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tv   Worldwide Exchange  CNBC  July 5, 2013 4:00am-6:01am EDT

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i'm ross westgate. this is "worldwide exchange." here are your headlines from around the world. another month of steady job gains are expected in the u.s. some worry that a stronger number might spark fed tapering talk again. investors in europe cautiously optimistic. shell is hung up on samsung electronics after forecasts failed to measure up to expectations. and china's biggest private ship builder sinking fast. it called for a lifeline from government and lenders after holding back payments and warning of a first half loss. plus, they're calling it the
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friday of rejection. supporters asked president morsi hold protests in egypt as the army arrested more leaders from muslim brotherhood. all right. warm welcome to you. plenty of things to look at today. really there is only one standout for global investors. yes, the june u.s. jobs report out at 8:30 eastern. economists expecting another month of moderate growth, perhaps not enough to make a major dent in the unemployment rate. dow jones calling for an increase in nonfarm payrolls versus 175,000 in may. a chance the numbers could beat expectations after the reports on wednesday showed hiring picked up in both the private and service sectors. unemployment is forecast to tick down slightly to 7.5%.
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joining us for first part of the program, chris tinker, founding partner at libra investment services. chris, good it see you. if we get somewhere around consensus, what we have seen the last couple of months, these sort of numbers, what does that do for investors? >> the funny thing about the jobs numbers, it used to be the first report of the month. now we have got surveys, now we have got heads up indicators like the ism, the adp. so it is almost a legacy that we have to focus on this for the latest information, given the volatility of the -- >> is the fed ahead or on target? >> exactly. the point was it always used to be a lead-in to what was going on a forward-looking basis. now the focus is because they started jaw boning and saying policy is going to be tied to unemployment, if unemployment rate is going to come down to around 7%, which is probably
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where the tapering is going to begin, on a rate of about 175,000 a month, you're going to get there this time next year. that's what the mark set loet i looking at. if the headline number comes down to 7.5 and the number is 160, 180, the market will maintain its view that tapering is about a year away. if, however, you see surprise numbers to the upside, 180, 190, 200 number, market will start thinking, well, if we're getting faster, if momentum is building, tapering could come quicker. that's the only risk i would have today, the market might get spooked by a stronger than anticipated number. >> yes. because are we so weaned on this liquidity? interesting, yesterday, of course, the ecb went with the forward guidance. they're doing their best to
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offset tightening and not even tightening, but a potential change in the direction of u.s. monetary policy. >> i think the market is reacting to the idea that this has all been a false rally. the market's concerned that what's opinion going on in the bond market may be signaling a trend that interest rates are starting to move back up. there are people through the who are talking very loudly and about not wanting to be on the wrong side of the trade, made a career out of buying bonds because they go up, the 30-year rally. what we're now seeing is things normalizing and stabilizing, the sense that carney and draghi were making reference to discussing policy options in advance this all came out of jackson hole a year ago. this is what central bankers recognized is potentially helpful. not without the pitfalls and day traders may be flipping us around short-term. but if we know what policy is aiming to achieve, we're not
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going to be sideswiped by it. i think ultimately is it all about liquidity? no. it is about a change in policy profile by central banks. we know where the fed is, and they keep telling us where they are. now the ecb and bank of england, what they're focus is, at least we're working within -- >> in time, though? we'll come back to that. we'll come back to that. second quarter earnings season is kicking off on monday. alcoa reports the highest number of prenegative announcements in 2009. again, second quarter profit estimates to 2.8% for s&p 500 firms. what do you take away ahead of the preannouncements? >> it is interesting the preannouncements have come through. sometimes they're directly related to confidence, corporates, what they're trying to do is maintain a steady profile, not wanting to come in
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and surprise them. we got very high cash levels still in corporates, particularly the u.s. those are plateauing but at very high levels. we have to recognize -- >> is that because investors are also demanding -- high cash levels but not much investment. i mean, investors seem to be demanding cash, either in dividend payments or buyback of shares. >> this is interesting, the buybacks and dividend payouts from u.s. corporates in particular is ranking in trillions of dollars since 2009 because that's been the focus. but cash balances are still extremely strong against large sways of mainstream corporate america. i think what investors are saying, if you haven't got a means of delivering to us, in terms of returning on investment capital, it is our money, we should be getting it back. the whole share buyback thing, interesting thing, they're looking at this on context of assuming share buybacks are
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taking place. forecasts are taking place against the backdrop of, you know, share buybacks. that's also something we have to watch for during this coming earnings season. value trends are uncertain now for the markets. but in europe here and the u.s. and this earnings season will give us the information. we're at the low level of visibility we get right at the beginning of the earnings season. this forward guidance reflects the fact that we have to manage expectations into -- a lot of people will be willing to consolidate what gains have been made, in a period of increased volatility and uncertainty. markets are fragile. >> from your point of view, then, when you're looking in your universe, ahead of this earnings season, is there -- are there sectors of fair value where you look to pick up depending on the news flow? food and beverage and autos. >> we look -- we focus from our european client base on the european markets, but we cover the globe. we cover 6,000 stocks worldwide
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and all the major markets. and the trends that are set are something that we are actually discussing every day with clients. and the message that we have this is very much that the momentum that we saw coming out of sort of the earnings season in q-2 has given way to volatility markets, but no trend, hardly any sector has a positive trend. we have become quite defensively we continue to look at food and beverage as being where you can get good value opportunities. we're selling the autos, selling into any rally, because what we see is price movements like yesterday, the european market was up 2.7%. yet that sounds great, except the fact that if you were the wrong way on a trade, you're squeezed by 4%, 5%, 6%, on banks rallying strongly as people digested news from portugal. volatility is what we have to deal with. it is not always a question of jumping into a momentum trade.
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it is a case of managing risk. and with the earnings season going forward, we have focused ourselves to be quite defensive, reflecting what the market itself is doing. as that information comes through, we're reaffirming where we already do see value trends emerging and seeing that, particularly in areas of food and beverage, and some of the more -- traditional defensive names, and we're certainly not chasing momentum at the moment. >> all right. portuguese prime minister coelho says he will provide stability for the government after a series of meetings with the pp party. a final agreement will be reached over next few days. same time, the greek finance minister says the nation is heading for agreement with international lenders over the next aid tranche. still waiting on a loan it hopes will be released at europe's group meeting. bank of england found their independence on the fourth of july. during the press conference,
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jeff pressed mario draghi on forward guidance. >> you were meeting another central bank in london was also having a meeting of its policy members. and in a break with previous tradition, we had a very clear forward guidance from mr. carney, the new governor. i wonder if because the bank of england has now changed its style on guidance it's time for the european central bank to also step forward with a new policy on guidance? it's clear from mr. carney's comments in the market reaction that he's moved the gilt market, moved the sterling curve. is it time that you put aside the precommit barrier to more detailed and specific forward guidance? >> thank you. if you ask this question, you haven't really listened to my
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statement. the -- >> sounds a lot like the statement i listened to when i was here in june. >> that's why i said you haven't listened carefully. the counsel took the unprecedented step to give forward guidance in a rather more specific way than it did ever in the past. it says the governing counsel expects the key so all interest rates to remain the key ecb interest rates, to remain at present or lower levels for an extended period of time. it is the first time the governing council says so. and it is just a coincidence, by the way, that what mark carney said in london. >> so maybe you can help us out with that. when you say an extended period of time, is that 12 to 18 months? >> it says extended period of time. >> quite an exchange there
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between draghi. how significant a shift is it in your mind? is there a -- central bank is like in the uk and ecb worried that if the fed is signaling some different bond yields are backing up, basically fed policy is going to be exported around the world to europe and to the uk or push yields in clearly -- or push yields in the uk and europe up as well, which is what they don't want. >> i think the first thing to remember is that they would like to point out to journalists that they don't know what they're talking about. >> well, clearly we don't. >> the second important thing here is that central bank also gets into this group think and essentially policymakers think they have been communicating this message. the fact they made an explicit statement more recently i think is just a natural evolution. what they feel they have already been doing and sometimes forget that the market is focusing on a
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minutia of statements that on the fact of the last day of the quarter you had two fed governors standing up and making speeches, making comments that had an impact on the market, where as in europe or the uk you wouldn't simply have any kind of follow through dialogue going on with central bankers in the market tells you there is still a very large gap between what it is that we get from the fed and what it is that we hear from europe. having said that, i mean, the message is coming really out of the jackson hole policy announcers that said we have this policy of guidance, forward guidance available to us, and we should really think about using it. i think mark carney will embrace that, that principle, that mind set to make sure that we don't come with any surprise, there is no waiting for the smoke to come out the top of the bank of england to tell us whether there has been a rate change. we're not being blind sided by something. so i think that draghi's comments were pretty much along
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the lines that i think back where we were a year ago, when he was telling the market that we do whatever it took, the market now completely accepts that the central bank has the means to do things, and will react whether it is to a policy wobble, potentially portugal or to an interest rate impact in the u.s. income from the fed, draghi and the ecb are saying -- >> take comfort is what you're saying? >> yes. >> take comfort. let's turn to events in the middle east. reports suggest that egyptian security forces have arrested the leader of the muslim brotherhood. the group is preparing for demonstrations across the nation today, saying it will not work with the authorities. we'll get the latest from yousef in cairo in a few moments on that. beforehand, though, let's get to today's global markets report. going to kick off with sixuan to wrap up the week for us in asia. hi, sixuan. >> thank you, ross. europe's relief rally extends into asia.
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after central bankers comments, japan topped the chart as the best performer in the region this week with the nikkei gaining over 4% during the past five sessions. the shanghai composite also in recovery mode. it finished flat today but added 1.4% on the week as liquidity fears subside. no such euphoria in south korea. shares of index giant samsung electronics dropped almost 4%. the company predicts a record q-2 earnings but misses analyst forecasts. in australia, crown gained 3% after local lawyers backed the plan to open the second casino in sydney. but its rival echo entertainment group slum pd over 5% today. also in the gaming space, a decent debut from casino operator makel legend in hong
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kong. the standout loser was china ro rongsheng industry. the country's largest ship builder expects a net loss for the first half this year, and reportedly has laid off 8,000 workers. it is also looking for help from governments and banks to renew its credit facilities. back to you. >> sixuan, thank you for that. markets, trading fairly cautiously. we're up a quarter percent in the ftse, the ibex down slightly. cac fairly flat. bond markets, the reaction to what we saw from the ecb and the bank of england much more seen in the middle of the curve, the five years. ten years didn't move a lot. ten year portuguese yields back below 7%. a little higher on ten-year gilts. a little caution ahead of the employment report. on the currency markets,
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interesting note, sterling down at a four month low against the dollar. 149.98 this morning. above that at 150. aussie dollar, not far away from the three year lows at 91.59. dollar yen holding the hundred mark we breached a couple of days ago. and euro/dollar, just below 129 at the moment. that's where we stand with the markets. i mentioned egypt a short while ago. let's get the latest from cairo. yousef rejoins us. yousef what do we understand is happening at the moment? >> reporter: well, ross, the atmosphere is still very, very tense here in downtown cairo. remember that the muslim brotherhood is now calling for its protests, calling it the friday of rejection, expected to rally around noon local time right after friday of prayers, basically fighting what they're calling a full military coup and clamoring for the argument they have been holding on to, they have the legitimacy after a free
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and fair election in 2011. the army is on high alert, we had more violence overnight, one soldier was actually killed in the sinai peninsula and here in cairo, and outside of the city in the hometown of former president mohamed morsi. now, the army is also taking precautions here, put out a statement saying that the guarantee the right to protest peacefully but they also made it clear that it would be negative implications for security and the national economy if excessive use of that were to be made. all of this comes less than 24 hours after the swearing in of the new acting president adly mansour to oversee this transition period. several names are being floated around for potential prime minister including mohamed elbaradei, but no word on when it would be implemented. at this point, still a very fluid situation. we'll keep you posted throughout the day. >> okay. yousef, thanks for that.
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quick note of what's coming up on today's show, more from yousef, estimated record quarterly profit for samsung. the market is unimpressed. south korea fairly shortly. central bank in china appears to have maintained liquidity concerns but should we be weary of more cash conscious? one of the world's biggest wind farms opened up on the southeast coast of the uk. we'll bring you a special report. and an estimated 160,000 more jobs were created in the u.s. in june. are the numbers right? is the u.s. economy still driving towards recovery? 11:30, we'll go to boston for a preview of today's nonfarm payrolls report. [ male announcer ] it's time.
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telecom italia shares opened lower today. this is after merger talks between an italian group broke down. they will not begin negotiations on a mobile business while conditions are unfavorable. contact began in april, but the ceo warned the deal could face complications. samsung says it is on track
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to report record profits but the estimate left the market cold coming in just below forecasts. let's get more. sherry king has details. why are we upset at the record numbers? >> i know. record earnings but investors seem pretty disappointed today. a flagship of smartphone galaxy s is believed to be the main driver behind the report earnings but that's the reason why the guidance fell short of market expectations. s-4 was supposed to be the big thing for samsung this year and did set the standard quite high for its own -- for itself with its own marketing blitz. and now failing to meet high market expectations because of high market and costs this time. now, looking ahead from here on, ross, we are expecting official earnings with the breakdowns of its second quarter performance at the end of this month. so that's when we'll definitely
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dig deeper into how its mobile division did this past quarter. and looking further ahead and down the road at the third quarter, the quarter we're in, and now, is the quarter when jpmorgan, for example, whose second quarter earnings projection came close to the guidance from today is saying galaxy shipments will start dropping. so at this point, many analysts seem to agree that how much of a diversification samsung pulls off successfully is the key here, how it successfully marks a turn around with its other businesses like semiconductors and consumer electronics to complement its earnings and how it successfully gets into every niche of the smartphone market with simpler and cheaper versions of the galaxy smartphones. now back to you in london. >> thanks for that. earnings are down 3%, but up for the record low of the previous
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year. the smartphone maker is working to restore its reputation after long product delays for the htc 1. and competition is only expected to get tougher in the coming months. nikala glaskov is with us. let's kick off samsung, in view of the guidance of earnings, very high expectations as chery says, what does that mean in terms of, okay, we didn't meet the high expectations but this is a company that is still going to deliver. >> yes. so the stock price really is more of a function of the expectations that were really high. so there is still growth and in the mobile division and with the galaxy s-4 launch, it really -- as far as sales figures go, really seems like it did much better than the s-3, its
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predecessor. i think there is a lot of concern about the company going forward. so there is aside from the mobile business, which basically accounts for a majority of the profits we're talking about today, the company has very little to fall back upon. so as we look forward, we see apple launching a renewal of its product lineup, in general, the competition tightening up, especially with samsung for its -- beyond s-4, they have quite a bit of -- quite a large presence in the lower price tiers and as you see other companies moving into that, there is a lot of concern about the company going forward. >> is there concern samsung may have similar experience to apple? you got very high valuation, and then, you know, the product sort of dried up a little bit or wasn't quite as wow as they
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needed to be. >> i think anytime you really have such high expectations, the danger of that really increases by a lot, but as far as -- as far as expectations go, we have seen them tamp down over the past month or so. this is largely because a lot of people are seeing this market reality where if we're talking about the smartphone demand, the volume sales, they're really shifting towards the emerging markets. and what that means is lower margin as not really selling the galaxy s-4s, but as we previously mentioned, the cheaper phones and even if they are samsung phones, still the margins on the phones will be a lot less than what the flagship devices. >> chris is with me in the studio. you say it is a value story on the system, but you still think it might go lower. >> the comment i put out was ahead of the numbers, and to that extent it was the idea that, you know, there is still
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room for an alert. we have seen that happen today, the fall in the markets. the reality is that it is flagging up as a value story for us now, particularly in the wake of the numbers, which actually doesn't miss by very much and we're already about 20% cheaper relative to where we think the value level for the stock is. like the apple story, the focus on the marquee name is something that draws sentiment to the detriment to the detailed analysis of where the value story is on an ongoing basis. mentioning the emerging market story, everybody is going for the volume story, but it is not the same margin as you get from an s-4 or iphone 5, and the market worries about pressure and margins, well, business model changes and the profitability is still ultimately what you're paying access to when you buy the stock. so i'm not saying you have to go and buy it this morning, but what i am saying is given the
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fundamentals for the company, and the fact that we will be getting more detailed updates, as we see the numbers coming through in the next few weeks, that's going to be the point when people review the relative attractiveness of some and i think that you should be looking at when you might want to add it to the portfolio rather than thinking something new is coming out. >> you talked about this from mobile. is it ever going to be seen as anything other than just sort of mobile hardware? they acquired boxy, dvr provider, you talk about. these are the moves in other areas ever going to amount to much? >> you know, it's very hard to say really. what they would like to do is move not just beyond mobile, but probably move beyond making money just off hardware alone. so, like you mentioned, the acquisition of boxy, that would be more towards sort of a tv everywhere experience for consumers maybe charging for
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content distribution or other services really. so ideally they would like to become more like apple in a business sense. so they would make some poor sale revenue, not just rely on devices, be they mobile phones or televisions or really anything else. >> okay. thank you very much for that. chris sticks around. still to come, the shift towards lower end smartphones giving samsung a headache. that's what analysts are telling cnbc. find out what else they're telling us about the tech giant's future, all on cnbc.com. the fourth of july is marked by a few tried and true traditions. fireworks, picnics, seeing how much food people can put in their mouth in the short amount of time available. now the annual nathan's famous hot dog eating contest was held at brooklyn's coney island. for the seventh year in a row, joey chestnut took home the crown, downing a world record 69
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hot dogs, buns and all, and he does it in just ten minutes. on the women's side, tonya thomas, nicknamed the black widow, won for the third straight time with 36 3/4 hot dogs. how do they know it was 3/4 or not 1/2 or 4/5? maybe they train for this stuff. what food could you overeat? let us know. keep it clean. e-mail us worldwide@cnbc.com, tweet @cnbcwex or direct to me @rosswestgate. what could you overeat? chris, are you astounded by these people's feats? >> the only thing i can't eat enough of actually, my wife's homemade curry. she cooks, i'll just have another portion. >> a big groan in the galley. is that true? >> i know. >> is that true? >> is it your wife's birthday today? >> it is not my wife's birthday.
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>> she's watching. >> of course she is. >> all right. okay. in the break, we'll have a real chat. still to come, china's cash crunch concerns had markets running scared. why does our next guest say the fear is healthy? find out coming up. it might not be the great british summer we hoped. i don't -- look at that. that's -- doesn't get any better than that. i'm not just stalking about steve as well. he rolled up his trousers. he's in the sea. what on earth is going on? stay tuned to find out. i want to make things more secure.
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and headlines from around the globe, another month of steady job gains are expected in the u.s. some traders worry a stronger number could spark fed tapering talk. investors in europe cautiously optimistic for now. shareholders hung up on samsung electronics after profit forecasts fail to measure up to expectations. china's biggest private ship builder sinking fast. rongsheng calls for a lifeline from government and lenders after holding back payments and warning of a first half loss. plus they're calling it the friday of rejection. supporters of ousted president morsi holding protests in egypt as reports suggest the army arrested more leaders from the muslim brotherhood.
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and ahead of the u.s. employment report, equity markets a little cautious today. up a quarter percent for the ftse, on the other side, the pso down a third. everything else pretty flat. the final thought from chris tinker with us. you talked about food and beverage and autos. looking at -- at food and beverage, you got diajio. explain your thoughts on this. >> these are stocks that flagged up to us on recent times as having corrected sharply with a market that lost its momentum. good quality companies with visible earnings have taken a hit here. in particular, these companies have reacted to perceptions of uncertainty in emerging markets, slowing down emerging market growth. as a result of which, we see real value opportunities appear. what i would cautious, when we go into the start of the earnings season, from the beginning of next week, really gets going over the next three
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or four weeks. we're getting an awful lot of information coming through. this isn't really the time to think about a new strategy. now is the time to be looking for the companies that you know about, you like, you owned before, you continue to see opportunities to perhaps add to positions you currently have. the opportunity to buy in and companies flagged up from the sector in the last two or three weeks and these are situations where you can go and add this to your positions, from a value perspective, with very low downside risk and worry about managing risk in the current environment. as we get clarity around corporate earnings reports for the second quarter, i think the markets can go ahead again. but in the very near term, we really should be focusing on things we know and like and see opportunities to buy. >> okay, chris, good to see you. thank you for joining us. chris tinker at libra investment
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services. rongsheng share on the rocks, down 16% after losing 10% on wednesday. this is after the ship builder warned it will post a net loss in the first half of the year. it is also calling for a lifeline from beijing and major shareholders to stay afloat. rongsheng laid off workers because of sluggish demand from global shipping lines. down 16%. shares of china vanke have swung lower. sales were higher in the first half of the year but pent-up demand, the latest june data shows slight moderation. shawn rain is in hong kong for us. shawn, so many different things going on with the liquidity in the secondary banking sector,
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concerns over the property market as well. look, what is your biggest concern as far as china is concerned and as they try and manage the changes in the economy? >> well, it is great to be here, ross. last time we spoke i said investors should look at vanke. on the residential real estate side, there say lot of pent-up demand and money sloshing around and that's why you saw the sales go up 30% in the first half of the year. my biggest concern is not residential real estate, because there is very little leverage in the marketplace. my biggest concern is commercial real estate. too many developers are setting up large malls in 100,000 square meter ones with louis vuitton as the flag ship store. and consumers are starting to lose confidence because of the slowing economy, they're not shopping as much in a lot of these malls. i think you're going to see on the commercial side there is going to be major deflationary pressure on a lot of the rents. investors need to be cautious of this. and also, ross, kind of
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surprised that your last guest tinker didn't mention lenovo when talking about whether or not samsung was going to face fierce competition going forward. as the economy goes bad, a lot of chinese consumers are trading down and starting to buy lenovo rather than samsung and they're coming out with new designs, dual simcards and they'll put a lot of continued downward pressure on samsung. >> yeah. at the same time, while looking at the commercial sector, how much is that going to feed back into fears about the banks and the shadow banking sector? >> yes, so shadow banking is a problem, you know. we estimate that shadow banks account for 4 trillion in loans in china. let's keep it in perspective. in the united states, about 24 trillion. so we have to worry about, you know, nonperforming loans, problems in that area, but i don't think it will cause a systemic threat. what is far more interesting to me is why isn't the shadow banking sector getting bigger, and when you take a look at a
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lot of the smaller microloans, they actually have better loan portfolios in the big banks because it is the smaller groups that are coming together, and they know who they're loaning money out to. they're giving it to the taxi driver or small shop keeper and doing much better credit risk than the bigger banks and my concern is on the big banks. there is far too many nonperforming loans right now, allocating too much money still to state owned enterprises and propping up companies like rongsheng not doing very well. this is a major cause of concern that investors need to take a look at. if you saw the end of last week, china emergence banks, a lot of banks were calling wealthier clients and saying why don't you buy the new wealth management products because they wanted to lock in 6% rates, but the reason was that they were sort of running out of liquidity, capital requirements at the end of the quarter weren't strong enough. i'm quite concerned about commercial real estate and also concerned about the financial health of a lot of china's banks. you're not going to have a lehman moment, but they're risky and investors should be cautious
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for them. >> yeah. do you think -- do you think what the authorities are doing is -- it is a healthy thing, they are actually just -- you support the policymakers? >> yeah, absolutely. i think they need to really rein in a lot of the credit coming out. if you look at the quantitative easing, and the money supply went up 15%, 16%, in the first half of this year, but gdp growth was only around 7%. you're not getting the multiplier effect because the money that is going out is not healthy. i'm one of those folks who think that the prime minister of china should really force the banks to have a very tight monetary policy. i don't expect quantitative easing anytime. the economy is not strong, but not very weak. we need to slow things down to sort of make sure we have efficient loans going forward in the coming quarter, ross. >> okay. shawn, good it see you. thanks for that. have a great weekend.
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ecology has filed for insolvency. they employ 1200 staff and they suffered as chinese competitors have increased capacity. they indicated a major investor could take a major stake in the firm. the application calls shares to plummet more than 60%. at the same time, brazilian billionaire batista announced a major shake-up of his empire. he's to step down. they will inject cash and take on a more active role in managing mpx which will change its name in october. batista expects to sell some of his stake in mpx at a later date to pay off debt at his other companies and avoid bankruptcy. a move towards renewable energy is innovating all the time and nowhere is this more evident than by the sea. steve sedgwick went down to a stumping ground to investigate.
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>> reporter: this may look like a glamorous location after the coast of the bahamas or california, but, actually, no. cnbc has come down to margate in kent. what has brought us, the uk prime minister and various business leaders from the middle east and europe down to this corner of england? well, the answer lies 12 miles off the kent coast. the london array has 175 wind turbines, two offshore sub stations and can produce 630 megawatts of energy a year. powering half a million homes, the biggest offshore wind farm anywhere in the world, it absolutely shows you can do scale renewables and you can do them right here in britain. government and wind farms developers say it will save 925,000 tons of co2 each year and play a major role in helping
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uk meet its carbon reduction targets. where is the best location in the wind? in the north of europe in the uk. let's harness the best sites and make them the most cost effective sites of energy delivery and this is an important aspect. also off the energy transition in europe. >> reporter: the business leaders and politicians still very excited about the wind industry. but there are real concerns out there, concerns over the actual mission of the industry, what it is doing for the environment, the cost of supply, and really how irregular that supply is. >> the reality is that that you do need to have some backup. the fact you've got some backup doesn't mean that backup is running all the time. >> we have not in my backyard, not under my backyard, so we're again striking -- we're against nuclear, we're against windmills because they destroy the landscape, we will not be able to just be against things, we need to embrace things and
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society needs to discuss this. >> reporter: the debate continues over the rights and wrongs of the wind industry. but the players themselves agree on one thing. >> overall we need a broad energy agenda with different energy generation mix, but renewable will be part of it and has to be part of it and therefore for this reason we need long-term consistency of regulation, of support. >> as long as there is a robust stable framework and policy as it is here in the uk, i believe that the sector will continue progressing and will continue evolving. >> we tell politicians, tell leaders of government we need consistency. wherever you want to drive, but it needs to be consistent. >> more on that to come. panasonic will shut the doors on its only solar cell plant in europe due to tough market conditions. the japanese company will wrap up its operations in the hungarian facility by september. closing down next many. 500 workers will lose their
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jobs. panasonic shifting solar production back to its home base. the japanese market is still growing because of government support. a weakening yen is also a contributing factor. now, keeping our eyes on what is going on in portugal. the president says a negative scenario would not be able to return to the markets after this -- this after the program is due to end in 2014. at the moment, government is holding together following meetings with the coalition partners and the government. we'll keep our eyes on that. portugal yields back below the ten years, back below 7% mark. japan's banking industry group tightening the monitoring of how interbank lending rates are set. now more from tokyo. >> the japanese bankers association will set up an independent monitoring body to
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oversee tokyo's intrabank tibor. the association decided to follow the steps that the uk and singapore were taking. issuing a report on reform plans today, other proposals include hiring external auditors to improve transparency and safeguard interest rate benchmarks. it would also stop publishing some of the rates that are rarely used. a final version of the reform could come as early as this fiscal year and take effect by the end of fiscal 2014. ross, back to you. >> thanks for that. still to come, feels like the week hong kong started to get its ipo mojo back. will casino developer make it? back in hong kong after this.
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earlier we asked you what food do or could you overeat? this is after joey chestnut ate a record 69 hot dogs to win a july fourth contest. john tweeted doritos. get in touch with us at e-mail,
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worldwide@cnbc.com, or tweet us at @cnbcwex or direct to me at @rosswestgate. shares of casino developer macau legend climbed in today's trading debut. pretty weak pricing. the firm managed to raise around $280 million through the offering and has big plans for how to use the cash. emily chan was in macau and filed this report. >> reporter: macau legend is going to be using funds raised from this ipo to redevelop its properties. behind me we have fisherman's wharf, an amusement park. when all is done, in 2015, macau legend is going to be macau peninsula's largest hotel operator. dinah japan is a believer in this story, signing up as a cornerstone investor, $35 million in the ipo. we have sjm, a name you should be familiar with the biggest player in macau, taking on a 4% stake in the company. macau legend comes to market on a very volatile time. we see companies shelving ipos.
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it had to delay it and cut down the size by more than 50%. now, with that, pwc issued a report earlier this week saying that there is some hope. currently hong kong stands as number four in terms of global funds raised from ipos, but we're looking to one ipo that is alibaba. it should bring hong kong back to number one in terms of ipos. reporting from macau, emily chan. back to you. joining us from hong kong is dickey wong at wikingston securities. you say it is not that impressive. >> well, i would say not really bad. as a matter of fact, they have cut their offer by more than 60% and the public offer tranche were undersubscribed. it is still close at above the
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ipo price i would say. it is okay. in fact, there is more than six casino operators already listed in hong kong, the big guys, licensed player and for macau legend, a smaller player, and the only thing i would put my eye on is the redevelopment of the fisherman's wharf. this is a weird place for me. so definitely good for redevelopment. so talking about future plans, not earnings at this moment, not very strong earnings in the past two years. i think it is okay because after it slashed its size and now trade at a fair value, given that the hong kong stock market has been really volatile in the past week. >> yeah. you talk about that. is it going to improve in the third quarter, the ipo market? >> well, i think hong kong ipo market will definitely improve
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in the third quarter. as a matter of fact, i believe hong kong stock market, the sentiment of the stock market will improve. but it is not that easy for hong kong, especially when we talk about hong kong stock exchange, to regain its first position. in fact, hong kong was deleting ipos, hot spot in 2009 to 2011. we actually consecutively three years had the first place. and i think this year we're definitely improve better. all depends on the big guy, like alibaba and also china and hotwell development finally postponed its ipo last month. this also gives some kind of bad impression to the local investor as well. so what we believe now, if they price at a lower end, or even a
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lower valuation, it will attract local investor to subscribe the ipo. >> yeah. and just briefly, hong kong exchange, much synergy? how is that going to pan out? >> well, if we're talking about hong kong stock exchange, it is not easy to development at this current level. after the acquisition of the lme, now hong kong stock exchange is doing quite good at those ipo, especially attracting more foreign company to be listed in hong kong. i don't really see a very significant synergy in the short-term. after the recent acquisition of lme. and as a matter of fact, hong kong stock exchange is trading at near 30 times forward pe, definitely higher than its major
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competitors like new york stock exchange and also nasdaq omx. i think stock exchange itself would definitely maybe cannot outperform the overall hang seng index. >> all right, good to see you. thank you for that. dickey wong from hong kong. the casino battle in australia pushed stocks of crown higher today, up more than 3%, receiving a conditional nod from the government to build a vip gaming room at its hotel project in sydney. take a short break. still to come, time to turn away and focus on the fundamentals. stay tuned as we preview next week's official start to u.s. second quarter earnings. and more on today's economic report.
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watching "worldwide exchange." i'm ross westgate. another month of steady job gains expected in the u.s. some are worried that a stronger number might spark more tapering talk. professors in europe cautious but optimistic for the moment. shareholders hung up on samsung after record second quarter profit forecasts failed to measure up to expectations. they're calling it the friday of rejection. supporters of ousted president morsi holding protests in egypt as other reports suggest the army arrested more leaders of the muslim brotherhood.
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all right, if you're just joining us this morning, state side, welcome. i hope you had a good day yesterday, on july fourth, your independence day. today, all about the employment report. ahead of that, futures at the moment are indicating a little bit higher. 136. we're about at the moment what 142 points above fair val you for the dow. the nasdaq is some nearly 30 points above fair value. the s&p 500 around 40 points above fair value. european stocks fairly cautious today. we had a bit of rally yesterday after both the ecbm, the bank of england came out and changed policy by issuing forward guidance. the global 300 is flat at the moment. european equities, though, reflect that pretty flat. ibex down .6.
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ftse up 8 points at the moment as well. dollar doing okay. dollar/yen around the 100 level. really going to be about the employment report as we say. let's show you where we stand with the portuguese bonds. still around the 7% level for now. the government is holding together. there will be doubt as to how long that will last. treasure yields higher, ten-year gilt yields higher at the moment as well. interesting, the impact of the bank of england coming up and saying we intend to keep rates low as we didn't see a lot of improvement in the ten-year or the five-year, the value of the curve of gilts and we saw some support. sterling dollar back down to a four-month low 149.87 as well. that's where we stand with european trade. let's wrap up the week from asia. sixuan in singapore to do that for us. sixuan? >> thank you, ross. asian markets enjoyed a nice rally this friday thanks to the guidance from the ecb and the
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boe. japan's nikkei was the standout performer, up 2% to hit a five-week high and has gained over 4% on the week. but south korea's equity index finished in the red as steep losses in heavyweight samsung electronics dragged the kospi lower. samsung fell 4% today after its guidance missed estimates. spent more than expected on marketing expenses for its flagship smartphone galaxy s-4. casino place also in focus as macau legend made its debut on the hong kong exchange. its shares managed higher on this first day of trading, but only by about 2%. the ipo was also priced near lower end of the indicative range, raising about 280 million u.s. dollars in total. over in australia, crown won a conditional approval for casino licenses sydney and that helped push shares higher by over 3% today. but rival echo entertainment suffered a beating, down over 5%
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after losing its exclusivity as the sole casino operator in the city. back to you. >> all right, sixuan, thanks for that. have a great weekend. it is about the june u.s. jobs report at 8:30 eastern. economists are expecting another month of moderate growth. not enough to make a major dent in unemployment. dow jones is calling for an increase around 160,000 nonfarm payrolls. 175,000 in may. there is a chance the numbers could beat expectations because we have reports from the adp and ism on wednesday which showed it picking up. unemployment rate, that's forecast to tick down from the 7.6% to 7.5%. joining me in the studio, patrick spencer of equity sales at bear. thanks for that. we had a bit of a wobble since we last spoke. we got worried about yields backing up and the fed tapering. this number today that comes in
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around that sort of consensus, what does it do? >> it is a very volatile number, first of all, the majority of numbers this year are between 150 and 200,000. the u.s. is on a firm footing. so i think it will be a little bit higher. the adt number as you alluded to was quite strong. but it will reignite worries about tapering, which i think are unfounded and we can talk about that further. >> yeah. the fears -- okay what is unfounded? are you saying it is wrong to push up bond yields? >> i think the best thing is if you look at where interest rates have risen in the past and what that has done to markets, i looked this morning and in 1994 you saw a dramatic increase in interest rates, and from 1994 right through to the end, you know, through the zeros if you like, right through the way until 2002, the market was up 200%.
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rise in interest rates is normal. >> talking about rising bond yields. interesting 1994 was different, it was not flagged. >> correct. >> this is with flagging, an awful lot here. >> sure, sure. i think overall the environment is positive. and market pricing comes in when the economies are reasonable. i think that's what you're seeing now really. so maybe bonds will sell off a little bit, stabilize a little recently, but i think there is a really -- we can talk about this later in the program, i think there is a real misunderstanding about what qe has achieved with the banks and impact that that has in the economy. and it's -- once that stops, there is a lag where that affects and benefits the banks and the economy. so i think the tapering is just the beginning and not the end. so i think it is really important to actually -- let's examine that. >> all right. we will do that. we will do that.
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meanwhile, fourth of july also marked by a few tried, true and trusted traditions. fireworks, family picnics and seeing how much food people can shove down. the annual nathan's famous hot dog eating contest took place again at coney island in brooklyn. for the seventh year if a row, mr. joey chestnut took home the crown. great name. is that really his name? he downed a world record 69, yes, 69 hot dogs, folks, buns and all, and did it in ten minutes. a remarkable feat. on the women's side, tonya thomas, nicknamed the black widow, won for the third straight time with 36 3/4 hot dogs. well done. it is not a life wasted. what food do you think you could overeat? food gorging is disgusting. i couldn't possibly comment. and rick commented he would gorge on pizza and stuffing. and fine if that's your thing.
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keep your responses coming here on "worldwide exchange." get in touch with us at e-mail, worldwide@cnbc.com, tweet us at @cnbcwex or direct to me at @rosswestgate. is that a full time job or something you train part time to do? i don't know. second quarter earnings season kicks off on monday. alcoa, traditionally the first one to report, build up toward the earnings season seeing the highest number of negative preannouncements since early 2009. patrick, could be seen as a negative, the preannouncements. on the other happened, christine was saying earlier, might show companies have a degree of confidence coming out and saying what they're saying. >> yes. i think there has been -- there isn't much expectation in the forecast -- >> your mike is gone. just clip that on. there we go.
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good man. that's all right. we got it. you did it. okay. perfect. perfect. >> so there isn't much expectation in the numbers anyway. and as you quite rightly say, there has been an interesting -- a lot of interesting developments in the quarter. you've seen huge swings in commodities, what happened to the gold price, a china scare, you've got worries in europe, you've got issues of sequestration. so it is hardly surprising that companies, you know, have been a little bit cautious. in fact, actually in this quarter we're looking for earnings as you said, which is 3%, a big part of this quarter, i think, isn't going to -- isn't really going to be about big cap stocks, though, because we at bear we cover not only big caps, we cover small and midcaps. i think the real trend through this quarter is what the strength of the dollar has done. i speak to big institutions on a daily basis and see where they're investing that money in
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the u.s., not only taking the waitings up, but going to specific parts of the u.s. market. traditionally the u.s. market has been on their own by the europeans and always gone to u.s. stocks to get exposure into emerging market areas such as yum brands that we'll talk about later. 50% of the revenues come from china. but i looked this morning before i came, and companies that have in the s&p that have 95% of their revenues based in the u.s. since 1995 are up 200%. not 200%. up 30% more than the big cap peers that have exposure. people investing now in domestic companies is much more important, because they don't get the china exposure, the emerging market exposure, not getting the currency exposure. i think a big takeaway from this quarter, as you say, has been negative preannouncements, the big companies won't surprise us.
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what will surprise us, i think, are the small and midsized companies. we're looking for growth, i think, on the s&p looking down 27.50, down to 27, taking numbers down, but taking numbers up for smaller midcap companies by about 5%. i think that's an important trend. >> also talk about -- we'll get into that as well. for more on the upcoming earnings season as well, click on to cnbc.com. you get a view of what analysts are saying there as well. now, amidst supporters of egyptian president morsi saying they will not work with authorities. this as reports suggest security forces arested the leader of the muslim brotherhood. a very uncertain situation. yousef is in cairo with the latest for us. yousef. >> reporter: ross, happening right now, military aircraft hovering over cairo, flying in
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different formations, with tail smoke. another sign of strength, like we saw yesterday, shortly after the swearing in of the new acting president adly mansour. you mentioned the political impasse which continues between the muslim brotherhood and the rest of the opposition and the army and the rest of the parties involved in this process. and they are going to be rallying for what they call the friday of rejection around noon just after friday prayers. they're saying they're not going to work with the army, with the transitional government, and still clamoring to what they say is fair la jegitimacy. you can hear the planes come back. the army remains on high alert, not taking any chances. and you mentioned what appears to be a crackdown on the muslim brotherhood. pulled the plug on three networks, arrested one of the most senior leaders as well, and they are, of course, other
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arrest warrants out for more of them. we'll have to see where this goes. but olive branch was given to the muslim brotherhood by the new acting president. he said that he welcomed muslim brotherhood participation. this will be key. in the meantime, a lot of names floating around, about who will lead this cabinet going forward. mohamed elbaradei is one voice mentioned. overnight, violence still. one soldier killed in the sinai peninsula. it shows you that with competing rallies expected for today, we'll have to watch this space very, very carefully. >> we will do. thanks very much, indeed, for that. also the latest from the u.n. human rights chief, he's concerned by reports of detention of the leaders of egypt's muslim brotherhood and says we're not getting into the question of whether egypt had a coup d'etat either. also still to come, president mario draghi showed a little bite when pressed by geoff. we'll bring you the full
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a recap of the headlines. june u.s. jobs report out today with more steady growth expected. samsung forecasts a record quarterly profit for the market
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isn't that impressed. egyptians express anger at the toppling of president morsi, calling for a day of rejection. ten year portuguese yields around the 7% mark at the moment. ecb costa says this morning that we have to rethink the nature of the adjustment program. this as bailout is well executed. the population and politicians feel failure. portugal needs a political consensus, social cohesion is important for the bailout plan, hence the meeting and potentially rethinking it. it all seems ecbm, the bank of england found their independence yesterday. during the press conference, geoff pressed mario draghi on the unprecedented shift of forward guidance. >> you were meeting another central bank in london was also having a meeting of its policy
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members. and in a break with previous tradition, we had a very clear forward guidance from mr. carney, the new governor. i wonder if because the bank of england has now changed its style on guidance it's time for the european central bank to also step forward with a new policy on guidance. it's clear from mr. carney's comments and the market reaction that he's moved the gilt market, he's moved the sterling curve. is it time that you put aside the precommit barrier to more detailed and specific forward guidance? >> thank you. if you asked this question, you haven't really listened to my statement. the -- >> sounded a lot like the statement i listened to when i was here in june. >> that's why i said, you haven't listened carefully. the governing counsel took the
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unprecedented step to give forward guidance in a rather more specific way than it did ever in the past. it says the governing council expects the key so all interest rates to remain the key ecb interest rates, to remain at present or lower levels for an extended period of time. it is the first time the governing council says so. and it is just a coincidence, by the way, that what mark carney said in london. >> so maybe you can help us out with that. when you say an ended period of time, is that a 12 to 18-month period? >> it says an extended period of time. >> there we go. interesting exchange. still to come, germany semens built the tire byne turb make the largest offshore area.
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british prime minister david cameron opened the world's biggest wind farm off the southeast coast of britain. one of the major players in the london wind farm project is germany's semens who provided the technology and built the 170 turbines. steve went along for the opening and caught up with peter losha
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and asked him about grave concerns over the cost of wind energy. >> the costs are very important. let's put things into perspective. the last decade, offshore wind has reduced the cost by 40%, so this is basically every decade you can talk about roughly as a target image to say minus 40% cost reduction. it cost effective delivery of clean energy very, very important aspects of our innovation initiative. so the next generation of wind turbines will be six megawatt will be one wind turbine alone can power 6,000 households. we're working on the next generation to be more cost efficient and cost efficient delivery of clean energy is an important aspect of our innovation, research and development initiatives. >> in the meantime, it is very expensive for the consumers in europe, in the uk, and elsewhere
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to have this subsidies involved in the industry. do you think there is a consumer appetite when wind generation costs three times the market rate? >> this is still something we are support of government is important, but at the end of the day, the industry must move to the center, and it will and the center means it has to be operating in market environments. >> do you have concerns as do some of your peers about the inconsistency of regulation, the inconsistency of political policy throughout europe to create that long-term investment agenda? >> it is a great symbol of the uk. but it is also a symbol for europe. it is a symbol where transition -- where transmission lines can be connected to other parts of europe. so where is the best location for solar? it is in the south of europe? whe let's harness the best and capture the best sites and make them therefore the most cost effective sites of energy
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delivery and this is an important aspect also of the energy transition in europe. >> on a broader front, the trading situation that you see for semens, how difficult is it at the moment? there was a little disappointment in the most trading update about paring down of expectations going forward. what are the main drivers of that? the ongoing eurozone crisis? >> we have nothing now say in this regard. what we try to highlight is that we have very limited tailwind in the world. so the macro economic environment continues to be slower than many anticipated 12 months ago. it is -- of course it is europe. but i'm also optimistic. when you talk about in terms of, yes, we have slower growth environment, yes, it is more volatile, but big industrial companies who are operating globally who are operating in innovative markets and who are innovation leaders will always be there. for this reason, we are
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focusing, we are -- with our program, and we are making everything possible to leverage ourself in this environment, at the same time drive our innovation agendas in growth markets. london is a great example of it. >> german exporters have been great examples of self-help, waiting for the solving of the eurozone crisis. how long can corporate germany continue to export the same king of length it is and the extent it is with the crisis continuing and sistzero growth in europe? >> very simple. everything about the hidden champions, so you have to produce products, services and solutions which customers in the world wants. and if you have great products, and you create demand, you will always lead. and therefore i continue to be optimistic about germany industry and the iconic companies which will continue to be important in the world. >> finally, i got to ask you, it is a long way to go, but how
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much is corporate germany waiting on the election? >> we have a great chancellor and i'm very proud of her. >> peter losha talking to steve. still to come, ten of the last 13 june payroll numbers in the u.s. failed to meet estimates. can this year's figure buck the trend? in boston to talk u.s. employment. ahead of that, u.s. futures, well, they're indicating a pretty good start. maybe play a little bit of catch-up with european trade yesterday. last half hour coming up right after this.
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this is "worldwide exchange." a recap of the headlines. another month of steady job gains are expected in the u.s. some traders worry a stronger number might spark more fed tapering talk again. investors in europe cautiously optimistic for now. shareholders hang up on samsung electronics after record property forecasts fails to measure up to expectations. and portugal central bank chief warns its country needs political consensus after the president voices fears about his country's ability to return to markets. plus, they're calling it the friday of rejection.
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supporters of ousted president morsi holds protests in egypt as reports also suggest the army's arrested more leaders of the muslim brotherhood. all right. if you're just joining us this morning, state side, hope you had a great july fourth independence holiday. i know how it feels. right now, futures are indicating up on this day back ahead of the employment report. all could change because we're going to get that report. but the dow is over 140 points above fair value. the nasdaq is nearly 30 points above fair value. the s&p 500 is 14 points above fair value. ftse and global 300 pretty flat at the moment. just up 3 points. caution here in european markets, indicative of kick from the ecb and bank of england
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issuing forward guidance. right now, fairly flat. ftse up a third. dax down nearly half a percent. ibex, down .2%. bond yields around the 1% mark. about the june u.s. jobs report out at 8:30. economists expecting another month of moderate growth, but not enough to make a major dent in unemployment. the dow jones forecast increase of 160,000 in nonpafarm payroll. numbers could beat expectations. we saw what happened with the adp on wednesday. both of those showing hiring picking up in the private sectors and service sectors. the unemployment rate, that's forecast to tick down to 7.5%. 2 so, what are you supposed to do ahead of this report? here is some thoughts already
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today on cnbc and some of our guests. 155 run rate, you're going to take all the way through late 2015 before we get close to get reaching the 6.5% for the unemployment rate. 2015, still a very, very long way to go. >> employment data at the end of this week comes at a 150. to my mind, it is not the kind of numbers you need to see to drive down the unemployment numbers, the kind of number the fed is supposedly targeting. >> headline number comes down to about 7.5, the numbers 160, 180, market will maintain view that tapering is about a year away. if this month, the next couple of months we see surprise numbers to the upside, 180, 190, 200 number, the market will start thinking, if we're getting faster than the momentum is building, tapering could come quicker. that's the only real focus we have for the numbers today.
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>> right. joining us for more about what happens with the jobs report is john kanelly in boston, investment strategist at lpl financial. also in london, patrick spencer still with us from bear. thank you very much for joining us. we have been between this 150 and 200,000 pace of job creation. if you expect that to remain the same, how does that then play into our fears or not about the fed? >> well, i think a month ago or even six weeks ago before we heard from bernanke about what the fed's number was, i think there was some debate. was it 200,000 a month, 150,000 a month? i think over the last six weeks we heard from bernanke the number was around 175,000 jobs a month. that's about what we're expecting this month. so i think if this number is a great deal above that, markets will, again, start to do this
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panic sell-off of papering. if below that, maybe those ease up a little bit. it is important to remember the fed never just looks at one month's data and says this is it, so if we get a stronger than expected number, 200,000, the market will overreact, the fed probably will not. so it is going to have to be a number of months where it is above 200 or even below. so i think we're, you know, this number is important, but probably not the end all and be all for the fed. >> is it the unemployment rate more important? they upped the target around 7%. how soon is that going to get down there? >> you know, i think they're looking at a number of factors, looking at the number of jobs created, the unemployment rate, they're looking at the jolt data, the quit rate, how many people feel strong enough about their own situation that they can quit their job and go out and look for different job. they're looking at the hiring rate, looking at a number of different indicators and they want to see sustained and real improvement over a number of
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months. i think all these things are important. i think a debate now within the fed and outside the fed is, you know, is the unemployment rate falling for the right reasons? how many jobs a month do you have to get to push unemployment rate lower. that number used to be 150 to 200,000. i've seen certain studies out there that say that number is now only 125 or 130,000 jobs. so the fed is weighing in all the different factors. the market kind of got i think a little ahead of itself in the last six weeks, especially the treasury market. i think this report this morning will either, you know, spark those fears again, or will stay calm as we have for last couple of days here. >> john, traditionally the employment numbers have been much higher in previous cycles. and one could argue this time around these growth in the employment rate is fairly muted relative to those prior cycles. and therefore the emphasis on
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what the fed is doing and continuing to bring qe is more important given how muted it is. do you think that's a fair comment? >> no, i do. i think it is a lot of internal struggle at the fed about that very fact. you have the doves on the fed saying, you know what, we need to do more because we're not creating the jobs that we used to back in, let's say the '80s and 1990s but certain factions at the fed are saying we need to stop now and start tapering. i think that's an ongoing debate. i'm not sure what the right answer is. but i think bernanke now thinks that the current pace of job creation about 175,000 might be the best that we can hope for, and i think in that situation the fed thinks that there is, you know, there is more risk than reward by continuing quantitative easing. i think they're in a position to begin tapering some time in the fall here. >> and just come back to you a second, patrick.
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you think we have -- we're getting it wrong here about the fears about tapering and -- >> i think there is two parts to the argument. first, i think a lot of bernanke's comments have been miss interpreted. if you listen to bill gross and a lot of the fed presidents, they basically said if you look at the economic data, and bernanke's comments have been misinterpreted, and certainly they have got stronger economic growth, but you got fairly weak economic growth out of housing and auto, so he's going to continue with -- he's going to continue with qe. but my point is the second part of that is that qe has provided a self-sustaining legacy, if you like, it is the gift that keeps on giving. because the banks' balance sheets have been expanded by $2 trillion. and even when qe disappears, you got this self-sustaining lending
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that from the banks is on their balance sheets now. as long as you get housing, autos, the engine of growth, continuing, you're going to see -- >> you agree with that, john? >> i do. i think the market has totally overreacted to what bernanke said and, you know, over the last week to ten days you've seen many, many top fed officials out there saying no, guys, wait a minute here, we're not in any hurry to raise rates certainly and tapering might be, you know, it is still -- i agree that markets definitely overreacted there. in terms of why the fed may want to slow down here, i think maybe they're at the point where the risk/reward is no longer in their favor. they probably want to do more, but they're uncertain if they do more, if it is actually going to help. i think -- i still think they're going to continue to do quantitative easing. they need to do a better job of making point that even though they're tapering, they're still adding to their balance sheet.
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when they're adding to the balance sheet, they're still easing rates. that's important. i think the market has not yet picked up on that. and there is still a long, long way away from raising rates. the market now says, you know, early 2015, my guess is that's not going to be until late 2015. >> john, thanks for that. thanks for getting up early after your day off yesterday. hope you had a good day. you didn't try your hot dog challenge or anything, did you? >> i didn't enter this year, no. >> no, okay. very wise. thanks for that, john. good to see you. have a good weekend when you get there. some of the other stories we're following today on the tech sector, samsung on track to report record profits for the second quarter, but the company's estimate has left the market cold. it came in just below forecasts. samsung's competitor htc underwhelming analysts. down 3% year on year, but up from a record low the previous quarter. the smartphone maker still struggling to restore reputation with consumers and suppliers
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after long product delays for the htc one. and competition with samsung is only expected to get tougher in the coming months. right. peter, your thoughts. what do you think of the tech sector? >> we like the tech sector. it is a very cyclical area and funny enough we have analysts that travel to the far east a lot and they're talking about shortages in semiconductor smartphones. and if you look at the minutes last night from samsung, i think they were look iing -- they misd by 2 million or something on the number. so it was insignificant really. we see shortages, especially in the semiconductor area. so we have done a lot of work, the best areas to be in with interest rates rise, and not only is that financials, but the second best group in the rising interest rate environment in the semiconductors. and in that group, we like intel
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because of those shortages that i just alluded to. >> we'll take a short break. still to come, a major figure at the center of the u.s. government's probe of the hedge fund industry may escape criminal charges of insider trading. details when we come back. ♪ ♪ [ male announcer ] some things are designed to draw crowds. ♪ ♪ others are designed to leave them behind. ♪ the all-new 2014 lexus is. it's your move.
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the s.e.c. plans to vote next week on whether to remove a decades old ban and allow hedge funds and small businesses to publicly advertise when raising funds. lifting of the rule is mandated by the jobs act, which was approved by congress last year to ease access to capital by small and mid-sized companies. critics are concerned that lifting the ban will result in more fraud against ill informed investors. u.s. prosecutors reportedly don't have enough evidence to file criminal charges against hedge fund manager steven cohen head of a deadline this month. let's get more on this. sima is at cnbc hq in the states. happy july fourth, sima, belatedly, but hope you had a good day. >> thank you. i did. barbecue, fireworks, the whole nine yards. this is a very interesting story, ross. steven cohen and his firm have been the focus of the u.s. government's long running insider trading probe of the hedge fund industry. the wall street journal reports
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a five-year statute of limitations on filing criminal charges is expected to pass this month without any action. reports say authorities are also electing to charge s.e.c. if they can charge cohen himself. both cohen and s.e.c. have said they have done nothing wrong and in may the firm said it would no longer cooperate unconditionally with the investigation. the deadline to file charges against cohen is tied to trading activity with former sac fund manager matthew martoma. prosecutors hoped to use information to implicate his boss, but he hasn't cooperated. he was charged last year with helping sac profit from well timed trades on elan and wyeth allegedly linked to insider information on the results of drug trials. he has pleaded not guilty and is set to go to trial in november. since the government launched its probe of sac capital, six current or former employees have pleaded not guilty -- pleaded guilty to or been convicted of federal insider trading charges.
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the journal says sac could still pursue several charges against cohen. in march, sac capital agreed to pay nearly $602 million fine to settle allegations related to the trades. ross, that's the latest. back to you. >> thanks for that. only one day to get through before we have to -- a weird -- next year, it will be a friday, july fourth, right? >> i know. i'm so looking forward to that, four-day weekend. >> good. sima, thanks. have a good day. the president will study proposals to shut down the u.s. embassy amidst protest his plane was diverted to europe on suspicions he was snuggling edward snowden out of russia. the leaders of venezuela, ecuador and argentina joined with morales on thursday. the venezuelan president told a crowd of reporters whoever messes with bolivia messes with venezuela. he also says morales' plane had been flying on emergency fuel
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and the diversion put his life at risk. recap of the headlines. junes u.s. jobs report out today. more steady growth expected. samsung forecasts a record quarterly profit, but the market isn't that impressed. egyptians express anger at the toppling of mohamed morsi, expressing a day of rejection. fourth of july also marked by a few tried, trusted and true traditions. fireworks, family picnics and seeing just how much food you can stuff down your face in a fairly short amount of time. this is the annual nathan's famous hot dog eating contest, held at coney island. for the seventh year in a row, this man, joey chestnut took home the crown, downing a world record 69 hot dogs, buns and he did it all in ten minutes. what an athlete. open the other side, tonya
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thomas who has the nickname the black widow, i'm not sure what that alludes to, won for the third straight time with 336 3/4 hot dogs. i'm not taking her out for a date. couldn't afford it. what food do you think you could overeat? tony e-mails, he would gorge on beer. keep your responses coming. get in touch with us, e-mail, worldwide@cnbc.com, tweet @cnbcwex or direct to me, @rosswestgate. a short break. something for you to chew over in this break, this is the welcome sight on the july fourth holiday. the statue of liberty reopened to crowds of visitors, months after being closed because of hurricane sandy. the 126-year-old statue was spared, liberty island was damaged by the storm. worker spent weeks cleaning away mud and debris. some parts of the island are still blocked off, but she's looking good. we'll be back in a few moments' time.
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could save you fifteen percent or more on car insurance. yep, everybody knows that. well, did you know some owls aren't that wise? don't forget i'm having brunch with meghan tomorrow. who? meghan, my coworker. who? seriously? you've met her like three times.
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who? (sighs) geico. fifteen minutes could save you...well, you know. portuguese prime minister coelho says he has reached an agreement with a coalition partner that will provide stability for the government after a series of meetings with the party, the prime minister said a final agreement would be reached over the next few days. mr. costa says it might need to rethink the adjustment program if they don't get both the politicians and the population in agreement on it as well. so clearly people worried about what has been going on in portugal as the bond yield stays around the elevated 7% mark.
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we're fairly flat. the ibex is a little weaker. generally caution ahead of the employment report. u.s. futures, a little catch-up, indicated pretty good at the start. much more depend on the june jobs report. the dow at the moment is over 140 points above fair value. nasdaq, 40 points. 30 points for the s&p 500. as i say that jobs report is the focus out at 8:30 eastern. economists expect another month of moderate growth. dow jones calling for forecast for an increase of 160,000 in nonfarm payrolls. 175,000 in may. there is a chance the numbers could be better. we have fairly good adp and ism reports on wednesday which showed hiring picking up. unemployment is forecasted to tick down to 7.5%. joining us with his views, from the cme, todd horvitz of
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averagejoeoptions.com. hope you had a good day yesterday. you feeling good about today? >> good morning, ross. you know, i think the numbers, they're pricing in certainly a beat. it is a sad day when we have to hope the worst numbers so the fed will keep the supply in the punch bowl. i think the numbers will probably beat, but i think any miss here i think will create some selling. draghi's comments yesterday, forcing the futures a lot higher yesterday, they have been able to maintain their gains, but they built in an awfully big expectation here. and if we don't meet these expectations or beat them pretty soundly, i think we could see a little selling pressure here this morning. >> yeah, well, at the moment, the futures are looking pretty strong. is that just because we had a reaction here to the ecb and the bank of england saying -- getting on the fed bandwagon and talking about forward guidance? >> yeah, these futures have been up since yesterday morning. the u.s. futures are open on the holiday and they spiked up.
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as soon as draghi came out with the announcement, they spiked up right away. it is a sad state of affairs we're hoping for bad numbers to get them to continue to supply the free money because really only helping the wealthy and not the average joe. true unemployment no matter the number today, true unemployment is well over 16% and we're not really creating any new jobs. we're barely maintaining the situation where we are. >> that takes a little bit of -- that takes a little confidence switch for ceos to take some of the cash they're holding and say, i'll invest it in uncle sam. >> i think as long as they keep the rates down here, they'll continue to hoard the money and continue to try to give it back. they already taught they're not interested in hiring. there hasn't been a big increase in hiring anywhere and the number is coming down because of the lack of interest and the people that are leaving the workforce. >> all right. we'll see what happens.
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have a good day. thanks for that. final thought from patrick. just explain, you like the banks, you like jpmorgan and wells fargo. very briefly explain that. >> the banks continue to do well. wells fargo and jpmorgan up 20%. the banks met their interest margins as interest rates rise, get a higher return as well. the banks basically as i say, the gift that keeps on giving, given 2 trillion in excess of reserves by the fed. so as admittedly housing and autos is really the engine of growth in the u.s. at the moment. that's creating obviously waves in fact for a lot of growth within the u.s. mortgage lending, basically car lending, just as the economy -- as the economy picks up. so we like them both very much. >> patrick, good to see you. thank you for that joining us from bear. that's just about it for today's
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edition of "worldwide exchange." coming up, "squawk box" and the countdown to the employment report. [ male announcer ] it's time. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse... and share... faster than ever. ♪ it's time to do everything better than before. the new blackberry q10. itime.
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good morning, the countdown is on. the june jobs report. what will the numbers mean for ben bernanke and company? the european central bank president mario draghi sparked a fourth of july rally across europe. they are petrified and they'll stay easy and maybe so will we. and hedge fund manager, andrew, another one getting away. steven cohen about to avoid the long arm of the law. he's too rich to fail. it is friday, july 5th, 2013. "squawk box" begins right now.
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>> good morning. welcome to "squawk box" on cnbc. e i'm michelle caruso-cabrera. becky quick is out today. the squawk agenda. the june jobs report, here are the expectations. economists expect the economy to add 160,000 nonfarm pay rolls versus june's 175,000. the unemployment rate expected to dip slightly to 7.5% from 7.6% a month ago. average hourly wages likely to rise by 2%, .2%. and the data will be released at 8:30 a.m. eastern time. full coverage and instant market reaction. as for the futures now, joe was telling you, the futures are soaring this morning. they indicate the dow would open higher by 144 points. and the markets in europe, holding steady after a huge surge yesterday. big, big climbs across the board there. even though you see some

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