welcome to "worldwide exchange." i'm julia chatterley and these are your headlines. the russian market shrugged off new sanctions that bpb opens lower. >> major sanctions we're announcing today will continue to rachet up. the pressure on russia including the cronies and company that are supporting russia's illegal actions in ukraine. french oil majors are discussing the impact of the

russian sanctions after discussing its lowest quarter output ever. barclay's investors reported a better than expected second quarter profit despite the decline of investment banking and a slew of investigations. peugeot returns to profit and the aerospace giant reassures investors on its books. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> a warm welcome again to "worldwide exchange." let's give you a look at what else is coming up on today's show. airbus third quarter profits take off as it assure its its forecasts are soldly. and held back by the euro, bayer posts a rise in profits, but how much of an impact did the single currency strength

have on the numbers? i speak first to the ceo. plus, have your popcorn in hand as the ceo of imax swaps the big screen for your small screen later in the show. and carl icahn steps family dollar for what's next in the late nest capital. we cross to new york to get you the latest. european markets right now, 8/2. st stoxx europe 600 is down 0.3%. it is concerned about what the impact is going to be of the latest sanctions. we're calling them phase three. we'll discuss them further on in the show. it does bring the eu and the u.s. closer together in terms of their stance as far as russia is concerned. right now, the ftse 100 is lower by around 0.25%.

the cac 40 off by 0.7%. despite the strengths we're sear in airbus and peugeot. the micex is higher by 2%, shrugging off some of the concerns we had over just what step up in sanctions wrp going to see the last few days. obviously with tb market right now not as bad as expected. what we have seen is the u.s. focusing in, the russian agricultural bank, too. sberbank notably missing from that list, right now being 3.5% positive, gazprom up 2.5% in line with the market, too. as i mentioned earlier, pageo on the up after the french carmaker narrowed its losses. the company posted its first positive contribution of its

auto division in three years. taking the stock up 5.5%. airbus up 3.75% this morning, too, soaring after the aviation group posted a 10% jump in the underlying profits. the company says it's steadying investment aviation. stephane will be bringing an exclusive interview with the airbus group ceo, too. that is coming up later on in the show, around 10:35 cet. right now this morning, as you can see, down 3% for total. the oilmaker is reacting to fresh sanctions on russia and total is saying it's stopped increasing its stake in russian producers and embraced yesterday more sanctions. that statement are at 18%, i believe. barclay's higher by 3.2%s let's

have a quick look at what's going on in the bond markets. broader sentiment in the equity market yesterday, we did see the u.s. ten-year yield pushing you back down to that 46 level. we did see a better five-year auction compared to the two-year. we were talking about that yesterday, too, even if rates go quickly, they're going to be slow-paced from these kind of levels. 1.1% on the ten-year bund. comparing the eurozone to japan as far as the inflation outlook is concerned. some other countries have been doing that a lot longer. let's look at the foreign exchange rates.

euro/dollar, 1.34, the lowest level this year. that's the european wrap. sri is in singapore. >> lovely to see you. value mixed, as you can see here. a lot of investors are marking time just ahead of the fed, the fomc and payrolls, of course. here is the outperformances on the south korean benchmark. you're looking at three-year closing highs for the kospi. they liked what they heard last week with the government's stimulus program. markets in korea also largely shrugging off the industrial output numbers which came in below expectations. we also saw some pretty disappointing numbers on the industrial production side coming out of japan, as well, down by 3.3% in june from the prime markets in terms of context, julia. that is the biggest pull since the march 2011 tsunami

earthquake. once again, you'll see the lingering after effects of the consumption hike here on the data. the markets are fairley agnostic. they're shrugging off and going with the earnings which have been fairley robust. shares having a good day today. a six-year high for the s&p/asx 200. the banks, cda had a new record high today. china shares, though b we have been seeing some strong performances the past week or so. some unwind today, breaking a six-day winning streak for shanghai. gains on the index heavyweight petrochina were largely offset by some weakness and the give back on the property developers and on the back. that's where we stand right now. back to you. >> thanks, sri. the european union has announced fresh sanctions in the uk crisis. banks will not be allowed to access the eu capital markets,

is imposing arms embargo and export on equipment needed by the energy sector. the u.s. has backed its allies including similar measures against bank of moscow, vtb, russian agricultural bank. russia has hit back saying it will support banks on the list. while barack obama is calling on vladimir putin to back down. >> it is not a cold war. what it is is a very disk issue relating to russia not willing to recognize ukraine can chart its own path. if you listen to poroshenko and the ukrainian pt people, they specifically said they seek good relation wes russia. what they can't accept is russia arming separatists or carrying out terribly destructive activities inside of ukraine. >> teanet, good morning.

>> good morning. >> we have narrowed the gap as far as sanctions are concerned. have we gone trappfar enough? >> the restriction, well expected. it could be quite a lot of problem for a lot of european corporates in the sector. the main is the sanction towards the back. if anything, that will be the one that will have a bigger impact for russia. right now, you have around 160 billion of tending which is from european or u.s. counterpart. and i think more than 1 billion

loans. so very, very larger now. in fact, the banking system and the corporate system, the corporate corporation in russia big time rely a lot on international market for funding. >> you make the point that some of these banks are assuring bonds as recently as this last month. and the number of times where the words sanctions appeared. what point are you making there? was that an knowledgement to investors right now that there could be problems ahead? >> well, for a state-owned bank, vtb and the gazprom bank and they did so. obviously, part of the business, the add part of the business with company of people and the sanctions. so the properties are very complicated and the word sanction was mentioned between 511 times and 81 times depending on which one. nevertheless, they achieved to enter quite a bond, 1 billion,

350 million of data for vtb. at the same time, one loan, as well, for large ou continue to issue the market and this market shares was for the western economy. >> i mean the u.s. basically with the control of the dollar funding market can turn this significantly higher from this level. do you think it makes a difference? do you think what we've done to this day, thursday, when we get the full details as far as the eu is concerned, does it makes a difference? >> today, more or less the investors are thinking if we be all right and we should be able to continue, it will be business as usual. i think from yesterday europe and from the states, it will not be the case and, therefore, it will have an impact. and the fact that, in fact, they could be at 0.3% gdp impact for

europe to list significant impact. >> let's move on to that and some of the earnings stories. taking a toll on total. one of the biggest decliners in europe, it's analyzing the impact of further sanctions. total says it's stopped increasing its stake in russia producer novatek. let's talk about that and then we'll talk about oil production itself. in june, an 18% stake. but they recently said up to 2020 this is going to be the dominant proportion of their oil and gas revenues. >> yeah. it was fully -- to russia.

it was supposed to be the big market. it is a back set of results. and maybe revalued. everything on russia will make things difficult. if pressure again. it's a very, very disconcerted effort. >> so as far as you're concerned, the share price is the rally that we've seen in the last 12 months. 27%. >> yes, i know, the company has done pretty well and in terms of valuation, it's a bit cheaper than competitor.

>> all right.. twitter reports its first ever headline profit with adjustedernings of 2 cents a share in the second quarter. revenue more than doubled in mobile which now account for 80% of total avenue revenue. ceo dick costolo says the world cup helped, encouraging users to download apps. >> we had a great quarter across the board, i'd say. revenue up 124%. that's great acceleration, a year over year for us. again, a fourth quarter of revenue acceleration. >> i've got janet yellen's comments about stocks making money at the moment. what is going on here?

>> right now, the markets still expect them to grow. they are used to doing this, did very well for many, many years. at one time, investors remember twitter and start to make money. >> how long? how long do they get that stay of execution? >> well, they get to 500 million active users and at that time they will start to make money. i think the advertising is doing very well. it's been very recent. in some country, you can't -- >> it was a great comment made by the ceo yesterday. 271 million active users, but there are two to three times more of that that actually don't

log on right now. at 4.4 billion impressions or tweets during the german and world cup gains. we're talking to the world cup. but it's interesting that it's not just about who logs on, it's about who is looking at twitter, particularly important if you're looking at advertising revenues and the access you get as far as that is concerned. we have to take a quick break. still to come on the show, deadline day. and argentina reaches the debt, is a second default inevitable? we hear from the committee of argentine, next. stay with us. ♪

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welcome back to the show. some comments from the state ta activityic service in ukraine this morning. future gdp down 4.7% year on year. follows a 1.1% contraction in the first quarter of this year. you need to focus on the situation of russia and the east of ukraine, but not only the fact that at the same time we know this is a country that is not only struggling to ease the loss of crimea, but also the fact that it's dealing with a stringent imfe program going forward, too. >> yes. in the ukraine because you have more than one -- in their life. and he said that you could use

the poor states because he's competitive not in some part of the company, impossible to collect tax in most of the cup. and the banking system probably will need reparation, which has not been done so far. they can see how this year they can turn around the economy. >> this political situation with russia could end in a few months. we'll talk about that later in the show. let's move on to other earnings. barclay's higher after investors cheer on a better than expected profit. profits investment banking profit falls 46%. helia, just talk us through the numbers. there are some bright spots in there. >> yeah. the chief executive andrew jenkins will tell you this is a

very good set of results. you might disagree, especially since the 900 million pound position for tpi takes them close to 5 billion. that's a hell of a cost. we're not just talking about the ppi provisions here. as you mentioned, investment banking, profits down 46%. revenues down 18%. this isn't happy news. there are some bright spots, yes, barclay cards would be the stand out contributor. you've got profit up for barclay card, up 23%. you've got income up, so profits up 24%, income up 5%. so very positive. it's slightly ahead for the second quarter. it's slightly ahead of analyst forecasts. analyst forecasts say something like adjusted profits of 1.7 billion have come in at 1.9 billion. but this isn't a brilliant performance.

thief hit by litigation, most notably this lawsuit that was meteed out by eric schneiderman, the u.s. attorney general, with serious allegations about fraud that barclay's is battling in relation to its dark pool business. >> we'll come back to litigation. they're making progress, aren't they, pulling down or reducing the balance sheet, too. i'm quite interested in the revenue drop as far as the investment banking division to get a sense of what proportion of that is down to restructuring the business, making people redundant versus a decline in trading activity that we're seeing from some of the other banks. >> yeah, look, i think the transform program, which is the program that jenkins held after he took over from bob diamond, that has had a lot of costs associated. today, they've said they have the lowest head count in terms of the overall bank since 2007. remember, that was when they bought naeemens shortly after.

so they've dropped a lot of people. 19,000 people have been announced as going. so let's of costs coming down. so shareholders will be pleased with that. the problem is, you haven't tackled the other thing which gets on share holdsers' nerves which is paying those bankers bonuses even when profits are down. remember, activities like macro and the investment bank really being hit by central banking actions overall. and even though the final director says no, you know what? there's been some good investment banking, we've had a great quarter for ecm, a great quarter for m&a, it's not quite enough to pull them out of the doldrum. and that knock from the lawsuit filed by schneiderman about dark pool what the has meant a 75% drop in volumes.

they were making money. >> i think it is tradition. they have to move away from investment banking and, therefore, i think they were quite different, all the numbers were quite where we stand. they were in europe in the uk markets and and that will be reliable for fit. the banks right now, times the value. a bank relying on asset management and goods will probably trade higher.

>> thank you very much. yesterday, i spoke to the chairman and ceo of grayluck capital. he says the global committee of argentine's bondholders might begin by asking what the likelihood that we see a last-minute deal. >> heard things come out of the some of the discussions through the press that suggests that there are proposals that are being discussed and one would hope given the potential severity of a default, that both sides would look very hard for a solution. but it's an interesting dynamic. on one side, you have a group of pretty hard hedge funds who have a lot of experience in being activists. and on the other side, you have a country that's being guided in some fashion by economics and the potential impact of a default. but really guided by politics, as well. and if you look back to the original default, 2001, a lot of

the decisions the country made were based on the political opinion on the ground. and it's very easy to inflame a population when they get a sense that there is an external act in imposing things on a country. so the political support, while christina kershfield's support is quite low, the polls in argentina suggest the population is not in favor of paying the hold outs. so you've got this backdrop of possible problems of one side guided by hard numbers and another side being guided by politics. again, one would hope this is room for something last minute because i think both sides underappreciate how bad a default could be. >> there's a third element here, as well. there's the 92% of investors that didn't hold out and actually took the exchange bonds. and the risk here that if they do settle with the hold outs of

this stage and those investors are 92% actually come back and say hang on a second, what about us? >> it's a good point. i'd quibble a little bit with the idea that there's a voluntary acceptance. i was the cochair of the average committee that tried to negotiate with the argentines. our impression was that the offer in 2005 was relatively unilateral. the 2009 opening was the result of a negotiation to some extent. the idea that the exchange bondholders will come and demand the same kind of treatment, it's a possibility and i think that certainly on the country's side, they brought it up in the court, that it's a -- potentially a ka lamb tuesday potential event. however, yesterday, one group of exchange bondholders came forward on their own to suggest that they would sign a waiver so that -- to say that they would not use this clause to get the

same kind of treatment. i think most accept the fact that the hold outs will probably get a better treatment and, in fact, it goes down to benefit extraordinarily if argentina returns to the international market because the spreads on the country's bonds will express dramatically. that's not to say there may not be some actions, but as a wholesale group, the idea that the exchange bondholders would move or use this clause is overestimated. still to come on the show, governments agree to impose sangs on russia. moscow says they won't have too much effect. who is bluffing, though? stay tuned. we'll discuss. we needed 30 new hires for our call center.

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welcome back to "worldwide exchange." here are your headlines. the russian market shrugged off new sanctions. the ecb opened lower. the bank is added to the u.s. restrictive list as the west takes the topic line on moscow since the cold war. >> the major sanctions we're announcing today we'll continue to rachet up.

the pressure on russia can including the cronies and company. >> barclay's investor cheer better than expected profits despite the decline in investment banking and a slew of investigations. stock surges on twitter as the monthly users jump more than expected. >> we had a great quarter across the board, i'd say. revenue up 124%. that's great acceleration year over year for us, again, fourth quarter of revenue acceleration. british bankers could stop at some of the world's toughest pullbacks and even face jail time due to the announcements planned in 30 minutes' time. we've bounced on the lows of the european market session right now. we've got the ftse 100 lower by just 0.1%. the xetra dax has been the

story, 0.1% lower. the french market is slightly lower 0.5%. airbus in particular, allaying concerns about their order book in particular, too. let's have a look at the foreign exchange market. you're seeing that dollar strength continuing to move through the markets. as you know, we're below that 1.34 level. it was the lowest level since november of last year. losses impose an arms embargo and restrictions on the exports needed by its energy sector. the u.s. has backed its european allies by announcing similar

measures, including sanctions against vtb, bank of moscow, russian agricultural back and united ship building core. >> it's not a new cold war. what it is, a very specific issue related to russia's unwillingness to recognize ukraine can chart its own path. and i think if you listen to president poroshenko, if you listen to the ukrainian people, they've consistently said they seek good relations with russia. what they can't accept is russia arming separatists or carrying out terribly destructive activities inside of ukraine. >> vtb, backing the trend lower

by 0.3%. they're specifically underprmping the broader market today. we'll continue to see gains this morning. now, the russian ambassador for singapore tells cnbc they may need to do some adjust manies following the latest round of sanctions. but in his opinion, it's business as usual in moscow. >> moscow is robust. it's -- the construction work was everywhere. its transport, it's metro, so it's enormously a huge development of moscow's -- i understand huge profits are being underrated all around russia. so, of course, after the ukrainian crisis, we will have to adjust some of this. because of the new situation in russia and around russia.

but i understand that it will still continue on these major developments. >> joining us now is the russian analyst at ihs global insight. good morning. so the only real thing to me sector sanction i see here is a defense sector with a carve out nor the french missiles. how impactful overall are these goes going to be? >> i don't think it will be great, to be honest. partially because of the soviet legacy. russia has never bn really ventured out and became a major importer of bonds. it has been self-reliant. only in the past two years they've been active trying to bring in -- from the west. and as you said, when it comes to the french deal, it's not going to be affected, anyway. so i don't think that when it comes to purely military imports that russia will suffer. however, if we're talking about the use, meaning goods used for silvern and military, in this

case probably russia and particularly russian industry could feel the pinch. >> we don't know yet. we don't know the details. >> well, i think it has been discussed, so we'll have to see whether this is finalized or not. >> when it comes out tomorrow. let's talk about the capital market. who is going to have the most impact here? we were talking about this earlier and we kind of agreed, when i was in brussels talking about the beginning of sanctions, they said this is what's going to happen. the european markets are going to find a way to impact russia. what we've done up to now is the most painful impact is going to be felt by the uk economy. >> well, i think we have to look at the statistics. they were provided by bank of -- and it suggests that actually it's the french and italian banks because they've been lend to go russia and financial institutions for more than london. having said that, i think those

banks, the western banks that have been incorporating with russian entities quite closely in the past decade. this is a two-way street. the russians will suffer a -- >> even if we pushed these sanctions to iran style sanctions on the russian economy, do you believe that putin would back down? >> i don't think at the moment the russian president can do that. because he's really in a very difficult position. >> he's put himself in a really difficult position. let's be fair. >> that is the reality. perhaps in three months' time when they situation de-escalates a little bit. but while there are reports of civilians dying in eastern ukraine and once the russian population is against the -- and eu sanctions and really blames

the west, the president won't have much room to maneuver. >> coming in quickly, if you read the media and russian media, the story is reported very differently for russian media. he is controlling the media. this has nothing to do with the fact that it's russian countries. all in all, it would be difficult to change right now. but, you know, we will see slowly the impact on the russian economy and get to expect that people around him, people with interest will turn in that sanction to have an impact..

>> great point. what are you hearing on that front? are some of the key business people, the oligarchs in russia now turning on people and saying, okay, we need to think about this again? >> well, so far, there hasn't been any really public statement by any of the oligarch. partly because they know how difficult it will be to put forward their business interested. and i want to highlight, also, that it is in russia's national interests to have good relations with west and it's in putin's interests to have good relations with west ultimately. because putin's stating power, in terms of the economic achievement and this is partly because it was integrating the country into the world economy. but at the moment, as i said, he's caught in a situation where there is a strong nationalistic sentiment domestically.

and even if the sanctions hurt, he doesn't have that much room to make a u-turn at the moment, not now. >> interesting. we will have to see how these work through. i think the reaction in the markets today, the micex higher by 2% tells a great deal about the concern that was potentially out there and actually what we've come up with here. >> well, it is a bit of -- today with sanction after sanction, the impact is quite small. but if you look at the print of sanction yesterday and today, i think it will be a significant impact for most of corporation in russia that really depending on foreign funding as well as bank that will be rationed down. you have to keep in mind, if you are in russia -- you will keep your bank or correspondence or ecb? i don't think so. >> great. thanks so much for coming on to the show.

yannick, great to have you on the show this morning, as well. >> thank you. airbus soaring in france after the aviation group posted a 10% jump in first half underlying profits. it's studying results in aviation. stephane, what else did he have to say today? >> net profits, 350% higher in the first half of the year, driven by strong international activity. however, the company did not raise guidance for the full year despite the recent commercial activity, clu including nearly 500 new orders at the air show that was just two weeks ago. i caught up with the cfo of airbus group announcing about the recent combination that airbus has been facing.

in the first place, having the 225 combination. number one, we're seeing an exceptional cancellation in there, which accounts for 70 aircraft. take that one off. but then we're approaching the end of the 8320 co and that means an aircraft we have success in the production plant. the overbooking, they need to go somewhere. so they are progressively converted from cos into neos and that's where you see in the order book revolution, the cancellation of the co coming back as an intake on the neos. if you take that one off, as well, we are at the normal level of cancellation. so monitoring the order book closely entirely, but not necessarily at normal level of cancellation. >> you've decided not to raise

the guidance, despite the high level of orders. why are you still cautious? >> as we speak end of july, the net orders, so cancellations, already stand at a book to bill above one. but to be honest, what the number is going to be at the end of the year, i'm sure the team are going to be super active in particular with the new a-330 neo in the portfolio will give a lot of boost. but what counts is we can replenish the order book. this is what we have in hands all right by now. >> how do you feel about the geopolitical situation in eastern europe, in the middle east? are you worried that it could destable ice the air transport industry? >> first, in terms of our own business and russia, we wanted some very closely -- our business activities.

we have some commercial activities, we follow them closely. we watch out on our suppliers and the relationships we have been building over the last year and we want to honor when these relationships that are very clear. we have no defense activities, obviously, so we're not exposed on that side. in terms of any traffic, at this stage, i think it is what we have in hands. we do not see an impact on traffic despite the tragic events made some two weeks ago. >> also concerned that the level of the euro was not ideal for airbus. it's a long going -- or jan ongoing issue. on several occasions, airbus claims that -- was strong and intervene to lower its level. however, they say that deals with the level of the euro against the dollar. >> all right. everybody else hedges it, d but

it does impact their earnings. thank you for that. we have to take a quick break. still to come on the show, you speak to the ceo of europe's company to see if they can continue. the ca♪illac summer collection is here. ♪ during the cadillac summer's best event, lease this 2014 ats for around $299 a month

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shares in twitter jumped 28% after the microbloging service posted a better than expected second quarter earnings. twitter added 16 million users during the course of the monthly average users to 271 million. julia boorstin spoke exclusively with twitter's ceo following results. we had a great quarter across the board, i would say. revenue up 124%. that's great acceleration year over year for us. again, fourth quarter of revenue acceleration, monthly active users, as you mentioned. up to 271 million. that was a net add of 16 million. these are, of course, the highest number of absolute net

adds. i think it was the highest number of net adds in the quarter. i think it was a combination of things across the company that have come together for us. >> how about that user growth? how much of that is thanks to the world cup? and will you be able to hold on to those users? >> fantastically, it's generally been the case that its product changes that have driven new user growth and these live events that drive more engagement from our active users. so it was, over the course of the quarter, product changes that we've made and that we've talked about that have driven the growth, not the event itself. >> so how many users were added before the world cup? can you tell us, like, how much of that was a total reduction of turn rather than just a big world event? >> sure. i would say that it was a continuous set of growth across the quarter. it was no one moment or one time thing that affected the growth and users. it was the combination of product changes that we've talked about over the course of

the year that are starting to deliver the kind of results we wanted to see. as i mentioned, the world cup drew engagement, more engagement from our existing users and i tell was the product changes that drove growth. >> and in terms of the revenue increase, i know you recently launched app install ad. how much are they to thank for this revenue? >> well, i don't want to steal thunder on earnings. if anyone is going to steal their own thunder, i'm a likely candidate for it. i'll talk about that more in a bit, but obviously, i'm pleased with the increase in revenue. advertising revenue, up 129% there, as well. that's all fantastic. >> we've just heard a statement from vbt bank that was added overnight to the u.s. sanctions list. they're saying they're certain they can attract resources despite the sanctions. here saying they can raise capital if needed and their sanctions are politically

motivated and unfair. now, europe's second largest water company more than doubled their first half profits after the sale of an indirect stake in electricity company. joining us from paris is the ceo. jean-lou jean-louis, thank you so much for joining us. talk us through the quarter and give us more defail tail on the currency impact you felt this quarter. >> yes, good morning, everyone. a solid result for the first half of the year. we are quite satisfied with the visit because we are growing, growth of roughly 2% for the year, exactly 1.6%. organic growth of nearly 1%. so i should say for the first half of the year are quite in line. the profits have been jumping by

more than 1.5%. so all in all, i should say, the business is better than the wait business which still is affected by i should say the slow economic recovery for the time being. >> you're a competitor of the earlier talked about seeing a resurgence in some of their waste activities as we start to see a pick up in factory orders and industrial production in europe. are you seeing the same? you just mentioned there with a little bit more of a negative tone, it seems. >> well, when i look at the volumes in europe, the growth is around 1%. growth for the waste story business in europe. out of the 1.2%, roughly 1% is coming from these activities

that just stopping the operation and 0.2% is coming, if i can say, for the market evolution. 0.2% seems slow. but when i look to the evolution of the production outfit in europe, in the country where we are active, i can see that it has been negative for the first half of the year and, therefore, yes, we have seen the kind of slowdown, slight slowdown in solid waste activity between the first quarter and the second quarter. but all in all, i should say, the residents are -- in terms of -- is quite stable compared to last year. >> you also made your point that this is the year where profits outside of france make up for the decline as far as margins and profits are concerned in france. and i know in particular you're looking at the consolidation in the italian water sector, too. what specifically there is a focus for you? >> you mean on the water

business? >> absolutely. >> well, the water business in europe has been doing very, very well. officialsly for french and -- business. t true also that we have increased shares in a big italian utility, so yes, we are delivering also upper activity in italy, actually. of the two activities we have in this country, one where the other 12.5% stake and the other one when you have the activities. if you like, italy is a country where -- will take place in the coming year. but we have to be there. and if i look at the trajectory of what we have been doing, it is well satisfied. the situation is what it is. it is not largest market, of

course, in europe. but it is one of the most promising markets for us in europe. >> you're expanding your global footprint, too. but you recently signed two contract necessary india, which i think is really interesting. i just wonder how you keep ahead of the competition in markets like that. until you see the new government there is pitiful for this kind of investment. >> well, yes, you mentioned the recent contract. we have the -- in bombay, mumbai, in fact. we are very pleased. we believe that it should continue to develop the business in in water and in waste. both in old asia, china and india are two of the largest populated countries of the world. their needs are really immense. a country can provide the

technology and the morale they need to really address water issues or waste issues and, therefore, yes, we are very active in india, in asia, in china. >> john, thank you. still to come on the show, a stronger euro, but profits are higher on new drug sales. we'll speak to the ceo right after the break. stay with us. we needed 30 new hires for our call center.

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welcome to "worldwide exchange." i'm julia chatterley and this are your headlines around the world. russia shrugs off sanctions. the e you takes the toughest line since the cold war. >> time for -- comeback. the stock surges after hours, adding $7 billion in market

value. users jump more than expected. we had a great quarter across the board, i'd say. revenue up 124%. that's great acceleration, a year over year for us. again, a fourth quarter of revenue. >> barclay's investors cheer a better than expected second quarter profit, despite further declines in investment banking and a slew of investigations. and the u.s. dollar is steady as investors expect taper to continue and minor language speak from the fed. gdp also on the agenda. >> thanks for joining us here on "worldwide exchange." right now, we're beating the trends we saw yesterday.

the nasdaq ending just a touch lower after a solid start, but it was the eu sanctions, the threat on activity that account xwaed sentiment. right now, we're seeing a bit of a bounce. the s&p 500 indicating higher by around 3 points and the nasdaq similar story here, too. we did have a discussion this morning about the net impact of some of these european countries and one guest telling us look, the problem is going to hit as far as the capital markets are concerned with the likes of the french bank in particular. perhaps you can take this as an indication of some of the funds out there regarding these sanctions and what we're seeing now. the micex higher by 2.2%. yesterday we see the ten-year

treasury back down at 2.46%. now 2.47%. i was talking to you about the two-year auction yesterday. we'll run through the details. we saw solid demand yesterday, the u.s. flattening to five-year lows. $35 billion of debt with a yield of 1.72%. the bid to cover was above the 12-month average there, too. i think investors got caught looking at this rate, seeing the back up in yields, saying even given what we're seeing now, it will be a slow ride higher from near these levels. ten-year bund yields, 1.1%. record low, comparing the eurozone economy with japan, some other countries in europe have been making that comparison for a long time since then. let's have a look at some of these foreign exchange rates, too. the dollar has been relatively up for the last few sessions. we have euro/dollar above that 1.34 level. as you can see now, still bouncing around at the lowest

levels that we've seen since november last year. the aussie dollar and sterling under a bit of pressure, too. we are seeing a bit of a policy as far as strengths is concerned. now you've got gdp, adp, a whole host of data to come over the next few days and, of course, the fed, of course, tonight. now, last week the hedge fund billionaire bill ackman promised to expose herbalife. however, the presentation failed to impress sending shares higher. on monday, herbalife reported it missed expectations. herbalife is currently under investigation by the federal trade commission. so where does the story go next? one man is a keen interest is john hampton. he's on the phone right now from sydney. john, by your own acknowledgement, the q2 results were a bit disappointing for

herbalife. a decline in north america. but you still hold the stock. you said the upside is close to $200 rooern $100 a share. why? >> yeah. the company has groan consistently for a long time now. it's had double growth many, many times in many markets. typical process are that they recruit hundreds of people. only, say, 15 survive, because most people drop out. but the people that survive become regular daily consumers of the product. the amounts of product consumed are enormous. on a rough calculation, this company feeds about 10% of the number of people that mcdonald's feeds. the growth rate has slow in north america to flat to minus 1 last quarter, it will probably

be plus one next quarter. there are a butch of reasons for this, but it's not necessarily to realize it's simply slowing. all of that slowing was venezuela and the company has been de-emphasizing venezuela because it can't repatriate its money and whatever profits are likely to be nationalized. practice zill was down about 1%. but they said that was related to the world cup. and that makes accepts because brazil yapts wanted to party rather than diet. the aggregate growth is about 5%. this is a company growing 5% to 7% volumes, probably 8% or 9% cash flows. and the management boyback all their shares incremental return on capitals closer to 10 0% and the business is completely real. at some stage or other, that will revalue as a growth stock

at the moment. it's valued at a very big discount at the moment. the share count will be substantially lower. the stock is going up. >> you mentioned a pick up in some of the american numbers in the next quarter. in my mind, if this is something that was going to implode, once the decline stepped in, that's kind of it, isn't it? we've also seen a pick up in asia from q1 to q2. what's going on here? >> asia declined for the first time in the last quarter. it turns out that the senior distributor in malaysia took the entire client list and went to a competitor. and that hasn't been widely discussed. we've tracked down the competitor and learned the story. they will regrow again. malaysia, which was possibly their best market in asia, has not been as good ever since that happened.

and i suspect there's sort of a vulnerability to thinks businesses in developing countries. if you tried to do that in america you would get sued. in malaysia, you probably don't. >> john, very quickly, bill ackman, has he let his personal feelings get the best of him do you think on this stock? >> it would look that way. he spent $50 million trying to prove that it was a fraud and he had nothing. in extremery, he even made comparisons to a bunch of people sitting around drinking protein shakes to nazi, germany. to sort of let yourself get away with it. i have this problem which is that i've not visited so many herbalife distributors that i can't be anything but convinced of the opposite of mr. bill ackman. and the problem is that, you know, looking at it from the distance, it looks strange. but when you go in there, what you see is real communities selling real shakes to real

people and large numbers of it. it's -- i haven't found a distributor that match tess bill ackman thesis yet. some along the line, he went astray. >> great to have you on, john hempton. we're waiting for announcements from the bank of england. they said they have new rums on pulling back bankers bonuses. helia has come back to tell us all the details here. >> we knew the bank of england would want a consultation. this is making it even tougher to pay bonuses and making it easier for banks to claw back money even when it's spent. and the result of that actually makes the uk the toughest place in the world to do banking and why is that? fistly, it's your deferral. this is how quickly can you get your hands on the bonuses? >> how many years are we looking at -- >> this has been five years now, five years minimum or seven years. so five to seven years.

and then we're talking about the clawbacks. and this is a massive seven-year period in which a firm can claw back money it's paid you. and it can claw that money back for a variety of reasons. so you don't have to be the person that is accused of wrongdoing. you could be a manager that should have had risk oversight and has failed to provide that oversight. so it's a slight watering down from what some of the fears were earlier this year. we were talking about clawbacks, talking about it possibly be retrospectively. today we learned that this won't come into effect until january next year. but already people are worried. so you just get hurt. >> the talk continues. helia, great to chat with you. let's move on to bayer's net profits in the second quarter

rise by 14%. the company says ebitda could -- due to head whippeds. the ceo joins us from the latest in germany. thank you so much for joining us. talk to us about the quarter and the impact of currencies and the limitations on the full year outlook for sales. >> we felt we had an exceptional quarter. our competitors gain share in what is continued to be a relatively good science market. overall operationally, 6% organic growth for a company our size, we're very pleased.

we have the head whippeds of fx. but in the whole picture, we're compensating for some of that headwind and we've reiterated our guidance for 2014. >> is the euro too strong here? >> well, i'm not a currency trader, but i can compare prices between the u.s. and europe. and i think 1.34 is stell relatively higher for the euro. this is my personal assessment. of course, it helps when the euro gets a little weaker for companies that are import in euros, it helps our international competitiveness. so overall, i think for europe, it would not be so bad to have a euro that is somewhat weaker. >> you're also dealing with the

merck acquisition, the consumer core business. there's been a lot of questions raised about whether or not you'll sell off copper tone. is it not part of -- i don't want to make you repeat yourself over that, but some on the criticism has been there's a risk here if you sell off those brands at lower multiples, it will highlight the fact that you overpaid for that business. how do you respond to that? >> well, these are unusual businesses. this is an over-the-counter-type of medicine. we know very well because obviously it is the emphasis. we have been selling products in this market for over 100 years. and what's interesting is this business compared to almost any other business is the incredible loyalty to a product of consumers. we have products that we have had on the markets 60, 70 years. and these products are growing.

these products are growing significantly because consumers want to have these products and they're loyal to them. so in terms of valuations for businesses like that, you have to take the sustainability of a revenue stream into account and that's why it seems higher than, you know, most other industries. but it actually is an appropriate valuation. >> i want to talk about the russian pharmaceutical business, too, despite being one of the fastest growing in the world, you said the company itself is going to take advantage of some of that growth. i just want to ask you what you think of the current situation with russia right now. there's a great deal of speculation about how german corporates in particular feel about the idea of more stringent sanctions in russia. i want to ask how you stand, where you stand on this issue and whether you believe there should be further pressure, irrespective of the economic cast. >> yeah. well, i think it's very

important that we continue to work very hard and find a diplomatic solution to this conflict. i think the escalation is in nobody's best benefit. so i hope that the politicians and the governments of various countries work on making sure that there are diplomatic solutions. from a pure buyer point of view, you're right. particularly in health care. russia is a nice growth market. we have good double digit growth there. but at the same time, russia is 2% of our total sales. so in that sense, not a huge factor in our overall, you know, business and success going forward. it's important, but it's not an overwhelming piece. and in that sense, you know, i am no -- relatively relaxed with respect to the impact it could have immediately on bayer's

performance. >> thank you so much for speaking to us. we've just had q2 earnings out from fiat chrysler. q2 revenues are a touch shy of consensus. that was expected to come in at 24.4 billion euros. but concerns about their 2014 guidance and they're saying net industrial debt at the end of june was 9.7 billion euros. so they're concerned the full year guidance. you can see the stocks there right now by around 0.2%, but in line with what we're seeing from the broader market. after seeing a pick up in user growth, we have more on twitter right after the break. stay with us. collection is here.ac sumr ♪

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zloo russia lender vtb called obama's fresh sanctions politically motivated and unfair. twitter falls after hours as the social media giant easily beats expectations. revenues up 124%. investors await day two of the fed and the first reading of second quarter gdp.

still to come shoet, can china help transform the movie business? we speak to the ceo of imax about how well the second largest economy is shaping the box office. and we'll leave you with the heat map to see how the european markets are fairing. we needed 30 new hires for our call center.

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welcome back to "worldwide exchange." let's give you a look at how the u.s. futures are trading ahead of the equity market sessions. back to the losses that we saw in yesterday's trade, right now, the s&p 500 indicating higher by 3.5 points. the dow higher by 37 points and the nasdaq 12 points higher, too. we have q2 gdp on tap. we'll be talking about those a little later on in the show. for now, let's move on to the s.e.c. who has an investigation over a write-down on turbo, an animated film which parted a 13 million impairment charge. this was disclosed during a conference call when the ceo reported a 19 million drop in revenue from a year earlier. the $300 million mark domestically for the first time

since 2001. they will become the fist movie ever to cross that mark in china. the shift was more -- areas as it locks harness with the online tv series model. imax continues a european expansion opening last month and boasted an 86 ceiling with projectors that weigh half a ton each. rich, great to have you. there is so much in that introduction. i don't know where to start. but let's talk china and the demand for the transformers board. how r adapting to this globalization of content right now? >> well, in china in particular, we were fortunate enough to be way ahead of the curve. so we have 168 theaters open in china already and backlogs set to build. our networks will be over 400

theaters. when we're involved in a film in china, whether it's an american blockbuster or a chinese stone, we typically do 10% to 15% at the box office. china has been a giant wave of demand as the economy has progressed and discretionary income has gone up, that's a huge movie going population. >> and you see that more bodily across emerging markets? >> we do see it. even russia and even the ukraine, believe it or not. but so much so across asia, you look at the philippines, malaysia, indonesia. and imax from our revenues used to be much more north american based. in the last quarter, it was 57% international and you've seen that growth in the emerging markets. >> talk to me about the potential slump we're talking about right now in terms of box office receipts the. we're talking 15% to 20%. is that typical with a lack of big movies or is it structural to the likes of online content? >> i think it's definitely

cyclical. and the movie business has been around for over is 1100 years. there are good years and bad years. every time there are two good movies in a row, everybody says it's back. when there are two bad movie necessary a row, they say the movie business is over. but i think if you look over the last number of years, it's relatively constant. when you go to 2015, there's a whole slew of blockbusters coming along, including the next star wars, avengers, bond, many others. so i think 15 and 16 look like very, very robust years. and i think for whatever reason, 14 didn't work as well as people expected. however, it's still early in the year. guard yarances of the galaxy, a marvell movie opens this weekend. the reviews are very good. audiences like it. i think people would be surprised at those results. the track record with the batman trilogy and exception are amazing and the hobbit for now it will do well. so it's too early in the year to

throw in the towel. >> so you're not seeing significant competition from the likes of netflix. how do you keep yourself relevant? i guess it ties back to the globalization, your brand, as well, the impact you're having in europe and beyond. >> i think in an ironic way, some of the changes of imax has been a beneficiary. if you can get product or content across so many different platforms, i think there are certain movies you watch on your ipad so when you go out, you really want to see you imax. and i think that's what is fueling our growth is the demand for more and better added home experience. >> as you said there, benefiting you rather than detracting. it's great to talk to you, rich, the ceo at imax. staying with movies, you can catch the premier of sharknado 2 the second one time at 9:00 p.m. eastern on sci-fi. you'll see cnbc's own brian sullivan making an appearance in the movie.

still to come, deadline day. can argentina reach a dead deal or is another default inevitable? we'll hear from the former chairman of the committee right after the break. stay with us.

welcome back to "worldwide exchange." these are your headlines from around the world.

the russian market shrugs off new sanctions and vtb opens lower. the bank has added to the u.s. restrictive list as the west takes the toughest line on moscow since the cold war. >> major sanctions we're announcing today will continue to rachet up. the pressure on russia including the cronies and companies supporting illegal actions in ukraine. time for twitter's comeback. the stock surges after hours, adding almost $7 billion in market value as monthly users jump more than expected. >> we had a great quarter across the board, i would say. revenue up 124%. that's great acceleration year over year for us again on the fourth quarter of revenue acceleration. barclay's investors cheer a better than expected second quarter profit despiert further declines in investment banking and a slew of investigations. and the u.s. dollar holds steady as investors expect tapering to continue and minor language tweets from the fed. the first reading of second

quarter gdp also on the agenda. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> if you are just tuning in, thanks for join ugsz here on "worldwide exchange." we'll change to the losses we saw in yesterday's sanctions, concerns about sanctions. right now, higher for the dow futures indicating higher by 35, 36 points. the s&p 500 higher by 5 points and the nasdaq indicating higher by 12 points, too. lots on the agenda. investors here digesting the potential impact of the latest sanctions from the eu and the u.s. on russia right now. we're seeing a boundback in the russian market. but as i mentioned, the vtb bank over in russia coming under a bit of pressure in the session today, too. i'm showing you the european markets 2456 bounced back in the lows of the session. right now, across the board for

the core market. the european union has announced new saengsz. russian-backed banks won't be able to access the markets and export and equipment needed by its energy sector. the united states announced similar measures with new sanctions in financial services, including vtb and the bank of moscow. as i just mentioned, their shares in vtb have been trading lower, the stock down just shy of 20% so far this year. speaking after the announcement, barack obama called on vladimir putin to comply with demands of the international community. >> it's not a new cold war. what it is, a very specific issue related to russia's unwillingness to recognize ukraine can chart its own path. and i think if you listen to president poroshenko, if you listen to the ukrainian people,

they've consistently said they seek good relations with russia. what they can't accept is russia arming separatists or carrying out terribly destructive activities inside of ukraine. the head of global portfolio international at goldman sachs, casey, good morning. thanks for talking to us today. what do you think here about the russian situation and the geopolitical list? >> as it leads to sanctions, these are clearly going to continue to weigh on the russian economy. but i would hasten to say that the markets are priced a lot of this in. russian equities as well as the local debt markets have underperformed their indexes by some 20%. so this of this is priced in. we don't expect a worst case scenario of restructuring or default, but we are remaining cautious on russian as es. and the other thing i would

mention in addition to boeing cautious on russia, we don't think there is going to be a big contagion to the rest of the emerging markets. so we maintain our strategic positions. >> without remaining post cyclical positions across border asset classes and not pricing any tail risk here for broader implications? >> yeah. i think you want to be diversified from russia into other countries, and i think you -- it's okay to maintain that strategic positioning in emerging markets that continue to work for investors. >> what we have seen is a doubt of spreads right now. we have seen a bit of diversification, too, if we look at the small cap equities in the u.s. what in the high yield markets are we seeing? >> spreads have widen by about 25 basis points at this month. i think it's important to separate the fundamentals from the technicals. the fundamentals are quite strong because growth is strong.

we have very strong balance sheets, they're cash risk, not overlevered. you don't have a lot of maturity. what is working against you is the technicals and what i'll highlight here is this has gone from an asset class predominantly owned by institutions to now having a lot of retail ownership. the retail investor has doubled his exposure to high yields over the past five years. they're starting to panic and you've seen that in outflows. we will continue to monitor the situation and if we see a further dislocation on the back of these technicals, maybe that's a buying opportunity. >> late to the party for retail investors and they get caught up in the change. i want to talk technicals there for fundamentals. you've been overweight european equities for most of this year. quite frankly, it's not working out relative to the u.s. talk to me about this president. >> sure. we have an overweight european equity. as you mentioned, it's underperformed. we still feel quite confident in this position.

i would highlight to you that the range of underperformance here is -- we think is overdone. so, in fact, european equities have underperformed the u.s. more than it did during the european dead crisis and more than it did during the financial crisis. so we think the underperformance is done. i would point out a very powerful valuation argument in european equities which is that this is one of the historical highs in terms of european equity yields relative to european credit yields. that's a very compelling valuation point. finally, we actually are, as you've commented on this morning, starting to see some positive earnings data coming out of europe. only a third of companies reporting, but so far that data looks good. so we have expecting to see good performance in european equities from here, although obviously selectivity. >> stitching, isn't it? we're going to talk u.s. in a few minutes' time. k.t., stay with us. the argentinean officials have failed to reach an agreement with bondholders after holding late night talks.

it has yet to be determined if there will be a further meeting today. the chairman of greylock capital spoke with me. i asked him what the aftermath would look like. >> the payments aren't released from bank of new york, does that constitute an event of default to trigger cds? we don't know. the cds market has had its issues, but it's not an automatic. critters don't receive a payment and, therefore, it's triggered. there's the potential of accelerating some of the other exchange bonds. that's a matter of going through a trustee to see that everything is due and payable immediately. i don't think many investors in argentina have had to work with trustees in this kind of a process. i think they're more used to seeing a u.s.-time distressed

environment where banks will operate pretty much automatically. we in emerging markets have had to deal with banks as trustees and it's been a rel problem. >> nicholas watson, analyst at tenure intelligence joins us now. good morning. what's your base case here? >> i think default is the most likely scenario. but it's perhaps not completely obvious. there is still a chance for an 11th hour deal today before midnight. >> and caution about the 11th hour deal, though. i was talking about the 92% of hold out coming back and saying, hey, what about a better deal for me right now? that's a complication because that would bankrupt argentina. they can't afford it, can they? >> and this is why argentina has been so reluctant to reach a settlement now because they are facing the rights upon future offers. which is basically entitled the

restructure if argentina voluntarily make the hold out. >> it was some of these hold outs going forward, saying look, not the hold out. the ones that have taken the exchange bonds we're saying, look, we'll stick with what we've got. we're not going to fight for more money. what's the likelihood that they get a full run of that 92% saying, hey, we're not going do ask the better term? >> i think from a practical point of view, it can be extremely difficult and you can get the numbers that you need. but there is one other solution that's emerged in the last sort of day. which is a group of private banks in argentina is willing to buy the claims of the holdout to be repaid in bonds with a later day. and they would put down, according to what we're hearing from argentina, they would put down about $152 million as sort of a down payment or guarantee and thereby stretch this negotiation into 2015. >> and what is the likelihood of that happening? >> well, it's possible.

you know, the argentine government has really been very erratic and it's a mixed signals during this whole sag captain. the judicial order is an extinction. >> the other one, and this was said to me earlier, was that the benefits of actually dealing with the holdouts now has enormous benefits in terms of investment potential into argentina. look at the ecuadoran case as an example he used. it's timely here. >> that's right. you know, over the last few months, the argentine government has been doing some quite good work to engineer with the market. we've seen the compensation agreement, a number of the arbitration cases involving argentina have now been settled and, of course, the deal with the paris club of critters, so $10 billion of debt relating back to 2001 default.

so a default would undo a lot of this work. there is a consensus here to reach a deal. a default is deep in a recession that's already under way. >> they are going to take it down to the wire, that's for sure. nicholas, it's good to talk to you. we look at earnings results right after the break. thank ythank you for defendiyour sacrifice. and thank you for your bravery. thank you colonel.

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welcome back to "worldwide exchange." russia learned vbt calls obama's fresh sanctions politically motivated and unfair. twitter falls after hours as the social media giant easily beats expectations. revenues are up 124%. plus, investors, day two of the fed and the first meeting of the second rt kwaer gdp. carl icahn is cutting back. he's trimming his stake in family dollar, a target of one of his activist campaigns in recent months.

jackie deangelis is at cnbc hq with all the details. jackie, where is your division focusing now, then? >> good morning, julia. that's the thing investors are focusing on this morning. icahn unloading more that a third of his stake in family dollar just takes cdays after t company agreed to a 8.5 billion buyout from rival dollar tree. icahn sold 3.8 million shares, lowering his stake from 9.4% to just over 6%. he had been family dollar's biggest shareholder, but is now the third largest. he comes behind howard levine and fellow activist investors nelson peltz. he believes his capital could be put to better use elsewhere. icahn mounted a public campaign last month to get family dollar to put itself up for sale. he claimed that the company was being poorly run and lagged its competitors. in a statement on monday following the dollar tree offer, icahn welcomed the deal but

still hopes that a higher bid will emerge. he says, quote, this is a big win for all shareholders of family dollar and yet another vool addition of the activist investment philosophy in general, end quote. icahn sold shares on monday and tuesday at prices between 7515 and 7595 a share, above dollar tree's office, which values family dollar at 74.50 a share. and that could make him a cool profit of $174 million bucks. he says that he could sell more shares in the future. this is just the latest feather in icahn's cap, of course. in the past year, he's scored some big profits, even when his investments haven't necessarily gone the way he expected. his huge returns include netflix and dell and apple and ebay. none of those companies exactly followed his advice, but again, gains on paper or in actuality are always a good thing for these investors. back to you, julia. >> they are, indeed. let's take a look at some of

today's top stories. twitter had earnings of 2 cents a share in the second quarter. revenues more than doubled and mobile ads account for around 80% of user revenue. the ceo dick costolo says the world cup as users interacted with each during the game. they launched a new type of ad to download apps. give you an ipd cage of how the price res moving in the german market session. significantly higher right now, 26% higher in the german market. american express second quarter profits shows revenues came up just shy of estimates. spending over 9% to $258 billion. the company says spend thing levels showed customers are more confident about the economy. but we're seeing spending growth over the past several quarters. the company has targeted a wider

range of customers by launch ago fee-free card. american express trading in the german market higher by around 0.7%. and second quarter profits for amgen rose 23% on enbrel. it is raising its full year outlook, but plans to cup up to 15% of its workforce and close plants in colorado and washington state. but it did say there are plans to expand facilities in san francisco and massachusetts. amgen trading in the german market session higher by 1.7%. now let's focus on the fed. does janet yellen still think there's slack in the labor market inspect we'll look ahead to the momc's latest move. stay with us. xkç

joo let's take a look at u.s. futures right thou. taking back around half of the gains from yesterday. 29 or so points for the dow. the s&p suspect higher by 4 points and the nasdaq higher by around 11 points, too. let's give you a look at what's on today's agenda in the united states. the july adp employment report out at 8:15 a.m. eastern. forecasts call for an increase of 238,000 private sector jobs. at 8:30, we'll get a first look at second quarter gdp growth. after the close, we're going to hear from kraift, whole foods

and yelp. katie, let's talk about the fed. i think the risk here for markets is whether or not we get comments that yellen made a couple of weeks ago about the data perhaps shifting forward, the timing as far as rate hikes are concerned. do you expect to see any tweet to the statement to contain that? >> we certainly don't expect any major policy announcements today. we are -- it's been well broadcasted that the tapering is going to be reduced to 25 billion of asset purchases a month and that will wind down in october. and the fed has already said that it's going to be a big lag between tapering and when the rate hike actually happens. what i think is going to be important is the economic data. as that supports the economic recovery. we'll get more confident on our view of rate hikes. >> will we get a rate hike?

how does the market take this about future rate rises sooner than later? >> if there's disappointment, obviously, expectations will have to adjust. but our core view continues to be that we're in a strong economic expansion in the u.s. as unemployment continues to fall and we start to see some pick up in inflation, it becomes more likely than that rate hike will happen, as we said, for quite some time, at least in the second half of next year. >> the second half of next year. so you're talking q3 or later? >> yeah. most likely, that's what we think the time sg going to look like. >> you've got analysts out there. >> if you take a look back, most inest vesters are positioning more dovish than the fed. so the important thing for us is if that rate hike does happen in the second half of next year, are we positioned well for clients? so in our portfolios, we are underweight. the beneficiary is the fed

liquidity and we're overweight risk assets like equities. >> so talk to me about payrolls on friday. what are your expectations? >> if we see a number above 150,000, i think that would be very strong. >> in our fixed income portfolios b we would be more favorable on a well to value based european bonds. the central bank in europe has to take a more easing posturing. we also still like credit, which we talked about before, but against the back drop of a strong economy, we still think there is merit in holding credit, particularly if you can hedge out duration. but overall portfolios, we are overweight equities. as i mentioned, still see value in fixed income. >> very quickly, the best value

trade right now? >> we would be overweight equities and within equities tack callie overweight markets. >> katie, it's great to talk to you. >> xwrae. now, earlier we reported that japanese brancheses of mcdonald's are introducing a whole new nugget. this time it's tofu rather than chicken that you'll be dipping into. we've been asking all morning, would you find tofu to your satisfaction? jeff tweeted in and said tofu, love it? no, i'm not loving it. sorry, i should have sung that. thank you so much for watching. we'll be back tomorrow. "squawk box" is up in just a few minutes' time. collection is here.lac sur

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good morning. welcome to "squawk box." the fed decision today, twitter's take off the stock soaring after positive second quarter result and a jump in active users. and water, water everywhere. nearly 100-year-old water main burst in los angeles, pouring more than 8 million gallons of h2o into the streets at a time when the west is dealing with a historic drought. it's wednesday, july 30th, 2014. "squawk box" begins right now.

good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin and michelle caruso cabrera. joe is off this week. we have three major economic event owes today's agenda. we get the july adp employment report. 15 minutes later, a read on second quarter gdp. this afternoon, a policy statement from the fomc. let's talk expectations. polled economists say the adp report is likely to show 280,000 jobs this month. the second quarter gdp figures are likely to be the market's main focus today. growth probably regained speed in the second quarter to the tune of a 3% growth rate. gdp shrank at a