welcome to "worldwide exchange." i'm carolin roth. these are your headlines from around the world. global markets are on the edge of their seats, waiting today's fed minutes, which could provide more clues into the central bank's thinking about tapering. indonesia reverses its stock market rout as its president promises new measures on friday to shore up growth and fight inflation. meanwhile, investors pour out of heineken as the beermaker's first half sales fall short of expectations. the dutch brewer also warning of a muted outlook. >> consumer confidence is still quite subdued, particularly in

europe, and also in the u.s. on the other hand, you see also a kind of slowdown in some traditional high growth emerging markets like brazil and marginally so in africa. we speak to the ceo of rival carlsberg in just half an hour's time. that is a first on cnbc. and a bailout bat unttle in german politics. wolfgang schaeuble breaks the party line saying greece could get another aid deal. good morning, everyone. welcome to a brand-new edition of "worldwide exchange." the stoxx europe 600 is down around .1%. we're in a holding pattern ahead

of the fomc minutes out later today. european markets are around a two-week low, after a big decline in yesterday's trading session and the picture is looking a little more mixed this morning. the xetra dax is off by .2%. the ftse 100, once again, underperforming. this market is now off some 3.5% this month alone. but today it is also being weighed down by some of the stocks which are trading ex-dividend. among them, hsbc. ftse mib seeing some bright spots, up by .3%. what is keeping us busy in europe is, of course, earnings. vesta shares are rallying after the danish wind turbine maker named better than expected profits. shares are up by almost 10%. heineken reported first half sales and net profit that fell shy of expectations and the company delivered rather weak outlook as shares off by almost

4 hr 4%. carlsberg down fractionally. a flat operating profit in the second quarter, also missing forecasts, but the danish brewer brought back its full year guidance. we'll be speaking with jergen buhl rasmussen, the ceo of carlsberg in about 30 minutes time. this is a check on the bond markets, where we did see treasury prices making a bit of a comeback after declines for almost two weeks. so yields actually fell a little bit. we are still close to those two-year highs, though. maybe a little bit of bargain hunting. certainly this is also the picture that we saw for bund prices. in terms of the yield, we're back from that 1.9% level at currently 1.845%. and finally, a look at the forex market where dollar yen is pretty much unchanged now, 97.31, was as low as 97.11,

after japan pushed the severity of the latest fukushima level or league to level three. we saw a little yen strength on the back of that. the aussie dollar against the u.s. dollar, it is down by .6%. this is on the back of the general weakness in the asian trading session. and do want to get out to adam bakhtiar who will give us a snapshot of what we saw in the asian trading session overnight. a little bit of stabilization compared to yesterday, right, adam? >> much better picture, that's right, carolin. stabilization is certainly the word to describe the trading session among a very mixed market here. but definitely a lot of caution and nervousness in these markets ahead of the release of the fomc minutes on today, in fact, in the united states, and for which we won't be able to react to at least until tomorrow. we are seeing a little bit of a rebound, certainly in the ones that were hardest hit, the

jakarta composite index. we saw bargain hunting within equity markets in the early hours of trade this morning, put together with accompanying words from the sovereign wealth funds in indonesia saying the market was too cheap at this point in time and apparently had been picking up stock. but the real momentum came after the president said he was going to come out with a package of policies on friday to address the slowing growth and the increasing joblessness in indonesia. didn't elaborate on the actual measures, but of course the market is going to want to see what it will be on friday. we'll have to see what happens with that. interesting moves also in india. that market had rebounded alongside indonesia today, back to at one point, was up over one plus percent as we saw bargain hunting in that market as well after it too had fallen. i suspect the turn around back into negative territory,

probably linked to the movements in the currency markets. let's look at that. as i mentioned, a lot of nervousness in anticipation of the fed tightening, in terms of tapering and the fomc minutes coming out and exactly that is happening. look at the indian rupee. it had dropped -- had improved to 6312 from yesterday's 6412 and now back down there. that is probably linked to the losses we're seeing in the equity markets as well. rupiah loses more ground. bank of indonesia was in the market, sold about 240 million u.s. dollars yesterday. so really the sell-off in currencies is happening across the spectrum, even to aaa rated singapore dollar. a lot of emphasis placed on the earnings from the resources space. the bhp numbers disappointing, australia reacted. we had glencore shares in hong kong slam down as well, but rebounded actually from the lows, which is rather interesting. it was down about 5% plus, and

cnooc shares a very weak market, hang seng almost all the stocks were down with the exception of three and this is one of them. up four points to 9% on the back of a solid number first half, 9% gains in net profits, driven by higher oil production and new oil fines across the board. i want to touch on some of the stocks in japan. we saw some support in japanese equities really driven by the weakness in dollar yen. tepco hitting a low point of the day after more radioactive water was leaking from the storage tank there. back to you in london, carolin. >> thank you for that. good morning to you or good afternoon to you, rather. while you were speaking, adam, we got some interesting flashes coming from the bundesbank president. he said monetary union is not a club where members can exit and re-enter. this is according to a report. said germany would face severe disadvantages if euro member

were to exit and no one here is yearning to refer to the deutschemark. this is according to a report. the discussion about a member exiting, probably a year old, so these comments certainly relate to what happened with the discussion around greece last year. we also got some interesting flashes coming from dow jones, regarding an eu egypt draft. remember that the foreign ministers are meeting in brussels today to talk about potential measures to help gr e greece or put more pressure on greece. the egypt draft calls on eu countries to review equipment export licenses, however socioeconomic aid will be protected and the government to government aid will be reassessed. again, this is according to a draft seen by dow jones.

let's move on, goldman sachs had a trading glitch on tuesday, resulting in several bad single stock and atf option trades. while many trades may end up being canceled, they could cause goldman upwards of $100 million. in a statement, the bank says exchanges including cboe and nasdaq and omx are working to resolve the issues and doesn't believe the risk or potential losses will be material. let's take a check of goldman shares in frankfurt, they're up just fractionally, about .1%. jpmorgan reportedly is close to naming two new directors with background in finance and risk management. a decision will likely be made next month. the names of candidates aren't known, but reports say ceo jamie dimon has extensive say on who is appointed to the board. they would replace long time directors david coat and alan footer. the financial times reports jpmorgan hired a new york law firm to investigate its hong

kong hiring practices. the firm will respond to questions from the sac about whether the bank hired children of key financial officials. and shares are higher to the tune of .5%. there had been growing concerns about china's shadow banking sector. some say the industry could lead to a systemic failure in china's financial system. cnbc's eunice yoon filed this report. >> reporter: when you first meet this man, it is hard to believe he's a shadow banker with experience at a wall street firm he now runs a website in beijing that matches companies in need of cash with small time investors willing to lend. >> i don't know why in china people think shadow banking is so scary, shadow banking is bad. >> reporter: many find shadow banking scary because they fear it could threaten china and the world. unregulated industry encompasses all sorts of untraditional financing, everything from private citizens lending spare

savings to indirect or off balance sheet loans from banks. >> now that we see banks off loading more and more assets into these hidden channels, it is difficult for anybody, the regulators, us, to really know what the positions are of banks or borrowers. and i think it is a very important point that the market is missing. and increasingly large share of the picture of what's going on in china is happening in this black box. >> reporter: this investment trust officer knows what's happening in the black box. she agreed to be interviewed but only if we masked her identity. >> translator: 70% of our business is shadow banking. through trust companies, the banks change the property of their loans so the bad debts don't show up on their balance sheets. >> reporter: investment trust companies are less regulated, and sell high return wealth management products based on riskier investments. >> translator: of course we're

very afraid of the risks. it wouldn't be risky unless the economy runs into rubble. >> reporter: that's what this banker is worried about. >> translator: i feel at some point the bubble will burst and we'll see a systematic financial crisis like the subprime crisis that occurred in america in 2008. >> reporter: with china now in one of the biggest credit booms in modern history. eunice yoon, cnbc, beijing. we may be seeing the effects of a slower economy on chinese lenders as they begin to report earnings. we're still expecting results from bank of communications today ahead of china construction bank on friday. analysts are expecting much slower growth from the low single digits on the year as china's merchant bank reported lower profits last week. a rise in bad loans and interest rate forum could put a dent in the bank's profitability. mike warner is senior equity analyst at sanford bernstein. he joins us now from hong kong. mike, thank you so much for taking the time to speak to us

this morning. how do you think will chinese bank earnings season shape up? >> i think the results are going to be slightly higher than expected. but we are seeing a slowdown. the profit growth in the mid to high teens simply will not be there anymore for the banks. that's coming down to the low teens. i really don't expect any really negative surprises. >> if we look for -- look at the chinese banking system in general, and the markets' perspective now and the market perception, it is extremely negative now. many banks are trading close to or below book value. do you think that's warranted? >> i don't think it is warranted for some of the banks. the large banks in general, they tend to have the better risk managements. they have the better liquidity profile which i think is very important. i don't think it is warranted for them, but for some of the smaller banks, you know, there is certainly risks on their

balance sheet that are opaque, such as inner bank exposures or exposures directly to the trust companies. i think that's what investors should be very focused on. >> just to give our viewers some statistics here, the off balance sheet exposure of china's largest banks is only 10% of their total assets for the smaller ones. it is closer to 30% to 40%. i mean, mike, do you think this could be ultimately be the lehman moment for some of the smaller banks? >> not yet. the lehman moment really occurred when liquidity dried up for lehman. they weren't able to fund their balance sheet anymore. right now, the funding environment in china is still quite strong. the growth is healthy. there is still a lot of money and that money can't leave china because of the closed capital account. these risks have been around for the past three years and the reason we haven't seen them really hit a head is because liquidity has been very strong. that means the tide is going to

remain high for the banks for some time. >> we did see that huge cash crunch in the month of june. would that not be impacting some of the smaller lenders? >> that will, and that's going to be something -- that was a shot across the bow from the central bank warning the banks to focus more on liquidity management. that will have an impact in the second half of this year where the smaller banks will be forced to delever that portion of their book. but, you know, in our viewpoint, we haven't seen these risks grow to the level we saw in the u.s. in terms of real estate exposure leading up to the lehman brothers crisis in the 2007/2008 financial crisis. >> very briefly, with that everbright scandal, do you think that regulation in china has failed? >> i don't think so. we even saw a trading error from goldman sachs earlier today or yesterday. this is one of the challenges as china becomes more market focused, they'll have growing

pains. and, you know, this is going to be one of the fallouts. hopefully these kinks in the system will be relatively small and the regulator will address them quickly. >> mike, thank you so much for that. mike warner, senior equity analyst as sanford bernstein. coming up on today's show, we'll be heading out to paris as the french parliament reconvenes with pension reform at the top of the agenda. can the administration make the painful changes that the european commission is demanding? and we continue our going green series, taking a closer look at the next generation on eco transportation as singapore's first green and driverless shuttle hits the road at 10:45 cet. and the pulse of the retail sector ahead of target's second quarter earnings. can the retailer impress investors after a slew of disappointing numbers from rivals walmart and macy's? we'll preview the numbers. and home sweet microhome.

a shortage of affordable housing is boosting demand for ultra small apartments in major u.s. cities. is this the future of the not so big city life? we'll discuss at 11:50 cet. coming up, we head to berlin where the german opposition is doing its best to make greece an election topic. while the ruling coalition is focusing on ways to kick start growth in the domestic economy. >> translator: providing financing possibilities which go beyond offering some initial capital at the setup stage to young highly innovative and very creative companies is very much on our agenda. we thought about this in the past. we had a market segment at the german stock exchange. we're well aware at the time a lot of mistakes took place with that. that's why we're much more cautious now. a startup should be one of the pillars of our economy. [ kitt ] you know what's impressive?

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a new bailout for greece is not the only option according to the eu economic and monetary affairs commissioner olli ren. he's quoted as saying he would not rule out fresh aid, but added extension of current loans are also a possibility. a new deal for greece is also

making headlines in the german press today. a german government official saying a third bailout for greece would be smaller and carry less restrictions than past programs. this after finance minister wolfgang schaeuble became the first leading german official to openly state that greece's existing aid packages wouldn't be enough to save it from default. chancellor angela merkel has so far sought to keep greece out of the election campaign, telling a regional newspaper there was no point in discussing further bailouts until the current one expired at the end of the year. but, the opposition has gone on the offensive with the former chancellor gerhard schroder using his first official campaign appearance for the party to bring up the greek topic. schaeuble joked that merkel might be wearing the wrong glasses accusing her of not telling the truth and misleading the public. and just a few minutes, we'll be getting out to annette who has

been following this and many other stories in berlin. all right, let's get to some earnings. i believe we just got numbers from go com. if you bear with me. first half net profit came in at 34.8 billion yuan. forecast for 34.39 billion yuan. so a touch higher than forecast, but only a smidge really. second quarter net profit was 17.1 billion yuan. first half net interest margins, 2.56% and june npl ratio at 0.99%. that, to me, seems pretty low. let's get back out to annette who has been standing by in berlin. we have been hearing about this -- the back and forth about will greece need more aid after the german elections.

mr. schaeuble's comments, this is what the opposition was waiting for, wasn't it? and this is probably something that the public has known about all along. i mean, my question is to what extent the social democrats can actually capitalize on that. >> actually, that's a good question. i'd say if we had gerhard schroder running for chancellor he would probably do a good job because he jumped into that little bit of contradiction between schaeuble and angela merkel directly while helping out on a campaign trail. steinberg, i'm not sure whether he'll go down this road because so far we haven't heard anything from him about greece and about how the government is actually handling the crisis. and his alternative to the bailout -- he as well of course does not have any alternative to the bailout programs because the social democrats by definition

are in favor of solidarity with our fellow euro state members. so i would probably say he is not going to capitalize too much on that. looking at the whole story, one has to point out, though, that schaeuble was indicating that earlier on already that most likely will see a third greek bailout package, but what is extremely important for him and for the government as well that we will not see another haircut because another haircut would mean losses for the german taxpayer. that is, of course, hugely not wanted in that pre-election phase, carolin. >> annette, greece came up when our colleagues on "squawk box" spoke to the ceo of a beermaker. he wanted a corporate view on how much it really matters. >> i think obviously there remain a lot of structural issues in europe. and the problem is that the decisionmakers don't want to take them on because they're in

continuous election processes. and that's also the greek story comes up because we have election next month in germany, and the germans try to talk about this and make a big story of it. if you look at the big picture, does greece really matter for europe? i wouldn't say that much. we should get confidence back into the businesses around europe, get growth back and that's very important. >> as we heard there, getting growth back is a lot more important than forever worrying about greece. annette, you've been looking at new growth avenues for the german economy. >> yes, actually. really green sprouts one would call them. it is the i.t. startups found in berlin. berlin has a reach and it is hugely important because berlin doesn't have a lot of industry because of the history of the city. and the i.t. startups seem booming here, so interesting to feel the different little areas

of the city. and partly we hear a lot of english, a lot of french, a lot of spanish, those people really flock to the city. so take a listen and have, yeah, just watch the pictures i brought from those little straws. sexy but poor that was the slogan for berlin over the past decade. now a new one emerges, silicon alley. berlin is home to one of the most active i.t. screens in europe. >> it has been founded to get an easy access and pragmatic way to leverage the execution power and innovation power and ability of startups. >> reporter: the grounds could not be better. creators from all over the world

flock to berlin. rents are cheap. people well educated and investors are around. startups have a good reason to be here. >> berlin is very attractive place for people who want to work with startups. so it is a great place for all startups to be because it is easier for them to recruit talented people than i would say anywhere else in germany. >> reporter: the recipe is simple, find a little market niche and meet the right people. >> in berlin, the startup scene is much better. it is much richer. and there is more possibilities for investment and also as a market, it's better. >> reporter: sap, the german software giant, was once upon a time a startup. it was erected in the outskirts of berlin. >> we saw the vibrant startup scene, we want very intense exchange with, to taking existing technologies to completely new areas, it's really affordable. it is a very international set

of people, and it is a great place for us to be. >> reporter: yet, the sap research center startup gets support. >> sap's program, the startup focus program has given us access to people in resources and technology and even then go to market possibilities in the future that we couldn't have other with the. >> reporter: this could be a big chance for berlin with its chronically low industrial base and high unemployment. more than 2,500 startups were born in the last five years and only last year more than 3,000 jobs were created. so sometimes it really feels like a big bubble and there is a lot of talk that, of course, the notion of startups means as well failure. and there are a lot of failures as well as expected among the startups here in berlin and that is actually the big question. who is actually making it to grow into something bigger or is this just a very trendy thing to be here, the likes of googles

and deutsche telekom, sap and others are flocking to the city here. it is not a lot of money to invest to open up office space because everything is so cheap here to support them. it is sort of trendy. but if they really were to come up with a business model, that remains to be seen. for the older ones around, just remember that timecompanies lik cargo lift which went bust really, really fast. >> annette, the germans don't necessarily strike me as the risk seeking type. why do you think berlin would thrive as a startup place, just very quickly? >> yeah, actually, i think there are a lot of foreigners around driving that i.t. startup scene here in berlin because of the cheap -- and this trendy feeling to be here. everybody loves the city. and that is one of the big reasons why a lot of foreigners are coming here. for the germans, actually, it

will be probably a bit of a challenge. they're even having a conference, which is called fail-con, which translates to failure conference that they can tackle that meantal issue gli thi. >> i think that's a good idea. if you haven't been to berlin, that goes to our viewers out there, if you haven't been, it is a great city with a cool feel to it. but we'll see how long that can still last. there is a lot of buzz around berlin at the moment. coming up, as part of our special climate week here on cnbc, we'll look at the future of green automobiles, with a special focus on driverless technology. the ceo of french firm induct joins us in 20 minutes to explain why he's optimistic on autonomous vehicles. we want to hear from you. would you buy a driverless car? join the conversation here on "worldwide exchange," get in touch with us by e-mail at worldwide@cnbc.com, via twitter @cnbcwex, or direct to

me, @carolincnbc. still to come, carlsberg reported this morning with beer sales in asia providing the only fizz in otherwise flat earnings. we'll talk to the company's ceo jergen buhl rasmussen after the break.

global markets are on the edge of their seats awaiting today's fed minutes which could provide more clues into the central bank's thinking about tapering. indonesia reverses its stock market rout as its president promises new measures on friday to shore up growth and fight inflation. and investors pour out of heineken as the beermaker's first half sales fall short of expectations. the dutch brewer also warning of a muted outlook. >> consumer confidence is still quite subdued particularly in europe and also in the u.s. on the other hand, you see also a kind of slowdown in some traditional for high growth emerging markets like brazil and marginally so in africa. >> we speak to the ceo of rival carlsberg in a few moments, a first on cnbc. and vestas shares rally after a new ceo is appointed and

posts better than expected second quarter earnings. we have got some disappointing uk july public sector finance numbers. this is as spending has risen. uk july public finances show a surprise deficit. this is the first july deficit in about three years. now, july is usually boosted by tax payments, but that simply didn't materialize this month. that is because it was offset by higher spending. so certainly a bit of a disappointment, but it really remains to be seen as to what extent these numbers will be revised. sterling dollar not reacting too much with the numbers to be honest, trading at 156.59. australian prime minister kevin rudd and the opposition leader are holding their second televised debate ahead of the

federal election. we'll monitor their comments and keep you updated, of course. european markets are seeing some choppiness this morning ahead of the fomc minutes. we're pretty much in a holding pattern. the ftse 100 off by .4%. underperforming because a couple of the stocks are trading ex-dividend. among them, hsbc. apart from the ftse 100, we're seeing some green arrows, the xetra dax is flat, but the cac 40 seeing some gains to the tune of a third of 1% and psi in portugal up by .9% after weakness in the last couple of trading days. in the bond markets, we saw bund prices rise. maybe a little bargain hunting, maybe safe haven buying, that's why we saw yields coming down from the two-year highs. currently the ten-year bund yield at 1.85. treasury yield at 2.83%, down from 2.9% levels that we saw on

monday. in the forex space, the yen did see a little bit of strength earlier on today on the back of japan raising the alert level from the fukushima leak to three. the dollar yen currently trading at 97.46, up by .2%. euro dollar become below the 1.40 level. many traders saying it really is priced for perfection, but it is back below the 1.34 level again. and sterling dollar unchanged on the day, down -- trading at 1.5657. heineken posted better than expected first half earnings, boosted by strong sales in some emerging markets. the dutch brewer says the bottom line also improved by cost control and more developed regions. speaking earlier on the channel, the company's ceo admitted the emerging market picture remained patchy. >> you see also a kind of

slowdown in some traditional for high growth emerging markets like brazil and marginally so in africa. on the other hand, going forward, asia is still going very strong as well as mexico for us. we have had a very good innovation rate on our portfolio this year. there are good things and there are a bit of bad things, but overall, i think in fairly challenging trading conditions, we boasted a decent result. >> danish brewer carl sberg als reporting today. sluggish sales across europe. one bright spot for carlsberg, though, were sales in asia where second quarter revenue grew by 10%. shares in the company this morning are down by .8%. jergen buhl rasmussen is the president and ceo of carlsberg and joins us from copenhagen. thank you for taking the time to speak to us this morning. despite the weakness in russia,

and the bad weather in europe and -- in western europe in the second quarter, you were able to maintain your guidance. does that tell us you are going to be focusing more on cost cutting and efficiency going forward? >> i would say we are always extremely focused on our cost agenda and how we make the company more efficient. particularly in western europe where we have seen declining markets for some time. but, yes, to compensate some of the worsening of the russian market development, we will increase our focus on cost in the second half. but also we are doing better on market share in a number of countries than what we expected, so in russia, as an example, we're doing better than market share. that's also helping our performance to stay on the guidance for the full year. >> in russia, which contributes 40% of group ebid, the

regulatory and demographic environment is tough. what is the outlook for the market as you are gaining market share? >> this year is very much impacted by the change to the retail landscape where pavilions and kiosks, nonstationary, they're not allowed to sell beer anymore. that has had a negative impact for 2013. and a little more than what we expected going into the year. at the same time, the per capita consumption is low in russia and a lot lower than what it used to be and lower than many western european countries, so i think sooner or later, at some point in time, you'll start seeing growth in that market again in terms of beer consumption. it is still a low alcoholic beverage unlike the strong spirits where consumption is very high in russia. >> let's talk about your biggest market, western europe. we all have been seeing that euphoria as europe emerges from the recession.

do you share that optimism, just how much visibility do you have for western europe? >> i believe it will take time before we start seeing a turn around in consumer confidence, consumer sentiment in europe. so despite maybe from a high level the macro economy is getting a little bit in western europe, it will take time before we start seeing that in the consumer markets. so western europe will be very changing markets, not only for the remainder of this year, but also going into next year and that's why looking at the business model, how we can operate more efficiently is very important. at the same time, we do invest in our brands, we also launch significant innovations doing extremely well and this is one of those examples. >> to wrap up the look at the different regions you're operating in, we have seen once again strong growth coming from asia. there have been more and more concerns about the

sustainability of the earnings growth there and the economic strength. can asia continue to offset some of the weakness that we are seeing in western europe and russia? >> i think it will. i do believe the average asian economy will keep growing for years to come. and also quite important the category we are in is still very underdeveloped in most of the asian countries. you're talking about still very low consumption, so even if the economy was not as strong at some point in time compared to a year before, i think the underlying fundamentals for this category is very strong and therefore we should expect china, india, a lot of our markets to continue to show very strong growth in asia for the coming years. >> if i look at your share price for

performance, you have underperformed the sector by around 10%, 11%. you've got to be extremely frustrated by this movement in your shares. what is it that you think investors are missing about the strength of your company? >> i do believe there is one major reason here and that's basically russia. some are very concerned about russia and some of the regulation has been implemented in russia. and that's really having a negative impact on our share development compared to some of our peers. >> there has been some worrying headlines coming out of denmark where you supply some 70% of the draft beer. now, there has been this labor dispute and the production in the brewery has been halted. can you reassure our danish viewers that their supply of draft beer in the bars is not going to dry up, excuse the pun. >> first of all, i hope this

strike will come to an end as soon as possible. and we cannot really do more as a company, it is not for us to solve this whole strike and this whole issue. at the same time, what i can say, we are doing our utmost to secure supply for all our danish customers and many danish consumers by getting beer in from outside denmark, so we can hopefully supply all customers, but hopefully also the strike will end very soon. >> all right, jergen, thank you so much for those thoughts this morning. jergen buhl rasmussen. french politicians will try to heed advice as they return to office with a challenge to reform the country's pension structure. france is under increasing pressure to tackle a system the european commission describes as an urgent need of overhaul. joining us from paris is philip

veshta. thank you for taking the time to talk to us this morning. hollande is in a tough spot. you think huge pressure from the international front, especially from brussels to reform the pension system in france, on the other hand, the unions are already threatening with strikes. what do you think he will do, just to what extent will any reform be watered down? >> well, when you look at the economic environment in france, we know that we have to reform pension system, because you know, the main point currently is that we have reform every three, four years, for the last ten years, and it creates uncertainty to companies. and in that environment, probably a drag for companies to invest in new technology, in

industry, and that's something that we can -- the french economic system. so we have pressure from inside, how to recover and we will recover only if we have investment, but investment will depend on this more stable framework that can come from the retirement reform, and we have pressure from brussels to try to -- to get a more stable market, but for a different reason. >> philip, just talk me through exactly how you think this pension reform will look like. do you think that will likely see that extension to the contribution period, which currently is 41 1/2 years? >> it could be the official, but we -- we know, you know, last june we had a report from the call, this is a commission that

thinks about and write about the retirement, and this commission said, well, this report said well we have to increase the number of shares as you said, but recently we have some other sound about the reform. we spoke about higher taxes. we spoke about lower pension for retirees, so we don't know exactly what will be the clue of this reform, and we expect that the government or the prime minister will do some direction to say, well, we want to reform in that way and that's what we will expect for the next couple of weeks before the start of the execution. but for the moment, we don't know exactly what will be the way the reform will be, will be

done in this. >> philip, just very quickly, this is not just about the pension of aid. this is more about whether hollande really is a real reformer. if we don't see a credible reform here, do you think that the market will be punishing france in terms of higher yields? >> well, i don't think it will be necessarily -- but it will be a very negative sharp fall for the france. we need to invest more. we need companies to invest more. and if we do not have the stable framework, it will be complicated and in that case, expectations on france will be lower than what we can expect. so this reform is very, very important for the french economy, and from our -- and from how the investors can see. >> philip, thank you for that.

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indian rupee weakens to charge a new regular low. this is despite measures by the rbi to stem the capital outflows and decline in the currency. japan's nuclear agency wants to raise the severity level of a radioactive water leak at the fukushima plant from 1 to 3. we have the story live from tokyo. >> the international scale of nuclear related incidents ranges from 1 to 7 with level 3 defined as serious incident. there is a low probability of significant public exposure. the highest level 7 was used for chernobyl in the initial stages of the fukushima accident. the leakage of an estimated 300 metric tons of highly contaminated water from a storage tank was the largest

since the fukushima plant was hit by a quake and tsunami in march 2011. meanwhi meanwhile, the proposal suggests reducing property taxes for buildings such as railway stations and hospitals that take steps to comply with the rules. back to you. >> thank you so much for that. meanwhile, vestas shares are surging higher after they reported better than expected second quarter operating profit. the group also announced that the ceo has been replaced by anders runevad. he will take over in september. until then, the current ceo will step in as interim chief executive. singapore launched first green and driverless transport

shuttle in asia in a project billed as a, quote, test bed for similar technology throughout the region. the shuttle transports passengers from a university and jtc corporation's clean tech park. the vehicle is manufactured by induct which is also developing driv driverless cars designed for sharing. they cited a report from cisco. not all nations are getting on board with germany and japan among the biggest skeptics. joining us now from paris is the ceo of induct, pierre lafave. is this new technology as a shuttle, is it actually safe? why should we be trusting this technology rather than being driven around by human shuttle driver? >> you know, in the statistics,

most, 90% of the accidents are due to human error. we can really remove the driver error. the technology is very safe now. >> we all have been dreaming about this driverless car. how many years until we actually get this scar where you can just put the place you want to go to and it drops you off and not just this driverless shuttle, which you're working on, which shuttles us from one point at the university campus to the other. >> well, there is two different market for driverless. the one we do address is we want to remove private from inside cities.

what we're looking for is center of city with a lot of pedestrians and mobility to a driverless system and we move the cars. the market is driving assistance into normal cars, which will not solve the trafficking to cities, but will probably solve a lot of incident and reserve situations en route. >> this all sounds well and good, but it requires a huge amount of investment in cash strapped municipalities and cities. do you think that your project will be hitting a roadblock just because finances on part of the cities are looking really bleak? >> this kind of service if you compare it to normal bus service into a city, is something like 30% less expensive. so i don't think it is a real

matter of finances. it is a matter of, like, what you see in singapore, which is very interesting test bed for us. there is a real ecosystem to develop clean technology and services. this is really something we're looking at. it is not a matter of finances. it is much more a matter of test bed, legal setup. it is a real solution. yeah. >> pierre, thank you for that. unfortunately, that's all we have time for this morning. pierre lafave, the ceo of induct. still to come, markets will hunt for clues on policy action as the fed reports july minutes later today. we'll preview that release, that's coming up right after the break. [ male announcer ] it's time.

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welcome to "worldwide exchange." i'm carolin roth and these are your headlines this wednesday morning. global markets are on the edge of their seats, awaiting today's fed minutes, which could provide more clues into the central bank's thinking about tapering. indonesia reverses its stock market rout as its president promises new measures on friday to shore up growth and fight inflation. investors pour out of heineken as the beermaker's

first half sales fall short of expectations, the dutch brewer warning of a muted outlook. >> consumer confidence is still quite subdued particularly in europe and also in the u.s. on the other hand, you see also a kind of slowdown in some tradition for high growth in emerging markets like brazil and marginally more so in africa. >> rival carlsberg reporting the danish brewer keeping its outlook unchanged as asian growth compensates for a sluggish european sales. the ceo telling this channel europe will take some time to pick up. >> despite maybe from a high level, the macro economy is getting a little bit invested in europe, it will take time before we start seeing that in the consumer markets. good morning, everyone. yes, we are in one hour into a brand-new episode of "worldwide

exchange." if you're just tuning in, thank you so much for joining us here on the show. here's how futures are faring ahead of the open on wall street today. now, we're looking at more red arrows across the board. this is, though, after we saw this rebound in the s&p yesterday. it snapped the four-day losing streak, it was up by .4%. the dow still slightly, fractionally in negative territory and the nasdaq up by .7%. we saw that nice rally in the retailers. we're going to be talking more about the retail space later on in the show. european markets looking a little mixed this morning. we are seeing some underperformance in the ftse 100, down by .5%. this is in part because of some of the stocks like hsbc, bat are trading ex-dividend today. this index has been underperforming of late, now down by more than 3.5% since the start of the month. the xetra dax is seeing declines to the tune of .2 and seeing

similar percentage declines for the ftse mib and ibex 35. for european markets, we're close to the two-week low. we are focusing back on earnings, vestas shares rallying after the wind turbine giant reported better than expected second quarter operating profit. the group also named a new ceo. shares in heineken are on the downside this morning. europe's brewers in focus definitely as heineken reported sales and net profit that fell shy of expectations and delivered a weak outlook. shares are off by 3.75%. meanwhile, carlsberg posted nearly flat operating profit in the second quarter. that also missed forecasts, but the danish brewer backed its full year guidance. shares aren't pretty much flat now after down by as much as .8% earlier on in the session. in the bond markets, yes, we saw yields coming down elevated levels in yesterday's trading session. this has to do with some certainly some bargain hunting, also some safe haven flows into

treasuries, into bunds as well. the treasury yield sitting at 2.82%, back from those -- back below the levels we saw on monday's trading session. the ten-year bund yield is at 1.859% off those 17-month highs. in the forex space, we're seeing the dollar against the yen, gaining a little bit of ground sitting at 97 it is 46. now versus the euro, the dollar is -- has been seeing six-month lows, the euro dollar currently down by .2%. back below that 134 level. let's check in on markets in asia. adam bakhtiar in singapore. the word of the morning is stabilization after that big sell-off yesterday. >> yes, we're seeing things stabilize. i caution the fact that with the release of the minutes out today in the united states, investors are still very jittery and

nervous. you see behind me in the wall, the picture really mixed out here in asia in anticipation of fed tapering. as i'm speaking now, if you can kick off with emerging market space, we're seeing huge volatility once again. the indian market which had rebounded following losses the last few days, that gave way to deeper losses as we're seeing weakness again in the indian rupee versus the u.s. dollar. that has hit another record low as of today, even though yesterday we saw that currency rebound. that could be affecting the equities picture at this point in time, market still trading. deep losses, 258 points across the board there. indonesia managed to rebound from yesterday's two-day selling route that took the index down by 9 plus percent. indonesia's president said he's going to be unveiling a package of policies to address the inflation issue and job losses in the economy. he went on to say it is going to be hard to hit the growth target of 6.3%, even though those

currents did come up. we saw the markets rebound because of bottom fishing or bargain hunting had been happening. in the rest of the area, still a very fragile picture in the southeast asian region. even singapore hit across the board here. hang seng ending down. a little concern about the interbank market rates spiking temporary above that 5% target, so the banks entered softer, oil plays did well in shanghai. tokyo back in the black. largely because of the strength of the dollar versus the yen and also strength in euro versus yen. currencies again, want to allude to this because of the indian rupee still trading very volatile. look at that, down 1.5% versus the dollar, coming off the record intraday lows. apparently the statement banks and the custodian banks that have been buying up dollars very heavily, which is rather interesting. we'll keep an eye on that one. rupiah continues to weaken and take out the other currencies as well including the singapore dollar. some of the stocks we're

watching out for today, market reaction to earnings. haven't been great for bhp billiton with profits down 30%. australia market wasn't impressed. glencore an interesting trade that was off very heavily after posting that first half loss because of the massive writedowns on assets after they acquired xstrata. cnooc managing to rack up gains of just under 5% after its earnings beat expect takings and r and oil guidance for this year. even though we had gains in tokyo, one stock that lost a tremendous amount of ground was tepco, the operator of the fukushima daiichi nuclear plant. apparently 300 tons of water leaking out of the storage tank there. the stock ended down about nine plus percentage. they'll ratchet up the warning level to number 3. that was a big concern. a lot of nervousness ahead of the release of the fomc minutes tonight in the united states. >> adam, thank you for that.

we'll talk more about the fomc minutes and our expectations for that later on in the show. first, i want to bring you numbers from toll brothers. this, of course, is one of the leading u.s. builders of luxury homes. numbers look to be in line with expectations, at least as far as the ebs number goes. 26 cents a share. the company saw third quarter revenue s of 689.2 million. this is slightly lower than the forecast, which stood at 695.8 million. so maybe a small miss in terms of the revenue line. commentary coming from the company this morning is quite interesting. it sees -- it says, let me just bring this up for you, it says this recovery is real, and we are in the early stages of the rebound. now, we'll be talking much more about housing later on in the show as well. let's give you a look at

what's on today's agenda in the united states. july existing home sales are out at 10:00 a.m. eastern, forecast to rise 1.4%. at 2:00 p.m., the minutes from last month's fed meeting which could provide more clues about the fed's tapering discussions. joining us now is chris godding, head of global equities at cigna wells management. how are you ? >> very well. how are you? >> fantastic. what do you expect to hear from the fomc minutes given they're slightly outdated. do you expect any more specific clues on the time of tapering? >> the point about them being outdated is a good one. we have to put ourselves back in the mind set of a month ago essentially and the statement out of the fomc on the day was pretty straightforward. they will begin tapering if the economic conditions indicate that's required. and the economic surprise in the index has surprised to the upside. i would say the data is very supportive of a move towards

tapering. the question is the amount, is it going to be 10, 15 billion and that's probably just the nuance of the fine tuning of the expectations. >> now, the july statement certainly was more dovish than the market had expected and that may also tran spire into the minutes. do you believe that the minutes will have the power to take the mash et out of the rut that we're currently in, given that volumes have been incredibly low? what is it at the minutes that would continue -- that would spark a continuation in the rally? >> i think the mash rket needs see the central banks get control of the long end of the bond markets and that's where credibility beginning to wain. they can control the short end. but if you don't use the short end to control inflation expectations and potentially surprise the upside in growth, you lose control of the long end. that's what is happening in the market at the moment. liquidity is coming out of the system. that's probably -- that's a

certainty. so long rates are going up. and that's causing issue in the markets. there is very little at this juncture that the central banks can do to implement long rates if qe is off the table. >> chris, what may not be included in these minutes necessarily, but maybe a topic, you know, for the next fed meeting is whether they would actually hold off on tapering because of that big sell-off that we have been seeing across global markets. do you think the fed will actually be concerned about this saying that, the economy isn't as strong as we would want it to be or is that exactly what the fed wants? >> i would say a couple of months ago, and after the may 22nd announcement from the fed and we basically discussed the fact that it is more of a trial balloon to see how markets would react. i think the fed knows how the market is going to react. probably aren't surprised what they're seeing right now. doesn't stop them from actually pursuing the policy of reducing liquidity in the system, you

can't let the economy overheat, you can't miss the inflation targets and creates a much bigger problem further down the road. >> certainly the fed has been very adamant about the fact that there is too much froth in the market and they do want to pick any -- print any asset bubbles that could potentially be out there. so it could be quite happy with, you know, some of the levels that we're seeing in the market right now. >> yeah, i think they worry about things, but the market is focused on inflation expectations and there is a lot of leverage in terms of the ten-year yield, in particular with regard to how those inflation expectations will change. and any indication the fed is not moving or controlling inflation expectations means a lot of uncertainty with the ten-year yield. >> just very quickly, what is the level that you think equity markets would be happy with in terms of the ten-year treasury yield? is it 2.7, 2.6, certainly not 2.9. >> i think you have to get used

to 2.9. i think it is anywhere between 2.75 is the kind of range we're looking at depending on inflation expectations. probably closer to 3. >> chris, thank you for that. we'll continue that discussion later on. chris godding. let's look at today's other top stories, goldman sachs had a trading legend tuesday, resulting in several bad single stock and etf auction trades. while many of the trades may be canceled, they could cost goldman upwards of $100 million. in a statement, the bank says exchanges including cboe and nasdaq are working to resolve the issues and it doesn't believe the risk or potential losses will be material. shares in goldman in frankfurt are just marginally higher. jpmorgan is reportedly close to naming two new directors with background in finance and risk management. a decision will likely be made next month. the names of the candidates aren't known, but reports say that ceo jamie dimon has

extensive say on who is appointed to the board. they would replace david coat and alan footer. the financial times reports jpmorgan has hired a new york law firm to investigate its hong kong hiring practices. the firm will respond to questions from the s.e.c. about whether the bank hired children of key chinese officials to help it when underwriting business. jpmorgan shares in frankfurt are up by .5%. and we have been asking you, would you buy a driverless car? this after singapore unveiled first green and driverless transport shuttle in asia. alex tweeted, it would be nice to have the setting as an option when you're on a long motor way drive. keep your responses coming here on "worldwide exchange." get in touch with us by e-mail, worldwide@cnbc.com, twitter, @cnbcwex, or direct to me @carolincnbc. would you buy one? >> i would be interested. >> i don't know. i wonder if i would trust it. european woes have been

conspicuous by their absence in the run-up to the german election. why the silence? analysis coming up after the break. i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪ to experience the precision handling of the lexus performance vehicles, including the gs and all-new is. ♪ this is the pursuit of perfection.

welcome back to the show. these are your headlines this morning. markets await today's fed minutes for july, keen for clues on policy outlook. a policy package this friday in a bid to shore up growth and fight inflation. heineken shares lose their fizz after a mixed set of

earnings. carlsberg also sluggish in europe. a new bailout for greece is not the only option according to the eu economic and monetary affairs commissioner olli rehn. he's quoted as saying that he would not rule out fresh aid. but he added that extensions of current loans are also possible. a new deal for greece is also making headlines in the german press today. the german government official saying that a third bailout for greece would be smaller and carry less restrictions than past programs. this after finance minister wolfgang schaeuble became the first leading german official to openly state that greece's existing aid packages wouldn't be enough. chancellor angela merkel has sought to keep greece out of the election campaign, but the opposition has gone on the offensive with former chancellor gerhard schroder using his first official campaign appearance for the party to bring out the greek

topic. schroder joked that merkel might be wearing the wrong glasses accusing her of not telling the truth and misleading the public. still with us is chris godding, head of global equities at cigna wealth management. this is now a bigger election topic than it was before. this is certainly something that the public has seen coming. i mean, even the imf has warned about this funding gap for greece, a couple of months ago. basically it shouldn't be a surprise. are markets complacent about it? >> they expect to change from policy, the hard-line into the election has been to satisfy the german electorate. the markets are not going to put germany at risk, but ultimately there has to be some consegs alo concessions along the line for the system to work and germany play its part. >> the tax payer is not going to be footing the bill anymore. >> i think the taxpayer, if the

bailout plans is put into effect will be at risk, so that's the -- there will be a lot of discussion about that from if that's required in a -- if one of the countries has a structural issue with regard to debt. >> okay. chris, we'll leave it there. still to come on the show, with in release date for the x box, microsoft will have to pull something out of the bag. we'll talk about the clash of the consoles. [ male announcer ] it's time.

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sony says its playstation 4 will hit store shelves on the 15th. european gamers have to wait longer. they get the device on november 29th. it is already seeing strong demand from the ps 4 with over a million preorders. and its november release will put it head to head with microsoft's xbox 1 during the holiday season. sony shares gained slightly in japan, up by .5%. here to discuss the latest is

the game correspondent for ing.com. we still don't have a release date for the xbox 1. has microsoft already lost the race when it goes up against sony? >> i would say if this was a boxing match, microsoft is on the ropes. we have expected on several occasions for them to come back, with a strong reply to what sony said in their press conferences and yesterdays with a disappointment. sony came out with a glitzy, confident presentation, talked about fantastic games and investment in indy developers, bringing new games and experiences to their console. they also gave the release date. on the other hand, microsoft gave very little. they would get a free game to download with their console if they preordered which possibly signals their preorders may not be as strong as sony's because sony came out and said they had over a million preorders. we had no figures or information like that from microsoft, yet they announced a game for people who preordered. >> how significant is it that sony will be releasing the ps 4

in the u.s. before it releases it in japan? that is a break with tradition. >> i think it is a shift in the perceptions because sony has very much been focused on japan as their lead market. xbox won the console generation wars in the u.s. this time around. what will happen that places it in an ideal place in the u.s. for thanksgiving. and for the black friday market. it also positions it nicely in the uk and europe for christmas sales as well. a big battle. we don't know where microsoft is bringing the xbox 1 to the market. rumors indicate that will be at some stage, possibly earlier in november. that may be microsoft trying to steal the march, get a couple of weeks on sony. >> these are the first two big console launches. how important is the success of the two consoles for the entire gaming industry, given the threat coming from smartphones? >> it is interesting you say these are the two big console launches because nintendo launched wii u earlier this

year. but everyone seems to have ignored that as a console competing against those guys. but in terms of the market, there is a great feeling of confidence in germany and games con this week that the new consoles will bring back some kind of freshness to the video games market. smartphones have eroded the market for traditional games. all new models like free to play, not having to pay 40 pounds or $60 for a video game is enticing there is fresh ideas, good stuff coming to the xbox and playstation this year. >> could smartphones be a blessing in disguise. could we see sony and microsoft making money with smartphones and gaming? >> well, sony already released lots of their catalog classic games. there is every sign they might launch on other devices too eventually because the games are valuable. but smartphones have been a brilliant gateway into video games for people that may not have tried them. might put game on your iphone or google device and then you might

fancy playing a bigger experience on a video games console. >> thank you so much for that. are you heading to games con. >> i wish i was this year, but i get to enjoy it from the office. >> fantastic. still to come on the show, syrian authorities have denied reports that chemical weapons may have been used in an attack near damascus. details after the break. we'll leave you with a look at how the futures are trading on wall street.

welcome to "worldwide exchange." these are your headlines this morning. global markets are on the edge of their seats awaiting today's fed minutes which could provide more clues into the central bank's thinking about tapering. indonesia reverses its stock market rout as its president promises new measures on friday to shore up growth and fight inflation. investors pour out of heineken as the beermaker's first half sales fall short of expectations. the dutch brewer warning of a muted outlook. >> consumer confidence is still quite subdued, particularly in europe, and also in the u.s. on the other hand, you see also a kind of slowdown in some traditional for high growth in emerging markets like brazil and marria marginally more so in africa. >> carlsberg also reports the danish brewer keeping its

outlook unchanged as asian growth compensates for a sluggish european sales. the ceo telling this channel, europe will take some time to pick up. >> the spike maybe from a high level, the macro economy is getting a little bit invested in europe, it will take time before we start seeing that in the consumer markets. good morning, everyone. if you're just tuning in, if you're just waking up, thank you so much for joining us on the show yet again. here is how markets are faring ahead of the u.s. open. u.s. futures indicating towards a little more weakness for the dow, the nasdaq and the s&p 500. the s&p 500 snapping that four-day losing streak yesterday, bouncing back .4%. the dow was flat yesterday. we saw a rally in the retailer stocks, best buy, home depot and jcpenney rallying. we'll talk more about the retailer space in a few minutes' time. european markets are seeing a

little bit of weakness, some pullback for the ftse 100, the tune of .2%. some stocks trading ex-dividend today. still with us is chris godding, head of global equities at cigna wealth management. we have seen some reversals in the asian trading session, specifically with regards to indonesia which really got pummeled yesterday. as investors are pulling out some of the hot money that is flowed into the country as part of qe 1, 2 and 3, are they also pulling out the all important fdi? >> i think there is an element of that, yes. i think the -- part of the fti flows are a real couple of investment companies making investments in emerging markets. a lot of money chasing those kind of returns, the returns we have seen historically in the markets. so you see a reversal and some markets more vulnerable than

others and we talked about the fragile five, and the fdi flows and capital account balances, and the reliance on external debt, et cetera. so there is a lot of issues worrying investors who have been putting money into those markets. >> do you think we're close to a situation where we're going to be seeing a revisit of the 1997 asian crisis or these fears completely overblown? >> you know, that's a really good question, really difficult question, because the negative feedback loop is sometimes difficult to avoid. you talked about indonesia today, moving to defend the currency. those kind of moves actually do lead to some kind of negative feedback loop in the economy. so those -- a repeat of old style is quite possible. >> okay, chris, thank you so much for that. have a good day. chris godding, head of global equities at cigna wealth management. syrian authorities denied chemical weapons were used in an attack in the city of damascus. the assad regime dismissed the

allegations as, quote, totally false and unfounded according to the state news agency. yousef is in cairo. what can you tell us? >> this is still a developing story. what we understand is that there has been attack on several suburbs in damascus. and it could have been possibly a nerve gas attack, and then at least 213 people may have been killed according to the reuters sources that are being cited. now, it is important to note that both the disturbing footage we have been seeing and the casualty numbers cannot be independently verified at this point. now, the syrian state has, of course, denied that attack, say there is no truth whatsoever about the latest developments. no part in it. if true, it would mark a major escalation in the civil war in syria. we have serious implications as well and may spur some policy

decisions from some of the major powers, like the united states and russia, who, in recent weeks, have not quite responded to the demands of many within syria. carolin? >> yousef, meanwhile, european foreign ministers are arriving in brussels to hold emergency talks on the egyptian crisis. some of the topics on the agenda include the scaling back of economic assistance and ban on weapons sales to egypt. yousef, let me bring you back in. obviously this is a tough balancing act for you, because on the one hand, they certainly do want to put pressure on the regime, of how they handle this conflict. on the other hand, they want to continue to support the democratic process in the country. what do you think will come out of that meeting? >> it is tough to tell, carolin. that's what experts are telling me because if you look at the reality on the ground, the amount of leverage that both the united states and european unions still have is limited.

and by cutting any of that aid or looking at revising bilateral relations, that little influence could be jeopardized. that's why the united states has been reluctant in cutting financial assistance to the egyptian military to the tune of $1.3 billion. and eu egyptian relations are quite strong as well. trade relations are important. egypt is the most important trade partner in this part of the world for the european union. looking at combined trade volumes of 24 billion euros in 2012. that has increased over the last few years. and as well, for egypt, european union accounts for 24% almost of total trade volume, so there is a lot at stake here, little to say as well on the 6.7 billion euros or dollars in aid pledges that could be curtailed, so we have to see how much european union is willing to cut down on that. carolin? >> yousef, thank you for the updates on syria and egypt.

coming up, earnings from target and lowes could shed some light on how the u.s. consumer is feeling this summer. we get the retail details. that's next. [ male announcer ] come to the golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. ♪ this is the pursuit of perfection. a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪

a pair of u.s. retail earnings out before the opening bell target and lowe's could

offer a fresh pulse check on the health of consumers and housing market. courtney reagan is live at cnbc's headquarters with more. court? >> good morning to you, target's second quarter results may offer some insight into how shoppers are dealing with the impact of higher payroll taxes and other household budget issues. the discount chain is forecast to earn 99 cents a share, down from $1.05. on revenue of about $17.3 billion. analysts will be listening for comments on the book to schoack season. target results come after several retailers reported disappointing numbers and gave bleaker outlooks citing consumers reluctance to spend. last week walmart said it expects economic strains in the u.s. to squeeze shoppers. some are shifting spending to bigger ticket items, cars and homes. that's leaving less for them to shell out on nondiscretionary

items like clothes. target's stock performed pretty well, up about 15% this year. lowe's first quarter numbers are likely to show the home improvement chain continues to benefit from the rebound in the u.s. housing market. they're forecast to earn 79 cents a share on revenue of just over 15 billion. analysts will be interested on whether consumers shopped more during the important spring and summer months and looking for news on how lowe's revamped pricing strategy is paying off. the company's return to offering what it says are permanent low prices instead of the temporary discounts. lowe's shares like rival home depot have been on a tear. the stock is up 24% year to date. looks like we're up just under 1% now, ahead of those earnings and home depot reported very strong results, same store sales up 11% yesterday. back to you. >> thank you for that. let's continue the discussion with joe feltman, senior research analyst at the telcy advisory group. do you think target will fare

any better than some of its competitors which had been disappointing of late? >> well, we do think target will be a little bit better, but not by much. we're expecting same store sales of around 1.5%, which would certainly be better than what walmart had posted last week, but, you know, it is still below the initial expectations heading into the quarter when the company had given guidance to do same store sales of 2% to 3%. the trend has been below expectations so far this earnings season. >> joe, much of target's fortunes hinge on its expansion into canada. and that has been off to a rather disappointing start to put it mildly. what is target doing wrong in that country? is the consumer really all that different in canada versus the u.s.? >> well, i think you just hit it on the head, the consumer in canada has slowed down and there has been some pressure there, combined with the fact that it is really difficult to open a significant number of stores all

at once. 25 stores a quarter or so. and to get it right, to work out all the kinks to make sure you have the right inventory levels, the right pricing, the way you market to the canadian consumer is different than the u.s. i think they took on a lot. i think the expectations were very high heading into canada for target. and i think they have done okay. but the expectation was much higher than what they have been performing at, it seems. >> joe, let's cross over to lowe's because home depot's numbers were obviously really good yesterday. the housing market is improving, unemployment is falling, that's got to be a boon for lowe's as well. >> it is benefiting like home depot. anything home related lately has been doing well. and, you know, home depot and lowe's are really at the center of it where it is people that generally own a home, they're not totally reliant on people buying and selling a home. if you live in a house and something breaks, you go out to home depot and lowe's and buy

it. the trends have been good and the whole category, we're expecting at least a 5% comp out of these guys this morning. and, you know, based on what the better than expected results from home depot, i think we'll probably get that from lowe's. >> okay. joe, thank you so much for that. joe feltman, senior research analyst at the telcy advisory group. these are your headlines this morning. markets await today's fed minutes for july, keen for clues on policy outlook. indonesia's president sent down a policy package this friday in a bid to shore up growth and fight inflation. heineken shares lose their fizz after a mixed set of earnings. carlsberg also sluggish in europe. let's look at today's other top stories. goldman sachs had a trading glitch on tuesday, resulting in several bad single stock and atf option trades. reports say while many of the trades may end up being canceled, they could cost goldman upwards of $100 million.

in a statement, the bank says exchanges including cboe and nasdaq are working to resolve the issues and it doesn't believe the risk or potential losses will be material. goldman shares in frankfurt are just off fractionally, just higher fractionally. jpmorgan is reportedly close to naming two new directors with background in finance and risk management. a decision will likely be made next month. the names of the candidates aren't known, but reports say ceo jamie dimon has extensive say on who is appointed to the board. they would replace long time directors dana coat and alan footer. the financial times reports jpmorgan has hired a new york law firm to investigate its hong kong hiring practices. the firm will respond to questions from the s.e.c. about whether the bank hired children of key chinese officials to help it win underwriting business. a quick check of jpmorgan shares in frankfurt, up by .5%. u.s. attorney general eric holder says the justice department is close to making

decisions on several probes involving big financial firms. holder tells the wall street journal he plans to announce new cases stemming from the financial crisis in the coming months. holder says, quote, anybody who is inflicted damage on our financial market should not be out of the belief they're out of the woods because of the passage of time. the obama administration has been criticized for not bringing criminal charges against any top executives over the 2008 market meltdown. deliveries of aluminum to warehouses run by big banks and trading firms have reportedly plunged this summer. the wall street journal says the slump reflects the retreat by banks from the once lucrative commodities business amid stagnant markets and increased scrutiny. shipment was down 79% this month versus two months ago. let me just bring you

numbers from bank of communication, if you bear with me just a second. bank of communications says second quarter net profit was at 17.1 billion yuan. first half net profit stood at 34.8 billion yuan. this is against a forecast of 34.39 billion yuan. just a tad better than forecast. bocom says newshamy stays as chief of the bank. just how smart could your living space be? after the break, we look at the microapartment boom taking place in some u.s. cities. we'll be back in two. just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes.

[ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before.

welcome back to the show. want to bring you the latest on syria. according to dow jones, the arab league urges the u.n. inspect syria attack side immediately. britain says it would be good to raise the issue of reported chemical weapons attack on syria at the u.n. security council. britain urges syria government to allow u.n. inspections, immediate access to the site of reported chemical weapons. now, we ran a report on the latest breaking news in syria around ten minutes ago and we want to clarify we're not reporting that there is a link between the conflict and syria and egypt. european markets are seeing a little bit of a pullback. the ftse 100 off by .8%. stocks trading today, but overall seeing some stabilization after yesterday's bigger losses, the xetra dax is off by a third of 1%. u.s. futures taking fair value into account, the implied open signaling yet another negative start to the trading day after

the s&p 500 snapped that four-day losing streak in yesterday's session. the dow was flat to slightly negative in yesterday's session. how do you make money in these mash ets? here is what some of the experts have been telling us this morning. >> there will be an announcement either in september or october and basically there is also maybe a cap then for bond. ironically everybody says bonds have to go up. maybe you'll want to own some inflation protected bonds at that stage. >> we have been favoring buying euro instead of aussie taking a dollar risk on the back of tapering challenge. it is going up every single day. we won't hear they'll start tapering assets.

we may see more hawkish comments from the fed saying -- >> they worry, but i think the market is focused on the inflation expectations and there is a lot of leverage in terms of the ten-year yield, in particular with regard to how those inflation expectations will change. and any indication the fed is not moving or controlling inflation expectations means a lot of uncertainty with the ten-year. a look at what's on today'send. existing home sales at 10:00 a.m. eastern, forecast to rise 1.4%. at 2:00 p.m., the minutes from last month's fed meeting, which could provide more clues about the fed's tapering discussions. earnings, we already heard from toll brothers, which saw third quarter results boosted by higher home prices. others include lowe's, smuckers, staples, american eagle and

madison square garden. after the close, we hear from mulmu l hewlett-packard and l brands. a hot new trend in the u.s., microhousing developments have been cropping up across the country as demand for smaller low cost living spaces begins to skyrocket. eric bungy is partner and joins us now. thank you for taking the time. what do you think is the biggest driver behind the success of these micropartners. is it the challenging economic times or sociodemographic trends and urbanization? >> clearly it is a bit of both. there are trends throughout the developed world towards single family households and these have been driven by higher education, higher standards of living and a lot of trends, you know, aging population and so on. we see this across many age groups and income levels as well. >> do you think that as interest rates are rising, especially

mortgage related interest rates are on the rise, do you think there will be more demand for these kind of microapartments because, you know, consumers will simply not be able to afford the housing anymore? >> absolutely. we see this as part of the global trend, since the second world war, with nuclear families and apartment size average of about 983 square feet in 1950, this rose it a peak and we're seeing a decline. people have been adapting since the crash, absolutely. >> a practical question, eric, how can you squeeze all of your stuff, especially if you're a female, how can you squeeze all of your stuff into a microapartment? i just don't see that working out. >> first of all, you should have less stuff, as we move forward, but that's one of our challenges as architects, we have been designing in this pilot project we're offering a lot of storage and a lot of ceiling height. when you take away so much area, you need to give something back.

so 9 foot, 10 foot ceilings in our case and storage space. >> eric, who is set to make most money off this? can you name a couple of developers who have seen that trend who are movers in this space? >> well, we have been getting a lot of calls, not just from developers, but a lot of people who want to be on the waiting list. i'm not sure about particular developers. we know there is a lot of anticipation for the zoning codes to change. if our pilot project is successful, that's what is expected to happen. it is a very expensive building type to build. it is a building of bathrooms and kitchens, but i do believe there is a new large segment in the market. >> americans are really used to living in big houses, used to wide open spaces. do you think this is just a fad or do you think that americans will change their mind set about how they live and how they live in open spaces?

>> well, you know, maybe big cars historically were a fad. i think maybe big homes as well. we look back at this, and couple of decades, but we simply can't, you know, continue to have vibrant and dense cities if we have large homes and this is putting a lot of pressure on transportation infrastructure and, you know, contributing to urban sprawl, unsustainable. i think we'll have to change and adapt, but, you're right, people have certain expectations that will have to change. >> eric, thank you for that. er eric, i wouldn't know where to put all my decoration. the rupiah, it extended its fall to a record low of 64.52 per dollar. now india's central bank is likely selling dollars via state run banks as the rupee hit another record low of $64.52. according to reuters. that's it for today's show. i'm carolin roth.

thank you for watching "worldwide exchange." we'll see you all tomorrow.

good morning. today's top stories, the markets in a wait and see mode ahead of the fomc minutes. goldman sachs trading glitch could cost more than $100 million. and facebook wants to make the internet accessible to two-thirds of the world, so that we can watch 75% of that that is not yet connected. it is wednesday, august 21st, 2013 and "squawk box" begins right now. ♪ good morning, welcome to "squawk box" here on cnbc. i'm andrew ross sorkin with joe kernen, kayla with us today

sitting in for the vacationing becky quick. morning headlines. the big one being that the fed will release its minutes from its last fomc meeting at 2:00 p.m. eastern time today. a bit of disagreement, of course, among policymakers about the timing of the expected taper. that's what investors will be looking for when they look at the minutes, hints on what the fed's next move may very well be. the kansas city fed, they're kicking off their annual symposium in jackson hole. steve liesman is there and he'll join us in a couple of minutes. later, not a couple of minutes, 8:00 eastern, to talk about that. the one person, by the way, not there, ben bernanke, we'll talk about why perhaps with steve as well. also as for the markets ahead of the minutes, look at u.s. equity futures now. the dow, red arrows across the board, opened off 23 points. s&p 500 off about 4 points and the nasdaq off close to 11 points. the dow, we should note, closed down just a little bit yesterday. losing gains in the final minute, and that means the blue chip index i