happened in the italian advertising industry. it lost a quarter of its value

during the last recession. the volumes of advertising revenues for media set dropped 50% over the last two years, so the backdrop is incredibly tough. what we have seen in july is signs of a turn around after 22 consecutive months of declines. and i asked him to talk more about what he's seeing and how optimistic he is. listen in. >> after 21 months of declining, we are experiencing a positive month, plus 4% on july last year and that's clearly an action number because we can also say that, this is going to be positive as well. two months, after 21, that we'll underline a positive trend. very good for optimism. and clearly some would say peculiar season. there are specific investor for the season, so not said that we go on. i believe it is a good sign and

also september is going to be at least better for six months. >> the italian advertising industry lost a quarter of its value during the recession. how long do you think it is going to recover the losses? are we talking three years, five, ten? >> very difficult to estimate. in any case we don't think about that because it would be too sad honestly. and you know we have been put in place pretty strong cost cutting plan in order to come back to the same level of profitability we had before independently from where the market will go and how long it will take to come back. clearly it has been the most impressive prices we ever experienced. and so clearly we reacted in a situation like that with extraordinary actions. >> the company obviously has been very aggressive about cost cutting and managing their debt profile. i want to point out in light of the music we're seeing in the

share price today this stock rallied 165% over the last 12 months, 75% of the analysts that rated it had it on a sell or a hold rating. so i think you have to give it a bit of perspective in terms of the kinds moves we have seen this week around the court case. >> jules, catch you later, thank you. good stuff. time to bring you up to speed with where we are on the global equity markets as we count down to the employment report. equity had a good move higher yesterday. 6 to 4 pace er advancers outpac decliners. we're off $8 point, xetra dax fairly flat. ftse mib down half a percent. ibex is fairly flat as well. cautionary. no one will want to take more positions ahead of the employment report. big move yesterday was t-bills. 2.72%, up 12 basis points on wednesday. not far away from the two-year

high of 2.75, which we held not long ago. ten year gilts, 2.3% now, yielding at 2.45. spanish yields moved higher, up flat on the session at 4.6. currency markets, dollar/yen, 99.56, up on thursday. euro/dollar, 1.3345 on wednesday. around the 1.32 mark. the big move town, aussie/dollar, .8896. oil rally being held on to, gold is weaker, back below the 1300 mark. that's where we stand in trade here in europe. sixuan will update the session for us in asia as ever. hi, sixuan.

>> thank you for that, ross. taking the cue from wall street, asia mostly high we are the japane -- higher leading the gain. as for china markets, they fared better than the shanghai composite and the hang seng in hong kong gained half a percent in today's trade. australian banks lent support to the asx 200 on possible tax revisions and it climbed over 1% reaching its highest level in more than two months. the earnings rate in japan continues. sony shares gained almost 1% today after returning to a profit after 12 quarters in the red. sharp shares climbed over 3% after the company saw a narrower loss than last year. this helped by gains in its smartphone displays. suzuki jumped 5.8% after the automaker saw profit climb 10%,

thanks to a weaker currency and surging sales in emerging markets. hong kong property stocks also gained ground today after hutchison reported better than expected earnings. hutchison shares jumped 4.5% today. over on the main land, chinese property developers broadly higher extending a four-day winning streak on hopes that authorities will soon loosen finance policies for the sector. poly real estate gained in today's session. back to you, ross. >> thanks for that, sixuan. that's where we stand with global markets. it is really all about nonfarms today. payrolls expecting to add 138,000 jobs in july compared to june. chris walker is the ceo of long view economics and joins us today. chris, nice to see you. we saw ism up to a two-year

high, good adp numbers. what is the strength of the economy and how will that affect the employment report? >> i think it is robust at the moment. we have seen a strong trend in housing, very strong for the last couple of months. car sales were quite good. and the ism was terrific, bouncing back from a weak month. so i think the underlying trend is robust and impressive given the backup we saw in interest rates across the yield curve. if anything, we might get a surprise to the upside. the whisper numbers are higher than the consensus, but the whisper of 200, we could go above that. one has to be cautious because the data often gets revised so much. >> do you think we're getting more relaxed? we come to terms -- investors come to terms with tapering. we're getting strength of data, and despite what the fed minutes suggest, there will be a view that they will start tapering in september. >> yes. we saw that with yields yesterday. yields backing up as a

reflection of that sooner tapering. it may well be there as much momentum in the economy as there appears to be. we start bringing forward the first rate hike again and equity markets won't like that. that will be -- >> dow industrials, transports, s&p, russell, all at record highs on the stronger data. clearly yesterday in that session not worried about tapering and if we get a strong employment report, one presumes it will be the same today, i don't know. >> this is what we saw in early may. as yields back up, equities carry on rallying. eventually it squeezes the equity markets and we see a dramatic fall in equities in late may and june. i suspect there is every possibility that happens. so we're in a 2004 type market, up and down 5%, three, four, five times of the year an consolidating over most of the year as you price in tightening in markets. >> you could lose a lot of

money. >> you have to be nimble, you have to trade. it is a trader's market, yeah. >> do you think a yield is likely to go higher than t the .275. >> there is still room for the yield curve to steepen. it has done a lot of it. still will steepen, of course. so, yeah, i think it is perfectly possible we see another 30, 40 basis points back up in yields. >> what is that going to do -- when we saw this in may, big impact globally, right, on the emerging markets, on european peripheral yields, mortgage rates in the u.s. do those affects repeat? >> they do. our global asset allocation is weighted much more heavily towards western equities or emerging market assets now. risk premiums are still too tight on emerging market debt and many emerging market equities are quite expensive. so the trade at this stage in the cycle as you start to price

in tightening is into the more defensive, more stronger western companies and corporates and equity markets. >> still backup in yields because of economic growth and fed policy is going to -- impact will be exported to the rest of the world and the rest of the world central bank will have to deal with it. >> that's what we have seen in the last month or so, and in other -- this is what is so interesting about the emerging markets. they're batting against a falling currency, rather than rising currency and raising interest rates into weakness. it is a very different environment. and our view has always been, when the fed starts tightening, you start to see the cracks in the emerging market economies. i think that's what we're starting to see. >> good to have you on today. you're with us for the first hour of the program today. and let's move on. despite the improving jobs picture, many employees

frustrated over the level of pay. could the smoking habit be to blame. a new study suggests that smokers only earn around 80% of what nonsmokers earn, even social smokers are not safe. the study says those who enjoy occasional cigarettes on the weekend and a pack a day addicts suffer a similar pay gap. oh, dear. we want to hear from you. is smoking damaging your earnings potential. or that of someone you know? not sure why it would, but join the conversation at "worldwide exchange." get in touch with us, e-mail us, worldwide@cnbc.com, tweet, @cnbcwex, or direct to me, @rosswestgate. want to hear about that. meanwhile, a little news out of cable deutschland. we'll get more on na that in a few moments time. still to come, rbs shares down after the bank has confirmed ross mckeown will become the ceo. is he the right man for the job

or not? we'll discuss that with our business editor helia ebrahimi right after this. [ kitt ] you know what's impressive?

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rbs confirmed that ross

mcewan will replace hester. he agreed to waive his bonus for 2013 and '14. it comes as the bank swung back in the black for the first half of the year, pretax profit of 1.4 billion pounds dpi s compara 1.7 billion pound loss the year earlier. what's next? helia, you're on the phone, you confirmed the story a couple of nights ago, late night. look, let's kick off with mr. mcewan, first of all. not a man with a huge amount of experience. >> no, no. that would be accurate. but despite actually in the press release the chairman philip hampton says with his extensive experience in banking, i think most people would disagree with him having extensive experience in banking. >> ten years in banking. >> ten years, one year in the current job in the retail job.

what he has been able to do is cut quite aggressively. if you look at what was announced in may for rbs, the bank actually cut the retail segment, a segment which the government supports quite frankly. so i think that could be used as a blueprint for how he's going to treat the rest of the bank. remember, one of the ways that steven hester fell out with the government was over how much he should take the ax to rbs. as i mentioned earlier, all about what one i tid me, all about now having to cut into the bone at rbs. steven hester has done a lot of taking of the flesh, but somebody needs to ta s ts to tao the bone. >> that's the investment bank. >> he's got a retail background. again, the results today were disappointing for markets, which is the investment bank. i think that's probably where the -- you know, he knows what he can do, he knows retail. we don't know what his views are. >> did you ask him to buy? >> i think you continue

shrinking it. >> if you ask someone to buy it, you do that in 2010 after the investment bank had a -- >> no good value in the investmenting ba inbank at the >> we have seen the shrinking consistently over the last few years. >> this bank, without an investment bank, i don't know what -- what do they do? they flop that off? >> they ipo citizens, unless someone puts down a big price, much to the horror of the finance director. if someone did, they probably would sell it. it is on an ipo track in the us us. >> without citizens, without an investment bank, how does the government get its money back? what is a british focused retail bank going to be worth? how do they float shares? >> we have seen lloyds, trading on a good premium, trading on multiples of its book value. and that is a good sign.

there is a lot of commentary the government can get good money back from lloyds. they'll look at it and say we can do the same with rbs, focus into retail bank, get it so they're lending again, get it so they're kind of taking leverage out and then, you know -- >> i think the problem is there is a lot of opaqueness about what is in the investment bank and what needs to be there. so the rbs claim is, look, we have an investment bank that needs to serve our corporate clients. if you want us to be banked -- british plc, we need to be able to offer them x and y service. there is an argument to say it is not quite make sense for rbs to be a marketmaker in singapore dollars or whatever it is. and i think that asian business is going to see a lot of shrinkage. but i think that's what rbs would argue, just on the numbers, quickly. it is not been a great -- even though we have got profits before tax of 1.4 billion pounds, you've actually seen

impairments jump up to about 1.1 billion pounds. that's 20% above what consensus was. >> impairments in normal commercial -- >> part of that is you've got 600 -- big part of that is -- you have 720 million pounds for legal costs ongoing with regulation issues. you've got 185 million pounds in ppi claims. so, i mean, despite the fact that we have got a return to profit, the earnings and the risk weighted asset on the book has seen a bit of a knock. >> well, i was going to say, i mean, interesting thing is this is essentially the government's agenda here we're seeing played out. and what is -- what exactly is the government's plan? is this indicative of it? >> i think so. i think they need someone to be able to be much more aggressive about returning rbs. remember, the vince cable comments, the business equity, we want rbs to be a uk retail

bank. the problem was that it wasn't a uk retail bank. you know, 20% of the balance sheet is still the investment bank, even after lots of cuts. somebody needs to go in there and i think what the government wants is somebody that will be their man who will go in there and aggressively cut. >> when does he get floated or refloated? >> i think if you look at results today, what beat estimates, there was an an online beat, the noncall did very well. they pushed it. made another guidance update saying it will be smaller by the end of the year than expected. another 3 billion smaller than first announcement. and the problem is the numbers today were good, but driven by the noncall and they want to focus everybody on the core and how much money they can generate it. they haven't got a very good return on equity including the return on equity, 7.4. nowhere near the cost of equity. it is not going to -- it is not generating enough money yet. >> and september is when we get results on the good/bad -- good

bank, bad bank issue. we're still yet to see whether they're going to have to separate rbs in the first place. and whether it is viable for the government to do that. a lot of that will be determined on how black rock says the valuation of those assets is. >> still, it is a bit -- ross mcewan one of those he could play for scotland, a kiwi imported to be in a scottish business. >> yeah. >> probably a lbit old for the team, i would imagine. >> a lot of good kiwi scottish players. ed, thanks for that. helia, thank you for now. aig second quarter profit rose better than expected 17% on higher net premiums, prices and investment gains. they plan to issue a quarterly dividend of ten cents a share, the first since the near collapse and bailout in 2008. on cnbc's closing bell, aig ceo says the company's performing well across the bard.

>> you want to make sure you're dealing with our shareholders and making sure to the extent we have sufficient capital as a company to deal with very aggressive stress testing of our company, it says we have to start returning some of that opportunity that we have been making money back to the shareholders. so clearly the dividend is important and we said before, one, we should -- we can provide it, we should provide it, and it also opens up new shareholders for our company. >> talks over the sale of aig aircraft leasing business to chinese group continue but are complicated. aig was up 6% in after hours. linkedin second quarter profits increased. they're raising their four year sales targets. linkedin is considered the bright star among the internet related ipos in recent years. shares were up 4% in after hours. up 8% as you see in frankfurt.

also on cnbc.com, once the darling investor, gold resembles the ugly child in recent months but the price of the precious metal has been creeping up raising hopes of a rally. catch the full story on our website, cnbc.com. who is the best dressed among first ladies? not michelle obama. penn lang landed on top. find out why she's leading a fashion revolution on the website. and control problems on twitter spell problems for any possible ipo. recent issues on the microblogging service with internet bullies could prove harmful when the company decides to go public. find out why on cnbc.com. you can follow us on twitter @cnbcworld. still to come, fresh off the back of solid manufacturing data, a check on britain's construction sector after this. duncan brock joins us in a few moments. [ male announcer ] it's time.

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these are the headlines from around the globe. u.s. is expected to report a fourth straight month of solid job gains in july, another encouraging sign for the still sluggish economy. tough time to take over for new

rbs ceo ross mcewan. shares down near the bottom of the ftse despite swinging to a 1.4 billion pretax profit in the first half. silvio berlusconi's media set trades lower. the former prime minister is no influence on the company. >> we have a normal company. we are a listed company. we have normal shower holders. the relationship is a normal relationship between the company and the shareholders. >> plus the world's biggest automaker raises its four year profit outlook after posting record earnings in the first quarter thanks to strong u.s. sales and weaker yen. just waiting for the latest construction data. pmi hits its highest level in over three years this morning. follows another bit of good

data. construction jumping sharply led by surge in residential building. the market construction pmi 57 last month, up 57 last month, up from 51 in june. strongest level since june 2010. let's get a breakdown, duncan brock director of sips. doug, nice to see you. really strong number. what is the sustainability of it? how does it reflect what is going on? >> i think the sustainability comes from the fact that house building in particular has been strong for six months now. and that's starting to feed through. the strongest level we have seen for a period of time. other thing that came from the survey, interesting for us, employment levels were high. companies don't invest in people unless they're confident in the future of the company going forward. and we as look at the confidence the people have in the future. 50% of the companies surveyed said they were expecting growth over the next 12 months.

>> what's been the biggest driver of this turn around? construction was a big dragger, biggest dragger on gdp in the first quarter. >> yeah. i think the driver is confidence in housing particularly. >> does that feed back to the policies or -- >> policies -- >> what is it? >> there was encouragement for housing building. we have seen the growth over the last six months. you argue that is starting to feed through. the housing market is picking up. >> what about the other parts of construction? housing is doing well, part of that is government, part of that is monetary policy. what have you seen -- >> we're starting to see growth. that's been very sluggish for a period of time. that's starting to come through. again, a lot of that will be government funded money coming through. we're seeing that starting to improve as we go forward. the other area, commercial, again, sluggish, but we're starting to see the last couple of months now areas of growth. across the picture, it is encouraging. >> what do you make of this funding for lending?

the government has got a new version of that coming through. do you think we had the biggest bang for our buck or do you think there is momentum here in the housing and the trend should continue and construction and housing should continue to improve from here? >> difficult to say. all we can say from the survey we have seen is the companies are now looking for the future. they're investing in people, investing in stocks, starting to build. and the signs are positive from the investments the governments are making. >> how does this feed in? kruk w construction was a big drag on gdp. look, let's say for the argument's sake it is it is also a strong number. no reason why it wouldn't be, looking at these. are you already thinking about what gdp growth is in this quarter? >> difficult to predict gdp. you're right, manufacturing was being very strong and that has seen a particularly driven by consumer business and domestic

and eurozone exports. that's coming through strongly. services has been strong now for the last six months. that has been taking the economy forward. gdp, .6% currently. we expect it to continue to grow on the basis of what we have seen. >> big discussion, this word escape velocity, right? and i don't know if you know what escape velocity it. self-sustaining momentum. you've been compiling this for a while. are any of these numbers at the moment starting to correlate with something that resembles self-sustaining momentum? >> we are seeing a continued growth in the -- we're seeing six months of trends coming through. we're seeing it as high as it has been for the last three months, three years in the manufacturing sector. is that sustainable? we're seeing the signs coming through. >> more sustainable -- >> the -- >> most sustainable it has been since the financial crisis. >> we're seeing it at the high

level now than we have seen for the previous two or three years. >> mid-50s is good. >> 60 is a great number. above 50 is -- we haven't seen it up to 60 for a period of time. the only things we're seeing 60s on is house building growth and confidence in the future. >> the point is the economy is still, what, 5% below -- >> something like that, 3%, 4% below its peak. >> there is a lot of room. >> we need to do a u.s. gdp revision, just pop it up. >> the other area of concern we have is the -- especially in construction, suppliers are being called out by the speed of growth. seeing some shortages in materials like bricks and blocks and contractors are pushing lead times out. so they got to catch up quite quickly to make sure we can sustain particularly the growth of this area. >> okay. duncan, thank you very much. we'll look forward to the

service. looking forward to that. european equities little cautious today after gains yesterday ahead of the employment report. cautiously higher, apart from the ftse mib, down a quarter of a percent and focused on berlusco berlusconi. on the currency markets, big move has been the dollar. dollar/yen up to 99.60. up on thursday. still around that 99.60 mark at the moment. euro dollar, 1.3231. the aussie/dollar also down a fresh three-year lows today. the world's biggest automaker reports record earnings in the first quarter. it expects to post $20 billion in operating profit for the full year. that's 8% higher than initial estimates. like other japanese exporters, they're enjoying the perk from a weaker yen. now more from tokyo.

>> major japanese trading house mitsui and mitsubishi reported their earnings today. both looking well thanks mostly to the weaker yen. mitsui posted $1.2 billion net profit for the april/june quarter, up 20% from the previous year. among the japanese traders, mitsui is the most dependent on resources and falling copper and coal prices have been putting pressure on this bottom line. but a softer yen helped offset some of the weakness in the sector. meanwhile, mitsubishi reported a net profit of $1.1 billion in q-1, up 15% from a year ago. mitsubishi also suffered from the falling prices and resources, strong sales on noncommodity related businesses and cost cutting efforts help boost its profit. the nikkei's reporting that japan's top trader of agriculture commodities will likely post a net profit of $531

million for the first quarter, that's slightly higher from a year ago. sales on overseas power and infrastructure businesses were solid. the weaker yen also helped boost profit for its food businesses including trading of grains. mar benny completed the acquisition of gabeon holdings. it is expected to lift the net profit by more than $100 million. ross, back to you. >> thank you very much for that. have a great weekend. japan's economic growth will slow to 1% in fiscal 2013 -- sorry, '14-'15. this is now according to official government forecasts. fiscal 2013 and '14, which began in april, forecasts 2.8% because of the improving labor market

bolsters consumer spending. announcing we put the sales tax here, hiking. it is going to slow growth to 1%. this comes as the -- a lot of debate about the sales tax. some policymakers believe the move will help fix japan's finances but a top government adviser told the wall street journal tax increase could disrupt the momentum that is helping to pull the country out of deflation. at the same time, in an interview with the nikkei, imf chief christine la guard says shinzo abe should push ahead, his commitment in managing japan's fiscal consolidation. what is the right way to go? tommo kimishito joins us. so they're now saying this official report is saying if we put a sales tax hike in, slow growth to 1%. should they or shouldn't they proceed? >> well, i think that the government should really proceed with the well planned consumption tax rate hike.

japan as you know has the worst fiscal condition among the advanced economies, and then this is a very right way to tackle this problem. well, if the government decide not to raise consumption tax rate, i think that would probably bring in the situation where the foreign investors will lose confidence on japan's economy and try to sell some assets. >> yeah. i mean, the assets they have been buying has been stocks because most of the debt is held domestically, isn't it? >> yeah. that's right. yeah, you know, as far as the jgb government bond is concerned, more than 92% of the jgb held by domestic investors, i think the news of the -- undo the tax rate hike would probably bring in the higher bond yield. and so i think that a government really needs to raise the tax

this time. >> surely this is bordering on economic suicide, a repeat of what we saw in 1997. and is it not the case, do we not think from the experience of the last five years when a central bank is buying an enormous percentage of the flow of bonds that actually any risk of a fiscal crisis is minimized. we have seen nothing in the uk, nothing in the u.s., really nothing in any economy where qe is under way in an aggressive manner. surely by raising like this, you're just going to bat against the momentum that is starting to come through in the economy. >> well, yes, but fact of the matter is that when i -- when i talk with the many institutional investors in japan, here in tokyo, most of them are worried that this current news about the

possibility of no tax rate hike from next april might have the very negative impact on the jgb yield. i understand tax rate hike had a quite negative impact in 1997, but at that time, as you recall, the japan had a financial crisis and we had asian financial crisis as well. so -- but now things seem to be very stable and we don't expect any very substantial negative impacts from the consumption tax rate hike. it will reduce the gdp growth rate for next year by maybe 0.7 percentage point, but because of abenomics, because of depreciation of the yen, the economy still should be able to somehow shrug off this negative impact. >> tell me what about the politics of this? abe talked about reopening the discussion after the upper house

elections. they have now passed. where do you see the appetite among the political classes for doing this or not doing it or maybe doing it in a diminished way? >> well, yes, certainly the politicians are worried about the negative impact, but so i think now the policy is thinking that we ned to do something to mitigate the negative impact. and then i think that the government is eventually going to come up with the supplementary budget, probably by the amount of 5 trillion yen which somehow should be able to mitigate the negative impact from the consumption tax rate hike. >> okay. thank you very much for joining us. have a great weekend. what is on the agenda in asia on monday, the earnings season continues in hong kong. we're expecting a report card

from hsbc, hang seng bank and liam man paper. on the data front, waiting for china services pmi. still to come on the program, egypt's government is calling on supporters of the ousted leader muhammad morsi to abandon forests as the finance minister tells cnbc that he's optimistic about the economy. more 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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egypt's government is ramping up pressure on supporters of ousted leader mohamed morsi to abandon the protest camps. it comes after the government said it was prepared to take action to end a two-week sit-in. this comes as the finance minister for the country said the country could reach 4.3% growth this year. it would be extraordinary. that sort of growth figure with the sort of trouble that we have got seems to me rather exceptional. >> well, analysts will tell you that is a bit of an upbeat

estimate to say the least. but just to give you an idea of the ongoing political impasse which in the past has hampered a lot of that economic growth, the supporters of the ousted president mohamed morsi plan more marches today and you mentioned a stern message from the ministry of the interior calling on demonstrators to come to their senses and to go home. we're not sure yet when the ministry plans to move in with security forces, and how they plan to break up the protests which have been staged over the past few weeks. also more and more diplomats coming to the country, trying to mediate in the standoff. u.s. senator john mccain is expected in cairo later next week. now, when it comes to the economy, of course, they have been dependent on foreign investment, from abroad and tourism as some of the key factors. we have never really had a chance to sit down with one of the key decisionmakers in the road map and for the plan going forward. the minister of finance who has only briefly spoken to reporters in the past, we got an opportunity to sit down

exclusive we with him and get a sense of what is on his mind and how he plans to handle the next six months and this limited transition period. >> people want predictability, people want to know that things are going to fall into place in the right way. so the more progress we make on the political front, the easier it is for all who are concerns with the economic side of things, their job will be a lot easier because with confidence, investors can come back, tourists will come back, the economy will be activated, the place would be more attractive, life will be better. >> egypt's economy grew by 2.2% in the second quarter of 2013. that compares to 5.3% a year earlier. what is your new target for economic growth? >> well, i think actually all transitions -- the economic performance during all tran significants everywhere, not just in egypt, always goes through a slowdown, inability to

create enough jobs, investment is not taking place, imbalances are taking place, also budgets are growing, inflation is higher. these problems are not new. all transitions go through these difficulties. in fact, i would even argue that the difficulty of the egyptian economy is going through now are less severe compared with the problems encountered in eastern europe during the transition. we don't have a negative gdp, 2.2% of gdp, that's higher than a negative. >> so what is your target? >> neighborhood of 3, 3. 5. we are operating under -- below potential, that's for sure. but given that we want to activate the economy, i do believe that this year we can possibly reach 3%, 3.5% to

increase after wards. >> what is going to support the transition is some $12 billion in aid pledges from the oil rich gulf countries. the minister told me they plan to use 9 billion of that to put into central bank to support the currency. remember, the fund reserves have been dwindling and 3 billion will be used to address issues with the budget deficit, which has widened now to close to 13% of gdp. yesterday, the central bank surprising with an unexpected cut by 50 basis points in its benchmark interest rate, because it was more worried about growth than about inflation. >> we have news coming out that the u.s. is closing embassies and consulates in the muslim world on saturday because of an unspecified threat. do we know any more about that? >> well, at the moment, ross, officials tell nbc news that the closures might be linked to a possible al qaeda threat and what the u.s. state department spokesperson said was that it

had been apprised of information that out of an abundance of caution indicates they should institute those precautionary steps. it is also not clear how long they're going to shut the embassies for now. separately they sent out warnings when it comes to the u.s. embassy in cairo. as a result of the marches expected later today and into saturday and sunday. as that standoff between supporters of ousted president morsi and the government continues and may escalate into further violence and made that clear. u.s. embassies in this part of the world are very heavily fortified. one of the most secure in the world. if you walk close to any u.s. embassy premise, riyadh, cairo, there is a lot of security around there. the last attack we had on a u.s. embassy was in ankara, turkey, that was about six months ago. we keep a close eye on the story. ross? >> you sufficiesuf, thank you v

imf fund members overruled by his own government. finance ministry in brazil has written to the fund. batista chose not to vote for fresh aid. spokesperson for the brazil ministry said batista was not authorized to act in the way he did. the same time, the u.s. mash ets hitting record level highs, renewed optimism the global financial crisis is receding into history. but mr. watley is with us today and says the debt levels in the western world have remained constant since the days leading up to the credit crunch. chris, things haven't got any better. underneath it all, you don't think anything has changed. >> that's right. while things look a little perkier, what we see that troubles me is if you look across the major economies of the world, they continue to leverage up in aggregate since

the global financial crisis. so you can understand the leverage ratios increase a bit when gdp -- >> talking about total leverage ratios across the country, government, corporate, private. >> exactly. government together with companies with households. so what we call domestic nonfinancial debt relative to gdp. you see the u.s. chart. if you look at the global chart, with the whole of the major western economies and china as well, the largest economies of the world, you'll see that actually an aggregate, there is is europe debt ratios continue to rise. and across the west they continue to rise. it is as if we're playing sort of past the debt parcel if you like. >> isn't that what the government takes on a bigger debt burden as theoretically the consumer and the corporate side reduce their debt? >> yes, this is a -- in a sense, this is like the keynesian argument, we have to keep demand going. there is another way of thinking about it, which is actually if you go back over 100 years, and

the best place to do that is the u.s., debt to gdp ratios was stable from roughly 1900 to 1980. so about 130% of gdp. the economy grew without being driven by credit growth. since 1980, we have seen a continual creep up pretty much in that debt ratio, and it is not just the u.s., it is across the western world. >> okay. take the point, the question is what does one do with that -- what is the conclusion, what is the consequence? >> i think the implication is policy is not actually working on a long-term sustainable basis. the throw the kitchen sink at the economy to get demand up, whatever it takes, is not a long-term sustainable solution. it is working for now. not long-term sustainable. ultimately you have to consider the keynesian is right, we need to revive animal spirits or is the case that the leverage is killing the animal spirits. in which case you are to deal with the leverage, which means

you are to cancel debt. so i actually believe ultimately we're heading towards a jubilee type moment. if you look the at course of history -- >> jubilee type moment. >> where the debt cancellation type concept, if you look at the course of history, that's ultimately where you always end up in the end. >> great point to end on. still to come, new record highs on the back of better than expected jobless claims yesterday. could solid nonfarm payrolls keep the good times coming? we'll head state side to discuss. the second half of "worldwide exchange" starts right after this.

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watching "worldwide exchange." i'm ross westgate. a recap of the headlines, the u.s. is expected to report a fourth straight month of solid job gains in july. another encouraging sign, still sluggish economy. the world's biggest automaker raises its outlook after posting record earning s due to strong u.s. sales and a weaker yen. the bank is swinging to 1.4 billion pounds pretax profit in the first half. silvio berlusconi media set

trades lower as his tax fraud conviction is upheld. the cfo told cnbc that the former prime minister has no influence on the company. >> we are a normal company. we are a listed company with normal shareholders. the relationship between the company and mr. berle scone is a nrmal relationship between the company and a shareholder. all right. just joining us state side, warm welcome to you. welcome to jobs friday. dow transports, industrials, s&p, russell 2,000, all closing up fresh record highs yesterday. nasdaq, highest for 16 years. now, futures indicating we don't know what it will do ahead of the employment report. absolutely flat for the dow. fairly reflective as well, european equity markets, little firmer. we had gains yesterday for the ftse up 60 points. right now, just down 7.

eight points higher for the xetra dax. .4 of a percent lower for the ftse. the ibex is flat as well. keep our eyes on the treasury yields bearing on what happened yesterday. 12 basis points, not far away from the two-year highs. treasury yields 2.72%. gilt yields higher, around 2.3, up to 2.47% at the moment. keep our eyes on treasury yields today as well. that will have an influence on emerging markets, cost of credit around the globe. currency markets, dollar yen. we saw dollar yen up 1.7% on thursday, on that mark at the moment. the aussie dollar down a fresh three-year low at .8889. euro dollar, 1.3213. we also saw an increase in oil prices yesterday. wti up over 2.5% and it is at that level. holding on to the gains at 107.76.

gold below the 1300 mark as well as we believe tapering may, if we get stronger economic data, may indeed start as scheduled. that's where we stand now in europe. let's recap how we finished the trading week in asia. sixuan has that for us out of singapore. >> asian markets wrapped up the week on a positive note, following the upbeat cues from wall street. japan's nikkei 225 with a standout winner once again, up more than 3%. besides the weaker yen, japanese stocks also got a lift from positive corporate earnings. sony shares finished higher, by almost 1% after better than expected results. this company going back to the black after 12 quarters in the red. meanwhile, sharp shares jumped more than 3% today after reporting a narrower than expected loss due to strong demand for its smartphone displays. and over in hong kong, hutchison soared to a two-year high.

the conglomerate owned by arab why asia's richest man showed an interim profit. it helped to lift other developers like trim congress. that stock added 1.7% in today's session. back to you. the jobs report is out at 8:30 eastern. economists expect solid month of highs. calls for an increase of 183,000 nonfarm payrolls versus 195 we got in june. the whisper number is as high as 210,000. goldman sachs points to employment gains in the ism manufacturing and regional fed indices. consumer confidence in the availability of jobs and the adp report which noted a pick up in construction hiring. the unemployment rate is seen ticking down to 7.5%. ahead of this number as i mentioned, u.s. markets hit fresh record highs yesterday. and u.s. ten-year yields also

moved near a two-week high -- two-year high as well, up to 2.73% at the moment. tom management joins us now. tom, very good to see you. we'll talk about specifically what you think from the jobs report, but i'm just wondering, if we're now getting a backup of fresh record highs of stronger economic data, does that suggest we're getting a lot more comfortable or coming to terms with tapering? >> i think we are coming to terms with tapering. i think the timing is still uncertain. expectations are for it to start in september. i think this bulk of evidence of stronger economic data makes it clear that it is coming, and the market is preparing for it. you saw the backup in the ten-year treasuries yesterday. i think part of that is expectations growing for better

than consensus number in the payrolls and unemployment today. but, yeah, i do believe that the market is getting more comfortable, that the economy has taken a turn from the soft patch in the spring, and is moving forward. >> yeah, so, look, what -- if we get that 200,000 number today, are we going to get a good reaction equity markets or might we be put off if treasury yields start rallying further? i mean not rallying -- treasury yields go higher? >> keep going higher, sure. i think you would get a good reaction, but i'll be honest, given all the good data that has come out recently, whether it is a jobless claims number yesterday, the really strong ism number, good housing information here in the u.s., there is a preponderance of evidence pointing to economic strength, so even if you had a number today on payrolls that didn't

beat expectations, i think they would shrug it off and view this is one more data point in a path of upward moving economy. >> if job situation improves, gradually accelerating economy, does that mean you -- you buy into even now record highs you buy into cyclicals, financials, you think they're still going to keep being at the forefront of further gains? >> the way we look at it from a portfolio strategy standpoint is we would emphasize financials and industrials right now. financials have done very welliwel well year to date. so if the economy really is firming up, there could be some potential there. we would stay away from areas like telecom and utilities, areas that are much more interest rate sensitive. i think one of the other interesting points you mention, the backup in the ten-year

treasury, if we see a strong number today, and anticipation of tapering continues to build and we see a little more backup in interest rates, you could see some interesting opportunities develop in the bond market for yield oriented investors. >> okay. tom, stick around. good to have you on. get a cup of coffee. we'll be back to fairly shortly. maybe the third time is the charm. dell will hold another special shareholders meeting at its headquarters in texas at 10:00 eastern. two previous votes on the $24 billion buyout offer was postponed. david faber reports talks between dell and the company's special board committee are continuing over the deal price and potential changes to voting rules. on thursday, carl icahn sued dell to stop the board from changing the record date of the vote, which would make more people eligible to cast their ballot. dell stock is up just over 2%. silvio berlusconi's luck

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media set continues to trade lower as they upheld the jail

sentence for silvio berlusconi who owns the firm. he'll reman a senator and leader of the people of freedom party for now. speaking on state television after the ruling, berlusconi said the sentence was baseless. >> translator: the ruling today confirms to me that some of the magistrates in our country have become irresponsible. and uncontrolled and uncontrollable organ of the state. they're judges not elected by the people, but selected through a competition like all public officials, and who have risen to become a real state power. >> it dern julia chatterley spo the cfo of the company and filed this report from milan. >> media set, the 4 billion euro firm, founded by silvio berlusconi in the 1970s, and who now owns a 40% share of the business, of course, is the firm too at the heart of the tax fraud case gripping italy this

week. and finally seeing silvio berlusconi convicted late last night. i spoke to the cfo of the firm, and asked him about the international perception of the company and with silvio berlusconi and what his influence currently is on the running of the firm. listen in. >> we are a normal company. we are a listed company with a normal shareholder. the relationship between the company and mr. berlusconi is a normal relationship between the company and a shareholder. and we believe that we are trying to explain that to the markets, since the listing. so in good time, in bad time, for our shareholder, the company has been managed normally, trying to maximize the value for the shareholders. relevant one, and the private one. so the company is trying to maximize the value for the share holding structure we have including the mention of --

>> there is a lot of focus on the supreme court this week and past issues over tax fraud. do you see that as a fundamental part of the history of the business and you've moved on from here? >> for the company, not certainly. i believe for the person, but certainly not for the company. we hope that the downturn has been finished. that's the real important formation we need to have. as far as -- it is not part of the media company. >> do you think it makes sense for any company to have a perceived political influence as well as a holding in a company? should those two things not be separated? >> no, i mean, we try to explain to the market that two things have completely separated. and the market is difficult. we are structured in a way to run the company professionally. we are full of high quality professionals, and that's how we make the difference.

all the rest is really, you know, things that appears on the newspaper and not really so important for the company life. >> this confusion now here in italy about just what this ruling will mean for silvio berlusconi, for the pdl, his party and ultimately for the coalition going forward as ever in italian politics, it's complicated. back to you. >> it certainly is. jules, a report from milan. a recap of the headlines, a weak yen and strong sales in the u.s. helped a record quarterly profit. investors less than impressed with rbs results as a new ceo takes the reins. more earnings to focus on. intesa sanpaolo expected to release numbers today.

the high cost of funding and likely losses in hungary and ukraine, rbs reported a return to profit in the first six months of the year. the british lender government owned said it expects to reach a core capital ratio of 9% by the end of the year and announced that ross mcewan will replace steven hester as ceo. it wasn't quite what investors were looking for. the stock off nearly 5%. axa, french insurer, posted a fall in net profit for the first half, hit by restructuring costs and accounting loss in interest rate hedging instruments. allianz stock is up. saw its second quarter net profit up 27% from a year ago, which beat forecasts. german insurer confirmed its target for over 9 billion euros. earlier, the cfo said he was not concerned about the outflows for the pimco units. >> most people are focusing too

much on this top fund bill that is managing. pimco is more than one fund. this fund makes 15% of the total. we have similar like work create a whole series of noncore products and when we compare it year over year over 12 months, we had actually capped our it fairly stable under um, but noncore products close to 100 billion euros in the time. that shows also the shift of support and makes up the true strength of the pimco organization, which is not limited to managing the fund. >> second quarter profit rose better than expected 17% on higher net premiums. the insurer also plans to issue a quarterly dividend of ten cents a share, first since near collapse and bailout of 2008. aig rose after hours. and is up 6% in frankfurt.

elsewhere, linkedin second quarter profit up 33%, topping forecasts. the professional social networking site is raising its full year sales targets. linkedin which makes most of its money perfect selling online job recruiting services is considered a bright star. shares up 4% in after hours. tom anderson still with us. it has been a bit of a disparity between those companies beating on the profits and those having better than expected revenue, which is the lower amount. does that concern you? >> well, not so much that it concerns me. i think expectations are pretty low coming into this quarter. management has done an excellent job of beating down expectations. so it is not surprised that something in the order of 70% of the companies reporting have managed to beat on the earnings side. less than that have beaten on the revenue side.

that's consistent with what we saw last quarter as well. that revenue number is what we view as the most important thing because we're going to need to see companies able to grow their top lines, so they can continue to deliver good returns to investors, which goes back to the economic data we have seen recently. if we are going to see strength in the economy, we think we'll see revenues come along with that. >> that's why i said is the revenue number concerning? we need to see that up. you think the revenue number will follow the data, you're confident about that? >> yes, i do. and i agree, it is concerning, but what we're seeing is it is growing modestly. so it continues, sort of like the economy, continues to move in the right direction. we just want to see an acceleration in that number. >> all right, stay there.

we'll talk -- we'll talk phones when we come back. still to come, motorola steps back into the smartphone waters in a big way, unveiling first flagship device being bought by google last year. can it compare with the iphone and galaxy s-4. we say hello to the new moto x next. [ 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, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪

motorola waded back into the crowded smartphone market, unveiling the new moto x phone in new york. first major device to be designed by the company since it was bought by google last year. the moto x, which will be built in the u.s., is customizable. you can choose different colors for the front, back and buttens. the phone features touchless control, which use s google's voice recognition software. >> you heard of the self-driving car, this is the self-driving phone. it hears your command, don't need to touch the phone to make a call or navigate, can imagine when you're in the car, it is dangerous to touch your phone. not going to need to do that anymore. >> right. bridget carrie is with us from cnet. bridget, good to see you. you've got the phone there. look. what does it do? what is special? where is the wow on this?

>> well, aside from being able to customize it to whatever color you want, even in wood, eventually, yeah, like a wood backing for it, it will be your phone, but it is all about the software tricks this time. so without me even touching the screen, i can say three magic words, okay, google now and this e my cmand. i can do things like without having it on, i can quickly turn the camera on. little things like this that they're hoping gets consumers interested in it. >> this is about rather than the design or whatever this is about look what i can do. is that what they're pitching it? >> yeah. i mean, nowadays there are so many smartphones out there to get your attention. it is a game of what can i do? what can i do that is different than the iphone. so for all the android phones, this is unique. >> okay. so how do you think it is going to compare against samsung and

iphone? >> well this is the big challenge motorola because samsung has been king of the androids. motorola is stepping in. no one has been talking about motorola for a while. they have been a financial burden to google. google is trying to rebrand it and have a strong product on every carrier. so by having something on every carrier, and having a lot of marketing behind it they'll be able to say this is a phone for the masses and this is a phone that they're taking a different direction by may making it customizable, something you'll want in your life. it may not have the most top of the line specs when it comes to how great the screen is, but how much, you know, will consumers care about that versus being able to customize it. >> some have said, look, you know, when google bought motorola, they killed the cheap end, have gone to the high end as the high end is running out of gas. is that fair or not? >> well, it's been tough for motorola because all this time they have been just getting rid of the phones they already had

on this is their big moment. >> i presume this is the first of a portfolio of products. a lot of people -- how hard is it going to get -- is it going to get to get people to buy this phone? a lot of people are on family pl plans, in plans with telecoms, don't want to switch out of them to get this phone. >> we're stuck in two-year plans. there is going to be a time where they have to die lot of marketing, take time, not an instant hit always. other phones that have been android phones that are really good phones, get good reviews, don't get a lot of traction like samsung does because they have been out there for a long time. so motorola will keep having moto x brands. they said they'll have a cheaper phone. under contract they're selling this for $200. they'll have a cheaper version if you don't want to have a contract. expect to see more moto x over time. >> bridget, are you -- okay, are

you -- do you like, are you excited by it personally or what do you think? >> okay, so only had about a day with it, right? but i guess i'm still enamored with all the little tricks i can do. it will be interesting to see how long does that stay interesting to do all these little things. but motorola made all these tricks in a way where it is not going to eat up the battery life, always listening for the three magic words, okay google now and i probably started it off again. >> glad you like it. that's what i don't like about the -- thank you, karen. have a great day. we lost tom. thanks to tom anderson.