welcome to "worldwide exchange." i'm carolin roth. out of recession, the german economy expands by 0.7% in the second quarter. that's the most in more than a year, while france posts the strongest quarterly growth in more than two years, reaffirming hopes the eurozone is out of the red. governor mark carney may have stam pd his style on the bank of england, but we'll reveal just how much support he actually has. crucial uk job sales also set

for lease. indian inflation shoots up in july thanks to higher food costs and the softer rupee making the job a stimulating for growth all that much harder. and 120 people are dead and 5,000 injured as police crack down on supporters of the post president mohamed morsi turns violent. welcome to a brand-new edition of "worldwide exchange." very busy day for these european markets. we get second quarter gdp, but also the boe mpc minutes and uk jobless numbers. the eurozone economy is expected to emerge from recession in the second quarter. that's according to estimates of the flash gdp figure to just about an hour from now. the 17 asian bloc is forecast to

grow by 0.2%, ending six straight quarters of contractions. now, the gains have really been driven by europe's largest economy, germany, which posted this very robust 0.7% jump in gdp from the previous quarter. this is the largest expansion in more than a year, which came in just above forecasts of 0.6%. i also want to show you, just a couple of the strong underlying indicators for the german economy. manufacturing pmi, that has been above the boom bustline of 50 to 50.3. we know that industrial output and production numbers have been very strong. that is up by 2.4%. the debt to gdp ratio that is relatively limited, relatively benign at 81.2%. and the unemployment rate, well, who wouldn't want to have this kind of an unemployment rate of 5.4%. now, the french economy is looking a little bit different.

now, the french gdp did come in better than expected for the second quarter. it came in at 0.5%. that is versus expectations of around 0.2%. that's the sharpest rise since the beginning of 2011. if we look at some of the other indicators for france, i mean, they just haven't been as strong. pmi still below the 50 line. unemployment is still relatively elevated. so certainly lagging. and certainly still has investors concerned about the two-tier speed we are seeing in europe. robert quinn is the chief european equity strategist at snp iq. good morning. what do you think of the numbers we have gotten so far, germany versus france? >> roughly where the market has

been pricing. in fact if you look at the market impressions of that, it's already been priced in. >> that's an interesting point. european markets this morning largely unmoved by the data. euro dollar sitting at 132.60. pretty much flat on the day. has all the good news about the eurozone been priced in already? >> i think in the short term, i think that's the case. august is always a fun trading month anyway. but if you look at yesterday, the zew survey was very positive. the market inched higher. we had a nice run. now kind of a pretaper highs, you know five-year highs, and i think you're hitting some resistance levels in the stoxx 600. >> interesting survey out by the bank of america merrill lynch. global investors the most bullish on eurozone stocks. most bullish since 2002. from evaluation perspective, yes, i get that.

looking very attractive both in terms of uk stocks and eurozone stocks. are the fundamentals -- are they actually justifying this positioning on part of investors? >> i would slightly change your intro to say on normalized evaluation perspective, this is less of a compelling case. i think the difference for you -- >> why is that? >> other regions always trade at slightly different levels. the difference is in the u.s., you're trading on peek margins and high earnings. in europe, you're trading on return on equity levels around 450 basis points lower. they're trading on profitability levels. q-2 earnings season wasn't particularly great and on sales, it gives you the hope in demands. i would definitely be structured positive on european equities.

the risk reward balance is slightly different. we have seen a big pickup in the macro indicators in europe, but still see the earnings creeping slightly lower. you probably need to get to pmis around 52. you see the contraction take off, then you start seeing a big pickup in european equities. >> we should be getting more earnings upgrades after this specific earnings season, after the run-up in economic data, right? >> should, but occasionally a lag. the big thing is on the conference calls, results on q-2, about the tone and conference of the management they give afterwards in the q&a sessions and that picked up dramatically. you haven't seen the pickup in earnings just yet. q-3 will be the first quarterly earnings season you'll see an acceleration in that. >> robert, thank you for those initial comments. we'll spend much more time talking to you about your equity strategy and about all other topics this morning. robert quinn, chief european

equity strategist at snp capital iq. in uk, all eyes on the jobless numbers after the bank of england said it would peg interest rates to the unemployment rate. at 10:30, we get the minutes from the central bank's last policy meeting which will indicate just how many policymakers support the use of such forward guidance. if you have any questions for myself, robert, or any other guests that you do see on the program, please do send in your e-mails to worldwide@cnbc.com. here's a look at european markets. about one hour into the trading day. now, you would expect with better than expected gdp prints coming out of germany and france, you would see a move higher in european equity markets, but that is not the fact. initially, yes, we did see a positive reaction right at the start of trading, but ever since

we have been losing steam, have been losing some of that positive momentum. the stoxx europe 600 is down by a third of 1%. keep in mind, european markets are at a 2 1/2 month high. maybe this is a little profit taking or as robert suggested a lot of the good news may have already been priced in. ftse 100 is a bit of an underperformer, down by a third of 1%. xetra dax holding up relatively well, down by 12 points. the ftse mib in italy off by 28 points. and the ibex 35 in spain also seeing a little bit of weakness. now, in terms of the individual stocks that we're looking out for today. a bit of news flow on barclays because barclays finance director chris lucas is to step down, six months ahead of his scheduled retirement. now, this is because the 52-year-old's deteriorating health and the bank has named current financial controller peter estlin as acting cfo.

barclays stock up by a third of 1%. portugal telecom is down significantly. shares off by some 5% even though the company has beat market expectations for its second quarter net profit. the numbers were given a boost by the sale of a stake in marco telco ctm. has to be a couple of other factors at play here. we want to show you the german listing of apple shares up by 5%. obviously this stock is in focus after carl icahn revealed on twitter yesterday he had amassed a, quote, large position in the stock. reports suggest the stake could be as worth as much as $1 billion. we'll talk much more about this specific story throughout the next two hours. last but not least, shares in germany off by a whopping 5.3%, this is as the u.s. business continues to be a drag on finance after the european closed yesterday. the company posted a quarterly net loss of 362 million euros, down from a profit of 109

million last year. lots of stuff going on in the bond markets, where we did see some heavy selling pressure for core paper yesterday. and a spike in yields. now, the ten-year bund yield at 1.89%. now, this is after we got the zew index yesterday, which was stronger than expected. we also get a 4 billion euro ten-year bund auction at 10:35. we'll be breaking that for you. also, big spike in treasury yields. 2.7% is where we're currently. now, this is in part because we got the core retail sales number which was stronger than expected. and that leads the market to believe, yes, we are going to be seeing tapering as early as september. and ten-year gilt yields, back below the 2.6% level, currently at 2.59%, highest level in two years. this came after the zew index, but also because the market is expecting rates to rise earlier

than expected. maybe even 2015. of course, we get the boe minutes in less than 30 minutes' time. and last, but not least, a look at the currency, dollar/yen unchanged after some significant boost over the last couple of trading sessions, currently changing hands at 98.20. euro/dollar, not a huge boost from the eurozone gdp numbers, currently trading at 1.3263. let's check in on the markets, in asia, li sixuan is in singapore. good afternoon to you. >> thank you, carolin. a quiet day of trade in asia. japan hogged the top spot with the nikkei 225 reversing earlier losses to end higher by 1.3%. a weaker currency and strong u.s. data helped sentiment. china pulled back a bit after three days of gains at the shanghai composite, both eased about .2%. but chinese automakers put in

gear today outperforming the broader markets, after probing gold shops, pharmaceuticals, milk powdermakers, beijing cracked down on price fixing to foreign automakers to collect data on prices of cars at home and abroad to see if there is a huge gap. according to local media, the price tags of some important luxury cars are three times more expensive than the broad, even after beijing slashed import duties. and on the back of these anti-monopoly probes against imported cars and solid earnings report in recent sessions, local carmakers got a strong boost. earnings news also very much in focus in australia. commonwealth bank of australia saw some profit booking after posting a record profit. both better than expected earnings and dividend. the stock shed over 1% in today's trade. meanwhile, contracting group

layton holdings tumbled almost 6% after posting disappointing earnings. back to you. >> sixuan, thank you very much for that. no market action in hong kong today. its stock exchange closed both trading sessions today due to the typhoon utor. more than 200 flights were delayed and schools and banks were shut down. utor is set to slam into the southern mainland later on today. egyptian state tv is reporting that police have broken up a protest camp. local media says 120 people have been killed and 5,000 injured. with more on the story, yousuf joins us from cairo. yousuf, just how accurate do you believe those numbers actually are? do we have any confirmation whatsoever? >> well, carolin, it is important to note we have two major sources for the casualty

figures. so the one hand you have the sources from the government and from ambulance services from their end, which are currently going with five people killed and 52 injured. and then on the other hand, you have the muslim brotherhood, and supporters of the ousted president mohamed morsi who have been in the two protest locations, they have their own sources, their own field hospitals, they're going with a much higher number, talking about 350 people that have been killed, and some 5,000 or so injured. be very cautious with these numbers. probably the next few hours, next 24 hours or something, much more clarity about really happened. what is clear is the smaller of the two protest camps just over there in the back ground, two kilometers or so from here, that has been cleared from protesters. there was an exchange of fire, this happened early dawn and police forces moved in. we saw the use of tear gas, stones were thrown, and then the

egyptian state television brandished some of the weaponry they claim they discovered in the square, including automatic weapons and molotov cocktails. the clashes are still ongoing in the much larger square, they have cordoned off a lot of the routes to the square as well. just have to see how long this drags on. this is a developing story and we also get a bit of a feel on how investors are seeing all of this. for the past week, the market was up 7% and the market will be trading in the next few minutes. then we'll get their reaction about what was really perhaps unexpected because the security forces until just yesterday seemed to be reluctant to move in and there was a lot of discussion about the ramifications of such a decision, both domestically and in terms of relations with a lot of important partners around the world. >> yousuf, thank you for that. y yousuf gamal el-din.

carl icahn's bite of the apple sent shares soaring. why did the billionaire investor actually say on his call with ceo tim cook. we discuss at 11:40 cet. has the eurozone managed to crawl out of recession? we break the gdp numbers expected to show a return to growth after six quarters of declines. tune in at 11:00 cet. las vegas might be known as the home of the shotgun wedding, but conference giants south by southwest is using the city to build lasting relationships between investors and entrepreneurs. we discuss with web entrepreneur jack hittery at 11:30 cet. from bernie madoff to enron, financial crimes have been stealing the headlines for years. has the global economic crisis made things even worse? we discuss at 10:45 cet. india's latest inflation figures aren't helping the country's efforts to revive the economy as the headline number

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carl icahn takes a break

from his battle with michael dell to focus on yet another tech company. apple had its second best day of the year, up 5%, that's after icahn tweeted tuesday afternoon he's bought a, quote, sizable stake in the iphonemaker and had a friendly chat with ceo tim cook about increasing stock buybacks. now, our question to you, today, is following a big activist investor like carl icahn a small investment strategy? if you want to join the conversation here on "worldwide exchange," get in touch with us, you know how, by e-mail at worldwide@cnbc.com. or via twitter, @cnbcwex, or direct to me @carolincnbc. robert quinn is still with us. robert, what is your response to this question? what do you follow a call by an activist investor like icahn? would you do that? >> i think it depends what your investment style. tim cook had a difficult time since taking over from steve jobs and apple has been pretty

badly performing more recently. for the last 12 months, tim cook has been taking on a hedge fund investor and largely to do with increasing economic shareholder distributions. so if you're a great investor, you probably want to see an activist shareholder take part. i think it is a resolution. another one is these guys do shake up the boards. >> yeah, thank you so much for that, robert. it all depends on whether we're going to be seeing more cash being returned to shareholders in terms of share buybacks. robert quinn there, chief european equity strategist at snp capital iq. india's latest inflation figures aren't helping the country's efforts to revive the economy. headline inflation picked up to 5.8% in july, blowing past estimates. food prices were pushed higher by supply disruptions and import costs surged due to the weak rupee. some economists say they may be

forced to higher grades despite the need to have more growth. joining us is sajeed. what is the spike in the wpi just temporary because we saw food price inflation surge because of the massive rain. >> yeah. well, some of it is temporary and some of it is not. you're right that food prices have gone up in particular vegetable prices for the second month very sharply. with a strong monsoon, at some point the hope is that food inflation will begin to abate. i think that's the good news. the bad news is that what we also saw this month was a pretty significant pass through from the sharp exchange in depreciation over the last three months. core inflation picked up, fuel inflation picked up. commodity inflation picked up. that process could continue for the coming months as well.

and will depend on how the currency evolves. at some point, what you're seeing playing out in india is the stagflationary impact in the short run from a sharp currency shark, where inflation pressures pick up and also drags growth prospects down. >> the rbi has been trying everything it seems to limit the declines of the rupee, just recently siphoning off excess liquidity from the system. it doesn't, though, seem to be enough. what else could it possibly do? >> well, i think it's hard to adjudicate the measures as yet because we don't know what the counterfactual would have been. we don't know where the currency would have been trading if these measures were not in place. i think there is a sense that at some point currency weakness expectations got completely unhinged. we went into a vicious self-fulfilling spiral and these measures were meant to anchor that. what i will say is that there are some indications that they

may have worked. if you look at equity flows into india, they have been positive in the month of august and they were sharply negative in the previous two months. i think for the time being, the hope is the central bank stays -- sits tight and keeps the measures in place. but these measures were never meant to solve the more fundamental problem, india has the prospect of a pretty big balance of payments gap and that's the context in which the finance minister two days ago laid out or tried to lay out a road map to try and -- that there is a plan that the government has to balance of payments this year and that should help anchor currency expectations going forward. >> there is obviously a huge conundrum, should the rbi raise rates to stem the decline of the rupee, but then that's not necessarily going to stimulate growth. which is the bigger concern to the rbi right now? inflation or is it growth, which is at a multiyear low, around 5%. >> yeah.

yeah. i think both are a concern. i would expect growth is a pretty significant concern because inflation has picked up, but still not, you know, in the 9%, 10% range. wti inflation isn't where it was two yeared ee es ago. growth is a concern. but i think it is mainly in the external sector. that has to be the primary objective of policymakers to find a way to bring a sense of calm in the foreign exchange market. >> okay. >> if that does not happen, i'm afraid both the other objectives get compromised, lmore inflatio and lower growth. >> if a few moments, we'll bring you the latest uk employment data and minutes from the most recent bank of england mpc meeting. should the uk pin its hopes on the policies of new governor mark carney? >> what the mpc is doing is giving a sense of the economic

conditions that would have to be achieved before we consider -- consider starting to withdraw the exceptional monetary policy stimulus in place. not point in time, but economic conditions and economic conditions is one, the employment rate. there has been no change to inflation target. the inflation target remains 2%. it applies at all times. we don't know exactly what shocks the uk economy will face over the course of the next three years. undoubtedly we will face some shocks and important not just to be there in the better times, but to be there when things get more --

out of recession, the german economy expands by 0.7% in the second quarter, the most in more than a year while france posts the strongest quarterly growth in more than two years, reaffirming hopes the eurozone is out of the red. governor mark carney may have stamped his style on the bank of endland, but mpc minutes out any minute now will show how much support he has. indian inflation shoots up in july due to higher food costs and softer rupee, making the job stimulating more growth that much harder. and conflicting reports over

the death toll in egypt as the police crack down on supporters of the post president mohamed morsi turns violent. jeffrey dicks is chief uk economist and joins me now and helia ebrahimi is also with us on set. we are just getting the uk unemployment rate. it is steady at 7.8%. put according to this copy, the outlook brightened. so we saw a sharp fall in jobless benefit claims in july. and that really points to a strengthening labor market. this is crucial. this is the first release of the uk unemployment data since the forward guidance announcement by mark carney last week. and we know that he ties rate increases to the all important unemployment rate. jeffrey, what is your initial response to the number? >> well, the labor market has been treading water for the last

six months. the low we have seen on the unemployment rate is 7.7. the high we have seen this year is 8.1%. it's been 7.8 now for the last two or three months. all of the forward looking indicators, the vacancies, i would imagine in this release are pretty buoyant. the rekrumt scruitment surveys o good. they're lagging data. so the actual data aren't moving at all. >> we know the monthly numbers are pretty volatile. to what extent can you extrapolate this number to what we are going to be seeing two years from now? >> i don't think the monthly numbers are volatile. we have had 7.8% for the last three months. >> a lot of people would disagree with that. >> well, we get movement, of course, in the employment numbers and in the claim account numbers, but the rate, because it is a rate, it takes quite a bit to move it. the forecast, of course, from the bank of england is that it

does come down quite sharply over the next two years, but not far enough to trigger the 7% unemployment threshold. >> helia? >> widely billed on expectations is that it would stay at 7.8%. it stayed at 7.8%. so no surprises there. that means you've got unemployment of about 2.51 million people. >> okay. let's get to the boe minutes. this is the other crucial point of data or information that we're waiting for, just to show how much support mark carney really has in its forward guidance. the bank of england minutes show that the mpc voted 8-1 in favor of forward guidance policy. this is actually a bit of a surprise, isn't it, because we were expecting an anonymous vote in favor of forward guidance. as expected, the mpc voted 9-0 to keep rates at 0.5%. again, this is in line with expectations also and anonymous

vote to keep qe bond purchases at a total of 375 billion sterling. it seems as though he doesn't have the support that is really needed to convince the markets that rates are actually going to stay low for an extended period of time. >> that vote is very interesting. clearly with the unemployment threshold set fairly high and with the three knockouts on inflation, inflation expectations and financial stability, it looked as if the governor would have got everybody on side, but you said martin weil. >> voted against forward guidance in the current form. he wanted a shorter timeline for the inflation knockout clause. >> that's a detail that i think the fact that he stood out against mark carney is significant. you would have thought a new governor having time to chat up all the members of the mpc, get them all on side, he has them on side for qe, has for the last two months. >> that's a big surprise when we

got that. because his predecessor wasn't able to do that. so we thought just based on that information that he was a better consensus builder than his predecessor. >> i think he's been able to convince the dubs, the forward guidance is in some sense a substitute, at least in the short term. they haven't said they'll never come back to qe. but it is a substitute for qe, but the fact that martin weale is saying i don't want forward guidance in this form anyway is a stumbling block, i would have thought, for mark carney. >> the market might take this as we might have to have rate hikes sooner than expected, which was kind of the reaction we had after guidance like came out last week. >> just want to bring you some market reaction. we see sterling at a fresh day high after the boe minutes. and jobs data. sterling again, rising to a session high versus the dollar. against the dollar it is

currently at 15489, up by a third of 1%. if we want to bring up sterling against the euro, i don't know if we have that right now, maybe not. but let's see what's happening with the ftse. we know the ftse was -- there you go, euro/sterling down by a third of 1%. we're seeing significant sterling strength across the board and against the yen by a similar amount, a third of 1%. in terms of the uk market, it has been a little bit of an underperformer today. that's because a couple of the stocks are trading, but it seems as though it is taking another minor step lower, down by .4%. otherwise the xetra dax is pretty much unchanged and the cac 40 seeing a little bit of an outperformance on the back of the gdp number. back to our panel. jeffrey dicks, chief uk economist at novis capital markets and helia joined us around the desk as well. interesting moves in the gilt

yields yesterday. a two-year high. i know these are longer term deals and what mark carney is focusing on is the short-term yields. is he wrong in thinking that he could actually -- it would actually be able to influence longer term yields given that data has been surprising to the upside? >> when they made that surprise statement of the first meeting in july, the markets did take notice. but the forward guidance, the markets are pretty skeptical about whether they can keep bank rate unchanged for three years. i think the markets are slightly misunderstanding the precise nature of the forward guidance. >> how so? >> it is a commitment not to raise interest rates providing certain conditions are met. but if those conditions are met, say unemployment does come down to 7%, it is not the opposite, a commitment to raise interest rates. and what we could easily see between now and when we get to

7% is that they have rephrased the forward guidance to an unemployment rate of 6.5%. not fixed in stone, so as we get to 7, they could say, well, there aren't any problems on the horizon. inflation is still under control, we'll go to 6.5 and then that would give the markets a gain, something to think about. it would extend the timeline for unchanged interest rates. >> just from the minutes, because we obviously wanted a tougher inflation knockout, the minutes say zurich particularly compelling need to do more to manage the risk aspect, risk that followed guidance could lead to an increase in medium term inflation expectations by setting an even shorter time horizon. so that's from the minutes. >> and that is essentially what the market has been focusing on. it simply doesn't believe that the boe, under mark carney, could stimulate growth while inflation is going to be running away. >> well, we're all surprised

when they came out with the forecast that said growth will be 2.75% next year. the obvious reaction to that is, well, if growth isn't going to be that strong, can they really just sit on their hands for three whole years? they might be able to. they think there is a lot of spare capacity, they think that the economy can grow, absorbing unemployment, absorbing the productivity, which has been short fall there has been a puzzle. but the risk is always -- the risk in the uk economy now is clearly one way. they can't keep rates on hold for as long as they would like to be able to do so. >> how frustrating must it be for mark carney that the market isn't listening, that as you put it, the market is misinterpreting what he's been trying to convey to us? do you think on the back of that realization, do you think he will actually tweak the guidance rather sooner than later? >> i think it must be very frustrating for him. he got a good reaction in july when he said the market

increasing market rates was unwarranted, that was the word they used. but since then, it has been a one-way street the other way. they turned a blind eye, ignored all of the protestations from the bank. but as i said a moment ago, it is not fixed in stone, the 7%. they can tweak that, your word, they can tweak their forward guidance as they go along. and the markets will rehave to think the times scale for next rate hike. >> jeffrey, thank you very much for your thoughts. jeffrey dicks, chief uk economist at novis capital markets and helia, thank you for your input as well. you'll be digging through the details of the boe minutes and we'll have you back on the show in i think an hour from now. just to recap the market action for you, uk two-year overnight was rising, the ftse 100 edging lower. down 0.4% after the boe minutes and the unemployment rate as we saw surge in the sterling. meanwhile, thyssenkrupp

shares have opened down in frankfurt this morning. the company posted a net loss of 362 million euros, down from a profit of 109 million last year. this comes as the german firm struggles to find a buyer for its loss-makimaker steel americ unit. a worse than expected core profit for first quarter ending in june. the company in the process of being bought by vodafone reported 3.8% higher earnings but missed analyst expectations. revenues rose 4.6%, but came in below forecasts with extra investments and broadband and marketing weighing on germany's biggest cable company. let's check in on how kabel deutschland shares are trading, higher by .1%. no clear skies yet for cafe pacific.

they have scaled back on seating capacity to cut costs. but the pint sized profit missed expectations. first class sales disappointed along with its cargo business. and the company warned high fuel prices would continue to weigh on the bottom line. staying with the airline sector, the u.s. government is challenging the merger of american airlines and us airways. it filed a lawsuit to block the move as cnbc's phil lebeau reports. >> here in the u.s., the prop e proposed merger is in a holding pattern. the department of justice filed an antitrust suit essentially blocking the merger of the two airlines saying that it would hurt competition and result in higher airfares and higher fees for the traveling public. both us airways and american airlines released statements on tuesday saying that the doj is wrong and plan to fight the government in court. the real term implications of this is that american airlines will not be exiting bankruptcy as planned as quickly as many

expected. also, the merger of these two airlines will not take place in the third quarter. doj says that if these two airlines were to get together, it would result in hundreds and hundreds of millions of dollars in harm for the consumers here in the united states. meanwhile, shares of lcc, the us airways stock, took a big beating today, dropping more than 10%. the biggest one-day drop for lcc shareholders since august of 2012. that's the latest from here in the u.s. back to you. australia's biggest bank now has australia's biggest bank profit ever. commonwealth bank posted a record second half profit pushing full year earnings to $7.1 billion. a good old-fashioned retail deposits were the source of strength allowing cba to boost its annual dividend by 9%. but given the capital rules on future credit risks, the lender held back on a special dividend and that did disappoint investors. >> about six months ago we made

our dividend policy very clear to the market, which is we're going to smooth between first half and second half and pay out between 70 and 80 and we ended up paying 75.4% profits. in this market, there is no doubt there were people who decided to buy the stock in the run-up thinking there may be a dividend surprise but we wanted to see what we were going to do. >> send in your e-mails if you have any questions or comments about what you see on the show. our e-mail address is worldwide@cnbc.com. a questionable trader practices, accounting fraud and tax evasion played some part in the global financial crisis five years ago. but how is white collar crime changing? we discuss after the break. [ male announcer ] i've seen incredible things.

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the u.s. is expected to file criminal charges today against two former jpmorgan employees for their alleged role in the london whale trading losses last year. reports say they have been the focus of the investigation. martin natal was in charge of

the london team that made the giant bets on derivatives, while grout was responsible for placing daily values on those positions. both worked with trader bruno iksil who has reportedly been cooperating and as a result of that won't be charged. lawyers for martin natal say their client is confident that he'll be cleared of any wrongdoing. here is a quick check of jpmorgan shares in frankfurt, up by a quarter of 1%. no charges have been brought against these two jpmorgan employees, the story is certainly reigniting a debate over policing financial fraud. economic crime is now estimated to cost the uk more than 70 billion pounds a year, and the global economy more than $2 trillion. that's according to britain's financial conduct authority. it says new criminal networks are operating across europe, with gains running like multinational companies. with more, cnbc's tom mckenzie joins us in the studio.

tom, these gangs operating like multinational companies. they must be pretty well organized. >> yes, a funny thought. they're very, very organized and operate across multitude of different nationalities. there is numerous nationalities involved in the crime gangs and operate against numerous jurisdictions. it is incredibly sophisticated now and they have the technology as well to pursue their aims and their goals. and this is a changing environment for the authorities looking into this. financial crime obviously covers everything from i.d. theft and card fraud to the much bigger and more -- much bigger types of financial crime and individuals in trading and boiler rooms, more traditional white collar crimes. one person looking into this closely is a professor of criminalology at cardiff university, professor michael levy. i caught up with him. i asked how the -- i started by asking him how the financial crime -- how it evolved over the

last few years, particularly on the back of the financial crisis and here is what he had to say. >> the biggest white collar crimes are really the big accounting fraud risks. and that's true also of the emerging economies, but in the emerging economies, the worst component of that is probably financial institutions, lending to their friends and powerful elites who then are just not accountable. >> do you think that's something that investors aren't paying enough attention to, those investors looking to emerging markets? >> yeah, i think it is a really -- you know, what can you trust? i mean, the big four accounting firms, you know, have been spreading their wings much more into emerging economies and that perhaps gives you at least someone to sue, even if no more reassurance.

but, you know, insider dealing in that more profound sense of dealing with people that you know and people who have got some clout in the society remains an endemic problem because it is connected to corruption in a way that it isn't so much in the west. >> where are these organized financial criminals based and what markets are they targeting? >> well, a lot of thought is a global floating community. there are people looking for people and institutions they can rip off with very good elaborate fronts. and, you know, particularly if you come out of the former soviet union, it is very difficult to do due diligence to find out who people really are and very often people see the

pound and dollar signs in front of their eyes, and they think, gosh, this guy seems to be very wealthy. let's lend to him. so that's one kind of thing. but in cybercrime, it is very often people in the former soviet union and china who are doing the initial kind of scams. >> if you could point your finger at one thing and say, this is going to be a big problem in years to come, what would it be? >> it is probably the big accounting frauds where people are able through deception to fully auditor and perpetrate big crimes as insiders. that and, you know, d-dos and other cybercrime attacks. it is going to be a whole host of threats from different sorts of threat actors. >> michael levy, professor of criminalology talking to me

earlier, pointing out there are lots of concerns in emerging markets and investors should be paying close attention to any corporations that they're investing in over there, particularly concerned about fraudulent lending. closer to home, the financial conduct authority here says that money laundering through the financial system globally costs about $1.6 trillion. that's about 2.7% of global gdp. so it is absolutely huge. the financial services authority has a list of hundreds of different corporations and individuals that are not registered with them that run regulated, that operate here in london. so it is a huge problem and something that regulators are paying close attention to but have a lot of work to do. >> tom, thank you very much for those stats. fascinating topic. i do want to bring you earnings from tencent, china's largest internet company. and it reports a second quarter net profit of 3.68 billion yuan.

that looks to be beating expectations. analysts were expecting a number of around 4.1 billion yuan. revenues came in at 14.38 billion yuan. i don't have a forecast for that. but revenue trends have been a little bit better. this company has been betting big on mobile. this, of course, is the future for this internet giant in china, which has this very, very popular chat option, we chat. remember, we talked about sina, one of the big competitors yesterday, which also has been a big on mobile. japanese prime minister shinzo abe decided not to visit the shrine tomorrow on the anniversary of japan's defeat in world war ii. so why not? we have the story live from tokyo. >> hi. yes, the shrine convicted war criminals with the war dead and

is seen as a symbol of japan's past militarism. visits to the shrine by prime ministers and lawmakers in the past have often drawn strong criticism, especially from south korea and china. the prime minister abe who is known as a conservative nationalist had been mulling a visit, but finally decided to refrain in order to avoid further escalation of regional tensions. he will make an offering instead paid out of his own pocket in a gesture to appease his conservative supporters. relationships with china and south korea are strained due to territorial disputes as well as disagreements over war time legacy issues. china used to be japan's top export destination, but it fell to second place behind the u.s. for the fiscal year through march, and trade has continued to decline since. also, the number of chinese tourists visiting japan has dropped nearly 30% during the first six months this year, while visiting south korea in droves. that's all from the nikkei business report. back to you. >> thank you so much for that. to find out more about why japan is losing its grip on the

korean tourist market, head online to cnbc.com. let's give you a look at what's on the agenda in asia tomorrow. an update on china's drive to learn more foreign capital. that's july fdi figures are released. indonesia's central bank makes its next decision after hiking rates last month. in hong kong, markets are set to reopen and many key corporates will report earnings including china mobile and lenovo. no market trading in south korea and india due to holidays. samsung has strengthened its position on the global smartphone market in the second quarter with a 31.7% share. that's according to the latest gardener report. meanwhile, rival apple market's share fell to 14.2% from nearly 19% in the same period last year. the research firm also said that it brought smartphone sales trumped basic hand sets for the first time on record in the second quarter. now, timing may not be perfect for this, but carl icahn

takes a break from his battle with michael dell to focus on another tech company. yes, apple. apple had its second best day of the year, up 5% after icahn tweeted tuesday afternoon he's bought a sizable stake in the iphonemaker and had a friendly chat with ceo tim cook about increasing stock buybacks. we have been asking you, is following a big activist investor like carl icahn a smart investment strategy. jeff tweeted, he doesn't follow big activists. most profitable moves may be behind scenes before the public knows. playing catch-up is not good. keep your responses coming here on "worldwide exchange." i appreciate every tweet i get. get in touch with us, by e-mail at worldwide@cnbc.com. or via twitter @cnbcwex or direct to me @carolincnbc. remember, we did have the boe minutes and we had the jobless numbers for the uk out a few minutes ago and saw the surge in sterling against the

dollar. it has come back down a little bit. it is only up by .2% now. it is -- it was up by as much as a third of 1%. this is after the boe minutes showed an unexpected split vote in terms of forward guidance. eight are in favor but one member dissented. we were expecting an unanimous vote for forward guidance. a quick check on the other forex will be coming after the break. the french economy is officially out of recession with the strongest gdp data in two years. but what does this mean for the administration? we'll go live to paris for more analysis after the break.

welcome to "worldwide exchange." i'm carolin roth. out of recession, the german economy expands by 0.7% in the second quarter. the most in more than a year. france posts the strongest quarterly growth in more than twoffirming hopes the eurozone is out of the red. governor mark carney may have stamped his style on the bank of england, but one mpc member descends on forward guidance as a drop in uk jobless claims boosts sterling. emergency services in egypt

report at least six dead, while other outlets are suggesting a higher toll after a police clampdown on pro morsi protesters turned violent. and carl icahn takes a shine to apple. shares of the iphonemaker surge after the billionaire investor discloses on twitter he's bought a, quote, sizable stake in the company. second quarter gdp comes in slightly better than forecasts. the eurozone number, plus 0.3% on the quarter. minus 0.7% on the year. and this follows a better than expected reading for the german economy and the french economy in the second quarter. so has europe really turned a corner? joining us in the studio is dara

majer. dara, let me kick things off with you. has europe really turned the corner? >> it's beyond the worst. i'm not sure if we have turned the corner but it feels better. it is a positive number. after 18 months of negative, negative, negative. that is significant. for the politicians across europe, they'll ready to say, looks are getting less bad under my tutelage, the tactics we have adapted are beginning to show some fruits but very early stages of this point. i don't think anybody is running at it and revising forecasts or i wouldn't believe so, at least. >> to what extent is this a mean reversion, for germany, which saw a very, very weak first quarter because of this long winter. these numbers we're seeing today, could they just signal a false start? >> a little bit of the story has been a reversal of what we had in the first quarter. the weather effect played in

germany's favor. france, similarly, tax hikes in the first quarter, which dampened consumer spending. got the payback for that in the second quarter. to be honest with you, we talked about six quarters of negative growth. we had plenty of negative special factors which we happen to dwell on. not a couple of positive ones. i don't think we should dismiss them too quickly. >> what do you make of the french numbers? are we popping the champagne bottles over in paris? >> well, paris is pretty empty at the moment. it is the holiday season. so i haven't seen much of that. but certainly this is good news. it is a relief. there was a lot of concern around consumer demand in the first half of 2013 as income taxes have increased quite substantially. so to see the economy now posting a positive number again is certainly welcome. and for the whole, we are -- there are good reasons to believe that we are probably at

the end of the longest recession in over 40 years for continental europe. that's obviously positive development. >> jean michel, we have seen this improvement in the french data. some of the other data, like the pmi, like the unemployment rate, still at a 14-year high. just how optimistic can we really get about the french economy, given that there is still this underlying lack of competitiveness? >> well, absolutely. i think what we have had with this number and other indicators is a signal that probably the worst in terms of economic activity is now behind us. we are entering a new period, which is likely to be extended, which is likely to be a long period of sluggish recovery, very slow growth, slightly above zero, but still very weak and that applies to the french

economy obviously but also to the economies like spain or italy. i think as far as unemployment is concerned, in our forecast we do not see really any significant meaningful improvement before the end of 2014. in the meanwhile, certainly some specific programs by the government to lift the numbers a little bit could bring some more positive news, but the fundamental trend as far as unemployment is concerned is still up. >> jean michel, thank you for that. do stay there while we do show you what european markets are doing as a result -- or in response to the better than expected economic data out of germany, france and the eurozone as a whole. not too much of a reaction, i got to say. you would think with the positive data, these markets were turned a little more positive. as we heard before, it may have all been baked into the cake already.

the ftse 100, down by a third of 1%. some of the stocks trading today, putting a little pressure on the market. also, we got an unexpected split in the boe minutes. and that may have pressured the market a little bit as we now have more uncertainty around forward guidance. the xetra dax seeing a little bit of outperformance, up by around 14 points or so. and in spain, italy, we are seeing declines to the tune of around a third of 1%. a lot happening in the bond space where we saw the big sell-off yesterday in terms of gilts, bunds and in terms of treasuries. i want to kick off with the ten-year gilt yield at 2.6%, just back above that. so on the back of the boe minutes, on forward giese auidae saw a spike in yields. this is a two-year high. sterling/dollar is changing hands at 1.5476. again, another jump higher for

the sterling against the dollar on the back of the boe minutes. let's not forget that the unemployment rate was unchanged at 7.8%, but saw that huge fall in the claimant account. do want to show you what's going on with the dollar/yen, pretty much unchanged after two sessions of very strong gains. currently at 98.24. the euro/dollar not moving too much on the back of the better than expected gdp data, 1.3262. u.s. futures are pointing to a slightly softer open, this is after we saw modest gains in yesterday's trading session. once again, lots of comments coming from mr. lockhart and core retail sales numbers were better than expected. that leads us to believe that tapering is likely going to be in place by september. let's check in on how markets in asia are faring. li sixuan is standing by in

singapore. good afternoon to you, sixuan. >> a mixed day of trade for asian forces after yesterday's strong gains. the nikkei 225 yet again outperformed despite fears of the fed tapering after the strong u.s. retail sales data. the weak yen helped the nikkei gain more than 1% today. in china, the shanghai composite a tad weaker after three days of gain. hong kong markets shut because of the typhoon. and automakers were the big gainers in china today. sbic up today. they will acquire a 50% stake of visteon in the joint venture. huayu up by 10% on the shanghai composite. faw car up more than 4% today on reports that china's top economic planning unit is investigating prices of foreign cars sold in the main land. earnings news very much in play, down under.

commonwealth bank of australia, cab, shed 1.1% due to some profit taking after posting record earnings. meanwhile, oz minerals tumbled more than 4% today after reporting a loss. and leighton holdings plunged nearly 6% today, hurt by its disappointing cash flow. back to you. >> sixuan, thank you so much for that. and let's take a closer look at the french component of the eurozone gdp composite figure. the economy picked up steam during the period expanding by stronger than expected 0.5%. its sharpest rise since the beginning of 2011. the figure was boosted by consumer spending and industrial output, marking the strongest pace of quarterly growth under president francois hollande. the country continues to struggle with high unemployment and other troubling indicators. we have a fantastic wall for you with a couple of those indicators. manufacturing pmi still below the boom/bust line of 50. industrial production continues

to be in negative territory, down by 1.4%. and the debt to gdp ratio, not too bad, 91.1%. unemployment rate 10.8%. this is a 14-year high. still with us in the studio is dara, senior fx strategist at hsbc and paris, being joined by jean michel, chief european economist at standard & poor's. let me get back out to you, jean michel. even if we do see this uptick in the french economic data, with the unemployment rate so high, do you fear what we're seeing in france is a jobless recovery? >> to a certain extent, yes. we will see a jobless recovery. we will see a sluggish recovery in the next year. in our opinion, no major sign of improvement before the second half of 2014. that's obviously a significant issue for the french

authorities. and -- but, unfortunately, i don't think there is -- i mean, you look at this second quarter result, it is encouraging in terms of consumer demand. but if you look at foreign trade, for instance, i think we still have an underperforming foreign trade sector with french exports still weak, competitiveness remains a major issue. and so the key growth engines, if you want, the drivers that could really lift the economy to a level where it starts creating jobs again, those drivers are still not fully operational. >> jean michel, what do you think this number and the general improvement will do to mr. hollande's approval ratings. many people think he's doing a good job. he's bound to benefit from this. >> probably will get a bit of a lift. don't forget that that is coming right in the middle of the

summer, and among other -- you just mentioned some other indicators. i think the population in general, public opinion in france remains very focused and rightly so on the jobless rate. so in that sense, probably stabilization may be a bit of a lift, but i wouldn't be too optimistic on that, at least for the near future. >> all right, thank you very much for that. german chancellor angela merkel taking a summer break ahead of september's general elections. she surprised students in a berlin school with an hour long history lesson, coinciding with the 52nd anniversary of the building of the berlin wall. the chancellor praised the values of freedom and democracy as the fundamental pillars of the german society. now, dara is still with us in the studio. you have put out a note recently about what the effect would be on german elections on the euro, and on policy in general.

what can you tell us about, you know, should we be worried about a policy shift? >> not especially. doesn't feel like it. the difficulty we have is in the context of german election. what merkel is catering for is domestic audience. and for many years -- taking on the european mantle. once we get beyond the german elections, the outcome is still a close call. once we get beyond that, the fixation will be back to the european story, i suspect, and resolving this conflict, still there, very strong in europe. >> overnight, we got comments from the spokesperson and he said, let's forget about any debt restructuring in greece. are we being a little too naive about what we're potentially facing come september 23rd? i mean, everyone i speak to says an official sector involvement or restructuring, that is inevitable. would you agree? >> we had inevitability on the eurozone crisis.

everybody is spouting inevitability, and we had that at every instance, in ever instance, somehow the politicians seem to get it together at the last minute. and evolve the ultimate catastrophe. i'm reluctant to buy into the idea that anything is inevitable in this kind of story. it seems we'll get the model through. we had it for many years. we continue after the german elections, the same strategy. markets won't like it. but it is all the politicians can handle at this point. >> dara, we have euro dollar trading at 132.54. it has been extremely resilient. one of the most resilient g-10 currencies so far this year. i find that absolutely fascinating given that we still have that risk of another restructuring in greece, even though you say that we're going to be seeing a muddle through the situation. is euro dollar overvalued here? >> i think it is. it is going to fall before the end of the year. i think some of the factors you point to will undermine it. the dollar, i think, will be a stronger currency through the same. the remainder of this year. and -- but even just this

morning, earlier story of gdp, i was a little surprised the euro doesn't do more, not more upside. so i wonder if there was exhaustion of the levels, 132. and the reflex will to be sell it lower and head to the 130 level. i suspect that's where we're going? >> what is the level, 134, i guess? >> 130 has been a big psychological level. but i think we'll get -- i think we tried top side and we're going to start pushing lower. >> dara, you'll stay with us. we'll talk more about the dollar in a couple of minutes time. carl icahn takes a break from his battle with michael dell to focus on yet another tech company. apple had its second best day of the year, up 5% after icahn tweeted tuesday afternoon he's bought a sizable stake in the iphonemaker. and he also had a friendly chat with ceo tim cook about increasing stock buybacks. is following a big activist investor like carl icahn a smart investment strategy? if you want to join the conversation here on "worldwide exchange," get in touch with us

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welcome back to the show. these are your headlines. the eurozone emerges from the longest post war recession with second quarter gdp coming in just above forecasts. clashes between police and pro morsi protesters in egypt turn deadly. and carl icahn takes a bite out of apple and sends shares soaring. egyptian state television is reporting that police have broken up a protest camp in nahda square. the crackdown on supporters of the imposed president mohamed morsi turned violent. yousuf gamal el-din is live in cairo with the very latest. yous yousuf? >> well, carolin, it started at dawn this morning and came as a surprise to many because, remember, the government appeared to be reluctant as to whether moving in with force would be the right thing to do. an update on the casualty figures so far when it comes to breaking up these two protest

encampments in central cairo. you have these supporters of the ousted president and, of course, muslim brotherhood sources who are going with a death toll of 600 at the moment. and some 5,000 people injured. now, be very cautious about this number, we cannot independently verify that number. now, government sources are going with much less of a figure. they're saying that 13 people, according to the ministry of health, have been killed. and some 98 injured. you can see the disparity, we'll have to wait and see until there is more clarity when it comes to those casualty figures. the operations are still ongoing in the larger of the two protest camps. the smaller one we understand has been cleared. the second one, there is still firing going on. there is use of, we understand, tear gases involved, and rocks are being thrown. the there are reports of live ammunition, we can't confirm

that. but there are more flashpoints emerging not just across the capital, but across the country. reports of clashes in suez and islamiyah and new parts here in central cairo. and that, of course, raises the risk of not just a protracted battle between security forces and supporters of the ousted president, but also the prospect of more violence and more casualties that could have very serious ramifications on the durability of the political reconciliation process in this country and that, of course, jeopardizes, you know, the economic prospects that a lot of investors have been betting on. but a quick note for the moment, investors are taking this relatively in stride, the market just down 1% or so, but you can bet they're watching this very, very closely and so should the rest of the world. >> yousuf, thank you for that. quite surprising just how resilient the market has been to those concerns over stability in egypt. still to come in the show, president obama says thanks, but

no thanks as lawmakers and washington insiders lend advise on ben bernanke's replacement. who are investors backing for the top job? we'll discuss after the break. [ male announcer ] it's time.

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to decide who he will be nominating to replace fed chairman ben bernanke. reuters reports the white house is annoyed that senate democrats wrote a letter to the president critical of former treasury secretary larry summers, urging him to pick fed vice chair janet yellen instead. deputy chief of staff nabor addressed the issue with harry reid's top staffer who says reid will support whom ever the president chooses. president obama isn't expected to make his choice until sometime this fall. still with us is dara at hsbc. i thought that president obama made it really clear to us that he wants summers to be the next fed president. all of a sudden, he wants more space. >> yeah, i mean, the way the media -- that seems to be the case. we have not heard anything from the white house to suggest otherwise. he wants to make it appear as a kind of decision process. only one guy in the lineup so far as you're concerned, not

really a process, why don't you just tell us tomorrow. he's trying to make it more into a debate, more of a process, which it is, i'm sure. i'm sure there are other candidates being considered, but for the market, the market says it seems obama wants summers and maybe the market wants yellen to a degree, because she's seen as so super dovish. >> what would be better for the dollar? given the positioning that we're seeing in the market now, it has been very long dollar positioning of late, maybe that has been unwound a little bit, but summers probably the more hawkish guy. >> yeah, and anyone other than yellen will be the more hawkish guy. that's reality. the dollar is trading i would say this a reasonably convention way, hawks and doves. get a dovish angle, selling the dollar and vice versa. get a hawkish. if we get summers, if that's what's confirmed, that will be the dollar positive outcome, particularly if it comes along side and recovering u.s. economy. it seems -- it is consistent to have a hawk alongside a u.s.

recovery story. a little bit more troubling if you had a hawk drop in, if you like, when the economy was still whopping. >> dara, thank you for that. i want to know your forecast for dollar/yen and euro/dollar. >> 99, 125, 124. >> 125, 124, wow. >> punchy. got a few months. >> thank you for that. still to come on the show, the startup scene has moved far beyond silicon valley to other fast growing hotbeds such as brooklyn and austin, texas. that doesn't mean the cut throat battle for seed money is any less to bring entrepreneurs ideas from paper to reality. we look at new ways startups are searching for and securing capital. that's coming up next. [ male announcer ] this store knows how to handle a saturday crowd. ♪

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welcome to "worldwide exchange." i'm carolin roth. these are your headlines from around the world. the eurozone officially emerges from the longest post war recession in the second quarter, boosted by a 0.7% expansion for germany, while france posts a strongest quarterly growth in more than two years. governor mark carney may have stamped his style on the bank of england, but one mpc member descends on forward

guidance as the job and uk jobless claims boost sterling. health ministry in egypt reports at least 13 dead and 98 injured while other outlets are suggesting a much higher toll after police clamp down on pro morsi protesters turned violent. and carl icahn takes a shine to apple, shares of the iphonemaker surge after the billionaire investor discloses on twitter he's bought a sizable stake in the company. hello and good morning. this is "worldwide exchange." if you're just waking up, welcome to the show. it is almost the start of a brand-new trading day. but we are setting up for a slightly softer open in terms of the u.s. markets. this is after we saw the nice rebound in yesterday's trading session. the dow up .4%. the s&p adding .2% and the

nasdaq showing some nice gains. we did have more fed speak from lockhart, really make signals about when fed trade could come, whether it will be as early as september. but core retail sales, remember, those were better than expected, up 0.5%. i do want to show you what's happening in terms of the european markets, which are a little bit mixed after this better than expected gdp data for the second quarter. that may suggest then a lot of this improvement has already been baked into the cake. the xetra dax seeing a little bit of outperformance this morning, up by .1%. the ftse 100 down by .2%. keep in mind some of the stocks here are trading x dividend but we did see that big decline in uk claimant accountant, that boosted the sterling. ftse 100 largely taking these numbers in stride. we also see a little bit of underperformance in terms of the italian and spanish market, down by .4%. keep in mind, we're still at

2 1/2 month highs for the european markets and have seen a strong seven-day rally. so maybe, you know, we are seeing a little bit of profit taking. so how do you make money in these markets? here is what some of the experts have been telling us. >> the biggest problem in eurozone is the peripheral rally above all the spanish and italian ones, where we're now getting threats down to the source of levels. the treasury perhaps more important. you question the value of holding. >> got to get a stream of better than expected or consensus economic data. that means that you need to shift your asset class expectation. get out of asset classes that would be safe, steady investments. look at risk asset classes. look at equity, look at high yield, look at other assets, don't look at commodities, that cycle may be over.

>> as an investor, stay in the low markets, stay in the high yield markets, stay with floating rate debt, as a borrower, you want to lock in low long-term fixed rates at the moment. >> it didn't take long for don matrick to make his mark on zynga after replacing mark pincus. he's shaking up management. several senior executives are leaving the social gamemaker including the coo and the company's chief technology and chief paper officers. matrick is expected to unveil his strategy vision today, that's when zynga holds its quarterly all hands meeting with employees. zynga closed down 1% in yesterday's trading session. moving on, aol ceo tim armstrong is apologizing for publicly firing an employee last friday in front of a thousand -- in front of a thousand

co-workers. a recording was leaked earlier this week in which armstrong is heard firing a creative director at aol's patch unit. >> you think what's going on now is a joke, and you want to joke around about it, you should pick your stuff up and leave today. the reason is, and i'm going to be very specific about this, is patch, from an experience -- abel, put that camera down right now. abel, you're fired, out. >> he apologized directly to lenz but he remains fired. armstrong said lenz was told to not record confidential meetings and that drove him over the edge on friday. at the end of the day, he is still fired, isn't he? the popular south by southwest conference has spawned a spin-off event for entrepreneurs and investors. it is called v-tubing and it is

going on now in las vegas. julia boorstin has more on the gathering and one of the biggest conflicts facing the startup world. >> here at the south by southwest conference on las vegas, one of the key focuses is how to manage that often contentious relationships between entrepreneurs and vc investors. the question is how to make that relationship a win-win even though the money guys and the idea guys are often at odds. startups need investors' capital but are wary of giving up too much control and investors want the biggest slice and the least risk. >> it is all about the team. and the team and their ability to execute on their passion for solving that customer problem is really what we're looking at. >> there is more pressure than ever because the money isn't flowing as freely. in the first half of the year, vc investment kline ete decline 7.5%. one solution we heard repeatedly is that the secret to managing that relationship lies in finding investors who bring more

than just money to the table. >> it is a partnership. and you're looking for relationship where they can add strategic advice and that they look at it as a true relationship that has mutual benefits. >> another hot topic here at south by southwest is the rise of las vegas' silicon strip. another hot entrepreneurial hotbed that is popping up around the country. i'm julia boorstin from las vegas. >> joining us now from new york is jack hittery, chairman of soma energy. he's also a candidate for the new york city mayor. jack, thank you for joining us bright and early this morning. how are you? >> great. hi, carolin, great to be here. >> fantastic. julia gave us a little bit of information on what this v2v conference is all about. but south by southwest is still pretty vague on what the whole aim is of the conference. can you shed a little bit more light on that? >> sure, south by southwest is a

great gathering. usually happens in austin, texas, every year. i've been there several times. it is a great gathering of a lot of creative people, investors, entrepreneurs, filmmakers, people from all across the creative and entrepreneurial range coming to austin, texas. what is interesting is they're taking it on the road. right now they're going to vegas, tony shay, for example, one of the featured speakers, he's the coo of zappos and doing great work, investing $300 million in downtown vegas to reimagine what vegas could be. >> jack, why vegas? i know the food there, the gambling there is fantastic. i just made a trip to vegas myself recently. but why would it be a hub for startups? is it because of the favorable tax situation? >> well, what's interesting is that startups are no longer just happening in silicon valley. when you're seeing across the country is a very interesting and emerging trend. vegas, for example, is definitely emerging, interesting

spot. new york, where i'm sitting now, for example, is the leader right now percentagewise in growth of startups. more than a thousand startups that received angel and vc funding here in new york city in the last few years. so new york's silicon alley is emerging as the leader now on a percentage basis in terms of increase in growth. what you see across the country and i think south by southwest is now realizing this is that there is a growth pattern of entrepreneurs, financial capital and ideas, coming together in hot spots across the country. >> jack, as my colleague julia there pointed out, venture capital money isn't flowing as freely as before. venture capital investment is down by 7.5% in the first half, down 10% last year. what is the disconnect? why is there more skepticism on part of the vc investors? >> it is a very interesting question. you don't really see in the numbers, what is behind the numbers is that many startups no longer need traditional venture

capital rounds to really get going. many startups now are using digital technology, in the cloud, their startup costs are much lower. they're turning to friends and family and in many cases angels and super angels. these are individuals who are investing in 30, 40, 50 startups at a time. and so the cost of actually starting a company has come down tremendously. this leaves venture capitalists in an interesting position, where exactly do they come in in the growth phase of a company? the beginning of a company is usually typically where they came in from the past, that's no longer the case. so actually the rise of the angel investor and the decrease of venture is a very interesting trend happening right now across the startup world. >> okay, jack, thank you for that. jack, good luck with your mayor mayoral race in new york. you can catch more of julia boorstin's coverage of the south

by southwest v2v conference on our website, cnbc.com. coming up, why the company behind the iphone and ipad has become the apple of carl icahn's eye. more on that next. ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ]

grab your binoculars, it is time to go whale watching. big hedge fund managers and investors are releasing quarterly s.e.c. filings showing what they have been buying and selling lately. david tepper who runs appaloosa management added shares of delta airlines, but trimmed his stake in apple. filings from warren buffett, george soros and others later today. just want to take a check of shares of tepper's holdings. we look at citi, up by a third of 1%. yesterday's trading session. delta down, but on the back of the airline news coming out of the u.s. and apple up by almost 4% on the back of this carl icahn story, which we're going to talk about right now. apple stock gets a big bump as carl icahn takes a break from his battle with michael dell to focus on the iphonemaker. seema mody is live with the very latest. seema? >> carolin, apple had its second best day of the year, up 5% in

yesterday's trade, after carl icahn tweeted tuesday afternoon he's bought a sizable stake in the company. the post sent out at 2:21 p.m. eastern time says, quote, we currently have a large position in apple. we believe the company to be extremely undervalued. spoke to tim cook today, more to come. reports say icahn's investment is worth more than a billion dollars. icahn later said his friendly chat with cook included a call to increase the company's stock buyback program. he says apple has the ability to do a $150 billion buyback now, by borrowing funds at 3%. apple confirms the conversation took place in april. apple bowed to pressure agreeing to return $100 billion to shareholders by the end of 2015. it is boosting its dividend by 15%, raising its share buyback program sixfold to $60 billion, one of the largest of its kind. icahn tells cnbc a large stock buyback is a no brainer for apple, and would enhance the stock tremendously.

he believes it could be worth as much as $700 a share. apple closed at a seven-month high on tuesday and gained more than $10 billion in market cap. it is up about 26% from its 52-week low on april 19th. but still down 31% from its all time high of 7.05 that it hit last september. he had a magic touch of late of his investments. nearly all of his holdings are up, including netflix, up 186%. herbal life, up 198%. >> you got to wonder, this is an extremely easy target, isn't it, because david einhorn has been pushing for more cash being returned to shareholders. we know that apple was going to do that anyway in terms of returning more cash to shareholders, in terms of share buybacks. so, you know, he could easily be successful in this one, can't he? >> perhaps. as you point out there are some major hedge fund managers who do have a position in apple as we

know. we'll learn more today as we do this whale watching, but apple has been under tremendous pressure to return more capital to shareholders. that is something that we perhaps could see more from apple going forward. >> seema, thank you very much for that wrap-up of that story. we have been asking, is following a big activist investor like carl icahn a smart investment strategy? jeff tweeted that following icahn is perhaps part of a diversified portfolio. keep your responses coming here on "worldwide exchange." by e-mail at worldwide@cnbc.com, via twitter @cnbcwex, or direct to me @carolincnbc. meanwhile, these are your headlines, the eurozone emerges from the longest recession with second quarter gdp coming in just above forecasts. clashes between police and promorsi protesters in egypt turn deadly. and carl icahn takes a bite out of apple and sends shares

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the eurozone has officially merged for the longest post war recession with 0.3% increase on second quarter gdp, slightly above forecasts for 0.2% uptick. the growth was largely driven by 0.7% expansion in germany and stronger than expected .5% growth rate in france. now, the dollar has been responding quite -- a little negatively to this. we did see a little bit of an uptick right after the data was out, but now it has fallen back by around .1% to 1.3240. the uk unemployment rate held steady at 7.8% in july. jobless claims dropped well more than forecast.

this as the latest bank of england minutes revealed a unanimous vote to hold rates. but one member, martin weale, descented on forward guidance, considered a signature policy of new governor mark carney. with more on that, helia ebrahimi joins me in the studio. this is a big setback, actually, for mark carney. one member dissented. we were expecting this unanimous vote. >> yes, so much for mark carney's beguiling ways in diplomacy. but, yeah, there is nothing in the minutes that you read that suggests that interest rates are going to be held until q-3 2016 as was the headline date in the inflation report. in fact, martin weale has come out as more hawkish as the rest of the members. remember the knockouts we saw in forward guidance kind of watered down forward guidance, and yet we see here that martin weale

saying it didn't go far enough. you could have a situation where you have three camps in the mpc. those who -- when you go to quantitative easing, actually, within the minutes you can see that there are some members who still think that it is possible that we need more stimulus to be added, but just waiting to see how forward guidance is effective or isn't effective. so you got clearly martin weale on one side, being on the hawkish end and you got those other members. in turn, the minutes are quite hawkish. >> quite hawkish. that is reflected in the sterling dollar at 1.5464, up by .1% on the day, though it was up by much more, up by almost a third of 1% earlier on in the session. helia, thank you for that. i want to show you what is happening with european markets, which are slightly softer throughout the trading session, with the exception of the xetra dax in germany, which is higher by .2%, following the better than expected gdp print.

by and large, the consensus is that, yes, these numbers show a turn around in the european economy. but they may have been priced in already. and may just -- may have just been a bounceback from a weaker than expected first quarter growth. so this -- these are some of the factors that you do need to keep in mind. let's give you a look at what is on today's agenda in the united states. the july ppi is out with producer prices forecast to rise 0.3%. and by 0.2% when you strip out food and energy. at 3:15 p.m., more fed speak, james bull lard speaks about monetary policy. as for earnings, look for results from deere and macy's before the open and cisco and agilent after the close. gold prices have seen a bit of a bounceback over the last couple of sessions today. today, though, they are pretty much flat at 1322. but they are back above the 1300 level. tyler broddia, analyst at

nomura. he joins us now. thank you for speaking to us this morning. to what extent can gold actually make a meaningful comeback given that tapering is probably coming, whether it is september or october, we don't really care. but tapering is here and dollar -- the dollar will be rising on the back of that. >> yeah. i think that's -- that's the interesting part of where we are right now in the evolution of the goal traders. i think the taper, whether it is coming in september or october, it is coming. and i think that those expectations have been largely now built into the market. what has been very interesting over the last six months, i guess, is what has happened to the physical demand that we're seeing in china, and that dramatic pickup is doing a lot to offset what has happened in terms of the changing of expectations from investors, largely western investors and what we have seen of the

disinvestment coming out of the etfs and strong buildup of short positions on the exchanges. i think in the near term, it is likely going to be a market that you're able to see a bit of strength in gold and can push back up towards 1500 dollar level. going forward, as you pointed out, the u.s. dollar looks like it is going to be rising, that's going to have a couple of impacts on the gold price largely just a stronger dollar creating a head wind, but also the cost curve is likely to see less support with the producer currencies weakening as well. going into 2014, it could become a more negative market again. >> tyler, let's stick with the demand side. india has been hiking those import duties. on the other hand, we have seen very strong better than expected demand coming from china. will the chinese demand story be able to offset what we're seeing happening in india? >> so far it has. it is a matter of how much that can persist for, i think, at the moment. what i find interesting is that the pickup in chinese premiums

to the gold price over western prices happened before the prices fell. it was back in february. so that is suggested to us that perhaps there are other reasons than just the cheaper gold price getting a return to the market from an investment standpoint in asia. and perhaps there is, you know, reallocation of savings reallocation of investment allocation into gold in asia. if that persists, that could do enough to offset the indian demand. i think we also have to keep in mind that indian demand is likely to stay higher than the official figures will suggest, because of the premiums that one can receive from smuggling. >> all right, tyler, unfortunately this is all we have time for this morning. tyler broddia. that's it for today's show. i'm carolin roth. thank you for watching "worldwide exchange." i'll see you tomorrow.

good morning, today's top story, it is now official, the eurozone's longest ever recession, it's come to an end. in the u.s., inflation and housing data set to dominate today's agenda. and then it's the summer of activists. news from bill ackman and carl icahn and their bets on a few well known companies. it is wednesday, august 14th, 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 steve liesman who is in for joe, who is still on vacation. steve, welcome. >> thanks for having me. >> great to have you here today. we have a lot of things to talk about this morning, including stocks snapping a two-day losing streak yesterday, reversing early losses to end higher. we have been watching the u.s. equity futures this morning and so far not a definitive direction for any of the markets. the dow is up -- below fair value by 10 1/2 points. s&p 500 futures down by just over 2 points. the nasdaq is up by one point. we have some economic tests today that the markets will see. weekly mortgage applications out at 7:00 eastern time. an important read on the health of the housing industry. and then our focus will turn to inflation. we get the july producer price index out at 8:30 eastern time. the headline number is expected to rise by .3%. the core component is seen rising by .2. some important economic data out of europe earlier this morning. official figures confirm the recession in the eurozone came to an end in the second quarter. the 17 countries that make up the