welcome to "worldwide exchange." i'm carolin roth and these are your headlines from around the world. stocks in europe trade higher as investors anticipate a strong zew corporate sentiment reed readie ining out of germany due one hour. e.on offers a more sober view on the recovery, warning that plunging power prices will depress earnings but the stock rallies on the back of the better than expected first half profits. more abenomic fuel for japan's economy could be on its way. tokyo markets jump on a report

that shinzo abe could cut corporate taxes to offset a planned sales tax hike. china's microblogging alternative to twitter boost shares of the internet firm in after hours and beats the street by a mile thanks to a new tie-up with alibaba. good morning, everyone. yes, you're watching "worldwide exchange." it is -- we are about one hour into a brand-new trading day and the stock europe 600 is seeing modest gains over .3%. this is the fourth straight session in which we are seeing gains for the european markets. we are currently at a 2 1/2 month high. this is a look at the individual indexes, all trending higher, the german market, though,

outperforming off its session highs. we saw it trading higher by around 1% just a few moments ago. but the xetra dax still adding on a nice .8%. we did get some very strong earnings reports which we'll talk about throughout the program. the ftse mib also adding on .4%. and similar percentage gains for the spanish market. now, here's a look at some of the best and worst performers on the stoxx europe 600. gam switzerland up after the asset manager saw a strong jump in its margins, strong inflows and better than expected numbers. and down in switzerland, we're also seeing dksa down by -- here is a look at bond prices. we're seeing core paper losing a bit of ground. the yields going higher now. the ten-year treasury yield back

above 2.6%. currently at 2.64%. this is ahead of the u.s. retail sales later on today. gilts, the yield at 2.49%, just below that 2.5% level. we did see it above that level, about half an hour ago. now, of course, we get uk inflation data for the month of july. that will be a key focus for the gilt markets and the sterling dollar up here, which is currently unchanged, changing hands at 154.64. aussie dollar we did see confidence at an eight-month low, down by .1%. and dollar/yen, seeing that strong surge following yesterday's gains, up by .9% in today's session. look, there is these reports in the nikkei newspaper saying that shinzo abe may offset the rise in the consumption tax with a cut in the corporate tax. these reports aren't new, but certainly fueling that rally in the nikkei today and leading to a lower yen.

now, let's check in on markets in asia. li sixuan is in singapore. good afternoon to you, sixuan. >> thank you. the market lagered yesterday and was the top gainer in today's trade. rallying 2.6%, helped by a weaker yen and hopes of a lower corporate tax rate. the rest of asian markets also broadly higher. the shanghai composite extended three-day winning streak ending higher by modest .2%. while the pboc injected 11 billion yuan into the market. the hang seng gained a stronger 1.2%. south korea and australia also gained 1% and above. in japan, stronger than expected data helped machinery stocks. fuji heavy jumped up 5.6% and kawasaki heavy soared over 6%. over in china, cement and steelmakers led the gains boosted by beijing's plan to

speed up infrastructure development. the eastern city of guangjo became the first city to ease property restrictions. the country's largest listed steelmaker just announced to raise steel prices for september, while cement prices in eastern china have been rebounding for nearly a month. shares of shangfung cement up by 10%. the dow and s&p 500 ticking lower yesterday, extending losses from the previous week. the nasdaq bucked the trend with blackberry and apple boosting the index. joining us from zurich is michael sullivan, head of portfolio strategy and thematic research at credit suisse private bank. michael, thank you so much for joining us today. what do you make of the move in the u.s. markets. i mean, we have seen a little bit of consolidation over the

last couple of days. some say this could be the precursor to a much bigger move to the downside. are you in that camp or do you believe we're going to be sideways trading until we get more news from the jobs market in september. >> i think if you look at the magnitude of the moves in the u.s. markets, it is very small compared to the nikkei or even over the last two weeks. i think some of the technical analysts may be worried with the ability of the s&p to hold that 1700 level. volatility is at very, very low levels, put the call ratio back down to where it was the end of may/june. some of the other tactical indicators also beginning to look a bit -- it look a bit stretched. i think the story really of the last two months is that the u.s. market, which has been very, very solid in terms of price earnings, the macro data, the moving to the recovery part of the business cycle, we're now

seeing a catch-up by europe to a lesser extent by emerging markets. in terms of what we do, we have been overweight equities, tactically, strategically much of this year and the last few weeks our investment committee moved the tactical view to neutral. i think it is just yet to your question just yet a little bit too early, i think, to be any more agresive than that. i think the rest of the year is still going to be quite solid for equities. >> just how much volatility are we going to be seeing around the jobs report in september, around the fed meeting in september. we know the vix has come down quite a bit. it is a multiyear lows. it is back below 13. are we being a little too complacent about another vat of volatility? >> i think that's a fair point. i think there are risk out there that to some extent have been priced into the market. i think, you know, anyone who

doesn't know about the likelihood, very high likelihood of tapering in september, is, as you say, perhaps complacent. i think tapering will be interesting when it occurs given the backdrop of, you know, we're beginning to see some slowing and macro momentum in the u.s. the housing sector which led the recovery very emphatically this time last year for a good nine or ten months is beginning to decelerate. and so the worry there i think is that if you get tapering, and you begin to get less strong macro data, you know, the market begins to reinterpret news in a different way. for much of the last year, bad news was seen as being good news because it meant more stimulus from central banks, but we may potentially move into a phase where bad news is actually read as bad news by financial markets. the other area i would flag is this debate between europe and emerging markets.

european data together with the uk really improving quite solidly now in the last couple of months. and european markets outperforming emerging markets by a good 8%. you see a little bit of an improvement in emerging markets. i'm frankly more convinced by the uptrade in europe than i am by that in emerging markets. i still have worries about europe, but i think the degree of financial operation leverage is probably greater in emerging markets. that's something to watch for the next four or five months of the year. >> let's stick with europe then. to what extent will that improvement in the underlying economic data translate through into higher earnings estimate. have we seen that beginning? how much of that will come? what do you think? >> i think it is going to come very, very slowly. i think the european recovery will be a bit more protracted than the u.s. one has been,

partly because you don't have the outright support from the central bank, partly because the embers of the eurozone crisis are still burning. you still have tensions at the heart of governments in countries like italy, spain and portugal. and also partly because banking reform has been slipping. and there is this underlying issue of the transmission of bank funding to small and medium size enterprises. and, again, just in the u.s., if you compare the u.s. banking sector and how that has repaired itself, repaired balance sheets, we have really seen the same magnitude of repair regeneration in the european financial sector. we have a preference for u.s. over the european banks within that sector right at the moment. i think the european recovery will be slower. and is still, i think, prone to, you know, periodic eruptions of the eurozone crisis.

i think compared to where we were last year, we're in a much, much better place in terms of economic activity, and also confidence, which in countries like france and italy is very important. >> michael, very quickly. we have seen an incredible rally over the last couple of days in basic resources stocks, gold and iron ore prices. is this really just technical short covering or is it a belief that the fundamentals are -- have actually hit a bottom? >> i think there is a lot in the short covering story. if you look at the recent earnings race, newcrest, the numbers were actually pretty bad, but the stock rallied. there is a very big positioning effect going on in gold and gold miners, the gold miners, if you look at the new ones of the world, really a tremendous rally in six weeks or so. that's one of the very, very few sources of -- or areas of volatility in the market.

so in terms of our strategy at the sector level, still underweight in the metal and mining stocks and tempted to take profits in many of them at these levels. >> okay. we'll take profits in the mining stocks. michael, thank you so much for that. michael o'sullivan, at credit suisse private bank. and this is what's coming up on today's show. u.s. authorities are reportedly preparing to make arrests in connection with the london whale losses. joining us at 11:10 is david birmingham, one of the three to talk about his extradition experience. as british home prices rise at their fastest pace in six years in july, we take the pulse of the uk economy. we bring you the latest inflation data live in 20 minutes. with protests and uprisings, the middle east is used to making headlines but our guest argues a quieter revolution is emerging and it's one of technology-based entrepreneurship.

tune in to find out more. on day two of our organized crime week, we take a look at what's been described as a bigger threat to uk security. then a nuclear attack, cybercrime. we discuss with our panel at 10:45 cet. will blackberry put itself up for sale? we cross the cnbc headquarters at 11:40 cet to discuss who might or might not be making a move for the troubled smartphonemaker. and if you have any questions or comments on anything that you see, any questions to any of the guests that you're seeing on the program, please do e-mail in to worldwide@cnbc.com. also social media may have taken china by storm. but the west is still struggling to monetize the world's biggest online population. we'll take a closer look at the business of social media after the break. [ kitt ] you know what's impressive?

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thyssenkrupp made plans to sell parts of its steel americas unit. the troubled german steelmaker has been struggling to unload the unprofitable division. the company will now hang on to the brazilian steel mill, but will continue with the sale of its processing plant in alabama.

thyssenkrupp is due to report earnings after the bell in europe today with pressure increasing on management to raise new capital to shore up the balance sheet. shares in thyssenkrupp today are falling by around 1.5%. a warning over plunging wholesale power prices spooked investors in german utility giant e.on after earnings came in better than forecasts. annette joins us from frankfurt. good morning. >> i think personally that those investors have been spooked quite a bit if we look at the share price development. they had a ten-year low and that well explains why the shares are now up on that -- have to say little bit of better than expected earnings in terms of ebda and underlying that income came in a bit better than expected. the company said they're sticking to their guidance of

2,013, but apart from theat, there is not a lot of good news coming out from the company. the ceo is saying that a view of the situation indicates that at least for 2013 and 14 no recovery is inside. that is, of course, due to low demand for electricity in europe and at the same time as well very domestic politics such as the u-turn on nuclear energy here in germany after, of course, the fukushima disaster, and that is weighing on utilities who are now desperately trying to get their feet into renewable energy. and at the same time, they're increasing production of coal plans, which is extremely controversial, discussed near germany. nearly all capacities are not utilized enough. and that is e.on saying as well. they're planning on shedding

capacity. they already shut a big coal plant outside from germany and that is the way most likely to go. of course, the whole situation, a lot of people here in the market saying is not very satisfactory for them, but what we could have seen now is actually a bottoming out of what was a lot of bad news. if we are looking ahead for the company, the ceo is as well saying a lot depends on political decisions, which they are, of course, not at the helm of. so there is still a lot of insecurity around utility investment. rwe, by the way, will present its numbers tomorrow. a little bit of positive news came out from the divestment aspect because the company needs to shed a lot of assets to reduce debt. they're ahead of plans to shed those assets. perhaps that's a bit of a reason for the surging shares.

>> thank you for that. moving on, sina shares jumped nearly 6% in after hours trade despite posting a lot on one-time charge. excluding items though, sina earned 21 cents per share when analysts were expecting about half of that. efforts to monetize microblogging side weibo and tie-up with alibaba has been tying dividends which is why they're predicting a strong increase. joining us now from beijing is duncan clark, managing director at bbh hina. in weibo, we have seen advertising revenue triple. now is that sustainable or just a one-off? >> no, i mean, sina has been investing a long time in the platform. it is in a way had more promise than sort of punch for a long time. weibo transformed china in terms of society and politics even,

anti-corruption. but now it is shifting really to the commercial arena that sina is trying to monetize and mobile will be key to that. a key battle with tencent as we said. >> the competition is pretty fierce, in terms of mobile. who has the better offering of the two? >> well, the important distinction between we chat and weibo is that we chat was born for the mobile industry, designed for the mobile phone. weibo from sina has been around for several years now and it is more than twitter. some people say it is china's twitter. it is more like a mix of twitter and facebook. it is pretty multimedia but designed for the desktop. so in a sense we chat, which is born from mobile, has really dominated now the mobile messaging sector. but the big question is going to be how do these two platforms link into other areas such as e-commerce or games to really drive big profits. >> sina sold an 80% stake to

alibaba. how much is this bump in earnings, how much is it actually down to the sale of this stake? and to what extent will alibaba be driving earnings in the future? >> i think it is important vote of confidence for sina that alibaba made the investment in weibo. in the chinese internet space there are three big companies. as you notice, sina is not one of those. but in terms of impact it is massive. not as big in montiizations. by having this alliance with alibaba, it is giving it a new lease in life into m-commerce and e-commerce merging with mobile. that's where they're afraid of tencent. i think alibaba is investing in sina and is probably to save its own skin, but also certainly helps sina in the long run. >> duncan, let's talk about the

broader chinese social media space and how facebook can play into this. i mean, facebook has a zero percent market share in china. it hasn't been able to enter that market. has the window of opportunity closed to facebook altogether. is it now too late to try and even enter the market? >> well, it is interesting, one thing in technology we learn not to make big predictions and also with china, one thing we learn for a long time is the lack of political change accompanying all the social and economic change. political change is almost necessary to, you know, to shoo-in companies like facebook or twitter which have been blocked for several years or youtube. one thing, instagram has done quite well in china and that's now obviously been acquired by facebook. there may be shifts in technology that allow the companies to pick up on the piece -- on the margins in business. unless there is a fundamental change in opening betweenpanies get their way into this market. >> good point there. thank you so much for that, duncan. on those insights.

kfc and pizza hut yum brands continue to feel the heat in china. same store sales jumped in july. customers were turning to rivals like mcdonald's for drinks and ice cream. yum's kfc brand has been hit hard by food quality issues following the bird flu scare. more than half of the operating profit is actually earned in china. japanese stocks outperformed the rest of asia today. that's held by reports that prime minister shinzo abe is mulling a plan to cut corporate taxes. according to the nikkei daily, that is -- that is to help offset the impact on planned sales tax hike on the economy and boost foreign investment. with more now, sachiko kishida from the nikkei. she has more for us.

>> prime minister abe has not yet decided to go ahead with the sales tax hike, but if he does, it is likely he may propose a corporate tax reduction along with it. tokyo-based firms payed an effective tax rate of 35.64% in fiscal 2012. one of the highest in the world. prime minister abe has already called for tax breaks to promote capital spending as part of his economic growth strategy. but such narrow incentives would do little to stimulate domestic investment and he fears that just raising the sales tax could delay his goal of ending deflation. the government is also looking to pass additional capital spending incentives this fall. it is essential for the government to carry out both deregulation measures to boost the economy, but a loss of tax revenue would hit japan hard as the country has a debt more than twice as big as its gdp. back to you. >> thank you for that. japan's core machinery orders continue to fall in june, down 2.7% month on month.

but the good news is the job was much less than the 7.2% fall that analysts were anticipating. still, the weak capex is headed for shinzo abe as he mulls whether to press ahead with a sales tax hike. minutes from the bank of japan's policy meeting shows central bankers were still on board with an optimistic 2% inflation target citing a recovering economy. some warned of slower growth from china and other emerging markets. there are also concerns that ultra easy policy might weaken the government's fiscal discipline. and still to come on the show, a drumbeat of positive data suggests the uk economy might be ready to take off. but could inflation trip up the recovery? we bring july cpi and ppi numbers right after the break.

stocks in europe trade higher as investors anticipate a strong zew corporate sentiment reading out of germany. that's due in 30 minutes. german corporate giant e.on offers a more sober view on the recovery, warning that plunging power prices will depress

earnings. but the stock is rallying on the back of the utility group's better than expected first half profits. more abenomics fuel for japan's economy could be on its way. tokyo markets jump on a report that shinzo abe could cut corporate taxes to offset a planned sales tax hike. china's microblogging alternative to twitter boost shares of ints net firm sina corp. in after hours, it beats the street by a mile thanks to a new tie-up with alibaba. we are just getting uk inflation numbers. the uk july producer output prices plus 0.2% month on month, up 2.1% year on year. this is the highest since february 2013. let me just give you the poll, the poll was for a print of 2.1% year on year. so that is in line with

expectations. the core producer output prices up 0.1% month on month, up 1.1% year on year. again, the poll was for a reading of 1.2% year on year. so just slightly lower than forecast. if we look at cpi and let me just get the data for you, we have got cpi edging lower to 2.8%. this is in line with what analysts had been expecting. this is after a june reading of 2.9%. just to get some of the commentary for you, the fall in cpi, the annual rate is driven by airfares, recreation and culture and clothing and footwear. robert wood is a uk economist at baron bank and joins us now. your initial reaction to the numbers? >> more or less as expected as you said. we have inflation probably bouncing around its peak now. i think we're slowly passing the

worst. don't think we'll see inflation come rapidly down from here, i don't think it will go that much higher. we should bobble around here for a few months and head down through next year. so good news, i think, today, it has come down as expected. >> the bigger question is after the forward guidance announcement from mark carney last week, can he actually stimulate the economy without inflation running away? >> well, that's the million dollar question, isn't it? i think for me, the uk is absolutely miles away from the normal position. unemployment is 7.8, way above where it was before the crisis. output is still more than 3% lower than it was in 2007. and importantly nominal wages, money wages are not growing very quickly at the minute. so companies' costs aren't rising fast. i think all those things point to the need to keep stimulating the uk, there is a long way to go and that probably isn't going to turn to sharp upturn inflationary pressure at any time. >> just an update with what is

happening with sterling, small gains after the above forecast julys, came in at 2.8%. this is what robert was actually expecting, but a wider range were expecting. this is why this is just ten basis points ahead of forecasts. now, we also saw a lot of good news in terms of the housing market. british home prices rose at their fastest pace in six years in july. that's fueling concerns of a housing bubble in the uk according to the survey, demand for property is at a four-year high with governments seeing the help to buy and funding for lending behind the pickup in activity. robert, we know that mark carney looks at the cpi in terms of inflation. he doesn't look at the retail price index, which actually accounts for housing. so to what extend will this data play into his monetary policy decisions. >> i think there is two ways. one is if you think house prices force up consumption by

improving consumer sentiment, in which case very strong house prices, get bullish on consumer spending. last week he said that the bank's forecast was for consumer spending to rise in line with pay. households not to save less and less. very rapid house price growth might suggest something otherwise. you're getting more of the wrong type of growth than the right type. i expect house prices to go up 15% over 2013 and 2014 together. i think the data is actually -- could pose upside risks to even that forecast. so i think it is quite important in that respect. the other is financial stability. that's a knockout for guidance. >> that's a very, very vague concept, isn't it? what would be the trigger level for this knockout to actually be triggered in terms of financial stability? >> the keys to the trigger are they're subjective. so they can mean everything to everyone, i think. that being said, these figures, the last time they were this high for the price balance, house price inflation was

pushing on 10% on year on year. if we get that for a couple of years that will meet quite a few people's definition and the danger. the financial policy committee with the bank could deal with this. it has tools to do it. but think i this is one of the -- not the first test but a test of how guidance will fit together with the financial policy side. >> i mean, when mark carney spoke last week, he was pretty relaxed about property prices. but then again, you mentioned those two knockout cloauses, inflation and how prices. do you expect more commentary from him on what house prices are doing? >> i think you'll have to give more commentary. these surveys are really very strong at the minute. house price inflation is accelerating. and i think we have seen the sort of damage that rising house prices and corrections can do in the uk. i'm sure he doesn't want to talk about house prices. but i think the need for him to do so will grow. >> robert, thank you very much for your thoughts. robert wood, uk economist at

baronburg bank. this is where we are in terms of european markets. we saw a positive start to the trading day and that momentum has continued. we're up by roughly .5% for the stoxx europe 600. the ftse 100 seeing strong gains of two-thirds of 1%. the xetra dax being lifted by strong earnings reported up by .9%. we are trading at 2 1/2 month highs, not too bad. maybe a little bit of profit taking yesterday. this is where we are in terms of the bond prices now. want to take a check of the ten-year gilt yield. it didn't change too much after the cpi numbers. still holding steady at 2.49%. very stable here. ten-year treasuries 2.65%. and the ten-year bound at 1.74%. we're getting the zew analyst confidence index in a couple

minutes, 20 minutes' time, we saw bund prices coming down a little bit. this is a look at forex rates. strong rally on the dollar/yen after a weakness over the last couple of trading days, up by around 1%. this is, of course, ties to the nikkei report about prime minister shinzo abe potentially offsetting the rise in the consumption tax with a cut in the corporate tax. euro dollar, very steady, at 132.89 ahead of the zew index and sterling dollar seeing a bit of an uptick after the slightly higher than expected cpi rate. and if you do have any questions for our guests or myself, or if you have any comment whatsoever on how your day has been and what you think about the markets, do write into us, send in your e-mails to worldwide@cnbc.com. meanwhile, elon musk has unveiled plans for what he calls

hyperloop transport, a system that could whisk passengers between san francisco and los angeles in about 30 minutes. wow. 30 minutes. the solar powered system, which musk has described as a cross between a concord, rail gun and air hockey table, would move people through a low pressure steel tube at about 800 miles per hour. musk says the hyperloop would cost less than $6 billion and could take seven to ten years to build. he could commit money to the project but he's too busy running tesla and spaceex to do it all himself. he's got the ideas, right? ryanair boss have come out saying the survey of more than a thousand pilots from the airline, speaking earlier on

"squawk box," the interim councilman chairman of the group expressed his concerns. >> there have been numerous reports in the past, mostly by anonymous pilots yesterday in the dispatchers program and it has to do with the fact that the pilots are really quite worried to step out in the open and actually tell their concerns. >> now, ryanair has strongly refuted the claim saying it complies with all regulations. speaking first on cnbc, the ceo called the council a, quote, joke, made up of pilots from rival airlines. >> so what you had last night was half an hour of a dutch pilot and his friends, you know, from air france, friends from air france, friends from klm, and friends from air lingis, making concerns about safety, but absolutely no evidence and no examples of anything. it is clearly another example of the european pilots union's

desperately trying to unionize ryanair and playing the safety card again and again and again. >> ford is revamping the strategy, announcing plans to update his entire vehicle fleet in australia by 2017. the move comes after the u.s. automaker decided to close its manufacturing plans in a country by 2016. but speaking in a first on cnbc interview after a surprise appearance in sydney earlier, ford ceo alan mulaly said he remained committed to the australian market. >> we have been serving the customers here for over 90 years. a lot of the vehicles we have come from all around the world. we're announcing today that we're actually expanding our portfolio of vehicles to support the australian customers. >> he also weighed in saying he was optimistic on china. >> we're talking about 6% to 8%. these are tremendous growth rates in gdp in china.

automobile industry is growing faster than that, and china is the largest automobile market in the world. so as you pointed out, we're the fastest growing brand in china, we're bringing all of our one ford vehicles to china. think our best now is it will continue to expand to the 6% to 8% range. catch more of his interview and his thoughts on china on our website, worldwide@cnbc.com. don't forget you can follow us on twitter at cnbc world. news of one of the worst conceived publicity stunts continued to spread. about 20 people were hurt in south korea recently at an event to give away lg's new g-2 smartphones. coupons for the free phone were attached to helium balloons released into the air. the phone frenzy crowd showed up with spears and bb guns to pop their prey and a lag of security

guards couldn't stop the injuries that ensued. those are pretty terrible pictures. if you've seent video, i mean, that's pretty frightening. you would think in a country like korea, one of the richest countries on planet, you wouldn't be seeing those scenes, but apparently, yes, when it is about smartphones, people do go crazy, i guess. so we want to hear from you. what's the worst pr stunt that you can remember? or think of? get in touch with us by e-mail at worldwide@cnbc.com. or via twitter @cnbcwex, or direct to me @carolincnbc. corporate earnings out of greater china will be front and center, from beer to blogs, with names like tencent, cafe pacific reporting. plenty of results from australia as well including cba, layton and oz minerals. and in india, an update on the fight against inflation when

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it doesn't matter if you're a sovereign state.

a multinational corporation or casual online shopper, chances are you've been a victim of cybercrime. this relatively new, but hugely sophisticate ed form of crime caught law enforcement agencies off guard. with more, joining us in the studio is cnbc's tom mckenzie. take it way. >> the cybercrime costs about $400 billion a year. that is a number that is growing. it is also a number that is difficult to pin down, but around that kind of ballpark number. cybersecurity market is worth about 60 billion u.s. dollars a year. that's growing about 8% a year as well. so plenty of legitimate companies making money out of this. 50% of the world's securities exchanges were targeted by hackers and most of them denied of service attacks in 2012. that's a problem that's being looked at. the s.e.c. regulators in the u.s. and the european union both pushing actually for more transparency and pushing for companies to come clean on any hacking attacks they may have

experienced as well. cybercrime is a service on the rise. it is far, far easier now to be able to rent, outsource or buy anything from mal ware to e-mail and password cracking services online. and this is an increasingly concerning part of cybercrime that the people are looking at. and it is growing as well. so that's where the focus is. >> thank you for that. the money was virtual, but the crime was real. three months after u.s. prosecutors accused the digital currency from a limited reserve of running a $6 billion money laundering operation, experts are warning our reliance on technology keeps us at risk. joining us now in the studio are andrew miller, director of information security at pwc and roger simoni at mccaffey ema. and still with us, cnbc's tom mckenzie. gentlemen, thank you so much for joining us around the desk

today. raj, we heard about bitcoin, a reserve. are we getting ahead of ourselves in thinking, you know, are these new virtual currencies, it is fun, something we can potentially be making money off, and completely forgetting about the underlying risks. >> well, you know, i don't think so. so, first of all, liberty reserve and other digital virtual currencies have got, you know, great benefits outside of cybercrime. but we mustn't forget the -- we mustn't forget the fact that actually these types of virtual currencies and digital currencies are very easy and individuals can -- themselves as well. i don't think we're getting ahead of ourselves at all. i think there is a considerable risk. >> andrew let me bring you in. pwc has come out with this interesting report, and, you know, one of the key takeaways to me is small businesses in particular are seeing a lot more attacks.

is it because they don't have the money to protect themselves? >> thank you very much. pwc has been undertaking this particular piece of research since the early '90s. what we have seen is a stabilization around 93% of respondents. but you're right, in the small company arena, we have seen quite a big jump from 76 to 87% of respondents being attacked. i think this is probably due to the fact that large organizations are beginning to put in the controls to protect themselves. smaller organizations don't necessarily have the risk assessment and consider the controls or the funding to put it all in place. so attackers naturally spring from one set of targets to the next. especially where small to medium sized int enterprise are a risk abroad. >> there is a mind shift that goes on. people consider hackers to be teenagers hunkered down in dark rooms at home with a grudge

against the world. it is a very, very sophisticated platform of organized crime groups that work -- that we're facing now. >> yeah, that's absolutely the case. but let's put it into perspective. roughly half of the worst breaches that we have reported to us last year or actually due to internal users. and of those half actually only 11% were malicious as it were. there were 20% over tax breaches if you like that were actual network attacks from the people that like you're talking about there. it really is a professional, industrialized distributed industry where in particular countries where regulation and law isn't quite as strong as it is in europe and america, they can harvest identities through social media and facebook, you can go to other countries where coding practices are well educated. an oversupply of professionals for software encoding. they write high quality sophisticated attacks. they have a time to expend on it. so organizations or criminal

individuals can go to a variety of different places and source the individual components for a quite sophisticated attack. >> i know mccaffey and you have looked at the cybercrimes service phenomenon. you are going to call up services for $2 an thundershoho down a website. behind the sophistication, how concerned are you this is a growing era and how easy is it to access the tools if you don't have the technical skills? >> this is one of the biggest issues we face. the previous view of the computer hacker was a technical genius. today, all you need is maybe $3 access to an online auction, and then, you know, you can go out and buy half a million e-mail addresses or bring down a website. i probably argue that one of the biggest challenges that we're facing as an industry is really how the bar has been set considerably lower. >> andrew, the rise of the smartphone, the rise of a cloud, how is that complicating companies efforts to protect themselves against cybersecurity. everyone is using them now.

and, you know, the cios can't keep track of what their employees are doing with the social media technologies. >> every technology, social media, the cloud, mobile computing, augmented reality. we have seen it built into glasses with the latest releases. everybody is going to have a completely digitally integrated portfolio. not just for themselves, but at work. so, yeah, it is a continual challenge. our research shows that these new platforms are -- they do have to be grown into terms of their applicability to crime. they have to present an opportunity for na fairious use. while the technologies are difficult to manage, they are difficult to control, they do currently only represent very small low single digit numbers in terms of actual breach causes. however, we fully expect to see those grow and we fully expect to see new technologies add themselves to the list of

techniques being used. >> raj, given that you work for mcafee, and hard to ignore the reports that have come out about the two reports, the two surveys you have come out with which are about the global costs of cybersecurity. now, back in 2009, mcafee said hacking costs the global economy $1 trillion. then you came out with a new report saying the cost is actually substantially lower and you've been under, you know, a lot of fire for the mismatch in these two numbers. how do you explain that? how do you explain how -- within just the space of three or four years you arrive at two completely different figures? >> the first report we did was based around third party research, and, you know, what in effect what we did was we actually instructed the university to go out and do research on our behalf and the second report was based around secondary research with csis.

>> raj, there is increasing numbers of startups focusing on active defense. hacking back at the hackers. is that something to be encouraged, do you think? >> many companies are actually actively going down the defense route. i think one of the questions you have to ask is who actually is targeting me. it is all well and good sort of seeing an ip address and going after that. but the challenge is manipulating the signatures is actually childs play. it is all well and good targeting particular systems, but how do you actually know that was the person behind the attack? >> gentlemen, thank you so much for your insight this morning, some really fascinating points here. and tom, thank you very much, for your contribution as well. andrew miller, director of information security at pwc. and raj simoni, vice president and chief technology officer at mcafee at ema. to find out more about organized crime, head online for a slide show for a look at the

world's most lucrative criminal activities, at cnbc.com. and tune in tomorrow for day three of our organized crime week when we take a look at financial crime. tom what else is coming up? >> a big focus on financial crime. good guests for you. make sure you tune in for that one. we'll be going through a lot of interesting cases and i'm picking them out for you. >> fantastic. you've been doing a lot of digging, a lot of research. looking forward to that. moving on , mexico's president unveiled plans to open up the country's energy sector to foreign investors for first time in 75 years. speaking in a televised address enrique pasaid the proposal awas approval in parliament, but under the new law, private companies would be offered profit sharing contracts allowing companies such as royal dutch shell and bp to tap into mexico's oil and gas reserves. some of the largest in latin america. royal dutch shell up by 1% and

bp trending higher to the tune of .5%. the former algerian oil minister has denied any wrongdoing after the country issued an international arrest warrant against him. he faces a probe which focuses on contract awarded by algeria's state oil company to a site. the warrant is part of the wider corruption investigation into suntrack where he was company president between march it 2 001 and 2003. libya's deputy oil minister says workers striking at key crude oil terminals have agreed to end two weeks of action. exports are expected to resume as early as this thursday, however, strikes continue at other key ports. brent is steady after coming under pressure in yesterday's session. brent is currently up by .8%. still couto come, we'll spe

to david bermingham who was extradited to the u.s. on charge of wire fraud. with potential arrests making headlines, we'll ask him to weigh in on the debate over extradition. that's at 11:10 cet. german stocks leading the way in europe. the euro has come out a bit. is there reason to be optimistic ahead of tomorrow's gdp release out of the eurozone? we have answers for you coming up after the break.

welcome to "worldwide exchange." i'm carolin roth. these are your headlines from around the world. stocks in europe trade higher as investors anticipate a strong zew corporate sentiment reading out of germany. it is due any minute now. more abenomic fuel for japan's economy could be on its way. tokyo markets jump on a report that shinzo abe could cut corporate taxes to offset a planned sales tax hike. china's microblogging alternative to twitter boosts shares of the internet firm sina corp. in after hours beating the street by a mile thanks to a new tie-up with alibaba. a blackberry private call

reports say the smartphonemaker's largest shareholder is exploring every option for a possible buyout of the company. german zew is heading the wires. the august number is at 42 versus 36.3 in the month of july. now, we were expecting a print of around 40, so there is definitely beating expectations and it is quite a jump from the july number which was below expectations, remember, with all these concerns about china slowing down, and how that would impact german corporates. so the zew economic expect takings at 42% 36.3 in the month of july. we look at the current conditions index, that is at

18.3 versus 10.6 in the month of july. though that is below forecasts. the poll was for a 12-point print and that is above forecasts, sorry, and that is quite a mile ahead of forecasts at 18.3. and quite a significant increase from the july numbers. if we look at the euro versus the dollar, it is rising after the german zew data. bund features extend their losses after the german zew index and this is what the markets had been setting up for. remember, that one did see german bund yields tracking higher ahead of that. the euro spiking above the 133 level on the above forecast german zew reading. now, andrew is managing director and head of german portfolio management at pimco and joins us on the line from munich. good morning to you. what do you make of the zew print? >> this is good data from germany. it is a continuation of the firm

trends we have seen in the past and i think it is confirmation that the conditions that germany is facing internally and externally are pretty favorable for economic growth. >> but, wait a second, back in july, there were all these worries about the slowdown in china, and what it would do to sentiment, what it would do to profitability on part of german companies. have we forgotten about all of that? >> well, the markets have shrugged that off a little bit in the last few weeks. given the improvement in the chinese data, the data we have seen out of china. but that risk is not gone forever. that's for sure. the german economy has a huge export surplus, germany is highly dependent on the external state of the global markets. so it is going to bounce around on the waves of global trade. but, some of the data we have seen from abroad are improving. and that's helping sentiment. >> and andrew, just how

representative is the zew index really, because it really just reflects analyst sentiment and that could be short-lived. this is not really a long-term indicator. wouldn't you rather be looking at epo index or at the gdp print and the pmi numbers? >> yeah, that's correct. the zew index, the way it is designed is essentially as a survey of what people are all forecasting. so it is like a snapshot of current expectations as opposed to what the real economy is actually producing. but nonetheless, it is a measure of the atmosphere in the economic conditions in the economy. and we, of course, better take it in -- with a pinch of salt and look at other data as well. but even those other data are, you know, they're on a gradual improving trend in germany. the economy here is not booming, but nor is it in recession and the major thing that i think we

should not underestimate is just the impact that low interest rates, you know, very low real interest rates have on an economy and germany has very low real interest rates. >> you make a very important point there, but speaking of other data, let's bring you other data which, again, mirrors the strengthening and fundamentals in europe. industrial output in the euro area rose at its fastest pace in more than 2 1/2 years in the second quarter. up 1.1%. the forecast was at around 0.8%, so once again, confirming what we have seen from other economic data points over the last couple of weeks. the eurozone economy could see a return to growth for the first time since 2011 in the second quarter. economists surveyed by cnbc forecast an expansion of 0.2% in the region's quarterly gdp. the official data which will be released tomorrow comes after the pace of contractions slowed to 0.2% in the first quarter. still with us, of course, is andrew bosomworth, head of

german portfolio management at pimco. we're expecting a very strong reading out of germany once again tomorrow to the tune of growth of 0.6%. now, it seems as though germany is always the powerhouse in europe. will that sway your view of what the eurozone economy as a whole is doing, even if the others are still hovering around a flat line? >> germany is important for sure when we look at, for example, what the ecb is doing and is going to be doing going forward. but i think equally important are also the aggregate picture that we see out of southern europe. and there, you know, it is not exactly as if the phoenix is rising from the ashes. but it does look as if some of the activity is starting to bottom and to firm up off a very low base. even gdp and greece has pretty much stabilized, could say, stopped -- virtually stopped contracting.

that signal is just as important as what we're seeing out of germany. >> andrew, thank you for that. andrew bosomworth, head of german portfolio management at pimco. let's take a look at u.s. futures, we are expecting slightly higher start to the trading session this side. the dow, the nasdaq and the s&p 500 taking fair value into account are seen higher. this is after we saw a pretty drowsy summer session in yesterday's session, the dow up by 0.1%. the s&p 500 flat and the nasdaq rising by around 0.3%. again, volumes were pretty low, not really finding that big catalyst in the market to drive us higher. every move we see here should be discounted by the low volumes that we are seeing currently. now, european markets look like

this. it seems as though they have gotten a little bit of a boost after the better than expected zew numbers. the xetra dax up by .9%, also remember a couple of very positive earnings reports coming out of germany. the ftse mib and the ibex 35 also higher by around .7% or .6% for the ibex 35. now, let's check in on how asian markets are faring. we did see that outperformance in the nikkei yet again. and on the back of the weaker yen, the two are so closely correlated. sixuan, thank you so much for joining us, just walk us through what we're seeing in the asian trading session. >> yeah, thank you, carolin, asian stocks had a good day led by healthy gains on the market. a strong rebound up 2.6%. this is mostly on reports that prime minister shinzo abe is considering a corporate tax cut to help buffer the impact of a planned sales tax hike on the economy. and the yen's pullback also

boosted key exporter stocks. shares of fast retailing up more than 4% today. in south korea, foreign buys helped lift the kospi higher. hynix and samsung both soared nearly 5%. in hong kong, chinese property stocks were the standout performers after the eastern city became the first city to really ease property restrictions. agile property climbed 4%. and longfor properties surged 6% helped by a strong july sales report. china's midsized lenders also higher after the pboc today injected 11 billion yen into the market. industrial bank gained over 4% today after positive earnings report. back to you. >> sixuan, thank you so much for that. still to come on the show, with a potential arrest of

ex-jpmorgan traders in london sparking a debate over extradition, we'll speak to a member of the net west three on his first hand experience in this area. david bermingham joins us after the break. [ male announcer ] this store knows how to handle a saturday crowd. ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves. all the bits and bulbs keep themselves stocked. and the doors even handle the checkout so we can work on that thing that's stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. 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.

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reportedly prepare to arrest two former jpmorgan employees for their alleged role in hiding the extent of the more than $6 billion in london whale losses last year, new questions have been raised about extradition laws and the future of policing cross border financial fraud. joining me now is david bermingham, author of "a price to pay: the inside story of the natwest three." he was extradited to the u.s. from britain in 2006 and imprisoned for a wire fraud charge. also joining us on set is helia ebrahimi. thank you for joining us today. give us your side of the story, just what was your experience with the extradition and dealing with the uk and especially u.s. authorities? >> well, very briefly we were indicted, three of us, back in 2002 by the the u.s. government on allegations that the three of us conspired with two members of enron to defraud our bank in london. natwest. it just so happened, i mean, it

was part of the larger enron investigation, but it just so happened that tony blair at the time introduced a brand-new piece of extradition law which still exists to this day, which essentially means that a u.s. prosecutor can make an allegation, unsubstantiated by any evidence and request the extradition of somebody who is a resident in the uk and that's pretty much what happened to us. we spent a long time fighting the extradition, trying to get the law changed because it is an incredibly piece of law, as these gentlemen are about to find out. and to date we have not yet succeeded but we are making some progress. >> so basically you say, yes, there was wrongdoing on our part, but the extradition act, the 2003 act, that is way too onerous and we want fair treatment living in the uk, even they we didn't commit any criminal acts in the uk. >> i think one of the issues facing people extradited, 98% of people indicted in the federal system in america will end up pleading guilty.

the pressure to plead guilty is enormous. once you're put on a plane, basically your goose is cooked. that's really the long and short of it. we ended up signing a plea agreement as most people do and admitting to the same conduct we had admitted to previously where they said, you know, there is no foul here. >> i'll ask you about theresa may's foreign provision and how relevant you think that is. you mentioned before in interviews that people involved in the libor scandal and you think these guys should just go into a uk police office and just present themselves and plead guilty. and that would be better. do you think that the u.s. extradition, which i think the law you're referring to was signed under terror act. it was in order to facilitate terror suspects being taken back to the u.s. do you think the u.s. throws its weight around unnecessarily? >> yes, i think it does.

a bit of a cynic about these things and that is born out of experience. the reality is that an awful lot of what goes on in terps of cross border enforcement, territorial reach, has a lot to do with politics and a lot to do with money. i think the jpmorgan story is a classic example of that. this is going to involve jpmorgan writing a very large check to avoid the firm being indicted and people will get thrown under the bus. that's how it always works. and the issue i have is that the uk government has actually encouraged u.s. prosecutors to exercise exorbitant territorial reach here in the uk by having this extradition act. >> do you see a difference between how we in the uk have bent over for u.s. regulators compared to someone like france? in the jpmorgan case, we're talking about people who lived in the uk, worked in the uk, and, in fact, what they're being accused of, the london whale cases, is the ceo was a

london-based operation. >> there has been any wrongdoing here, it's clearly been on our patch. what ought to happen in a perfect world is the prosecutors should be working together but where they would say, look, this needs to be prosecuted here. if there is wrongdoing, prosecute here. the -- as you mentioned, the funny thing here, not funny, but the odd thing is one of the people involved is a french citizen who i believe is now back in france, there is no way on earth france will extradite. they do not extradite their own citizens to america. they have a slightly more grown-up approach to the whole thing than we appear to. >> so, david, to defend the u.s.' position, not taking sides, but i just want to get to the two sides of the story here, could you argue that the uk authorities, the uk police simply is behind the curve? >> definitely. >> in terms of cracking down on financial crime. >> absolutely. i have written about this in many newspaper articles.

nature an hye nature abhors a vacuum. there is a vacuum here. it has been acknowledged for a long, long time that the prosecution of white collar crime in the uk is lamentable. the financial services authority, the sfo, whoever, is terrible. and unless and until they get their own house in order, we're enestably going to see this. you got a massive cross border issue there, because the u.s. want to prosecute a lot of these cases. they're saying, well, gee, it is political. >> back to the new provision that was put into legislation, how effective is this foreign provision that was introduced by the house secretary? >> it is worth starting by saying it hasn't yet come into play, though it was passed in lords, not yet in force. it is a negative step. the most fantastic piece of flil shah n

political shenanigans you can imagine. just for your viewers, it would allow a judge in the extradition precede proedi ing precedings, should a case be heard here or overseas. authorities don't like the idea of that and have come up with something which on its face is a foreign provision, but in practice allows a prosecutor here to say to the extradition court, i don't think this should be heard here and that's the end of the matter. it is an appalling amendment, dreadful. >> what would you do differently now, apart from committing wire fraud in the first place? >> well, yeah, that's a very interesting question. first thing we would not have done is go forward to the authorities here in the uk and say, we think there is an issue over there, here is everything we know about the case. if we had any understanding of how the system worked in the u.s., we would have just sat there, shut our mouths and eventually if anyone ever came to us, which they probably wouldn't have done, traded the information.

the single only reason we were put on a plane is because we walked into the offices of the financial services authority and said, we think there has been a fraud here in america. >> maybe the two jpmorgan employees listening are watching. we'll hope they are. we'll see. not condoning anything here. david bermingham, thank you for joining us today. and helia ebrahimi. a stronger than expected rise in german business sentiment boosts the euro. japanese markets breathe a sigh of relief on reports the government could cut corporate taxes. and blackberry's largest shareholder backs all options for a buyout. still to come on the show, thousands continue to protest in egypt on behalf of the country's ousted leader mohamed morsi. can a peaceful resolution be found or is the country sliding toward civil war? that's coming up right after the break. [ male announcer ] come to the golden opportunity sales event

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authorities in egypt have postponed plans to break up sit-ins being held in cairo. thousands continue to protest in the capital demanding the return of mohamed morsi. yousuf gamal el-din is in cairo. as an investor out there, just how worried should you be?

is the country really sliding towards a civil war? >> it is a good question, carolin, i don't think there is an easy answer to it. the fact of the matter is the political impasse is still very real. and no progress is being made on the diplomatic front, the calls for talks and trying to break that impasse are being effectively rejected by the muslim brotherhood and supporters of mohamed morsi. you reminded us of the protesters in the two key squares out there and out overnight. more marches are planned. their demands are quite simple. they're calling for mohamed morsi to be reinstated as president. and that is likely the reason why we haven't seen any progress when it comes to finding a resolution to this political divide. we had expected that security forces would try to break these pro tests up. remember, we're in our sixth week of these encampments and that raised concerns of the

prospects for further violence. but, keep in mind, that the dwo government is taking this very seriously and moving carefully. they would not like to see an escalation, so we could see a gradual tactic here in terms of breaking the pro tests up. but in terms of how investors are feeling about this, you see the yields on egyptian bonds decreasing by some 1% on the three-year paper, which is a notable emphasis on this trend that we're seeing, when it comes to the easing of those yields and also for the seven-year paper. also interesting moves on stock exchange. again, to the upside. in terms of how the performance was over the course of the week, you're looking at gains of the range of 6%. and that tells you that domestic and foreign investors, despite some of the setbacks, remain quite upbeat that this can be resolved and that the real economic potential of the arab world's most populous country can finally be realized. carolin. >> thank you for that. there is definitely still hope out there. so with continuing turmoil

across the middle east, can the region achieve enough stability to allow sustained economic growth? chris roder is the author of the new book "startup rising." he believes opportunities particularly are in the tech sector do exist. but investors need to look beyond the headline. he joins me now from new york. thank you for taking the time to speak to us today. how strong is entrepreneurship in the middle east? we probably would be surprised by just how much activity there is, right? >> i think we would be stunned. narrative in the united states is so focused and i think the west generally is so focused on the political instability that you led in the story today. but by the tens if not hundreds of thousands young people throughout the middle east are building outstanding globally competitive software and technology companies as they are throughout the world and emerging markets in particular. >> chris, i want to bring in a couple of points that you make in your notes that the world's largest ipo in the first quarter was the mobile company of

enrock. and the number one ranked consumption country is saudi arabia. that's absolutely fascinating. >> what is additionally fascinating is the largest population watching youtube in saudi arabia is women and the largest amount of content that they're watching is education. so what i think so many of us miss, though we shouldn't, because of course it happened throughout asia and south america, eastern europe and happening in the middle east, in africa, is that having technology in people's hands gives us an ability to do all sorts of things that were not possible five years ago. >> you got to wonder, fostering entrepreneurship, that would be the least of anyone's problem in the middle east right now. specifically in the case for egypt right now because what they want to get at the this point is bringing stability back to the region. how can you talk about fostering entrepreneurship and, you know,

making financing possible for these kind of companyies if you've got all these other problems to deal with? >> you're asking two questions really. one is fostering entrepreneurship but that's happening whether we want to foster it or not. it is absolutely astounding that on a day to day basis, again, tens if not hundreds of thousands of people are building their companies. i think the story in emerging markets particularly now in the middle east is they're always two narratives going on. a lot of political instability, tremendous poverty, infrastructure challenges and that's all very, very real and very true, but in parallel at the same time, and again i think now in an unprecedented way because of technology, so many people can start to take hold of their own economic future at the same time. so i think it is actually a very, very intriguing opportunity. if we were doing this show ten or 15 years ago and told you we should be thinking hard about entrepreneurship in places like brazil or southeast asia, let alone columbia, we would think we were crazy. we don't look very crazy now and people are moving much faster

with much greater alack ritty now in the middle east than anything i've seen almost anywhere in the world. >> are you implying that investing into the middle east and some of those startups by fostering entrepreneurship you get more than just your average return on your capital, what you get is helping them in revolutionizing the democracies? is that what you're aiming at? >> i think what any investor should aim at is looking at great opportunities to develop in the economy. and as economies rise, as entrepreneurs rise, as great businesses create, you have success building success, success creating success. and the ramifications of it are powerful. as you know very well, the youth bubble in many parts of the emerging world, but particularly the middle east and egypt is an important thing. the bad side of it can be there are issues of unemployment. the good side of it is yet again, they're taking their economic futures into their own hands, which means you're right in your question, the opportunities are not just about

returns, but about literally evolving and improving societies and unbelievably powerful and i hope quick ways. >> right, chris, thank you so much for that extremely fascinating point there. chris roder, the author of startup rising. news of one of the worst conceived publicity stunts continue to spread. about 20 people hurt in south korea recently at an event to give away lg's new smartphones. coupons were attached to helium balloons but the crowd showed up with spears and bb guns to pop their prey and a lack of security guards couldn't stop the injuries that ensued. we want to hear from you. what is the worst pr stunt that you can actually remember or think of? get in touch with us, by e-mail, at worldwide@cnbc.com. the twitter, @cnbcwex, or direct to me @carolincnbc. the u.s. markets have been on a long upward climb over the last two years, despite a few

dips along the way. will investors keep moving forward or are they ready to take a step back? we get some market insight next.

welcome to "worldwide

exchange." i'm carolin roth. the euro stabilizes as stronger than expected german business survey boosts growth hopes ahead of the gdp print tomorrow. more abenomic fuel for japan's economy could be on its way. tokyo markets jump on a report that shinzo abe could cut corporate taxes to offset a planned sales tax hike. blackberry's private call reports say the smartphonemake ers er -- china's microblogging alternative to twitter boosts shares of internet firm sina corp. in after hours, beating the street by a mile thanks to a new tie-up with alibaba. good morning, everyone, if you're just tuning in, just waking up, thank you for joining

us on the show. here is how markets are faring ahead of the u.s. open. we're expecting a slight move to the upside for the dow and the nasdaq and the s&p 500. this is after we did see a bit of a patchy picture in u.s. markets yesterday. many people call it a drowsy summer session, with volumes being very low. a lot of traders being at the beach rather than at their desks and the dow jones, for example, it was up by 0.1%. the s&p 500 flat, and the nasdaq up by 0.3%. now, the ftse cnbc global 300 is looking like this. it is close to the session highs actually, up by .3%. about an hour ago, or half an hour ago, rather, we got the better than expected zew index out of germany and that stabilize the euro. after that, european markets did maintain their gains. we also got industrial production number for the second quarter in the eurozone up 1.1%. but the monthly number, that was a little bit below expectations.

and, again, germany leading the way to the upsite. the ftse 100 up by .5%. the xetra dax, steady after the zew index up by .8. we got pretty positive earnings reports from the likes of e.on out of germany today, the ftse mib up by a half percent. how do you make money in the markets? here is what some of experts have been telling us this morning. >> 250, 275 in terms of ten-year yields, i think as we get closer to the september meeting, the market will get too bullish. can't see this range being broken, but we do think other markets are a bit too optimistic about the fed actually sort of delaying tapering and that leaves them vulnerable. >> it could end the year a bit higher, $1400 an ounce, we don't

see it going much higher. one reason is chinese demand is sensitive. they buy more because the prices come down so sharply. another reason is that the investment case still damaged by the fact that the fed will be tapering qe at this point this year. >> might see further sell-offs in emerging markets. we think it is likely. but on the other hand, the valuation, one-year forward returns, six-month returns that you expect to come from buying highly beat up country with very low -- it will be much better than chasing the s&p or ftse. >> joining us now from philadelphia is martin la clerk, chief investment officer and portfolio manager at barrack yard advisers. good morning to you and thank you for joining us. how are you this morning? >> fantastic, carolin, thank you for having me.

>> thank you for joining us this morning. u.s. markets have rallied by some 40% over the last few years. it is time to take profits. >> well, in the u.s. it would appear to be that way, i think. this rally seems to have legs and who knows when it will end. but one of the things we look at for long-term investors is the famous kate, the cyclically adjusted ratio that the professor from yale has come up with. it has been approximately correct in giving you sort of the seven to ten-year future returns. famously in the year 2000, it was portending 2.5% for stocks and that's sort of what we got. right now, american equities are priced to yield about just over 4% over the next ten years. that's more attractive than corporate bonds, for example, but not exactly, you know, too exciting from our point of view. >> so if the u.s. are not the --

the u.s. stocks are not coo excitin exciting, which areas are more attractive? i know you're looking for europe for growth. >> well, we're very much attracted to continental up and the uk to a lesser extent. the cape yield there is over 9%. and singapore is a very attractive market as well with about an 8% kpe. so within europe, some sectors are like the u.s., the big glamorous stocks, l'oreals of the world, for example, are just as expensive or more expensive than any of the american counterparts, but there are great swaths of europe that are very much undervalued, where you can buy stocks at ten times earnings and get give dividend yields, which we think is very attractive.

>> martin, i hear that from a lot of investors. europe is undervalued. stay there for a moment. because we're coming back to the discussion, we'll get more calls from you. but just want to take a look at today's other top stories. blackstone wants to be your landlord, reports say the private equity firm struck a deal to buy the majority share in 80 apartment complexes from the lending arm. portfolio is worth about $2.7 billion. the buildings contain 30,000 units and are primarily located in atlanta and dallas. blackstone is the biggest owner of single family rental homes in the u.s. blackstone shares in frankfurt are down by roughly 2%. reports say the hedge fund manager has made a bid for steinway of about $38 a share or $478 million. that would trump the offer that pianomaker agreed to in june from kkr.

kohlberg has three days to match or top the new bid. paulson's offer is a rare topping bid made during a so-called go shop period. and after the fact option companies used to search for better deal than what they have accepted. steinway jumped 9% on this on monday and is up about 86% this year. warren buffett may just be a modern day willy wonka. today's the last day to bid on an all you can eat tour of the candy factory in los angeles. buffett and berkshire hathaway bought the company in 1972. after the tourks you'll have a meet and greet with the oracle of omaha who will show you the only acceptable way to eat a bonbon. the estimated value of the tour is $75,000. the current bid on charity buzz.com is $42,500. so still a couple of dollars away from that. proceeds go to a benefit l.a.'s communities and schools project. coming up, a blackberry put

itself on the auction block and reports are swirling over who might bid to take the smartphonemaker private. we get the latest details next. [ kitt ] you know what's impressive?

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the move comes after the u.s. automaker decided to close its manufacturing plants in the country by 2016, but speaking in a first on cnbc interview after a surprise appearance in sydney earlier, ford ceo alan mulally says he remains committed to the australian market. >> we have been serving the customers for over 90 years. a lot of the vehicles we have come from all around the world. we're announcing today that we're actually expanding our portfolio vehicles to support the australian customers. >> he also weighed in on the broader asia pacific market saying he was still optimistic on china. >> we're talking about 6% to 8%. these are tremendous growth rates in gdp in china. and, of course, the automobile industry is even growing faster than that. and china is the largest automobile market in the world. so as you pointed out, it is we're the fastest growing brand in china, we're bringing all of our one ford vehicles to the

consumers in china. i think our best estimate now is that it will continue to expand in between that 6% to 8% range. >> catch more of his interview and his thoughts on china on our website, cnbc.com. don't forget you can follow us on twitter @cnbcwex. kfc and pizza hut pairing yum brand feeling the heat in china. same stores sales jumped 13% in july. ch yum's kfc brand has been hit hard by food quality issues following the bird flu scare and a series of consumer reports. yum shares fell 4% in after hours trade. more than half of its operating profit is actually earned in china. and shares in china's sina jumped nearly 6% in after hours despite posting a loss on a one-time charge. excluding items, though, sina earned 21 cents a share when

analysts were expecting about half of that. efforts to monetize microblogging site weibo and its tie-up with alibaba is paying dividends which is why sina is predicting a solid return despite competition from tencent, we chat and overall chinese growth concerns. i do want to bring you numbers from hon hai. this say company in taiwan, which is also known as fox con. works as an assembler for apple's products, ipads, iphones, everything you can think of. and 40% of its revenues actually do come from apple. so numbers for the second quarter, looks to be beating expectations. second quarter net profit 16.98 billion taiwan dollars. this is versus a forecast of 15.49. just a tad better than expectations. analysts were expecting the net

profit at 16.32. so a little bit of a discrepancy here to be honest in terms of what analysts were forecasting, but just to give you a little bit of background, analysts have been quite skeptical as to whether fox con or hon hai can reach the 15% sales target for the year, given the weaker tech environment and also problems or maybe a little bit more pessimism around apple. stronger than expected rise in german business sentiment boosting the euro. japanese markets breathe a sigh of relief on reports the government could cut corporate taxes and blackberry's largest shareholder reportedly backs all options for a buyout. picking up on the last story, blackberry's largest shareholder is reportedly exploring the possibility of taking the smartphonemaker

private. seema mody joins us with the latest. >> fairfax financial holdings is blackberry's largest shareholder with nearly a 10% stake. the company, which is based in toronto, was founded in 1985 by prem watsa. fairfax is invested in insurance and reinsurance business, but the toronto globe and mail reports fairfax is interested in taking blackberry private. on monday, blackberry said it was exploring a possible sale and watsa resigned from the board citing a potential conflict of interest. he has contacted private equity firms to gauge their interest in joining a buyout bid. it is unclear who he contacted. silver lake, currently tide up with dell's buyout battle, held talks about taking blackberry private in late 2011. now, blackberry may be up for sale, but there could be few buyers outside the private equity world. the wall street journal

speculates whether lenovo might make a bid. they acquired ibm's pc business in 2005. it has said it's keen to make acquisitions to expand the smartphone business, but analysts say it is unlikely that blackberry offers enough advantages for lenovo to take the plunge as the market share has been on the rapid decline. blackberry shares rose 10% in yesterday's trade. right now seeing the stock, well, up about 10% as you see there on the screen. carol, back to you. >> seema, thank you very much for that. maybe that's -- stay there for a second. i wonder, silver lake said it is not interested in taking the company private. why would it be? why would it be willing to provide leverage given the very, very uncertain business outlook for the company? >> you know, blackberry still does have a footprint in the mobile computing space. they do still have a customer who does enjoy that physical

keyboard that the blackberry device offers. that might be a reason a private equity firm might want to come in and some analysts say going private does make sense for blackberry as it will give the company breathing room to execute partnerships and really focus on its smartphone business. >> seema, thank you for that. investors may get clues on the spending appetite of consumers today with the monthly retail sales report. we preview the trading day ahead. [ male announcer ] come to the golden opportunity sales event

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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. germany's zew investor sentiment index climbed more than forecast in the month of august with the think tank citing solid domestic demand in europe's largest economy. the euro initially ticked up on the report, but has since stabilized and european markets have maintained their gains. they have been up all morning. let's give you a look at what's

on today's agenda. july retail sales out at 8:30 a.m. eastern, forecast to rise 0.3% and by 0.4% when you exclude autos. also at 8:30, we get the july import prices and june business inventories are out. dennis lockhart speaks about the economy at 10:45. look for earnings today from coupon company val spar, jdc uniphase and theme park operator seaworld. let's get back to martin a la clerk. which data point or what are you going to be looking out for today? retail sales or is it lockhart? which one will move the market more? >> well, probably retail sales, though the price of the retail stocks kind of indicate the market expects the numbers to be fairly decent. all of the stocks are selling

near their all time highs or near their 52 week highs. i would think that might be the more salient data point. >> just how reliable are the retail sales really, though. we know retail sales all over the world generally tend to be quite volatile. how much of an indicator is this for the strength of the u.s. consumer, really? >> well, one of the things we know is we definitely are in a muddle through economy. the stock market is up 20% in the u.s. in the past year. corporate earnings are only up about 4%. and if you strip out the financials, corporate earnings are down. partly that's because energy earnings are down. so we're not exactly dealing with a great economy here in the u.s. for certain. so whether the data point is really significant beyond the next few hours is anyone's

guess. but we, between, we're more focused on where we're starting as an investor in terms of valuations, and a lot of really good news has already been factored into security prices here in the u.s. >> okay. martin, we have ten seconds left for you. what is your trade of the day? >> i would -- in the u.s., i think ibm is pretty attractively priced. outside the u.s., i would look at french utilities. >> okay. martin, thank you for that. that's it for today's show. i'm carolin roth. thank you for watching "worldwide exchange." we'll do it all over again tomorrow. ross is still on vacation. you'll see me on the show again tomorrow.

good morning. today's top stories, jcpenney's board and bill ackman could be closer to settling their fide. stocks in japan rising on a media report of a possible corporate tax. a barrage of economic data ahead of the u.s. this morning. it is tuesday, august 13th, 2013. "squawk box" begins right now. ♪ good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick with andrew ross sorkin and scott wapner in for joe who is still on vacation.

the bulls are trying to bounce back today after the dow closed at a one-month low yesterday. the s&p fell for the fifth time in the last six sessions. u.s. equity futures this morning are indicated a little higher, check out right now, you'll seat dow futures up by 66 points. the s&p futures are just about 6 1/2 points above fair value. a lot of this is coming off what happened in japan overnight. we'll talk more about that in a moment. a number of key economic reports are expected today. at 7:30, the nfib survey of small business sentiment. an hour later, retail sales and import export prices. and finally at 10:00 a.m., business inventories. in global market news, stocks in japan rose after a media report suggested that the prime minister is considering a corporate tax cut to help offset the impact of the planned two-stage hike in the sales tax. that definitely helped up the nikkei, up by 2.5% at the end of the take.