welcome to "worldwide exchange." i'm carolin roth and these are your headlines from around the world. european markets trade cautiously higher as a dramatic slowdown in chinese lending and a sharp contraction in japanese growth weighs on sentiment. investors anxiously eyeing ukraine as kiev says it will block a russian convoy of trucks carrying humanitarian aid into the east for the country. looking on the bright side,

e.on looking at earnings. and release of unemployment and wage growth data in the next 30 minutes. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. good morning, everyone. let's have a look at how the markets are trading. the stoxx europe 600 index, higher by around 0.4%. we're pretty much range bound and recovering from the steep losses that we've seen over st the last two weeks. we did get a couple of earnings reports out this morning, which were modestly positive. e.on being one of them. the ftse 100 a little cautious ahead of the boe report, the wage data. we'll get do that in 30 minutes'

type. the xetra dax, up by 0.8%. a lot of focus on the renewables business and the ftse mib in italy trending higher around 0.6%. let's have a look at the currency markets where the euro/dollar is not too far away from the nine-month low. down by 0.1%. dollar seeing a rebound against the japanese yen. the yen taking that dismal second quarter gdp number in stride. and we are seeing cable at 1.6824, close to two-month lows ahead of the inflation report and the unemployment numbers. the economy rank by 6.8% in the second quarter, the second fastest pace of contraction since the tsunami. sri, did you have a good holiday? >> it was quite chaotic when you consider all your children are

with you and there's more children in the shape and form of cousins. but not to worry, we still had a good time, all things considered. i need a vacation from my vacation, though. we were talking about the japan data. the nikkei 225 has tape it on the chin. yes, contraction of 6.8%. it was the worst shrinkage since march 2011. we saw a devastation of the tsunami and the nuclear reactor. but a lot of this data is in the rearview mirror. it was widely expected because of the impact of the sales tax hike. so all eyes and the emphasis now is on the third quarter. analysts telling us we should see a rebound in the third quarter. that that would build the case of further accommodation by the

boj, possibly coupled with further stimulus by the government. the nikkei 225 taking it in stride. the markets settles up about 0.4% higher. and the shanghai composite only just in positive territory. we got some very weak credit data from the chinese government and that really told us that there's still a lot of healing to go in the property market. so it is probably expected that we will see more targeted investment in the numbers. some of them hit expectations, some of them didn't. that was another -- in the works in terms of the recovery process in the chinese economy. elsewhere, we are seeing some bright spots in the shape and form of the kospi. we've seen some foreign buying there. overall, we are seeing quite a lot of risk aversion, as well.

case in point is the s&p/asx 200. we've seen retracement in the iron ore and the copper price, the weaker china lending data for the month of july, hitting some of the mining stocks, as well. broadly, quite a mixed picture. but we are seeing resilience in the north asian markets, the nikkei 225 and the shanghai composite, despite patchy economic data. back to you now. >> thank you so much for that, sri. it is certainly good to have you back. andrew goldberg has joined us from jpmorgan asset management. sri was just on vacation. have you been on vacation? the reason i'm asking is a lot of people say don't go on vacation in the turbulent times of the market. >> i'm going tomorrow. >> oh, good for you. >> that's okay, i'll have my blackberry. >> do you think that now with all these wall street traders,

now seemingly experts, do you think that is a fair assessment of what's driving the markets right now? >> i think a lot of people are looking and tracking. yesterday i saw some stuff come through the tape. yields move, volatility moves, there's not a lot of conviction on either side and people are hanging back. >> what do you buy? what do you sell? >> oh, my god, you're going to hate this answer. and i know it sounds so -- this is the ideal environment to be very, very balanced and the proof is in the pudding. this year going into the year, we were pro risk, risk on. and it looked like for a while we were going to have that wrong.

preem are worried about valuations. it is not valuations that cause markets to go down. it's recession, aggressive interest rate hikes, commodities and we don't have those things right now. >> they came out with a knows saying the party is over. but you're not concerned about the valuations on the s&p right now. tell us why. >> i'll read that report later. by the way, they do excellent work. you have to title these things with something aggressive like the party is over. if i dig into that report, what they'll tell me is have more rationale expectations about what markets are leakly to do going forward. but i bet you they're not calling for a major correction and calling people to get out of equities. >> no, they're not. should investors be preparing for an era of lower returns? yes, according to one barclay's

strategist who is warning the party is over on wall street. in a note, jonathan warns that while equity ves made a remarkable advance over the last five years, the rally can continue due to one missing vital ingredient, revenue growth. >> so far if you look at this earnings season, year over year earnings growth is about 10%. if you take that 10%, 6.5% of that 10% came from margins and about 3%, 3.5 % came from revenues. not altogether missing, he has a very good point. you'd like to see some of that revenue growth coming through. i think the u.s. economy -- i'm a little bit more stable on that than we have been. >> who is the big player in town in terms of market drivers? is it the fed, earnings, geopolitics? >> in terms of market drivers, i think it's still the fed. people are very, very focused in

on interest rates. and the way i would think about it is if any of your -- you see a continuation of decent growth, but not great, meaning no premature fed hikes, then we'll be okay. if growth turns out to surprise on the upside, then you worry about an aggressive rate hike. so we're in this goaldy lock slow steady growth environment which is pretty good. do we worry or are we not worried enough about the magnitude of the hikes? yeah. so on the 20th of august, we'll get minutes from the fed and right after that they're going into the jackson hole conference. one of the things analysts are looking closely for is any indication that one of those two parameters will change. people are pretty confident that time is going to be sometime next year, that the big debate,

that doesn't mean. if it's 50 instead of 25, that's scary. i don't think we're there yet, but that's what people are watching for. >> have a van fastic vacation. in fact, i think you're sticking around for a little longer. >> that's right. i'll be thinking about it during the break. >> we want to hear from you on this. is the party over on wall street? should you just ahead off to the beach for a conversation? join the conversation here on "worldwide exchange." worldwide@cnbc.com, @cnbcwex. here's what's still coming up on today's show. hollywood has been raking in big bucks from comic book super here roys. one of the rarest comic books goes up for auction. we test out the new robot

service. and we ask if the retail sector has done their homework. back to geopolitics, an aid convoy sent by moscow will only be allowed in the country once it meets criteria set out by kiev. petro shenco's add men administration wants it to pass over -- with the red cross. the deputy spokesperson warned the kremlin not to act alone. >> russia has no right to move into ukraine unilaterally without kiev's permission. we have spoken with the uk today. now the russians need to deliver. and coming up next, could more easing by the boj be on the table as data out of japan continue to knowledge? we'll have your answer right after the short break.

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welcome back to the show. the sales tax hike hit spending in japan. the number was marginally better

than the consensus forecast of 7.1%, but the contraction is the biggest since the devastating 2011 earthquake and tsunami. now joined by thomas burns from moody's sovereign risk group. and andrew goldberg is still with us. thomas, let me kick things off with you. i want to talk about japan for a little bit here in terms of the sales tax increase. if you strip out the effect, it seems the economy has lost speed, hasn't it? >> it does reflect the fragility in the economy. the one not so dismal point is that not residential investment and growth fixed capital formation. when you net out the first and second quarter, it's still in positive territory, although both did shrink in the second quarter. >> we have the tap can survey,

which is pretty upbeat. i just wonder, can pe wut the burden on the corporate sector and not rely on the consumer too much. >> japan? >> most of the burden will have to go in the corporate sector. it's only through more investment will you get the job creation that japan needs to sustain long-term growth. >> the gdp deflator, that's been picking up. that's a positive sign, isn't it? we're still far away from that 2% inflation target. is that still realistic? >> well, according to the bank of japan's recent minutes it is, but not until next year or perhaps two years from now. but the bank of japan said that will continue to -- it won't adjust its monetary easing policy, will continue to ease until that inflation target is reached. but another, i guess, positive element of this overall weak picture in the second quarter is

that gdp inflater did increase at 1.7%, much higher than the first quarter or the last quarter of 2013. >> you say, though, your expectation for growth rate for the whole fiscal year, that could be lower than the boj's expectation. do you think on the backside we will be looking for more fiscal stimulus, maybe mon tar policy stimulus? >> that can be possible. that is the essence of abe-nomics. it's a strength through unity thing. you need all three working together, at least over the short-term. the monetary policy stimulus and perhaps physical policy stimulus to offset the contraction increase. i would not be surprised if there is more fiscal easing in the near term. >> one of the things that we try to understand is does the thifttyness overall culturally of the japanese consumer matter? i heard an interesting anecdote

from a strategist on our team in tokyo that in advance of the sales tax coming into effect, people swarmed the equivalent of what we call here the $1 store. they stormed these 100 yen stores and bought out the shelves. to save the equivalent of a pound, you'd have to buy like 1 a hundred things. how much does that factor into the thriftiness culturally? >> well, they must have bought a lot because it was really personal consumption spending as well as the spending on houses that led the sharp fall in gdp in the second quarter. until wages start to increase, you'll see that thriftiness. another positive sign that the economy is fully healing is that the wages have been increasing finally after more than a

decade, albeit very small. >> thomas, thank you so much for your time today. appreciate it. thomas burns, senior vice president regional credit officer asia and the middle east. head to cnbc.com to find out why a number of investors are still bullish on japan despite the latest growth slump. i want to get back to you, andy. if equitier aren't going to deliver the same returns that they have in the past, where do you invest? >> one of the things is when you have -- you have to have an approach to thinking about equities at a level that's deeper than just an index level. one of the things we're looking at is investment themes. for example, one team being the tech convergence, big data. all of us are using personal technology and devices. how does that insert itself? one of them would be biotechnology and health care. it's been ten years since scientists successfully mapped the human genome. these are the kind of things that investors need to be trying to identify if it's not just

going to be a big data play. >> all right. andrew, thank you so much for that. have a fantastic vacation. >> thank you. >> see you in a couple of weeks time, tanned and refreshed, of course. andrew goldberg, jpmorgan asset management. russia's second largest lender is apparently in the market for a hot new fashion house. italian designer roberto kovali is reportedly in talks to sell his business. and russia's richest man is freeing up more cash. he is selling a 10% stake in his holding company. the billionaire businessman has not been targeted by sanctions and a spokesperson from the company says the decision knot preempting a move by brussels and instead is part of an incentive program for the group's management.

core profit did slump as e.on grapples with russia. e.on is under pressure due to restructuring with the energy sect sector. our next guest says high energy prices undermine efforts to xwoot climate change as europe could become increasingly dependent on all the countries that don't have a top energy loss. matthew elliott, thank you so much for coming in. you say that 1.5 million jobs are at living because of energy policy. isn't that scare mon gering? >> it's not scare mongering at all. we're looking at what reform should happen within the eu.

the eu should set a big role in emissions target. >> what exactly do you expect realistically speaking? what do you expect from the forthcoming renegotiations? >> rightly the energy passes at the state levels, here in the uk, for example, we're doing a lot more on the fraking. the uk government is keen to go for this in quite a big way. it's being stopped by certain eu policies. so actually, we need to look at this and work out what the best policy is for the united states where, of course, you meet those emissions targets. >> that's why the united states, the gas prices fallen by 66%. electricity price fell by 4%. we don't know if fracking is economically viable. we don't know about the environmental impact as it's certainly having one in the u.s.

you couldn't realistically expect the same sort of drop in energy prices, can you? >> certainly the uk wants to look closely at fracking. and if you have a manufacturing company in the uk, they're paying about twice as much for energy as an equivalent company. so, of course, this is putting uk jobs at risk. >> it is, isn't it? you say in that report, there's a good chance the uk would have introduced similar policies had it been outside the eu. so let's say you are able to renegotiate some of the rules. who says that your policies are going to be more cost-effective? >> i think it's very true the uk would have quite similar policies where it's looking after its own energy policy. but they could be different in certain ways. i think frag fracking is a very good example where they could be different. >> matthew elliott, chief executive at business for britain, appreciate your time. the oecd will knock on nearly 5% gdp by the end of the

century. head online to find out which companies will be hit the hardest. and how would you like a robot butler at your service? josh lipton has all the details. >> i want to introduce you to my new friend. his name is allo. he sounds a little bit like r2d2. it is the hottest new technology to hit hotels. guests can call the front desk when they need, let's say, a toothbrush, candy bar or towel. the staff loads up the goods and sndz him on his way. he calls for an elevator, makes his way down the room. the mrg tells me this is just a pilot program, but it seems to be popular.

the company's ceo has big hopes for the alo. >> they're not going to do all the things that a person can do. it's not going to replace people, but they can safely be a productivity tool. >> importantly, the robot isn't designed to replace any employees or take their jobs, rather assist them. the idea is it can do more important work while alo remains in the hallway. >> i'm not sure how i feel about that robot. what about the tip? do weigh in on twitter. still to come on the show, uk unemployment may be falling, but could weak wage growth put the brakes on a rate hike? find out what the bank of england has to say after the short break. don't go away.

a dramatic slowdown in chinese lending and chinese growth weighs on sentiment. investor eye ukraine as kiev says it will block a russian

convoy of trucks carrying humanitarian into the east of the country. looking on the bright side, e.on shares jumped to the top of the dax as investors say its renewable business could generate strong returns. and the bank of england could give us clear signal yet when it will hike rates with wage data and inflag reports due out any minute now. >> let's have a look at these european markets. we are cautiously higher. the xetra dax up by almost 1%. it's been under heavy selling pressure for about a month or so. this was reflected in the investor sentiment in the zew index yesterday. roughly 900 points away from that record high. the ftse 100 close to the flat line ahead of the data flow that will get out any second now and the cac 40 is up by 0.8%. let's have a look at the currency markets where a lot of focus on cable, obviously,

1.6822, pretty much unchanged on the day, added the unemployment wage data, the inflation record, dollar/yen modestly higher by 0.25%. shrugging off that dismal gdp growth data. not too far away from the nine-month lows that we saw yesterday, changing hands at 1.3349. robert wood is chief uk economist at barrenberg bank. he is joining me for the jobless data, for the unemployment data, for the wage numbers. let's get to the uk july adjusted jobless claim. down 33,000 at 3% of the workforce. we've got the claimant rates, it was forecast at 3%. so i guess more or less in line with expectations. we've got the irl's three-month june unemployment down 132,000 at a 6.4% rate and this seems to be in line with expectations. just very quickly, ahead of those numbers, you saw potentially there could be a

drop of 6.3%. but the number is in line with expectations. what does that tell you? >> well, the growth in employment should be a little bit slower than expected. unemployment has dropped a little bit less than i had forecast with consensus. we're seeing unemployment continue to drop quickly here. you're down 0.1 relative to last month, which is still a chunky drop in unemployment. it comes after this low string of falls in unemployment over the past year or two, which the bank of england will have to respond to today. it had forecast its sort of wage neutral unemployment rate close to where we are now. we'll have to revise that inflation report and that's the key news coming out later today. >> sterling/dollar, 1.6795. you can see that big drop and that seems to be after the uk wages data. just want to bring that to you. you can average weekly earnings bonuses up 0.6% year on year in

the three months to june. looking for an increase of 0.7%. and that number, that 0.6%, that is the lowest on record earnings turning negative. so it seems as though we're adding jobs without any wage pressure. that is a huge predicament for the boe, isn't it? >> it's a massive disconnect. unemployment has fallen and wage growth isn't responding at all. it's marooned below 1%. that negative number there, including bonuses, is partly distorted by last year when ponus bonuses were shifted. this conundrum is really what the bank of england faces now. i think it will lower its estimate of where unemployment can go where it sets off wage growth. that will allow it to not rate interest rates immediately. i still think they will focus

with the speed with which unemployment is coming down. today we've got another big fall in the climatant count rate. that's a decent leading indicator for the unemployment rate. i think they'll focus on the speed with which unemployment is falling. if it keeps falling this quickly, we are going to have to raise interest rates in the next three or six months. >> robert, why isn't there any wage growth? along with the productivity poll, can you provide us with a couple of answers? >> well, there's plenty of answers. the question is finding out which one is the right one. productivity growth in the uk is very weak. the flip side of that, of course, is strong employment. if people aren't producing more output per person, you can't pay them more. that's one expectation. another is the unemployment, the rate of unemployment, the economists would call it could be much lower than currently estimated. a third could well be the job turnover is quite lower. there's not that much churn in the market, which means people aren't taking advantage of particularly higher salaries which are showing up in some

surveys. they all point, i think, to wage growth eventually picking up if unemployment keeps falling. that plainly is disappointed so far. >> what does this tell but the economy and the recovery of the economy here in the uk? the surprise to the upside and it's taken a lot of people by surprise because no one thought it was going to be this strong, including the imf, including the government and the boe. but if earnings go negative again, could that stall a recovery? >> it's a big risk. wage growth needs to turn positive and it needs to rise above inflation. if this recovery is going to continue. it is a big risk over the next year. equally, what we also know is as you say about the recovery, unemployment is falling quickly, growth is pretty strong. monetary policy is very supportive. these are conditions in which wage growth should eventually pick up. the big risk, i think, underlying all of this is the productivity growth is key to how fast the economy can grow without setting off inflation. the big risk is that that doesn't pick up as the bank of

england has forecast. i think that could be a key change in their forecast later today. they say productivity is disappointing and we need to be careful about that. >> the focus is on the risk in the economy. maybe slightly easier for the experts among us, but do you think it is too difficult for the consumer to understand when rates are going to rise? >> yes. there was a survey out last week who said only 4% of consumers understood. and they can't guarantee when interest rates are going to rise or how fast they're going to rise. that is the sort of clear message that would get through. i think absolutely, these are difficult, complicated messages and it's going to be very hard to get that pure steer that people want. >> you put a 60% probability on

a first rate hike in november. has that changed at all after what you saw now and what you're expecting from the inflation report? >> it's always unreview. but they say a minute 60/40 between then and february. if wage growth remains weak, if it doesn't pick up, if the pace of fall in unemployment slows a bit, if some of the hard data we're seeing following ukrainian tensions and geopolitical worries continues, then yes with, that probability would fall. we haven't got to that stage yet. >> robert, appreciate that. and i just want to recap the market action for you. the ftse 100 has turned positive after the uk data. sterling has fallen after the uk labor today. no wage pressure there. coming up, we'll bring you bank of england governor mark carney's quarterly inflation report. that's coming up at 11:30 cet. let's switch gears.

citizens financial, ubs is reportedly beefing up its commercial banking operations ahead of its expected ipo later this year. the financial times is hiring about 70 people to increase coverage across several u.s. cities, including washington, los angeles and charlotte, north carolina. the home turf of bank of america, of course. citizens filed for an ipo in may, despite talks to try to tell the bank. rbs currently trading up by roughly 1%. and banks reportedly lobbying the fed to delay the volcker rule by up to seven years. the provision would require banks to sell investments in private equity and venture capital funds. it also bans them from making speculative betts with their own money. "the wall street journal" says a delay of the rule would impact large banks. such as goldman sachs, jpmorgan and morgan stanley. meanwhile, private equity firms are leading the charge in higher

m&a revenues on wall street according to a new study. total global financial sponsor revenues have soared to a record 3.6 billion so far this year, driven mostly by takeover activity. joining me now to discuss the report is christ jan, global head of revenue analytics research. just go through the highlights of this report for us. >> basically what we've seen this year, especially, is that private equity activity is really focussed on exit activity, as you said. so while the private equity market during 2006 and 2007 is a vast amount of feeds was generated through buyout activity, we're seeing that this year is really focusing on the private equity efforts, on exiting the company over the last few years. so we're seeing exit activity across the ecm spectrum and the

m&a spectrum. the ecm market is probably overperforming the m&a market. >> a lot of focus is on m&a. surprisingly on ecm. >> funny. and what the data shows us and that is supported to the discussions we hope with senior market participants is that the ecm markets always are rampant. so it's very good for -- on private equity companies to get a good price for their portfolio companies. and the m&a side there still seems to be a bit of hesitancy. when you look at the size of the deal, for instance, the largest buyout this year has been the 5.4 billion u.s. dollar takeover. if you take that in perspective compared to other similar deals in the past, six deals last year alone were a notch up than this

one. you had 20 deals each. >> christ yap, just how sustainable is this revenue stream from the banks coming from those exits? because we're now seeing a little bit of a cooling off in the ipo markets. can we expect this to continue? >> there are lots of portfolio companies out there that have private equity houses for three, four years, that are ripe for sale. i think we can expect in the near future private equity houses will make an effort to divest in those investments. at the same time, as well, banks will not be too concerned if the exit activity slows down a bit, because then there are many other areas within the ibe spectrum where private equity companies pay a little bit of money to investment banks such as refinancing. and then hopefully at some stage, also, renewed bioactivity. >> what is the significant of this report in terms of how much

power private equity firms are yielding over wall street? to what extent are the likes of goldman sachs courting the private equity companies and would is winning this? >> so i guess private equity companies are certainly very sophisticated players in market. they certainly know exactly what they're doing. they can also probably achieve slightly better rates than normal corporates who are just entering the market once or twice a year, if at all. so clearly banks will be conscious enough to not -- to basically enable them to gain any repeat business down the line with private equity houses because they have so much power, they have so much activity they bring to the ip market. >> absolutely. and goldman sachs, according to the report, leading the global exit revenue banking. year-to-date with 11.1% followed

by jpmorgan and bank of america. thank you so many for that, christian, global head of analytics research at theo logic. the u.s. has sent military advisers to iraq as political tensions ease. the u.s. has been carrying out bombing campaigns against isis and it comes amid easing political pressure as the prime minister has been granted support from iran. speaking earlier, chuck hagel insisted the increased support for iraq did not amount to a mission increase. >> as the president has made very clear, we're not going back into iraq in any of the same combat mission dimensions that we once were in in iraq.

very specifically, this is not a combat boots on the ground operation. we're not going to have that kind of operation. >> meanwhile, the humanitarian aid effort to save tens of thousands of people continues. kier simmons has the latest. >> they have crossed a mountain on foot in the desert heat, forpsed to flee their homes, driven by their fear of isis. this woman says mill at that points beheaded several men in her village and mounted their heads on the hoods of cars. isis is well armed, but sheer terror may be their most powerful weapon. crucifixions, men tied together and marched to their deaths, shot in the head. others buried alive according to one iraqi minister, atrocities documented by the ministers themselves sending a chilling message, we take no prisoners.

and these are the men confronting isis. today we met kurdish commanders. >> are there men who look at them who said now fighting isis. fighting fear and brutality, outgunned, using weapons from the past. the kurds share this base with the iraqi army. two former adversaries now united by a common enemy. pope francis is on his way to south korea in what marks the first official visit by the pope to asia in two decades. he'd widely expected to address this as he flies over the country. but the fact that he is being allowed to fly over china, it seems like many of the breaks through beijing did not

recognize the authority. and let's give you a look at what's on the agenda in asia tomorrow. more data out of japan. most forecasts don't paint a very worthy outlook for this one, either. we also get rate decisions out of the bank of korea and bank of indonesia. still to come on the show, tencent is expected to see its bottom line grow 50% this quarter. does this mean it's time for facebook to step up its game? analyst perspective right after this break. ♪ ♪ developers are all about speeds and feeds. it's all about latency. it's all about how fast does it run. i often sit with enterprises who ask me about how mission critical and how's the performance of the cloud. and i tell them, if you can make gamers happy, you can make anybody happy.

speed is made with the ibm cloud. the ibm cloud is the cloud for business.

lauren mccall died tuesday after suffering from a stroke. she was 89 years old. she starred with humphrey bogart who she married. she won two-tony awards for her work on broadway and a special oscar for a lifetime achievement.

uk security contractor g4s has cited strength in emerging markets. the firm has been shedding noncore units as part of a turn around plan to restore its operation going back to the 2012 london olympics. king digital gets crushed. shares of the candy crushmaker fell after hours. gamers are spending less money on its fractured gains. the company is cutting its full year outlook and will pay a special one-time dividend. in frankfurt, down by 18%. tencent is expected to post a 50% surge on second quarter profit on the back of best selling movie games. seven of country's ten highest grossings offers on apple's

iphone. a research analyst at guiton holdings international limited. thank you so much for joining us. can they continue that online gaming? >> yes. they have a very strong -- because they have test a famous korean with the games. >> how exactly do they monetize that? >> tencent has introduced a number of game titles to its region and to introduce them of the new spectrus and also a new business that they have acquired

rece recently to -- >> i get the impression, though, that tencent is really trying to be everything to everyone. does that strategy work? do you think it will pay off for the company? >> yes, i think so. they have different types of numbers and services. we expect tencent to benefit by having different type of surface contact in its mobile platform to monetize it. there were more than 527 million mobile internet users. >> let's go to the media app. the video has been screaming the latest season of the voice of china, obviously hugely popular in china.

to what extent is that a game changer for that part of the business even as it comes at a huge cost. >> yes. the large content, of course, can boost the advertising view by having a large -- in his traffic wallet. we spec advertising rapidly. >> very briefly, the stock is up a whooping 30% year-to-date. does it have further to run? >> yes. in second half of the year because they're expecting to introduce more business sectors to monetize it. >> all right. thank you so much for yao time. we're still waiting for those

tencent numbers. increasing 49% on game revenue. ricky is a research analyst. thank you so much. alibaba plans to sell its install and medium business loan units to the parent company of affiliate alipay. the china e-commerce giant will receive cash for the unit. sony is taking on apple, roku and amazon. it launched a date for its tv in the u.s. it goes on sale for $99 and will allow users to stream play station games, watch movies and watch television. and developers around the world have invited others to

take a look at this game system. >> the gaming industry is expected to growth more than $100 billion this year. but much like the tech sector, it's rye for disruption. the big players in the market are coming together and they will present the games to their friends. these guys are deciding what's going to happen next in the industry. for years, events like the gdp the hard core gaming establishment, the times are changing. the local gaming systems, organizers say, are forcing the gaming systems into somewhat a form. >> the biggest trend is the rise

of social mobile gaming. it's an ever changing market and it's growing exponentially. >> the search in mobile is leading growth. >> we believe sometime in the future, your cell phone is going to become your economics mat form. >> when you're talking about noble typos, the initial games often -- how you monetize that, the games brought in by flexpace with google on the continent. >> you're not spending $60 a game and going home and playing it. you're downloading a game for free. you're spending a dollar on ingame purchases. it's tcompletely skewed the traditional gaming platforms. >> microsoft, sony and others

are looking at taking advantage of their platform's unique futures. what we have to do is the virtualizers. this is a vertical e-commerce device. >> meaning no one is ready to call game over on the traditional game console markets just yet. >> they also have to adapt. but you do have to look at the life of microsoft who initially bundled their connectivity into the xbox 1 to try to increase sales. a lot of people are asking the question now whether the latest cycle of traditional consoles may be the last.

tencent holdings came out with their numbers. we've got a second quarter revenue of 19.75 billion renminbi up slightly shy of estimates. but the bottom line number, that beat expect ages. still to come on the show, from the pages to the silver screen, hollywood has been raking in big bucks from coppock book super heros. we'll look at whether this market is still a super investment.

welcome to "worldwide exchange." i'm carolin roth. japanese growth weighs on sentiment. shares of king digital are getting crushed after the popular gamemaker reports disappointing earnings. a report on july retail sales is out before the opening bell. and uk wages grow at the

slowest pace on record. potentially throwing a wrench in the rate hike timelines. well, good morning, everyone. if you're just tuning in, thank you so much for joining us on the show. let's have a look at how markets are fairing ahead of the u.s. open. we're expecting a slightly higher start to the trading session. the s&p taking into fair value up by around 8 points. the dow jones could rise by 57 and the nasdaq seen up by 16 points. this after the markets off by 0.1% on the dow. european markets look like this. we are higher across the board. barely modest sell for the ft. if it is 100 which didn't react

too much to the wage data, to the unemployment data. wages growing at the slowest pace on record, unemployment rate dropping to 6.4%. the xetra dax is pushed higher by the earnings report. cable, 1.6803. euro/dollar, not too far away from the nine-month lows that we saw yesterday. and the dollar seeing a bit of a top higher against the japanese yen. the japanese yen brushing off the theory of a weaker second quarter numbers. talking to the guest in the last hour, we were lamenting the fact that there's really no conviction in these markets. once again, we're really just trading sideways.

what is going to make us break to the up side or the down side? >> you must remember, it's august, traditionally the worst month of the year. volumes are very low. i was looking yesterday and i think the volumes were at the lowest they've been in two years. i think we have to go past august, wait until everybody is back from holiday. earnings have been pretty good. a lot of geopolitical issues upsetting the world at the moment. but generally, the u.s. is in pretty good shape. so i think when people come back to their desks in september, things will continue to resume, things will continue the improve. >> there's a lot of caution out there in the market at the moment. geopolitical concerns, we'll see what's been happening in interest rates, etcetera. but looking at the interesting this morning, i look at the midcap tech earnings for the second quarter they're up 35%,

which is stunning. yet if you look at the performance of the shares, they're flat year on year. but if you look at big cap text, they're reporting 8% growth. but their stocks are up 10%. i think an interesting divergence and a place for midcap to look at the midcap space. very interesting here. >> what do you make of small cap at the moment? that was one of the worst performing sectors yesterday, essentially. and the question out there is once we do see wage growth, it's not materializing in the uk, it's not materializing in the uk. but can these small cap companies actually stomach that? >> i think in the u.s., the big issue is the health care reform act. that raises costs and that's more than an issue for small cap companies. but the majority of u.s. smaller companies started by mortgage loans and mortgage market is reasonable and origination of

small companies is beginning to pick up. that to me would indicate that they're fairing quite well, the economy is doing well. they'll be able to absorb these costs reasonably well and the economy is very strong in the u.s. i suspect it won't be a huge impact for them. >> patrick, you're going to stick around a little bit longer. let's get back to japan. japan's economy shrank by an annualized 6.8% in the second quarter, the fastest pace of contraction since the 2011 tsunami. sri, what dots markets make of the numbers? >> well, it was as expected, really. it was always good to be a contraction because of the impact of the sales tax hike. but the emphasis now is really on the third quarter data. are we going to see a rebound?

so the july to september period, which we are currently in, is going to to be absolutely critical. if we do see the data outperforming, that will build the case for the boj, possibly more fiscal stimulus from the government. so the market taking a second quarter number. 6.8% contraction. as you noted, carolin, that is the worst shrinkage in the japanese economy since march 2011 when we saw the devastation from the triple disaster. now, the other factor here is that the volumes have been very thin. a few of your guests have been discussing. and that really kept the market many investors sidelined. we also got data from the chinese economy. you mentioned the lenning numbers in july.. pretty weak. that's probably a reflection of the fact that the property market is still the clear and present danger, the chinese economy, and the it's still the

weak link in the broader economy, as well. we got investment numbers, retail sales, industrial productions. some of those numbers missed expectations. but the markets in greater china have done a reasonably good job today of overcoming that data. elsewhere, the market are doing a pretty good job of overcoming this risk aversion predominantly coming out of ukraine. the kospi up by more than 1%. carolin, back to you now. >> thank you so much for that. the s&p may be up 350% since the beginning of 2012, but should investors be preparing for an era of lower return? yes, according to one barclay's strategist. he's warning the party is over on wall street. jonathan notes the rally can't

continue due to one missing vital ingredient and that is revenue growth. we want to hear from you on this. is the party really over on wall street? should you just head off to the beach for a vacation? join the conversation here on "worldwide exchange." get in touch with us by e-mail, worldwide@cnbc.com, @cnbcwex or directly to me. let's get back to patrick. if i'm looking at that report, and let me quote barclay's here, they say the advance that we saw the last five years are grounded on increased earnings, and augmented by an extensive val you autoation. are valuations really that high? >> no, they're not. they're on 16 times at maybe 10% of the ten-year average.

priced to seams are exactly the same. you've got record low interest rates. i don't think i'd agree with that thing about debt. they are high. but companies are buying huge amounts of stock back. so valuations are not excessive and i believe the market will continue to do well in an environment that is quite strong. >> all right. thank you so much for that, patrick. in the united states, retail sales are out at 8:30 a.m. eastern, forecast to rise 0.2% and by 0.4% when you exclude autos. falling gas prices could impact sales, but that could mean consumers have more money in their pockets to spend. at 10:00 a.m., we get june business inventories. as for earnings, flip for results today from deere, macy's, cisco systems. let's take a look at today's other top stories, meantime. king digital getting crushed. shares of the candy crushmaker fell 21% after hours as it

reported lower than expected second quarter revenue. king same gamers are spending less money on its game and the company will pay a one-time special dividend. they're still down by a whooping 18%. g4s has confirmed it is in talks with one buyer to sell its government solutions business as the company reported a stronger than first half market it's been trying to restore its reputation following a series of failures going back to the 2012 london olympics. still to come on this show, are record outflows just another short-term casualty of market volatility? our next guest says investors might be wise to ditch junk bonds before it's too late. find out why after the short break. ad? a card that gave you that

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the candy crushmaker posts a revenue miss. macy's kicked off a busy week on revenue earnes as the back to school shopping season gets under way. and we weigh the quarterly

inflation report. u.s. based junk bond funds saw record outflows earlier this month in a sharp reversal for a record that has enjoyed sharp returns since 2009. i want to get back to patrick spencer from baird. do you think this wave of outflows is going to hit ceu? to a certain extent, we're just as overvalued as we were in the u.s. maybe two months ago. >> well, the european markets are a slight discount to the u.s. they are cheaper. but with regard to high yields, i think the concern is the geopolitical issues rise about higher interest rates have made people more defensive. we talked about the s&p big tech, you know, doing better. people are hiding because they're worried and the outlook. so junk bonds generally, their default rates are much lower than the perception.

so they're not bad instruments, but they've done extremely well. i think it's risk off. we'll see monies rotate back into these. >> in the meantime, where are inveters sending their cash? >> if you look, you have seen flows coming out. just this morning, i was looking and you've seen big outflows from equities into bonds because of this risk/risk off. that's usually a very good buying signal. i would look to equities even though we've seen money coming out of there. you've go seen the defensive part of the market doing well, the less the risk on has been doing and, in fact, a less well. >> let's get another opinion on this. i want to talk to alberto gallo, head of market credit research at rbs. you say that you expect more

volatility for the sector, that is the connection that you make. how much volatility? >> hi, good morning. so we have four weeks of conservative outflows out of high yield bond funds. this is coming from five years of persistent inflows. people have put money into high yield funds from money market funds, from treasuries, and have taken a lot of risk. now, everyone is in the same trade and credit markets have little liquidities. in other words, the exit door is very small. because especially in the summer, it's very hard to trade in and out of high yield bonds. the fed is becoming more hawkish. we saw wage reports showing the labor market is getting tighter in the u.s. there is overheating in some areas. yellen is going to be under pressure. we can see another pick up. so currently, we have high yield at around 5.9%.

it's still a very low level. we could see another, you know, 50 basis points, 1% wider yields in the coming weeks. the fed is getting more hawkish. the ecb cannot fight it. there is no buyer of last resort. >> there certainly isn't. as european banks reduce their lending bill and we're seeing outflow out of the high yield space, does that automatically mean the financing for corporates will collapse, too? is it as dire as this? >> well, you know, in the u.s., high yield bonds are more a subset. they're around 10%. so 10% of u.s. workers work for

a high yield company. it's not a systemic issue. obviously, if there's a crisis for a long period of time, it can become one. but there's not a systemic issue. i think a lot of companies have finance so they don't have short-term volatilities. but it's more a confidence issue for investors. in europe, we have a different problem. the problem is in the banks. the banks are not lending yet. the ecb is waiting for the tltro to come up in september and we need to see if banks are going to use that money to issue loans. and the ecb is waiting to see how banks are with the stress test that comes up in october. we have inflation and too much credit in the u.s. here we have too much deflation.

>> alberto, thank you so much for your time. he says the high yield isn't over just yet and patrick spencer from baird, thank you so much for coming in. have a fantastic day. the s.e.c. has reportedly launched a probe into alternative mutual funds. these typically use investment strategies similar to hedge funds and command higher fees. "the wall street journal" says the targets firm black stone bank of new york melon and pimco. they're examining the liquidity of the funds and how they use leverage. banks are rt rodly lobbying the fed to delay the volcker rule by up to seven years. the provision would require banks to sell investments in private equity and venture capital funds. it bans them from making speculative betts with their own money. "the wall street journal" says a delay of the rule would impact large banks such as goldman sachs, jpmorgan and morgan stanley. still to come on this show,

interest in comic books has never been higher thanks to super hero movies and the monster success of conventions such as comic conin san diego. we get a pulse check on the industry.

welcome back to the show. let's have a look at how u.s. futures are doing early on this morning. they're looking quite perky. the s&p 500 taking fair value into account, seen up 8 points, the dow jones seen up by 52 and the nasdaq up by 15 points. the markets did snap a two-day whipping streak yesterday. energy stocks declining the the most yesterday. moving on to european markets, the ftse 1100 is range bound. coupled earnings reports are better than expected e.on, cac 40 up by 0.6%. look, up in the sky, it's a bird, it's a plane, it's a superman! the come inge book number one goes up for auction on ebay, published in 1938, this is one of 50 unrestore original copies known to exist. it's expected to fetch upwards of $2 million.

we're now joined by vince zurzolo. also with us is auggie. let me kick things off with you. just how healthy is the comics book market? >> in general, the publish market itself is on an upswing. it has been for about the last ten or 15 years or so. the profit margins are kind of slim on it, though. most of the money seems to be coming from hollywood. publishers are starting to move into digital, too. is that a curse or a blessing? >> i think it's a blessing. i think that it may just be me, but i think it is bringing back the last -- basically,ite a new news stand.

comic books are no longer on the news stands. they're now in comic bookstores. the digital market is a whole new place for people to be able to buy comic books again. >> this is really just for comics that are plus 40 years old. what about some of the new stuff that's out there. could this fetch high prices? >> definitely. you can see in the last ten years, a lot of newer comic bikes have been selling for expensive prices in the hundreds of dollars and thousands of dollars. however, for me and my market, mostly we're talking about comic books from the silver and golden age of comic books. our company holds the record for the most expensive comic book ever sold for $2.9 million. the second one coming up in the market and, you know, everything i know about comic books, what i see is happening is when you have one, a unique item, it

sells for a certain amount. when a second copy comes on to the market, it usually dilutes the price and sometimes it sells for 50% to 75% of what the original comic book sold for. >> wow. the original, wasn't that the cage copy? >> yes. that was nick cage's copy. i think what made that comic book so special was the prove nance. this was stolen from his ohm over 15 years ago. my company, working with the l.a. detectives worked to recover the coppock book. what's important to note is it went straight from the detectives to us and in one day turned around and on its first go around got a 9.0 grade, which is unique and makes this comic book extremely special in the market mays. >> comic art, this has been popping up all over the world. what are the prices for comic

art? >> comic art, there's a wide variety of prices. the biggest price ever made was i think about $650,000 a couple of years ago. those prices have been going up. i collected average art a little bit about 15 years ago and it's been going up ever since there. you can get some average pages for $100 or $200, but a lot of the more key pages are going for higher numbers. the collectors of the comic art have become investors in a different way. trying to buy it now was more expensive than it was a few years ago. thank you very much. >> thank you. let's look you with a look at how futures are trading ahead on wall street.

welcome to "worldwide exchange." i'm carolin roth and these are your headlines from around the world. global markets trade cautiously higher as the dramatic slowdown in chinese lending and a sharp contraction in chinese growth weighs on sentiment. shares in king digital crush today after the popular gamemaker reports disappointing earnings. investors will get a clear read on the u.s. consumer power today. reports are out before the opening bell. the bank of england cutting its forecast for wage growth

dampening expectations of a rate rise this year. >> you're watching "worldwide exchange," bringing you business news from around the globe. we've got all these flashes from the quarterly inflation report. mr. carney is already speaking. just want to bring you the highlights. the bank of england slashing its forecast for wage growth on wednesday and said how fast wages picked up would be key to determining the timing and pace of interest rate rise. about an hour ago, we got the wage data for the last three months. we saw the slowest pace on record earnings actually go negative. let's listen in to that quarterly inflation report. >> on how the expansion proceeds and how the inflation outlook evolved. this expansion faces some challenges. geopolitical risks have intensified. structural adjustment continues

in the euro area where growth is expected to remain modest. financial conditions are likely to tighten as the global recovery progresses. and sustained expansion here at home will ultimately require growth in productivity and real incomes, both of which have disappointed. thus far, output growth has been more than matched by record employment growth. more than 800,000 jobs have been added in the past year. total hours worked have risen even more sharply and the participation rate has reached its highest level in almost a quarter century. all of these labor market signals tell us -- is being used up at a faster pace than we have anticipated. but that's not the range of the story. a level of indicators suggest there was more slack in the first place. in particular, pay growth has been remarkably weak. even as unemployment has fallen

rapidly. this may partly reflect lags. but it also seems there's been an increase in labor supply at a given wage rate, especially amongst older wage groups. that represents not just -- >> and for all of our uk viewers, you can continue watching the bank of england inflation report on the uk field. we'll bring you extended programming following the show from around 12:00 p.m. cet. here's how markets are fairing ahead of the u.s. open. we're expecting slightly higher start to the trading session, looking at the dow, the s&p and the nasdaq. the u.s. stocks edged lower yesterday. european markets, we are higher across the board. the ftse 100 modestly so with a lot of caution around this inflation report. the xetra dax, though, it is supported by a couple of good earnings reports.

the cac 40 off 0.6%. how do you make money in these markets? here is what the experts have been telling us this morning. >> i think now you have markets which represent a buying opportunity. and i take the view that represented global equity markets for at least the next two to three months. . >> there's still some noise. it could keep spreads elevated. therefore, we would favor high yield. >> i think there it's most evident if you're trying to play a cash flow recovery that translates into shareholder returns.

the cost of corn fell to a four-week low last week. that may impact innerings for machinemaker deere. joining me now from new york is michael cox, senior research analyst at piper jeffrey. michael, thank you so much for joining me on the show. they cut their sales forecast. what are you expecting from the numbers today? any surprise left? >> for the quarter, i don't think there are many surprises. >> industrywide sales of

combines of 25% year on year, do you have any indication as to how deere have been doing within that mix? are they doing better or are they doing worse? >> john deere has a strong market position in north america. as we look ahead, that's going to be the key. farmers are start to go prebuy combines for 2015 delivery over the next couple of weeks. that program will open and we'll get a good glimpse into how farmers are looking at spending now that the farm income budgets are much tighter. >> i have to think of sales of the equipment accounts for a small part of revenues, around 1/5 or so. to what extent can they accelerate that? >> yeah. i think we're at a different cyclical point in the construction side of deere's business. i think we'll see that play out in the results. as we look forward over the next

several quarters, really. the exception pete to the dooers story is much smaller. i think investors will remain focused on the agriculture equipment side. >> you've got a neutral rating on the stock. at what point are you going to be more positive? is it auto turn around in grain prices or something else i'm missing ott out on? >> we took our earnings estimates below consensus in our research. i think we need to see street estimates coming down significantly for next year. certainly it would be nice to see a turn in grain prices, but i'm not particularly optimistic with that. but given that back drop, i think we need to see lower street expectations for the out

years from an earnings standpoint. >> michael, thank you very much forever that, michael cox, senior research an left. ding digital getting crushed, as it reporter second quarter revenue. the company is cutting its one-time special dividend. shares in frankfurt are extending their slide off by almost 20%. and uk based security contractor g4s has confirmed it is in talks with at least one buyer to sell its solutions business. this as the company reported tifrt half profits fighting strength in emerging markets. the firm has been shedding noncore units as part of a turn around plan to fight its reputation going back to the 2012 london olympics. let's have a look at today's other top stories. ukraine's government says an aid

convoy sent by moscow will only be allowed into the country once it meets criteria set out by crimea. it wants it to pass under a designated border citing. russia has no right to move into ukraine unilaterally under any other pretext without kiev's permission. we have spoken to ukraine today. they have a plan in place that they feel comfortable with. we feel comfortable with it, as well. now the russians need to deliver. the mreeps and special operations forces will monitor the situation on the ground and offer training. the u.s. has been carrying out a bombing campaign against islamic state fighters and this comes amid easing political pressure as iran gave its backing to the

nomination as prime minister over incumbent nuri al maliki. >> as the president hats made very clear, we're not going back into iraq in any of the same xwag combat dimension that's we weren't were in in iraq. very specifically, this is not a combat boots on the ground operation. we're not going to have that kind of operation. >> meanwhile, the humanitarian aid effort to save tens of thousand oefs people continues. kier has the latest. >> they have crossed a mountain on foot in the desert heat forced to leave their homes driven by their fear of isis. this woman says militants

beheaded several men in their village and mounted their heads on the foods of car. isis is well armed. but sure terror may be their convictions. many have been shot in the head, others dotted with lies. and these are the men confronting isis. today we met kurdish fighters. fighting fear and peru tallty, outgunned, using weapons from the past, the kurds share this space with the iraqi army, two adversaries now united against a common enemy. a foe that has made it clear it

will stop at nothing. kier simmons, nbc news, abiel, iraq. up next, feeling confident. we have the results of the annual deloit survey. find out where in the world and which sectors these top investors are putting their money to work. 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

global markets hold to to modest gains despite weak lending in china and a drop in gdp. king digital turns sour after the candy crushmaker posts a revenue miss. and the bank of england cut the forecast for wage growth, pushing the odds of a rate hike into next year. just how confidence are some of the world's top investors? we have the result of the annual deloit capital venture survey. and by we i mean seema mody. take it away, seema. >> global investor confidence in the u.s. has soared for a third straight year according to a survey by deloit. it measures private equity and

growth equity investors. venture capital fund-raising has been picking up. investors raised 7.4 billion in new commitments from 78 funds. that's a increase in the first quarter and the strongest period in nearly seven years. the survey finds confidence is on the rise and the ability to fund raise and despite negative feelings about the government not enacting policies to support the industry. around the world, confidence is increasing in canada, israel and the uk. global investors continue to compute for cloud computing, mobile technology, enterprise software, health care i.t. and services. and a survey shows segments

shying away from semi conductors which i found interesting because if you take a look at where you're seeing outperformance on techs, semi conductors have been a bright spot so far this year. >> thank you so much for that. let's move on. citizens financial, the u.s. arm of rbs is reportedly beefing up its commercial banking operation ahead of its ipo later this year. the financial times says citizens is hiring about 70 people to increase coverage across several u.s. cities, including washington, los angeles and north carolina the home turf of bank of america. rbs shares in the uk up by 1.3%. banks are reportly lobbying the banks to delay the volcker rule by up to seven years. it also bans them from making

spec lafk bids with their own money. t "the wall street journal" says a delay of the rule would impact large banks. and lauren bacall died wednesday after suffering from a stroke. she was 89. she starred in such movies as "to have and to have not." she married humphrey bogart in 1945. known for hurry sulry looks and voice, she won two-tony awards for her work on broadway and a special oscar for lifetime achievement. it's back to school season. who will be the big winners and losers in the retail space? and will american apparel be able to overcome the scandal? we discuss after this short break.

welcome back to the show. the ftse 100 now gaining strength after that boe inflation report, essentially pushing out a rate hike from the first quarter of this year into the first quarter of next year. the xetra dax up by 0.8%. and the ftse mib highest by 0.3%. u.s. futures look like this. we're expecting a slightly higher start to the trading day, actually, after we snapped a two-day winning streak yesterday. the s&p 500 taking fair value into account, sent up by 8 points. the dow jones seen up by 52 and the nasdaq seen up by 14.93 points. again, not a lot of conviction in these markets. let's give you a look at what's on today's agenda in the united states. july retail sales are out at 8:30 a.m. eastern forecast to rise 0.2% and by 0.4% when you exclude autos. falling gas prices could impact sales.

but that could mean consumers have more money in their pockets to spend. at so o'clock a.m., we get june business inventories. boston fed president eric rosengren can speaks and look for earnings from john deere, macy's and cisco systems. the company is in the midst of a corporate shake-up that resulted in the ousting of founder's nco doug churny. he's being investigated for misuse of funds and his part in sending naked photos to an employee. our next guest says the big thing to watch out for in retail earnings is if the middle chas shopper is out during the bad weather. jeron, if we get a recovery in

retail sales, it's going to be a very slow one, isn't it? >> it's going to be very slow, carolin. in fact, when we're looking at the same-store sales growth over the next two quarters, we expect to see a recovery and we expect to see a stronger recovery in the fourth quarter. it's up and to that point in the holiday season that we expect to see stronger sales than a year ago. but for now, expect a slow recovery. right now, retailers are reporting earnings this week. however, it's very evident that wall street is very concerned with what looks like promotions and discounts and that's over-shadowing news when retailers beat expectations. what we're looking for is the fact that retailers are posting a growth in terms of earnings and revenue. that underlines the fact that wall street is seeing this.

>> macy's has been performing very well and has done that consistently, even as others are struggling. but you say the bigger surprise could come from jcpenney. is that because comps are really easing? >> xshthly. this will be jcpenney's third consecutive quarters of improved earnings after nine straight quarters of earnings decline. jcpenney, when we look at an analyst with a very high rate, we're predicting consensus of a loss of nine pennies. however, the highly rated analyst does believe that jcpenney could beat and post as high as a loss of six pennies. this compares to a loss of $2.26 a year ago. >> it is august. that means back to school forlty of folks. dem is dead is what some people are saying. some argue there is no real trend in the back to school shopping.

what do you think? what is the trend that you're seeing? >> the trend is unique items. students are willing and able to pay for it. >> they've been koesing their stores and losing to fast market retailers. in fact, when with look at our data, h&m and thera are expecting to see double digit earnings growth for them. even the stocks look good in terms of value and growth. >> i'm looking at game stop. wow, video game sales rose over 50%. this is one of the few retailers surpassing expect ages, isn't it?

>> yes. most of the video games are introduced for the month of november. analysts are very optimistic that gamestop will continue to do well going into the holiday season. >> all right, i appreciate your time this morning. director of research at thompson reuters. earlier on the show, we asked you, is the party over on wall street? should you just head off to the beach for a vacation? never a bad idea, is it? josh has tweeted in. he says the u.s. markets are running out the back door screaming and crying. that's it for today's show. i'm carolin roth. for our uk viewers, stay tuned for the inflation report coming up in about 30 minutes' time. see you soon. [ male announcer s was the first modern airliner,

revolutionary by every standard. and that became our passion. to always build something better, airplanes that fly cleaner and farther on less fuel. that redefine comfort and connect the world like never before. after all, you can't turn dreams into airplanes unless your passion for innovation is nonstop. ♪

good morning. welcome to "squawk box." the u.s. now considering a military mission to save thousands of refugees from isis. and more u.s. advisers heading to the war torn region maybe with that in mind. and breaking overnight, fresh signs of weakness from china.

it is wednesday, august 13th, 2014, and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and scott wapner. andrew is off today. looking to bounce back from their first down day in three sessions, the volume yesterday was very light. you see green arrows in trading across the board. the dax was the big winner at this point. the major markets in asia closing higher. you'll see right now that the hang seng closed up by 0.8%. the nikkei and the shanghai markets closing higher. among today's areas of focus for the future markets, we have been talking about continuing geopolitical concerns.