welcome to "worldwide exchange." i'm julia chatterley. these are your headlines from around the world. ready for more action? the ecb policymakers say measures prove not to be enough. the central bank will act to ease policy further. we'll hear from ecb board member peter frett later on cnbc. it's worse than you think. india's government sends a warning ahead of tomorrow's numbers, calling for the a sharp fiscal correction to bring down inflation. reclaiming victory in

indonesia's political race. but some say it's too early to call. $7 billion in the works for citigroup. investigator look at paying out for mixed mortgages. coming up on today's show, croatia plays the game of tourism and looks to cash in on the huge success of the series "game of thrones." and brazil's football coach luis ferarri describes it as the worst day of his life after the national team suffers an embarrassing 7-0 defeat. we bring you all the action from brazil. and the u.s. retailer the container store misses that america is now in the midst of a

retail funk. find out what he has to say about shoppers' habits later. sharp losses for the markets in europe, yesterday's trading saw the index in particular down at a seven-month low. we're currently switching between making gains and loogz them. the stoxx 600 down 0.1% right now. we've now taken out all the year's gains, so relatively in change for that. the german dax relatively unchanged today. a bit of movement going on in the italian market, up 0.5%. yesterday there were losses across the board. the dow down 0.7.%.

the worst two days that we've seen was back on april 11th. similar to the russell 2,000. we got a similar idea back in april when we saw this pullback. momentum leaning under pressure yesterday. some significant falls across the board. it can be down 7%. pandora, similar story the. linked into all the stocks that gained most over the last couple of months pulling back. i guess if we do see a pullback, we can expect to see that to some degree. in the asian session, sri, taking the queue from what we saw in the u.s. session, tencent one of the real underperformers, sri. >> absolutely. it was down by 276%. the markets really couldn't ignore that steep sell off on the nasdaq that we saw

overnight. stateside, deepest drop in almost two months. big drag on the broader hsi as were the banking names for the greater china market. but many are characterized in this pullback that we're seeing on h shares, the hang seng and the shanghai comp over on the mainland as a correction to the oversketched rally that we have se seen. we have realism coming back into revelations right now. we're not seeing any quotes for the benchmark composite because today, in fact, is a public holiday. polling has now finished in the country and the counts are starting to come in. even at this early stage, i believe more than the vote countered, jokobi is declaring

victory albeit by a narrow margin. the fact that this is not a resounding victory may create some consternation in the market when they return for trade tomorrow. watch the reaction in the jakarta confidence. there could be some legal challenges from the main opposition contender. that is the former general. that's something to watch out for. elsewhere, the australian market was another underperformer today, 5,45. again, we are off from multi month highs in the market. it was the big blue chips that were reacting to the weakness on wall street overnight. let me he come back to china. it's going to be the data that is going to be front and center, julia. we got the numbers on the cpi

front. once again, when you look at ppi, that is telling us there is a lot of slack and overcapacity in the system. we get trade numbers tomorrow. the big story there is whether we are going to see further evidence of stabilization in the world's second largest economy. >> we're going to be talking about indonesia, but sri, we'll catch up with you a little later on. matthew, good morning. i was jus just saying what we're seeing is the nasdaq and the dow. we've seen it before. same again here or something a bit more sustained, do you think? >> mixed messages. which right now make it challenging to call the direction of markets into the shape of markets. whatever the sector, i mean,

you've got technology there. i think if you go beyond technology, some peripheral european stocks, media stocks bank across the world. including smaller midcap stocks. >> he said yesterday he would much rather be in markets, rather be in europe than the u.s. >> markets are fined somewhat harder. and i think the emerging markets on this who mortgageness block of websites. indeed, how some of the regional forces are behaving. it's increasingly relevant. the market shares are doing very

well. >> i know morgan stanley now has an 80% probability that we see further sympathy ewe husband in october, i believe. do you expect that and do you think that could then see markets rally again further in q4? >> is good data bad news or is bad data good news? we've been expecting further stimulus already. the answer is really quite well. demand inflation, all indicates we know the boj are looking at. if anything, there is a concern that that incremental -- won't come about. which i think will be seen as a negative.

>> it's pretty bold when you're saying an 80% probability. >> prime minister abe as well as the bank of japan governor are very strong. they are going to do whatever they think they need to do to ensure inflation in japan. the data so far has suggested improvements. i think we'll see further stimulus. >> let's bring everyone up to speed with more top stories for today. alcoa is seen second quarter profits beating forecasts as cost cutting feed through to the bottom line. revenues are flat but beat estimates. the aluminum giant selling products on business which includes truck wheels and parts.

>> the activity is strong and it comes from all across the country. it has been like this since the crisis which leads us to ensure the balance sheets are strong. our net debt has come down. this is a very positive thing. this allows us to invest. >> alcoa shares rose more than 2% in after hours trade. alcoa was kicked out of the dow last year. had it still been in the dow, it would have been the top performer up 39%. the next one is caterpillar, i believe, up 221%. similar story with bank of america. that would be the top financial institution. we'll move on. the container store is cutting its full year outlook amid a retail funk. even as the company reported a first quarter loss. the company, which went public last november, saw same-store sales for nearly 1%. in a statement, the ceo says we

thought our sluggish sales were because of calendar and weather shifts, but consistent with so many of our fellow retailers, we are experiencing a retail funk. shares dropped 13% after hours. just down 14% at this point. matthew is still with us. earnings season crucial to seeing a share rally in particular here in the u.s.? >> really important. really important in the u.s. after the difficulties of q1. we know they were weather related. suggestions of q2 have been better. perhaps not as good as we were expecting to offset. the trajectory today is lower than where we thought we would be at the beginning of the year. q2 is crucial in the u.s. >> and it's going to be fine, isn't it? because if we look at the amount of the revisions lower as far as estimates are concerned, 97 revisions and 133

preannouncements have been negative. we have to beat as best we can. >> yeah. we had a series of preannouncements in q1. this is the challenge, people are looking at good data. apparently good data, but it's not enough to move markets. to move markets higher, we need to see earnings upgrades. markets are at multiples, not yet expensive, but certainly nowhere near cheap. therefore, the markets go higher, it's that valuation not to be stretched too much further. they need to see earnings upgrades across multiple sectors with markets moving significantly higher from here. >> define significantly. we're not getting that and yet the markets are inching their ways higher. we're talking about new highs as far as last week's trading sessions are concerns. >> stocks are more expensive. earnings are going down incrementally. the markets are higher. now, it is very hard to know just how far it can be

stretched. it can be stretched much further to historical highs of 2000 or 2008. right now, the markets go high with confidence in the profit driven cycle. >> where is the best place to look at this stage? regionally. >> in our global equity funds, we find ourselves with decent applications towards japan. bottom up specific things going on. interesting, too, in europe compared to the u.s. >> where in europe? >> i think the stocks are interesting. leverage. operationally -- >> where? give me a country. >> in this, for example, we own banks of uni credit, we own a greek bank, kbc, the belgium bank. so there are lots of banks exposed to this economic recovery where we don't think it adequately affects prices. >> matthew, thank you.

germany utterly humiliated brazil in the world cup semifinals in what was the host nation's most dramatic defeat in their history. thomas muller opened the scoring in the 11th minute. they beat the world cup scoring record just 12 minutes later. there you go. tony cruz stunned the whole scoring within just three minutes. they made it 5-0 with just half appear hour played in the first half. the second half, then, was played almost at walking pace, but germany remained ruthless with andre schuler tacking in a sixth and smashing in the

seventh across the crossbar ten minutes later. the last-minute fight for brazil, no constellation on the record, winning 7-1. phillipe scelari called this the worst day of his life forway called a catastrophic defeat. fans clearly shared his sentiment. german fans were understandably overjoyed from the results. germany's thousands of supporters watched the game from outside the brandenburg gates. germany will go into the final as many people's favorite. tonight, big game as netherlands takes on argentina. the match will see messi and lionel go head to head. up next, we continue our european tour live in croatia.

we'll tell you what's coming up. >> this is a country with approximately 16% unemployment. one of two youths are unemployed, as well. after the break, i'll be speaking to the president of the croatian employer's association, to stay with us. 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 and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter.com/offer2.

president obama has been quoted in the german press saying skraellys and palestinians must be prepared to take risks for peace. it's removing the gloves against hamas in retaliation for rocket fire. palestinian officials say at least 23 people, including civilians, have been killed across the region. war planes hit 50 targets. at least 130 rockets have been fired into israel since monday. nbc's eamon is in tel aviv. >> the sirens in tel aviv have gone aif indicating rocket fire is reaching deeper inside israel. it has become a major cause of concern for israeli officials. they have opened bomb shelters

across the country and canceled summer school and day care programs and raised the levels at hospitals all across the country, an indication that they are expecting this to worsen in the coming days. inside gaza, the situation is catastrophic according to health officials who say they simply cannot deal with the casualties a large conversation praise could bring. already on the first day, they could bring fatalities. the israeli military says it is targeting hamas factories what produce rockets as well as the homes of suspected militants and other rocket capabilities, rocket firing capabilities from gaza. but at the same time, there is growing concern about some of the rockets that are coming out of gaza. at least a hundred have been fired into skrael on tisrael on day of operations alone. meanwhile, negotiations between iran and six major powers have hit a further road block after the country's

leaders said iran needs enrichment capacity. this while negotiators struggled to reach a new final agreement by july 20th. demand for a further enrichment program would be a deal breaker in the negotiations. the world bank has blamed weak leadership for korea's six-year recession and says structural problems will prevent the country from growing. the country's minister is positive that they will turn to growth in 2016. >> it's not so easy. parts of yugoslavia and then we had a war. after that, we changed the logic of the economy from the regional to the european opportunities. that's why it takes so long.

but i hope that the numbers say that. this year, it's a zero point growth and for the next year, we will have the growth in gdp. >> louisa is in the area. louisa, this government has three years to try and address some of these structural issues and they failed. can we believe the promises? >> well, that's a good point, but i think you have to see it from another perspective and say, well, they're the newest member of the eu. they've only been a member for just over a year now. the 1st of july, 2013, was when they joined. the good part that could come out of that is they now have to report back to the eu and show them numbers every six months. so there is some thinking it might help push along some reforms and help push across to get out of this six-year recession. i have with me the president of the korea asian employers'

association. welcome and thank you for being with us. we were just talking via the studio about weather enough is being done and also indirectly what the role of the government is. >> well, i would say from the business association point of view, of course, we are never happy with the amount of reforms, with the type of strategic changes that are change place. on the flip side, we understand there are basically three reasons why we currently are not seeing a great economic boom that we would have maybe expected immediately following the session. first of all, we are in the midst of a recession. so ourselves and the eu is depending on which numbers you're looking at is also not doing great. the second reason is that we lost the central european free trade agreement, as well. so we joined as a single country, not as a group. which means when we joined, we lost some of the privileges we had as a region and the countries of the region are still outside in the eu. so those two reasons coupled

with the lack of reforms that didn't take place over the last 10, 15 years which should have been done and that would have actually brought us into a great position to capitalize on this session. because of these three reasons, we are still in a recession. however, we do expect in the coming years a great deal of change. we do expect a boom. because we believe that the location that we have, the resources, the human capital, the people, the innovative skills that these people have are all the reasons why we should see a boom. we also have tourism. we have many small and medium sized enterprises, also large companies, as well, that are competing on a global scale and doing this exceptionally well. so with some reforms, we believe we will make a great move forward. >> with a jobless figure of around 16% and a youth unemployment level of closer to 50%, how long will it take before those numbers come down? >> well, those numbers are

directly coupled with the lack of reforms. they're directly coupled with the inability of somebody to come in here and create value very quickly. in order to create value, you need to lower taxes. you need to put in place reforms, reforms like the public administration, the number of municipalities and the number of regional governments that you have, which are too many in this case. the reform of, for example, education and health care shipments judiciary. if you start moving in these areas, you can very quickly create a condition in which it pays to invest because you have so many other things so well positioned, you know, croatia has a lot of things going for it. >> coming back to the point that it's just been a year since joining the eu yet we've seen a drop off in foreign direct investment, how long will it take to get foreign investment back into croatia because people, they should know then that with reforms coming, now would be the time to invest if

you want to benefit from the up point. >> foreign direct investment is kind of a barometer. it tells you how well you are doing. so if you're lacking reforms, if you're not actually -- if you don't have a set of conditions in which it pays to invest and bring back the return on investment, then you actually don't have the idi. as soon as you make some changes, as soon as the government makes certain commitments, as soon as they change a couple of key things, i believe you'll see the return to croatia. there are many reasons for this, as i said. if you take tourism alone, if you consider that you have a hotel infrastructure that's only being used one-third of the year with supplement some services, perhaps medical tourism, you know, hiking, bicycling, whatever the case may be, you could immediately use the same infrastructure and increase the total revenues from tourism. >> sure. for good measure, i need to

mention you're speaking with a number of hats on because you were the former ceo of deutsche telekom now you're with croatia telecom. we thank you for speaking with us. >> it's a pleasure. i should not neglect to say croatia has great infrastructure. we have not only roads, well positioned harbors, but the telecom infrastructure is world class, as well. >> gotta go. thank you very much. we'll enjoy your connections. and more to come in around an hour. sometimes you can places where you can never get a connection, so it's nice to be here. >> thank you, louisa. we'll catch up with you later on in the show. on cnbc.com, we put all the details of that story and more on over emerging week. how competent are young people when it comes to money matters? the oecb has been trying to find out by testing 15-year-olds across 18 different countries.

who is the winner? the youth of shanghai, excepts such as bank accounts and savings rates, they should be the custodians of global financial system in the future. but how do you fare? here is a sample question. you can buy loose tomatoes for $2775 zeds per kilogram or buy the box for 22 zeds for 10 kilograms. which is the better deal? i was trying to figure out what zeds were. it is early. i apologize. now, do you think kids are savvy enough when it comes to financial spending and planning or do they need to be taught more in school? join us in the conversation via e-mail. now we're going to take a quick break. still to come on the show, the governing house, the big euro isn't too strong and no intervention is necessary. is he right? stay tuned. we'll be asking.

welcome back to "worldwide exchange." here are your headlines. ready for more action, an ecb policy measure says measures proved not to be enough. the central bank will act to

ease policy further. we speak with peter kress later on cnbc. it's worse than you think. india's government sends a warning on the shape of the economy ahead of tomorrow's budget calling for a sharp fiscal correction to bring down inflation. jakarta's jokobi claims victory in the race, but rivals say it's too early to call. citibank looks at a $7 billion fine in the selling of its mortgages. watches and investors alike will be keeping a closer eye on the fomc minutes this afternoon for any hint of when a rate rise could occur. many are prompted to suggest it may happen sooner rather than later. goldman sachs could see the rate rise further next year.

joining us is kit from society generale. i think the expectation here is in line with what we've heard from yellen and some of the fed speak. it's not on the hawkish side. have the risk here more than we should expect? >> i think seriously, i would have thought that the language would change after the summer when we come up against the undertapering, when we've got to start talking more in the minutes and in the meetings about particularly the engineers will move to get the fund right back to the nominal target of 25 basis points. the first rate rise isn't from 25 to 50. it's getting us back to 25. i think all those conversations will be really interesting after

the summer. tonight, less so. >> there is some anticipation on the timing and the pace. but as far as you're concerned, we're not expecting a carney style jackson hole in august? >> no. i think that the last comments janet yellen made about the slight uptick in inflation being nothing much to worry about, it does seem to me to indicate a bias to say that we had a bad winter data, we saw weakness in emerging markets, last summer we saw slowdown in the housing market. we need to make sure we have a post winter rebound in the data and they'll get that. but i think once we've seen the data through the summer, once we get back to the start of a new school term, the start of new graduate training probably with higher salaries than last year's, then i think the whole thing shifts. i think the football might be more exciting than the minutes.

>> couldn't possibly comment. the dollar? >> the dollar, we all held the dollar at the beginning of the year in anticipation of a rate rise next year. currencies move before the rate rise. we're all kind of crazily early into the long dollar trade mainly because lots of people like me found lots of other currencies they didn't like. patience is incredibly difficult to keep hold of. but it will come, just not yet. >> the euro is not too strong, that's the message from ecb governing member luke krone. he urged critics to remember the euro level precrisis towards 1.6 against the u.s. dollar. he added that the ecb should not do any money to control the currency and it is not their mandate any more to control the curren currency. >> i think the trouble is there's not much they can do. if you don't have a mandate that includes intervention, and because it's hard to go with outright quantitative easing to

buy assetes and push money out, the best thing they did overall since 2012 was to reassure financial markets that the whatever it takes comments that the euro continues to invest at which point and since when foreign investors have been buying european peripheral. but he's right, we've spent about five years 1.50 to 1.35. why do you want to sell the euro in september? >>. >> it is waiting and hoping that fred is going to come to his rescue and so is mr. draghi. and they will, but all in good time. >> and what about carney with the bank of england tomorrow?

we get overexcited. sterling here? >> sterling here, i've been wrong on sterling all year. i think we're probably 170, 172 this month. down 1.8%. it doesn't take much softer data to make people wonder. >> coming up on cnbc, wealth more on the state of the european recovery with ecb board member peter pratt. we did see the gains that we've

seen so far this year. after the losses that we saw yesterday. the banking index was really important yesterday at a seven-month low. still waiting for information as far as commerzbank is concerned and these german banks and sanctions violations. the markets are adding to gains, though, over in italy, up over now 9% year-to-date. carlos slim is ready to break up his american mobile empire, selling a large chunk of the telecom giant's assets in the face of movil empire in mexico. the company opens 80% of mexico's mexican market and 7% of mobile. trading in the german session

down by 0.3%. citigroup and the u.s. justice department are reportedly nearing a settlement where the bank would pay $7 billion to its old charges related to the selling of bad mortgages in the run up to the financial crisis. the two sides have been far apart just weeks ago, but are now putting the final touches on a deal that could be announced as soon as next week. reports say the justice department has demanded citi pay at least $10 billion while the bank receiving a fine of about $4 billion. citi trading higher in the german market session up by 0.6%. barclay's is looking to sell off its natural resources investments unit and is reportedly helping phaser to offload the division. it could rally the 8-year-old portfolio at nearly $11.4 billion. shares in barclay's trading lower in the market session today. india's finance minister suggests the company is facing a tougher fiscal situation than previously thought.

the finance minister is predicting gdp growth at 5.9% year on year in 2014 and 2015. we're joined now by lassa with all the details. >> this xhikts the economic selby which is released on the budget. the new government with its first budget tomorrow. >> gdp growth is likely to be between 5.4% and 5.9%, more likely to be at the lower end of the range. 5.9% is way out of walk. most of the economists have received 5. 1%. but xkly there are more important indications. there are statements that a fiscal responsibility act is needed and that act needs more

teeth, which means that the fiscal deficit that will be announced tomorrow in hopefully below the provision fiscal deficit number is 4.1% of the gdp is very difficult for the new government to stick to that because they had to do some thinking from the previous government unsafe bills. but they carry on with the intention of announcing a road map whereby fiscal dif sets will be reduced in subsequent years. the market will take it positively. but the upcoming -- the government may not always share the philosophy, but nevertheless, it's part of the government and ultimately it is tape positively by the markets. we saw a bit of a recovery of equities which had sunk to some lows. after the economic sell-off 37. >> thanks so much for that. we certainly look forward to the budget tomorrow. japanese shipping company mitsui

osk will start shipments of natural gas from northern russia. >> yes. mitsui oks will be delivering gas from northern russia taking part by russian gas plier and a french energy group total. mitsui will have tankers they plan to start operating by 2018 and are expected to take 111 days to arrive in europe and reach asia in about 18 days. shale gas from the u.s. to export to japan which is said to take 25 days to deliver. the new delivery may give a wider range of choice which importing energy resources. one drawback is that almost shipments to europe will be carried out year-round. the shipment toes asia will be

limited to because of the ice in the winter seasons. it will allow shipments between japan and europe to be delivered in about 30 days, which is ten days shorter than the common southern route. transportation costs can be reduced by 20% to 30% and chemical materials being cared to japan from europe. that's all from the nikkei. still to come on the show, the world's third large echt democracy is voting in a new president. more from jakarta right after the break. stay with us.

early indications from indonesia's presidential election seem too close to call. cnbc's martin song is in jakarta. it seems both candidates are currently claiming victory. what's the latest you're hearing? >> good morning, julia, and hi, folks. this is political drama of a increasingly high order. the uncertainty is likely to continue. we won't really know for some time yet, until about july 20th or 21st when the official

numbers come out. but you are right, we had the final, the last of indonesia's near half a million voting stations closed about three hours ago. in that time, we have had jokowi, indonesia's new political rock star, the governor of the capital jakarta claiming victory on national television, a very bold move. initially, the prabowo side denied the claims saying, look, it's too early to tell. more recently, though, he has come out and said no, our side has won, as well. basically, what they're squabbling over is what is known as quick accounts. now, these are not surveys or exit polls. these are actual tallies or counts of votes that have been made by indonesia's 190 million of eligible today. and what happens is polling agencies are able to get in there and actually count the votes after, of course, the

officials have done so. and they do a sample of about 2,000 polling stations across the country. and on average, if you do the math, that means each of these polling agencies count literally 600,000 votes. and according to those polls, and we have about half a dozen of them, we reported on national television here, they give it to jokowi by a margin of about 5 percentage points. in other words, 52% versus 47% for prabowo. but again, with both sides claiming victory, we will have to wait and see. official results out on july 20th or 21st. so about a week and a half from now. the losing side has a option to

file with the legal court. but we were talking to an old indonesia camp and he said what the jokowi camp is doing is basically to start building the narrative for his victory. when the numbers come out, if they tally extremely closely, that basically will cement it. if so, the other side happens, which is both sets of numbers die verge and that will leave the door open for the prabowo an open door to file with the constitutional court. we will have to wait and see if the numbers build. >> we have seen the poll support narrow in recent weeks between the two candidates, too. but i just wonder what is the market pricing here? we have seen a run up in the currency, a run up in the equity markets, too. are they expecting jokowi to win here and are they anticipating any constitution or legal

challenges should we get too close results? >> well, julia, that's one question i can tell you this. a lot of the foreign money has been betting that jokowi would win. they want this guy to be the next president of indonesia. and the first six months of this year, january through july according to jakarta stock exchange as well as indonesian government numbers, $10 billion in foreign money has gone into stocks in jakarta, also into southern bonds, namely betting on a jokowi victory. this is versus negative 1.8 billion bourls. that is an outflow for all of last year. what we've seen since about may is the 30 percentage point lead that jokowi had, prabowo came in and whittled it down to almost nothing, single digits. and that's reflected in the way the stock market as well as the rupia has softened it during that time. in the last two sessions, as i'm sure you know, we've had this corner stock market pick up on average about 2.5% each apiece

in the last two sessiones and that is largely because we understand the voter absentee ballots cast in places like australia or singapore where there are hundreds of thousands of ex patriot indonesians, that has shown that these indonesian exchange prefer jokowi by a margin of about 60/40. >> thanks, martin. great to chat with you. now we can get more on the indonesian election, including the five things you need to know on our website. there it is. now, kit is still with us. we've been moaning the lack of space. what's your take on indonesia? >> euphoria is coming in. indonesia was hit hard last year in over the course of the summer. it's been going back in.

all countries with current account deficits are on higher yields and have benefited indonesia has ridden that way and further wave in the last few weeks of optimism about jokowi winning this election. i think my take, again, in line with look we'll eventually get that when they are closer to raising rates. the euphoria is probably already overdone, but certainly whenever i can work out peak euphoria, i think that's the peak level for the currency. they've got to get the economy growing faster, they have to get reforms through and they've got a current account deficit that they need to tackle. there's a bunch of issues for whoever wins the election and there's a lot of phone money coming in that is basically pushed out of zero interest rate markets elsewhere. >> we're also talking about samsung yesterday, bemoaning the strength of the korean won. 6 1/2 year highs against the dollar.

what are your thoughts on this one? >> they have a huge current account surplus and solid growth. you know, if you look at the won against the yen going back ten years, it's gone up a lot from the low levels. >> buy, sell or hold? >> i'm still buying the won for a bit longer, not giving up yet. >> kit, thank you for having you on. earlier, china received lower than expected inflation data from the year to june. ppi missed market forecasts by 0.1%, rising 2.3%. u.s. and china's strategic economic dialogue kicked off in beijing today. john kerry and jack lew will sit down with vice premier wangyang. surely what they need the address is the growing mistrust between the two countries. are they going to do that?

>> that is what they are trying to do. the two, as you have suggested, have seen a relationship that has soured over the past several months. so we've been hearing strategic and economic dialogue. a lot of positive talk about the relationship. the u.s. state secretary john kerry was saying the two needed to find common ground. the chinese president xi jinping should set aside their differences and a confrontation in china in would be a disaster. these comments are really to address what has been a very strained relationship, especially over the past year. now a lot of that is because the relationship has hit a snag over cyber security issues and over china's growing assertive presence in the south china sea. both of those issues are likely to be discussed and other issues are coming to the fore and those are economic issue.

treasury secretary jack lew is here. he opened up the discussions calling for more flexible curren currency. one other thing people are talking about here is whether or not the chinese and the americans will be able to finally hammer out or at least lay the groundwork for a bilateral investment treaty. there's most hope that progress will be made on that treaty as opposed to anything else. because a lot of people said that the incentives are aligned for both countries who want to see more investment in their respective countries from other companies. now, one other issue that you brought up is the economic data. that came in a bit weaker than people had expected. we saw some softer inflation numbers, consumer prices came in higher by 2.3% for june. the producer prices, which is the price of the factory gates fell yet again in negative territory by 1.1%. and a lot of this suggests the domestic economy just isn't seeing the strength that a lot

of people had hoped. and so because of that, there's been, you know, a lot of debate already going on, but this is feeling even more as to how much the government is going to have to stimulate the economy. will it be targeted or will it have to come in and try to do something more abroad in order to prop up growth for the year. julia. >> thanks. we'll catch up with you later. in other news, nike has walked away from negotiations to extend its sponsorship to manchester united. and to replace nike's deal which is set to expire next season. while nike has the right to top any contract options, dow jones has notified it's not prepared to top adidas's bid. and get ready for your brain freeze fik. 7-eleven is celebrating its 80th birthday on friday by giving out free slurpees all day long.

it's expanding the freebie celebration to next week by offering from cookies to twinkies and only if you download the 7-eleven app. 7-eleven will have hot dogs for sale on friday. still to come on the show, as if fed unveils its minutes, why now is the best time to paint a new u.s. narrative or at least as we head into the third quarter. stay with us on "worldwide exchange" coming right up.

welcome to "worldwide exchange." i'm julia chatterley. heavy metal, alcoa kicks off the earnings season with better than expected results boosting shares of the aluminum giant in after hours trading. billionaire carlos slim decides to break up his business in mexico. and could a $7 billion settlement be in the works for citigroup? the lender braces for a larger than expected fine as parts of an investigation into misselling of mortgages. indonesia's presidential

election is too close to call as both main candidates declare victory. >> you're watching "worldwide exchange," bringing you business news from around the globe. thanks for joining us here on "worldwide exchange." tough day for u.s. stocks yesterday, the worst two days and two months of the nasdaq losing 1.4 yesterday. similar story as far as the smaller names the russell 2k yesterday since april 10th and 11. are we get ago different message from the small caps to the large caps? or is it another head fake number? we're seeing a bit of a bounce. 15 pinoints or so higher for th dow and a similar story for the nasdaq today. losses in yesterday's trading session, 0.7% for the dow.

the s&p and the nasdaq. as you can see, 1.4% lower. what was dragging the market down? gains in the momentum stocks. the names gained most in the last couple of months since the april sell-off, some of the ones that came under pressure yesterday, twitter, the likes of pandora down 7%. facebook losing ground in yesterday's trading session. the question is will we see a bounce over the coming session for some of these names? european sessions this morning, talking about a bounce. we were seeing that earlier on in the session. we slipped slightly into negative territory now. the ftse 100 crucial down 0.6% today totally wiping out year-to-date gains. the cac 40 managing to hold in relatively unchanged levels. italy managing to gain over 9% gains year-to-date. the periphery managing to hold on to some of the gains that we've seen so far in the year.

quick check on bond markets this morning continuing to focus on the shift we got yesterday from equities into bond markets, taking the u.s. ten-year yields down 2.5%. seeing a bit of a bounce. we had that three-year treasury auction yesterday. it went off without any problems at all. there's focus on that given the concerns about when the u.s. is going to start to raise rates and the pace of raising rates following last week. that's a clear indication that everything is fine. that is europe. that was yesterday. what about the asian session? following what we got from the u.s. yesterday with some momentum stocks under pressure overnight, too, sri. >> absolutely. and you can now see into that names to that list, julia. that's one of the reasons why the hang seng was deeply on the defensive today, down by 1.6%. off the seven-month highs and it was tencent that was to blame for that. shares were down by more than 3%. elsewhere, the banks were the

laggard from the greater china market. the shanghai composite off three-week highs pt sxin china data on the inflation front was fairley benign. but once again, we saw the persistent drag in terms of deflation at the factory gate. that's another reason for the pboc to step up to the plate in terms of more calibrated stimulus for the broader economy. economists not ruling that out. you're not seeing any close for the jakarta composite. indonesians have gone to the polls. those poll res now closed. as martin soong was pointing out earlier, it's neck and neck in terms of the quick count. this is causing a bit of uncertainty. right now, we are hearing that the former general probowo is saying that his side has actually won this election.

earlier it was jokowi, the former jakarta governor saying he has won the election. uncertainty is running supreme. the latest here, reporting that the prabowo camp is ready to approach the election commission. this going to be critical because the final result will be unveiled on july the 22nd by the election commission. whether this stoonts constitutes a legal challenge, the two jokowi's claim is unclear at this stage. but right now, there is no clear winner. jokowi apparently has edged ahead of his main rival by a few points is by no means a resounding majority and i suspect that it may cause some consternation in the markets when they reopen for trading tomorrow. but having said that, julia, one thing is quite clear. the indonesian rupiah is rallying. they seem to be pricing in a

jokowi victory. he is viewed as being pro market, pro growth and reformist markets and reformist minded. he seems to be the market's favorite at the moment, but conservancy reigns supreme here. back to you. >> thanks, sri. alcoa spins to a second quarter profit beating forecasts as the cost cutting feeds through to the bottom line. revenue is flat, but beats estimates. the aluminum giant is focusing on selling more products from its downstream giant. alcoa is confirming its outlook for aerospace and demand this year. >> activity is strong and it comes from all across the company and it has been like this basically since the crisis, which leads to, again, we show that the balance sheet is

stronger. we are again rating nice cash flow. our net debt has come down. this is a positive thing. this allows us to invest. >> alcoa shares rose more than 2% in after hours trade. in the german session, gaining around 2%. the container store is cutting its full year outlook amid a retail funk that hurt sales growth even as the company reported a narrower first quarter loss. the company, which went public last november saw same-store sales fall nearly 1%. in a statement, the ceo says he thought sluggish sales were because of weather and calendar shifts, but we've come to realize it's now than weather and calendar. we are experiencing a retail funk. shares dropped in after hours trade, as you can see there, down more than 14%. and the phrase same-store sales, different -- on "worldwide exchange," to let you

know. let's take a look at today's other top stories. carlos slim is really to break up his telecom empire in the face of sweeping reforms in mexico. the new deal will help america movil from being the main company in mexico. america movil is trading in the german market session down by around 0.3%. citigroup and the u.s. justice department are reportedly nearing a settlement where the bank would pay $7 billion to resolve charges related to the selling of bad mortgages in the run up to the financial crisis. the two sides have been far apart just weeks ago, but are now putting the final touches on a deal that could be announced as soon as next week. reports say the justice department has demanded citi pay at least $10 billion while the bank was seeking a fine of

around $4 billion. citi trading in the general market session higher by is 0.6%. so outperforming the broader market. coming up, croatia playing the game of tourism or should the country brace itself for another year of recession? we'll find out when we go live right after the break.

welcome back pop "worldwide exchange." earnlings season unofficially begins with a beat for alcoa. mexican billionaire carlos slim says he'll break up his telecom's empire. and too close to call, both sides claim victory in indonesia's presidential vote. the fed will release minutes from the june meeting later today, which may shed light on when policymakers would like to start moving ahead of rates. ahead of that, jeffrey lacker said inflation in the u.s. brings stocks doubt but he's not expecting acceleration in the u.s. economy saying i've come to the conclusion that a sustained acceleration of growth to over 3% in the near future is unlikely. he cites subdued productively gains for that view. that is what is keeping the ten-year rate in the u.s. down, a lack of productivity growth.

but now we're joined by new york from george ahead of u.s. rate strategy at nomura securities. george, we're seeing a bit of a son sole addition in the markets right now in part over the timing of fed rate rises. you think this provides the perfect opportunity for them to paint a new narrative. the question is will they or will the markets push them to? >> this quarter definitely starts the kind of discussion, the narrative building process for the fed for -- so they prepare markets for some time next year. keep in mind, we've had in these extraordinary easing type of world for over five years and it's going to take time for the fed and people to get on board with how to raise rates. i guess what we heard from lacker and i'm much more sippic to his view that i believe it's going to be hard to maintain growth at 3%. there is some inflation, part-time pressures, not to

mention that the fed, you know, at some point has to give up the zero point, we're no longer in emergency mode. so preparation for strategies are, i'm sure, in the works. it's not clear to me that we're going to get@of new content from what he we've heard so far. the meeting and followed by a dovish press conference, we'll hear most of what the fed wants to relay, especially ahead of next week's testimony by yellen as well as the september meeting in the jackson hole and in between. but i do believe q3 is building up to this crescendo period where we'll learn more about the fed going forward. >> it's a risk that we see bank of england carney stylest at the jackson hole meeting from yellen. >> i really don't see janet yellen doing a 180 what we perceive from carney. i think she's been very steady with her views. i think what we're seeing from the fed is sorted of consensus

of the committee. if you look at the forecast the fed has put forth and specially as it relates to their interest rates going forward, it's all over the map. they really need to start to get on the same page before they start hiking because they are sending a confusing message to the market. so i think for her to do a 180 would be out of character. >> you actually said it there. they're the least clear in terms of their future direction than any of the other g-4 central banks here. what she has to do, she has to build consensus on the fed for where the direction is going. does it make fed speak going forward that much more difficult? because we have a dovish lead. so the slight hint back that not would be very much focused on by the markets here. >> yeah, listen, there's a lot of different cash points. those would argue you go slow and start sooner or you go later and start faster. you try to find that right balance is i think the challenge that she faces. i think over the course of the

summer and into the fall as the data would continue to improve, it doesn't have to be running at plus 2% in the economy for the fed to hike. but they can get confirmation of a steady hand compared to q1. then she has the time to start to change the course of fed policy by really getting most people on board, you know, a start of a hiking cycle. this means we're going to get back to the old norms of higher rates. we've got some hints of that where some members are viewing they want to hike and hike all the way. i'm sympathetic to that view. i think that is what you're going to do. there's going to be horse trading about those that are hawkish and those that are dovish. forming a consensus may be the challenge for her. >> the pick up in rates particularly at the front end of the curve, do you expect to see a similar pick up, particularly with qe end or is this time going to be different? and what's -- >> just naturally, i mean,

naturally compliment of events happening as we get towards the end of the quarter, new information from the fed, we've got the ecb ltros, the qe is starting to wean off. it's natural to expect there's going to be a pick up involved. it's also under the year for chase performance or the cool down positions. i think that's critical and i think the vol is relative low to where we are compared to the inflexion of most central bank policy. we have divergence going on between what the euro and the fed is doing. i mean, this is definitely creating a weak vol window that's going to open up between september and october which is is going to impact valuations from everything, to fx to rates for equity markets, for sure. >> great to speak to you, george concalves from nomura securities. we saw a pick in equities

yesterday, too. this ties into what george was saying a there. we have to take a quick break. still to come on the show, taxi service uber has struck a deal with new york's attorney general. find out all the details after the break.

welcome back to "worldwide exchange." taking a look, telecom practice zillan state bank is lashing out at the country over a debt deal done with relationship to a group highlighting across the xhnt pressure on the planned tie-up between those two names. they're saying rights now it's inconsistent with the minimum standard of good corporate that they require. it aims to protect the interest of shareholders. a bit of a complication having a tie-up between portugal telecom. we'll continue to watch the headlines come out on that right now.

croatia hasn't been profitable, however, thanks to "game of thrones," tourists are adding it to their list. louisa, is it doing anything to help them balance the books as far as the economy is concerned? >> keeping in mind tourism is one of the most important sectors for croatia, and we've seen a big inflow of visitors here over the recent years compared to in the past. a lot of that has to do with history, as well. taking a step back, remember i'm in a country that gained independent back in 1991. the independence war led to a huge drop-off in gdp. since then and skipping lightly over a lot of the important historical things that happened, but last year we saw it join the

european union. but we haven't seen a direct boost in gdp since then. but some say timing is everything. if you joined in 2007, banks were still willing to plow investment into this region. now, not so much to. on top of that, you have a government stalling with regard to implementing reforms that is going to make a difference and make a change. they are pushing ahead to reforms in housing. but a lot more needs to be done. but i think we should go back and talk about tourism. it's a company with a beautiful coast. it's a country that has more than a thousand islands, also, off the coast. blue waters. of course, now, also the "game of thrones" being filmed here. let's talk to somebody who knows much more about this. ratomira spgs ivoshik is the deputy of tourism for croatia. welcome. thank you for being with us. who is coming to visit croatia

now? >> we have a lot of ar rivals, mostly from european countries, from italy, france, czech republic, slow vein ya, russia, and the last few years we are realizing a lot of tourists from the chinese market, south korea and japanese market. those last markets are very important for us because it is a way to extend -- in croatia. it's very important for us. >> sure. and the "game of thrones," my colleague is in the studio was just asking does that mean you have a lot more visitors who want to see where "game of thrones" was filmed? >> yes. a lot of people in the world. but thanks to this "game of

thron thrones," many people are coming and also the next season five will be make, you think, and also a very beautiful place in croatia. >> how much would you expect tourism is going to grow over this year and into next year? >> this year, we are expecting to grow approximately 6%. we are very satisfied. we also realize 9% included from city. again, the market, it's very interesting for us. it's several to go. >> and you mentioned china. are you doing anything in particular to grow the chinese markets? >> well, we visited some fair. we are also putting a lot of

preference in the marketing on the chinese market. and they like this country, i think. >> excellent. thank you very much for being with us this morning. we appreciate it. the deputy minister of tourism here in croatia. i'll be back this afternoon with more, julia. for now, i think we're going to take a wander and check out a few more of the sites and do some croatia tourism on our own. >> you do that. i spent a lot of time in croatia. it's absolutely beautiful. elsewhere, uber has agreed to cap price necessary new york during natural disasteres and other market disruptions. it's part of a deal that car on for hire app has instruct with new york. the rate rises and fall with demand, but it's been criticized for so-called surge pricing. uber is expected to apply the same price cap for its services throughout the u.s. get ready for your brain freeze fix 7-eleven is

celebrating its birthday on friday by giving out free slurpees all day long. they're hoping to lure tech savvy consumers to stop in, too. it's offering everything from cookies and twinkies to big gulps, but only if you download the 7-eleven app. check that out, too. still to come on the show, could accusations of buying sour talks between u.s. and china today? we'll head out to beijing for the latest.

welcome to "worldwide exchange." i'm julia chatterley. these are your headlines from around the world. heavy metal, alcoa kicks off the earnings season with better than expected results boosting results from the after hours giant in trading. carlos slim decides to break up his telecom empire in mexico rather than being faced being labeled a monopoly. could a $7 billion settlement be in the works for citigroup? they brake for their fine in the investigation into misselling of mormgs. and indonesia's presidential election is too close to call as

both main candidates declare victory. thavngs for joining us here on "worldwide exchange." a quick look at the performance of the u.s. majors yesterday's trading session. for the dow, the s&p and s&p, the worst day in two months since april the 11th for that name in particular. we're watching the smaller caps off the likes of russell 2,000. the worst day since april 2011. questions about whether we're getting the small caps to the large caps. this is the head fake. yesterday, all the stocks that have gained most in the last two months losing ground. we have the likes of twitter down 7%. pandora down 7%. linked i didn't know down over 6% in yesterday's trading

session. those that have gained the most losing most in the session yesterday. here is a look at the futures. we're seeing a bit of a bounce as far as these futures numbers are concerned. about 14 points higher for the dow, the s&p gaining a couple of points and the nasdaq similar story to around 5 points higher acrossing to these futures. now, the european markets this morning, they've been under pressure for most of the session. down 0.6% now losing and raising all the gains that we've seen year-to-date. the ftse mib over in italy still managing the gain, but it has lost around 0.25% over the last hour or so in trading. let's take a look at what's going on in the bond markets. oouz the u.s. coming down to 2.535 in yesterday's trading session in line with the weakness that we saw in equities the.over in europe, we're looking at significant moves as far as the peripheral bonds are concerned. portugal bond spread pushing out by around 22 basis points.

italy, too, wider by around 6 basis points. so we're not seeing a flight to quality. we have seen that back in april. something to keep an eye on this morning, too, crucial question as always we ask how do you make money in these markets? listen in to what inexperts have been saying. >> you can't always expect to have the full return@that is written on the paper when you signed up for it. >> sovereigns do default. >> the world is listed and it's our job to spot that risk, manage that risk. that's what banks do.

>> that is based around the sort of improving yield environment, improving capacity, measured capacity growth. we cast the business, trying to show off the cash for this year. >> taking a look at emirate. by about 15%. if you look at the portion of european transfer traffic, ten year hes or so ago, that was less than 10%. now it is 20% and it's growing rapidly. they are extremely competitive. >> president obama has been quoted in the german press saying both israelis and palestinians must be prepared to take risks for peace. this as israel steps up its bombardment of gaza with the government saying, quote, it's removing the gloves for retaliation for rocket fire.

at least 23 people, including sievans, have been killed across the region. war planes hit 50 targets that the palestinians claim are military sites. nbc's eamon filed this report. >> the sirens in sell aveef and jerusalem have gone off indicating that palestinian rocket fire now is reaching deep and further inside israel. it has become a cause of concern for israeli official. they have opened bomb shelters across the country and canceled summer school and day care programs in the south of israel and they've raised the preparedness left of hospitals all across the country, an indication perhaps they are expecting this conflict to worsen in the coming days. inside gaza, the situation there is catastrophic according to health officials who say they simply cannot cope with the number of casualties a large

scale military operation could bring. on the first day, they have seen fatalities and at least a hundred or so people that have been injured as a result of israeli operations. the israeli military says it is targeting hamas factories that produce rockets as well as the homes of suspected militants and other rocket firing capabilities from gaza. but at the same time, there is growing concern about some of the rockets coming out of gaza. at least a hundred have been fired into israel on the first day of operations alone. >> earlier, china received lower than expected consumer inflation data for the year to june. the latest numbers show cpi missed markets forecast by 0.1% rising by 0.3%. the sixth round of the u.s. and china's strategic and economic dialogue kicks off in beijing today. the u.s. treasury secretary jack lew and secretary of state john kerry will sit down with the vice premier. eunice yoon, with all the cyber

spying going on, do these two countries need to have discussions? they know what each other are going to say already, don't they? >> well, they need to have discussiones and that's the main purpose of the strategic and economic dialogue. this is a major annual summit between china and the united states that keeps the two very powerful economies talking. and the senior officials are going to be sitting down to try to talk about the importance and the -- to really steer this very important and complicated relationship and to figure out how we move forward. now, a lot of people have been talking about what issues would come up. just because the relationship, as you suggested, has become very strained. one of the issues that has hit a snag has been over cyber security. that's because the u.s. has accused china of cyber theft. another issue that has cause a deterioration has been china's stance in the south china sea.

that's been affecting a lot of china's neighbors who happen to be u.s. allies. today on the first days of the discussions, there has been actually a lot of discussion and playing up of cooperation. president xi jinping has been talking about how a confrontation with the united states would be a disaster on the u.s. side, secretary kerry has been discussing how both sides needed to seek ways to really work together. now, overall, one way that people have been discussing that the u.s. and china could work together would be on economic issues and more particularly a bilateral investment treaty, which would allow the countries to have gator access to invest in each other. julia. >> thanks so much, eunice. do we get any kind of break through on this meeting on that? but we'll talk to you again about this. eunice, thank you for that. we've just had some comments to the adviser of japan, saying

the economy is on track. they see no reason right now for additional bank of japan easing. morgan stanley is looking at an 80% possibility that we see a stimulus by the end of this year. they're saying it's too early for the bank of jo pan to openly debate the purposes. and the bank of japan's 2% inflation target will likely head to april of 2015. let's take a look at today's other top stories. carlos slim is ready to break up his american movil empire in the face of sweeping government reforms in mexico. it will help prevent america movil from being designated as the dominant player in the seconder which would force it to share infrastructure with rivals for free. the company controls 80% of mexico's six line market and

tensil which controls 70% of mobile. citigroup and the u.s. just department reportedly is nearing a settlement where the bank would pay $7 billion to resolve charges related to the selling of bad mortgages in the run up to the financial crisis. the two sides have been far apart, it seems, just weeks ago, but are now putting the final touches on a deal that could be announced as soon as next week. reports say the justice department demanded citi pay $10 billion while the bank was seeking a fine of $4 billion. let's give you a look at what's on today's agenda in the united states. the minutes of the fomc meeting will be out at 2:00 p.m. eastern, with one notable earnings report today to watch for. wd-40 is out after the close. and the big movers and shakers in the media are

gathering in the resort town of sun valley, idaho,. the meeting has seen some major deals in the past. this year's attendees including marissa mayer, tim cook and the murdoch clan. stay with us. we'll giver you all the details in two. the cadillac summer collection is here.

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or purchase with 0% apr and make this the summer of style. welcome back to "worldwide exchange." ernings season is officially a beat for alcoa. carlos slim says he'll break up his telecom empire. and both sides claim victory in indonesia's presidential vote. the u.s. earnings season kicks off with a mix of good and bad news. the good? better than 13eexpected results from alcoa. bertha coombs is at cnbc hq with all the details. good morning, bertha. >> good morning, julia. so how is the world's largest

aluminum producer very much like germany? they both beat by six yesterday. let's start with that news from alcoa. it swung to a second quarter profit of 18 cents a share. the estimate had been for 12 cents on the bottom line. the company's years of cost cutting is now starting to boost the bottom line revenue. it was flat, though. but that beat estimates. alcoa is focusing on selling more products from its downstream business, which includes truck wheels and aircraft parts. the company is affirming its outlook for global aluminum and aerospace demand this year and hiking its forecast for the north american commercial transport market thanks to rising truck orders. >> our activity is strong and it comes from all across the company. and it has been basically since the crisis. this leads to, again, show the balance sheet is strong. we are generating nice cash flow, our net debt has come down. so this is a very positive thing. this allows us to invest.

>> kleinfeld says aerospace is attractive because airplane back orders can stretch out for years. last month, aloe ya bought a british jet enginemaker for $18.2 billion. at this hour in germany, it is up nearly 2%, as well. now on to the container store which is cutting its full year outlook. it calls a retail funk that is hurting sales growth, even as the company reported the narrower first quarter loss. the chain, which has more than 60 stors in 26 u.s. states went public last november. it has consistently reported higher sales in recent quarters. the same-store sales fell near 1% this past quarter. the ceo said we thought our sluggish sales were because of weather and calendar shifts which started in november and extended into the spring. but we've come to realize it's

more than weather and calendar, consistent with so many of our fellow retailers, we are experiencing what he calls a retail funk. he says while consumers are buying homes, cars and big ticket furniture, most retailers are seeing more challenging sales than they had hoped for. they plan to launch a cut tom build store in texas in hopes of attracting more higher end customers. this hour, down more than 14% in trading in germany. and i will confess, julia, when i walk into a container store because i'm geeky and anal, my heart goes pitter patter with all those organizational things. >> i have to admit to feeling the same. but you know what i want to talk about? i want to talk about your very smart comparison between alcoa and the german soccer. did you watch the game last night? >> you know, i didn't. i have to say, but i have to

give props to our earnings desk. somehow they kept an eye on both the game and the headlines and they were able to get through all of this. so robert humm and juan irego have that. >> thanks, bertha. you have a great day. but it does leave lead me nicely on to give you the details of the match last night. luis calls this the worst day of his life in what he calls a catastrophic defeat. saturday's playoff will be held in brazil ya. german fans were understandably overjoyed at the results. thousands of supporters watched the game from outside the brandenburg gate. germany will go into the final as many people's favorite. last night, big gains will be watching to see the netherlands taking on argentina.

the match will see two of the world's stars go head to head. now we're back to the retail space after that brief football distraction. walmart will open its doors this week to hundreds of entrepreneurs looking to get their products on the shelves of the world's largest retailer. cnbc's courtney regular yab has been following one small business as they make their pitch to walmart executives. more than 500 vendors traveled from all over the country here to arkansas to walmart's headquarters to attend the retailer's first ever made in the usa open call. a shark tank-like product pitching event. the world's largest retailer is looking for suppliers with products at least 90% made in the u.s. to add to store shelves and online as part of a ten-year, $250 billion commitment to support domestic products and jobs. joe rosenburg, vice president of sales in new york state says his meeting went even better than he hoped. >> go forward with a test product. it was exciting.

it's going to have an impact on us and doing business with walmart is humbling and honoring. so we're exciting to be going forward. >> while getting a distribution deal with walmart offers an incredible opportunity for suppliers, retailers posted five straight quarters of negative same-store sales, the company's ceo says while unemployment may be at its lowest rate in six years, walmart's core consumer may not be a part of that job growth. >> the unemployment numbers particularly have been difficult to read with the number of people dropping out of the workforce. and i think it's going to take a while, six months or a year, for those numbers to balance out. you'll see a drop in the rate and that as more people come back into the workforce that might change again. hopefully after six years we're starting to gain a little traction in the u.s. and that traction is coming at the top end. i think the middle and down is still challenged. >> joe rosenburg is anxious to do what he can to help traffic and sales. one sustainable garbage bag box

at a time. >> we're going to take a quick break. i'll leave you with a look at the futures. after the break, we'll be talking fomc minutes and fed speak the last. stay with us.

it's a top day for the u.s. markets. the worst day in two months for the nasdaq losing 1.4%. we have the s&p and the dow losing around 0.7%, too. but focus on the small cap, the russell 2k, the worst two-day drop since april the 10th. the concern about the timing of rate hikes as we head close towards earnings season, will there be enough there to underpin equities? you're looking at the futures. we are seeing a bit of a bounce

in performance. dow jones higher by 20 points, the s&p higher by 3 points and the nasdaq higher by 9 points, too. the fed will release minutes if it is june meeting which may shed light on when policymakers would start to move rates. ahead of that, jeffrey lacker says inflation in the u.s. has bottomed out. he's not expecting an acceleration in the u.s. economy saying i've come to the conclusion that a sustained acceleration of growth to over 3% in the near future is unlikely. he cites subdued productively gains for that. joining us now, john, are the minutes going to tell us anything we don't know today? >> well, it's interesting because we -- a lot has transpired since that last meeting in mid-june. of course, we got most of the economic data released since then has been relatively strong, capped off with a very strong jobs report we got last thursday. so things have changed a bit and

that may, you know, as people try to interpret what's in the minutes, they really need to keep that in mind. but, you know, i think what we would like to see out of the minutes is discussion around the exit strategy. but i think that's probable going to happen later this year. and you would also like to hear discussion about that disconnect between a big drop in gdp in the first quarter, down 2.9%. that against the fact that we've seen five straight months of $200,000 plus job growth. those are the kind of -- we would like to see in there. i don't think we're going to see those. >> is discussion of exit strategy and a bit further explanation as far as the forecast changes are concerned, do you think it's enough to move the markets right now? we have seen repricing as far as timing is concerned on hike. >> we have. and, you know, that two-year note is moving up and that's key to watch. you know, i don't think it will be quite enough to do that. i think the fed and the market are relatively aligned about when rate hikes are going to start. it looks like the middle of next

year to maybe the third quarter is when they're going to start. that's kind of where the fed is. they said all along this is data dependent. if the economy keeps creating 200,000 plus, we can run the economy. i think the fed will be tightening rates in a year from now, although those comments from jeffrey lacker were surprising that he doesn't think that we can sustain 3% plus. and, you know, he's a policy hawk. so interesting to see, but i think the minutes will shed some light on it here, but i think we're going to lead the way to the fall and we see more on the exit strategy. >> john kanalley, investment strategist and economist at lpl financial. that's it for today's show. you've been watching "worldwide exchange." i will see you again tomorrow. for now, have a great day. turbocharged reward u can0 card with a new volkswagen turbo.

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good morning and welcome to "squawk box." big profits at al kocoaalcoa. the unofficial start of earnings season, that's why we follow it so much. it means the flood gates will soon open after a trickle. we'll tell you about all about results. escalating violence between israel and gaza. israeli forces now considering a possible ground incentive after stepping up air strikes. and the host country, brazil, gets trounced at the world cup. the german team scoring seven goals before almost a charity go in the last couple of minutes

for brazil. will this dramatic defeat actually cause political unrest for the brazilian government when the whole pride of the nation is all astink on one team? it's a little bit strange. that's what we have going on here, it's wednesday, july 9th, 2014, as "squawk box" begins right now. >> i still can't get over that match. good morning and welcome to "squawk box" here on cnbc. i'm michelle caruso cabrera along with joe kernen and scott wapner. becky and andrew are off today. stocks are coming off a second straight down session. the s&p logged in its biggest drop in nearly one month. however, the futures this morning are suggesting a positive open, albeit a slightly positive one. the dow would open higher by roughly 20 points. no economic data on the docket today. however, we will get minutes from last month's fomc meeting. that release set