you're watching "worldwide exchange." i'm ross westgate. stocks in the red after spooks on wall street. folks in the bank of england on departmenter hooks about how much forward guidance mark carney will give in the first inflationary report. ing earnings fall, but investors like the improved picture on the operational side. italian banks trading higher. green chutes in the italian economy.

and china takes another blow with six more firms fined more from $100 million for price fixing. all right, warm welcome to the start of "worldwide exchange." stocks in the red today. had the sell-off in the states last night. advancers outpacing decliners 7-2. the ftse yesterday down about 15 points. then saw the dow off 93 points, s&p down 9, nikkei below 40,000 this morning. this is where we stand with european, just over an hour into the session at the moment. and we pull it up. we're having a little technical issues right now.

don't know what's going on. right. there we go. good. ftse 100 is down half of one point. ftse mib up a quarter. the ibex is down two-thirds. bond market rates, keeping our eyes on gilts. inflationary report due out 10:30 london time, half an hour from now. maybe more dovish, mr. carney, than some expect. we had a raft of really good data out of the uk, of course. and it is going to be about is he going to issue forward guidance. gilt yields lower because of stock weakness. keep your eye on treasury as well, 2.6%. italian yields, 4.25, where we were yesterday. on the currency markets, big movers dollar yen six week lows, 97.09. and below now at 96.85. dollar is slightly stronger against the pound. the aussie dollar down to .8941.

and euro dollar, 133. the big mover has been dollar yen, yen strong as well across the board. more on what's been happening in asia. sixuan is in singapore with all the latest. hi, sixuan. >> yeah, thank you, ross. taking the negative cue from wall street, asian markets also lost steam in today's trade. a stronger yen took a toll on japanese stocks. nikkei 225, the worst performer in the region, down 4% to close below the 14,000 mark. australian shares also had the worst session in five weeks, down nearly 2% amid uncertainty over the fed's next move. china markets also reversed early gains as investors remained cautious ahead of tomorrow's trade data. in japan, tokyo electric power shares gaining as much as nearly 5% in early trade. today reports that the government may step in to help deal with this toxic water problem. but shares reversed early gains

along with the broad-based sell-off on the japanese market, ending down by 1.4%. meanwhile, sony shares continued to sell off in today's trade, after rejecting 30 point proposal to spin off its entertainment unit. the stock tumbled over 4%. let me quickly show you the resources space. australian miners took a double whammy on weaker commodity prices, while australia's high court upheld a controversial mining tax. fortescue metals tumbled almost 5%. chinese property developers showed pockets of strength today after vanke's report card shows a demand in the sector remains resilient. more on that later in the show. vanke shares gained a modest half a percent today, gemdale adding .8%. and poly real estate gained over 3% in today's session. and that's all from me. back to you. >> all right, sixuan, thanks for that. first it was richard fisher, now charles evans who is predicting

the federal reserve could begin to reduce its bond buying program next month. the president of the chicago fed who is a known dove, also told reporters he expects interest rates to be kept at an all time low until the middle of 2015. the dow is down 93 points in the end of the session. joining us for more is kevin doran, senior fund manager at branchially kimling. we did have u.s. stocks up record highs during the week. it sort of seems like we have been priced for perfection. what is the risk over the next couple of weeks, do you think? >> i think the risk you got over the next couple of weeks is the markets rely on easing, production of new money, and, of course, as the economy does pick up, you would think that would be good news. but market is interpreting that as bad news because that leads to a quicker taper. >> yeah.

earnings, what do you think of earnings? >> earnings on the whole have been okay. really sector by sector. the banks have a strong reporting season. but elsewhere you're not seeing a lot of top line growth. it is a combination of cost causing measures, not great in terms of top line growth and that's causing pause in the main stable market. on the flip side, you have the banking sector which i consider one of the strongest reporting seasons for some time. >> we'll talk more about the bank and other earnings in a second. questions for us, e-mail us, worldwide@cnbc.com. despite numerous property curves and slowing economy, china's vanke managed to post a healthy growth in earnings. jumped to $745 million. vanke, which serves the mass market is a bellwether for chinese property sector and strong result is a good sign for the real estate market. vanke shares up more than 2% in

early trade, but gains were paired down by the close. ing shares trading up despite lower than expected second quarter net profit. the dutch financial group attributed the loss to insurance and investment management business in asia. speaking to cnbc, patrick flynn remains upbeat. >> improving our margins. we have our interest margins up to 142 basis points. we're controlling costs. fees are lower. our costs are flat. that good cost discipline, improving margins, the drivers behind the good results. >> on mutual in the green after seeing funds under management rise 9% in first half. stock up nearly 4%. the long-term savings group posted a pretax profit of 801 million pounds. speaking first on cnbc, the coo gave us his take on the recovery of the uk economy. >> we have seen from the statistics coming through is

that things are better. the question mark is how much better and how sustainable is that. i do have a view that interest rates are going to be kept low for quite a period of time. but there is more confidence, clearly. i think we're all seeing that. >> travel down 4.85%. it saw strong demand across key markets. the company remains confident of hitting a full year profit growth of at least 10%. and stocks trading higher for swiss com despite a 10% drop in second quarter net profits. switzerland's national telecom operator hit by price pressures and lower revenue from roaming fees after the passing of its previous ceo last month. swiss com announced it will appoint a new chief executive by the end of the year.

mixed bag of earnings there. is there a -- is there a difference between ftse 100 companies and ftse 250s? a lot of people have been going long ftse 250, short ftse 100, they figure the uk economy is outperforming the rest the world to some degree at the moment in terms of what we expected. >> it is probably slightly more complicated than that. the u.s. economy seems to be picking up with much more strength than european economies, no question about that. some of the middle and far eastern economies are slowing down at the moment. for us, i think you have to be just a bit more clever than that, and go into individual companies and take a view on which sectors you want to be in, what geographical region you want to be exposed. >> and where does that lead you at the moment in terms of your stock selection? >> for us, i think the -- definitely more to be had within uk financials.

we had a strong reporting season there. lloyds probably got on to a premium. i look around the rest of the uk banking sector. >> as i say, stay off banks, we'll come on to that in a few moments as well. we'll come more and talk about the banking sector. interesting thing here, a couple of things have come out, which i thought was interesting, hsbc, there was a theme here. hsbc talked about weakness in china and elsewhere hurting them. diageo talked about that and was key to emphasize america. is there a sense that some of those stocks that had -- we were buying because they had emerging market growth have suffered slightly? >> chinese economy has gone through a massive change at the moment and will continue to go through a massive change. they have got to make this transition from a very construction, infrastructure led economy to more consumer based economy. and that will not be frictionless. that will be bumps along the way.

i'm not saying they can't do it, but will not be frictionless. the chinese have to get much more engaged with the economy. and they'll have to stimulate growth in other areas other than just moving roads, trains, bridges, et cetera. they have to really -- >> also the core inflation report today out of the bank of england. waiting to see if we get forward guidance. they'll try to anchor the short end of the bond market. what is your view of gilts at the moment and what is happening with bond funds? >> short-term, long-term, today the inflationary report is the biggest change in uk monetary policy since black wednesday and that sounds like hyperbole, but this is the biggest change since black wednesday. this is the next stage in what a 12 to 18 month project to move uk investors away from focusing purely on inflation. we're moving to inflation plus another variable. >> yeah. are we subsuming inflation?

are we downgrading it? >> let's look at this. the uk has the debt to gdp ratio which suggests they would like to default on the debt. let me -- the uk is not going to default on the debt. when you're uk sovereign body, there are another two levers you can pull on to effectively create a default. and the first one is to devalue currency. look at what happened in recent years, that's definitely taking place. that allows us to default on foreign creditors. for the domestic creditors, you can default by inflation. we had inflation above target for a long period of time now and seem to be intent on keeping inflation above target for some time. let's look at the uk. since march 2009, when we sta started quantitative easing in this country, you had a 2% on your savings if you left them in the bank of the over the same period, inflation has gone up 18%, so 16% off where in real

terms. this is a war on savers and inflation is a means of reallocating wealth from savers to borrowers. as a nation, we are a nation of borrow borrowers. >> fair point. good analysis. stay there. we'll talk about banks. more from kevin doran. also on today's show, we have to be cautious on the eurozone recovery from the natixis ceo. we'll have that exclusive interview in the next half hour. bank of england back in focus. mark carney expected to unveil forward guidance on uk interest rates. we'll get his statement at 11:30 cet. so toe shiba foe toshiba expect forecast. the lone ranger box office flop could cost the company as much as $190 million in the next quarter. we'll talk about that at 11:50.

plus unicredit says there is early signs of recovery. speaking exclusively to julia, we'll have the latest from milan coming up. [ male announcer ] it's time. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse... and share... faster than ever. ♪ it's time to do everything better than before. the new blackberry q10. it's time. 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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nonperforming loans continue to cast a shadow over italian banks. unicredit announced an increase of 1.7 billion euros, rise of 35% on the previous quarter. julia has been speaking exclusively to the unicredit ceo and joins us now. hi, jules. >> good morning, ross. thank you very much. yes, as you quite rightly point out, 1.7 billion euros as far as loss provisions. if you compare that to the same quarter last year, of course, it was actually a lot less. we are seeing at least the progression as far as it is concerned is right. the direction at least we're going in is right. i like the way he described the recovery and the change in progress we're seeing in gdp too. he described it as changing a negative threat to a positive threat. what we're looking at now is not recovery. but something that investors were very focused on here is whether the amount of provisions we're talking about for the next year and in 2014 could actually be narrowed as a result of the change that we're seeing here on the macro front.

>> we are not surprised. when we had first quarter, we said already second one will be much higher. for us, it is important the growth. this is the key topic we are focused on. we are doing a lot of efforts. i think that provision we continue to be high also in the third and fourth quarter. even though our guidance indicates us to do better than 2012. we did extra at the end of december last year. so high provision, but better than 2012. >> when do we see a peak in nonperforming loans for the banking secretarier bank ing sector in italy? >> we believe the first quarter in italy will be the first with the positive signal, over the

previous quarter. when you look at the banking sector, you need one or two quarter to realize. i would say year end first quarter, next year, we show some stabilization and growth. >> some part of managing that is about new loan origination and now you're still actually originating less than being repaid. what else needs to be done to address that? >> we need two conditions, one, banks have to become more active. we are trying to do that. we need more demand from -- especially investment loans, very low. and demand is very low. we hope that if companies will realize that the economy is moving up, they will start to do investments and this will help with requests. >> he mentioned too it is not just a problem in italy. there a problem in germany and

austria. to give you some clarity in terms of the growth impaired loans for unicredit, we're talking about a sum around 59 billion euros. he did say they were looking at the possibility of selling off some of these npls, but there is no discussion with the regulator over a more systemic way of dealing with this. for now, at least, no bad bank here in italy. ru russ, back to you. >> thanks, julia. good stuff. from italy to france, natixis releasing second quarter results. the french bank saw income beat forecasts. came in line with analysts' expectations. stephane has been speaking exclusively to the natixis ceo and joins us for more. stephane? >> ross, the second quarter was impacted by one charge linked to the evaluation of its debts. the bank took a charge on the quarter of 20 million euros. while it took a year ago booked positive impact of 91 million

euros. that's the reason why we had a 29% decline of the net profit for natixis on the quarter. that was stronger than expected. natixis also stated it was in line with expectation, up 2%. i caught up with the ceo of the bank to talk about the outlook for the banks starting with the market conditions. >> it seems like the market conditions were really tough during the month of june, but improve very significantly since then. and july has been pretty better environment in term of market conditions. in term of economic condition, there are signs of improvement in the eurozone, but i think it is too early to count on that in order to make any projection of real turn around of the eurozone

activity. signs are positive for the time being, but we have to keep cautious about it. >> how do you think you will perform for the second half of this year? do you give a guidance? how do you fee, for instance, the cost of risk? >> we don't give guidance, we never give guidance about -- we have never. there is no more uncertainty today than ever. it is a policy not to give guidance. in term of cost of risk, we have always said our cost of risk on normal period years around the 35 basis point area, we are at 49 basis points today, slightly below where we were as i mentioned over the last two quarters. i don't expect that we should anticipate -- that it will go down further for this year. again, i think that we have to

be cautious on the level of economic growth within the eurozo eurozone. >> natixis is going to unveil a new strategic plan in november. the plan for the next three years, the ceo, however, didn't want to confirm if the bank was going to cut some jobs. the french newspaper was reporting that natixis would cut 700 jobs by the end of the year. the recommendation was lowered to neutral from buy. in a statement, they say the restructuring and capital and retail policy from natixis was already priced in given the 38% increase of the stock since february. and that's the reason why natixis is trading lower, down 3.4%. ross, over to you. >> stephane, thanks for that. more on the banks with you, kevin. you said earlier you like some real interest in uk finances. why? >> what you've got on the bank,

what would you be looking for is a checklist of things from banks you want. asset growth, you want increase in margins, you want cost controls and want lower provisions. and if i go through the uk banking sectors that report, companies that reported recently, you can take pretty much all of the boxes. of course maybe not in rbs and lloyds, haven't got the asset growth. but, yes, funding led to higher interest margins, as they replace old mortgages on low interest rates with more mortgage loans and higher margins. cost-cutting has been costly in the industry and we go to provisions and that's the big swing factor. the improvement in uk economic outlook, the improvement in uk housing market all feeds to low provisions. if you move the ppi and some selling to one side, these banks are in a position where they have earnings 15% over the next

12 months or so. as you add all of those things together. and then you look at evaluations and evaluations are -- lloyds has gone on to premium. most of the banks we look at, not just in the uk and across western europe as well, you look in the discounts, and that ought not to be the case. you will see a flip. increase in earnings and potential for evaluation on to maybe a premium. >> is the rally in lloyds, though, done? clearly they're try ting to gett up, the profits going to dividends, trying to get the price up, trying to get it a way so the price will flow. >> i'm a bond investor so let me give you the numbers i would do. i could go out and buy lloyds coe coe, not eke ququity, but e

type investment. i'm taking less risk with coe coe with equity, that suggests if lloyds is ten pence higher on share price, you get a better return on the debt for less risk than you would in equity. >> good to see you today. thanks very much indeed for joining us. stick around. a little bit more, we'll talk about the uk as well. yahoo! is getting first new logo in nearly two decades. next month, over the next 30 days the company will showcase 30 different logos on the home page. on september 4th, one of them will replace the distinctive purple y logo. yahoo! has chosen which one but wants to show the different looks. we want to know how much does the logo really matter? join the conversation here, get in touch with us, e-mail us at worldwide@cnbc.com, tweet @cnbcwex, or direct to me, @rosswestgate.

still to come, mark carney set to take center stage with his first uk inflationary report. will the new bank of england governor take a leaf out of the fed's book by giving forward guidance? we'll talk about that next.

these are the headlines from around the globe. stocks in the red after fed taper talks spook wall street. investors on tenterhooks about how much forward guidance mark corny will give in the first inflationary report. insurers buck the trend. profit rise thanks to a strong performance in u.s. asset management business. italian banks trading higher. the ceo of unicredit tells cnbc he sees green chutes in the italian economy. >> we believe the fourth quarter will be the first one with gdp growing versus the previous one. and after a couple of quarters mid next year we see growth year on year. >> and the baby formula industry in china takes another blow. six firms fined more than $100 million for price fixing.

european equities then today are down, not heavily. we had near 100 point decline for the dow. japan, the dow down more. the ftse off a third as we wait for the inflationary report in an hour. on the bond markets, gilts trading with a yield of 2.46%. that yield slightly lower this morning. a lot of caution ahead of that report. treasury yields, 2.62%. on the currency markets, big move today has been the dollar yen. 96.88, down fresh six-week lows. and maybe there is one of the concerns for global investment will be if we do get the yen appreciation and the nikkei impacting and then maybe lose jgbs as well. meanwhile, it has been billed as the first big test for mark carney. bank of england's new governor will present his first uk inflationary report since taking over in july. in a shift from the central bank's style, he's expected to flush out new guidance on

setting rates until britain's economy returns to better health. so the big question really is, here we go, the implied rise in the expected future path of bank rates is not warranted. some interpreted that, of course, as guidance light and the bank went out of its way to suggest no, that isn't anything like guidance. so what might they give in terms of forward guidance? we'll talk about that. will they peg it to some sort of measure of employment. and maybe wrap up the growth forecast, maybe ramp up inflation forecasts as well. gilt yields meanwhile, we have seen what has been happening with them. this is where we stand at the moment. and it comes on a raft of a big batch of data. there we go. ten-year gilt yields at the moment, 2.45%. comes on a batch of data that's been substantially stronger than one might have expected.

pmis on the services side the best, at the best level since that series began in 1998. and we have seen retail sales up 3.9% in july. gdp up .6% for the second quarter as well. the unemployment rate steady at 7.8%. housing, of course, also doing an awful lot better. joining us for more, kevin doran is still with us. where are the risks here going into this? i read something this morning, the risks are that mr. carney might be more dovish than we expected. i'm trying to see how we might warrant that. is that because we had a lot of data, so therefore we think he'll rein things in? >> good morning. i think the near term risks are if anything governor carney disappoints slightly. expectations have been very high for governor carney and forward rate guidance. with the market not pricing in

any real rate hiking in the uk until the back end of 2015, i think the question becomes whether the market feels that the governor has been a bit too sanguine about strength of near term data relative to its own expectations. >> well, that comes down to how sustainable is this recovery? >> well, it is worth noting that as you pointed out in your intro that the pmi series had been drifting higher. the forward indicators do look stronger. it looks like there has been something approaching some kind of traction or self-sustaining recovery in the uk. it is early days and, if you look at the manufacturing or it data yesterday, that remains 9% and 13% respectively below the precrisis peak. plenty of room for the economy to grow here. >> yeah. and let's bring kevin in here. what do you expect to hear from mr. carney? should they introduce forward

guidance? >> i think they will introduce forward guidance. you have three options today. they said they will move to -- they can either reduce interest rates, engage in more quantitative easing, forward guidance. the only three options available to them. they'll give forward guidance today. i wouldn't rule out more quantitative easing. >> could do more quantitative easing of a different kind. >> they could. >> don't have to buy gilts. they could do something like buy bad debt off banks balance sheets. >> they could. but let's look at this. by the time we get to the next election in may 2015, they will have issued in excess of another 300 billion pounds worth of gilts. who will buy them? since march 2009, the only people who whave bought them is the bank of england and overseas investors.

how will they stand to gain? the rest of the market, professional investors, they have not seen a single gilt for over ten years now. the banking industry has increased that exposure slightly, but you go back to june of last year, banking sector of 120 billion pounds worth of gilts, that's below 90 now. >> who is going to buy gilts without qe? >> i mean, there is a buyer price. the impact is yields have to rise from here. certainly the case that the big buyers of gilts had been the overseas buyer and bank of england. you have a shift in the kind of dynamics of the gilt market. issuance is going to remain somewhere around 150 billion per fiscal year type level. you are going to have to have a stepup from the domestic investment base, which traditionally has been uk insurance companies and pension funds and they will have to return to the market and they

will but has to come at a price and that price is higher yields. >> okay. what do you think they're going to -- i mean what do you think the bank is going to do today? they come out with an inflation target, will they peg it to an unemployment rate? and that means what they're admitting is yes, we're downgrading the importance of inflation and downgrading importance of price stability. >> i xthink the common consensu is it will be couched in terms of intermediate threshold. i think it is important to note that it will be tied to the medium term stability of inflation expectations and in, you know, being either well contained or giving some kind of formal guidance, like the fed has done on inflation at the two-year horizon. the bank will be very wary of being perceived as weakening its resolve in retaining an inflation -- it is worth reminding that the inflation is

a legally binding one. the bank of england, that refers to price stability. >> that's the point. a bit compromised. if you're on the mpc, you go before the treasury select committee, and you're asked, my job actually is to hit this inflation target, and then actually one of those members might say i don't actually agree with the forward guidance, don't you need consensus for the forward guidance to work anyway? there are a lot of problems here. >> forward guidance is untested water. there is no doubt about that. the new new thing for central bankers globally. what you are doing and i thined facto tying the hands of future members of the mpc. for example, john connolly joining the mpc in later on this year, forward guidance is in place and let's say it is tied to the unemployment rate, which i don't think anybody expects to

come below 7% for the next two or three years, are you tying john connolly's hands here in terms of his independence as an mpc member and his judgment on whether to change the policy style? that independence in membership was always seen as a great strength by governor king over the monetary framework. there is an argument to be had it becomes more difficult for central bankers globally, particularly for the mpc, about how forward guidance interacts with their independence. again, this is a new area, new paradigm for monetary policy and we have to learn by doing. >> i can't help by feeling slightly hamstrung that the market is not expecting a great rise in 2015. they don't come up with something, that pricing will no doubt change. thanks for joining us. kevin sticks around. also still to come, we'll be bringing you the opening comments of mark carney's statement here on "worldwide exchange" at 11:30. viewers in europe can watch full coverage of that press

conference. egypt's interim government is reportedly ready to declare that foreign mediation has failed. according to state run newspaper, the government will make an announcement fairly soon. the report comes as u.s. senators mccain and graham called for the release of detained members of the muslim brotherhood as they tri to ease the standoff between the government and supporters of the ousted president morsi. morsi supporters camping out for more than a month demanding his reinstatement and the restoration of the constitution. tens of thousands of tunisians took to the streets on tuesday demanding the ousting of the transitional government. protests led by the country's secular opposition calling for the dissolution of the constituent assembly following the assassination of two key politicians in the last six months. the prime minister has rejected opposition demand for his government to step down. and a fire has broken out at kenya's nairobi airport, forcing authorities to evacuate

passengers and close the international airport. no reports of casualties and the cause of the fire is unclear. the bbc is citing a junior police officer who says the fire started in the airport's immigration offices. in japan, more troubles for tepco as it struggles to stop a tainted water leak. the government is prepared to come to the rescue. the story now from tokyo. >> the stricken nuclear power plant is likely to be leaking radioactive water into the ocean and shinzo abe decided to step in and use taxpayer money for first time to stop the contamination from spreading further. tokyo electric power or tepco which operates plant has been struggling to contain up to 400 tons worth of ground water that flows daily into the reactor buildings. the firm is building a barrier underground to prevent the tainted water from flowing into the ocean, but earlier this month nuclear regulators pointed up that there is a high

possibility that the water is climbing over the wall and into the ocean. stemming the flow has become an urgent issue and under guidance from the government tepco is planning to build a new wall underground by freezing the soil surrounding the reactors to prevent the water from pouring in. this kind of construction is set to be unprecedented and will come with a hefty price tag, around $400 million. government will shoulder most of that requested from the fiscal 2014 budget, but government insists it is necessary, saying the plant could be leaking 300 tons of the toxic water into the ocean every day. and that's all from here. back to you, ross. >> thanks for that. that's the latest from tokyo. toshiba cooling down longer term sales targets for nuclear business. latest strategic plan banking on $8.2 billion in sales, down from the previous target of $10.3 billion. while the company sees steady growth in key markets like china and the u.s., opposition to nuclear power in places like

germany continue to pose challenges. speaking first to cnbc, his hisao tanaka talks strategy later in the program. china's top economic planning unit slapped a fine taking $110 million on six fo formula makers. beijing said the fines are for restricting competition, price fixing and disrupting market order. while baby form has in china sell for double the price of local brands, they account for half of the total sales. any thoughts or comments, e-mail us, worldwide@cnbc.com. still to come, it has been described as someone who predicted financial crisis, but can the newly poid rbi governor fix the indian economy? we'll talk about that when we come back. ♪

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third quarter profit up 1% on higher revenue from media network like espn and theme park. those gain were overshadowed by the lone ranger. the big summer box office flop.

disney's movie studio reported a 36% drop in profit and the company expects to lose 106 to 190 million on the film which star johnny depp. they acknowledged the risks of big budget movies like the lone ranger but still thinks they're a good strategy. that was a thumbs down from somebody here. 21st century fox reported higher fourth quarter profit. it is the company's first earnings report since the company split in june. revenues beat 20th century fox is betting on a lot of sports in the near term as it launches a new 24-hour cable network fox sports one later this month to compete with the like of espn. shares up more than 3% in after hours. we'll be talking more about the indust

industry. ibm reportedly told most of the employees in its struggling systems business to take a week long furlough, an extra week of mandatory summer vacation. market watch says big blue opted for the move rather than the more extreme measure of layoffs. last month, they reported disappointing second quarter earnings. ibm stock at the moment is down 7% for the last three months, just off half a percent today. and yahoo! is getting first new logo in nearly two decades. next month, over the next 30 days, the company will showcase 30 different logos on the home page. on september 4th, one will replace the purple y logo. usa reports yahoo! has chosen which one but wants to showcase the different looks to show renaissance under marissa mayer over last year. earlier we asked how much does the logo matter?

jeff tweeted, branding can be part of a larger restructuring, focus on the brand rather than the look. e-mail us, worldwide@cnbc.com, tweet, @cnbcwex, or direct to me at @rosswestgate. i suppose the key thing about that logo, it has everybody talking about yahoo! which is something that we haven't been doing. do you care? do you care about logos and rebrandings, do you? >> not particularly, no. >> it has us talking about the company. this is nothing to do with financial investing in bonds or anything. >> i look at the news item you just put up there, i thought, why show people 29 logos you're not going to use? >> that's what we said in the meeting this morning. i like number nine. why didn't you have that? interesting to see which one we did like. but it has -- if it is a

marketing stunt, has us all talking about it. india, the rupee continued its slide today as policymakers gathered in mumbai to discuss ways to defend it. among them, the next central bank governor of india. the government picked the former imf chief economist to succeed the current governor leaving in early september. he has his work cut out for him. not only did the rupee hit a record low yesterday, but india's growth is at its slowest in a decade. so, what do you think of the new man? >> well, i think it is an excellent choice. he certainly has a lot to offer. he offers a lot of credibility to the central bank. ri his credentials are strong. he's got a wealth of experience and insight into international

economics, financial markets, which is highly relevant at the moment in india considering what they're facing and also seems like a relatively level headed guy, also open to it inputs and feedback from some of his employees. i think that's important attribute to have as a central bank. overall, i think it is an excellent choice. >> how tough is his -- how tough is his remix, though? growth is very weak. he's got a weakening currency. that's pretty tough. what can he do? >> i think -- first and foremost, he has to face, you know, the challenge of getting concerns about external stability off the table. basically focus on stabilizing the currency. i think two things you need to focus on in that context, first and foremost, communicate that rbi is going to continue to focus on currency stabilization.

not in the sense create ambiguity about that. we saw a little bit of that after the last monetary policy meeting, some confusion in markets about what the stance was on the currency, important to send a clear message on that front. that could also mean it has to continue with the liquidity type investment, put in place recently that are keeping interest rates in a short and high. and also potentially as needed, potentially tighten the liquidity measures even further to basically put a line in the sand, to say that, you know, the currency stabilization is a key objective. >> yeah. can he -- can he achieve that? can he -- you say it is a key objective. what does very to do to achieve that? >> it is a two things it both in terms of communication, and in terms of actually being able to maintain relatively tight liquidity conditions in place.

he needs to get help from the government. needs to be a continued push on the performance side, not so much just in terms of announcement reform, implementation of reform, generate growth, more confidence in the economy and track foreign investments. i think the government needs to walk the straight and narrow when it comes to fiscal policy, move on with -- that will help contain demand and the current account deficit. and the government should announce a number of additional measures to contain the current account deficits. increasing import duties on luxury goods and things like that and also potential of opening up more foreign investments into government bonds and what have you to. so the government certainly has to play a key role and play the key role in terms of bringing about more sustained current account deficit over the next couple of years. >> good enough political operator? he's been a critic of cronyism

and corruption, you mentioned he supports deregulation. is he going to be enough -- good enough political operator to get consensus around what he wants to do and to also help, you know, the government to develop policies that will be helpful. >> well, i think there will be a key test, of course. he's been chief economic adviser for about a year now. and i think it will have to see how he can maneuver the politics of things. general sense is he would be relatively good operator on that front too. but we'll have to see how he actually manages over time. >> leif, good to see you. reminder of what is on the agenda in asia tomorrow, central banks out of japan and south korea will be front and center. also watching for key corporate earnings from rio tinto, acer and smic. data front, july trade numbers out of china and jobs figures

from australia. final thought from kevin doran from brown, shipley. you clearly think gilts are -- yields are going higher. whatever, they have to at some point. what about corporate credit? >> well, you've got a mixture of situations in corporate bonds at moment. fundamentally corporate bonds are overvalued. the reason they're overvalued is because bond yields are too low. as bond yields push higher, spreads can contract, but for a large part of the corporate bond marketplace, spreads are now reasonably tight levels. if gilt yields get by 100, 150 basis points, there is nowhere else to go other than higher. our strategy would be to be very short on the risk, take credit risk where it is appropriate, we see value is financials and what we got. that's a global organization,

and then the other area where you can have value is taking liquidity risk in the most appropriate place. >> which would be where at the moment? >> for us, retail bonds in the uk. these are smaller bonds, so they should be 50 to 100 rather than institutional 200. >> who is issuing them? >> more your mid250 company. >> back to what i was saying earlier, those are tuned into the uk economy more than the global economy. >> sure. what you're guessing is 200 basis points worth of liquidity risk. i accept the bonds are less liquid than your bt bonds. you buy the bonds but then ensure your portfolio by hauling excess cash. later in the year, there will be a liquidity event in corporate bonds. 3 billion taken out of retail corporate bonds in the past nine months. and that's -- that trend seems

to be accelerating rather than flattening out. >> more money coming out. >> more money coming out. yields on corporate bonds these days of 3.5%, not attractive when ftse is running to -- >> you think an opportunity to buy more retail bonds later in the year? >> an opportunity to buy corporate bonds. >> i'm with you. buy retail now, save cash for corporate later. good stuff, kevin. great to have you on. thanks very much. kevin doran, senior fund manager at brown shipley. a short break. still to come, the bank of england back in focus as mark carney is expected to unveil forward guidance on uk rates. we'll have his statement live in around 30 minutes. second hour of "worldwide exchange" continues after this. [ male announcer ] it's time. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse...

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watching "worldwide exchange." i'm ross westgate. your headlines today from around the globe. stocks in the red after fed taper talks spooks wall street, focus in europe on the bank of england. on tenterhooks about how much forward guidance mark carney will give on the first inflationary report. profits rise thanks to strong percent form a performance in the u.s. asset management business. box office bust, disney studio drags down the media giants earnings as the masked man in the white hat and his faithful companion fail to attract

moviegoers this summer. plus, toshiba tells cnbc that it will announce further cost cuts in its money losing pc business by the end of september. exclusive interview with the ceo coming up. good morning to you. if you're just joining us state side, second hour of "worldwide exchange." after that 93 point sell-off for the dow last night, right now futures are lower again. 33 points below fair value for the dow at the moment. the s&p yesterday closing down 9 points, currently moved it on, currently 4 1/2 points below fair value. trying to keep on my toes. off a third percent for the ftse global. where we stand with the ftse, off 15 yesterday, just off a

tenth of a percent at the moment. the xetra dax is down a third. the ftse mib up at the moment, up half of 1%. and the ibex is down about a quarter. bank stocks once again in focus. we'll run through the earnings during the program. bond markets, treasury yields slightly lower, 2.62% and a lot of the action in the next hour will be focused around gilts as we wait for the bank of england core inflationary report. more importantly, is the bank going to issue formal forward guidance and how will they do it? we'll have to wait and see. a lot riding on that for investors in the uk. the big mover today, dollar yen, down fresh six week lows at 97. were down 96.80 handle. the aussie dollar back down near three-year lows .8934. japan saw a sell-off because of

the strength of the yen today. more on that and the rest of the markets in asia. joining us from singapore, once again, sixuan. sixuan? >> yeah, thank you, ross. a pretty dismal day as taper talk from a couple of key fed officials spooked investors. japan's nikkei 225 standout loser down 4% today. export stocks lost ground as the yen gained strength. sony tumbled more than 4% today. they now want the company to outline plans to beef up its performance after the proposal to spin off sony's entertainment uniwatz t was rejected. tepco stock gained as much as 5% on talk that it won't get assistance to contain toxic water crisis. shinzo abe confirmed that the government will step in to help the operator of the fukushima nuclear plant deal with the

problem. south korea, samsung electronics fell more than 2% today ahead of a u.s. patent ruling on friday. investors await authorities' decision as to whether some of samsung products will be banned from the u.s. that's an update on asian markets. back to you, ross. >> thank you for that. as far as the u.s. agenda is concerned today, a pair of fed officials speaking this afternoon. charles plosser at 12:30 eastern, and sandro pianalto. then june consumer credit figures. ralph lauren, time warner, aol and wendy's report results before the opening bell. after the close, we'll hear from green mountain coffee roasters, groupon, mondelez and tesla motors. right. let's find out then what global investors are feeling right now. hans retico at morgan stanley joins us now.

let's kick off with the overall sort of -- the mood in the u.s. this week. we saw stocks up at record highs. we seem to be priced for perfection is there is a feeling we had enough good data to keep stocks healthy, but enough dovishness with the fed to suggest the fed won't taper. where are the risks at the moment, hans? >> two risks coming up. we are talking about global economy which is no longer moving, but emerging market is significant under performance and there are good reasons for that. they have priced themselves out of competitiveness, effective exchange rates are high, high debt level and the result is very clear. you'll see there are asset markets declining. the question is more about gravity and you're referring to the fed debate. i think it is a very important

debate, and when you have mr. evans suggesting there is a strong likelihood the fed is going to taper in september, then, of course, that is going to have a market impact. we should not forget the asset liability ratio in the united states has reached levels comparable to those in the year 2007. in the early period of the economic rebound in 2009, up until recently asset liability ratio was in the mind set of the fed, i think that now the misallocation risk of quantitative easing or links to quantitative easing is increasing. if you like, the cost of quantitative easing is increasing. i guess the market is starting to realize this. you have this coming in on one hand. gravity from emerging market on the other hand. you have to look into what the fed is going to -- i think that the debate is back on tapering. >> yeah. and, look, the dollar -- the big

move over the last, you know, 48 hours or so has been the dollar/yen, back down to below 98 today. everybody has been pricing in a stronger dollar. the investors in the nikkei have been thinking we're going to get a weaker yen. is this -- how much risk here is that the bank of japan loses control of jgb yields and stronger yen and falling nikkei. does that have big ramifications? >> well, i think that we should not be too surprised about this strength in the japanese. the yen trades now like a dollar traded a couple of years ago. we had central banks, boj, which has gone into quantitative easing, doing $75 billion and adding to the balance sheet and more important you have japanese banks which will lend us to foreign clients. that means the yen has to come -- the funding.

now when risk is taken off, you see the natural reflect is again strengthening. we have been wanting in our research over the past couple of weeks about this very likely development, our target on the corrective side is that we move to the 94 hand until dollar yen. the risk that i see here is that the head winds coming out of emerging markets and out of asian economies as these economies are declining, you have to consider what type of environment do they need to impose structure? you do not want economic head winds. precisely the economic head winds are not flowing out of asia. that means it is going to find it very difficult to come with structure reform. but the equity markets bullishness, based on the idea of the third arrow to be shot quickly. there is no disappointment taking place.

you look at the numbers of investment into the japanese equity market, foreign investors, and they have to adjust and as a result of that dollar yen goes down, not up. >> briefly, hans, the chinese yen a record high against the dollar. will they keep the u.n. -- allow the u.n. to keep appreciateiatiappreciateiate i across the dollar? >> you an overleveraged economy, debt problematic, do you want that continue to money inflows entering your country or are you setting an exchange rate? china does not want to have more money because it does realize the sustainability of economic growth is the way to go and not to look just for exuberant economic growth in the short-term. i think there is a long-term

adjustment taking place. >> hans, always good to see you. thank you for that. still to come, italy's economy shrinking in what is the country's longest recession on record. when will it turn around? find out what the chief executive of the firm thinks. we've an exclusive interview after the break. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids that's right for you, including the lexus es and ct hybrids. ♪ this is the pursuit of perfection. 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. ♪

number of earnings stories we're following today. ing trading up despite lower than second quarter net profit down 39%, just over $1 billion. the dutch financial group attributed the loss to insurance and investment management business in asia. speaking to cnbc, patrick flynn said he's upbeat. and old mutual in the green, a rise of 9% for the first half of 2013. the insurance group benefitted from strength in its emerging market and u.s. asset management businesses. italy's finance and economics minister said the country reached the end of its recession. in an interview with sky gg 24 economics, he said italy's economy is at a turning point and will enter a recovery. those comments come as second quarter gdp data beat forecasts, the eighth consecutive quarter of decline. the economy was also something

that jules spoke to the unicredit ceo about. she joins us for more. hi, jules. >> thanks so much, ross. quite interesting because unicredit ceo refused to use the term recovery. you'll hear what he said about just what we're seeing in terms of a kind of turning point. skied him what point do we see positive growth and not just a quarterly positive comparison. listen in. >> credit expectations in some time now is the turning point should be the end of the year. so we believe the fourth quarter will be the first one with gdp growing versus the previous one. and after a couple of quarters, mid next year, we see growth year on year. 2014, 0.6%. this is not growth. it is turning from negative to a positive trend. we think -- what is important is

to take the opportunity of this crisis to improve the efficiency of the private sector. and out there we have already a number of companies performing very well. if you take the 30% company, they show better numbers this year compared to one year ago. that is not enough. so i hope that the political side will take this crisis, an opportunity to come with some reforms in order to improve the overall efficiency of the private sector. it goes one and one with less weight of the public secretarier. >> is this coalition going to be able to manage and enact the kind of economic reforms the country needs? >> instability, i strongly think that without political stability, no reforms can come.

so we need political stability. this is indispensable. so what is happening in this day that creates the economic confusion and stability is not good. we need stability, the problem of italy has been consistently the last few years, this one, so this is the first -- there is reform that should be done immediately in my opinion, the constitutional reforms, the electoral law is needed to create a condition to have more stable government looking forward. what is good in italy is in any case the country still a rich country, strong enough to face the situation and the private sector overall is strong. the family wealth is pretty high. >> he actually repeated what we heard yesterday from the chief

economists, one of the huge banks in italy. that is that electoral reform is more important, more crucial for this country than the economic reform. but i do want to put it back to the earnings. the bottom line is they're making progress and that they're doing what they need to do in order to address profitability aside from the fact it is a very tough environment to operate on here in italy. i think actually the move in the share price we're seeing today and yesterday reflects that. so positive result for them, i think, on this quarter for earnings. ross, back to you. >> good stuff, thanks. that's jules from milan. just joined us, here is a recap of the headlines. markets wait to hear on the extent of guidance from mark carney. strong numbers in the u.s. helping insurance companies. disney's movie business is a flop as the lone ranger fails to attract audiences. still to come, twitter has grown by leaps and bounds since its humbling beginnings. but with an ipo next year, is the microblogging service ready for the sometimes harsh lights

of the market's primetime? we'll explore the twitter revolution next. [ male announ. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse... and share... faster than ever. ♪ it's time to do everything better than before. the new blackberry q10. itime.

just joined us, futures are indicating another negative start. the s&p down around 5 points at

the moment. the nasdaq currently down 7. now, twitter has been called the pulse of the planet, used by superstars like lady gaga, revolutionries, journalists, tech geekz as and the pope. at seven years, twitter change ed. many expect the company to take the next step and go public sometime next year. joining us from san francisco is john alvacrox. good to see you. i appreciate you joining us. 2:00 in the morning or something there. so i don't know whether you've gone to bed or just got up. but thank you. >> you're very welcome. we're still going -- some of my guys are still coating as we speak. >> good, i like that. i like people working through the night. john, look, how crucial -- how hard is it going to be for twitter to get this ipo right?

and where are the risks for them and the opportunities? >> yeah, i think this -- the twitter ipo will be huge. throw out everything you think about out the window, it is going to be a blowout event for twitter. i think there is obviously a huge precedent set with facebook and their ipo that happened a year ago and getting back to the $38 ipo price. i think twitter is in a very different trajectory as a company, though they are at the same age. seven years old when they're ipo'ing. i think their growth trajectory and revenue trajectory going to put them in a much better position. >> let's talk about the revenue side and how advertisers are trying to engage. how does twitter monetize itself, right? and how do you commercialize it? how people use twitter, reacting to things like promoted tweets and advertising or people that

are pushing you to product. >> i think overall it has been pretty positive. they have taken a lot of time to sort of get to this point in advertising perspective. they have done the right things to consider the user experience and how users react. i think on the other side of the equation, from an advertiser perspective, something hugely different is big brands have always been a part of twitter from earliest days and i think brands have a huge appetite to be in social, to be in facebook, to be in twitter, to be on pinterest, and so i think with that much attention, and that much attraction, they're going to get a lot of revenue growth and a lot of traction and i think they're predicting to do a million dollar, or billion dollars in revenue next year in 2014. i think it is a pretty good trajectory for them. i think from our business, we see a lot of demand from brands in the advertising world. they have the code -- the code picked out. there is one thing i would, for both facebook and twitter i

would look towards, if there is an advertising solution they can call their own, something unique to either a twitter or facebook, and the same way that google had their paid search key word solution. i think that might be the -- one of the indicators who gets there first, but certainly a lot of great traction today. >> there is, look, it used to be just, you know, traffic, clicks, you know, formulaic approach to how you valued advertising on the internet. with social, presumably, are we moving to the next generation? actually you've got -- it is about engagement and with people and brands. how do you do that without actually damaging the brand, being overtly commercial in a social environment? >> yeah, no, that's a great question. i think one of the pieces is that the ads, unlike they have ever been in the past, are interactive. so you can retweet them, engage with them, like them, you can pin them.

standard banter, you have none of that interaction. so from a social perspective, that's a whole new opportunity, that's an advantage for advertisers. i think the other piece of that is, you know, twitter in particular had sort of blurred the lines between marketing and customer support and advertising. interaction might start out as a customer support activity, might turn into an actual sale on twitter because it -- it merges all the different functions together into one sort of mish-mash. that's a challenge for most markets. from an advertising perspective, the engagement or ability to retweet is a bonus and a real positive for the brand. but that sort of keeping it all together and meshing the different disciplines at a company i think will be a challenge. >> john, good to see you this morning. or good night to you. i don't know. thanks very much. john, ceo at 140 joining us from

l.a. the twitter revolution, cnbc documentary tonight at 9:00 eastern. still to come, central bank watch now waiting for the quarterly inflation report from mark carney. will he deliver forward guidance? we'll find out.

this is "worldwide

exchange." i'm ross westgate. the headlines today. stocks in the red after fed taper talks spooks wall street. folks in europe on the bank of england on tenterhooks about how much forward guidance mark carney will give in his first inflationary report. box office bust. disney studio drags down the media giant earnings as the master man in the white hat and his faithful companion fail to attract moviegoers. toshiba will announce further cost cuts by the end of september. an exclusive interview with the ceo. right, hello and welcome to "worldwide exchange." if you're just joining us state side, as we have mentioned, new bank of england governor mark carney speaking any moment now.

are they going to deliver a framework on forward guidance? are they going to say we want some forward guidance? that's coming up fairly shortly. no one in the room at the moment. supposed to be released at 10:30. so we'll see what happens. the release is coming out right now. even though there is a huge amount of snaps coming out right now. there we go. the bank of england is tying future rate rises to a drop in employment. they plan to keep rates at a record low until employment falls to 7%. something unlikely for another three years. this is a major new departure from business monetary policy, barely a month after carney took over. that is the statement. they say until the margin of

slack in the economy is narrowed significantly, appropriate to maintain the current exception stimulative stance of monetary policy. let's listen to mr. carney. >> -- next to me is the governor of the bank of england, mark carney. >> thank you, nils. good morning, everyone. a renewed recovery is under way in the united kingdom and appears to be broadening. while that is welcome, the legacy of the financial crisis means that the recovery mean rhee ma remains weak by historical standards and there is spare capacity in the economy. this is most clearly evident in the high rate of unemployment. it is now more important than ever for the monetary policy committee to be clear and transparent about how it will set monetary policy in order to avoid an unwarranted tightening in interest rate expectations as the recovery gathers strength. that's why today the mdc is announcing explicit state contingent forward guidance.

our aim is to help secure the recovery, while ensuring that risk to price stability and financial stability are well contained. there are clear signs that economic activity has strengthened this year. recent positive indicators led the mpc to revise up growth projections significantly in this inflation report. nevertheless, even under the assumption that the currently -- current exceptionally stimulative monetary policy stance is maintained throughout the projection horizon, the mpc expects annual growth to be only 2.4% in two years' time, a rate still a little below historical average. moreover, the level of gdp is not expected to regain precrisis peak until a year from now. this remains the slowest recovery in output on record. will job growth has been a relative positive in recent year, unemployment is still

high. there are 1 million more people unemployed today than before the financial crisis, and many who have jobs would like to work more than they currently can. the weakness in activity is also accompanied by exceptionally weak productivity. it is for these reasons that the mpc judges there to be a significant margin of slack in the economy, even though the extent of that slack, particularly the scope for productivity rebound, is very uncertain. what is clear is that even under conservative assumptions about the scope for productivity rebound, the elimination of the margin of spare capacity will require a sustained period of robust growth. the mpc can help deliver that, but only if it is consistent with our primary objective to maintain price stability. turning to prices. cpi inflation was 2.9% in june, and is likely to remain around

that level in the near term as it continues to be pushed up by past increases in import prices and unusually large contribution from administered and regulated prices. nevertheless, underlying domestic inflationary pressures remain subdued. that's why the chart, even on the assumption that bank rate remains at its current level, at a sustained period of growth is delivered. inflation is expected to fall back to the 2% target only a little after the two-year horizon. for that reason, the mpc's judgment is that the path of market interest rates implies a faster withdrawal of monetary stimulus and appears likely given the current economic outlook. above target inflation, coupled with depressed level of output make for an exceptionally challenging environment in which to set monetary policy. the uncertainty over the degree of slack in the economy, and the

responsiveness of productivity to the emerging recovery makes the mpc's task harder still. in these unprecedented circumstances, the mpc has to decide how quickly to return inflation to target and how much support it is able to provide to activity and employment. the second document we're publishing today describes these trade-offs inherent in the setting of monetary policy and describes how we are responding to that. it is in this context that the mpc agreed at meeting last week to adopt explicit forward guidance. the mpc intends at a minimum to maintain the current exceptionally accommodative stance of monetary policy until economic slack has been substantially reduced, provided that this does not put at risk either price stability or financial stability. in practice, this means that the mpc intends not to raise bank

rate above its current level of 0.5%, at least until the labor force survey headline measure of unemployment has fallen to a threshold of 7%. while the unemployment rate remains above 7%, the mpc stands ready to undertake further asset purchases if further stimulus is warranted. >> all right, you've been listening to mark carney. uk viewers will keep watching this bank of england inflationary report. and helia brahimi is in there, and he had is tweeting as well. if you want to keep following that, follow helia's tweet as well. forward guidance voted on by the mpc. the details of the vote will be published in minutes. interesting to see whether it was unanimous. pick up on the point, lots of things to talk about here. the interesting thing, we have forward guidance, laid out how

it is going to work. what if not everybody wanted it to happen? >> wouldn't be a surprise, would it? >> does it undermine? >> no, i mean, yes, if it is 5-4. but one or two wouldn't be that surprising. on the flip side, if he gets 9-0 behind this, that would be very positive. i don't think people would be too surprised to see one or two people voting against it. >> sterling, reaction in sterling was down nearly a cent, just below 1.53, down to 1.52. that's the market reaction. interesting to see what happens with gilts. sistering down 1.5038 at the moment. what do you make of the threshold and the unemployment target? >> well, where did 7 come from? >> draw a line in the sand. >> yes. a homage to the united states to

some extent. but, yeah, maybe they need to did a little bit of work just looking at gilts here, very interesting, the front end as you expect is rallying strongly. basically saying short sterling, not the currency, the short sterling strips the expectations of monetary policy. those rates are too high. and that's what they don't like. they want -- they want this low rate regime to be priced in to people's thinking. >> but clearly they have -- they have raised their growth forecast significantly, but then went out of his way to say how much weaker we are on a historical basis. >> exactly. i picked up on something he said about in four years' time growth will still be relatively weak in fo four years' time. curious to make a reference to growth in four years' time. we're not recovered from the recession in four years time. overall i think it is much more dovish than expected. >> unemployment is now forecast

to fall from 7.8% to 7.1% in the third quarter of 2016. that's the end of the forecast. that implies that they're going to keep interest rates unchanged until then, unless some of the other thresholds on inflation, whatever, are breached. they're saying now, markets pricing until the end of 2015, we suggest here, and, yeah, towards the end of 2016, september short sterling is the key number to look at. that was pricing, it was 1.7, so now basically a base rate of 1.5, maybe a base rate of 1.7. now there is a risk premium embedded in this. but you heard it from mark carney, he treats expectations very seriously. but i think you'll see the hedge funds piling into the front end of sterling, sterling curve. we'll try and bring that up. okay. as i say, uk viewers staying with that inflation report.

we'll have more on this as well in about 20 minutes or so. for now, alex, thank you. still to come, tech giant toshiba tries to change forechuens. we'll hear from the company's ceo in an exclusive interview with cnbc. [ male announcer ] come to the golden opportunity sales event to experience the precision handling of the lexus performance vehicles, including the gs and all-new is. ♪ this is the pursuit of perfection.

now, bank of america finds itself in more hot water today. u.s. regulators close in on the bank for actions taking in the run-up to the financial crisis. bertha has been with us this week looking at these stories and joins us right now. hi, bertha. >> it has been five years, eenand yet still probing this. they accuse b of a of misleading investors by failing to disclose risks of $850 million of mortgage bonds in 2008. the suits claim that 70% of those securities were written by mortgage brokers outside the bank's network, making them more vulnerable to default. the s.e.c. says at the time, ken lewis called for the mortgage securities toxic waste. they're zpudisputing the allegations and saying they're prime mortgages sold to sophisticated investors who had access to the underlying data.

bank of america trading in germany off 2.5%. the s.e.c. reportedly decided not to file civil charges against magma capital over it role in creating mortgage securities. the wall street journal says the s.e.c. has been probing the firm for more than a -- over a year now over a cdo that was created by merrill lynch. the agency has not officially closed the investigation, which means it could still take action if new information emerges. ross? >> all right, bertha, good stuff. thanks for that. have a great day. the ntsb says it hasn't found any mechanical failures that led to the crash landing of a southwest airlines jet at new york's laguardia airport. the boeing 737 touched down on its front landing gear first, which collapsed instead of rear wheels. investigators say the first officer was flying the plane, which isn't unusual. the captain grabbed the controls, which hasn't been fully explained.

a pair of u.s. stock exchanges, bats suffered technical glitches. they handle 20% of overall u.s. stock trading. it was hit by a near hour long outage which it says was due to an internal network, not a software issue. it was having trouble processing trades on a narrow group of stocks which were canceled. issue was resolved in ten minutes. it had they say it had a minimal impact on the market. we'll look at disney and the health of the media sector on the next part of "worldwide exchange."

recap of your headlines.

mark carney sets out forward guidance, tying the rate of unemployment to interest rate rises. more cost cutting by toshiba as it tries to stem the bleeding in its pc business. and disney movie business a flop as the lone ranger fails to attract audiences. like many japanese consumer electronics giants, toshiba is losing billions in its pc and tv businesses. during a strategy update today, toshiba promised it will nurse the division back to profitability this year. the company's newly appointed ceo sat down with carrie for an exclusive interview. >> translator: we need to do more cost cuts by reducing the number of platforms and using more xhocommon parts. for pcs, we'll announce more rationalization on the sales side and in the services

department. we have promised to push back into the black this year, so it will be too late if we wait until the second half of the fiscal year. we'll mackke a detailed announcement by the end of the second quarter. >> the government is getting ready to restart the nuclear reactors. every time prime minister abe comes abroad, he's selling the technology of the japanese corporations have in nuclear power. why are you not forecasting bigger growth in your nuclear energy operations? >> the u.s. has been pursuing a nuclear energy policy, but because they have come up with a cheaper natural gas, shale gas, nuclear power is fading. i don't think our business opportunities in the u.s. have declined. our plans have been extended. initially we had counted on deals being signed this year and reactors going online in 2017 or 2018. but those plans have been moved forward. >> are you considering sales of

shares that you own in westinghouse? >> we are in negotiations with a number of partners. we won't sell the shares to just anybody. westinghouse is an important subsidiary and source of profitability now and in the future. we want someone who shares our vision. it is not simply that we want to sell our westinghouse shares. >> there seems to be some growth coming back to the japanese economy. what is your forecast for domestic demand here in japan? >> reviving the private sector requires more, like deregulat n deregulation, lowering corporate taxes. i hope the government will deliver on these measures. they have not decided whether to raise the consumption tax next year. many people are worried the economy will shrink if that happens. but i personally think that the sales tax should be increased in order to improve japan's fiscal standing. it will help restore global confidence towards japan. but a hike in the sales tax

needs to be accompanied by temporary measures to protect low income households and small and medium size enterprises. >> exclusive with the toshiba ceo. disney third quarter profit up 1% from its media network like espn and theme parks but overshadowed by the lone ranger, big summer box office flop. disney movie studio reported a 36% drop in profit and the company expects to lose $190 million on the film, which stars johnny depp. the ceo acknowledges the risk of big budget movies like the lone ranger but thinks they're a good strategy. disney down 2% after hours. 21st century fox had higher fourth quarter profit and revenue on a rise on cable television fees. the first report since news corp. split in june. profits missed analyst forecasts but earnings beat. it launches a new 24-hour cable network, fox sports one, later

this month, to compete with the likes of espn. shares up more than 3% in after hours. what do we make of the reports? alex joins us now. let's kick off with the movie business. clearly already in focus with the spat between george clooney and daniel loeb surrounding sony and the profitability of films. such a variable business. one big hit, you make enormous amount of money. one flop, you lose a lot of money. that's never going to change, is it? >> it is is same in consumer books and films and the same in music. hit-driven business can be disproportionally profitable on the upside. but when it goes wrong, it can impact quite badly. >> what does that mean for those -- doesn't mean you shouldn't be in the business, though. it also means you can't mitigate. >> it is hard to mitigate against such underperformance, such unexpected

underperformance, but the experience a lot take is the portfolio approach, you enter more winners than losers but you accept there will be some losers. >> is george clooney right when he says hedge funds never appreciate how the movie business works? you can't apply normal metrics. >> i have some sympathy, but my overwhelming sympathy is with investment community and the financial markets community. let's not forget george clooney takes in the best part of seven or eight figures. >> and he has a contract with sony to make movies. >> there is a vested interest there. the general thrust of what is going on in the u.s. and across europe in fact is to strip away noncore assets from conglomerate. maybe a conglomerate is hiding assets that may be undermanaged, that may be the case with sony. >> 21st century fox had a rise in cable tv. how is this going to perform? >> i think it will perform well. the consumer environment in general in most western markets

is improving. we can see that closer to home here in the uk where subscriber willingness to put up with pay rises, frankly, pay increases is being tolerated. and where as your preamble mentioned there, the appetite for sports is just undiminished. it is growing and we're seeing new entries in the marketplace, both here and also in -- >> still driving up sports rights. bet in this country competing squarely with sky. is that going to be undiminished, people prepared to pay and how does the model more effectively -- sky used to be more. if you're already a cable customer, get it for free now. >> right. their proposition is triple play. they will use sport to cross subsidize the triple play. selling tv, telephony and internet to the same guy, the same household. sport has been worked out for some time now that sport is the

one staple of premium content that most consumers, most blokes, let's be honest, will pay for. >> so who is going to win? does it work? does triple play, quadruple play win? does it work? >> i think ultimately it will work. i think the more interesting question is whether or not sky's existing proposition of delivering tv through satellite is technologically the right and sustainable way going forward. i think probably some form of streaming option online is probably the way ahead. but just to take a step back, this is a very exciting time for the sector in general. lots going on in terms of deal flow. i think the new entrance into the marketplace endorses the fact they can smell the money too. >> content with social, third screen, second screen. those movements, really at the beginning of that, right? >> only at the beginning. so far generally traditional media like tv and broadcast, you'll be pleased -- it is

complementary. >> social maybe reinvigorates, right? >> that's all the evidence so far. most twitter feeds boil down to somebody on tv or what you think of somebody on tv. >> thank you very much. recap on european equities, this is where we stand. down about a third a percent for the ftse 100. xetra dax is down three-quarters. ftse mib up a quarter. as far as futures, we had near 100 point for the dow yesterday. right now we're indicated down about another 50 points. the nasdaq is some ten points below fair value and the s&p 500 is 6 1/2 points below fair value. we have charles plosser at 12:30 and cleveland's sandra pianalto later. a number of corporates reporting.

that's it. "worldwide exchange" is finished. "squawk box" is up next. we'll have the inflationary report for viewers in europe. yo? 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. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪

good morning. our top stories, sharp sell-off in japan overnight as the yen rises on fed uncertainty. in the u.s., we have a key treasury auction in focus for the markets today. on the corporate front, disney earnings beating the street despite a studio decline. it is wednesday, august 7th, 2013. a little early. 5:59 on the east coast here. and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick with andrew ross

sorkin and brian sullivan in for joe kernen today. why don't we start things off. 5:59 every morning. not early. >> i thought the show starts at 6:00. i looked over and saw the clock and see there, can you show -- >> we're just about to be 6:00 right now. >> there you go. >> now it is 6:00. let's start things off with the markets this morning. andrew mentioned japan. nikkei closing down 4% overnight after u.s. stocks logged their waft day in over a month. among the reasons that were cited, fed fears, you had fed president dennis lockhart and charles evans suggesting the central bank could begin tapering easy money program as early as september. there was some doubts after that lousy jobs report we got last friday. but there is more fed talk today. philadelphia's charles plosser will be speaking at 12:30 on his economic outlook and cleveland's sandro pianalto talking about an hour later on the regional economy. in the meantime, the bank of japan kicked off a two-day