implths. >> welcome to worldwide exchange. i'm seema mody. the leaders of greece france and germany vow to intensify negotiations but berlin gives no indication that it's ready to soften it's stance. >> we need a new force. china's premiere calls from action from beijing to counter a slow down in the country's economy following another bout of disappointing data. >> the new zealand and south

korean central banks cut rates. the bok also citing the impact of the mers virus. shares in rbs moving higher after the government says it will off load it's stake in the bank. royal mail in the red after it sold at a discount. and welcome everyone to the show. we just got out the most recent iea oil report. global oil supplies falling to 96 million barrels a day on lower nonopec output. short-term imbalances appear to be supporting oil prices. three factors have been lifting oil demand growth in the first half of 2015. those would be the global economic recovery.

lower oil price and cooler that winter weather conditions and many large consuming countries. the iea says momentum is expected to ease some what in the second half of 2015. saudi arabia iraq and the uae pumped at record monthly rates to keep output over 1 million barrels per day. that's the main take away from the report and we have been seeing oil prices rally. that was the big story in yesterday. overnight, one of the reasons we did see the s&p energy index hit a new 52 week high. moving on to greece a deal for athens remains elusive despite the 5th conversation between the french german and greek leaders. the latest talks concluded with all sides agreeing to step up negotiations. >> today i had the opportunity to talk with the president and chancellor merkel as we discussed in our last telephone

call. it was a friendly and constructive discussion as always. we pledged to intensify our efforts to bridge the remaining gaps. the political leadership of europe understands we have to give a solution. a viable solution and the possibility for greece to return to cohesion safety growth and a viable debt in an effort to give safety and stability not only to greece but also to the rest of europe. >> some flashes from the ecb bank -- ecb governing council member. he is upping the pressure on greece to meet the demands of its international creditors. he is saying that time is running out in greece. he is also saying that greece is the main loser in the insolvency scenario. now german newspaper build is reporting berlin is against a third aid program for greece under any circumstances. it comes amid claims that the german government was willing to

come to a bailout deal with athens if it agreed to just one reform up front. nancy is live in brussels. great to see you this morning. viewers are just joining us now on worldwide exchange. get us up to speed on the situation and the various developments taking place over the past couple of hours. >> thanks seema. it was a long night here in brussels last night and a lot of anticipation building over whether any greek talks would take place on the sidelines of this eu latin america summit. we did have conversations taking place after the working dinner here. that took place until well after midnight. the press core was even getting worked up at that point. we were really looking for indication or confirmation of whether or not berlin was willing to give those

concessions as you mentioned. report unconfirmed at this stage. they could be looking to take a promise on one reform measure. but she did not comment on that. chancellor merkel arrived here in the last five minutes or so. she did comment briefly but only saying the three parties agreed they were unanimous to work intensely going forward. toward the end of june greece abilled to bundle all those payments to the imf worth over 1.5 billion euros so that deadline coming up and the bailout expiring as well. the days are counting down so a lot of anticipation and still great uncertainty. you can sense patience is wearing thin. we had the chance to people with the president of cyprus and ask if he thinks time is running out for greece. >> i hope a solution will be found. this is what i'm expecting. this is what every one of us is looking for. we see an end.

a happy end. >> are you aware of any talks that took place tonight. >> no. >> do you think the euro zone could survive a grexit? >> i do hope so. >> he was striking almost a somber tone. he was confident and hopeful greece would reach a deal with creditors however when we asked if it could survive a grexit he didn't say that wasn't on the table. he just said i hope so. a lot of hope and nervousness as well. this is taking place on the side lines of the eu-latin american summit but coming up we'll tell you about the other developments happening with latin american leaders. back to o you. >> in the meantime let's get you a market update. european stocks moving to the upside. after six consecutive days of losses here we are on thursday look at green across the screen. the stoxx europe 600 index up at

session highs right now. a lot of that having to do with the out performance in energy shares shares. right now we are at 11,339. cac 40 up .6%. as nancy was breaking down details, leaders of greece france and germany agreed to intensify negotiations with it's creditors but at this point no science of progress. we're looking at the greek equity index up about 5.5%. there's no significant risk from greece in the euro area at this point. in the meantime take a look at the bond market. it's been the bond market stealing the limelight over the last couple of days. the elevated yields has been the

big discussion and question at hand. we're looking at the 10 year german bund. of course yesterday the german bund breaking that 1% yield level. not that high compared to other parts of the world. we haven't seen this level in quite sometime. the yield on the bund was at 0.05%. you can see yielding right now 2.12%. in the u.s. though today it is all about the u.s. retail sales number after that blowout auto sales number last week. the big question is is the consumer spending on other goods aside from autos? that's the answer we'll get in today's trade when that retail sales number comes out. in advance we are look at the 10 year treasury note yielding 2.47%. just to give you context the big

question is will yields now surpass 3%? well the last time the yield was above 3% was january of 2015. the last time it hit 2.75% was april of 2014. we haven't seen this type of yields in quite sometime. that would be a significant move to the upside. currencies, what are we seeing in the euro? the strength of the euro has been one of the reasons they have been under pressure for the last couple of weeks. ization around 112. the u.s. dollar has been now weaker in 8 of the last 10 trading sessions. some traders say that's one of the reasons we have been seeing an out performance in u.s. stocks as of late. the s&p 500 yesterday seeing a big move to the upside. still below it's record high. let's get stock specific. rbs shares are trading higher after u.k. chancellor announced

the government will begin selling shares in the bank within the next few months. speaking in london osborne said selling the stake was the right course of action. even at a loss. let's get out to wilfred frost at the mansion house in london with more on that story. hey, wilfred. >> hey, seema. i'm not, in fact at the mansion house. i'm outside rbs headquaters. the government sales stake will start in earnest along side further sales of the royal mail and he also said he would enshrine a commitment to austerity into law and we also heard from the governor with stern words on how to con to bankers in the future. to discuss that with me is andrew a senior economic advisor and former member of the monetary policy committee. good morning to you. let's kick off with the comments from the chancellor that he's

deciding to enshrine into law a desire moving forward to balance the books. what do you make of that decision? particularly the aspect of enshrining it into law? >> it's more symbolic than anything else. in practice the government immediates to balance two things. one is getting the deficit down over longer term and hopefully moving into surface if the recovery goes on long enough but also the short-term fluctuates in the economy and fiscal policy is always about that. i'm not sure that it changes anything fundamental. it's a symbolism that the government is going to move ultimately if the recovery continues toward a surplus. that will help finances over a longer term. >> is it a political employ to increase pressure on his labor opposition that will have to say we either back austerity or we don't and that might throw them back into the issues they suffered in the election? >> it might be a short-term political point but this

legislation could also change. it doesn't tie the hands of a government. it's more a statement about what this government intends to do. he wants to make a powerful statement. maybe he'll try to wrong foot the labor party that have a leadership problem at the moment. the economics profession wouldn't days agree with the objectives. it's how it's applied the practice that's going to be the key issue. >> let's move on and talk about rbs. 45 billion pound bailout is the biggest bailout in the world. the fact that the government is now intending to sell down it's stake, does that mark the fact that we have passed the end of the global financial crisis. >> i don't think we passed all the consequences but we certainly passed the worst phase of it and i think it's quite helpful for the chancellor to symbolize that we're no longer in the depth of the prices but now trying to tidy up things

that we did and try to sort them out. after all the year after next we will be ten years on from the first signs of the financial crisis so it's quite right for the chancellor to be signaling that he wands to sort out the share holdings of this bank. >> let's sort out mark carney's part of the speech where he had stern words for bankers and how they should be controlled going forward. do you think off the back of a week where hsbc has been in the spotlight, do you think that might force companies to carry through with their threat to move headquaters out of the u.k.? >> they're not going to tolerate bad behavior in those markets but he also needs to strike a balance between trying to clamp down on a few instances about

behavior and recognize that the majority does conduct itself in a sensible way and serves the public well and if the consequence of waving his big stick and appearing too aggressive is that london is seen as an unfriendly place to be financial business that's not a good thing. so he has to get the balance right between the rhetoric we heard last night and reassuring institutions that london would be a good place to do their business. >> i want your view on the state of the u.s. economy at the moment and whether you expect a rate rise this side of the calendar year. >> i'm expecting u.s. and u.k. interest rates to rise as long as growth continues as it seems to be on both sides of the atlantic. not in the euro area but this is another area where we need to recognize we're moving on from the financial crisis. the economy was in danger of

disappearing into a deep dark hole. we need to gradually move up interest rates. if we don't do that now we'll have to move more aggressively in the future. i don't think people will welcome that. >> thank you. we'll leave that there. former mpc member and senior economic advisor. seema back to you. >> thank you and more on our wilfred frost throughout the show here on worldwide exchange. the u.k. government sold half it's stake in royal mail. it confirmed it off loaded the shares at 500 pence. a discount to yesterday's closing price. shares trading below that level. home retail sales saw a bigger than expected drop. the british hold house sales retailer said weak demand for tvs and tablets were to blame. stock up just about .3% in today's trade and then there's volkswagen with a drop in sales

in may due to calendar effects. let's get to annetta with more on that story. >> it's not only calendar facts to be precise even though volkswagen might like to hear that. it's prepared if you calculate the nonworking days out of that money we're still flat lining for sales compared to april so it is the 7th month of declining of stable sales for volkswagen's first brand. it's a very bad and poor data set for the month of may. especially because after the weakness we had in brazil for months, now also china is seeing declining sales for its core brand vw. the chinese problem is an old one though for volkswagen because they have failed to actual actually market a bunch to the chinese market which is

competitive pies-wise to the likes of toyota. on the other side we see other car makers still saying that they're expecting double digit rise in the chinese markets despite the fact that today the world banks will see glowing growth through the next years because it might also mean we're heading into an era in stagnation in developing markets. hooking at the valuation, the stock price is now recovering with a general market environment. we had it down before but now volkswagen is also firmly in the green territory. we have volkswagen shares already being priced relatively to appear on the low side.

roughly at 8.6 currently where as they're trading a little bit higher. also when it comes to the other valuation, they are cheap in comparison to everybody else. so it's actually cheaper price when it comes to that. that measure, enterprise value. looking at the share price itself compared to the general german market which of course was doing quite well this year we have the dax up by 15% and volkswagen is up by 18%. it's only a five year horizon that you could reach more than 200% return with volkswagen which has outperformed the dax three or four fold even. with that back to you. >> annetta with a look at volkswagen and the moves in the

german dax. it's a slam dunk for nike as they sign an 8 year merchandising deal with the nba. we look ahead to tonight's big game. and is approval for the so-called female viagra. we speak to them later in the show. we're back in two minutes. heroes charge! ♪

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welcome back to the show. headlines coming out of turkey. it is open to all options for a government. they are open to all options but doesn't believe coalition governments are suitable for turkey. they're saying open to all options but doesn't believe a coalition government is suitable for turkey at this time. central banks are taking action today. sank to a 5 year low after the reserve bank of new zealand cut rates for the first time in four years. the central bank said the currency was overvalued and suggested more stimulus could be on the horizon. this after a risk of inflation and falling commodity prices.

the bank of korea signals there would be no further rate cuts over fears of the economic impact of the mers virus. fixed asset investment grew at the slowest pace in may. industrial data was broadly in line with expectations. earlier today china's premiere struck a bearish tone saying the world's second largest economy needs a new driving force to maintain steady growth. joining us to discuss the opportunity in china and all the news we're getting out of china over the past couple of days chinese equity fund manager at henderson global investors. pleasure to have you on this morning. >> morning. >> we have been getting a disapointing batch out of china but for the most part markets are responding positively on the prospect of further central bank intervention but do you think markets are getting overly

optimistic about what further central bank policy can achieve to turn around china's economy? >> they're certainly going to cut interest rates more. if you look at the economy and what's happening, that's almost certain actually but investors i think you need to distinguish closely between shanghai list of chinese shares and hong kong. shanghai investors are very bullish and you can see signs of activity so there could be a risk of a correction there. in hong kong which is more international investors, a far less entrenched bullishness. >> can we expect growth to bottom out? if so when does that happen given the economic backdrop? >> they have moved to growth perform and deleverage. if you look at the economy right now probably they're worrying that growth has shrunk too low and they might take some action to stimulate the economy. we don't expect a big stimulus

package but they might make fizz fiscal moves and subsidies. one area is the property market where in response to interest rate cuts property transactions are improving. >> that trade data i was speaking to a couple of investors. to them it looks concerning. imports to china falling 17.6%. exports also falling. factory prices under pressure from a slowing economy. do policy makers need to reassess the way business is getting done? because clearly what's being done now is not working. >> a lot of that data is related to the traditional chinese growth of exports. that sector is under a lot of pressure and there's not a lot they can do about it. by that i mean it's under pressure because wages are going up and costs are going up and it's strong against other

currencies so the exportd machine is not competitive anymore. so really from an overall economic activity what you're looking for is a domestic consumer to step up to drive growth. >> when do we see that happening? >> you can see it already. it's just in terms of how you can invest that is different from the overall indices. you were talking earlier about car sales. overall car sales are weaker now. about 4% growth from passenger vehicles but suv sales are up over 40%. if you can pick your pockets you can see that coming through. >> china's msci inclusion. some say it's inevitable but not imminent. would you agree? >> the announcement showed the problem is access. access for passive funds. >> transparency issues. >> no it's access. they're talking about the practicalities of being able to move money in and move money out. >> shanghai composite, can it

continue to run further now? >> it can continue to go up further because if you look back there's been a seven year bear market but if you look at the activity over the short-term clearly there's evidence of a lot more margin. i would expect more volatility going forward for sure. >> thank you for breaking down the china trade. chinese equity fund manager at henderson global investors. our next guest says qe is putting off corporates from spending their cash hoard. where is the money falling? find out after this break.

the leaders of greece france and germany intensify negotiations but berlin gives no indication it's ready to soften it's stance. >> we need a force. china's premiere calls on action from beijing to counter a slow down in the country's economic following another bout of disappointing data. >> they counter demand by cutting rates and the bok citing the impact of the deadly mers

violence. ryanair will appear the u.k. watchdog's decision that would force it to cut it's stake. we speak to mike o'leary in ten minutes. >> investors keeping a watchful eye on the move in the price of oil. continued long drawn out negotiations between greece and it's international creditors. you're seeing a gain of around .2%. the zetra dax a bit of a rebound this week trading up about 80 points. cac 40 also in positive territory and a similar move in the ftse mib. we have been talking about currencies. the focus on the euro dollar trade. wred the euro hitting 113 on the prospect of a potential deal coming together. right now we're looking at the

euro hold on to the 112 handle against the u.s. dollar. moving on to bonds, that's been the story. elevated yields the ten year treasury note yielding 2.48%. it hasn't topped 2.5% since september 30th of 2014. and of course the ten year german bund has also been the story. right now below the 1% threshold it crossed in yesterday's trade. >> he asked what would happen if it comes toen end. >> liquidity dries up. we think it will be worse 2, 3, 4 years from now when these typically stop. you would think a central banker wouldn't stop if they knew it would produce a crisis type of

moment and lots of volatility but central bankers don't exactly know the way home so we'll just have to see but you know, the global markets have benefitted to the extent of trillions of dollars of liquidity and we have to wonder what happens when they don't. >> this seems to be the home of the car chase, right? the helicopter car chase. the metaphor may be that we have been watching this slow motion car chase waiting for the car being chased to run out of gas and maybe that's the market and that the car just seems to continue on further and further with an endless gas tank. how much longer do you think this can go on? people have been waiting for this to end badly and all that's happened is investors have missed out on good returns in a lot of cases. >> and you can wait it out in cash and earn nothing or you can participate and hope that you can time it properly at the moment of the end but it's been

five or six years and markets have done well and checks are still being written and it's almost like a tag team match in which the fed has transferred or tagged their partner with the ecb and boj and corporations are chipping in and china is doing it's part so one after the other they take responsibilities. >> what happens when there's no one left to tag? >> they won't stop unless they think that the economy has normalized normalized. the normalization may happen at a point in which inflation is not 1% but two or three or four and therefore bond assets and stock prices might be hitting lower. >> we tend to treat the fed's words as gospel and draghi too perhaps. you just said a few moments agatha maybe the fed doesn't know the way home. how much do you treat the fed's words as gospel versus it's a

suggestion but i'm going to go with what bill gross thinks. >> i have a coffee mug that says don't fight the fed. >> is it that simple though? >> no because on the other side i have written in with dark pencil but be very afraid. >> bill gross may not want to fight the fed but head to cnbc.com to find out what he is calling his best trade idea right now. super mario's massive quantitative stimulus program bolster the pile but actions increased market volatility discouraging companies from spending extra jurors. let's bring in the managing director of european credit strategy at bank of america merrill lynch. >> thank you for having me. >> let's talk about the moves in the bond market. the elevated yields. the volatility the sharp move in the german bund what does it tell you? do you think investors will

question whether they should find safety in the bund trade? >> the first stage was we lived in a world of so much negative yielding assets it felt wrong. the inflation data was getting better so yields went up and then we had this bizarre comment by draghi that we have to get used to more volatility in the market. that's taking the lid off the bund market. we're all grappling with what does that mean? >> you also say this erratic trading behavior we're seeing in the bond market will result in corporations spending less money. >> possibly. historically over time what we saw in the u.s. was a strong link between corporate actions and the former share buy backs m&a dividends and low levels of volatility. we live in this proverse world at the moment where we have so much liquidity but yet volatility is going up and we have argued that this is the

effect of all of this intense monetary policy. it's adding to market volatility and when markets are more volatile, every corporate cfo can see what's happened in bunds and he or she will be thinking that acquisition, maybe i'll just wait for things to calm down before i pull that trigger. >> but if we train our eyes to look down the horizon won't the 1.1 trillion euro monetary support lead to suppression in yields in the long-term? >> we believe they'll go beyond september of last year. that's the message draghi said in the last few months. if they're buying more assets that is a long-term cap on where yields go. >> are greek worries also part of the story when looking at yields in the periferal debt market? >> well obviously having it widen has been a function of

greece. so undoubtedly the greece standoff and lack of resolution is forcing it to underperform. >> when talking about the they're playing don't you think the recent economic data is a vote of confidence to put it to work despite the volatility in the bond market? >> it should be. it's business sard it's business sard. qe and the recovery in europe should be giving companies confidence to spend and not hoard cash. we suspect we're just in the early days of qe where the earnings growth is coming through but companies don't quite believe there's a recovery yet to spend it. we argued that 2016 will be the year where the shareholder gets his or her revenge. >> when do we get to see a turn around in capital expenditure? >> probably two or three quarters but the good news is

we're seeing capacity utilization move sort of 82 or 83% and historically when it reaches 84 that kicks off a cap ex cycle. >> thank you for joining us here on worldwide exchange. managing director for european credit strategy at bank of america merrill lynch. moving on ryanair will appear a decision. the u.k. regulator said it made the decision due to concerns over ryanair using it's take to block aig's bid for the budge airline. jeff is going to give us more perspective. >> yes, you know what it's like when you're not wearing a seat belt and you hit a patch of turbulence and it becomes very uncomfortable? this is where the story is going at the moment. ryanair had several goes at taking over aer lingus and on every occasion it's either been

rebuffed by the irish government or the european commission or decided not to proceed with a bid. now we have aig. they step into the picture here and suddenly we have lots of green lights on the runway and aig is on the driving seat in this deal and the competition on markets authority here in the u.k. said knock yourself out and ryanair you have a near 30% stake but you need to sell that stake to allow this deal to take place. but of course ryanair, not happy about that and are raising objections and saying we don't think this should take place on these terms. let's find out what the objections are. because joining us is michael o'leary from ryanair. what is your chief objection here? is this not just sour grapes because you lost fair and square? >> i don't think so. what we're trying to expose here

is the failure of the cma to come up with any national basis for the decision. we accept we have been turned down on three occasions now by the european competition authorities. they came in and went one step further and said you must divest. they tried to suggest it was because of competition concerns ariseing or consumer harm arising but fairs have fallen and traffic has risen on the irish roots. they then invented this new theory which is that somehow the minority stake would prevent someone else from making aed by for or requiring aer lingus. it's completely taken the rug out from under the cma's case. and he's trying to move or change to get the goal post yet again. he now remarkably says that the

aig bid is secure on ryanair's agreement to sell it's share holding which is untrue. it can proceed if aig gets to 50.1%. at the moment ryanair holds only 30%. so it's clear that ryanair's share holding hasn't prevented a bid and two that there's nothing ryanair as a 30% shareholder can do to stop aig successfully acquiring aer lingus and they have resorted to telling lies in attempts to cover up what has been a shambles from its involvement from day one to date. >> but in the event, if you look at what's in the best interest of your own shareholders here when you took a run at this business, you were offering what? 694 million euros in 2012. iag is going to put 1.4 billion euros on the table to buy this business. isn't it just in the best

interests of your very own shareholders so say thank you very much we'll take the money. this is a descent uplift for the stake that we own and walk away into the sunset and invest it in something else? >> that's a very plausible case but the two issues rntd related. we're very happy and we have said publicly we haven't come out on the aig offer because we vn haven't received an offer yet. the offer document will emerge in the next couple of points highers and we said the board would consider the aig offer on its merits whenever we receive one. this is a separate issue. we are trying to establish we have been part of a flawed divesting decision made by the u.k. competition authorities. the same competition authorities that had no problem letting british airways buy them and yet they turn around and five years after the european competition

authorities say we can't buy as a 30% shareholder nor can we disrupt anything so they can't force us to sell down. five years later we're still fighting this decision which says that one irish airline has to sell a 30% stake in another irish airline because somebody might not be aer lingus. and you have the cma resorting to manifestly false claims to argue that all circumstances hasn't changed. the aig offer is a change of circumstances when the only basis for the divestment decision is that nobody would make an offer for aer lingus. >> in any crime when it's committed there has to be some weighted evidence that there is a reason or a motive. what do you think the motive in this case is for what you're accusing the market watchdog of doing? do they dislike you personally? or do they dislike the fact that

ryanair is a budge carrier where as british airways is a former flag carrier? >> i hi that's a question that the cma has to answer and we intend to take them to appeal this decision because we intend to force the cma to answer that question. remember we have never seen -- we were not allowed to see the evidence which said nobody will bid for us as long as ryanair is a minority shareholder. it was redacted. we weren't even allowed to comment on it. this is one of those decisions where u.k. buracracy got the decision wrong in the first place and now they won't admit they got it wrong. they're intent to try to force us down some divestment route when the only basis was that nobody would make an offer for them and the best they can come

up with now is there isn't a change of circumstances because somehow ryanair can block a take over when it's clear that we can't. >> can i ask you then -- you have found ways over the years of skirting around bureaucracies and what one would suggest is the closed ranks of those that think they're in charge. how far are you prepared to take this appeal against the cma decision and would you argue at this point that this is an elite who are trying to close ranks against ryanair? >> no i think that's overdoing it. to describe the cma as an elite is a bit overstating the mark. here's a group -- at the time we have to ask why originally was the u.k. competition authorities

when this matter was already decided by the european authorities even getting involved in this issue between two irish airlines? for some remarkable reason which the cma have yet to explain why they believe when there's been no competition concerns raised here there's clearly consumers that have continued to benefit regardless of the 30% stake in aer lingus. they're attempting to force us to sell a 30% stake on an airline solely on the basis that nobody else would bid for that airline while we hold that stake in the midst of an airline for aig. it's bizarre and we believe it would be overturned on appeal. >> your stake is worth what? 500 million euros.

if ultimately this deal goes through and you are forced to sell is it a special dividend for shareholders? >> i think the board of ryan air will consider firstly an offer from aig when we receive it and if it's accepted then i think the board will consider the use of the proceeds in the best interest of shareholders but that's all speculation. what will not change is our determination to continue regardless of whether we accept the aig offer or not. we intend to continue to pursue this case. we're not going to allow this decision to stand and we intend to overturn this decision which has no basis in fact and no basis in law. >> thank you for joining us. >> thank you, jeff. >> jeff thank you so much. still to come on worldwide exchange alibaba chairman is predicting an explosion in chinese demand for foreign

goods. how is the e-commerce giant set to reap the benefits? find out after this sharp break. you wouldn't order szechuan without checking the spice level. it really opens the passages. waiter. water. so why would you invest without checking brokercheck? check your broker with brcheck.

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. >> results beat photographs and the company is beating it's outlook and more customers sign up for its products. you can see the stock is up more than that by around 14% in frankfurt. aaron levie will be on closing bell just after 4:00 p.m. eastern time. you won't want to miss it. alibaba expects to grow sales to $1 trillion within five years. david faber caught up with the founder and chairman and asked about alibaba's ambition goal plans plans. >> we can focus on helping small business. this time because we have 350 buyers in china. we think about bringing european small business to china because it will be easier. if you don't have the buy side it's difficult to help the supply side.

when we have such a huge demand in china. especially last year our gme is $390 billion. for that it could support millions of businesses. >> the middle class is doing nothing but growing in that country. 300 million now. perhaps half a billion. but why not just keep it in china? why not continue to dominate with the growing middle class buying from those supplying in the same country. >> no this is our mission. helping doing business easier. we choose the name alibaba because it's a global company. it's founded in china but it's created for the world and i think our goal is the next ten years i hope that 40% of our gnv is from outside china. not because we need money from outside the world but because our mission is helping small business. doing business anywhere in the

world. >> you're talking from almost nothing right now. >> that's why i go to europe and africa and everywhere that small business. it's an opportunity for everyone. >> you recently did a deal with soft bank in japan as well to promote japanese imports. >> and korea. >> this is what you're focused on. >> yes. >> with the belief this can become a real part of the overall alibaba marketplace and platform. >> yes and the other thing because the demand for china is huge because china today the population of the middle class is almost the same size as the american population. in ten years we'll have more than a half billion middle class. china should change to importer country. they will be the largest buyer of the world. so we need products from outside china. >> let's talk more about alibaba with cynthia, the managing director joining us live from hong kong.

pleasure to have you on the show. during that interview he also noted that china's middle class is now the size of the entire population of the u.s. he also predicted that it will grow to half a billion. do they need to seek out growth in other markets given that they have seen so much growth in china already? >> they have both opportunities. both in china and overseas. for the chinese e-commerce players they're growing to expand into product categories where they were previously not allowed. going into the rural areas and then going abroad. initially i think this the

growing opportunity. but down the road they can grow more to other countries as well but what jack said makes total sense. you see a lot of chinese travellers lining up in front of the physical stores to buy products from u.s. and europe but inbound, cross border e-commerce can bring these products and merchants into china and there's so much more demand to tap into. >> how does alibaba achieve success in the western world, in the u.s. and europe when the likes of amazon and ebay are dominating the e-commerce space? >> what we are positive on is they introduce them into the

market. the buy side is in china. the supply side is coming from us. and european countries so that's what they are doing and this is the main market that's dominant. >> he has his eye on international expansion. cynthia, we'll leave it there. managing director at jeffreys. thank you for joining us. >> not so bad after all, our next guest says a grexit could be the best long-term scenario for the euro zone. find out more after this short break.

the detail is in the retail. u.s. futures indicating a higher open as investors eye key retail data for an indication that u.s. recovery is on track. the fed should hold off on raising rates next year. the group lowers it's forecast for global growth. the euro on a slide as hopes for a greek deal are dashed. the leaders of greece france and germany vow to intensify negotiations but berlin gives no

indication that it's ready to soften it's stance. we need a force. china's premiere calls for action from beijing to counter a slow down in the country's economy following another bout of disappointing data. >> if you're just waking up with us in the u.s. welcome you're watching the second hour of worldwide exchange. we did see a mega rally in the u.s. in yesterday's trade. that was captivating the attention of investors as the volatility in the bond market continues. that was one of the reasons we saw investors reallocating capital into the equity market. indicating a higher move by around 1 point. dow up 26 points in premarket trade. the s&p tech sector hitting a 52 week high. just in yesterday's trade gaining about 1.6%. that's the reason you saw the nasdaq being the big out performer in yesterday's trade.

what about here in europe? we are holding on to gains but greece continues to keep a lid on stocks. remember greece does face a default at the end of june if it fails to repay 1.5 billion euros to the imf, the eu and the imf, they want further economic reforms to be released unveiled by the greek leaders. that will be the big question as the leaders meet in brussels. a quick market check, the xetra dax at 11,345. french market up by 33 points. the greek equity market up 6.3% and a quick look at the ftse 100 holding on to a gain but below 7,000 up about 22 points. what about bonds? of course violent moves in the bond market seems to be the new normal given the central bank policy that's been moving the bond market. here in europe we're looking at the ten year german bund back above 1%. that was the key threshold that

broke yesterday. that was something investors were keeping an eye on and the question is what this means for the dividend paying income producing sectors that had been rallying on lower rates. in the u.k. the yield at 2.14% and in the u.s. 2.48%. remember the last time we saw yields up 3% in the u.s. was january of 2014. so keep an eye on the 10 year treasury yield. especially as we get the u.s. retail sales number. that will give us a better indication as to if the consumer is spending more and if the first half of the year was a minor set back. a quick look at currencies. the story was the euro breaking 113 on the hope of a deal between leaders and international creditors. it's at 112 against the u. s. dollar down about .6%. we should point out when looking at the dollar it has been down in 8 of the last 10 trading sessions. the weaker dollar of course good

for those multinationals in the u.s. the stronger dollar has been one of the main head winds in terms of earnings so far this year. what about commodities? it's the rally in oil prices yesterday that hit the energy sector hit a new 52 week high. the best performing sector in yesterday's trade. here on thursday a slightly different picture. the iea coming out with this latest report saying that oil demand did rise after the drop in price. the iea does say demand for growth is slowing in the second half of the year. that could put downward pressure on oil prices and in today's trade the wti crude trading at 61.17. the international gauge for oil, brent at $65.63. well above the threshold of 60. let's get you a run down of what to watch. weekly jobless claims are out at 8:30 a.m. eastern and filings

are expected to hold from next week. we get may retail sale which is are likely to have rebounded. we also get import prices and business inventories. bojangles reports it's first set of earnings since going public in april. that's making me hungry. let's get to our top story. a deal for athens remains elusive despite the fifth conversation in less than two weeks between french german and greek leaders. the latest talks concluded with all sides agreeing to step up negotiations. >> today i had the opportunity to talk with the president and chancellor merkel as we discussed in our last telephone call. it was a friendly and constructive discussion as always and we decided to intensify our efforts to bridge the remaining gaps. we will move forward toward a solution. the political leadership of europe understands we have to give a solution. a viable solution and the

possibility for greece to return to cohesion safety growth and viable debt in an effort to give safety and stability not only to greece but also to the rest of europe. >> a german newspaper is reporting berlin is against a third aid program for greece under any circumstances. it comes amid claims that the german government was willing to come to a bailout deal with athens if it agreed to just one reform up front. we should point out that's one of the reasons stocks in the u.s. rallied in yesterday's trade. let's get to nancy for the full story who is live in brussels with more. nancy. >> thanks, seema. it was a long night here in brussels and a lot of enthusiasm and momentum building after we saw those market moves hoping that chancellor merkel may give a comment on reports surfacing after she held talks with the greek prime minister. she did not stop to give any comment on whether or not berlin was willing to give a concession

to greece. i should mention that merkel arrived here over an hour ago for the second day of the eu latin american summit and she said that all three parties agreed to intensify talks. not a lot of substance and people are really disappointed after they thought we were moving closer to a deal but for now again we have to look ahead to next week and wait to get concrete details specifically pension cuts and whether or not greece will increase taxes. now as the clock keeps ticking we've seen growing frustration. time really is running out but it's also the other eu leaders here. particularly the euro zone members and neighbors of greece growing weary wondering if a deal ever will be struck. we had a chance to speak to the president of cyprus and ask whether he thought time was running out.

>> all right. i don't think we have that bite. can you tell us what he told you? >> absolutely. sounding a bit optimistic that he hoped a deal still would be stluk but then he cautioned, you know, time is running out and he did say even if we get to the stage where grexit is on the table he was optimistic that things could go on as normal but hoping that creditors can come to an agreement. i don't expect to get any more developments out of the summit today since the focus turned more to the latin american leaders since at the were closing their remarks in an hour now. back to you. >> thank you. let's talk more about greece with the interest rate strategist strategist. how are you doing this morning? >> great. how are you? >> listen the long drawn negotiations continue. how are you pricing that into the bond market which of course you focus on? >> yeah so i tried to look at worst case scenarios and as a

result of the measures that have been put in place by europe since 2012. so the bank bailout mechanism and pspp. it's really difficult to see even a grexit costing too much. so i don't actually see too much of an impact on italy and spain in terms of them underperforming or widening in spread terms. >> what about the contagion effect. what does that mean for yields going forward? >> those are only risks if there is a political uncertainty and also economic weakness. right now spain is in the middle of a really really strong recovery. i don't think that poses too much of a risk in spain and in italy at the moment there's political stability and good signs of economic recovery in that economy also.

so i don't think that the political contagion is too much of a factor at the moment either. >> from 1 to 10 at this point how worried are you about greece? >> 3. >> what? >> i always thought this just carries on running until the drop dead date is july 20th. it's when money is owed to the ecb: so it's difficult to fudge that point but i think all of these points even the imf, a nonpayment to the imf is not a strict default. there's still a period of four weeks where until that becomes a cross default. there's still plenty of time for more negotiation. >> getting back to the broader story, long-term interest rates have been at historic lows for years now are acting as if they want to break out to the upside. what's the catalyst here? the economic data or technicals at play?

>> the market was pricing in all of qe at once. that's why bund yields were able to go down to almost 0%. then there's some strong data. the data was the real catalyst late in april and then the market went from being overbought to eventually now being oversold so flipping from extremes and now it's a question of whether 1% is the right level to be buying at. i'm not convinced yet. i think that 1% is not a strong level. i think it's psychological so i think the bund yield can go higher than this. if i were to pick a level it would be 115. >> that would be a buying opportunity for the german bund? >> i believe so. we'll leave it there. interest rate strategist. sorry about that. all right. moving on the world bank is cutting it's global growth forecast and thinks the fed should wait awhile longer before

raising rates. in it's twice yearly report the world bank says countries should fasten their seat belt as they adjust to lower commodity prices and potentially higher u.s. rates. the chief economist says the fed should hold off until next year to avoid making exchange rate volatility worse and crimping global growth. moving on to china, china delivers a bag of disappointing data. fixed asset investment grew at the slowest pace for nearly 15 years in may. retail sales and industrial data were in line with expectations. earlier today he spoke a bearish tone saying the world's second largest economy needs a new driving force to maintain steady growth. taking a look at how stocks in asia ended today, specifically in china, shanghai composite ending higher by .3%. bad news is seen as good news

for the chinese marktd as it raises the expectation of further central bank intervention. now the u.s. sent 450 more troops to iraq but is that enough to turn the tide against isis? we have the latest on that story coming up after the break. we're back in two minutes. more and more, data is visual. in fact, the number of mris has increased by ten percent a year. and a radiologist might view a thousand images to find one tiny abnormality in shape,

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implts here . >> here are your headlines. the euro slides as hopes for a greek deal are dashed plus china's premiere calls for action from beijing to counter an economic slow down. now the united states government has ordered the deployment of up to 450 more american troops to iraq. they will not be used in a combat role according to the white house but will advise and assist local forces in reversing the recent gains by islamic state militants. white house press secretary outlined president obama's plan. listen in. >> the president and his team are confidence that for now, 450 troops are additional military personnel are what is necessary to fulfill this expanded advise and assist in training mission

to the air base. but the president is going to continue to evaluate the strategy. >> will that really alleviate the situation in iraq. >> we already have 3500 there at this point and what will 450 more to achieve and is it too late for them to make much of a den and many people questioning if we had done this earlier maybe there would be more progress on the ground and isis wouldn't have taken over half of syria and so much area at least in terms of iraq but the other question is are we doing this on credit to iraqis because you have a government having trouble paying government salaries and i spoke with a senior iraqi official and he was saying to me we're not looking for handouts

here but we're looking for deferred payments and what we're talking about is who is the big winner in all of this? the defense companies globally. not just in the u.s. quite recently in the last couple of weeks we saw a huge deal to israel and saudi arabia. $1.9 billion worth of weapons. we already started delivery of $1.6 billion worth of weapons to the iraqis and that's speaking back to the bigger problems the country has in terms of corruption. $330 billion has been lost over the last several years in terms of where has that money gone. this is the third biggest producing country in the world globally in oil and we know that they have increased their output. where is that revenue going? it's not going to pay for the defense of their country. it speaks back to the bigger problem going forward. >> at the same time global leaders have been calling for troops to be scaling back on their presence in iraq. but this is going against what global leaders are calling for.

>> this goes back to strategy or lack there of? what will 450 troops actually be able to do? and this is a president who still failed to articulate a strategy going forward which leads one to believe that the u.s. government doesn't know what to do about the problem. and if the u.s. government doesn't know what to do about it you can be for sure that the iraqis are having trouble ending this conflict as well. >> from your conversations do you think there's a sign we could see more troops deploy there? >> this is a president that was elected on the fact that he was going to pull all the troops out of iraq. he did that. we were there and we left and now we're going back. we're going to have to foot the bill for most of it and you're going to see a serious disinterest not just from the president but the candidates running in the election in trying to put boots on the ground. everybody says no boots on the ground but how much can 450 more

advisors achieve. that's the question. >> we'll see. thank you for breaking down the details for us. still to come an fda panel supports approval for the so-called female viagra. we speak to the ceo behind the pill right after this break. don't go away.

technology up 1.8%. one of the topper forming sectors tracking to end it's losing streak at 4. so technicals also part of the story when looking at the technology sector. i also want to point out that the dow jones transport index has been trading in correction territory down about 10% from the record high but yesterday we did see a bit of a rebound but the widening divergence between the dow jones industrials and the dow transports some say is a concern and something we should continue to watch. in terms of valuation, s&p 500 trading at 18 times earnings despite elevated valuations. stocks continue to rise as you can see. interestingly enough bank of america, merrill lynch says most multiples remain elevated but the index continues to look cheap versus small caps and bonds. a look at stocks and valuations.

let's look at the other top stories at this hour. cri krispy kreme beat estimates. they now operate more than 70% of its stores outside the u.s. investors were eating up those shares up about 5% right now in frankfurt. box reporting a wider first quarter loss as it continues to invest invest evelynidence heavily on security. ceo aaron levey telling reuters it will be break even by the end of the next fiscal year. shares rising in after hours trade. aaron levie will be on closing bell. first on cnbc interview just after 4:00 p.m. eastern time.

you won't want to miss still. financials driving a rally in u.s. stocks but which bank should be be investing in? find out. we have that answer coming up after this break.

you're watching worldwide exchange and i'm seema mody.

here are your headlines. the detail is in the retail. u.s. futures indicating a higher open. if the u.s. recovery is on track. this as the world bank warns the fed should hold off on raising rates until next year. oil prices taking a hit as the group lowers it's forecast for global growth. the euro also on a slide as hopes for a greek deal are dashed. the leaders of greece france and germany vow to intensify negotiations but berlin gives no indication that it's ready to soften it's stance. >> and after stocks moved slowlower for the last couple of weeks we're looking at a rebound here in europe. the second day of consecutive gains. the ftse 100 with a gain of 25 points. earlier this week we were trading below 11,000 but as you can see a rebound for the german

market at 11,355. up 90 points in today's session. this as the kwur row has been stabilizing at around 112, 113 against the u.s. dollar. at this point the long drawn out negotiations between greece and various global leaders continues slow and drawn out. now back to pharma. an fda panel is backing the drug to treat patients with dangerous high levels of ldl or bad cholesterol. the panel is endorsing the drug despite the lack of data on whether the drug reduces heart attacks. a study won't be available until 2017. you can see it's up a similar amount in frankfurt. it follows on the heels of an fda panel voting to support the female viagra. peaked low sexual desire in

women. joining me to discuss is the co-founder and ceo. a pleasure to have you on worldwide exchange. thank you for joining us. >> thanks for having me. this is being seen as a watershed moment for women. tell us about your drug and why you're bringing it to market. >> sure so it's a novel non-hormonal pill that could be the first ever treatment for premen premenopausal treatment. >> the male viagra has been on the market since 1990s. it's been a blockbuster drug. why has it taken it this long to get a female version to market. >> it has been on the market for 17 years. i suppose breakthroughs take tile and in this case particularly there's been a notion that's reduced all things in the pedestrian room for men to biology and all things in the

bedroom for women to psychology and in fact you have to deal with both for both genders. so in terms of biologic dysfunction that's where women have been underserved until now. >> where do you expect to get approval from the fda? will it be in august? >> final decision comes on august 18th. >> okay. but the drug has already been rejected twice by the fda. are you confident that this time around it will be approved despite the series of risks that have been outlined? >> so based on assembling an expert panel and that expert panel of 24 individuals voting 18-6 so approve i'm optimistic that that was an important step toward the even actual approval of the drug. i think what you have seen and what played o out last week in terms of the thursday meeting is there's a lot of new data that's come forward. this has been the process with the fda. there's been additional requests

for new studies. we have completed 14 new studies. 3,000 new patients worth of data and i think if you look at it having been studied at this point in over 11,000 women we have characterized the benefits and the risks and that's what the fda panel was voting on last week. >> tell us about the market audience. how many women suffer from sexual dysfunction? >> yeah so based on prevalence data across the decades, between 7 to 10% of premenopausal women suffer from it. it's an unmet need. the fda recognizes this as one of the top 20 priority unmet needs. >> all right. we'll be waiting for august to see what happens. thank you for joining us on worldwide exchange. co-founder and ceo at sprout pharmaceuticals. rbs shares are trading higher after u.k. chancellor george osborne announced they'll begin

selling shares in the bank in months. osborne said selling the stake was the right course of action even at a loss. let's get out to wilfred frost joining us live outside of rbs. take it away. >> it's good to hear from you my dear coanchor. thank you very much. yes, indeed rbs shares rising off the back of this news. the market taking it well. the chancellor deciding to sell the government stake at a loss. the stake at the moment worth 32 billion pounds. the peak of the crisis 45 billion pounds was invested into the troubled lender. nonetheless, the market taking it well. the chancellor feeling that the economy and taxpayers will benefit too down the line. once the bank is back in private sector hands it will allow it to flourish and the economy will benefit too. the other big takeaway grabbing headlines, the comments from the governor of the bank of england that had strong words from those in the financial service authority industries that have

abused their position over recent years and tough new rules will be brought in to make sure that doesn't happen again. i want to move on to europe because we weren't expecting the chancellor to mention europe but he did mention it. he outlined in brief terms his argument for why there needs to be renegotiation. he focused on the differences for why various countries joined in the first place and the difference between the eu itself and the economic and monetary union for the members of the euro. let's take a listen for what he said about why the u.k. joined in the first place. >> britain joined for overwhelmingly economic reasons. so put behind us our industrial decline and open up our economy. it's why for us the common market and now the single market has always been the benefit of membership. we have raised above all others. now it is economic challenges that are causing our country to consider the merits of that

membership. >> his arguments were very clear for why he felt britain deserved renegotiation. he said we joined for economic reasons. to join the single market. to have free trade where as the likes of france and germany joined for political reasons, post of course the second world war and someone like spain joined he said to move on from internal revolution and with that came the difference between the 19 members of the single currency and overall 28 members of the european union saying that at the moment the eu as a whole is being run for the 19 members of the euro. not all members of the european union. now of course it's over to david cameron. mr. osborne too and phillip hammond to see if that rational is enough to convince them for some level of renegotiation. >> thank you so much. we're seeing rbs shares react up

about 1.6% in today's trade. up next just do it. nike wins a major contract to supply the uniforms for the world's top players including the king lebron james. more on that story coming up. don't go away. you probably know xerox as the company that's all about printing. but did you know we also support hospitals using electronic health records for more than 30 million patients? or that our software helps over 20 million smartphone users remotely configure e-mail every month? or how about processing nearly $5 billion in electronic toll payments a year? in fact, today's xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. with xerox, you're ready for real business.

. >> leaders of greece france and germany agreed to intensify negotiations with athens creditors but there's little signs of progress. the finance minister agrees that athens and lenders have not agreed on a 1% primary budget surplus for this year. remember, greece faces a default at the end of june if it fails to repay 1.5 billion euros to the imf, the eu and the imf now putting the pressure on greek leaders to come together with an enhanced economic reform deal. poouf moving on to markets. the u.s. finished in the green. every stock on the dow, including tech and financial index closing up nearly 1.5%. let's talk more about the opportunity in the banks with the director of bank and equity strategy. thank you for getting up early

with us. how are you doing this morning? >> doing well. good morning. >> good morning to you. listen our banks are screaming by now that the fed is expected to raise rates sometimes this year? >> we have been recommending overweighting the banks for several months. you did have the fed increase in rates which would be the last stage of this recovery for the banks. the large cap banks need to generate revenue growth and we're in that inflection point and we'll start to see that coming through as we get in the back half of 2015 here. >> obviously on this side of the atlantic we're watching the situation between greek leaders and international creditors. in fact bank of america said that banks would probably be the best sector to benefit most from the end of the greek uncertainty. do you agree with that? >> what we're looking at is a lot of the issues that have been

overhanging the financial markets since the financial crisis started five years ago have been one by one pulled away resolved the impact is lessening at this point and that's clearing a path for the financials especially the banks to be able to you know lower their cost of equity begin to see the economy starting to get some firm grip and some momentum that they can begin to enjoy and benefit from. >> where do you see more opportunity, though? in the larger diversified banks or perhaps the regional names? because the nfib small business optimism index rose to a five month high in the month of may. is that a reason to buy the regional banks on the prospect of smaller businesses taking out more loans to grow and expand their business? >> as the economy begins to pick up speed as well as starting to see the increase in interest rates, we would like t what we call the super regional banks which would be everything from wells fargo to keycorp to mnt

bank to be able to benefit from economic growth as well as the strategies they're deploying and being able to leverage at this point. >> the co-ceos re-signed. new leadership at the top. what are your thoughts on deutsche bank? it's one of the outperformers in the financials index. >> we don't cover the european banks. we're focused in the u.s. we see fresh start with management. new direction in some of these banks and the u.s. paid off so we're seeing citigroup for instance getting the benefit of really focussing on a strategy resolving the issues it's had and being able to deploy capital. those turn around stories are positive in the banks as well. >> we've already seen quite the run in the banking sector so the question is is that fed rate hike already priced into these stocks and how much further can they run from here?

>> well we believe that we can see in the revenue growth of 6 to 8% once we get a very modest increase in interest rates. we're likely priced in the first 25 basis points but that doesn't mean that once the fed begins it's not also likely to stop after the first move. so you'll tart to see 50 to 100 basis points over the next 12 to 18 months and you'll be able to recreate profitability on the deposit side of the bank that they haven't been able to enjoy or benefit from since rates reached this low level right at zero. >> what's your top bank pick? >> right now we like wells fargo. we think they'll be able to benefit from the turn around in the mortgage market as well as what we'll see in them being able to lag their deposit rates once you start to see short-term rates move higher. we think they got several angles

continuing to generate some operating leverage. those are things we do believe with a very strong dividend 2.7 as you go into next year the pay out ratio continuing to go up. earnings rising. a 3% dividend as you move into next year. those are things that will attract investors as they look for these banks as an incremental investment. >> banks have been a source of leadership for the u.s. markets. marty, thank you for joining us this morning. moving on krispy kremes first quarter profit rising 10% beating forecasts as the doughnut chain posted stronger revenue. sales rising 5%. they now operate more than 70% of its stores outside the u.s. shares on a sugar high raising 4% in after hours trade. as you can see up 5% in frankfurt. switching to tech box reporting a wider loss as it continues to

invest heavily on improving security for its cloud storage service. the company is raising it's full year outlook as more customers sign up for the products. box will be cash flow break even by the end of the next fiscal year. what about price action? well shares rose nearly 9% in after hours trade. the stock is up about 13% in frankfurt frankfurt. aaron levie will be on today. nike scores a big win inking a long-term contract with the nba as the league's best players battle it out to be crowned world champs. let's get out to landon with more on this story. >> good morning to you. nike signed an 8 year merchandise and marketing deal with the nba. it will take over from adidas

when the current contract expires. it's worth more than $1 billion. the contract gives nike rights to supply the shirts shorts and warm up gear to the team. a bigger win, nike will be able to display it's logo on nba uniforms. a first for the league. that would pave the way to one day sports sponsors names just as in soccer and european football. nike has been marketing partner since 1992 and has endorsement deal with the largest biggest names starred in the league. nike controls more than 90% of the basketball shoe market and has been selling replica jerseys under the swing man line. it's been the nba's exclusive outfitter since 2006 when it took over an 11 year deal from

rebok. but earlier it said it wouldn't renew the contract. the nba also soured on its relationship with adidas as it focused most of its energy on soccer. under armour also bid for the nba contract. shares of all three in europe today, nike and under armour up fractionally. >> of course we got game four coming up tonight. i'm looking forward to it. >> that's right. i'll be watching. >> the current face of nike lebron james continues his quest for a third nba championship. tonight when the cleveland cavaliers host league mvp steph curry. after falling in game one james and the cavs have come back to win the next two. before we go to break, here are

your headlines. the world bank warns that the fed should hold off on raising rates until 2016. the euro slides as hopes for a greek deal are dashed and china's pedestrians mere calls for action from beijing to counter an economic slow down. worldwide exchange. we're back in about two minutes.

>> the french market sporting a gain of around 37. as you can see the greek equity market up about 7%. now yesterday we did see a rebound in the transport sector. financials continue to be a source of strength for the

markets. the s&p 500 up two points in premarket trade. the dow up 19. nasdaq up 2. focus will be on that retail sales number. taking a look at some of the retail stocks grabbing the headlines, mulberry's change in strategy is working. cutting prices boosted full year sales for the fiscal year but there's still work to do for the shake up to be reflected in the bottom line. shares rallied 30% over the past 12 months. men's warehouse signed a multiyear deal to open tuxedo rental shops within 300 macy's stores. they'll house three men's wearhouses mini shops. they'll open this fall with a full roll out expected by the end of next year. taking a look at shares of macys at 68.9. down from yesterday's trade. analysts are optimistic about a pick up in u.s. retail sales in may after auto sales flew past

expectations next week. forecasters are expecting a 1.1% rise following flat growth in april. a positive reading could bring forward expectations for the first fed rate hike. this after a slew of mixed economic data and bad weather plus a stronger u.s. dollar weighing on the u.s. economy in the first half. let's talk more about what to expect and how to position your portfolio ahead of that sales number. the chief global investment strategist joining us here on worldwide exchange. thank you for getting up early with us. >> thanks for having me on. >> there's a certain level of finesse involved given the mixed economic. on top of that you have the volatility in the bond market. how do you position yourself given the factors at play here? >> you have to look through the volatility and the bottom line is things do seem to be improving at the margin. within europe improving economic

momentum largely drich by the consumer. in asia we're starting to see a pick up as well. the u.s. is behind in the trend but perhaps over the summer months we'll be able to see that stabilize as well. we believe stocks are are still the way to go this year. >> do valuations concern you? s&p 500 trading at 18 times earnings? >> well that's the key. you have to get earnings picking back up again. we've been in a stall since the middle of last year and they took two years before they turn around and pick back up again. hopefully this time it is tied to those factors. many you mentioned earlier in our discussion here. many factors, currency weighed on earnings here and abroad over that sort of first quarter of this year and even late last year. hopefully those begin to stable size and pick back up again. the citigroup economic surprise index has fallen in the first half of the year every one of

the last five years only to stabilize in the summer and pick back up again. that suggests maybe better economic data in the second half is something we can look forward to. >> how porn is today's retail sales number given the slew of data over the past couple of weeks. but that blowout auto sales number suggesting the consumer is in fact spending. >> well it's an encouraging number but a lot of that being supported by very attractive financing and we're seeing some of that in other areas where financing plays a big role. the bottom line is if you take a look at the weekly retail sales data it's not showing any further pick up in spending momentum. we can get a good advanced retail sales rating today but that has not been sustained yet. the savings rate is up a full percentage point. consumers are feeling a lot less optimistic. we used to be able to get in consumers heads and take a look at the stock market and gasoline

prices and that would tell us how they want to spend. but with stock prices relatively flat and gasoline prices creeping higher since january we're not seeing that momentum in consumer optimism that would lead them to improve their spending pace. >> oil is now up about 40% since mid march of this year and, in fact, that's helped the energy stocks rebound. would you put money to work in this sector? or is it too late? >> you know overall, we like the more business spending oriented sectors. areas like technology for example we find much more attractive as businesses are beginning to finally ramp up their capital expenditures. the consumers may have room to spend further but job growth and income growth isn't there. looking at other sectors very much impacted by energy prices we think are probably lower for longer. a number of other factors keep us less optimistic on other sectors. we're more focused on technology along with financials. >> lastly i want to draw your

attention to what's happening in the bond market. the german bund is back above 1%. are you seeing clients reassessing whether they should find safety in the bond market? given elevated yields not just on this side of the atlantic but in the u.s. as well? >> the move up in bond yields has been long expected and long discussed. we'll have to see how it begins to effect behavior. it doesn't seem to be shocking anyone yet and maybe some of them are looking at it as a bit of a positive. it's nice to see inflation expectations get to around 2% in the euro zone. deflation less of a risk and a better outlook for growth. if it starts to flow through and looks to be more period drichdriven by inflation. >> a pleasure to have you here. chief global investment strategist at charles swab. that does it for us on worldwide exchange. we'll see you tomorrow.

good morning, everybody and welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. richard bransen is no stranger of making headlines for thinking out of the box. he's offering fully paid paternity leave for a full year. we'll get the details later this hour. first let's get to the markets. take a look at the u.s. equity futures today. at this point up by 21 points. markets came roaring back yesterday. s&p futures up slightly as nasdaq is up by 3.5. >> a couple of big stories we're watching this morning. the world bank calling on the fed to delay raising interest rates until next year. kick the can a little further. the institution arguing that keeping rates at record