welcome to "worldwide exchange." i'm carolin roth. russia retaliates. the cu tells the nation's capital that the long-term effect of sanctions will fade. >> russia is never going to disappear completely from radars of investors because it's such an important part of this global financial system. >> commerzbank net profit

doubles n second quarter sending shares to the top of the european market. benefiting from a fall in bad loan provisions. a sweet session for nestle, too. they launch a buyback program as an emerging market pick up boosts sales. and investors hoping for a windful from rio tinto. posting a first half jump in profits thanks to iron oreships. we speak first to the ceo in just a couple minutes' time. display you're watching "worldwide exchange," bringing you business news from around the globe. good morning, everyone. you're watching "worldwide exchange." roughly one hour into the trading session, the stoxx europe 600 extending its week-long slide. we're down by 0.2% as we're digesting the retaliatory

efforts coming from russia. the ftse mib has been the big underperformer in yesterday's trading session. it's bouncing back just modestly, up 0.5% following that shock return to recession yesterday for the italian economy. the cac 40 down 0.2% and the xetra dax still 900 points away from that high, down by 0.25%. plenty of earnings out today. this is what we want to focus on next. commerzbank, shares up by 2.6%. the big story here, shares performing very well in today's trading session. this after germany's second largest lender announces a net profit more than double from last year. let's continue our look at the earnings story with nestle up by 3% on the smi. nestle announcing a share buyback worth 8 billion swiss francs or $9 billion. and maintains its outlook.

the owner of kitkat and niscafee outperforming by 3%. old mutual off by 1.7%. it beat by first half profit by said external conditions look set to be challenging for the rest of the year. and last but not least, rio tinto up by 1.8%. up 21% thanks to cuts in costs and capital spending. we'll be joined by rio tinto's ceo sam walsh first on cnbc. that's coming up in around 15 minutes' time. let's continue with a look at the bond markets because we saw the ten-year bund yield going negative for the first time since may 2013. currently is at 0.013%. also want to draw your attention to the ten-year yield. another record low and this is obviously in response to all the dpeeo political and

disinflationary pressures we're seeing out there with 1.086%. the ten-year treasury yield still below that 2.35% level, as well. very quickly want to show you what's going on in the currency markets. the dollar showing a bit of a rebound against the japanese yen. 102.29. we did see that big fall yesterday, but many chalk it up to sink or trade. the aussie/dollar slumping in today's trading session. a two-month low against the greenback. down by 0.2%. unemployment in australia hitting a 12-year high. cable is down by 0.1% and not too much activity in the euro/dollar. 1.3367 ahead of that ecb meeting. the next day of the crisis

in ukraine could be more serious. this as nato cop firms about 20,000 troops are ready on ukraine's eastern border. take a listen. >> we have reasons to believe, according to information i've received in the last few hours, that the threat of direct russian intervention is certainly greater than it was a few days ago. >> translator: unfortunately, russia has restored its fighting capability on the ukrainian border. >> in a tit for tat move, russia has banned agricultural imports from sanctions that ban moscow. clul food and vegetables from europe, soybeans and chicken

from the u.s. the european union exported a total of $13 billion in food to russia in 2013. germany has the greatest exposure followed by poland and then the netherlands. hadley gamble joins us now. what are they saying about the impact of sanctions and outflows? >> in terms of the outflows, we've seen about 74 billion leaving russia. that's the first half of the year and that's more than the whole of 2013. that is a big concern. i asked the ceo directly with what we're seeing on the ukrainian border. he said yes, there's no point in denying it. but speaking of those bans in terms of imports and fine whines and food from europe, i asked the ceo in terms of the imports, is this still business as usual in moscow?

>> talked to the owner of the medium sized restaurant chain who says my menu was my -- my course of productes or the share of europe it's very significant, 60% of import. now, my menu list was 2 hurn items on the list. now i'm just cutting it to 80 items on the menu list and we're going to reach out the pricing model. so that's a very, very small example that businesses thinking how to adjust to that. and that's happening with a larger organization, as well. >> the ceo of rencap telling me this is really an opportunity.

these sanctions represent an opportunity for the russian businesses to get on board not only looking east, but the in terms of scaling back and they're dependent on the west. >> what's really interesting is that the two big competitors, they have been sanctions. so what are the opportunities here in terms of grabbing market share for the nation's capital? >> at least in 2013, 50% of their revenues came from investments in africa. really, this has been a -- for them. >> hadley, thank you so much for that. breaking news, itihad, the italian government officials are meeting on thursday regarding the al italian agreement to be signed on friday.

a major deal to help out a troubled alitalia. this week saw two senior band officials quit for the private sector. the financial stability center up and left for bp. let's get out to uk's business editor helia eperhelimi. helia. >> good morning, carolin. you're right in naming those two people, especially the departure of dale. just a few months ago, he was transferred out into this new job. many were speculating that he was up for deputy of the bank of

england. he didn't get it. he felt it was a demotion possibly? that was talked down but now he's gone and there's lots of changes at the bank of england. there might be changes about the management, but what hasn't changed is the voting record. so discuss that with me a bit further is martin beck. martin, lots of criticizing the monetary policy committee for voting in line with the governor. we're not used to the mpc having 9-0. what's the issues there? >> i think we've had over three years now where we haven't seen a rise in interest rates. i think the economic background has justified that. we've had a period of stagnation and the recovery is getting going now, but it's still fragile. >> you say the recovery is fragile, but we're growing at 3..1%. this might be revised up in september. it doesn't sound too fragile.

unemployment is a record lows. is that the key metric, productivity and wage inflation that is concerning the bank inflation? >> changes on interest rate. wage growth, which is actually nonexistent. >> so another unanimous vote today, you're expecting. >> i think one or two votes. something like martin who has been hawkish in the reerchbt past. given, as you say, the recovery is picking up steam. >> and let's talk about that in the context of communication in the market. it was a year ago that forward guidance was introduced by mark carney. that seemed to have a whole range of failures, including most specifically that the

market think it seemed to know when rates were going to go up and the bank of england said that was then. they wanted to guide away from that. they wanted rates to tighten. was going on there? >> i think in a way forward guidance has been the victim of its own success. when we saw mark carney come into its position as governor, you saw activity pick up. you could argue the forward guidance and carney is more positive. so i think forward guidance is coming in for a big deal in some respects. it's boosting confidence and recovery. >> and so the interest rate rises finally hit the uk. but when are we going to have it? we're going to have the scottish referendum before the ends of the year. >> we think before the end of the year or into next year. if that is the issue, interest

rates stay low for 2015. >> and what about politics, the bank of england gets to help. the run away housing market has been hugely contentious in the uk. what are the political pressures that have been applied? >> you could argue that the housing helped a lot in terms of the economic recovery. i mean, the government will be unhappy if the bank takes too much action to cull that market. mark carney and the others will judge what to do on the merit of the economy's needs. the markets will cool down a bit, even on the back of some -- point of the governors. >> thank you very much, martin. we saw the housing market cuhl down a tad in june. but as halifax price data showed just yesterday, that has picked up again and mortgage applications again picking up. political pressure being a huge determinant in the bank of england even though they're

independent. we'll wait to see what they say in the inflation report next week, but probably not much change from today's decision. >> helia, a very busy month for you. not the worst to be standing outside the bank of england. i saw when i came in, the weather is absolutely beautiful today. check out helia's article on cnbc.com on why the boe is absolutely key for the bank of england. so one central bank to the next. let's listen to what they've been having us. >> our strategy is to ensure that we're a customer funded bank, customer loans funded by customer deposits in our capital.

we always tried to resist the temptation of central bank money because, you know, that can be unsustainable if you base a strategy around that. so i don't think that we will be significant participants in that you have to be very careful to make sure you can wean yourself off. but, obviously, if there's an opportunity to do a small level of a carry trade, we will look at that. >> the signal that was attached doesn't really apply to this round. it's different. and it's very, very cheap funding. we're certainly looking at it because our strategy is to grow, funding is to grow commercial ending. so this is in the right space strategically. but on the other hand, you know, we're highly retail funded as we mentioned at the beginning of your program. so we don't need fund. we're debating whether we should take this or not. attractive because of the price, but maybe we don't really need

it. >> we haven't decided yet whether we're going to get the full number or not. probably we will and we will decide further down the road whether it will go to the september option or the december auction. in a way, i think it's a very good opportunity that we can take advantage of in order to keep on increasing our lending volumes. >> let's get out to annette who is covering that ecb decision for us in frankfurt. annette, it seems as though there isn't as much of a stigma attached as there was with the last two rounds. do you think the take up, despite that, will still be pretty if good? >> well, what we are hearing at least from german banks, they are not too interested in that. probably the tell tale is something for the banks and the periphery. that is where the effects should also bear its fruit. shly, the ecb came up with that

idea to close the gap between what big companies pay on capital markets, the interest rate and what small and medium sized enterprise has to pay when they take out a loan from the bank. they have to give a little bit of that lower interest rate that at least is the idea behind. but looking at the realities, also that those banks we are talking about are right now quite -- because they have to gather a lot of information and they've stress test the balance sheet.

they have to hold more collateral between those risky loans. there's a bit of a conundrum here as to how those banks should deal with those loans. essentially during the press conference, i would say there will be some question on the latest on the asset quality reviews because the ecb is sitting on data from those banks and they will look into the data in early september. it might be perhaps interesting to see. we spoke earlier on we're saying who is the vice president of ecb. >> thank you so much for that. stay tuned for our special live

coverage of the ecb's rate announcement coming up at 13:45 cet followed by the press conference with mario draghi. we've got flashes coming in from deutsche telekom. deutsche telekom saying we're very satisfied and t-mobile developing very, very well. this is interesting in light of the recent new flow surrounding that deal given that the sprint deal has fallen through. but deutsche telekom's ceo is saying we don't have an offer at this point that will increase or improve the company's or shareholders' positions. so basically saying the offer we got from iliad is too low. sprint was offering $40 a share so i guess they have have to up

their offer a little bit. growth is sustainable and valuable. competition became a great deal. more intense in germany, they say they're cutting costs significantly in germany and europe. there's the latest in terms of commentary come from deutsche telek telekom. still coming up on today's show, an app that let's drivers pay for parking spaces if their dashboard. the nikkei snaps a business on news. a government fund increases its domestic stocks more. plus as nfl preseason kicks off, we're joined by a super bowl linebacker turned wealth manager. and as earnings season turns to retail, are american firms struggling to shop around for new executive talent. we'll cover this and much more on today's show. we'll be back in two.

welcome back to the show. cnbc has confirmed reports that bank of america will pay up to $17 billion to settle a justice department probe into the sale of toxic mortgages before the

financial crisis. this would be the largest settlement to rise from the meltdown following similar deals by citigroup and jpmorgan. bank of america merrill lynch could pay $9 billion in cash and the rest in systems to struggling homeowners. the deal is not final yet. reports say it came about after a call last week between bank of america's ceo brian moynihan and eric holder. atlanta fed president dennis lock heart tells cnbc despite recent economic growth, the fed shouldn't raise rates until at least the second half of next year. he says the second half gdp was partly to rebound from the first quarter and may not be sustainable. lockhart says he's slower on the trigger than other fed members and dallas fed president richard fisher needs to act sooner. lockhart says he's focused on growth and ensures the recovery is maintained. president obama says his

administration seems to move fast to help escape corporate taxes. the president's comments came as drugstore chain wall greens decided not to pursue an inversion. president obama says the practice is unfair to americans. >> we don't want companies who up until now have been playing by the rules suddenly looking over their shoulder and saying, what some of our competitors are gaming the system and we need to do it, too. that kind of herd mentality, i think, is something went to avoid. the president says congress would need to pass legislation to stop the tax inversions entirely, but he plans to look for ways to discourage them. hawaii is about to get its first direct hit by a hurricane in 22 years. hurricane iselle is set to hit

the big island bringing heavy rains quarterback winds gusting up 2080 miles per hour and flooding in some areas. right behind iselle is tropical storm julio which could impact the storm this weekend. mining ceo gary goldberg says he's open to resuming talks about a potential memorier from garrett gold. a possible $35 billion deal between the north american gold miners fell apart in april amid reports they couldn't agree on how to handle the assets in australia. do you feel like you spent too much time on your tablet, smartphone or social media? uk adults spend an average of eight hours and 41 minutes a day on media devices compared with the average night's sleep of

eight hours and 21 minutes. even that average is pretty high, isn't it? eight hours and 21 minutes. most of us don't get that. there's one person that isn't happy about the time people are spending on their technical devices. the pope. the pope blasted today's youth for wasting too many hours on things. he said our time should be spent on good and fruitful actions. chatting on the internet is one thing we should be doing less of. we want to know from you. what do you think? do you spent too much time on your smartphone or in front of a computer or a tv screen? could you live without these things? that's a tough question, isn't it? if you want to join the conversation here on "worldwide exchange," get in touch with us. we're interested in hearing your views. worldwide@cnbc.com, via twitter @cnbcwex or direct to me, as

as@carolincnbc. still to come here or show, russia slapping an embargo on western nations. the details next.

russia retaliates. moscow imposes substantial bans on imports from the eu and u.s. the long-term effect of sanctions will fade. russia is never going to disappear completely from radars of investors. because it's such an important part of the global financial system. >> commerzbank profits double in the second quarter. the lender benefiting from a fall in bad loan provisions. a sweet session for nestle, too. an emerging market pick up boosts sales. and investors hoping for a windfall from rio tinto. the mining giant posts a jump in first half profitses thanks to strong iron ore shipments. we speak first to the ceo in just a few minutes' time.

let's get a quick check on european markets. we are still under water. the ftse 100 is down by 0.1%. we're seeing a bit of improvement for the german dax. up by 0.1% after the massive drop of the last couple of trading days. the cac 40 just holding on to the flat line. and the ftse mib is recovering from yesterday's slide. remember, this came on the back of the surprise slip into technical recession once again. let's also take a look at the bond markets once again we are seeing a bit of a move into safe havens, the ten-year treshy yield at 2.45%. the ten-year german yield hitting another record low, 1.09%. if you take a look at the two-year yield, that has gone negative for the first time since may 2013. that tells you what the level of risk aversion is in these markets. pretty incredible, isn't it? the dollar seeing a bit of a

bounceback against the yen at 100.31. there seems to be a fat finger trade in yesterday's trading session. euro/dollar, 1.3373. down modestly ahead of that ecb meeting. and sterling/dollar, 1.6837 down by 0.1% on the day. the australian day, that was the big mover in today's trading session after unemployment hit a 12-queer high. rio tinto saw net proovt more than double in the period as the company stepped up iron ore output while reducing capital spending. shares are trading higher. joining us now, sam walsh. taking a look at the share price action, up 1.5%. sam, always great to speak with you. that was a surprising and convincing beat. what was it that analysts didn't see going into these numbers?

>> good morning. i think we've been on a journey. and i expect that's what analysts didn't expect. cash up 8%. and we're seeking a cost reduction target. we achieved 3.2 billion against a target to 3 billion for the entire year. so we're attracting very, very well. >> you seem to be defining logic that continued to ramp up iron ore output even as iron ore prices have hit two-year lows. how long before you stop investing? how long will the price of iron ore have to go? >> if you look at the forward, it's holding around the current level through 2017. if you look at our position, there's a lot of -- in the

world. cash is $20 per ton. around $95 a ton. and it's a good business. so it's important for us that we do complete the projects that are on the way which will take us from 290 million tons to 360 million tons.it is actually a good story. >> you've got great insight into how the chinese economy is recovering. yes, we have seen some bottoming out there. what are you seeing? how strong is demand? >> it is certainly seeing as strengthening pmi and industrial production. we are also seeing an easing of product. we're seeing some stimulus package and we're seeing the slowdown in housing stabilize. can the government achieve 7.5% growth in the second quarter? so the growth target of 7.5 for the year is. that's good news for us. it's actually good news for the

world. >> it is good news for the world, isn't it? let's talk about what shareholders can expect from you. you've reached the debt target earlier than expected, yet you were pretty vague today about what kind of returns shareholders could be looking at, whether we could be looking at a share buyback program, a ec dividend. can you enlighten us here? >> well, that's a decision for the board in terms of the mechanism that returns will make. but they have made the comment that the material increase as shareholder returns will reveal that. this is good news for our shareholders. and it turns a commitment that i made this time last year that i was committed to shareholder returns. >> so we'll have to wait until 2015 until details are announced. is that correct? >> well, i think if the analysts are doing their homework right as we speak. >> that's a fair point, isn't it? i want the talk to you about the

aussie/dollar. we saw that slump in today's trading session on the back of the unemployment numbers. given this is a large cost factor for you and so far the rba has been pretty neutral, there is a chance that it may become even more dovish after today's data point. the level of the aussie/dollar at this level, is that a big concern for you? i think we're sharing that that is disconnected. i think the strength we've seen in the aussie/dollar is a safe haven, that there are relatively high interest rates. the reserve bank is recently concerned that the rates are on hold. i think the unemployment announced today is disappointing, but it's an issue that the government is clearly focused on ensuring that this

improves. >> i also want to talk about your aluminum business. first half earnings beating expectations, an increase of 74% yee year on year. is this because you were able to realize premiums? is this all about pricing or what is it? we've reduced our costs by $500 million. 20 businesses, the least effective businesses. we have seen an uplift in premiums during the first half of this year. we have seen an increase in the aluminum over the last three months. so it certainly cost restructuring and advantage. but importantly, again, we stabilize and strengthen this business coming through in the results. >> sam, i appreciate your time this morning. sam walsh, ceo of rio tinto.

we're getting more details on the food import ban from russia. russian prime minister medvedev says russia will ban meat, dairy and fruit imports from the u.s. this will last for one years. he says russia is mulling a ban of transit slides for eu and flights that fly over russia. obviously that would have huge implications for those airlines. in a tit for tat move, russia has banned agricultural imports from countries that have put sanctions against moscow. andrea mitchell has details. >> with the fighting escalating and russians training across the border, vladimir putin is striking back against the west's economic sanctions, today banning food imports to russia

from one year. beef and pork from australia. soybeans and chicken from the u.s. up to $1.3 billion worth. america's third largest poultry producers in mississippi is preparing to take a big hit. >> what do you think is going on here? what do you think vladimir putin is doing? >> i think it's politics. he's searching for however he can we tail i can't knowate and he's picking agricultural. >> russia rely hes on imports for 40% of its foods. experts say putin is hurting his own country. >> he believes in matching force with force. he always retaliates. but in the end, he is only making life more difficult for the people of russia. >> and putin won't stop at food imports. he's expected to ban european airlines from flying over siberia, the shortest, cheapest route to asia, even though the

western sanctions are already hurting all sectors of russia's collapsing economy. this week, a subsidiary of russia's national eighteen line had to suspend flights to crimea, unable to get boeing parts. and travel agencies go bankrupt. tonight, the biggest worry for the u.s. and europe is whether putin will stop at a trade war or order his troops into ukraine. tonight, the president said that the sanctions are working as intended. >> hadley gamble joins us now. it seems as though business is going as usual for them, isn't it? >> it was interesting. when i sat down with the ceo, he basically told me in terms of everyday life in russia, moscow is definitely along at the same pace. everyone is still going out to the restaurants, everyone is still spending, everyone is still shopping.

we've seen about $74 billion of outflows in the first half of this year. and i asked him, are these outflows directly related to what we're seeing on the border of ukraine? >> it is directly related, yes. identities hard to deny. there's no point to deny that. >> how much money are you expecting to leave russia in 2014? >> in terms of the capital outflows, the public figures that are available in the first half of the year, it was around $70 billion. that figure may reached $100 billion. it's a substantial number. it's a hit to the economy. at the same time, the government is looking at new opportunities and we've seen the intention to go east. that was the deal signed with china. just yesterday it was understanding -- memorandum of

understanding signed by iran between russia and iran in different sectors of the economy, not only oil and gas. and this is exciting. i believe this is what's going to happen. >> so where is that money headed? >> i believe some of that is going that direction. some of that is going to take place -- if you make -- switzerland as a safe place and some other jurisdictions. but i believe the majority of those sitting on the so i had lines and just wanted to make sure that the situation stabilized in order to come back. because if you look at the business of strong financial institutes in russia, we also

see the inflows and someone can sit and speculate, yes, it's government related mope, money coming back, whatever that is. it's money flying back and that money is going to be deployed. russia is never going to disappear completely from radars of investors because it's such an important part of the global financial system. and despite all the talk about the sanctions and violations, we are part of the global economy. we are part of the global financial system. >> the ceo talking about the fact that no matter what happens in terms of the geopolitics, you know, russia is a part of the global financial system, it's here to stay. and eventually we it grate it into what we're doing in terms of the west. rio tinto leading specations seeing net profit more than double in the first half. this as the company stepped up

iron ore output while reducing capital spending and cutting costs more than expected. the board may consider returning capital to investors in 2014. >> i think that's what analysts didn't expect. it's good news. >> joining us now, gavin out of sydney. thank you so much for speaking to us. why exactly did they beat? >> yeah. it was a sensational result and i think it surprised everybody in the market. basically, the reason was i think analysts most market watchers had underestimated the company's capacity to generate earnings with respect to their iron ore business. i think there was a feeling around the easy money had been

made, there had been a lot of focus on the folding price of iron ore which is followed by about 30% so far during calendar 2014. i think everybody was on the conservative side as far as rio's earnings were concerned. but the company has ramped up production significantly, so what they've lost in terms of pricing, they've more than made up for in terms of sales. >> that is pretty impressive, isn't it? i also talked to sam walsh about shareholder return and basically he said look, we can't really announce anything until the board has agreed on that. and that will probably be tend of 2015. what exactly are you expecting? a special dividend of shareholder buybacks? >> i think it's probably a

special dividend. analysts here expected bhp and rio tinto to look at capital measures during the current year. but i think the fall in iron ore prices has put that back. i think realistically we're looking at 2015, 2016. but the market would have taken great heart, particularly some of the larger investors, because not only has the company surprised on the upside as far as earnings are concerned, but, of course, capital management measures would have pleased those larger investors and, of course, the fact that the company is bringing down their debt levels at a more rapid pace than what the markets might have expected. the other piece, if i could just make a point, is some of their other -- performing extremely well. aluminum, which is a real ugly duckly for the company in previous years, ebitda was up. that's very important in terms

of earnings diversity, of course. >> very little to complain about with this set of results. you talk about diversity at a very high risk strategy. what do you mean by that? >> well, i think there's two aspects to that. if you compare bhp and rio's growth strategies, bhp is much more conservative. they're focusing on third world countries, on canada, on canada. but, you know, they're in higher risk parts of the world, mongolia, guinea, for example, that's where some of their large scale world class emerging minds are located. of course, there are higher risks associated with operating

in those jurisdictions. the other thing, of course, is rio is hugely leveraged iron ore, about 80% of their earnings are generated iron ore whereas with bhp, it's less than 50%. it leaves the company somewhat exposed. when the iron ore price does come off, as most of us expect it will, one of the other commodities that rio is going to focus on. i think that's why it's particularly encouraging to see the strong performance in aluminum and copper. >> gavin, we're going to have to leave it here. thank you so much for your time. and still to come on the show, the ad that hits the spot. the parking spot, that is. we're joined by the founder of quite a different type of parking aid. that's coming up next.

it's time to address one of motorist's biggest headaches, finding a parking spot. an average drivers waits 106

days of their lives searching for that spot. just park has launched the world's first in car parking app that finds, books and pays for a parking space and today announced its piartnership with bmw mini. thank you so much for coming on to the show. just explain to us how this works and how you came up with this idea, essentially. >> sure. i was in san francisco going to a table game. i couldn't find anywhere to park. i said wouldn't it about he great if i could knock on that person's door, park in their driveway, pay them $10. came home, made the app and justpark was born. justpark allows you to book a parking space, also in hotels, church car parks, schools and also in private driveways. >> it's background this all

started in san francisco. we just saw a cease and desist order for some parking apps, but not for you. is that a endorsement in san francisco? >> what we're not doing is we're not using public space which is a number of companies are talking about. we don't sell the information when an online parking space becomes available. that space belongs to the city. we're talking about parking spaces owned by churches, houses. >> how do you make money? >> if you're looking to rent out a parking space, you charge 10 pounds, we add a 25% markup on that price. >> you do break even? you are making money, right? >> we're making significant money.

we want to really grow in the uk but internationally. >> but are we seeing -- this can't be limited to parkling. there are so many things you could do with that app. are you thinking about going into restaurants and shops, that sort of thing, so extend your offering? >> not right noi now. we are a parking company and trying to help solve an age old problem. parking is a problem in our cities and we want to destress that experience. >> anthony, thank you very much. i think it's a huge public service in a way, isn't it? anthony, founder at justpark. and fancy giving a gift that shows your soft side. the latest 3d start-up allows you to personalize marshmallows. the new willie wonka on the block is none other than james middleton. we'll speak to him coming up at 12:20 ceo. the state of california

continues to suffer from one of the worst droughts in history. >> in california, the drought is on everybody's mind. but now start-ups are riding to the rescue here at the francis ford copola winery where they're teaming up with one start-up. that company flies planes over farms providing thermal images that could provide a bird's-eye view of any problems. when it comes to the consumers, the name of the game is shaming. the start yaup software looks for data turning it to easy to understand reports senting it to consumers. those reports detail how much water they use and how their usage compares to their neighbors. nobody in any neighborhood wants to be a water hog. >> you can in some ways think of

water smart as a virtual water monitor. you're effect ily putting more reserves in the reservoir for more people to use. >> this drought conditions and concerns mount. those working in the industry think you're going to see a lot more interest from both consumers and investors in start-ups that are technology to ease this water crisis. josh lipton, cnbc. still to come on this show, bank of america could cough up $17 billion to settle a mortgage probe. details coming up next. ♪

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who don't have electricity 400 million people and i just figured that it's time i do something about it. what we're doing right now, along with ibm, is to actually transfer data through a satellite from our wind farms directly onto the cloud. i think we could create a far more efficient system across the whole network where we could actually draw down different kinds of energy based on when it's needed by the consumer. a smarter energy system is made with the ibm cloud. the ibm cloud is the cloud for business.

welcome to "worldwide exchange." russia retaliates. moscow imposes substantial bans on food imports from the u.s. and eu. the ceo of the nation's capital tells cnbc exclusively that the long-term effect of sanctions will be fading. >> russia is never going to disappear completely from radars of investors because it's such an important part of the global financial system.

nearing a settlement, reports say bank of america could pay $17 billion to resolve a probe of a sale of toxic mortgages in a run up to the financial crisis. net profit for commerzbank doubles in the second quarter, the lender benefiting from a fall in bad loan provisions. a sweet take for nestle, the group launches a share buyback as emerging market pick up boost sales. >> you're watching "worldwide exchange," bringing you business news from around the globe. good morning, everyone. if you're just tuning in, thank you so much for joining us here on the show. let's have a look at u.s. futures. they're pointing to the upside, even if you take fair value into account. this is after the s&p was little changed in yesterday's trading session, holding on to that two-month low. the vix was off by around 3%, a

lot to digest for global investors. we've got retaliatory action, we've got those meta deals which have fallen through. let's take a look at these european markets, too. off by 0.2. the cac 40 off by a similar percentage and the ftse mib bouncing back from yesterday's weakness. that related to the renewed recession in the economy. let's take a look at some of the earnings news out of europe. this after germany's second largest lender announces net profit of more than $400 billion. more than double last year. nestle not doing too badly on the smi up by 3.3%.

nestle announcing a share buyback worth $8 billion and maintaining its full year outlook. the owner of kitkat is up 3. 13% on the back of that announcement. old mutual beat by first half operating profit but said external conditions in emerging markets are still to be challenging for the rest of the year. we want to talk about rio tinto, shared monitoring up this morning up by 0.9%. the company reported a first half profit up by 21% thanks to cutting costs. >> we've been on a journey. i expect that's what analysts didn't expect. it's good news. >> and let's give you a look at what's on today's agenda in the united states.

weekly jobless claims are out forecast to rise by 8,000 to a total of 310,000. at 2:00 p.m., we get june consumer credit. after the close, we hear from cbs, monster beverage, news corp. and lions gate. about a dozen retailers for july same-store sales today. analysts expect sales to top 4% for the fourth straight month as stores continue to use promotions to entice shoppers. july is a traditional month as retailers clear up spring and summer inventory to make room for back to school items. bank of america will pay up to $17 billion to settle a justice department probe into the sale of toxic mortgages before the financial crisis. this would be the largest settlement to rise. reports say bank of america could pay $9 billion in cash and the rest in a assistance to

struggling homeowners. reports say the deal is not finalized and came about after a call between bank of america's brian moynihan and eric holder. bank of america shares in frankfurt, pretty much unchanged, 11.38. joining us now is brett mcmillan, officer of commonwealth financial network. brad, what do you make of fms right now, given that we're seeing all these headwinds in terms of litigation and compliance? do you want to buy the sector? >> i think we're getting there. i think the buy is certainly something to think about. what we need for financials to do well is to put the uncerta uncertainty behind us. then we need the yield curve to improve. >> is this economy strong enough to stomach a rise in rates?

>> i think at this point, a rise in rates is a very, very good thing. if you although at past performance, a rise in rates can contract and run with economic recovery. if you look at stock market performance, rising rates up to the normal levels say around 3.5% to 4% leads to improve stock market performance. here at commonwealth, we're not that worried about rates going up because they're probably not going to go up that much and at some point it's healthy to see rates normalize and i think investors get that. >> i think one investor said he has never seen so many people who are positioned for a sell-off in the second half of the year. but that sell yaufr hasn't happened yet. is this maybe that is never going to materialize? what do you think? >> we should going to see a sell-off at some point. the old economist will give you

a number or a date, maybe both. but right now, i don't think we're in the middle of that sell-off. we've seen market action like in this year. i don't start to worry until we break the 200-day moving average. we're not close to that on any of the major indices. wee seep autos, manufacturing, government is coming back. this earnings season, we've seen both earnings and revenues outperform expectations. all of those activities should support the market. the market right now is priced to perfection. and once things weaken a little bit, that's when i start to worry. >> do you want to get into the sectors, they have underperformed the first half of the year talking consumer

staples or do you want to continue with those that have outperformed in the first half, i.e., energy, for example? >> i think consumer staples are a play right now. risk is coming back into focus. europe's financial crisis is not over yet. look at ewe crepe, look at russia. the market is priced for perfection. >> with the u.s. recovering and with china seemingly continuing to grow, there's some real fundamental foundation under there. if you want to make a more speculative, i like consumer spending and discretionary. and as wage growth accelerates, which we should see, there's an opportunity to outperform. >> stay with us. atlanta fed president dennis

lockhart tells cnbc despite recent economic growth, the fed shouldn't raise rates until at least the second half of next year. he says the second quarter gdp was partly a rebound from the dismal q1 and may not be sustainable. we will not see a reversal of the trends that we are seeing. i would like to see more evidence. >> let's get back to brad mcmillan, chief investment officer of commonwealth financial networks, still with us. brad, what do you make of those comments? do you agree? >> i don't agree. the fed has been consistently behind the curve on the recovery and approachly so. their responsibility is to make sure we don't drop back. but if you look at almost every single indicator, we've been stronger than the fed thought. unemployment has come down much more than anyone thought.

there is fed recognition. they're cautious about it, but i think we're getting there and i think they'll be more aggressive than people think. >> there is no sign of inflationary pressures, especially in terms of wages. so unless we see that, i think the fed is right to stay on the sidelines, isn't it? >> well, the fed isn't really staying on the sidelines. they're continuing the taper. which is to say they're not reducing the stim use husband. things are indeed getting better. in fact, if you look at what they did, they could have extended the taper a little further than they did. they made the statement we're going to end it a little earlier. i think that's a degree of confidence. inflation is not high yet. you're seeing it accelerate. you're seeing it about a number of wages, but you're absolutely right about wage growth. that's the next thing that has

to happen to prove the fed wrong. until it does, i think they're going to sit tight. >> thank you so much for those thoughts, brad mcmillan, commonwealth financial network. the next phase of the crisis in ukraine could be more serious than that of today. that's the certain warning. russia has about 20,000 combat really troops on the eastern ukraine border. >> translator: we have reasons to believe, ard cooing to information i've received in the last few hours, is that the threat of direct russian intervention is certainly greater than it was a few days ago. >> translator: unfortunately, russia has restored its fighting capability on the ukrainian border. there are more than a dozen groups and a large saturation of military equipment.

you either do such things to ex either pressure or enter. >> in a tit for tat move, russia has banned countries with imports. putin has banned food imports to russia for one year, including fruit and vegetables from europe, beef from australia and soybeans and chicken from the u.s. germany has the greatest exposure followed by poland and the netherlands. russia is the biggest buyer of fruits and vegetables in europe and the second biggest buyer from poultry from the united states. russia is also considering banning transit flights by eu and usair lines headed to the asia pacific region. he says the final decision has not yet been taken but that russia has already decided to ban transit flights for ukrainian airlines through

russian territory. still to come on "worldwide exchange," rate decisions coming up. don't go away. where the reward was that what if tnew car smelledit card and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits.

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this morning, russia bans food imports from europe and the

u.s. bank of america is nearing a $17 billion payment to settle its mortgage probe. and a host of major european corporate eps beat forecasts with second quarter earnings. and it's that time of the month. it is ecb day, a slew of negative data from the eurozone has rates reasons ahead of today's ecb meeting. italy slipped back into recession. germany manufacturing orders decline the most in thee years. the inflation number, 0.4 had%. let's bet back out to annette who is standing by in frankfurt. just how worried will the ecb be sitting in that tower behind you about all the data points they've been sitting in the last

few days? >> that's the question, whether from draghi will have the glass half empty or half full. it depends on which economy you're looking at. they're really one can say in spain this economy looks quite promising when it comes to recovery. unemployment tickers are still going down even though they're at high levels. mr. draghi will be very concerned about emanating should russia go into ukraine with their forces. that would mean a substantial shock for the eurozone. also the sanctions on russia and now the sanctions by russia on european corporates, will weigh

down on economic activity in the eurozone. it will be interesting whether we see or hear a more dovish mario draghi during the press conference which potentially could also have a negative impact on the euro exchange rate. right now, everyone expect this ecb meeting to be a nonevent when it comes to policy actions. but there could be some rhetoric from mario draghi to weigh down on the euro exchange rate. also the inflation which is still below the trajectory the ecb is envisioning. there might be some update here. the official staff projections by the ecb will only come out next month. with that, back to you. >> annette, thank you so much for that. stay tuned for our special live

coverage of the ecb's rate announcement at 13:45 and the news conference with mario draghi at 14:30 cet. the bank of england's monetary policy committee meeting on rates today. with sterling rising in value by nearly 10% against the u.s. dollar over the last 12 months. the e starts heating up concerns about sterling strength and its impact on the economy. let's get back outs to helia. just how worried is the boe about the strength of sterling? because the numbers that we've seen over the last couple of days, specifically the service sectors, they're still very strong, aren't they? >> they are. but actually, manufacturing hasn't done as well as people expected. and there are some people saying

the fall should be less for sterling, as you said, up 10% for the year. but the bank of england is remarkably cool about the strength of sterling. and you look at some economists, look at rob wood from barrenberg bank he said noon should be worried about sterling because it's a side show event and effectively in terms of exports, you're not really getting the effect of sterling that people worry about. but that data -- and if we look at the data, you said uk data very strong in services. but there are some weaknesses. one is in manufacturing. are we getting a balanced recovery? two is that going to lead to some softening in numbers in the second half of the year? remember, for the first six months we have outpaced the u.s., we have outpaced the eurozone. but will that continue? where is productivity and what does that mean? today, we're not expecting any change from the bank of england. but for the first time under

carney, you might start to get some dissenting votes. and there's a clamor to hear at least one or two mpc members start to raise the specter of interest rate rises. many expecting that to happen november possibly february next year amid a good degree of political turmoil. >> back to you, carolin. >> and let's not forget about scotland, either. we have in a that small but very important coverage coming up. check out helia's article on cnbc.com on why wage growth is absolutely key for the bank of england. still coming up on the show, the countdown is on, literally. the nfl unveils a new super bowl quag as we talk to nfl former linebacker reggie wilkes.

sfwhoo and it's never too early to start thinking about the super bowl. the official nfl countdown clock to super bowl xlix was unveiled on wednesday.

while we wait another 178 days for the big game to arrive, nfl teams are getting set to kick off their first preseason game tonight. joining us now to talk about the business of football, is reggie wilkes, former nfl linebacker and now vice president of wealth management advisers. thank you so much for coming on the show to talk to us. now with the preseason starting, a lot of focus on the rookie athletes. how are they dealing with that new found wealth? >> it's always a struggle with these young men coming into so much money. gentleman davon clown jadavian clowney, he was our first pick this year. one of the things i suggest is that uncle sam is going to be your partner for the rest of your life and they are a part of the 1%. they realize that that first check, albeit $1 million, $10

million, half of that check will go to uncle sam. that's one of the biggest struggles that players have to deal with is understanding that taxes are going to be a big issue for the rest of their careers and their adult earning lives. >> but how much money are we talking about here for those young guys starting out? i guess it would be more than just a couple of years ago, if you take into account all these endorsements? >> well, when you look at jadavion, it's public knowledge, he's going to make close to $23 million. almost $15 million is in a signing bonus. $23 million is guaranteed. that's a lot of money for a young man who potentially could play 12, 14, 15 years and make.wards of $80 million during his career. so we're talking about a lot of money relative to the normal adult earner or teacher other in some cases a doctor for that matter. or like my wife. we are making 10, 20, 30 times

the normal income that a consumer would make in a regular job. >> you're absolute lit right, but their career is much shorter than that of, say, a teacher. i know you think family is a big threat. why is that? >> well, family is part of it. i think it's a big hit to begin with. players need to make sure they have a game plan, to make sure they have a good team of advisers. and we always remember there should be separation of services. they shouldn't rely on one person to take care of all the business of sports. they should have an attorney, an agent, an accountant. they should hopefully have a financial adviser. in many cases, guys need spiritual support. their families. but, again, we stress in our practice lifestyle management. and that to me is really the key.

if you can manage your lifestyle, manage your spending, manage your savings and come up with a good game plan, just as anyone would in their lives, you could be very successful when you come out of the ball. now, the average career is 3 1/2 years. so we always refer to football at the nfl as not for long. so you've got to realize, yeah, you might play two years, it could turn out to be one year, depending on what happens on the field. >> reggie, briefly, i'm hearing our very own jim cramer is a philadelphia eagles fan. how do you think they're going to do? >> i like the eagles this year. i think they're going to do better than they've done in a number of years. they clearly have the best running back in my opinion in the nfl. they've shored up their defense with the draft picks this year. their offensive line is going to be one of the best. so the eagles are, i think, going to be in the mix at the end of the season. certainly when you look at other

teams, if i'm looking around the nfc, the washington redskins are another potential threat. the green bay packers are going to be in the mix, san francisco again, seattle, all great quarterbacks on those teams. the atlanta falcons with matt rieb who played here locally. and on the afc side, i like new england. i think new england, certainly peyton manning out in denver. and my big sleeper is the baltimore ravens. >> reggie, thank you so much for that preview. i certainly appreciate it. let's get to some breaking news. the u.s. national hurricane center says hurricane julio has strengthened to a category 2 with maximum sustained winds of 100 miles per hour. we'll have an update later with the weather chance on "worldwide exchange." stay tuned.

welcome to "worldwide exchange." russia bans international transit flights going into international tashtory. bank of america could pay $17 billion to resolve a probe of tox ix mortgages in the run

up to the financial crisis. and in europe, commerzbank profits double in the second quarter, sending shares to the top of the european market. the lender benefiting from a fall in bad loan provisions. nestle launches a $9 billion share buyback as an emerging market pick up boosts sales. injury watching "worldwide exchange," bringing you business news from around the globe. good morning, everyone. if you've just woken up on the east coast, thank you so much for joining us here on the show. we've had a fantastic show so far. we've got another jam packed half an hour that is left for you. here is how markets are faring ahead of the u.s. open. we're expecting to see a bit of a rebound after trading sideways in yesterday's trading session. the dow jones could rise by 23 and the nasdaq seen up by 3.7

points the s&p up by 3.5 points. the nasdaq still clinging on to those two-mow lows. in europe, the ftse 100 is under water to the tune of 0.3%. the xetra dax down by 0.2% and the cac 40 down by almost 0.5%. we've had a couple of earnings out, many of them better than expected. the ftse mib is bouncing back from yesterday's weakness, though it is off the session's highs. earnings per share is at an all time record for the s&p 500. $29.60. how does the second quarter rate among the previous quarters? let's put that question to christine shores, global market intelligence director at s&p capital iq. how does it compare to previous quarters, christine? >> as you said, we're poised to

hit double digit growth. i'm happy to report that as of last night with all the companies reporting after yet yesterday's closing bell, we have officially hit 10.1% earnings growth. we think this has been a great quarter, not only for earnings, because there was always speculation, why is there earnings growth? cost cutting, accounting manipulation. but we're also seeing growth on the top line. so revenue growth at this point is up to 5%. that's the highest revenue growth number we've seen since the second quarter of 2012. all around a great season that i think points to overall strength and health of u.s. corporations. >> why is that revenue growth coming from? because we're seeing all these geopolitical jitters and all those ricks around the world that are hitting u.s. corporations, as well. are revenues coming from the domestic business or is it still coming from the international business? >> well, if you look on a sector basis, and to absence your

question, i think it's both. i think second quarter has been over for a while now. some of these geopolitical issues have hit just recently. they've mainly stayed localized and there hasn't been a worldwide ramification. i think we're just starting to see that now impacting the stock market. but specifically speaking of sectors showing the most strength, we're seeing health care. really just coming out of nowhere at the beginning of the season only expecting about 6.5% earnings growth. and about the same for revenue. that has doubled over time since companies have reported. so health care coming at 16.1% year over year. a lot of that driven by the biotech stocks. that industry looking at nearly 100% growth year over year. so there's been all this speculation regarding biotech, stay away from them, they're overvalued. but if we look at this quarter's reports, if we look at the fourth quarter expectations from analysts suggest that biotech stocks will still remain very strong going forward. >> look at numbers from

barclay's, they say about 70% of the s&p 500 companies have managed to beat analyst earnings estimates in the past quarter. and a lot of times this is essentially because managers have been able to guide down expectations ahead of that. there have been a lot of preannouncements, not really the case this time around. because the negative preannouncements, that was actually lower compared to previous quarters. so if you take -- if you keep that in mind, it's actually high quality. it's actually a beat if we look at that 70% number, isn't it? >> you're right. coming into the second quarter, we had quite a high negative deposit ratio for eight companies that gave negative guidance, only one would issue positive. we could see that wall really predictive of how the season turned out. looking ahead to the third quarter, rather, we're seeing that ratio much lower at two. so for every two companies that

issued negative guidance for the fi third quarter, only one has issued positive guidance. but i would agree with you, in the past couple of years, we have seen companies cut their way to that overall profit groepth number, which is why a lot of people have started to pay attention to the top line number as more of a barometer of corporate health. you know, not only revenues have been paying attention to, but capital expenditures. for the first time, we're seeing cap ex go up. that's been a concern. with so many cash on the balance sheets and seeing companies have been putting their cash to use by buying buyback shares, for the first time, we're seeing an increase in cap ex, up 80% for the first quarter of 2014 and up 9% on a year over year basis. so i think that's another sign that u.s. corporations are growing and they're not just cutting their way or dressing up the numbers to look as though they are growing. >> christine, that's very interesting research. thank you so much for that. and maybe it justifies some of the gains that we've seen on the s&p 500 hitting numerous record

highs over the past couple of months. thank you so much for your time. christine shore, global markets intelligence director at s&p capital iq. let's take a look at today's other top stories. president obama says his administration plans to move fast to curve inflation deals that help companies escape u.s. corporate taxes. this comes as walgreens decided not to seek inversion. president obama says the practice is unfair is americans. >> we don't want companies who have up until now been playing by the rules suddenly looking over their shoulder and saying what some of their competitors are gaming the system. and we need to do it, too. that kind of herd mentality, i think, is something we want to avoid. >> the president says congress would need to pass legislation to stop the tax inversions entirely. but he plans to look for ways to discourage them.

in a tit for tat move, russia has banned agricultural imports from countries that have imposed sanctions against moscow. putin has banned food imports for one year, including beef and pork from australia, soybeans and chicken from the u.s. and fruits and vegetables from the eu. germany has the greatest exposure followed by poland and the netherlands. russia is the biggest buyer of fruits and vegetables in europe and the second biggest buyer of poultry from america. and russia could continue to punish the west. prime minister medvedev says russia is considering banning transit flights by eu and usair lines heading to the asia pacific region. he says the final decision has not yet been taken, but that russia has decided to ban transit flights for ukrainian airlines via russian territories. coming up, banking on a settlement. bank of america may be ready to

write another big check for federal charges that hold bad mortgages for financial crisis. details on that possible settlement coming up next.

bank of america is nearing ads 17 billion settlement to pay its mortgage probe issues. and european earnings beat estimates in the second quarter. baj of america may be the latest big financial firm ready to pay big bucks to settle a probe into its mortgage practices. let's get out to courtney reagan at cnbc's headquarters with all the details. is this a record fine, courtney? >> yeah, definitely. cnbc has confirmed reports bank of america will pay up to $17 billion to settle a justice department probe that it sold talks with mortgages before the financial crisis. now, details still need to be worked out and the deal could still fall apart. but it would be the largest settlement to arise from the financial settlement. reports say bank of america will

pay a cash penalty of $9 billion. the rest will go toward helping struggling homeowners. this would cap four years of work by the company to rid itself of the massive liabilities it took on of countrywide financial and merrill lynch in 2008. the agreement comes after a phone call last week between bofa ceo brian moynihan and u.s. attorney general eric holder. just officials continued to meet on wednesday. countrywide has cost merrill about $50 billion in litigation. one al qaeda accounts for 75% of those troubled investments. now, these mortgage settlements are the production of the task force president obama formed in

2012 to investigate fraud that helped fuel the financial crisis. major global banks including bofa, bnp paribas and credit suisse have been fined at least $50 billion this year for u.s. authorities from everything from shoddy mortgages to money laundering. news of bank of america settlement comes as the fed approves the company's plan to raise its dividend for the first time since the crisis. checking in on shares this morning, just about flat, at least right now. back to you. >> courtney, thank you for so much for that. some would argue those fines truly are inflationary. moving on, hawaii is about to get its first direct hit by a hurricane in 20 years. hurricane iselle is forecast to make landfall this evening. alex wall yas joins us live from the weather channel. >> good morning to you. the latest advisory of hurricane iselle. category 1 hurricane, sustained winds, 90 miles per hour. moving to the west-northwest at 18 miles per hour.

in relation to the big island, it's about 405 east-southeast of hilo and moving in that general direction. here is a look at the circulation. we're going to start to see some of those higher clouds begin to move on in. we'll notice that increasing as we head on into noon. conditions will start to move downhill from there. the projected path, pretty much confident that in the move right over the big island and impacting some of the northern islands, as well. continue to go maintain intensity and starting to slow down a bit as we work our way into the weekend. conditions start to improve. we've got hurricane warnings up for the big island. that's the area shaded in purple. then maui towards hawaii, tropical warnings. hurricane conditions are expected or tropical storm conditions are expected. tropical storm watch for kauai and tropical storm conditions possible here as this system moves on through. all the islands are into flash flood watches. that will be a big threat with

this system. heavy rains coming down. flash flooding will be a problem here. a lot of vacationers in town. right on the heels of iselle is another hurricane. julio. this one is a bit stronger right now, category 2 hurricane. winds sustained at 100 miles per hour. it's moving to the west-northwest at 17 miles per hour. taking a northern track, but still a little too close for comfortable. looks like it's going to move just north of the big island. we'll be watching as we head into the weekend. this is something we don't see too often, two tropical storm cyclones coming in from the east impacting hawaii. carolin, back to you. >> thank you so much for that. moving on, do you feel like you spend too many too much time on your smartphone, tablet and laptop? communications watchdog alcom says uk adults spend an average

of eight hours and 41 minutes a day on media devices compared with the average's night's sleep of eight hours and 21 minutes. there's one person who is not happy about the increasing time people are spending on their tech devices. the pope. at a service, pope francis blasted today's youth for wasting too many hours on futile things, saying our time should be used for, quote, good and fruitful actions. he specifically said time on the internet and smartphones as one thing we should be doing less of. so we wanted to know from you, what do you think? do you spend too much time on your smartphone or in front of a tv or computer screen? could you live without these things? if you want to join the conversation here on "worldwide exchange," get in touch with us. that e-mails @cnbcwex or world would it@cnbc.com. steve has written in. he said twitter is essential. time off on beaches and parks

and up to see "squawk box" europe and wex, that is 24 hours. that's exactly what we want to hear, steven. alex writes in and says eight hours and 20 minutes? surely that's because we all work at desks and sit by computers. >> very good point, as well. still to come on the show, have u.s. retailers got a problem? our next guest thinks so. we'll preview sales and same-store earnings, coming up next.

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and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits. so every time you use it, you're not just shopping for goods. you're shopping for something great. learn more at buypowercard.com and we're back. let's have a look at u.s. futures and see how they're shaping up. we're expect thing to see a bit of a bounceback in today's trading session. the s&p 500 taking fair valuable into account seen up by 3.5 points. the dow jones could rise by 33 poivents and the nasdaq higher by 6 points.

the s&p held pretty steady in yesterday's trading session holding on to those two-month lows. today, weekly jobless claims will be in focus. costco has reported a 5% jump in international sales, that's below expectations of 5.7%. a number of other u.s. retailers reveal same-store numbers for july later with investors set to pay close attention to those gap and ell brands. this as earnings season focus is set to turn to u.s. retailers next week. walmart, kohl's and jcpenney update investors on thursday. joining me on set now, stacey, always great to speak to you. this week has been incredibly busy in terms of retail earnings. we had an update from target. very specific stories for each of the companies. can you see a trend within the retail earnings season so far?

>> yes. we've heard from companies that have guided down, most recently target who not only got a ceo, but took the opportunity to clear the dax and take down earnings. we heard from walmart about a month ago saying even though the unemployment picture is improving, their consumer is not feeling better. that mid and low-end consumer is still struggling here. costco's numbers were a little light and they're the ones that are forgetting the traffic increases, so it will be very telling to see what sort of the retail darlings say they see looking forward. >> you just talked about a change in management at target. one of the biggest feeds out there is a lack of talent. why is that and how can that be remedied? >> there are so many retailers out there, we just saw a change at walmart, target, american eagle looking, jcpenney still looking. there are all of these companies out there that desperately need change and a lot of companies have looked for internal promotes, which has not worked. we've seen a period of consolidation so the benches are pretty light. and, you know, there are a few

retail rock stars out there. some of them are goggles where. they're going into private equity and saying, listen, i've had my time in retail, i'm moving on. again, the benches out there are a little light. >> is this because it's intensely competitive with that price war going on and because more shoppers are moving to online? it's incredibly difficult navigate through these challenges. >> that's a very good point. so the talent that you are looking for maybe ten years ago is a completely different talent now. now you have to have the expertise online and now you have to have global experience, being u.s. focused or just european or just asia is not enough. you will have had to have experience in all three regions to make it work. >> let's talk about footwear nap remains one ovptd positive highlights. that's encouraging. >> it is. we were just talking the other day about handbags. certainly that category is still growing, not as much as before,

but footwear is really becoming the new handbag. and so that space is working quite well. wave heard from skechers that beat, nike is doing extremely well. so that is sort of one category that continue to grow while apparel is losing excitement and losing share. >> and now we're getting into the back to school season. what about the teen space? >> the teen space is always -- it's been a mess for years here and it doesn't look to be getting better. the trend now is that the teen retailers have decided, let's remove our logos and become more discreet and sophisticated. that may work in luxury, but when you're a customer, a good portion of your customer does care about logos and also you have fast fashion, that is so cheap and really looks about the same when you remove a logo. good luck with that strategy. >> all right. thank you so much for your time, stacey. that's it for today's show. i'm carolin roth.

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good morning. welcome to "squawk box." bank of america close to a $17 billion settlement with the government, the biggest on record. also, negative for ebola. the patient in new york city doesn't have it. that's the good news. vladimir putin, russian president retaliating with cuts to the grocery list. it's thursday, august 7th, 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 today. we've been watching u.s. equity futures and they have been trading higher at least as of this hour. but the day is young. there are a number of potentially market moving economists, economic events on the calendar. you can see right now, the dow futures up by about 35 points above fair value. pay attention to europe today. the ecb is meeting and a policy decision is due at about 7:45 eastern time. no change to rates is expected. but ecb president mario draghi's news conference starts at 8:30 eastern time the and it will be important. market watchers will be listening for his xlents on recent signs of weakness in the eurozone and his take on geopolitical threats which obviously have been front and center the last few weeks. the bank of england holding a policy meeting today. a boe decision is due in just about an hour's time. a major european market in the early trading, you c