. welcome to "worldwide exchange," these are your headlines from around the world. prospects of a civil war in iraq send oil prices to a 9-month high. stocks fall as militants move toward baghdad and president obama says a u.s. intervention is on the table. shares in uk house builders fall to the bottom of the ftse as the bank of england governor mark carney warns a rate hike could come sooner than expected. the risk of deflation in europe is low. that's the message from bank of japan governor kuroda.

takes it one step further saying the central bank is barking up the wrong tree. >> it is, in my view, not -- the discussion in my view is irrational. and, can the thrill of victory soothe the anger on the streets of brazil? fans celebrate the home team's 3-1 win against croatia after demonstrations break out in the major cities. you're watching "worldwide exchange," business news from around the globe. well, a warm welcome again to "worldwide exchange." we've just got the monthly all market report out. opec oil supplies inched up by 85,000 barrels per day to 29.99 million barrels per day. in may, they are raising the

call on crude oil by 150,000 barrels per day for the second half of 2014 to an average of 30.9 million barrels per day. they're saying that global oil demand is set to increase sharply from a low of 91.4 million barrels per day in the first quarter. so they are expecting to see an increase, sharp increase, in fact, in oil as far as iraq is concerned, they're saying the latest defense in iraq may not for now put additional iraqi oil supplies immediately at risk. so that's the latest from them. they're also forecasting demand for oil in the second half of 2014 to 30.9 million barrels per day. now, neil atkinson joins us now. neil, a quick comment there. obviously, we've got the situation with iraq right now, that supercedes to some degree this iea report. but they're saying we're not seeing a risk of supply damage.

>> yeah, morning, julia. well, most of the capability in the certain part of the country, that remains under the control of the baghdad authorities. this is a fast-moving situation with, however it turns out, iraq is clearly not going to remain the same political entity that it is today. there is a severe danger it'll fracture into three pieces, the kurds, sunnis and shias. today, there's no indication it'll fall sharply. but as the weeks unfold, that could change. >> and even though if we're not expecting any kind of supply restriction as far as the situation across the area is concerned, talk to me about the oil markets right now. how much higher do you think sentiment can push prices? >> well, if there's a severe escalation of the iraqi crisis, sky's the limit.

we've got brent up to $120 barrels a day. the potential for it to rise significantly higher to 120 or even higher if iraqi exports were to be severely restricted. that is a very strong possibility. but events will foretell. i've been with the opec ministerial conference this week, and even before the escalation of the iraqi crisis, which happened as we were all sitting in vienna. we were looking at a higher requirement of production from the opec member countries, as you mentioned a second ago. and even without the escalation in iraq, we were looking towards the possibility of higher oil prices in the rest of 2014. >> so message that the iea are suggesting perhaps here, too, given the increasing demand they're expecting. we'll leave that there and i'll bring viewers up to speed of what we're hearing as far as the iraq situation is concerned. president obama said he's not ruling out air strikes to aid the fight against insurgents. marking a potential u turn after pulling u.s. troops out two years ago.

>> i don't rule out anything because we do have a stake in making sure that these jihadists are not getting a permanent foothold in either iraq or syria, for that matter. >> republican senator john mccain criticized the obama administration saying there was a lack of foresight in troop withdrawal. >> it is clear that this decision of a complete pullout of the united states troops from iraq was dictated by politics and not our national security interests. i believe that history will judge this president's leadership with the scorn and disdain that it deserves. >> tensions have escalated across northern territories as radical jihadist group isys continues the push into the iraqi cities. launching air strikes, but reports suggest insurgents are steadily advancing toward

baghdad. now, speaking to us on the phone from dubai. first, yousuf, give us the latest on the situation and what you're hearing. >> well, julia, that's let's start off, the city of kirkuk which is a strategic oil hub, as well. you have the pipeline that goes to turkey, which is offline at the moment, but it's important in terms of refinery and other infrastructure. that town is in the hands of the forces which are kurdish fighters. and the central government has pulled out of that town. now, as you mentioned, still on the offensive is what we've heard from ihs, that they would continue to exploit the momentum to seize new territory. and we understand that a smaller town outside of baghdad going by was captured, as well. again, some of the reports are sporadic and not all of them line up necessarily. so all the information at this point we are taking with a grain of caution.

the head of the political mission in iraq, the u.n. security council just hours ago, he said that fe helt that the central government was strong enough and in force in the capital to prevent any loss of baghdad. now has been on the defense since the beginning of the year end. this is not an organization that's very pr savvy, julia. it's a faceless organization led by a name by a man, if you look him up on google, you won't find but one pixlated image of him and no real video of him speaking, either. and his spokesperson only released an audio message asking followers to march on to baghdad, even though cnbc could not independently verify that. and just to pick up, as well, on what neil said in terms of the oil infrastructure in the south near export terminals near major oil field and said that any

disruption should be contained. but if you think of the example of libya where you had the collapse of state sovereignty and state control, you quickly had oil infrastructure becoming the target. and that could be a scenario if it continues to march forward to other parts of the country, which at the moment is still not happening. and then you have the minister looking, security council, looking for the international community to take action. and there is a precedent. earlier in the year, we had islamist threatening the government, put through a resolution and the -- and it has happened before, it can be done. but you have to round all the political parties around one table and get everyone to agree. and what is a multi-facetted complex proxy conflict happening now in the very heart of iraq.

julia? >> thanks so much, yousef. stay right there, i want to come back to you on that, but first, i want to ask neil about the libyan situation and the parallels. >> it's a very good point. yes, at first in libya, after gadhafi fell, oil production fell for a while, but it rebuilt quite strongly before eventually collapsing again. it's a question of who has control. i know the moment there isn't a threat to the southern export infrastructure. yes, yousef is quite right. yes, we could have a libyan situation. we're probably going to have a libyan situation anyway with a division between the kurds and the shias and the sunnis. and the prime minister of iraq is in danger of ending up becoming the mayor of baghdad. >> moving from a failing state to a failed state. quick question. we've obviously seen quick comments from president obama overnight suggesting nothing is off the table in terms of potential support.

i've also seen reports that iran could be sending up to 10,000 troops, special forces to potentially help iraq with the situation right now. what's the risk this actually escalates? >> well, there is the risk of escalation for sure. you have to keep in mind that the iraqi central government under prime minister maliki is very close to iran, they've gotten a lot of support over the last few years, and they are at odds, though. not, let's say with the american administration, but the rich powers in the oil-rich gulf. i've been following that story very, very closely. any increase in support to the central government might be met with resistance from other parts of the middle east who are not necessarily in agreement with the dominated central government in iraq. they may make a stand or increase their support to other factions opposing the central government there. any increase in support.

the only way to resolve this, i think that's what analysts are making very, very clear, you have a change in the way you approach the political situation within iraq to create a really inclusive government that's a lot easier said than done because it's not just a central government that's pushing away the other faction. the other faction, they don't want to have anything to do with the central government. so you have your semiautonomous kurdish in the north and the sunni heartland of the province on the adjacent region, as well. unless you resolve that, any solution is going to be very short-term. >> yousef, thank you so much for your points there. and neil, i know you were nodding vigorously there, but we have to wrap up. we have to finish here. thank you so much for your input. and, in the northeast of iraq, as we were mentioning there, kurdish forces have taken control of the oil city of kirkuk saying the government forces have fled. later in the show, we'll talk to the high representative to the

uk off the kurdistan regional government to get her take, too. well, as we were just talking there, of course, key element of the caution that we're seeing in sentiment right now in the markets is because of the situation in iraq. we've also had reports of tanks crossing the border from russia into ukraine, too. that going on, of course, while the world eyes are looking out for us. in addition to what else comes up next week, of course, we've got the fed meeting next week also. right now, stoxx 600 around .2%. not so excessive right now. i guess it is also friday, low volume trading, too. we've got the german and uk markets losing around .5%. in the uk, it's the home builders losing ground. we're going to be talking about that very shortly in particular. let me give you a look at how bond rates are going right now. all the focus, as always on the

u.s. markets in particular. we saw the u.s. ten-year breaking down, just shy of 2.60 yesterday in trading. that's the level right now. portugal, too, another interesting one. the bailout yesterday afternoon saying, look, we're not going to add further austerity as per the constitution. we don't need the cash. it was 2.6 billion euros. the dollar on the back foot after the retail sales data yesterday, no change there. we've got euro/dollar slightly higher, 1.3574 the level there. i'll mention sterling. we're talking about this 1.6840 yesterday, following the speech yesterday, and we're seeing the markets pulling forward the likelihood of rate hikes for the uk in particular, too. and that market, obviously, the sterling rate significantly higher, 150 picks over 24 hours. i'll bring you up to speed completely with that. the governor of the bank of england has given his strongest indication yet that the era of

record low interest rates may be coming to an end. mark carney warned those betting on a rate increase around april, q-2 of next year, may be in for a surprise. >> there's already great speculation about the exact timing of the first rate hike. and this decision is becoming more balanced. it could happen sooner than financial markets currently expect. but to be clear, the mpc has no preset course, the ultimate decision will be driven by the data. and at this point, it's safest to conclude as the mpc has, that the remain scope for the spare capacity to be used up before policy is tightened and that a host of labor market capacity utilization, pricing and wage indicators should be watched closely to determine how that slack is evolving. >> this comes as concerns grow over a house price bubble with

mark carney calling it, quote, the greatest risk to the domestic economy. the uk government has responded with new powers to the central bank to restrict mortgage lending. george osborne told the audience financial stability could be at risk going forward. >> if london prices were to continue growing at these rates, that would be too fast for comfort. and the rates of price rises is now beginning to spread beyond london. across the country, the ratio of house prices to incomes is high by historical standards. and while average loan to value ratios fought, new lending well below normal. average earning to income ratios have risen to new highs. let me spell it out, does the housing market pose an immediate threat to financial stability today? no, it doesn't. could it in the future? yes, it could. especially if we don't learn the

lessons of the past. >> shares in britain's home builders slipping into the red following the chancellor's comments on curbing mortgage lending. two of the biggest decliners in europe. this is osborne and london mayor boris johnson reportedly set to unveil new measures to ease housing pressure in london including addressing supply. now joining us to tell us the details. whoever said carney was a dove, the ultimate pragmatist, isn't he? >> yeah, he's a good politician. and in the middle of a very, very long speech came this bullet about interest rates for the last year, he's been telling us, actually, the markets are getting it wrong. we're going to keep interest rates low. the bank's own forecast, suggestions from the inflation report was that interest rates wouldn't begin to rise from these historically low levels until april of next year. now, people are talking about

november. now, why is this? we have had data for the last six to eight months, increasingly good. we know that gdp is now at levels that surpass the pre-crisis peak. so we've recovered much of the momentum in the economy in the british economy. employment has picked up massively. we don't have things like wage inflation. which is a very strange thing to have on the one hand, you have huge employment pick up, on the other hand, you don't have wage inflation. that's a strange data mix. but you have got increasing pressure about the housing market. >> right. >> so we knew that they were going to do something in the fpc, they're meeting next week. and the -- the chancellor of the uk said was we're going to give the bank of england new powers to limit the way how much people can borrow. whether it's in relation to their incomes or in relation to the value of the home, we're

going to put in these massive macro prudential tools to make it harder. that's why you're seeing house builders crash this morning a bit. not only because the governor has raised the specter of interest rate rises much earlier than people predicted, but because we're going to see changes in the mortgage market already, as soon as a couple of week's time, when the announcement for the all-important meeting will be made. >> as far as forward guidance is concerned in doing what -- exactly. >> what forward guidance. >> more forward guidance. that went out a long time ago. yes, the -- >> he's guiding on rates. look at the move in the markets. 15 basis points, from the curve, that's still guiding the market. >> and there'll be lots of people saying, look, sterling's a problem in the ux k economy because we have this massive deficit, massive trade deficit, hurts our exports. but yesterday, he said doesn't matter. and as you said, very turn

around policy. >> i'm getting in front of the curve. thank you. we'll see you a little bit later on in the show. rating agency fitch has reiterated the double-a plus rating. pointed out that the fiscal deficit review. now, on today's show, the world cup craze begins. we'll give you the round-up of brazil's opening games as the country gets off to a winning start. how unexpected. now, if the world cup hasn't gripped you, then maybe superstition will. it's friday the 13th. the market is full of dark magic, as well. are you also a china bull or bear? we'll discuss whether reform will happen despite skepticism from investors. and finally, how many

smartphones do teenagers go through? i bet it's more than you think. we speak to teen vogue who says it's more of a birthright and not a privilege. stay with us, we'll be back in two.

croatia threatened to spoil the party in brazil. after a lengthy opening ceremony featuring j.lo and pit bull. they took an early lead through an open goal. then turned the game, equalizing from the distance after half an hour. the game then turned on a controversial decision by the referee when fred went to the ground with minimal contact. then converted the spot kick. the game was rounded off by chelsea's oscar and injury time when he scored a final individual effort, beating the goal keeper there. football fans will be able to fill their boots with ten games scheduled over the next three days. mexico and cameroon. spain and holland, and chile and australia will round off the action. english high stakes will be a wash with more drunk people than

normal on saturday as england takes on italy. and greece and uruguay and costa rica. much of the attention on the pitch. admitted it's likely to be in poor condition with pictures showing numerous sandy patches. there are four further games on sunday, including one of the tournament's favorites, argentina. protests broke out in at least four brazilian cities yesterday including rio de janeiro. demonstrations have been widespread in brazil and the last year with many rails against the cost of the tournament saying the estimated $11.5 billion could have been better spent elsewhere by the government. now, the bank of japan left the monetary policy unchanged as

expected delivering an upbeat assessment of the domestic economy. the central bank's governor added that growth abroad is also continuing to recover and europe is at low risk of falling into deflation. japanese prime minister shinzo abe saying he hopes to cut corporate tax below 30% over the next few years. now, joining us is the senior economist of the research institute. martin, we'll start with kuroda. one of my favorite lines was, even if exports are weak, growth could be strong if domestic demand surprises on the upside. i look at the latest wages report, declining by as much as 3.1%. and i worry about the recovery in private demand. >> well, so far, the bank of japan remains quite optimistic and basically in the markets we share that view. so far, the run-up in the beginning before the sales tax went up was extremely strong.

and what we are seeing now is a drop that is balanced by expectations that the worst is basically over from that and households are buying again. we see a big drop, of course, in incomes on the household side. but that is related to the sales tax going up. overall, the outlook is positive. >> abe's comments about getting corporate tax rates below 30% over the next few years. would've quite liked to have him tied that down or at least set out a more definitive path for corporate tax rates to come down, wouldn't you? >> well, now that is really the very important part today. we have been waiting for the government in terms of structural reforms already for more than a year. and so far, we got little things here, little things here. and there will be a lot of tiny structure reforms that will have a strong impact over a period of five to ten years. what we need is the domestic economy moving forward.

and households have done what they could be doing. they have been buying, they have swallowed a tax hike. and now, there is very little that could be done on the household side in terms of buying even more. but what we need is companies in westing. and that is related to -- needs to get some boost here, some incentives, and lower taxes are very big boost. and this is also the government policy, the government can do immediately for the next year, and for showing companies, as well. it is a worthwhile location in the future. >> let's bring it back to markets. the positive today, we don't need to add more stimulus as far as the bank of japan are concerned. if we look at the situation as a result of qe, they've effectively zapped liquidity from the bond markets right now and leaves them seemingly without an exit. i appreciate that's a long way down the road, but how do they solve this situation? >> yeah. and that is the situation we are looking at here in the markets today. on the surface, everything looks basically fine.

the problem is, the surface is frozen. we have zero liquidity in the bond market. the only buyer is the bank of japan so far. any bank and any trader wanting to move is basically producing major price signals that are very, very hard to handle if anything goes wrong. this is why the bank of japan is also stressing that the overseas environment is fine, also, asia looks a little bit tricky and everybody's in a difficult situation. so here the point is really the government needs to move and the corporate tax hike. this is the long-term move that breaks the surface. and the ice on the surface. >> martin, thank you so much. martin schultz of the research institute. great to speak to you. still to come on the show, nothing to see here. former ecb board member.

you're watching "worldwide exchange," business news from around the globe. prospects of civil war in iraq send oil prices to a 9-month high. stocks fall as militants move toward baghdad and president obama says a u.s. intervention is on the table. shares in uk as house builders fall to the bottom of the ftse as mark carney warns a rate hike could come sooner than expected. the risk of deflation in europe is low. that's the message from bank of japan governor kuroda.

former ecb board member takes it one step further saying the central bank is barking up the wrong tree. >> it is, in my view, not -- and can the thrill of victory soothe the anger on the streets in brazil? fans celebrate the home team's 3-1 win against croatia after demonstrations break out in the major cities. so we've had some uk q1 construction output data, revision up to 1.5% quarter on quarter from 0.6% estimate. that's a revised 1.5% quarter on quarter level. good news on the construction side. not helping the house builders, of course, today, after the mansion house comments. you can see those down now over 4% in the case of persimmon.

under pressure, we've got the situation, of course, concerning investors right now in iraq, significant news, too, it seems on the russia/ukraine situation. tanks reportedly crossing the border from russia to ukraine also. i think keeping investors very much on the back food right now. and the bond market's focus remaining on the u.s. ten-year dropping below that 2.66 yesterday in the trading session off the weaker than expected retail sales number. right now trading at the 2.60 level. the dollar on the back foot overnight in the trading session. euro/dollar, but all the folks on sterling with carney suggesting rates could rise sooner than expected. almost 200 added in the last 24 hours. now, the european central bank, the imf and the oecd are all taking part in a quote irrational discussion about the fear of low inflation.

this according to the former ecb board member. he was speaking exclusively to annette. we know he's a hawk. we know why he resigned his job. was there anything surprising in what he was telling you? >> well, actually, i thought it was surprising that he's already seeing bubbles in the equity markets and that also he's saying that it will be almost impossible to actually unwind those additional measures from the ecb without causing major havoc on the markets. that is on the sidelines. and while not that much surprisingly, he wasn't on one page. on, with regards to what the ecb has done last week. so he doesn't really buy these unconventional measures. and he also thinks that these more easing buyers, which we still have with the ecb, is actually overdoing things. and that is mainly because his

assessment of inflation is a little bit different than the assessment of the ecb's. so take a listen of what he had to say about the threat of deflation or if there's no threat at all. >> we are in a period of low inflation. i would use a totally different term which i miss in the public discussion. price stability. we live in an area of price stability now. low inflation, price stability will boost real disposable income and will help to foster private consumption. this is good news. however, imf and oecb and also the ecb are participating in this discussion about too low inflation and inflation is too much below the target. by the way, the ecb does not have an inflation target. it has a definition of price stability, which is unchanged. it's below 2%.

with the aim to achieve inflation rate of below, but close to 2%. in the medium term. and in the medium term, we'll get closer to 2% again. one has to understand what is behind this low inflation rate. the decline of the consumer price index. it is mainly driven by the decline in oil prices and commodity prices, also the ecb argues that 80% of the decline in cpi is due to the decline in oil and commodity prices. and it is a reflection of the ongoing price adjustment, which is urgently needed. so one can really understand and explain why the inflation rate is so low. and, again, it is in my view, not a threat. the discussion all in all in my view is irrational.

>> and arguably he has a case because the deleveraging will take years for the periphery until it will fall to levels seen prior to the crisis or prior to the build up of that whole leverage. and also, it will actually probably demand problem when it comes to corporations. not so much we have been hearing from the ecb, but a lot of people think it's questionable rather that new ltro will really change things because at least this is one opinion that those enterprises still need to unload data, not -- they are not actually looking for a new one in order to spur any kind of growth. that is the bottom line of that interview for now. of course, he was also making

clear that he is not. he would not be in favor of further additional measures from the sides of the ecb. back to you. >> thank you so much, annette. you raise many points there. we'll pick them up. let's start with the deflation situation. because he said it was irrational. you say a deflation scare. it's nonsense, quite frankly. does that really matter. he took measures last week for other reasons. >> well, first of all, he's right. the inflation debate or deflation debate has gone off track. price stability is good. having said that, the european central bank is aiming as promised to deliver medium term an inflation rate of close to 1.8%. they are clearly below what they have promised. and as they do not inspect inflation to go up a lot over

the next two years, they had a good reason to act so. in that sense, draghi last week was probably right. >> but deflation or disinflation is taking place. actually financing costs are coming down at a greater rate than actually we're seeing in terms of inflation and prices right now. we're seeing competitiveness gains. it's exactly what we need in europe. it's a good thing. >> exactly. europe is very much on the right track. we have seen significant improvements at the europe periphery. two years ago when i said that, a few people believed it. now, perhaps, a few more people believe it. europe is on the right track. nonetheless, with inflation being below what the ecb has promised, the ecb had a case. i'm not sure that what the ecb actually did last week will make a lot of difference. but it's very clear it won't do any harm trying to ease the credit crunch for small enterprises in italy and spain. >> come in here. >> i have -- hello.

i have a question for you on the mandate. can it be that mario draghi tries to change the mandate of the ecb through the back door because it seems as if he was trying to take also care of broader economic matters here. >> well, i don't think he has changed the mandate in any significant way. he's clearly explained what he is doing is there to deliver on the ecb, inflation, close to but below 2%. that in order to get inflation from very low levels now to the level the ecb wants that in order to do so, he may have to do unconventional matters where we learned since lehman that there are situations when central banks have to do unconventional matters. i don't think it's a change in the mandate. he's not trying with rate policy or other policy to change overall european policies. >> you're probably going to tell me off in a few months for questioning this, but you do

seem to have rose-tinted spectacles as far as rome is concerned. crisis countries turning their back on such reforms because market tensions have eased. really? because everybody else seems to be talking about come plplacenc warning about it. look at italy. look at france, not enough. >> well, that's a very different point. you can say not enough, but you cannot say that france or italy are now doing less than they did before. the opposite is true. the oecd does a big annual assessment of structural reforms across all its members. and it's very clear the top performers in the oecb are the euro crisis countries. >> let me turn it back on you. if the markets hadn't have lent them a hand with rates coming down, would they have done more? would they have been forced to do more? that's the reverse psychology of your argument. >> put it that way. the european central bank has a

mandate price stability. it's not the mandate of the ecb to say push france into deep recession in order to see whether after that recession either france introduces bigger labor market reforms or elects president. the business of the ecb and the mandate is to deliver price stability, defined as close to but below 2%. the ecb is acting on its mandate period. >> he's buying time. >> by stopping, of course, it's buying time, but it's what they have to do. meet the mandate. >> fantastic to talk to you. chief economist, we can continue this into the break and for several hours, i'm sure. we have more from that exclusive interview on cnbc.com. now, ukrainian officials have accused russia of moving tanks and other heavy artillery into ukraine's southeastern regions. during a phone call with vladimir putin, ukraine's newly

inaugurated president called the move unacceptable. separatists in the region issued a statement confirming they spotted three tanks that had not said where they had come from. let's look at the agenda in asia on monday. we get investment numbers for may. fdi picked up in april. and china's targeted reserve ratio cuts that were announced for rural banks also take effect on monday. this was one of the few measures that it took to shore up the slowing economy. we also get wholesale inflation numbers out of india as the country braces for what is expected to be a poor monsoon season. thailand's military -- telling them to get with the program. the communications commission of the country has reportedly warned telenor it must comply

with the rules laid out by the industry. also threatened to keep the dtac out of the upcoming auctions for 4d spectrum. this comes after telenor says it was asked by the military to block access to facebook after the recent coup. mulling the sale of the asian oil and gas assets valued at around $4 billion. the nation's fifth biggest independent oil producer has been slimming down its operations in a bid to reduce debt and alleviate pressure from activist investors including carl icahn. now, still to come on the show, could george osborne's proposed crackdown on bankers harm the city of london? we hear straight after the break on what she thinks. stay with us. we started zya with the thought that the kid on the back of the bus might have a song that he has in his head

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you're watching "worldwide exchange." >> welcome back to the show. now, it made the headlines, but is the uk chancellor george osborne's pledge to make manipulation political offense just political grand standing? asked whether this is genuinely a good idea for the city. >> go around the world, what i'd like to see is we're well-regulated but we're not overregulated.

we're not stifled by regulation because that would interfere with the ability of markets to innovate and be efficient and do new things that would contribute to society. i think as far as behavior which actually is beyond the line in terms of criminality, then clarity of what is a crime, what isn't and the pursuit of that is important for us all and moves towards clarity in that area. we'll do nothing but good in terms of establishing the integrity of the uk. >> how do you do that, though? how do you establish clarity on what's a criminal offense and what isn't? >> well, i think the part of bringing fx into the auspices of the city regulator, the fca and

by adding it to the list of things. remember, libor was brought into criminal offense charges, back in the banking reform act. so this is extending powers. i think many people in many of these benchmarks would say that there wasn't clarity in terms of what information you could share, what information about client data you could share. and, obviously, we know that this massive probe going on with more than a dozen banks in the uk and globally, as well. and the city of london has really had a knock in terms of reputation. not only because of the financial crisis but because every year we have a brand new scandal, whether it's on the consumer side with ppi or whether it's on libor fixing or fx fixing. so only the second woman in the 825-year history who -- >> which tells you something. >> which tells you something. was talking about the fact that

the city does need to clean up its act, does need to create rules that are clear in the way that people trade so that then if they do, if there is wrong doing, there can be action. >> what about the idea of a personal find. i know a number of traders who when they saw that story about an individual trader getting whacked with multiple million fine were like, whoa. >> look, if a 7-year stint in jail is not going to deter you, i don't know what will. so there should be -- >> individual punishment. >> what else is a jail term? >> it was already that. there was already the risk of going to jail. >> well, no, because these -- >> regulations. >> these things, though, they doesn't used to be criminal sanctions against them. that is new. criminal sanctions against manipulation in the fx market. that is new. libor. we've had that for about 18 months. but all of those are new laws that create a kind of criminal dimension to this.

but it was an interesting night. >> manipulation is against regulations. back eight years ago, you could still be jailed for breaking the regulation exams or the details within that that you could do. so there was always a deterrent of jail, it wasn't so specific to an individual. and look where we are. i don't know. i don't know. i'm a skeptic. sorry. >> good points, though. thank you. we'll see you a little bit later in the show. portugal's constitutional court has rejected fresh austerity measures meaning the nation won't take the last tranche of the 70 billion euro bailout package. says the government doesn't think it's time to make decisions about substitute measures. and therefore won't need the final eight installment. they have said they've taken note of lisbon's decision. now joining me onset now is

kevin adams, at henderson global investments. kevin, good to see you. >> good morning. >> thoughts on this. >> yes, it's quite interesting, the way portugal have rejected this final part of bailout package. i think what's happened is interest rates generally for government bonds in the peripheral part of europe come down to such a level. the country's there and the governments there have now new options you wouldn't have had when rates were much higher. they are being forced to -- >> new options as in no need to -- >> step back a little bit from the programs of reform and the austerity that was previously being kind of forced on them by the markets. >> i was having this conversation. he was saying there's absolutely ei as far as the markets disagr? >> they're not being forced by markets anymore. is there moral hazard? well, they're given additional nily beflor

sovereign peripheral spreads in particular. how much of that's already in the price, particularly in positioning. i was wondering whether it's time to take a step back as far as it's concerned. >> there's a lot of money gone into peripheral bond markets and the tltro doesn doesn't start u september. so there is that kind of hiatus where, you know, there's a lot of money gone in there. we could see quite a bit of volatility, you know, if there's no follow through. and all those guys who have bought the peripheral bonds actually get, decide to get out of it. >> there's conditionality attached to these new inflows of money, as well. but some disagreement over whether or not the first two impulses of money will be allowed to be invested in the carry trade. there is a likelihood that we do see a pick-up again, surely in bond prices in the periphery and start to go down. >> it's likely. and certainly for the first two years, doesn't seem to be the degree of condition. essentially, banks can borrow for two years at relatively

attractive rates, pull that money into the peripheral bond markets. and they can go and take the carry there. but our sense is, the sovereign bond markets, the spreads have come down so much now that demand seems to be more in the corporate bond markets. and what we're seeing is substantial demand for corporate bonds in europe and peripheral corporate bonds in particular from italian banks in particular. and that's a sense we get. >> the corporate bonds rather than the sovereign debt aspect in particular. i want to ask you a question about relative yields right now. if i'm an asian investor looking at yields in the u.s., looking at yields as far as spain is concerned and see as far as the ten-year is concerned, spain trading through the u.s., if i look at the credit? >> i think you're right. >> where's the value. >> i think you're right. there's a fundamental dichotomy between kind of credit quality which we would argue be better in the u.s. and the uk compared

to peripheral europe. but the bond yields in peripheral europe are trading lower than they are in the uk and u.s. that's just the dynamics of the monetary policy. >> it's about inflation, as well. look at the five-year point for these two countries. you're not necessarily worried about that, you have to take everything in -- >> i think you have to make an all-around assessment. >> since when do fundamentals matter? >> at the moment, ecb have told us that interest rates will stay low for a long period of time. potentially as low as four years. and therefore, if you got a 4-year holding period for your european bonds and you're getting cheap funding, why wouldn't you go? whereas in the uk and the u.s. probably rates will be starting to move up, and carney told us last night that rates are likely to move up this year. well, do you want to own uk bonds relative even to the front end of europe in that situation? >> very, very quickly, i have to finish one line on how you make money in these markets. >> you've got to be really active and take a lot of

different positions, particularly different yield curve positions where we see value. >> perfect. kevin, great to chat to you. kevin evans, director of fixed income at henderson global investments. the u.s. marshal service plans to auction $18 million of bitcoin seized from the website last fall. silk road was used as a hub for transactions involving illegal drugs and other criminal activities. the site's owner also known online as dreadpirate roberts has been charged with drug trafficking and money laundering. the bitcoin sale will take place on june 27th. get there if you fancy some bitcoins. by the time millennials reach the age of 17, they will have owned on average five smartphones. i find that quite shocking. this according to a study by "teen vogue" that found 42% of views today are the driving force behind tech decisions at home.

we'd like to know, when did you get your first mobile phone? and what was it like? it was like a brick. that's how they started, wasn't it? if you want to join the conversation here on "worldwide exchange" get in touch by e-mail. via twitter or direct to me. some of those really old first mobile phones, if you've got one, send a picture, that would be really exciting. still to come on the show, reports of the pc's demise appear to be greatly exaggerated. stay tuned as intel raises the full-year outlook. we bring you all the details. huh...fifteen minutes could save you fifteen percent or more on car insurance. mmmhmmm...everybody knows that. well, did you know that old macdonald was a really bad speller? your word is...cow.

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welcome to worldwide exchange, i'm julia chattily, and these are your headlines from around the world. president obama says a u.s. intervention is on the table. shares in uk house builders fall to the bottom of the ftse 100 as the bank of england mark carney warns a rate hike could come sooner than expected. the risk of deflation in europe is low. that's the message from bank of japan governor kuroda.

taking it one step further saying the central bank is barking up the wrong tree. >> it is, in my view, not a threat. the discussion all in all in my view is really irrational. >> and can the thrill of victory soothe the anger on the streets in brazil? fans celebrate the home team's win against croatia after demonstrations break out in the major cities. >> you're watching "worldwide exchange" bringing you business news from around the globe. >> if you're just tuning in here, thanks for joining us on worldwide exchange. let me give you a look at the u.s. futures. and green behind me on the board. we've got the dow adding around 32 points, the s&p 500 by around four points. as far as the futures are concerned and about 11 points for the nasdaq in particular. the marks finishing the lows of the session yesterday, the worst day for the s&p 500 in a month.

and right now, the major averages all ticking lower on the performance for the week. that despite the bright spot, of course, which intel yesterday raising their guidance as far as the full year and the q2 on greater pc demand. pc demand, the story there isn't over, which is quite interesting. let's take a look at the european markets to caution right now on the situation in iraq. also caution over the situation between russia and ukraine, the reports of tanks crossing the border into crew crane, too. so all of these things right now are occupying investors' minds, taking these down across the board right now by .5%. let's take a look at the foreign exchange markets. the dollar on the back foot yesterday as a result of that weaker than expected retail sales number and the similar story, in europe today, too. 1.3570 the level, but really the story is all about what we're seeing in the uk markets. sterling gaining more than a point, yesterday, 1.6840.

after mark carney indicated we could see rate hikes comer sooner rather than expected. so the market might now repricing from the second quarter of next year to the first quarter right now. quick check on the commodities markets in particular, too. we saw 2% gains in brent yesterday, we're adding to that again trading just over $113.50 for crude. gains across the board for these commodities also. >> president obama said he's not ruling out air strikes to aid the iraqi government's fight against insurgents marking a potential u-turn after pulling u.s. troops out two years ago. >> i don't rule out anything. because we do have a stake in making sure that these jihadists are not getting a permanent foothold in either iraq or syria

for that matter. >> republican senator john mccain criticized the obama administration saying there was a lack of foresight in the troop withdrawal. >> it is clear that this decision of a complete pullout of the united states troops from iraq was dictated by politics and not our national security interests. i believe that history will judge this president's leadership with the scorn and disdain that it deserves. >> tensions have escalated across northern territories as radical jihadist group isys continued the push into the cities. reports suggest insurgents are still steadily advancing toward baghdad. meanwhile, the u.s. contractors have been evacuating employees due to security concerns. now, i just mentioned intel and they're raising the full-year outlook citing stronger than expected demand for chips used in corporate pcs.

the company now expects some revenue growth for the year versus its previous forecast of flat sales. intel may have been boosted recently by microsoft, ending support for windows xp in april forcing companies to upgrade their systems. intel rose 5% in afterhour traders. taking this year up just shy of 17%. we've just had some data out of eurozone this morning. 0.1% quarter on quarter. that 0.2% year-on-year right now. and minor gains, but at least some gains for the employment situation. brazil have overcome croatia in the opening game of the world

cup. despite scoring a goal in the first 11 minutes, the host nation bounced back with goals to win 3-1. now, football fans will be able to fill their boots over the coming days with 10-game schedules over the next three days. mexico and cameroon, spain versus holland is the pick of the games this evening, kicks off at 9:00 p.m. i may be watching that. and chile and australia will round off the action. as england takes on italy in the late match. the other games feature colombia and greece and uruguay and costa rica. much of the attention has been on the pitch. the groundsman has admitted it is likely to be in poor condition with pictures showing numerous sandy patches.

the games on sunday including one of the tournament's favorites, argentina who play bosnia. we were just showing you some quite dramatic pictures there of protests breaking out in at least four brazilian cities yesterday, including rio de janeiro and sao paolo. using tear gas to dispurse of the crowds in some areas. demonstrations widespread in brazil over the last year with many railing against the cost of the tournament saying the estimated $11.5 billion could have been spent far better by the government elsewhere. now, still to come on the show, markets beware, the bank of england governor says a rate hike might be coming sooner than people think. we'll be discussing right after the break.

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these are your headlines. oil prices pushed higher as civil war looms for iraq. bank of england governor mark carney suggests a uk rate hike is coming sooner than you think. and intel raises its full-year outlook suggesting strong demand for corporate pcs.

the governor of the bank of england has given his strongest indication yet the era of record low interest rates may be coming to an end. in his speech, mark carney warned those betting on an increase around april of next year may be in for a surprise. >> there's already great speculation of the exact timing of the first rate hike. and this decision is becoming more balanced. it could happen sooner than financial markets currently expect. but to be clear, the mpc has no preset course. the ultimate decision will be driven by the data. and at this point, it's safest to conclude as the mpc has that the remain scope for spare capacity to be used up before policy is tightened and that a host of labor market capacity utilization, pricing and wage indicators should be watched closely to determine how that

slack is evolving. >> joining us to give us more details. this is about getting ahead of the curve as far as expectations are concerned. >> look, a lot of people will say, hang on a moment, the governor has been telling us for the last year that interest rates won't rise as fast as the market expects. and last night he throws this absolute bombshell, says, actually, markets have got it wrong again and could go up much sooner. many people think, why is this happening? it could be, number one, we've got an election next year. if you are going to introduce a rate hike, probably better to do it in november than in march or april right before on the eve of an election. number two, we had really incredible jobs figures recently, 345,000 new jobs created. unemployment really going down. there's a lot of pressure and momentum in the economy. and three, maybe there's a split in the mpc.

we still haven't seen the minutes from the last meeting. so as you said, maybe this is a reflection of the fact that there is growing voices within the mpc saying, hang on a moment, economy is returning to precrisis levels, employment is increasing at a state -- at a rate we haven't yet seen. why are we keeping interest rates at these record low levels? and, remember, carney is very worried, i guess, about exposed households. people who have mortgages who are used to these kind of incredibly low rates, 0.5%, and they're in no way ready for any kind of increase. and he's very concerned that these households start to have fixed rates, start to fix their mortgages, or don't become too dependent on interest rates being low for too long. so a mixture of probably politics, the increased debt levels of households, and how

they're affected if interest rates go up. and also, possibly, a split within the mpc. but -- >> the head of the bank of england minutes next week -- we might see dissension in the ranks. >> the statement came after the mpc meeting, but you would expect even if there's growing dissent within the monetary policy committee that that jobs data is going to raise those heckles. they're going to say, hang on a moment, why are we still at this moment? gdp is pushing ahead so far. the only problem is, of course, we still don't have inflation, which is very bizarre. because common sense would tell you if there's so many jobs created, you would tell your boss, hang on a moment, give me a raise because why would i keep it at this level? so slight distortion in the slack in economy, but massive bomb shell last night. >> and he's allowing himself a bit of maneuver room, too. >> as always. ever the politician.

>> the central bank, we would never want to suggest the bank of england isn't independent, of course, on the political front. good to have you on. thank you. now, coming up, how many smartphones have you gone through in your lifetime? millennials probably have you beat. we'll have that number right up next. and we'll leave you a look at the heat map to give you an idea of how the european markets are trading.

some latest developments on the situation in iraq. comments from a human rights spokesman at the u.n. saying they're concerned about government successes in iraq, including shelling that may have killed 30 civilians. because we heard that the iraqi government had launched air strikes around the city of mosul. that was last night, this was the u.n. responding to reports of at least 30 or at least may have killed 30 civilians. the comments there from the u.n. on the back of weak earnings seasons with some of the world's largest retailers, a new trend is emerging as companies try to fight back against ruthless competition online. we sent carolyn out for some retail therapy fitting of the digital age. >> you don't have to go far in

london's high-end shopping districts to see some gaps in this season's lineup. occupancy rates by large cap retailers have shrunk in recent years. in part, this is due to the fact that many are looking to compete against etailers like amazon. >> the entire retail environment is being rethought right now. amazon can usually undercut any brick and mortar retailers. but then there's also the experience. if it's fun, interesting. you need it right now. you know, you got -- want to buy a dress or suit for a party tonight, you've got to go. you've actually go to physically go to a store. >> now, this london company is trying to stem losses in the retail environment by giving the retail experience a digital makeover. >> welcome to flux, a new retail experience store designed to pair up the interactivity of online retail with experiences only possible in a physical store. >> the fox lounge is an ability to showcase to corporations and

retailers what innovation means for their business and how they can accelerate their business processes by utilizing the latest technology. >> the store features everything from video walls and holographics to virtual dressing rooms that can change outfits in a flash. >> you can see that you can put them on and try them out. you can also take a photo of the clothes that are on you. you can e-mail them to your facebook page or your twitter page, get your friends to say, actually, that looks awful or that looks great. and then you get feedback, instantaneously while you're at the fashion show. >> and the system has different capabilities for different retailers. from fashion to homewear, the company says it's about customer involvement. >> if you read something, you retain 10% two weeks later. if you play, share or do something, you retain 70% two weeks later. when you're mixing messages

around a retail environment with that sort of interaction and technology, it means you recall things much better. >> and the argument of spending big in an industry that prides itself in penny pinching isn't without its challenges, adoption from retailers is surging. the operator of regent street announced a plan that will see over 100 of the premium stores to come together to offer customers a unique experience the other smartphone. >> what the app will deliver to you is information about the stores that interest you. it could be the opening hours, it could be what's special in the store this week. it could be pricing. we've got 80% of the stores signed up so far, which is pretty good at this stage. this is the first beacon system in europe in a high street. >> and it's a trend set to grow. a new category of start-ups is emerging to help retailers both small and large take advantage

of platforms to transition their bricks and mortar stores into new digital environments. >> if traditional retailers don't adapt, they're going to fail. the latest technology, today we are all connected. we're all using different technologies, multiple devices that connect to the internet. and if you're not connected to that world, that virtual world, what are you going to find? >> and there's more tech drivers coming up. next week we'll look at the high stakes shakedown in the mobile payments space. that's at 11:20 cet next friday. by the time the millennials regi reach the age of 17, they'll have owned five smartphones. this according to a study by teen vogue that found 42% today are behind the decisions of tech at home. joining us now the vp and publisher at "teen vogue." jason, is that all?

just five smartphones by the time they're 17? >> yeah, i'm 40 years old, julia, and i've probably owned about four, i'm quite behind, i think. >> you know, i've smashed a few in my time, that would be my excuse. >> yeah. >> how important, i would assume it's very important, media capacity of these phones. and is that driving the brands they choose to purchase? >> yeah, absolutely. it used to be that cell phones actually made phone calls and that was the primary reason that young people bought phones or anybody bought phones. but now they're looking at things like the capability in a camera or the memory it has. and most of that is being driven by social media and how prolific social platforms like instagram and snapchat have become. those are the qualities beyond just the basic calling capability now. >> and who is actually driving the decision making over what brand is purchased? do retailers need to be focusing on parents who make the decisions? or actually are the discussions being driven by the teenagers themselves? >> well, a lot of -- there's confusion in the market or among

marketers in the tech space that parents are the ones making all the decisions. but right now in the household, the millennial, that 15, 16, 17-year-old kid in the house is the one making all the decisions. they're more credible, they're very smart. grown up as digital natives with their smartphone as the most important accessory in their lives. and because of that, they've got more credibility than the 45-year-old parent in the household. >> i've got a quick question, actually. we've seen intel in the last few hours suggesting that actually they're boosting their forecast for pcs. to what extent are laptops replacing pcs as far as the younger generation are concerned. expected to be pretty high. >> well, among our audience, we've seen pretty much saturation with about 86% to 90% own a laptop and use it as the primary device in school. use it to study and use it for research. what we're seeing also is the tablet coming onboard and very strong. up to about 60%. grown 60% in the last two years among our audience. and we're seeing that as a new trend that the tablet may

eventually replace the laptop. it hasn't quite happened yet. >> interesting. using the term saturation even at this stage. fantastic to talk to you. jason, the vice president and publisher at "teen vogue." now, joining us is john kanali at lpl financial. and john, we were just talking about intel there. what's the take on the announcement yesterday? >> well, we think there is some chance here in the second half of the year to get uptick in business capital spending. it's been a while. this has been a pretty slow recovery for business capital spending in this cycle. and we think the pieces are in place for that to pick up. it is a good sign that the announcement we got yesterday might be sort of the first shot across the bow there. >> so you think it could get better from here? >> yeah. it should. there's a lot of cash out there. the economy itself is getting better. the stock market's at all -- new all-time highs. businesses are feeling a lot more confidence about the --

about the outlook. they're no longer worried about whether or not there's going to be a recession or double-dip. i think all the pieces are in place. one thing that's missing sort of, is that idea of washington and the regulatory environment. and i think there, if the polls are correct and the gop can take over the senate, i think that might be a boost, as well. >> john, very quick question about the situation in iraq right now. how focused are you? and should investors be, do you think, on the potential risks here? it's a significant one always with geopolitical risk. >> it's very unpredictable obviously. and i think the immediate impact there is looking at the impact of oil prices on the economy, things like transportation. that's been a great sector this year, that's being hurt. we're a lot less sensitive today than we were five, ten, 20, 30 years ago to oil prices. that's a good thing. but all this geopolitical unrest

is certainly giving the bulls some pause here this morning. >> thanks, john. and actually in line with that. let's take a quick look at the airline stock performance. we obviously saw those under pressure in yesterday's trading session in the u.s. in particular. we can have a look at the situation for some of the european airliners, too, also under pressure this morning if we can show them to you. are we going to be able to pull that up for you? i don't think we are. okay. well, i tried. we'll show you after the break. on the show, china retail sales to the highest levels in december. and positive data from the country. we'll get to the china chat right after the break.

welcome to "worldwide exchange", and these are your headlines from around the world. prospects of a civil war in iraq send oil prices to a nine-month high. stocks fall as militants move toward baghdad. and president obama says a u.s. intervention is on the table. shares in uk home builders fall to the bottom of the ftse 100. this as bank of england governor mark carney warns a rate hike could come sooner than expected. the risk of deflation in europe is low. that's the message from bank of japan governor kuroda, former

ecb board member, though, takes it one step further saying the central bank is barking up the wrong tree. >> it is, in my view, not a threat. the discussion all in all in my view is really irrational. >> and can the thrill of victory soothe the anger on the streets in brazil. fans celebrate the home team's 3-1 win against croatia after demonstrations break out in the major cities. >> you're watching worldwide exchange, bringing you business news from around the globe. >> if you're just tuning in, thanks for joining us here on the show. quick look at how the futures are trending as far as we go. we're a few hours now, of course, from the u.s. opening session. and we've had a bit of a change as far as the futures are concerned. we're adding around 2 points for the s&p 500. slightly here, the markets closing at the lows of the session yesterday, the worst

day, in fact, for the s&p 500 in a month. and as things stand right now, we're indicating to finish lower on the week right now. so a mixed performance, caution about the situation in iraq. also caution about the situation with moscow and kiev right now with reports of tanks crossing the border from russia into ukraine, too. so plenty to occupy investors right now. quick check on the european markets this morning. and it's a similar story here. we're adding to the losses, around .7 lower for the german, the uk and the french markets in particular, too. so across the board right now. losing around .7% in europe. i just mentioned the situation, of course, in iraq. we're still adding to the gains we saw in yesterday's session for brent around .3% higher. gaining just shy of 2.5% in the last couple of sessions. now, let's bring you up to speed with the situation, again, in iraq. president obama said he's not ruling out air strikes to aid the iraqi government's fight against insurgents in the north

of the country. this marks a potential u-turn after pulling u.s. troops out two years ago. >> i don't rule out anything because we do have a stake in making sure that these jihadists are not getting a permanent foothold in either iraq or syria for that matter. >> tensions have escalated across the northern territories as radical jihadist group continues the push into iraqi cities. the government launched air strikes against militants in the town of mosul, but reports suggest insurgents are steadily advancing toward baghdad. meanwhile, u.s. contractors have began evacuating employees due to security concerns. yousef speaks on the phone from dubai. we were just talking there about president obama leaving the door open, perhaps, for support and intervention in the situation there. can i ask you from the

perspective more broadly in the middle east, do they actually think the u.s. can do any good here? >> well, to a certain extent, they can. i mean, the conversation has already been ongoing about supporting the iraqi central government with arms, which by itself has been a contentious issue. in many ways, the escalation and violence in recent weeks and especially in recent days goes to underscore how pressing the issue is and how much the central government was actually struggling to control the situation. even though that shouldn't be a surprise because you had the loss of two key cities earlier in the year which instigated this conversation to begin with. the iraqi central government arguably has reached out to partners around the world for support. they themselves have already upped the sort of caliber of attacks. if you look at the air strikes according to state television that happened in mosul yesterday. but keep in mind, there's only so much you can do from the air. this is a militant movement that

operates on the ground, almost in civilian clothing for the most part. this is urban warfare. so what the iraqi central government needs to do is not just get support, it needs to resolve the political crisis in the country. because it's also suffering from defection from within the army, armed forces, and it's unable to get the necessary sit certain support on the ground in some of those contested areas. you mentioned they continue to push through toward baghdad, according to an assessment, a briefing that was given to the u.n. security council, their view was that baghdad is fortified strongly enough the armed forces on the feet sufficiently to basically defend the capital city. it is when the capital city of baghdad falls that worries about administrative overview of oil resources and oil sales and the southern oil infrastructure becomes a key issue. think of what happened in libya

with the fighting centered in tripoli, overall control of the infrastructure collapsing, and that ultimately led to volatility and sporadic oil supply. julia? >> thank you so much for your upset. now, in the north of the country, kurdish forces have claimed control of the oil city of kirkuk saying government forces have fled. have been locked in years with baghdad over the region seeking to incorporate it into their own autonomous area. now the high representative to the uk of the kurdistan government. can we first ask what your assessment of the situation is? and also what you're hearing from the people you speak to in iraq. >> well, what we're hearing is we're facing a disaster in iraq. if the gains aren't reversed very quickly, this is really going to be a disaster for

everybody in iraq and wider in the middle east, as well, it's going to cause widespread instability. we've had unconfirmed reports, i have to say, that there have been some air strikes by the iraqi forces against the terrorist organization. as your correspondent said, the kurdish forces have gone into the territories to defend the population there because the iraqi army is not able to do so. >> to an outside observer, though, you could perhaps suggest there's an opportunistic element to the kurdish military here, something disputed for a long time. they want to see autonomy from iraq in the sense. how do you respond to that? >> it's true that half of kurdistan and iraq is half way outside, and we have claimed those territories because historically, culturally, they belong to us. we had hoped we would be able to claim those territories in a peaceful and democratic way.

and there is, in fact, a mechanism in the iraqi constitution to deal with that. one of the big failures of the government of the iraqi maliki government is that this situation wasn't dealt with. we haven't -- our troops, haven't entered kirkuk and other territories to claim independence or oil fields, we have gone there to protect the population because clearly the iraqi troops can't do so. >> but you're not ruling out claiming it beyond here? >> we have to see how the situation unfolds in iraq. iraq currently faces a humanitarian crisis, most of which is coming to us. we have tens of thousands maybe hundreds of thousands of people coming to for safety. we also face the security cri s crisis, all of us in iraq. we also face a political crisis. how is this going to play out? yesterday, prime minister maliki tried to call parliament to h e have -- to give him emergency

powers. this failed because i'm afraid politically prime minister maliki has alienated every block in the parliament. so politically, we face a crisis, as well. >> it feels like he's pretty much a lame duck, given the forces of the military don't seem to be supporting him either. and we've seen weapons seemingly change hands as the military have left them. i wanted to ask you, do you believe the u.s. can be supportive in this situation? and whether the people there believe the u.s. can? because my understanding is, actually, they don't really see what president obama can do anymore. >> i do think that the west's nonintervention in syria has, perhaps, led to a bleak view of what the west might be able to do in a situation like this. however, i think president obama's statement said nothing is ruled out and perhaps they can provide some support. >> i don't know direct air strikes, but perhaps drones, perhaps information to the iraqi

air force that might help them target the terrorist organization. there are lots of ways that the americans can help. but don't forget that iran, of course, will and will intervene because iraq is a very important center for iran. >> the high representative to the uk of the kurdistan regional government. thank you very much for your insight. i did talk about the higher oil prices on the airlines. i'm showing you them again today, of course. right now, these are close, but you saw off 5%, and we've seen them off 2% to 3%. the european versions here in the european session, too. doesn't help, of course, we've had the world bank lowering their growth estimates, too, of course, that kind of impacts it. and we have the iea this morning, too. strong economic data in china. jumped 8.8% in may while retail sales hit the highest levels since december, rising by 12.5%

in the same period. fixed assets investments meanwhile grew 17.2% for the january to may period also above expectations. the report will be welcome news to the chinese leaders who are betting on their so-called mini stimulus measures preventing a major economic slowdown. now, head of the macro economic research joins me now. and you're fresh from a visit to china. can i ask what your key take aways were from that trip? what are fund managers in particular saying to you about the situation there? >> well, actually, there was a lot about the political situation. there is, i think, extremely important consolidation of power, managed to achieve, which will make this decade very different both for china and for the rest of the world.

and that wasn't necessarily the opinion was split inside china whether this was a genuine consolidation of power that has now finished. and there was still quite large number of people who thought things were up in the air, still. >> and how does that consolidation of power influence the relationship with the u.s., let's say. for example. we're expecting, i know we're expecting the currency to depreciate over the next 18 months. how is that going to play with the u.s. relationship, do you think. >> well, if has managed to consolidate power, which i believe he has, and he has claimed that he's serious about financial market reform, and i must say, i've been covering china for 14 years, in the previous ten of the previous leadership, they talked all about the same things and did nothing. we've now had for a year and a half a lot of reforms.

i know they're the easy steps, and i know we haven't seen how exactly some of these reforms will play out, but i think this marks a very important new route for china. if the authorities there do allow much more freedom in the movement of capital and also in the setting of the interest and exchange rate, i'm afraid america has to only be happy about that. that was what they have been advising them to do for a long time. i would argue that opening the account would mean the currency will have to go down, especially because we estimate that the yuan is between 15% and 25% overvalued. whether that's -- the u.s. would like that, that's difficult to say. but they'll have no ground to complain. >> there's going to be a few raised voices on that one. you also say in order to signal commitment as far as market reform is concerned, they need to allow defaults.

not just small defaults, we need to see a small bank go or a significant private wealth product. i want to bring john canally into the conversation here. suggesting the asian banks are gearing up for some kind of significant default. what do you think the impact of that would be on the markets? and do you they would take this as a signal that the reform is progressing? >> maybe eventually, but i think the initial reaction to that would be similar to what we saw earlier this year when we saw the issues with that -- with the private investment pool going under. so i think right away, it would be more uncertainty. you know, there's still a lot of investors out there who think that china's going to go back and grow at 10% again, which that's not our view. chi china's clearly in a glide path of 7.5%. but a lot of people fearing they're going to go to 5% to 6%.

they're working with the policy tools they have. up until this point, it's been a blunt instrument. raise rates or lower rates. in the last couple of months, they've tried to do some targeting. that's encouraging they're mixing it up a bit. but i think if we did have a big default, it would send shockwaves around the world. >> we lost john there. that was john canally at lpl financial. thank you so much for your insights from your china trip. the head of macro economic research. now, coming up, the new telenovella may be in the works. could be on the auction block. will that spark the next buyout bonanza? well, we'll give you the details coming up. i spent my entire childhood

seeing the world in reverse, and i loved every minute of it.

but then you grow up and there's no going back. but it's okay, it's just a new kind of adventure. and really, who wants to look backwards when you can look forward? welcome back to "worldwide exchange." these are your headlines. oil prices pushed higher as civil war looms for iraq. bank of england governor mark carney suggests a uk rate hike is coming sooner than you think. and intel raises its full-year outlook suggesting strong demand for corporate pcs. some comments out of

ukraine. they say they're ready to pay russia $326 per 1,000 cubic meters of natural gas for an interim period of 18 months in a bid to settle the gas dispute around $60 less than what europe pays russia right now and significantly below the current level of contract in the recent conversations that they've had, ukraine pushed back against russia's offer saying they wanted any kind of discount written into the contract, which it seemed russia was refusing. russia, meanwhile, saying no plans to meet ukraine or eu officials, forecast talks before june 16th deadline. that's monday and no plans from russia to speak to them in order to settle that dispute. putting ukraine under pressure right now. now, what do telenovellas, online poker and a trip to the mall have in common? i know about one of those things. the next big buyout bonanza. and bertha coombs with the

answer. >> i can see you a big fan. i -- i know that. >> nothing to do with shopping. >> i see that in you. >> well, it often leads to shopping, as you know, they always have fashion and lots of make-up. we usually talk about mergers on monday. merger monday, but boy, a lot of news on the m&a front this friday, starting with univision. may be on the auction block. the "wall street journal" reporting the owners recently held talks with cbs, time warner and others about a possible sale. but discussions went nowhere as they were reportedly seeking north of $20 billion for a deal. univision is controlled by a group of investors including the media mogul who bought the company back in 2007 for nearly $14 billion, including debt. the journal says the group had been expected to take univision public next year. they also looked to what

supplies most of the programming as a possible buyer. but u.s. rules cap foreign ownership of broadcasters at 25%. express, meantime, may be headed for the checkout counter. private equity firm sycamore partners says this closes a 10% stake in the retailer, making it the largest shareholder. sycamore's also considering a possible buyout offer. express has been struggling with weak sales and slowing traffic recently cutting the full-year earnings outlook. the chain also plans to close about 50 of its 600 u.s. stores. shares jumped as much as 33% in after hours after the news broke, came through an sec filing. at this hour, they seem to be pretty strong in germany, as well, up about 24%. the company's valuation is about $1 billion. we'll see how a deal might shape up if it comes to fruition. canada's gaming has struck a deal to buy rational group, the parent of the poker stars and

full tilt poker websites for $4.9 billion. gambling equipment and systems. poker stars and full tilt have more than 85 million registered users worldwide. the deal could pave the way for the site's return to the u.s. online gambling was effectively outlawed here until 2011. nevada, new jersey and delaware now have some forms of legal online gambling and eight other states are considering legislation. i don't see you doing online gambling, am i wrong? >> no, i don't. find out why intel is feeling bullish about its future. we're back in two.

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i'm spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast? go to ziprecruiter.com and post your job to over 30 of the web's leading job boards with a single click; then simply select the best candidates from one easy to review list. you put up one post and the next day you have all these candidates. makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter.com/offer2. welcome back to the show. intel is raszing its second and full-year outlook citing

stronger than expected demand for chips used in corporate pcs. the company now expects some revenue growth for the year versus its previous forecast of flat sales. intel may have been boosted recently by microsoft ending support for windows xp in april forcing companies to upgrade their systems. intel rose 5% just over 5% in afterhours trading. this year, as you can see, up over 16%. now, todd horowitz joins us briefly for an update on the markets. todd, likely to keep investors on the backfoot, you think, in this session? >> good morning, julia. i think that, you know, we're going to see more of a little continuation. we're just really so quiet here. you know, even with yesterday's down move, i mean, there's a lack of volume and volatility, and right now, still a lack of interest. >> so we just continue to see key risk events next week. we've got the fed to consider. >> i think, really, all eyes will be peeled once again on the

fed. last week, they were worried about the lack of volatility in the market and they came on stage -- and i don't think there can be any change here. they're going to still taper, they're going to still stay the same course, they're going to leave interest rates, i'm sure, at zero. >> should investors sit on their hands into that meeting? or can they position themselves? >> you know, i think they're going to sit on their hands. just as they've basically done. the markets, you know, with yesterday's big selloff, we're still less than 2% from another all-time high. we have still the same problems, though. we still have a lack of growth and, of course, the fed does not admit to any inflation here because they don't count food and energy. but those are problems and issues that they continue to hide from. so we'll see, but i would expect the same as usual. >> same as usual. todd, great to speak to you, of course. and that's it for today's show. i'm julia chesley, thanks for watching on "worldwide

exchange." "squawk box" on right now.

good morning. and welcome to "squawk box." the crisis in iraq escalating with cities being overrun by islamic militants, the white house is weighing military options as baghdad prepares for the worst. global markets getting nervous about the uncertainty in the region. you can see it in oil, see it really probably in the equity markets. and on the corporate front, intel is raising its outlook on stronger pc demand. really? is it friday the 13th? it is. it's news to me, it's friday, june 13th, 2014, i was actually married on friday the 13th.

it's great luck. "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc, i'm becky quick along with joe kernan and andrew ross sorkin. and our top story today is what's been happening with iraq. the global markets on high alert this morning as jitters about iraq are unsettling investors. if you take a look at what's been happening with the oil market, this is playing out. up again today with wti trading at $109.94, below $110. that was the highest settlement since mid september and up once again today. the futures this morning, if you take a look, you'll see that they are slightly higher. this is after two days of declines for the dow. yesterday, the dow was down 109

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