government at the deadline is set up for new -- in baghdad. shinzo abe prepares to fire his third arrow that the nikkei retreats from a five-month high ahe ahead. and 30 minutes to go before the bank governor appears. how will he defend the timing of a rate move? welcome to the show. we're just getting some breaking news on the data front. german index is out for the region, the largest economy. the headlines here. ifo says the german business climate falls in june.

and the number -- the headline number for the business front index, 109.7. that's, again, the reuters consensus forecast for 110.2. so missing expectations. current conditions index, 1.48 in june. again, below consensus expectations, calling for 15. the expectations index, 104.4 -- excuse me, 104.8 in june and, again, that's below forecasts, reuters consensus calling for 104.9. i guess to a large extent this was to be expected given the softer pmis we saw yesterday. >> it follows the survey we had for this month, too. we will dig into some of the more details about that.

scott, weaker there on some of these german numbers from the ifo survey in this month. >> i think it's very much in line with the pmi as we saw earlier this week. i think that maybe reflects the fact that you have a lot of your political answers going on. right now, we have the situation in the middle east. i think many corporates are concerned about oil prices going forward and, of course, i would say when i look at ua, we see this kind of end of the recession, that we still have lots of problems and lots of political problems. >> and the ecb, even with the stimulus it's add hasn't done much right now and needs to look to add more? korea. i'm very concerned about inflation expectations. inflation, you could say that is history. the central bank cannot do anything about the current inflation rate. inflation expect ages tell you something about the future, how those corporates can change

their consumption behavior and i think inflation expectations are at too low levels right now. we have especially a problem in germany, i would say, because low inflation in germany makes this rebalancing even more difficult. so i think they have to do more. >> what does that mean for qe? >> i think that has to do more qe. i think that should be the most efficient instrument, if you would like to change the direction for inflation expectations and also if you would like to get the weaker euro. and i think that finally the ecb, draghi, he has to start focusing more on the euro, the strength of the euro. it's a negative factor for exporters, but is a negative factor for inflation. with a strong currency, you get this disinflationary fourses.

>> but right on queue, the ifo, more clarity here, reiterating exactly what you said about geopolitics and the tail risks, the german economy fears the impact of ukraine and the iraq crisis. japan's prime minister shinzo abe may finally be about to fire the third hour in an attempt to get back on track. the press conference is scheduled for late this afternoon in tokyo. abe's third arrow has always been aimed at structural reform. however, reports are surfacing that today's focus will look at deregulating the labor market. let's get more with the chief economist at seb still with us. this is going to be a very hard sell for the abe administration, given the fact that they have some very deeply entrenched

interests. when is it going to start to be material? >> that is a very good question. i think what we have seen so far, we have delivered the first two arrows. that's the easy part, to get the more expensive fiscal policy and to print money. but the big challenge for japan, that is, of course, aging population, that the amount of labor is sinking. and i can see only two solutions to that kind of problem. the first solution is to see if you can krez productivity in japan. but we are at quite high levels. and the second solution is to increase women's participation in the labor market. that's a huge, huge source. to get women out in the labor market, you have to change the factor around the house and the family. maybe either because tax changes, benefits, etcetera, and

i think it's quite interesting that japan is looking at -- to see how we have been able to increase the labor and supply and participation in labor market. >> the bottom line, in the eurozone, is structural reforms take time and you don't see the impact of them in a year into 18 months, you need to look towards further forward than that. in the case of abe, if you're about the message that he's sending here. so is he going to get the message right as far as what they're actually hoping to achieve and what can he do short-term to at least sell that message? and is he doing it? >> i think that he will probably -- if he's addressing these kinds of problems, i think that could be kind of a relief for japan. but i think it will take a very long time to see the effect of this. and the aging population, that's a problem that they have right now. we cannot wait for the solution. if we could say that, well, in 10 wrb 15 years time from now

then we are going to have these problems in japan. i can see he's kind of long political processes and that it will take a very long time to see the results. but i'm quite concerned about japan. >> the cuts in the corporate tax rate for enterprise, is that long? >> i think it's a long way to -- well, it will not increase, but it will help to get maybe a hopefully stronger economy and also improve the situation for the corporate sector. but i think that you have to think about the -- mentally how to change the point. i think that the head of chiefs of society in japan. >> speaking of concerns about abe nomics, head to our website to find out why one economist

thinks abe nomics could ultimately fail. also coming up on today's show, mumbai calling with india's new government looking to boost trade. we speak to the bombay stock exchange ceo on luring foreign investment. find out why yahoo!'s big boss ended up having dinner for one at the arts festival in cannes last week. >> finally, see the latest at the sleeping mobile industry, it involves nothing more than the lesser words. we are joined by the ceo later on in the show. >> i'm looking forward to that one. hedge funds have had a difficult first half of 2014 with struggling returns. not helped by the unrest in russia and ukraine. the great and the good of the economy have gathered in monaco. karen drew the short draw and joins us from monaco now. karen, hearing what you told us

earlier and the managers focusing on special situations, they are outperforming, it seems, their peers on the macro front. do you think they can turn it around in the balance of the year? >> the specialist fund managers are having a very good time. but these are people who look at the long-term performance. long-term performance is made up of different parts, different volatilities thp they're enjoying the past three months. but let's talk more about that. a fund manager who invests partly in global markets, 100 billion in management, henrik, welcome, great to see you. >> thank you, karen. nice to be here. >> it's not a bad gig. now one spent a lot of time going after u.s. money the likes of frontier markets. how significant has the sentiment shift and how willing are investors to engage in these markets?

>> large u.s. institutions don't take short-term bids. they've been diversifying their portfolio systemically over the last few years. even in the emerging market pullback of last year, we haven't seen a slowdown simply because they are so far from being balanced and, therefore, being -- according to the future weight of the global economy. >> there is a message in that chasing markets higher is not necessarily always the right approach. some people feel as though emerging markets are just not ready for an investment, they feel like it's too early to buy in emerging markets. do you think that's true? or do you see opportunity right now? >> if you look at the relative performance of the last 12 to 24 months or even longer, emerging markets have been derating relative to developed markets. if you're a long-term investor, this is an opportunity to expose yourself to a change in the world economy which is not disputed any more. we have been talking about the

fact that the largest -- the weight of the world economy would be in asia and some people would have been called your profit. it's a bit like global warming. similarly, the emerging market exposure challenge is there and institutional investors understand it very well. >> many people think africa could hold some kind of gospel teaching, as well. 37 billion is the amount of money you have invested in africa. where do you see the upside? this is a market that some people say have enormous barriers to increase. >> africa has done quite well over the last decade when it came from undiscovered continent to now a news worthy item. and i would say going forward, africa faces a number of challenges simply because things don't go up in a straight line and it does struggle to absorb large money. so it's an extremely specialist

area. but if you look ahead, where is the next 1 billion market after india? well, that is the african continent.. it has divided subsa hair ras desert into three large play blocks. you have to be willing to engage liquid and nonliquid and this is not for the day trader. >> phoenix would say tough yield debt products, money has gone into emerging market equities, so the next is a spill over to frontier markets. do you think that's true? >> i think i can argue with you that high quality mid sized local companies are having to borrow mope at roar expensive rates, particularly if they want to fund in dollars compared to, say, low quality companies in the development world. the countries are pretty sound.

you stay away when the record bond issues happen. but i find the stress, you'll be able to buy at sensible prices and, of course, you have a very, very strong national balance sheet as opposed tot developed world which remains overleveraged. >> can i ask you quickly about some geopolitical events? we've been russia, ewe crepe, now insurgencies, but even across the country of africa there's been different terrorism acts, as well. why do you think retailers are want to go invest in global markets despite some of these concerns? >> i think geopolitics is back in a big way and geopolitical risk is back. that doesn't mean opportunities are going away. an example is russia. it was taken to absurdly cheap levels earlier this year and it's still extremely cheap. in the end, investment is about your ender price and timing.

the risk really is background. so it brings a kind of volatility which we're not seeing displayed in the vix yet that can be used to access markets that haven't accessed. >> i thank you very much for joining us. the ceo of investec management. you're just here for the day, about 24 hours. so i'll let you go and peel off and have a swim before you leave monaco. it's a pretty idyllic spot. >> it's a tough job, but someone has to do it, karen. thanks for that. in m&a news, syngenta is trading higher. mon san toe was considering a

$40 billion takeover from the firm. syngenta has no comment to make on the news when contacted by cnbc. the two companies held preliminary talk bes the deal before sib again ta walks away. that's according to reports from bloomberg news which said talks fizzled out in may. the tax location for switzerland was said to be a key note factor for the u.s. company. meanwhile, ge's ceo jeff immelt is expected to join other ceos after general electric significantly resigned the company aefs offer for alstom. stephane is outside the plant now. they've managed to organize this event in just 24 hours. they agreed to do the deal. am i missing something? >> perhaps it was organized earlier, but the board of alstom

said over the weekend that it would accept the offer from general electric. today, the ceo will visit an alstom factory where the turbines are built. these turbines are used in the french power plant. it's part of the agreement that was sealed over the weekend. now, jessie mills will explain the strategy of ge in france. he's due to talk to the press after this visit. the ceo perhaps will give an indication about what the company is going to do with the cash because at the end of the day, there will be less cash than expected. ge will pay a bit more than 12 billion euros to buy most of the power business of alstom. but the french company will have to invest 3.5 billion euros with general electric and it will have to pay a bit more than 600 million euros to buy the rail

signaling business from general electric at the end of the day. there will be less cash than expected and perhaps less cash than what we thought for the shareholders of alstom. that's the reason why. yesterday the share price was down more than 4%. that was the reaction of this deal over the weekend. so perhaps of that point we'll get some information from the ceo of alstom who is going to attend the visit in this building right behind me. >> stephane, try to tell us about the workers, as well, and how they feel about this deal since french jobs were so central. stay tuned as we head back out to monaco for the world's large just fund forums, we'll hear from charn cho.

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welcome back to "worldwide exchange." markets are evenly split between the losers and the gainers with the stoxx 600 relatively unchanged if in market session so far today. the german ifo coming in below

expect ages 109.7 versus 110.2. very little move as far as the euro or the market is concerned right now. a bit of a strength of core in the weakness of the periphery. slight movements. low volumes of gain comparing yesterday's session, too. let's have a look at the foreign exchange market. all the focus today on both what's going on in sterling. we've got mark carney's testimony this morning at 10:30 cet. how is he going to justify that shift to a more hawkish start we got on june 12th? and, of course, dollar/yen, we were talking about this earlier on the show. we're waiting to find out what abe can do. >> that exactly is the big story. that's informing the trading session for the nikkei 225, tokyo equities so broadly. ending fairley flat. the markets are looking for some spans and some clarity later on today. about half an hour or so from

now, we should hear from the japanese prime minister on the third face of this longer term economic program which could include a phased tax cut, pension reform and also some other longer term economics including possibly more flexibility in the labor market. that's going to be a very tough sell from the union's perspective in japan. so deeply entrenched interests there. the nikkei backing away from five-month highs at the settlement. the kospi strong, the outperformance factor up by 1%. the shanghai composite stable at 2033. but the s&p/asx 200, got some news from bhp looking at further cuts in its iron ore division. we're looking at the miners because of what has been happening in south africa, the five-month platinum strike is

over. there should be some stability returning into the pgm's market and the miners following that, one, as well. back to you now, jules. >> sri, thank you. now let's get straight out to karen cho in monaco. karen. >> thank you very much, julia. pollen to talk about here. jim mccochran joins us. normally you would be in the studio. lovely back drop today. >> lovely back drop. glad to be with you. >> what sort of sentiment we're looking at, you were saying you don't think they're as foolish as i think they are. >> well, i think after five years of really strong equity markets and particularly strong last year, you would think that everyone would be fully into the market and saying, hey, it's great. but we're not actually seeing that. i think there are quite a few people around who have money on the sidelines and who are thinking, hey, i want to start back before i -- or maybe it's

not as good as it appears. so i would say sentiment is kind of mixed which gives me some confidence that maybe there's still more to go in this bull market. >> in terms of some of the decisions or strategies, people are saying should see strength with the upside? >> well, the upside is really from the ecb. it's in contrast to the u.s. so there's a very good fundamental for the equity market. i think in the case of the european markets, the ecb did the right thing earlier this month when they went to negative rates on balances with the ecb. they cut the blending rate further. that means that the ecb is really pushing the european banks to lend and get the economy going, get the eurozone economy going. however, the european banks can't really do as much as they need to. there needs to be other sources of credit creation. with too much debt in europe

still, i feel that although the ecb will push the market up with some kind soft moves, i think that may be an opportunity to sell because i don't see where the growth is coming from in europe. that is in contrast to the u.s. but i see another couple of years of pretty good growth in that economy. >> you can see this stretch higher for the s&p 500. let's get over to japanese equity as one of the other asset opportunities. shinzo abe has been talking today and talking about the third arrow and delivering reform which the market said has been missing which is why we didn't get the currency depreciation the market had expected. >> that's right. >> do you think we're going to see the performance we had last year with japanese stocks at 57%? it was staggering. >> it was staggering. the run a lot of what may have happened this year. the market really got ahead of itself at the end of the laugh year in japan. if mr. abe can bring that third

arrow into play, then you can see some pretty good performance from here. but i think it's very dmentant on the currency. at 102 yen to the dollar, it's still painful for japanese business.. they need 1110 or 1115. that's what you need to see a really good performance in japan. >> very quickly because we're running out of time, you're giving a couple of speeches today. what's the message you're giving about flows in and out of the mainland? the message i would give is that some of the proposed regulatory changes, notably mutual recognition, mainland funds being sold in hong kong, hong kong funds being available for sale in china, those are, in principal, very attractive changes. but i do think the chinese will hedge it around a bit with some regulatory rules to slow it down because they're very concerned about volatility in the

renminbi. ultimately, the chinese individuals would be big investors in global markets. >> thank you very much for joining us today. i'll let you get back to the conference to prepare for those two big speeches you're giving. back to you. that's the latest live in monaco. i'll see you later on in the program the. >> thank you so much. we're looking forward to it. still to come on the show, the bank of england compared a uk recovery to success at the football world cup. will mark carney's defense to a better job of keeping a grilling mp? we'll discuss right after the break.

shares in syngenta jump higher on the talks that u.s. rival monsanto has considered a $40 billion bid for the firm. u.s. secretary of state john kerry urges leaders in iraqi and kurdistan to be set for a new government. >> shinzo abe prepares to fire his third arrow as the nikkei retreats from a five-month high

ahead of those prime minister's growth plans expected this morning. and bank of england governor carney appears before uk lawmakers. how will he defend his new curb of the timing of a rate move? so one of the best performers in the european elections, prime minister renzi of italy speaking this morning in parliament. she said the european election results is a very loud alarm signal, very interesting because he was meant to be seen as perhaps someone who supported cameron against the role of the jean-claude curve. he said it's impossible to see who should be the commission head without knowing who is going to be in the top spots. so perhaps there's an olive

branch for david cameron. we know he's someone who wants to put a bit of leeway on the deficits and that was seen as something he could get away with asking for if he signed off on the appointment. very interesting. see whether cameron pushes for a vote. let's quickly get to more corporate news now. shares in belgium firm thrombogenic rules out sale. in february, they said they were exploring strategic options. however, it's now said it's settled on remaining a stand alone firm. the ceos of directv and at&t head to capitol hill to testify

about the merits of their proposed $49 billion memorier. they also say the combined company will sxan high speed broadband service to at least 15 million customers mostly in rural areas. critics say the merger would stifle consumer choices. in the session today, at&t slightly higher by around $4%. directv losing by around 0.3%. last week we told you about the new app yo the start-up which apparently began life as a joke, it allows users to do nothing but say yo to one another. but it's seen a huge amount of. layerty topping the charts, even securing over $1 million in venture capital money. over the weekend, hackers exposed a security flaw in the app. later on in the show, we'll be

joined by the app's co-founder live from san francisco. >> instead of yo, it should be yikes. >> i don't. what am i saying to you? yo. >> you're very hip. anyway, what's the weirdest app you've seen lately? get in touch with us here on "worldwide exchange." worldwide@cnbc.com, @cnbcwex or directly to julia or me. you can yo us if you want. move on now, japan's prime minister shinzo abe is set to hold a press conference in the next hour. it's expected he will unveil a third arrow of its abe nomics growth strategy. the story live from tokyo now. the japanese government last week released a draft of its new growth strategy.

the third arrow plan is expected to unveil four main parts boosting regulations and employment, agriculture and health care. the corporate tax rates now as high as 35.6 of 4% for tokyo based companies. but the government will seek to cut that to the 20% level over the next several years. in hopes of attracting foreign investment. the government is going to crack bedrock regulations that have long resisted change. the first part of a performance employment, nonmanagerial employees earning at least $100,000 a year are to qualify for a new pay scheme that rewards for results rather than hours works. it's proposing steps to bring in more women and foreigners into the workforce. in terms of japan's long protected agriculture sector, the government will overhaul arguing co regulatorregulators first time in 60 years.

the group is seen as a barrier to direct local farming. in health care, patients are to have greater freedom to combine naturally ensured treatments with out of pocket treatments. prime minister abe is emphasizing that he'll make sure to carry them out in order to lead japan to sustainable growth. back to you, sri. >> thank you very much for that. let's get more now from jane foley. jane, good to see you. the third arrow, they are very longer term structural changes. but in the here and now, does the japanese economy and the export sector need a weaker yen? >> well, yes, for japan, so many countries now would like a weaker currency. if you look at europe, we have a disinflationary environment. even in north america, there's a little bit more inflation in that. you go back six months or so, you could see some disinflation.

the problem is, it's very difficult for the japanese to engineer a weaker yen. the dollar is such a weak currency. does the japanese economy need a stronger dollar? >> yes, it probably does in the same way the eurozone would need a stroker dollar, too. >> what about positioning as far as tying that in with expectations of abe. >> i don't think the market is -- because you can go back to the 1990s, there's a lot of analysis about what is wrong with the japanese economy. generally speaking, there will be conclusions that come to well, they need structural reform. everybody knows that. are we going to see this massive appetite or are the tip of the iceberg? i think it's probably the tip of the iceberg. i don't think we're going to see a huge amount of measures, particularly with respect to the labor market.

>> how close are you watching what the government pension fund does with its nearly $1.3 trillion in assets? getting assets into the accounts market, it's going to be a very gradual one. but ultimately, this will be a yen negative story, will it not? >> yings. there's this negative flow argument. but it's a relative positioning of the bank of japan. we'll see some disappointment this year that maybe the bank of japan are more upbeat than the market anticipated, that the markets will pair back its quantitative easing from the bank of japan. if we stop and look and see what the bank of japan is doing, it's a huge amount of monetary stimulus. it has no idea that it's going to start paying that back as the fed continues to taper, as the fed moves towards a hike, a relative amount of easing at the bank of japan is doing will

become even more apartment. so i think there is a weakening story out there, but i think this is probably very gradual and maybe not one for this month. >> jane, stay right with us. because the bank of england's governor mark carney is appearing before the treasury select committee. the governor is expected to be grilled on the may inflation report which claims the bank's economy is on its way back. many investors will listen to see when they're going to start raise benchmark interest rates. we're waiting for mark carney to start speaking. i think he's being bruised at this stage. net mortgage lending, 1.2 billion, this data just coming in. that's the lowest since august of 2013. but, of course, we know the bank of england has been teetering with mortgage availability in some of the conditions attached to that. so some of that is to be

expected. what we are seeing is lending to nonfinancial firms rising for the first time since september 2013. at least that is a good sign right now. let's get a quick comment from helia. >> this is a massive session. it's not going to be a statement, as you would have seen. it's a question and answer egz session and this is a three-hour monster time that they have with the governor and it's not just mark carney. but you're right, he will be quizzed ahead of this thursday's publication of the financial stability report. he won't be able to comment on that. but he won't be able to get away with not talking about interest rate hikes and what that means for the uk economy, especially when it comes to mortgages. i think that's going to be key for the treasury. >> if we look back to may and the tone that was coming out in

there and we look at what happened on june 12th, how are you going to justify that shift? someone is going so ask him. >> well, look, i think andrew, who chairs the treasury select committee has been impatient with forward guidance to begin with. another forward guidance to even more unclear version. carney, who will have been in his seat for about a year to the date almost, has been let down in transparency. it was going to be clearer with the market, clooer clearer with business owner. and i think mps today will be giving him a very fierce grilling over his communications style and why that seems to have been flip-flopping from the last two years. of course, his argument would be just to say quickly that the economy is a success and that is

the only standard by which you should be judging him. and that's the point, you have to catch up with the market. you have to catch up with the data. so yes, you can argue that but at the same time, he had to get at least in line or at some point ahead of the curb, surely. >> there is a danger that with mile and mr. bean -- sorry, peeg, as well, that there could be some dissonance there. they may not necessarily speak with one voice. >> and recently, it's been fairley consistent. but i think the plot thickens because that cpi which we had a couple of weeks ago was weak. >> listen listen in now because mr. carney is speaking. >> the relative gap as we sit here today is probably about 16 points. we published that in our quarterly bulletin estimating that a quarter of that could be

represented by measurement and there's a few aspects of that and i'll touch on them briefly. first with the just missed measurements of output, some of that subsequently we would expect to be with revisions of data, final data would come in. but some are more substantive. an example which is about to be fixed by the ons would be the treatment of r&d which is treated in an intermediate consumption as opposed to investment. so that is a secular underestimation of output which as i say is about -- we expect to be adjusted in the revisions coming up to methodology in the fall. other challenge owes on productivity added by value sector, it's one that the bang has done work on, capturing value added more broadly in the services sector is quite

challenging as you're well aware. 70% of output is from the services sectors. it is less likely that there's measurement around the labor input component. that's more readily measured. but the last point i'll make in terms of these estimates, when i quote 16%, i'll quoting relative to a precrisis trend and this smings have changed relative to the financial crisis. for example, in financial services is one of the toughest areas to measure. another example is oil output which has been on some secular down path. and so that would affect it, as well.. just to summarize, with that estimate of that issue is about a quarter of the material now. but it is certainly not the -- does not explain the majority of the productivity.

>> thank you very much. andy love. >> what the basic labor markets are -- as you have anticipated in the main inflation report. >> well, there's many aspects to that data. in terms of the pace of job creation continues to be strong, as you're aware. employment growth is stell running at a record pace. but what was weaker and notable was average weekly earnings, the wage data in effect, was softer than our expect ages and adds to a run of hard data around wages, actual data aren't wages that has been softer than we would expected. that's important for the forecast because our expectation is that there will be an accelerate entering into the second half of this year into 2015 which would help support

consumption. so taken together, that data presents some cross currents for the open. >> this update up to the spare capacity in the economy? >> taken in isolation, which is always tainted, but taken in isolation, the developments on the way -- >> let's leave mark carney there. this is going to go on for three hours. we will continue to bring you the headlines as they come. he did mention when he was talking about the labor market that it's notable that the latest wage data has been softer than our expectations. to come back to you, you mentioned the key word inflation, softer than they had expected and the wage data softer, too. so it has to be data dependent, doesn't it? >> if you look at the minutes, they do talk about wage inflation. wage inflation is a sign of slack in the labor market. perhaps a little more slack than

they have anticipated. if you're looking at the cpi prints, 1.5%, that's relatively low 50% target. and in my mind, as long as the macro projection numbers are keeping up or has inflation down, i think there's still a good reason for them not to hike into that. >> there ever two things that are difficult. while you were cpi ott at 11.5%, you have asset bubbles at 9.9%. those are an increased worry for the economy. not just because prices are going up, but what the governor and the bank of england are concerned about is the level of debt that people are accumulating and how that -- remember that we had in terms of disposable income we were up at 1160%. that has come down to 140%. but according to obr's forecast, that's going to go up again. that's not a very healthy or a very balanced economy. the other thing to say is it's

just something very strange going on in the uk economy. because when you think about it, unemployment is falling at this incredibly fast paced. but you've got zero wage inflation and there's a slight mismatch in what's happening. because you would imagine if you were offering an alternative job, you would say to your boss, well, i won't leave if you give me some more money. but that doesn't seem to be happening. >> outside, i'm just curious as to how important that wage component is in terms of policymakers. as governor carney said, wage data is softer than expectations. does that mean the rate hikes gets pushed out further into the horizon? >> well, i think that you -- it certainly doesn't create more inflation repressures. i think what it does, though, is it creates concerns about affordability. and that's where you see the bank takes these draftic measures that we're going to see or spengt to see introduced on

thursday. that is really taking a swing at the mortgage market. really, it means that those changes which we've talked about before in london, of course, one in five people would not be able to get the mortgages that they want. and that's all about currently being worried that people are accelerating the amount of debt they can get, that they're not getting the salaries to pay for it. >> we have to back up, but the bottom line is, after what carney said on june 12th, the market has shifted its expectations quite dramatically. based on wage growth, is the market getting ahead of itself or do you think he meant to do that? >> i think he meant to do it, but looking at the cpi data, that is a risk that the market is getting ahead of itself. this is very data dependent. i think if there is continuation of disinflation, as long as

there are signs that the market is beginning to -- which there are now, then i think they can probably delay. >> is he a good governor? >> we got some numbers, when he was with the bank of canada, he was a hawk. he had a lot of macro numbers which had showed signs of success in canada. so from that point of view, i think there is a precedence and i think right now the market is still giving him the benefit of the doubt. >> sterling back to 170. as we've been talking. jane, fantastic to have you on, jane foley at rabobank. as sri just mentioned there, sterling is under a little bit of pressure. but it is now back below that 170 level, 1.6992. minimal moves, but it is back below 1.70. still to come on the show, boost investment in india. we'll speak to the ceo of the

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japan's prime minister shin sdwoe abe is unveiling the details of the third steps in his plan, the so-called third

arrow. right now, he's suggesting he'll cut the corporate tax rate starting next april. we've had some of the details on that already. they're going to revise the tax system to promote more women in the workforce. the gpis, the pension fund will appropriately revise its portfolio as quickly as possible. we can deal with some more clarity on that. japan will immediately take measures to strengthen the governance of the pension fund. we're talking about shifting assets from equities into other assets right now. we were talking about that earlier. and the message here right now appears to be that the growth strategy contains very little drastically new for the draft. your thoughts on this? drastically different. >> i would say that the market

expectation had been a lot more prompt. they wanted something more urgent. i would say that's basically done on the first and second arrow. the third arrow consisted as you pointed out a lot to do with structural transitional type changes. it is a very positive thing. so he is trying to basically tackle the walls that have been withholding japan from modernization especially, for example, in with the pib. >> i want to pick up on this move to try and encourage greater market flexibility. that is going to be a very, very tough sell because the abe administration.

it does involve liberalization to help companies fire people. in terms of a time frame, when are we going to see that? >> especially in japan, it's difficult to get reemployment. that's the only country in the world where you see a correlation between jobless rate and suicide rate. if you don't do it now, when are they going to propel this move? if they don't conduck these now, they'll never be able to do it. >> and i could make this point about any of them. he's going to address the pension system as quickly as possible. he needs to tie some of these things down. >> absolutely. and that's one of the things from last year.

he came up in june and came up a big disappointment, very negative in the market. this time around, they know how to cope with it. i think they've learned their lesson from the mistakes last year. you can see they're taking into account on how the market reacts. >> we have to take a quick break, but you're going to be staying with us, so we'll discuss this far more after the break. plenty more discussion coming up. carney, we'll give you the latest comments on that, more on japan and the second hour of "worldwide exchange." stay with us. geico's been helping people save money for over 75 years. they've really stood the test of time. much like these majestic rocky mountains. which must be named after the... that would be rocky the flying squirrel, mr. gecko sir. obviously! ahh come on bullwinkle, they're named after...

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welcome to "worldwide exchange." >> shinzo abe fires his third arrow. japan's prime minister confirms he'll cut corporation tax to less than 30%. mark carney says interest rate rises will be limited and gradual. the bank of england governor says he expects stronger growth in the second half of the year but amid weak data that was softer than expected. >> wage data in effect was softer than our expectations and add to a run of hard data around

the actual data around wages. that has been softer than we had expected. >> shares in swiss agri giant syngenta jumps higher on reports u.s. rival monsanto is considering a $40 billion for the firm. john query urges leaders to be part of the national government as a july deadline is set for new leadership in baghdad. >> announcer: you're watching "worldwide exchange," bringing you you bis business news from around the global. japan's prime minister shinzo abe has unveiled the third step in his economic front. let's bring you up to speed with some of the highlights. that will cut the corporate tax rate below 30% in phases over the next several years.

as far as the allocation of the government pension fund is concerned, remember, just under $1.3 trillion in as et. gpis will revise that as quickly as possible. so we don't have any real detail about the tame frame for this, but they are shifting into mover areas. japan will take measures to strengthen gpis. and in terms of the dem dprafices, japan will promote more women in the workforce. there's not a great deal here. at what point are we going to see the trickle down effects of all this into the real economy? and we have to also add that interpretation is key here.

>> it will take time. next year, the year after, could be years and years after. but before that, we were seeing organic growth kicking in. you could see all the statistics, including capital expenditure is showing very good price. his measures would give a very good following for that japanese exporters and would induce a lot of foreign direct investment into japan. this is aimed at their target for 2020. the market might be disappointed, but if you really read, there is a good plateau for what is emerging. the deregulation for workforce migrants and there are lots of hints to the future growth perspective right now. does this all take the burden of responsibility off mr. korodo or

the bank of japan or do they have more work to do to try to engineer a still softer yep? i've been hearing that 110 dollar/yen is -- 110, 115 is really what the corporate sector needs ford to make japanese exports more competitive. >> i would say that's what they want. they're well over the breaking point at 100, so it's not a problem. that should come up with his policies. as you noted earlier, it comes with more implementation details and how they're going to progress it. the boj right now is a role of more standing by the side. >> if we see, for example, excessively negative whiplash to the tax increase we saw in april, if we see that in april/june period, they're ready to basically come with a positive. because by end of this year in november or december, the government has to come with a decision to raise the tax again by 2% in consumption tax to 10% by october 2015.

they have to keep the momentum going until that time or they wouldn't be justified. the government wouldn't have the justification of raising the rates. it will be a joint concerted effort. >> this morning, under pressure as far as the uk and german markets are concerned. minor losses and gains, you can see there at the french market. the ftse under a bit more pressure, 0.6%. we had that weaker than expected ifo business 109.7 versus 110 expected weaker on the expectations, too. there's very little change as far as the equity markets are concerned. mark carney is testifying this morning on his hawkish shift that we got in the early part of june, noting that wage growth in particular, the wage data is not as strong as they were expecting and that's going to be

fundamental to a sustained consumption of growth recovery. he's saying, look, the timing of these rate hikes will be driven by the data. they are data dependant. what that has given us is a drop below that 170 left in sterling. about 0.3% lower. so no significant moves. but it is obviously a significant level that we've dropped below. let's have a look at u.s. futures this morning. two down on the s&p snapping a six-day session. under a little pressure as far as the futures are concerned. the dow just shy of 28 points lower and the nasdaq five points lower this morning, too. consumer confidence a host of fed speak, too. let's bring you up to speed with today's agenda. in the united states, we have case-shiller home prices out at 9:00 a.m. eastern. new existing home sales data followed yesterday, too. at 10:00 a.m., we get new may

home sales data expected to drive 0.5%. we'll get june consumer confidence and a trail of fed officials as i mentioned there, vice president charles plosser, bill dudley and fran's john williams. as for earnings, look for numbers today from carnival and drugstore chain walgreen. let's get set up for the u.s. markets. steve, you heard julia just outline the data dockets and the fed speakers, as well. are they govern to move to meet on the markets? >> we'll see if those specific items move the needle. the housing data has been something that we've been getting a little bit more comfortable with positive data. and i think that could help.

if the fed decides to throw a curveball in there, that can be an issue, but earnings could be a net positive. >> how close are we to watching investors watching what happens outside in the u.s.? should that give you a bit more conviction about companies that have a large international footprint, like caterpillar? >> i think it's sector dependent. you mentioned a name like caterpillar. surely the folks that are watching the heavy industrials, the capital equipment side, which has been a little bit soft, they're going to watch that very closely. again, that has been soft. you've seen that in the tech sector, absent semi conductors, software has been quite a drag on that sector. so if we can see some more growth on pacific rim and also continued pick up in europe, i think those two sectors in particular could be quite strong. >> steve, don't get me wrong.

i like a good rally just as much as the next man. but how strong is the risk off the correction given what is happening in iraq and the knock on effects of the price of oil? are the markets doing a fairley commendable job of climbing this wall of worry? >> yeah. the melt up continues. it's primarily driven here, in our view, by the credit availability from the central bank. so until that saturdays to ease back and it looks like, you know, the tapering is in place but it's not yet noticeable, that can continue. this correction is always there. i don't think that an issue like isis running wild in northern iraq is -- that would be the tipping point. although we do think that there's still risk to oil of about $15 to $30 on that depending on how far they get. but equity markets on their own, i think they should continue. >> all right. noted, sir. thank you very much indeed for that. >> thank you.

>> analysts are weighing in on how much they think alibaba could be worth. morningstar thinks the offer to raise $26 billion. valuing the company at $220 billion. that would make it the biggest ipo ever on china's record. now, u.s. authorities are seeking information from two companies in connection with an insider trading probe of carl icahn. pro golfer phil mickelson and las vegas billy walters, it's reported clorox got a request from the s.e.c. in 2011. investigators are examining trades around july of that year when icahn offered to buy the company. back in 2012. none of the men have been charged. dean foods says it's conducting

its own investigation. that's where dean foods shares are trading on your screen, as you can see in germany, the listing in frankfurt off by 0.8%. still to come on the show, will modi's pro business reforms help boost business investment in india? we'll see. humans. even when we cross our "ts" and dot our "i's", we still run into problems. that's why liberty mutual insurance offers accident forgiveness with our auto policies. if you qualify, your rates won't go up due to your first accident. because making mistakes is only human, and so are we. we also offer new car replacement, so if you total your new car, we'll give you the money for a new one. call liberty mutual insurance at...

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welcome to "worldwide exchange." bank of england governor mark carney tells uk lawmakers interest raits rate rises will be limited and gradual. reports suggest monsanto considered a $40 billion bid for swiss firm syngenta. we're seeing a sell-off in dubai today. it's the biggest daily loss since last august.

abe rab tech earlier confirmed reports of large layoffs at the company following the reputation of its ceo last week. that story has hurt sentiment throughout the dubai construction market. we'll keep you updated on that story as it develops. the formal request for securities transaction comes on top of modi's first budget to be unveiled on july 10th. joining us now is the ceo of the bond-based stock exchange, ashi. do you think the government will deliver in terms of what you are looking for? if so, how deep do you think it

will be? >> what we have been telling is that in case you want to promote investment and speculation, if you can't cut the -- might reduce the index on the investment situation that is the delivery based and include it on the options and futures and so on and so forth. so we are asking for more if you can please reduce the tax. but if you can't, give us later on the delivery based prediction so that more and more people move over into options and futures and that will come into the ipo and so on and so forth. >> so let's take the most favorable scenario. if they do deliver on what you are seeking, how much in terms of volume investment is that going to split up? investors come in. today many of them are currently trading in futures and option

market. when we bring them down, they start getting the flavor of what is that required to be listing in the long run? and once that happens, india acquires their only $1.5 trillion to invest over the next seven, eight years, and probably half of it will come out of the markets. that's a massive sum. >> overall in the equity markets, who are you targeten ring here i guess is the question? >> in fact, over the last 20 years, foreign investors always had more faith in indian markets than even some of us had. so today, 20% of indian markets are owned by the foreigners, what we call fra, foreign

investors. if you were a foreign investor, now >> june 1 on wards, we have created a new frame so that in portfolio investment in which not only institutions can invest, but the family officers and even -- investors of foreign origin can invest in india. that's a massive game changer. we believe that's going to get money from japan, from u.s. and uk coming into the indian market in a big way. >> the turbulence the second half of the year, based on modi and what he can achieve, are you worried that he has a finite window to act? >> he has begun very cautiously. he has taken some steps in the market's perspective or even from social perspective, he would call all the leaders which are unheard of.

pakistan, so on and so forth. similarly, it has increased rates. effectively, he's telling people saying, you elected me, let me go on. i may become unpopular, but i need to do this for the country. i don't think he will be playing for short-term. it's not 2020. it's going to be a death match. >> a long process. thank you. >> thank you so much. still to come on the show, bull markets don't die of old age. that was the rallying cry from the goldman sachs back in february. find out if she tells us the same thing now.

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welcome back to "worldwide exchange." seemingly on the down side after bucking six sessions of rallying. the dow jones jut over 48 points lower, s&p over 6 points lower

and nasdaq 11 points lower. data, consumer confidence and fed speak to watch for today. right now, following the trend of the european markets here, too. in february, goldman sachs says she remained positive on the u.s. equities as there's nothing positive on the horizon to devalue the stock market. karen, under the spotlight or at least the burning monaco sun. >> well, in fact, it just turned a little windy and a bit overcast which is not ideal. but let me bring in david coschi. yesterday we had an interesting day in markets. we saw homes rising more than expected. this is a very different tone after what we saw last week. is the market trying to question the turning of interest rates?

>> we were quite encouraged to see that strong housing data because we've been saying fort a long time that the housing market would recover. linked to that, we expect rates to go up sometime next year. our portfolios have been positioned for this strong u.s. recovery. the bottom line is that we like flow assets and we like underweight assets for fed liquidity because of this coming interest rate rise. >> if you were going to chart u.s. markets for us, where would we be on the charts? >> obviously, a lot of risk assets across the u.s., whether that's equity markets or credit markets have already priced in a lot of this recovery. so i would say we're further into this story. however, we still do like u.s. equity. we're very selective about what sectors to own. we particularly like the ones here for growth that we see beneficiaries of cap ex and information technology comes to mind there. and in the credit space, we have some positioning in credit and in high yields in particular.

but we do think you need to be cautious because it is further into the story. so we're hedging out interest rate risks. >> is this unlikelyhood of a black swan into the markets, some people are cautious here at the formus, others are diving into the exposure looking for long-term investment. is there a long-term that could change sentiment that we're not watching? >> i think there's always a possibility for tail risks in the markets. that's one of the reasons to have a robustly diversified p t portfol portfolio, which we do. i would say geopolitics is rising around the world. the situation in rashg, you have ukraine/russia and issues in asia, too. so we are concerned about potential issues with geopolitical risks. >> you have a natural hem here. injury a long-term strategic

position oil and copper. >> yeah. >> why is that when so many people are selling off those assets? >> this is a great question and i'm glad you used the word strategic. our positioning is part of our strategic allocation on exposure. the exact reason to own it is because of a lot of these geopolitical issues out there. owning them is a good hedge if there are flare-up necessary this region. oil is obvious. that's why we own that. in terms of copper, the reason for owning that is a hedge in disappointment to chinese growth. >> now, at the risk of being caught up in conference, let me bring up one of the buzz words, mega trends. one of the areas you're looking at is the role of women in terms of profitability for some of the asset managers. where do you see the growth potential? it's such a broad topic when he

is women are providing the opportunities down the track. >> giving credit where it's due. the headline behind that report is basically that a $300 billion credit gap exists for female led small and medium enterprises across the developing world. we did some work to show we could add up to is 12% for income capita in places like brazil and vietnam gaining savps 12%. i end with by saying these gains are particularly important where we know these countries are growing below trend. these countries can't afford to perpetuate the barriers facing women now in their economy. >> they're meant to be the fiscally responsible one. why are they not giving credit to men in the same position. >> so one major reason is legal and regulatory barriers. so of all the countries you looked at, 90% of them had at least one gap in how they treated women and men. i'll give you one basic example,

which would be property rights. in a number of these countries, women don't have collateral rights. >> thank you so much for joining us. kately koch from goldman sachs. with that, we're going to go chase some sun and what you're supposed to do here in monaco, which i think is a little bit of socializing. >> enjoy it while you can, contain. looks fun. thank you very much for that. next on "worldwide exchange," it's yo joke. we assess the future of the yo app. we're joined by co-founder and ceo or arbel. coming up next. what does an apron have to do with car insurance? an apron is hard work. an apron is pride in what you do. an apron is not quitting until you've made something a little better. what does an apron have to do with car insurance?

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welcome to "worldwide exchange." i'm julia chatterley. >> and i'm sri jegarajah. japan's prime minister saying he will touch corporation taxes to less than 30%. >> mark carney tells u.s. lawmakers uk interest raises will be gradual. he expects stronger growth in the second half, but admits recently wage data has been softer than expected. >> wage data was softer than our expectations and adds to a run of hard data around wages -- actual data around wages that

has been softer than we had expected. shares of swiss agri giant syngenta jumped higher on word that monsanto offered a $40 billion bid for the firm. and a july deadline is set for new leadership in baghdad. just tuning in, thanks for joining us here on "worldwide exchange." a quick look at the u.s. futures ahead of the market open. losing a bit of ground over the next hour or so. the dow jones lower by 45 points and the nasdaq lower. both the dow and the s&p snapping a six-day rally, ending slightly lower. not much to talk about in low volumes in yesterday's trading session. plenty of data.

housing, consumer confidence and fed speak. over in europe, losing a bit of ground here, but relatively unchanged. ifo survey and expectations and sentiment data from germany weaker than expected this morning. we've heard mark carney talking about the situation as far as rate rises are concerned and saying, look, it's going to be data dependentant. primary shinzo abe has fired his third arrow. jap japan's p.m. has released the latest tactics to unveil the economy. meanwhile, mark carney says gradual rate rises are more important than the date of the first hike. carney appears to have switched his position once again less

than two weeks after saying rates could rise faster than expected. sterling has taken a slide on the comments. carney did admit that recent data could suggest the economy has more spare capacity than the bank had expected. >> the wage data in effect was softer than our expectations and add to a run that has been softer than expected. >> can an app still be called a joke when it raises over $1 million in beven capital funding and over 1 million users in four days? the communication tool yo did just that and it's proving divisive in the tech community. and the security issues, where does it go from here. >> the co-founder of the app joins us from san francisco. talk to me about the hacking

situation. is the situation now resolved and is the app secure? >> forbes wrote the hacking situation isn't a disaster. it's a catastrophe. how are you going to prove them wrong? where do you go from here? >> well, you have to understand, first of all, we did take it seriously, but we don't store a lot of personal information on you. i mean, the only personal information that we have on you is your phone number only if you use the fine friend feature and even then we don't have your full name or your e-mail address or anything. so yes, if you have used the find friends feature, then your phone number got leaked without your name and without your e-mail address. so that's it. but now it's fixed, so now

everything is fine. >> what comes after yo? >> well, after yo, we plan that you will be able to get notifications from whatever interests you. yo isn't just an app that says yo. it is a notification. >> do you see this as a shorter way of adding out to somebody? >> currently, we don't feel like adder other features and links and locations and photos. if you want that, there are a lot of other apps that you can get it on. twitter and facebook and what'sapp and others. but the different things about yo is that it's just yo. there is nothing else.

so basically, the notification itself is everything you you need to know. that is what is so special. i also believe why people don't understand usually. some people understand it, some people don't. >> some people think it's a complete gimmick and you're laughing all the way to the bank. can i ask how much of that $1 million you've invested personally? >> zero. i'm not -- money personally. we're taking the whole money that we raised into building the company to the next year. we didn't touch any money to ourselves. >> thank you so much for chatting with us, or abel and, yo, you talk to your guests now. >> go with the flow, yo. space, the yahoo! ceo marissa mayer arrived about two hours late to a private dinner.

the gathering was a chance for clients to get the firsthand update on what yahoo! had to offer. "the wall street journal" says she had fallen asleep. she was so late, some guests had already left. it happens, jewel yeah, to the best of us, especially to you and i when we have to wake up early in the morning. >> or when each other is talking. would it bother you if i said, sorry, didn't turn up for work? i guess that's the benefit to being the boss. last month, amazon cut off orders for movies. "the wall street journal" says amazon has been seeking more favorable pricing terms.

the company is still embroiled in a contract dispute removing preorders of several titles including j.k.rowling's upcoming book, the silk worm. coming up, one analyst says alley ban ba could be the biggest offering ever. we'll explore what's behind that valuation, coming up next.

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welcome back to "worldwide exchange." these are your headlines. abe fires the third arrow embarking on a path to cut japan's corporate tax rate to below 30%. bank of england governor carney sends sterling lower telling uk lawmakers interest rates will rise gaully. and mon san toe considered a $40 billion bid for swiss firm syngenta. u.s. secretary of state john kerry has touched down in iraqi kurdistan where he is urging leaders not to give up on the

political process in baghdad. yesterday, kerry met with a deadline of july the 1st with a formation of a new government. backing in iraq could help secure the country, but insisted baghdad would need to form an exclusive government. >> this is a critical moment for iraq's future. it is a moment of decision for iraq's leaders and it's a moment of great urgency. a car bombing in beirut left a number of people injured. it caused a human firm. it comes a week after another suicide bombing in beirut killed a policemen and injured 30 others. hadley gamble is beirut, lebanon, to give us the latest. can you give us a sense of who may be responsible for this latest suicide bombing attack and how the situation fits more broadly with the situation in iraq and potential spillovers to other regional countries? >> morning, julia.

so basically what we're seeing here in lebanon last night's car bomb targeted in the city mainly shia southern district. and this is the type of coming just days after another car bomb at an army checkpoint near the syrian border. what is believed to have been a failed attempt to take out the head of the lebanese security forces. basically what you have are sunni, groups believed to be targeting major members of the lebanese government and of society and the security forces, as well. there's no doubt that what is happening here is just another sign of the destabilization that can begin to cripple the region as these isis militants cement a real foothold and we've seen them now in control of much of iraq's western border that's some 300 miles. secretary of state john kerry saying how crucial it is for isis futures. now you have the last time americans secured baghdad, they did it with some 80,000 troops. now they're bringing in 300 advisers.

so the iraqis are going to need to take some measure of responsibility here, including perhaps a counteroffensive. isis now is claim to go be -- that whole refinery. i spoke with one iraqi diplomate earlier this morning. if isis militants were able to get that refinery working again, to the whole of northern iraq and we're seeing fuel availability declining. we're not talking about fuel for cars, but for homes and generators and businesses. and, of course, another major concern for the iraqis, a dam in that area i'm told by the same iraqi officials that iraqis have withdrawn from the area. if the lights go out in baghdad, that could make it difficult for effective measures by the iraqi government.

i was told by one iraqi that this is sort of like nigeria on steroids. we've seen nigeria ruled by weakness and corruption on all sides. it's the same thing you're seeing in iraq. it's quite clear that the situation is diminishing, but not just in bag, but in neighboring countries, as well. stiging in the region, we're seeing a sell-off on the main index, the worst daily decline since last august down 8%. arab tech earlier confirmed reports of a large layoff at the company following the resignation of its ceo last week. that ongone story has hurt sentiment throughout the dubai construction market. we are in a pre-ramadan period.

>> m&a news elsewhere, swiss agriculture giant syngenta is trading higher on reports that u.s. rival monsanto was considering a $40 billion takeover bid for the company. syngenta had no comment to make on the news after being contacted by cnbc. that is calling for reports from bloomberg news which said the talks fizzled out in lay mate. the ceos of at&t and directv head to capitol hill today to testify before a senate subcommittee about the merits of their proposed $40 billion merger. they plan to say the deal could lead for major problems for consumers. it would expand high speed services to at least 15 million customers mostly in rural areas.

critics say the merger would buy the competition and consumer choices at&t relatively unchanged. directv slightly underperforming by 0.2%. meanwhile, france's government is claiming victory in the alstom takeover after forcing ge to significantly revise its offer for the company's energy assets. alstom and ge boards agreed to the terms of the deal over the weekend. but not everyone sees this as a tie- tie-up. cnbc's jim cramer has his own message for ge's jeff immelt. >> ge, i'm begging you. walk away from alstom. it's crazy. you don't need this kind of headache. >> alibaba's ipo is expected to be as hot as the temperatures when the e-commerce giant lists shares this summer. that's leading analysts to put some sky high valuations on the company's value. courtney reagan has more on

this. >> good morning. brokerage firms are coming up with their own estimates of how much alibaba could be worth when it goes public. the latest is the morning show which expects the ipo to raise $26 billion. it could value the chinese company at $220 billion. incidentally, only ten stocks in the s&p 500 have a higher market cap, including apple, exxon mobil and microsoft. at that point, alibaba would be the biggest ipo in history topping the bank of china's $22 billion haul and shanghai in hong kong in 2010. it would bead out the largest u.s. ipo to date. visa krb which raised $19.8 been in 2008 and the tech ipo facebook which brought in $16 billion in 2012. morningstar says its estimate is based on reports alibaba is likely to offer 12% of the company in the ipo. the firm estimates alibaba will post annual revenue growth of

33% and expand growth margins from 47% to 49% over the next five years. but some investors have questioned whether alibaba's are sustainable. alibaba conceded in an updated ipo filing earlier this month. morningstar thinks alibaba can sustain profit margins. morningstar also believes chinese e-commerce market has plenty of room for growth, expecting the company's morning sales to double in 2020. the company's valuation was put at $230 billion last month, lower than the previous estimate of $245 billion before alibaba filed its ipo documents. whenever it happened and whatever it will be, it will be

big. julia, back to you. >> courtney, absolutely. thanks. now, going tore a strong, one of the most popular tunes of all time is on the auction block today. southby's selling a draft of "like a rolling stone" which bob dylan wrote on hotel stationary back in washington before recording it back in 1975. this draft, this includes notes and dooldzs is expected to fetch up to $2 million. other rock and roll items up for bid include elvis presley clothing. >> thank you very much, julia. elvis has left the building. anyway, coming up sales of existing homes in the u.s. forecast for may. we speak to the national association of home builders, coming up next opinion. humans.

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the eu agreed to grant albania status of candidate for membership. thank you for fighting for the right to be in the eu. trust in the u.s. property market surged in may. the national association of realtors announced yesterday that existing home sales grew by 4.9 the%, the largest increase since august 2011. let's get more now with the economist at the national association of home builders. rob, as a first time buyer, they are conspicuous and absent right now. when do you think they're going to return? >> well, we need strong job growth, we need wage growth for those younger, first time

buyers. they're at 27% market share for existing homes. they should be 40%. a few months of good job growth and we'll start to see some of that pent up demand unlocked. >> and one of the big wild cards, of course, are rising bond yields. saw what that did for the knock on effect of mortgage rates. do you think that they are in check now or could they reservice and push higher and pose a risk for the housing market as we get closer towards that ultimate rate hike by the fed? sfwh we saw the impact that had in the housing market. the rates remain historically low and it is a good time to buy. >> is it too early to say we're looking at some kind of sustained stability in the

market? >> yeah. i think in may you are certainly seeing kind of a catch up due to delays that occurred because of the winter. the beginning on the year was bad, so some of the gains, we're seeing a continuation of the organic recovery. >> great to chat with you, national association of home builders. now, on a programming note, make sure to stay tuned to "squawk on the street." we'll be joined by adee da ceo in an exclusive interview. it's iconic, isn't it? >> iconic brand. that's it. that's it for today's show. i'm julia chatterley the. >> and i'm sri jegarajah. thanks for joining us. ank you dr defending our country.

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good morning. the insider trading probe surrounding an activist, a gambler and a golfer. all walked into a bar. and the u.s. export/import bank under scrutiny in capitol hill. now there's an investigation into possible gifts and kickbacks for federal contracts. it is tuesday, june 24th, 2014. "squawk box" begins right now.

goodmorning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. stocks bouncing around to start the week, but the bulls are quietly in control. so far this year, the dow is up 2%. the s&p has add more than 6%. and the nasdaq is higher by 5%. this morning, if you check out the futures, you'll see at this hour things are indicated lower. the dow futures indicated down by 50 points. and the ten-year at this point looks like it is yielding. 2.595%. it's still sitting just below 2.6%. we're continue to go watch gold prices. the commodity now higher four straight sessions closing yesterday at its highest level since mid april. among the tests for the markets today, we have some economic numbers coming out.