welcome to "worldwide exchange." i'm julia chatney. and these are your headlines from around the world. the russian firm demands ukraine pays for all gas deliveries up front starting immediately after it fails to meet a deadline for payment. and fighting spreads across iraq in escalation of violence between sunni insurgents and the military. the u.s. moves a carrier into the persian gulf as the obama administration says it could engage in talks with iran over the cop flinflict. and in electronic news, a

deal that could see it move its offices overseas to cut the corporate tax bill. shares in london, meanwhile, sink as that firm has been lined up as a potential target instead. >> announcer: you're watching "worldwide exchange." bringing you business news from around the globe. and a warm welcome to "worldwide exchange." and a warmer welcome to sri. >> thank you, julia. great to be here. well, england is still in the running, aren't they? we wish them all the best in the world cup, but there are bigger fish to fry, aren't there? >> of course. >> we'll talk about the tail risks. and russia and ukraine are still

proving to be an elusive deal yet on the gas pricing issue. and can the markets really climb this is the big question as they have done in the past with syria and the ukraine crisis. or is it going to be the catalyst? >> we have a guest coming up who believes this could be the ultimate catalyst for a 10% correction in the equity markets. so we'll be talking about that later on today. but for now we'll get to the top stories in ukraine and russia. ukraine has failed to make its payments to russia missing a deadline earlier this morning. ukraine owes billions of dollars in unpaid bills and now the russian firm will only ship gas to you cape if it prepays for what it orders. they have also filed a lawsuit to try to recover the $4.5 billion that ukraine owes for gas deliveries.

all right, steve sedgwick is at the world petroleum congress in moscow live on the ground now. steve, so what is the latest? what is the next step here? so if ukraine has to pay up front for advance deliveries of gas from moscow, does it have the capacity to do so and if it doesn't, is moscow going to act on its threat because of the gas? >> reporter: well, it's got the class to do so because it has the u.s. bailout. the money they would spent for what they believe is the wrong price for russian gas remains to be scene. don't forget the russians originally offered gas at $2.68 per thousand cuber meters and then put the price up to $485 for the same gas under the present administration. then ukraine said, we want to pay $2.68 to what you offered.

there was a lot of horse trading over what price is paid. the ukraine yians believe theree assets in crimea that are theirs, including money in the banks. so if you want recompense for this, you can imagine what goes back and forth. so if you look at the gas in isolation, it's very hard to do so. that said, alexei miller is set to report to president putin on the progress on the talks in kiev. i was told there would be no prejudgment on the talks and the pipelines are switched off. the ukrainian gas pipeline. the operator said things are

operating as normal at the moment. and i talked about the potential sanctions that come next from the americans especially that could put a curtailment on oil companies in russia as well. this could be damaging for the relationship between the ocs and russia. let's listen in to his response. >> i do not expect any action towards international companies in russia. we are open for investments with all our partners and we believe that our relationships are long-term in nature, stable relationships and don't have intent to cause the market for our partners. >> will russia retaliate using energy influence on europe if there's a third round of sanctions from the eu, from the

united states? >> the sanctions are stupid and russia is not going to imply any sanctions in the normal circumstances. >> i'll throw numbers at you as well. the ukrainians got 50 billion cubic meters of russian gas in 2013. according to the wall street journal, he believes if you had 20 billion domestic capacity, 10 billion in reserves and a quiet number of reversal out of hungary, that could be less if the russians were to turn off the taps. julia? >> steve, we seem to have a compromised solution selected by the energy e u commission in the last few minute that is ukraine would pay up to $1 billion today and pay the remaining cash later on throughout the year. is that really a compromised solution for ukraine and russia

if they can't agree on price? >> reporter: well, it could be. i have seen the same comments from the european commission as well. it could be, but don't forget they have already compromised on the table with ukraine paying the best part of $800 million. the russian side said they are actually owed the best part of $5 billion for gas already delivered as well. so you've got to remember this $326 figure per cubic that the commission put forward. the ukrainians want to pay $268 and the russians want to sell at $385, that was dismissed at hand so there's horse trading going on. if it was in isolation we would get a deal, but the trouble is there are other things going on. the new president said they will never give up on crimea as well. and you have tragic events going on an almost daily basis east of

the country, which is hard anything attitude on both sides of the device as well. >> absolutely. steve, thank you so much. we'll catch up with you later on in the show. breaking news in the last few minutes. nato is calling for the immediate release of turkish diplomat stars held by insurgents in iraq. meanwhile, the tech of the central bank said he's monitoring developments in iraq. they are the second biggest export market. this comes as so many insurgents of the isis group had a heavy weekend of in fighting. this is a short drive from mosul, which was captured by the fighters last week. they warned that the following images are graphic. isis posted video images online showing the leading soldiers being led by gunpoint and laying

down in trenches for execution. in the meanwhile, the iraqi air force launch air wrads against the group cangroup /* killing more than 200 militants. the u.s. secretary of state john kerry described washington's concern over the escalation. >> given the gravity of the situation, i would anticipate timely decisions from the president regarding the challenge. we have already taken immediate steps, including providing an enhanced aerial surveillance support to assist the iraqis in this fight. we've also ramped up shipments of military aid to iraq since the beginning of the year. and we have continued to ramp up efforts over the course of the

last months leading up to the events of the last week. >> yousef is in dubai, the u.s. plans to talk to iran about potential efforts to support iraq right now. and i wonder what the situation and the response from iran has been on this because as far as i have seen it, they have offered iraq help but have not been take up up on the offer. >> reporter: yell, julia, so far we have not heard from the official and semiofficial news agencies running stories in general about iraq and the conflict there and about the upcoming talks on the controversial nuclear program, nuclear weapons program in s vienna this week, but no word on resolving this with united states or the outstanding problems in iraq. they are close allies of the incumbent government of the prime minister muri al malaki. and they are willing to support

the government there if need be. we are keeping a close eye on the political reaction from the rest of the world. they met arab foreign ministers to describe the situation as the most serious threat to iraq in the country's history. and emergency summit is expected in the coming days as well. but unlike when issues flare at last summer in syria, julia, this time around we are not hearing much from saudi officials that have been very quiet. when the saudis have something to say, they are usually quite clear about that. so a bit of a surprise there, but we'll keep a close eye on them. >> thanks, yousef. joining us is jordan perry, analyst at maple croft. jordan, let me put this to you, does isis have the capacity to push further south where the strategically important oil fields are in iraq? >> certainly i think isis does have the capacity. the real question is whether

they can actually move to baghdad and post a real threat to the essential government. it is clear they do have the capacity. we have seen this isis security forces collapse north of the country and the kurdish forces are taking over the slack in their backyard. but certainly i think, yes, isis has the capacity. we have seen this in recent days and seen them move to districts just south of baghdad. so certainly isis is still pushing, but the question is can it take on such a government is less possible. >> do you have any visibility about how close isis is to baghdad now? we have been getting unconfirmed reports they have attacked the international airport and are some 25 kilometers from the capital. >> well, one of the worrying things is that isis is moving into abu ghraib.

and isis has had prison breaks in the past, including some last year, so that's a real concern. whether they move to abu ghraib and release other sort of islamist militants to help them go against baghdad. we have seen clashes in the southern neighborhood, so certainly isis is moving much closer to baghdad which is a big worry for sure. and for oil and gas investors in the country. >> i bet the iraq government was actually asking prisoners to return to the prison because how much of a lame duck it seems they are right now. at what point do you think we get a response from the west, even from the arab league, because they made comments over the weekend saying they want to see greater political dialogue. what do we have to see here to see a greater response or any kind of response, frankly? >> a very real threat to

baghdad. i think also if you start seeing a greater humanitarian crisis with half a million people flee mosul. the city fell a few days ago and is now under the control of the islamist militants. so i think it's humanitarian issues. we have already seen some mass killings over reports of iraqi soldiers for isis. so we are seeing greater deaths over the human taitarian crisisd over baghdad. so this is clearly -- >> and washington is caught between a proverbial rock and a hard place. >> exactly. >> thank you very much, indeed. jordan perry at maple croft. staying with the outlook for the old markets, a vast majority of respondents to our cnbc

weekly survey say 92% expect benchmark crude prices to extend gains this week as the iraq conflict threatens supplies from the second largest producer. strategists also warn that any disruption to exports from the terminals south may send crude oil prices and red contracts to $220 a barrel, possibly higher. and they set a price like that would likely tricker action by saidee arabia. what do you think, are oil prices set to move higher and by how much? if you want to join the conversation here on "worldwide exchange," get in touch with us by e-mail at worldwide@cnbc.com. or by wet the er wet thor twitt. heading to london for a summit and meeting with the prime minister. find out what to expect from his visit and what deals could be

signed. and hitting a five-month high by fuel costs. we'll break down the numbers when we go out live to mumbai. and we have been to paris as the french government tries to convince the u.s. authorities to reduce the potential $10 billion fine on bnp palibas. and going to coffee college? starbucks is announcing a program to help their workers get a college degree. stay with us for a quick break. we needed 30 new hires for our call center. 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

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welcome back to "worldwide exchange." the headlines, a gain for russia and europe stoxx. pretty low volumes in the markets this morning, but it is monday morning. as you can see, some of the biggest losses are in the cac 40 as we continue to watch bnp with the situation and the department of justice. and the likes of italy and spain under the most pressure this morning, but i'm still talking about .60 to .70. the pharmaceutical company

actelion has a drug that could help to boost its product pipe line. the stock is up a whopping 14 0 14.50%. and bmps is jumping on the open only for the trading session. right now it is just shy of 7.5% higher. we'll take a quick look at the bond rates this morning, bnp palibas, sorry, the bank is suggesting that rather tensions in iraq will continue to add to gapes in peripheral bonds pushing the spreads tighter this morning. we have trading near 278, so significantly below the 3% level. we'll keep an eye on u.s. tenures in particular after last week's session was at 258.

a quick check on the foreign exchange rates, the dollar is feeling pressure on weaker sales. 1.3525. 1.3505 was the recent low. the sterling as well is at 1.6995 was the high but right now we are just shy of 1.6970. sri, you are here. i am here. we'll look at asia and singapore. we are seeing some weakness. and that's altogether not expected given the fact that oil prices have been rallying and sentiment is on the defensive because of the situation and the conflict in iraq. there's going to be a big emphasis on the china markets because we have data out this week. home prices later on this week and before that on tuesday we do have fdi. that will give us a sense of how foreign investors are positioning themselves toward

the chinese market and the broader economy. the nikkei 225, the firm er yen could be a culprit here. into the defensive currencies and the safehaven currencies like the swiss frank and japanese yen, a bit below 15000. it is in thin volumes. julia? medtronics strikes a deal to buy covidien for nearly $43 billion. they want to shift it to an island to benefit from a lower tax rate. covidien has an office near dublin but is based near boston. for more tax evasion, i hear the crowd scream. tell us more about this deal. >> julia, so many of these deals are just inversion, inversion, inversion and this is a classic one.

in terms of tax efficiency, they want to create two new irish deals and the headquarters will end up in dublin. having said that, i have seen covidien's headquarters, they are not huge and there are not many employees located in that particular building. and for the island, there's going to be continually questions at the top level of government on just how much this is delivering to the irish economy. if you have entire squares where buildings are just saying, this is the global headquarters of a company that may employ tens of thousands of people around the globe, but ten of them are in ireland. >> but you can do a lot with the money. the tax revenue with the hiring, perhaps, it is adding money to the economy, isn't it? >> well, yes, there's a certain level of that, but it is not quite the money and the kind of numbers needed to get back the

tens, hundreds, thousands of people who have immigrated in the past couple of years. and mitsubishi, meanwhile, is expected to look at a joint bid today derailing a rival offer from general electric. anetta is in frankfurt to give us the details. this is a different deal as far as it looks to the xwhents we were describing or the look of it from last week. so can you just take us through the deal and thou would potentially be structured? >> it's a complex theme, but it is more mitsubishi unveiling the alstom bid. they would offer a joint venture for passion assets into a giant

bid for the steve turbine business. and in the third step, there's a vision that the french government and mitsubishi take a giant and equal state in alstom. so essential ly it will remain s the company but it will only be the gas turbine business which will go to siemens and the rest will remain as a joint venture between mitsubishi and alstom and the french government. the whole thing looks to succeed because that is what the french actually wanted to have to keep alstom intact and more something along the lines of that. back to you. we'll get more on this now with the senior france correspondent for deal reporter.

emilio, on balance, who has the upper hand now? >> well, it seems that what is being talked about is the new siemens bid and the perfect offer for the french government. that's exactly what the french government wants. french assets staying in french hands. and it will echo a lot, a recent deal that had a lot of heavy government involvement, which is the investment where both shareholders and the family stayed in and the government became a shareholder. now, until now it seems that the alstom board certainly preferred the ge deal and they were really just playing along with siemens or it seems they were giving a fair and balanced process that the government was happy with the process. we'll have to see now what the board feels, in particular, the ceo patrick cron. >> only from a national point of

view, i would have thought siemens forming an alliance with mitsubishi chevy would be counterproductive. this is a japanese company, not a european company. doesn't that put them on the back foot? >> well, you say that, but like i mentioned earlier, the french were happy to have an asian investor as a major investor, which is also a french national champion. obviously, the fact that the french government will also be there will also suede a lot of the fears in terms of national interest. in fact, it might be that the french government through direct stakes and direct bpi will have a greater stake in mitsubishi. so that way i don't think there should be too many concerns at that level in terms of national interest. now what we have to see is how ge comes back. because i would be surprised if ge didn't counter this. >> absolutely. we have to expect ge to come

back. what kind of response do you expect from them and how quickly do you expect them to come back? and actually, my second question is, after everything we've said about the french national interest, who is going to make the decision here? alstom or the french government? >> well, two very good questions. in terms of what ge will do and when it will come back was very clear that it's offer would expire on the 23rd. that's monday. next monday. so what could they come back with? obviously more things to appease the government. they have already said publicly they are working with the french investors to look at alliances with the french investor. and they are looking at an alliance with alstom. this looks more like an alliance than an outright acquisition. in terms of who decides, it's not really clear. we have a previous deal, that

the french government made a lot of noise and had a preferred bidder in the form, interestingly enough, of alstom's majority of their shareholders. by they chose another bidder. at this point they said, this shows that they have no close. really the french government has that much of a say in things. so the government has passed a law, a special decree, to give it veto rights in the sector, such as energy and transport. now, this law is currently being reviewed by the ec. and the ec should come with an opinion at the end of the month. and we'll see if the law will be valid and work. similar law is in other countries. the other question is, obviously, can the government use the law and does the government want to use the law? just because it has the power, doesn't necessarily mean it will use it. i think again what we'll see is a mix between alstom's interests, the main shareholders interest and the government's

interests. a combination of all the interests prevailing in the decision of what the final offer will be. >> you have brussels interest as well. emilio, thank you. we have breaking news before going to break, more comments that the eu's energy commissioner is aiming for more talks between the ukraine and russian counterparts. he assumes ukraine has 12 billion cubic meters of gas reserves. this is the point steve made earlier on "squawk box." u.k. could be okay for the better part of 2014. what is next? meanwhile, ukraine's gas demands fair prices on the market value. right now based on two countering offers, they are about $60 as far as price is

concerned. now more "worldwide exchange" coming up after the break. we are back in two.

>> announcer: you're watching "worldwide exchange." bringing you business news from around the globe. welcome back to "worldwide exchange." here are your headlines.

the russian firm demands that ukraine pay for all gas deliveries up front starting immediately. this after it fails to meet a deadline for payment. and fighting spreads across iraq in escalation of violence between sunni insurgents and the military. the u.s. moves an aircraft carrier into the persian gulf as the obama administration says it could engage in talks with iran. in corporate news, medtronic buys cavidian for $43 billion and could see offices move overseas for the corporate tax bill. and bimitsubishi launches a rival bid against siemens for alstom. we'll look at the european markets as we had a fairly weak

lead from asia and the sentiment seems to be on the defensive because of the situation and the conflicts of the destabilizat n destabilization. we are seeing some stabilization for oil prices still at elevated levels. >> if we look at the bond markets, analysts are suggesting that perhaps peripheral bonds can continue to benefit from the tensions in iraq as we saw earlier this year with tensions in emerging markets right now. we have the spanish yield trading just shy of 2.66. so bonds are gaining on the current tensions. in the foreign markets, julia, we are seeing a safehaven flight and inflow into the japanese yen and the swiss frank. the dollar is clearly going to be front and center for trader

this is week ahead of the firm. this will be an important meeting, remember, because not only does it include economic projections and the markets have been looking for any kind of upgrade, but that will also be a very closely watched press conference from janet yellen. ukraine failed to pay the billions of dollars in unpaid bills. and now gazprom says they will make them pay in advance. and breaking news, for comments from the eu's energy commissioner who is aiming for more bilateral talks in june between ukraine and russia over the gas payments. he assumes ukraine has $12 billion in cuber gas reserves but says we could have a problem

in europe if gas storage is not filled. meanwhile, ukraine is demanding this based on market values. steve is at the world petroleum in moscow, how much money is paid right now. they can't agree on the price and the backdrop here is tensions are ongoing in the east and comments over the country confirm the boundaries. how do we reach a deal on this when the underlying issue is just so huge? >> well, they are huge, but let's not forget, you mentioned the resolve ultimately on both occasions despite the magnitude of the problems to get a resolution. the two sides do seem pretty far apart at the moment. the eu is desperately trying to come up with more proposals. last night they proposed $326

per thousand cuber meters. ukraine said yes, russia shade no. now they are producing an idea where the ukrainians could pay $1 billion and pay the rest throughout the year. it makes sense that both want to do business with each other, but as you say the backdrop is quite horrific. this dates back to the civil war in the south and east of the country. a lot of other issues discussed here at the world petroleum congress, including the ultimate buyer in china and india clearly where we are seeing the big drivers of growth. but there are question marks over the short-term as raised by the chief economist over at bp. he said the numbers at the moment regarding china are just not stacking up. >> personally i find it hard to reconcile the energy slowdown with the constant gdp growth. i find it easier to explain why the u.s. with sluggish gdp growth has the high energy growth pointing to a better future.

>> longer term china will be voracious in the demand for oil and where it comes from, all energy, that will be needed over the next 20 years. but what about the players that are trying to sell at the moment in the market? we'll concentrate on nigeria in a very interesting situation at the moment. nigeria is basically shutting out the u.s. market because of shale. and i spoke to a member about this key issue last week, and they said we have to look to china and india. now i'm going to talk to a key executive in the nigerian oil industry, the chairperson here, very nice to meet you. in terms of the oil price and how nigeria sells its oil in the 21st century, you are having to readapt and made big changes domestics as well, haven't you? >> yeah.

the oil that you have in nigeria we have bought condensate, you have bought heavy oil, but more of light and condensate. and these are things that are needed. those are the oil that are needed by anybody to spike up to a higher level. or you use a little bit of chemicals. so we are not looking at where to sell the oil because china, the far east, you know, have a lot. we are not that much bothered about closing off the u.s. market. >> 40% of your exports is to the americans before. >> because now china is getting involved in nigeria and africa. and they are closing out on

europe and u.s. and we are not looking at sticking with one. we are looking far better partner. >> you are going to take any buyer. >> we'll take any buyer. >> now you are working for a nigerian company. they are increasing energy assets in the country, so why are the big iocs, like shale, having so many problems in nigeria and lessening the amount of assets. why can't they make it work? >> yeah, i think the major problem is that when you are in an environment, you must lend to understand the dynamics of that environment. and the only way you can do it is to know the values and then respect people and appreciate people. so once you do that and give

them opportunity, train them, not just dealing with one chief in a locality. if you look at the oil that was in 1958 to now, you look at it as a whole, the development there hasn't been anything much. >> katherine, let me just ask you one more question, with the huge amount of accusations flying around about problems at the nigerian oil company and the money not getting there as well, we have not heard yet about the accusations but we want to follow the operations. do you think a lot of the nigerian problems are all problems and do they surround the old familiar issue of corruption? >> i don't think so. you see, when you make an allegation, it's not enough to just make an allegation. that has to be the proof until there's a completion of the forensic audit, which incidentally the president and

the minister of petroleum have allowed to be carried out until the result of that, i don't think anybody should be in a position to just say this about the corruption. we have to wait until the outcome of this. i want to see it and i'm sure you want to see it. for so for anybody to brand the nigerian government and the nigerian people with corruption -- >> sure, but that was the internal investigation to the national company. >> the corruption is not peculiar to nigeria. >> of course, the central government made this -- >> excuse me, it is not. central bank is an individual. it is a human being like yourself. and he is not infallible. he can make mistakes. >> i can make mistakes. thank you. let me hand it back to you.

contentious issues in nigeria like a lot of players here looking for new markets. back to you, sri. >> steve, thank you very much indeed for that. let's get more now joining the chief investment officer at axis investment limited. johnny, when you look at the tail risks that are abounding now in the markets, iraq is the latest one, can they find this latest wall and climb it like they did with syria and ukraine? >> it is pretty much market driven that it seems that's going to happen. if you look at the risk indices and the risk metrix, the asian volatility indices, they have not crept up that much. they have been bumbling around on historic low levels. it marks a high level of complacency, perhaps, or at least a perception that any of these issues that are prevailing are not going to destabilize perhaps some of the good

elements that are in the depending equity markets. whether that's the lower for longer outlook for interest rates generally, leaving aside governor carney's slight change and script of that, or otherwise the amount of cash on balance sheets in the u.s. companies. there are a few things that are cheering investors to keep them in the markets. and the volatility markets don't seem to be showing any she made in the last meeting? i remember the volatility that

ensued from that. >> i don't think there's going to be anything to change the perception. if you look at the short curves on euro/dollar and sterling, all the markets are telling you that 2015 will be an interesting year for interest rates generally. >> how much from the first fed rate hike? >> last quarter to next year, i would say. and even then that doesn't really bother me greatly in terms of the current equity market. there are actually other things that would worry us more than the interest rates hike on the u.s. >> johnny, we'll leave it there. thank you very much. the chief investment officer at axis investment. we have heard further comments this morning as they are considering if western companies could rent storage capacity in ukraine. he's also said that he believes that ukraine intends to fulfill its gas transit commitment. he's offered a compromise this morning that ukraine could pay russia a billion dollars today

and pay the rest of the amount later in the year. but they have to agree on price. . moving on, france's finance minister said progress will be made for pnb palibas, what does more equitable sound like in terms of cash? >> that's the question. he did not indicate what would be the fine per bnp paribas, less than $10 billion that the u.s. is reportedly asking of the french bank. speaking this week, they called for a quick settlement because this is not good for the french economy. according to people close to the negotiations, pnb paribas would not lose its banking license in the united states, which

basically would put the friend tornado watch bank out of business in the coup trichlt last week that was a signal for the u.s. authorities, bnp palibas said the sale officially would not believe the bank, but it is no secret that the department of justice was asking for the french bank to fire part of its top management. sri? >> stephane, thank you for that. still to come on the show, food and fuel prices send india's wholesale inflation to a five-month high. we'll the go to mumbai for full market reaction.

welcome back. japan plans to offer a one-stop service for business start-ups in hopes of attracting more foreign investment. akiko has this story live from tokyo. >> yes, at the proposed one-stop centers it will be official to file all the paperwork to start a business including applying for electric and gas services and credit cards. the service will also be available in english and will be located in special deregulation zones including tokyo and other

large cities. currently japanese paperwork is starting a business involving going to add min straytive offices and can take two to three weeks. the new initiative hopes to shorten the process to half the time to compete with rivals such as singapore to accept online applications in a few days and in south korea where it takes ten days. the plan is for the prime minister to come up with strategy for economic growth and the aim is to double the stock of direct investment to near $350 billion by 2020. other new proposals for the special zones include easing residency criteria for foreign entrepreneurs. that's it from the nikkei, back to you. >> thank you for that, makiko. now to india, wholesale prices based inflation in may rising to a month high driven up by food and fuel costs, but predictions for a bad monsoon season have analysts jittery

over food prices that will rise further if crops fail. we are joined now from mumbai where inflation could get worse if we see a sizable el nino effect. >> reporter: absolutely. well, that's the view, actually, dominating most of the economists' minds as well as the bond and european markets in india where the bond markets had the highest levels we have seen in two weeks. most of the up natiinflation is coming at a five-month high indicating that despite what the economists are expecting from the food up nation dinflation d come through at this time. we are watching this in terms of via data points. and india markets went from 3.3%

to 3.4%. so despite the headlines, it is a current inflation that along with the march backdated information has been revised 30 points higher to 6% walas well. in case the government does not act fast enough to insure there are adequate supplies in the system, that is if el nino does possibly spoil more for inflation. >> thank you very much indeed for that from mumbai. all right. let's get you up to speed on the latest from the world cup.

switzerland faced ecuador in opening world cup game. ecuador took the lead in the first half. switzerland battled hard and leveled just two minutes after halftime. the swiss substitute scored a dramatic goal to get the 2-1 win. argentina also got its campaign underway. they led early thanks to this goal. in the 65th minute, they had a superb effort. they lowered the deficit with 6:00 on the clock but it was not enough to avoid the 2-1 defeat. now the action continues to come in thick and fast. today sees groups f and g get started. the pick of the games is no doubt germany's clash with portugal at 18:00 cet.

and iran versus nigeria and the united states faces ghana. who are you rooting for? >> so unfortunate england happened on a saturday and we don't speak about it today. now, demonstrations against the tournament itself showed no sign of abate iing as they facef with protesters ahead of the clash with bosnia. many protester were met by police with canisters of spray. there was no major drama on the links this week as germany's martin kaymer raced to a inwith at the u.s. open championship. he was never challenged finishing at 9-under ahead of

eric compton. and the miami heat were beat in game five sunday night, 104-87. it's the spurs fifth title giving them a championship ring for every finger and ends the heat's two year reign. we have more coming up on "worldwide exchange." we have to take a quick break and will come back for the second hour.

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welcome to "worldwide exchange." i'm julia chatney. here are your head lives from around the world. the eu's energy chief says talks are still on the agenda while russia's deputy prime minister tells cnbc he hopes the situation can be resolved. >> the sanctions are stupid and russia is not going to imply any sanctions. in the normal circumstances. and fighting spreads across

iraq between the sunni insurgents and the military. the obama administration says it could engage in talks with iran as the central bank governor says he's watching the situation closely. in corporate news, medtronic buys covidien for $43 billion. meanwhile, shares are under pressure as the world hopes that could be a potential offer partner. and siemens and mitsubishi plan to launch a bid for alstom. >> announcer: you are watching "worldwide exchange." bringing you business news from around the globe. welcome back. now sunni insurgents of the isis

group have seized tal afar after a weekend of fighting. this is a short drive from mosul, the main city in the north captured by the fighters last week. please be warned that the following images are graphic. the isis has posted violent images online showing their leaders leading soldiers at gunpoint and lying down in trenches for execution. meanwhile, the iraqi air force launched air raids against the group killing 200 militants according to the state tv in anticipation of the violence the u.s. sent an aircraft carrier and two guided missile ships into the persian gulf. the u.s. secretary of state john kerry described washington's concern over the escalating situation. >> given the gravity of the situation, i would anticipate timely decisions from the president regarding the challenge. we've already taken some immediate steps, including providing an enhanced aerial

surveillance support to assist the iraqis in this fight. we've also ramped up shipments at military aid to iraq since the beginning of the year. and we have continued to ramp up efforts over the course of the last months leading up to the events of the last week. >> let's get more now with cnbc's michelle carusa cabrera on the ground in northern iraq. michelle, can you give us any visibility at all about isis and how far they are, specifically from the capital of baghdad? >> reporter: it's very difficult to know. there were a couple of reports that there was fighting north of the airport in baghdad, but those are impossible to verify along with a lot of the statements coming out of both the state government, the baghdad government, but also isis, the militant group. we do know there is fighting about 100 miles from here to the

west. 157 kilometers. and that most definitively, the vast majority fighting for control is north to northwest of the country. in the meantime, the state government of baghdad is very much trying to bolster the defenses of the country and also bolster the spirits of the soldiers as well. the prime minister nuri al maliki released video struggling to try to regain control. and there was video of the iraqi soldiers trying to retake the city of tikrit. the iraqi government has air strikes that killed more than 200 militants in a city northwest of fallujah, but it is impossible to verify. also impossible to verify and nbc news is releasing very few of the photos you mentioned, isis is posting gruesome photos online they say are iraqi soldiers they have executed. the associated press reports that the iraqi military spokesperson believes that the photos are real.

we are still awaiting president obama's decision on the there will be air strikes or drone strikes, but as you mentioned at the top, the movement of aircraft carriers and support chips into the persian gulf gives the president that flexibility if he wants to do it. in the meantime, we are in kyrgyzstan because when middle east experts talk about the disintegration of iraq, they are talking about kyrgyzstan northeast of the country. it's a semiautonomous region and they have very long wanted to be their own country. the leadership in kyrgyzstan is saying they don't necessarily want a split-up iraq, but they would like to stay in iraq only if under certain conditions. once you start listening to their conditions, it becomes very clear those are going to be difficult to achieve. so still it's unclear what the future of iraq is and whether it can be maintained as the iraq we have known since world war i. >> michelle, have you come across any evidence of iranian

forces or assets deployed in the fight against isis? >> reporter: well, we are in kyrgyzstan, so it's difficult. we wouldn't see as many iranian forces here. there are reports that they are there. iran says they have sent iranian support as well to help the shia factions, but here in kyrgyzstan we wouldn't be seeing that. >> all right, michelle, thank you very much for that. we'll quickly bring in steve at the world petroleum congress in moscow. the iea said last week that iraq is set to provide 60% of the growth in opec output to the end of this decade. is that what is causing the market so much concern rather than the current situation? because my understanding is this is negligible in the grand scheme of things.

>> reporter: i think actually i'm going to slightly disagree, julia. it is very important for the future. only 45% of the incremental growth encrewed up to this will come from the iraq growth. but the president isn't negligible but they export about 2.6 to 2.7 million barrels a day. they are producing in total about 3.3 million barrels a day, down from the peak of 3.6 million. on saying these numbers, they are important because of the spare capacity of the swing producer of opec is 2.5 million spare capacity. they are producing and can produce about 12.5. if we lost the iraqi oil for a short time or indeed for a longer term, and the bad template there is libya, which should produce 1.6 million barrels, is producing virtually nothing at the moment. so it can happen. if we lost the iraqi oil, they would not be able to replace the 3.4 million. people are not sure they can get

to 11.5. so the problem is the current supply. and as you say, the future suppliers, well, the iraqis have made the boldest of claims object whether they think they can get there by 2017. they believe they can produce 12 million bares a day by 2017. we are taking that with a pip ch of salt, but there are huge projections of what they can produce over the medium and longer term by 2020. the iea believes they can produce 6 million barrels a day and on a longer term they can produce 8 million barrels a day. they have reserves throughout the country of 140 billion barrels of reserve proven. so you can see the numbers we are talking about. absolutely very important. and if it was not for u.s. shale, this is what i'm hearing time and time again, we are in a pickle in terms of world supply at the moment because yes, there are concerns as we heard from bp earlier on about the growth in china, how it's not quite matching from their statistics what we are seeing in terms of chinese gdp growth. but the fact remains we'll need

every single barrel we've got. $2 trillion a year according to the iea, up to 2035. so yes, i think the iraqi barrel is very important today. and i think it's even more important tomorrow. back to you. >> steve, thank you so much for clarifying. all right. let's bring in our next guest who is the chief political strategist at the research group. you believe this could give us the 10% correction that the markets are talking about. explain how you see that playing out. >> i would say in a word, uncertainty. i think uncertainty is going to prevail for days if not weeks. with a growing threat of a civil war in iraq, with a growing threat that higher energy prices will be a headwind for our economy with higher gasoline prices for the u.s. economy that's still fairly fragile. i think this is a really enormous crisis that down the road runs the risk of having a

terrorist state with some territory persisting in iraq and exporting terrorism around the world. >> greg, having said that, society general said the commodity analyst team sent out a note earlier today reporting a 5% likelihood that exports from the south could be disrupted by this conflict. do you have that probability higher or do you think they have that right? >> i think the odds are below 50%. that we'll have a major disruption, but we don't know. that's the point. i think we've gone from an environment in washington and around the world that was pretty encouraging, pretty optimistic, to an environment now that is very uncertain it. and i think the uncertainty will persist for a while. >> so combined with the urn certainty over russia and ukraine and both sides now seem to be fighting some of a proxy war over energy now, and gas

supplies, on top of that, you've got the tail risk from iraq. oil prices closer to $120 a barrel. how much of a destabilizing impact will that have? >> i think it's a pretty big deal for all of us who thought the u.s. economy would easily get to a 3% live path. and there's still questions on business fixed investment, but now the whole factor of having a de facto tax hike because of gasoline i think reduces the chances that we'll be at the 3% gdp glide path. >> i understand what you are saying about uncertainty, but right now the risk metrix are not budging. at what point is the market going to catch on because right now they disagree with you? >> well, i think this key is baghdad. if the shiites are willing to fight, if they get some support from iran and baghdad holds,

then i think the crisis, the immediate crisis may lessen. but i think there's a longer term crisis and that is much of the center of the country will be controlled by these fanatics. and i think the implications of that are very negative. >> greg, thank you so much for your insight. the chief political strategist there. we'll stay with the markets and the outlook for the area as the vast majority to cnbc's weekend survey say 90% expect gains this week as the iraq conflict threatens supplies from the second largest producer. and strategists warn that exporters from the terminal south may send crude to $120 a barrel, possibly even higher. and they see a price spike of that kind of magnitude would likely be the trigger for action by saudi arabia to increase production or the release from strategic petroleum reserves by the iea. are oil prices set to move

higher and by how much, if so? if you want to join the conversation here, get in touch with us by e-mail or by twitter or directly to us. >> what happens to the markets if we see oil back up at $120 in this kind of situation? back to what greg was just saying there -- >> i think all bets are off then, all bullish bets, at least. that will slow them by 10% in a relatively short period of time. >> because look at the positioning. if we look at the difference in positioning and the increase in positions since february of last year, i would suggest it is more vulnerable than a few months ago. >> yes. we'll be watching. coming up, will u.s. authorities give bnp a break and shave off a few billion from the fine it faces? we cross to paris next with the details.

welcome back to "worldwide exchange." fighting intensifies in iraq as president barack obama says the u.s. could engage with iran. and medtronic buys covidien in a deal that could exceed its

tax bill. and gazprom demands that ukraine pay for all gas deliveries up front starting immediately. if you are just tuning in, thank you for joining us on the show. let me give you a look of the u.s. futures indicating ahead of the u.s. market open in a few hours' time. right now the negative sentiment is across the global situation right now with the situation in iraq, also the situation in ukraine. the dow indicating lower by about 32 points. the s&p 500 is lower by 4.5 points and 6 points lower for the nasdaq. these are snapping a three-week win streak into the close on friday, though we did see miner gains for the markets. but i have to admit this is gaping in the session on concerns over iraq leading the european markets lower in this session. keeping an eye on medtroni

contribution set to buy covidien just short of $43 billion. and the cac is lower by just shy of half a percent. and the ftse is down by .63%. >> we have seen some pockets of strength, so look at this, the shanghai composite is one of the outperformers today. fairly listless in the weak market. and remember, we have seen targeted stimulus by the chinese authorities. that seems to be helping sentiment but the market is always banking on further easing measures. will we get them? some economists say we could see them in the third quarter with leadership on the data front for the greater china markets because we have fdi on tuesday and home price numbers. remember, the housing market is the weak link in the chinese

economy. the sensex is under pressure. and the nikkei 225 is retreating from three-month highs we saw recently. quite a sizable correction here. this is probably down to the fact that we have seen a firmer yen taking the exporters down. we'll look at the markets to see how this is playing out there. the dollar under a lot of pressure against the japanese yen. the british pound is still looking strong, just a tad under 1.70. and the dollar will be front and center ahead of this foc meeting. this will be an important meeting. janet yellen, remember her six-month timeframe that got her into the trouble and the economic projections.

and if they are on the higher, firmer side in terms of this recovery, i will wonder about get i getting this out. >> she's always bullish, more than we expect. now we have breaking news as far as ukraine and russia are concerned. russia reduced gas prices to you crain to zero. russia has reduced gas supplies to yukraine to zero. they hope to still reach a solution and the talks will continue in june. let's take a look at today's other top stories. medtronic's strikes a deal with covidien for nearly $43 billion. theft to shift their headquarters to dublin to benefit from a lower tax rate.

they have executive offices in dublin although it is based near boston. the deal values covidien at $93.22 a share according to friday's closing price. the merger is based on complimentary strategy with covidien's products and won't lower the current 18% tax rate that much. the analysts are saying 2% to 3% lower as far as the tax rate is concerned. a quick look at the medtronic shares right now up 6% and covidien is up 32%. and $6 billion will be paid to buy part of midstream partners that they don't own already. the move will expand williams'

presence in north america. williams and access midstream are just slightly higher in with williams up a half percent and access up 1.25% right now. france's finance minister says progress has been made to a more equitable fine for bnp paribas as they will see a breach for u.s. sanctions. bear in mind they have just over $1 billion so what does this look like? >> 1.1 billion is what this looks like from the fourth quarter last year to cover the fines in the united states. we know that it won't be sufficient to cover the whole fine in the united states, but still the bank probably won't have to pay $10 billion. it's what the u.s. authorities were asking the french bank. and the market seems to be more positive in terms of outlook for

bnp paribas. the shares are outperforming on the comments from the finance minister. it told europe radio this weekend that the government has made some progress to want more equitable sanctions without providing further details on what equitable would mean. and it also called for a quick settlement because the uncertainty is not good for the french economy. so in the end, we expect bnp to pay less than reported by the press recently and perhaps we would hear more in the coming days. bnp will still face a ban of the u.s. dollar clearing activity, but would not lose its banking license in the united states. and that would be obviously great for the french bank. >> thank you, stephane. we have further comments from ukraine's energy minister

guaranteeing reliable gas supply to yukranian xlints. they are reducing the gas supply to zero. they will also continue to supply gas to european customers. that's the situation right now still trying to reach a deal. still to come on the show, will it be steady as she goes for janet yellen in the u.s. policy meeting? that's coming up. [ female announcer ] there's a gap out there. that's keeping you from the healthcare you deserve. at humana, we believe if healthcare changes, if it becomes simpler... if frustration and paperwork decrease... if grandparents get to live at home instead of in a home... the gap begins to close. so let's simplify things.

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welcome back. we'll take a look at u.s. futures to see how the major indices are positioned. we are looking at further losses for all the main markets stateside. and the transmission mechanism is the old price continues to be quite elevated because of the ongoing conflict in iraq. so this rests clearly on the global markets. further events are going on between ukraine and russia right now. we have been having comments all morning with the latest from the ceo of russia saying the ukrainian side is unconstructive in gas prices and blames kiev for using blackmail to get an

ultra low price. they are offering a price similar to what europe is paying right now. the government wants to see a third in the reduce of prices and the talks are suspended with the deadline passing a few hours ago. the u.s. federal reserve is widely expected to continue tapering its bond-buying program. it will wrap up the policy meeting on wednesday. let's get more now with greg, the chief political strategist that is still with us out of d.c. greg, there seem to be two components with this meeting this week. the first one is what janet yellen was going to say at the news conference. and the second element is the economic projections that will be released. on balance, where do you think all of this is going to take the markets? >> well, i think it will be fairly constructive. i think fed will indicate and she will indicate they are getting closer to their two big goals. improvement in the labor market and a little bit more inflation. they would like to see a little bit more inflation.

the problem is, and i think she'll indicate this, that the jury is still out as we talked about a few minutes ago on whether we really are at that 3% or better glide path on gdp. the jury is still out and the higher energy prices don't help. >> so greg, do you expect the element to effectively endorse current market pricing because we've seen a pull-back as far as rate expectations are concerned and the market is actually pushing out when the fed actually is higher. >> i think the fed is pleased to give more momentum to housing which remains a question mark. so i don't think she'll disabuse anybody, but we are still a year away before we get the first hike in the fed funds rate. >> greg, the chief political strategist at potomac research group. ukraine's energy minister claims russia has reduced gas prices to the country to zero. this as gas from demands that

ukraine pay for all gas deliveries up front starting immediately. fighting spreads across iraq with escalation of violence in the military. the obama administration says it could engage in talks with iran. the turkish markets hit hard on developments that the central bank governor says he's watching the situation closely. in corporate news, medtronic buys covidien for $43 billion. a move that could see them move overseas to cut the corporate tax bill. and siemens and mitsubishi hold out a bid for alstom. we'll see a bid from all contenders. let's look at the futures trading ahead of the opening on wall street. we have to take a quick break and will be back in two. i spent my entire childhood

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if you're just tuning in, thank you for joining us here on "worldwide exchange." a quick look at the futures behind me losing more ground in the last 30 minutes or so. we are down 41 points for the dow. 6 points for the s&p 500. and 10 points for the nasdaq. the dow and s&p breaking the three-week win streak at the close on friday with concerns

over iraq. we have the situation with russia and ukraine and the tensions there all feeding into sentiment right now. some big risk events this week with the fed meeting on wednesday also. so plenty for investors to focus on. this is how the european market session is progressing also. pretty light volumes, but we are still losing .20 in the ftse 100. .20 for the french market. and the italian market is a similar story here, too. particularly with the focus of what's happening in iraq, sri. the latest from iraq, the sunni insurgents from the isis group have seized tal afar. the main city in the north captured by the fighters last week. please be warned the following images are graphic. the group isi sirks posted violent images online claiming to show fighters leaving the army soldiers by gunpoint and laying them down in trenches for

execution. in the meantime, the iraqi air force launched air raids against the group killing more than 200 militants according to the country's state tv. and in anticipation of further violence, the u.s. sent an aircraft carrier and two guided missile ships into the persian gulf. the u.s. secretary of state john kerry described washington's concern over the escalating situation. >> given the gravity of the situation, i would anticipate timely decisions from the president regarding the challenge. we've already taken some immediate steps, including providing enhanced aerial surveillance support to assist the iraqis in this fight. we've also ramped up shipments of military aid to iraq since the beginning of the year. and we have continued to ramp up efforts over the course of the last months leading up to the events of the last week.

>> ukraine's minister says russia has reduced the gas provisions to the country to zero missing a set deadline this morning. ukraine owes billions of dollars in unpaid bills. the russian firm says it will now only ship gas to you crain if it is prepaid for what it orders. they have also filed a lawsuit to try to recover the $4.5 billion that ukraine owes for gas deliveries. in the last few minutes, the ceo said the ukrainian side has been unconstructive in gas talks blaming kiev for trying to use blackhail to get an ultra low price. meanwhile, we are getting comments from the eu's energy commissioner who says he's aiming for more trilateral talks in june between ukraine and russia over gas payments. he's confident that russia will continue to come up with a

compromised deal for kiev to pay $1 billion today and pay the rest later in the year, but so far no further developments. jenna godfried is joining us right now, good morning. take your pick of the events, ukraine and russia, the developments in iraq, is it likely to see this continue? >> the concern is if there's anything to shake this, given how the markets have run, you need to see growth in order to justify the higher prices. >> and why aren't we seeing a pickup in the volatility, though? if there's cautious sent. right now, why is volatility so low? >> market volume is low. this means you have to question how confident markets are and how much complacency there is in the markets instead. what we are concerned about is not just markets raising higher

on low volume but also the rotation within that. and what we are seeing is the rotation from small cap to large cap, from growth to value, and this is a slight growth of concern and any pullback would be healthy. >> in my mind it's the economic projections that are going to be key, of course, yellen's news conference as well. but if there are upgrades to the forecast or inflation for that matter, that may get the market thinking that rate hikes will happen sooner rather than later. >> exactly. the thing that is interesting is they tend to balance what they are saying with the focus being on not taking undue risks. they are aware that still the economic recovery has vulnerabilities. in particular, the housing market. how 20% of houses are still worth less than mortgages and another 20% is left to move. so there's still the risk there in the market. >> we are all seeing this escape

of velocity, in other words. >> no escape velocity yet. and what is interesting is the words that came out in the last meeting, it is not you, it's me, i need more time. it's that kind of rhetoric which means they won't take undo risks, they will take their time, and crucially they will see the market and not a heads-up if they are looking to move and will do it gradually. >> a lot of the expectation in the market right now is for them to lean against the moves we have seen in pricing as far as rate hikes are concerned. is not the greater risk here as greg was just saying there, okay, we are fine. we are good with the market pricing now. she acknowledges the current pricing because that's pretty bullish. >> that's exactly the main point there. there's such a substantial risk, too much of a risk if she comes out so bullish that this could continue. >> interesting. >> all right. jenna, thank you very much for joining us. now we'll take a look at the

other top stories we are following today. another headache for target, a glitch in the retail's checkout system caused delays among lines at u.s. stores on sunday night. this iphone video shot by cnbc at stores in california, this is what you're looking at right now, customers lit up twitter with reports of big backups and closed cash registers. in a statement, target apologizes and says the glitch is not related to a security issue. i think this is my favorite story of the day. starbucks is announcing a program to help its workers get a college degree. the coffee chain is partnering with arizona state university to offer discounted tuition on an online degree. any employee who works at least 20 hours a week will be eligible for partial tuition for the first two years and a free ride for the final two. workers can choose from about 40 programs including engineering and business. this comes as u.s. student loan debt has topped $1 trillion. i like that. i like that story.

did you work? >> i did, very hard. >> as in did you have a job at the same time studying? >> i did not. my parents wanted me to concentrate solely on studies. >> yeah, but given the relatively expensive u.s. education versus europe in particular, i like that. what is the motive behind the medotrin's deal to buy covidien. what is next? sri, i love the idea of you working hard at the university.

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fifteen minutes could save you... well, you know. welcome back to "worldwide exchange." here are your headlines. russia's prime minister says talks will continue when kiev pays its debt. and medtronic buys covidien in a bill for $43 billion that

could see its tax rate be cut. and a medical device maker covidien could have the latest move to lower u.s. corporate taxes. here's more on the story joining us live from cnbc headquarters, jackie deangelis, is this really about gas considerations or great pains to stress complimentary strategies. >> good morning, sri. that's what everyone is wondering this morning as they are pondering and looking at the details of this deal. medronic agreed to buy covidien, $42.9 billion in cash and stock. and it's going to pay just over $93 a share. that was actually a 29% premium to covidien's closing price on

friday. covidien that in makes products for surgical procedures will make a market close in size to johnson & johnson. they provide insulin pumps to areas like weight loss surgery that could help it better compete with business for hospitals. so maybe that's the advantage there, sri. meantime, medtronic will shift its headquarters to dublin. they have executive offices in ireland known for having a relatively lower tax rate, but the deal was driven by more a complimentary strategy with covidien rather than the tax consideration. he says the current tax rate is 18%. that's not going to change that much. analysts estimating that the deal will shave 2% to 3% off its tax bill. in the meantime, medtronic will keep its base in minnesota with 8,000 employees and is pledging $10 billion in investments there

over the next decade. these tax inversions have historically been rare but are coming back into some u.s. deals. u.s. lawmakers are concerned that they have hurt government revenue giving companies a tax loophole. two tax aversions have failed after focusing on political attention on the deal. pfizer's bid for astrazeneca was rejected and also the merger of amnicom that fell apart for non-tax reasons. medtronic is trading up 7% today. covidien is up 31% today. so investors like this news. back to you. >> thank you, jackie. and it is not about taxes, is it, jackie? meanwhile, medtroni were is teaming up with sanofi to

specialize in insulin drugs while they monitor blood sugar levels. it looks to be a good fit. sanofi is trying to protect its position in the $40 billion global diabetes market. the top insulin producer is society to fall half a percent in the first session. now breaking news with further developments in the russia/ukraine situation. russia will continue gas talks with kiev if they pay down their gas debt. we are talking about amounts of more than $4 billion. we also had comments from the ukrainian prime minister saying he blames russia for the break down in gas talks. we also had comments earlier saying that kiev was being unconstructive in the progress in the talks. what a situation unfolding here after the sanctions and violence in the east. it is tough to see an agreement

made on this. and this is a good story. former star michael schumaker is no longer in a coma and has left the french hospital that he was in since the ski accident last year. this is according to the motor racing spokesperson. he is no longer in a coma. a little bit of ftse for you. a busy day in the world cup. we saw eventful games in groups e andf. switzerland beat ecuador after a late goal to bring the final 2-1. france clashed with honduras for the first time. the french were led to a

comfortable 3-0 victory. and bos-herce lost 1-2 to argentina. world action comes in thick and fast today. no doubt germany's meeting with portugal at 18:00 cet. germany is the favorite. and the other games see iran take on nigeria and the u.s. faces ghana. major drama on the links this weekend as martin kaymer cruises to a win at the u.s. gold championship. he raced to a lead in the first round on thursday and was not seriously challenged. he finished 9-under, eight shots ahead of erik compton. still to come on the show -- >> the global markets feel the heat from the continued crisis

in iraq. wee will go live to the middle east and get investor reags. that's coming up on "worldwide exchange." we needed 30 new hires for our call center.

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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 "worldwide exchange." we have some breaking news. in the russian gas standoff, there's a limit in prices. we'll continue to keep you abreast on the developments, but for now sunni insurgents have seized tal afar. this is a short drive from mosul which was captured by fighters last week. yousef is in dubai, and we have commentary from the u.s. suggesting they are going to try

to talk to iran now to solve or at least help the situation in iraq right now. what are you hearing on the ground? and what talk are we having from the arab league, too, because they are crucial in any kind of solution here also? >> you're right, julia. the u.s. is making a suggestion but we have not heard from the iranian political leadership on whether they are open to that. they are very close allies of the incumbent iraqi central government. of course, we are waiting to hear from selected arab political leaders. yes, you heard the statement from the arab league being concerned about the situation in the days to come. we are also keeping a close eye on the indices. dubai down close to 5% after losing 4.7% yesterday. that market a key gauge about how foreign investors feel about this part of the world. we'll continue to mop or tnitor situation. julia? >> thank you, yousef.

we'll bring in scott who is a broker joining us live from chicago. scott, let me run this scenario past you. if baghdad falls, what could be the reaction in the markets? >> well, it would obviously be bullish for oil in the short-term until we get some sort of other supply. with what the markets have been doing for quite some time, we have been winding this ball of low volume and low volatility so tightly that i think that in talking to the traders on friday going home and over this weekend, that maybe, just maybe, this middle east tension is something to bring back the volatility in the market. because with the central bank intervention across the board with all three of the major geographies, asia and the u.s., it has really been a dampening down effect as far as volumes and volatility. i heard you mention earlier we have the all-time record highs in the equity markets but all-time equity low volumes.

so that can't go on forever, but i will say this. that's taking the volatility out of the market and maybe, just maybe, the extension on oil brings back risk. and we have a risk premium into the market across all things we trade. >> what about injecting life and volatility into the markets? >> it just might. the chatter is that we have seen what the ecb did and maybe the outlayer could be the fed. maybe the fed uses some of the strength that we have goaten from the ecb's movement and the door they left open for further qe. and maybe the fed will do something, may not speed up the taper, but maybe do something to change the verbiage about raising rates earlier rather than later. keep an eye on the fed. that would be something to bring the volatility back. >> thank you, scott. we love to see your jacket on a monday morning. that's it for today's show. i'm julia chatney. thank you for watching "worldwide exchange."

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good morning. and welcome to "squawk box." another transatlantic deal. inversion medtronic buying ireland-based covidien and then moving to the emerald isle? and chaos in iraq. the isi sirs claiming they kill 1700 soldiers. and a target glitch at the checkout line. it is monday, june 16th. "squawk box" begins right now. good monday morning,

everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin and joe kernan. a total deal of $42.9 billion as medtronic buys covidien. we'll take a look to see where this stands, but again look at what happens with covidien shares on this news. medtronics will move its base to ireland to reduce its global taxes. we'll talk to the chairman and ceo bill george to get his take on it later this morning. and siemens and mitsubishi are prepared to join in an offer of alstom.