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tv   Worldwide Exchange  CNBC  July 16, 2013 4:00am-6:01am EDT

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you're watching "worldwide exchange." the headlines today from around the globe. stocks in europe on the back foot head out of key confidence out of germany. u.s. bellwethers reporting today. investors started buying goldman for signs of signs of investment trading. mining companies are liking new government plans to scrap australia's carbon tax. plus, another gauge of
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industrial sentiment, the world's biggest maker skf says the outlook is uncertain, but better than expected figures. we'll hear from the ceo in 30 minutes. warm welcome to you. plenty to look at. we'll dig into the resource sector fairly shortly. before that, goldman sachs reports before the u.s. bell this morning with analysts expecting another stellar set of figures. the investment banks beat expectations for the last four quarters. analysts are estimating a 20% increase in revenue this quarter. we also expect coca-cola to postearnings of around 63 cents a share, down from $1.21 per share for the same period last year. the company's expected to remain pretty focused on emerging markets for growth. as far as johnson & johnson is concerned, performance has been
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solid across all business segments with strength in pharmaceuticals, and health care. shares up over 30% in the last 12 months. and then after the bell today, we'll hear from yahoo!. not expected to dazzle. the stock has. up over 70% since marissa mayer took over. she's marking one year at the helm of the online search engine. so we'll talk about those companies. also on today's show, india's central bank unveiled new measures to prop up the rupee. we'll have the latest reaction from mumbai. greek labor unions are protesting plans for civil sector job cuts. we'll have analysis from a former imf board member from greece at 10:20. and cracks in peripheral are appearing in spain. prime minister rajoy trying to stave off a political crisis. we'll have the latest from madrid. bull markets and global investors await ben bernanke's day in congress tomorrow, we'll
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find out why one strategist is refusing to get caught up in the qe frenzy. he says tapering does not mean tightening. dan greenhouse will be with us in the next hour. and i mentioned yahoo! we'll be asking what's in store for the ambitious tech giant as marissa mayer is one year into her turn around plan, that's 11:30 cet. any thoughts, comments, suggestions, anything you like, e-mail us, worldwide@cnbc.com. concerns over chinese demand and wet weather in australia couldn't stop rio tinto from churning out a record number of iron orr in the second quarter. they posted a 7% rise in iron ore output and more capacity is due to come online in the third quarter. copper production was also up 10% on the year despite setbacks from landslides at a key u.s. mine. rio tinto stock, this morning,
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is bucking the trend up 1.4%. we're waiting for the downside in europe. danny morgan is global commodities analyst at ubs. thank you for joining us. it is always a difficult period we're going into for miners. how surprised you were by what rio had to say? >> rio's results were out late afternoon here in australia. and the market took it pretty positively. the stock was up a tad afterwards. you know, everything looked reasonably solid, just the one impact from -- in iron ore from, you know, a conveyor that was out. but rio is guiding the market to making that up later in the market schedule to be changed
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over anywhere. overall there wasn't a lot in the result that surprised many people, but it was just a tad better than people had expected or feared. >> yeah. people obviously feared chinese slowdown would impact. doesn't seem to be -- iron ore plans are on track despite that. >> yes, very much so. i mean, rio is full steam ahead with the expansion, which, again, guiding the market to be delivered in the late in the third quarter. and that is, you know, an extra 15 million tons of iron ore into the sector. that as well as delivering new tons later this year has made the market a little cautious about iron ore process heading into the back half of the year and, you know, china seasonally slows in the third quarter. people are a little worried about iron ore processes in next few months and we expect weakness and a correction. >> okay. stay there, daniel. we'll come back to you in a second. in a move to welcome australia's
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big mining companies, the company's prime minister will scrap the unpopular carbon tax. set to abandon the scheme in 2014, a year ahead of schedule. he's got to get through an election of course. matt taylor filed this report in sydney. >> reporter: it was one of the most divisive issues facing australian politics, particularly dogging julia gill lard's prime ministership. today, the new prime minister announcing the carbon tax essentially will be scrapped and australia will be moving to an admissions trading scheme, one year earlier than expected. the ats will come into play on the first of july, 2014. it was expected to move to that floating price on the first of july, 2015. and this will say that fixed price currently around about $24 a ton significantly reduced the current floating price somewhere between 6 to 10 u.s. dollars a ton. comes at a cost, though, the government saying that there
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will be about a full billion dollar short fall when it comes to government revenue as a result of this change. but take a listen to what the prime minister kevin rud hd hado say about that earlier today. >> this change will cost $3.8 billion over the four distance period for the budget. we'll make up for the lost revenue with savings in other government programs. this is the fiscally responsible thing to do. >> in terms of plugging that short fall, the government announcing a range of measures that will ensure that the budget can be returned to balance in the next few years. these include cuts to public service jobs, about 800 of those will be going in the nation's capital in cambria, saving $248 million over the forward estimates. also changes to fringe benefits, tax and that particularly relates to fringe benefit taxation, with respect to cars. that is saving $1.8 billion. also the government announcing
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that it will be trimming some assistance to the call sector, which was one of the compensation measures as part of the original carbon tax. that's the latest from sydney. back to you. >> that was matt taylor. and also top u.s. oil companies here plan to tell congress today easing rules on using bond yields could help stabilize prices. a senate hearing at 10:00 a.m. eastern, it is prepared remarks, saying the governments feel the prices are affecting products. the renewable fuel standard calls for increasing amounts of fuel like ethanol to be blended into u.s. gas and diesel supplies. right. let's get back out to daniel. global commodities analyst at ubs. back to this carbon tax, if they lift that, how much of a boon is that? >> look, the carbon tax has been part of a number of initiatives that the government has put in
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place, that has put, you know, added cost pressure on the resources industry. there is the carbon tax, more lengthy environmental approvals. there is the mining tax as well. so, you know, there is a part of a fabric of issues the government has -- how miners do their business on. today's news, it changes or brings forward the emissions trading scheme of the proposal, so, you know what we would have had a couple of years time, that just comes forward a little bit. not a huge change and the market should reasonably take it in stride. these are factored into forward estimates of company earnings. i guess it does add to uncertainty about government policy. you know that is an issue for the sector. but governments haven't made it easy for the mining industry for the last few years and people looking to an election to see, you know, a bit more certainty later this year. >> yeah, we already talked about rio. and you like that.
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glencore said they're abandoning their iron ore. but you still like the stock. why? >> the news today on iron ore, it is not a huge driver of the glencore story. the iron ore news today is more about byproducts in one of their mines in australia. it doesn't fundamentally alter the story to us. what we do like about glencore is, you know, you've got a big cost out story, merged two businesses together, you know, yet to see all the benefits of that realized, so we're looking for that to help the stock, and, you know, more generally strategically in this time we're looking to be in, you know, the more diversified companies, which have, you know, more stable cash flow. so, you know, for these reasons we prefer glencore, but we actually prefer rio and bhp a little bit more. for the margin of safety. >> okay. daniel, thanks for that. good to see you today. thank you for joining us.
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>> thank you very much. >> as governments face pressure to tap the growth of climate change, is this a sign that green energy push is losing momentum or simply put green energy going out of fashion. join the conversation at "worldwide exchange." e-mail us, worldwide@cnbc.com, tweet @cnbcwex or direct to me @rosswestgate. you'll see we're waiting for the downside today. advancers outpacing by decliners here by about 7 to 2 on the dow jones and ftse 100 up some 41 points. right now down 9 points. the focus is very much on earnings as normal. we'll come to that in a second. xetra dax down half a point. ibex down .9%. you look at the fallout from the scandal with mariano rajoy. number of individual stocks in
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focus today. telecom italia is down 3.5%. said it wants better regulatory conditions before moving ahead with a spin-off of the fixed line network after the local regulator cut the fee its rivals pay to access the grid following a board meeting. telesaid the move had created uncertainties and could affect the feasibility of the spin-off. commerce bank off 1.2%. the paper which cites financial sources says the retail banking business is its main focus. what is going on with commerce bank? annette is with us from frankfurt. >> there is a firework of speculation surrounding commerce bank. there was this news that wolfgang has been in talks with ubs and now santander looks like the more interesting party or
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the bank who could really be interested in commerzbank's retail customers because santander is a retail bank. in germany, they're owning already scb and ge money bank they acquired recently and they're both successful in that business as well. one has to say the retail business is really its problem child as well, next to, of course, all the bad assets which they have to write down, but the retail business as such is oversized in terms of people and has too high costs and now they need to cut a lot of people -- the bulk of the job cuts will be in its retail business of commerzbank, so it is a turn around story. and if there is any truth in that report, it probably might be sold to a discount. the other big thing is it might not be in the interest of the german regulators because 11
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million retail clients based here in germany are quite huge and there might be some protection from that side. so it will be interesting what is going to happen, but, of course, it really looks like wolfgang, our german finance minister, was -- for the 17% stake, ross. with that, back to you. >> annette, thanks for that. we also focused on changes in ownership rules has given the bank a lift. the foundation it krolz it wants to scrap bylaws preventing investors from owning more than 4%. skf also up 2.82%. reported better than expected numbers this morning for the second quarter, helped by cost cuts. we'll speak to the ceo later. earnings to bond markets. really a case of waiting for mr. bernanke. treasury yields, 2.54%, away from 2.75% we hit last week.
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inflation data in 15 minutes from the uk. gilt-year-olds 2.33%. spanish yields still elevated 4.75. currency market, cautious ahead of mr. bernanke's testimony tomorrow. aussie/dollar, 89 handle, just above that at the moment. sterling above 150. euro/dollar, 130.68. we traded in a 120/137 range for the euro/dollar over the last month. that's where we stand right now here in europe. let's check in on the markets in asia. we'll focus on india where the central bank is set to tighten liquidity. >> it was an unprecedented switch the rbi took last evening
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but it is pretty much in line with what a lot of emerging markets had been doing in terms of curbing the volatility they have seen in the currency. we have seen it with indonesia and brazil, so now the rupee has preceded over 10% or nearly 10% from may 2013. in terms of a couple of -- initiated last evening, the amount which the bank can borrow from the liquidity adjustment facility will be around 75,000, so the cap of the ceiling has been around 75,000. that's one of the steps which has been undertaken in order to suck up the liquidity from the system to provide lack of volatility within the inr. now if the banks cannot sort of borrow from the liquidity adjustment facility or the organized facility, then they have to move to the marginal standing facility which is basically the rate which they can borrow from the rbi at which
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is now hiked to 10% and that is above 200 basis points. they want to make it more difficult for banks to access liquidity. what does this mean? it means cost of borrowing will go up, wholesale funding will become much, much tighter. a lot of banks within the indian space are down on the back of this news. with that, back to you. >> thank you for the update about the india market. we can see sensex is underperforming the rest of asia. all these major asian indices ending on a red note. the nikkei 225 played catch up to the rally after a long weekend ending higher by .6%. weaker yen helped exporter stocks. south korea, india and some southeast asian markets saw profit taking after their recent
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value. the pboc once again held off from any open market operations, a few midsized lenders came under pressure today after recent gains. ping an bank lost over 1%. technology shares in both the mainland and hong kong markets rallied on the hope of supportive policies. tencent jumped 2.6% to close at a new record high. in australia, the rba minutes remained dovish as the rates will be kept at record low in july, while there is room for further cuts. banking shares were broadly higher. westpac gained over 1%. in the mining space, we talked about rio already. paladin energy surged over 7% thanks to record production and strong sales numbers. and now let's get back to -- now back over to ross in london. >> all right, sixuan, catch you later. on cnbc.com, the question
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everyone on wall street is asking, wilbl bernanke surprise us again? why some experts say we should never say never when it come to the fed chairman and monetary stimulus. the aussie/dollar surged. some think it is a temporary move and downtrend is still firmly in place. catch the investment call as well, all on cnbc.com. and the pain at the pump continues with global economy feeling the pinch from rising oil prices. how high can they go? is it a threat for recovery? you can also follow us on twitter @cnbcworld. a fresh austerity bill with thousands of public sector jobs on the line. we'll talk about the implications for the administration with former imf board member eamanda zaphr. that's coming up. i want to make things more secure.
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greek lawmakers begin voting today on whether to press criminal charges against a former finance minister for his handling of the so-called lagarde list.
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if convicted on charges of tampering with evidence, he could face time in jail. he denies the allegations. also today, the two main labor unions in the country will hold a 24 hour strike protesting against the government's latest plan to cut thousands of civil service jobs. it is part of the country's reform program which needs to stay on track to ensure the next dispersement of aid from international lenders. amanda zaphr is a former board member for greece at the imf. this is the omnibus bill voting in on wednesday. presumably because they want to tackle reducing jobs in the public sector, something which i understand they haven't had much success with. >> actually that is the most contentious part of the omnibus bill. it's part of a long delayed plan to reduce the size of the
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bloated greek public sector to target redundancies. so after three years of austerity, which saw the unemployment rate shoot up to 27%, no civil servant had been fired until the closure of the public broadcaster last month. so now as part of the agreement with the troika of creditors, greece has to place more than 4,000 civil servants on a mobility scheme, which means that if they cannot find a job elsewhere in the public sector within eight months, they will be fired. >> yeah. it's only really the start of a program. public -- we got one thing we need to slim down clearly the civil service and get a privatization program going as well. so where does this sit within the broader scheme of doing the right things for the next tranche of aid?
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>> for privatization, there has been an agreement with the troika that the targeted 2.6 billion in revenues this year have been scaled back to 1.6 billion because of the failure to private iize debt. that is now placed on the back burner, but the whole issue is really the downsizing of the public sector now. the governing coalition has a conflict of majority in parliament, they control 155 seats, so probably the omnibus bill will pass on wednesday. it has already been approved by the economic affairs committee of parliament. but the government has already withdrawn a couple of controversial provisions, including the provision that would have given the management and staff of the hellenic financial stability fund which
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oversees bank recapitalization immunity from prosecution. >> yeah. okay. so it is all part -- as you say, you think this law will pass and it is part of the progress. what progress generally do you think we are going to get with greece restructuring? and actually do you think we'll have to have another bounce of debt forgiveness? >> the debt forgiveness discussion will only be on the table in early 2014, after the german elections and after the final data are out for greece assistant performance this year. any further debt relief is contingent on greece achieving a primary surplus, meaning a surplus capable of covering the interest payments on the public debt, without resulting to further borrowing. >> which might be a tough call. miranda, thank you for joining
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us. miranda xafa, former board member for greece at the imf. we'll focus in on the uk and inflation. will the new governor be forced to write a letter explaining why he missed his target?
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headlines from around the globe. stocks in europe on the back of key confidence data in germany. the real driver is earnings. four u.s. bellwethers reporting today.sachs, looking at signs of strength and investment banking to off set weakness in trading revenue. and rio tinto digz up a record amount of iron ore in the second quarter. also likie ining government pla scrap australia's carbon tax. the world's biggest banks says the outlook remains uncertain, but investors have cheered the better numbers. we'll hear from the ceo of skf shortly. right. let's just bring you up to speed with the latest cpi figures. looked a little better than expected. just as i wanted to bring that to you, it appears my machine
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has crashed. my apologies for that. the annual rate 2.9% year on -- the timing couldn't have been worse. 2.9% annual rate of inflation. all right for mr. carney. also looking at producer prices subdued. we know on the cpi probably coming from petrol prices which rose 1% last month, fell 3% in june in 2012. and we're also looking for producer prices as well. i don't know whether we have those. we'll come back to that in a second with the producer prices as well. there we go. the annual rate is what is important. 2.9%. michael gallagher, director of research at ieda global. is this the peak in inflation? >> i think it is in the
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short-term. i think if you look at the message that we saw after the last mpc meeting, it was quite dovish. they're sort of very much of the view that inflationary trends should be under control and we should sort of see a gradual sort of downward trend. i think for us this reinforces, you know, the message that we're getting inflation, short-term inflation is peaking and that two years forward we should be down at 2%. so that leaves the door open for more dovishness from the bank of england. >> how do you expect that dovishness to be translated into policy? is this more funding for lending world and more qe? what is -- and instead of trying to talk things better? >> the key watch word is forward guidance. sort of -- >> what they said is that they're concerned about the rise in global yields and the rise in uk yields and that in august
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they look at forward guidance. the way that forward guidance comes out could well be that they promise to keep and trade to current levels for two years or contingent on hitting a certain unemployment or gdp level. i think we're likely to see something along those lines in the august statement. this will be stronger forward guidance than they have done in july. the critical question is whether they'll reinforce the words with actions. >> they can't -- they don't control -- do they -- i know they keep buying a lot of -- they bought a lot of the gilt market. this particular moment when they're not buying anything, yields will influence by the fed, are they not, by what the bank of england does, to a greater degree? >> to the primary degree, yes. the key driving force this year has been the direction of u.s. treasury yields. but notwithstanding that, the bank can actually sort of still promise that they could revisit qe in the future. i don't think the macro picture really requires them to do anything in august.
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and they could -- will be a debate about interest rate cuts because the central bank thinking is that generally around the world that forward guidance works best when you actually cut interest rates as well down to the very lowest levels. >> we are, aren't we? what difference does half a quarter of a percent make? >> in the bigger picture it doesn't produce the macro recovery. in the short-term, it is important. so i think tomorrow's minutes we can actually see the bank of england debating the idea in the option of rate cut again. >> okay. all right. thanks for that. michael, stick around. now, 100,000 euros is being offered to anyone who can pen the most workable plan along the uk to exit the eu. it will award its price to the best blueprint covering britain's withdraw. entrants have to submit a 2,000 word treatment by mid-september. the uk set to hold a referendum on eu membership in 2017.
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are you -- it is a breeze for a man of your capabilities. >> well, i mean, it is an interesting sort of prize, i think, really. so, you know, i might -- i might be trying something one weekend to craft something. >> long summer coming up. what better can one do to think about how we should exit the eu, right? >> absolutely. >> yeah. okay. good. i look forward to hearing that. you got until september. it is perfect. european equities are weaker today. we're flat on the ftse 100, off the third for the xetra dax, ftse down a third. bond markets, yields fairly steady. gilt yields, down to 2.33%, helped more by that inflation number. and treasuries 2.5% ahead of mr. bernanke. currency markets, dollar steady compared to where we were this time yesterday, really, across the board. financials very much in focus again today. goldman sachs reports its second quarter figures at 7:30 eastern. the company's forecast earned
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$2.86 a share, revenue of under 8 billion. analysts say goldman will benefit k benefit despite weakness in the trading business. goldman stock is up more than 25% this year. the banks won't have the spot lite all to themselves. several tech companies are also reporting. jon fortt sent us this preview. >> a big week for tech earnings. yahoo! today, ebay, ibm and intel on wednesday and nokia, google and microsoft on thursday. let's start with yahoo!. analysts aren't expecting much from the quarter, which coincidentally marks ceo marissa mayer's first an verniversary ae helm. mayer will probably have to produce growth in yahoo!'s core display ad business. on wednesday, we'll have intel's
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ceo giving his first earnings call, giving 11% drop in pc sales we saw in q-2, it will be another quarter where intel has to rely on enterprise and data center sales to pick up the slack. ebay has a challenging quarter to report. thanks to pay pal, its stock is near all time highs, revenues have to come in around $3.9 billion, 64 cents in eps, the very high end of guidance range in order to meet analyst expectations. and then ibm, big blue was a machine when it comes to eps growth, managing to keep its results deliciously predictable until last quarter, anyway. the ceo has been working to reign in expenses. we'll see if that was enough. on thursday, nokia reports before the bell. all eyes will be on smartphone sales. we'll see if last quarter's numbers add credibility to the survival story, if nokia is experiencing the turn around that is evading blackberry. google and microsoft, both companies trading at or near their highest levels in recent
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memory. for drastically different reasons. google's core business is strong, but taking risks in mobile that might hurt the bottom line, microsoft is eroding pc business and prompted a rework last week. arguably more important than this week's results, what these companies say about the outlook for the second half. between ebay, ibm, intel and more, investors looking to consumer and enterprise should get a broad look. for cnbc, i'm jon fortt. back to you. >> that's a look ahead to the big tech names. another big shareholder voiced opposition to michael dell's proposed buyout offer. the asset manager owns a decent 4.4% stake in dell. the company first came out against the buyout in february. shareholders vote again on -- they don't vote again, they vote on thursday. dell down 1.2% on monday. down a percent today in frankfurt. the world's biggest pc maker is
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trying to calm fears over growth. the main land's low pc penetration rate and beijing's urbanization drive, which they think will fuel demand. 40% of sales come from china. the shares traded modestly higher today in shanghai. glaxo smithkline says it is deeply concerned by corruption allegations in china. they have accused the british drugmaker of being the ring leader in a multimillion dollar bribery scandal saying it used agents to bribe doctors and officials for sales. it is cooperating with authorities and stopped using travel agencies identified in the investigation. glaxo shares today off half a percent in london. in japan, the nikkei ended hi higher. let's get more, joining us from
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tokyo, sushiko. >> fuji heavy industries rose 1.7% today after the nikkei news reported that the firm's expected to report a record quarterly operating profit. it is posted to around $700 million operating profit for the april/june quarter, up 300% on the year. the strong profit is supported by solid sales overseas of new car models. may was a monthly record. as one of the major exporters in japan, the weaker yen lifted the company's privating profit by more than $200 million for the quarter. sales also grew in the domestic market as well. and cost cutting efforts also contributed to the strong earnings. fuji heavy projects 49% jump in operating profit for the full fiscal year ending in march 2014, an all time high.
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the firm is likely to top this forecast as well, since it has already earned 40% of it in the first three months. ross, back to you. >> thank you for that. we just had a t-bill auction in spain. six months, the yield was .958. it has ticked up. the cover ratio, 3.5 versus 3.8 on the 12 month bill. we continue to take a look at what is going on with prime minister rajoy. and the slush fund scandal. still elevated here, 475 spanish ten-year yields. the politics in europe seem to be getting ever more difficult, michael. >> i think it is kind of interesting in terms of the developments that we have seen
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on a number of countries sort of producing concern on the political sort of front, but we haven't seen the market reaction really to any of this adverse news apart from the portuguese crisis. i think all that reflects is that the market feels if it is modestly bad news, it will wash through, it doesn't matter if the personalities change. we still got the broad thrust policy. if there is a more foumtundamenl change in policy, then we really have to react. i think that's going to be the way that we see the summer panning out. i think once we get into the autumn, there is is a real risk of a crisis, there is a head-on collision between germany and greece. >> we keep waiting for the elections to get out of the way. is anything going to change? >> no, i think that's the key point that germany is not going to actually sort of change attitude. i think whether we get grand coalition or we get, you know, cdu dominated government, germany is still going to be sort of cautious in moving
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forward. northern europe generally will not want to put any more money on the table. >> they know eventually they have to put money -- there will be more debt forgiveness, how long can they delay it for and how long do they tell their -- >> not necessarily. >> what is the alternative? >> the alternative is you resize the euro and you actually have smaller number of countries. that threatens potentially greece and -- >> do you think they're prepared to see that? >> i think it will be an open debate after the german election. i think the market s will react to that. >> shares moving higher this morning after reported better than expected earnings. all helped by cost cuts. flat demand for the next core saying it doesn't expect an improvement. tom johnson is ceo at skf and joins us from gothamburg. tom, good morning to you. thank you for joining us. give us your view of the strength of the global economy as you see it at the moment in
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industrial sector. >> from our viewpoint what we see is an improving demand subsequentially in the second quarter, we expect to keep it at that level moving forward. and we see that in most geographies in the world, most of our industries. we do see some improvement in aerospace, we see some improvement in energy. we see some improvement in trucks, for a geographical viewpoint. but elsewhere we see it keeping at the same level just now. >> meanwhile, in the eu, the number of new car registrations continue to fall in june. we know the european oil sector is very weak. how is that feeding through back to you? >> the capital production in the second quarter in europe was relatively unchanged year on year, even with the dropoff in registration. that does impact us as well. but it is not a major part of our business, the european car business. our sales were slightly up in
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the second quarter to the car industry. >> yeah, what is -- what happened to the raw materials on your cost side? >> yeah, we have sanetaken a nu of steps in order to become more competitive in our business. we have seen some benefits from that in the second quarter, we'll see that continuing going forward. that's a major part of the steps we have taken within the group is to reduce our cost structure and we're getting the benefits from that. >> what is your sort of investment plan, tom. i'm just trying to work -- we have a lot of companies that have done a lot on the cost side as you have mentioned. they have been careful about their cash position. what sort of world are you planning for? what sort of investment -- are you thinking now is the time to think there will be a sustainable upturn, so we'll start investing for it, or are you thinking, let's still keep a very tight hold of the purse strings here? >> we're investing with a real business opportunity. at the moment, we are building a new technical center in china.
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we are building a new college and factory in china at the moment. we're building a new factory in india. where there is specific growth going forward we are putting investments in place. of course, also, it is an uncertain business environment. so generally we are being somewhat cautious from what we're doing from an investment viewpoint. where we see growth and opportunities, we are investing, we're stepping up our spending and reception development in order to be able to bring to the market even more new products there. so it is both -- i would say both a break and accelerator we're using in our business, breaking where we need to be more cautious, accelerating where we see business opportunities. >> don't burn the clutch out, tom. >> i try not to. that's why i use the automatic. >> i did that once. much better automatics, particularly in the city. you mention those investments in china. what is your view right now of the economy there in developments. everybody is wondering about whether the government can manage this transition.
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>> it is a very difficult read in china. we see some businesses doing well in china. other businesses not so well. if i look specifically at car business, it is developing well, renewable energy business is developing well. but in other, the general industry, it is still -- we won't see a lot of traction. it is a mixed picture also in china. i think we need to keep a close watch on that going forward. >> and, look, you obviously compete with the like of tim kin, shaffer. in the u.s., manufactures now getting much lower energy costs. shale gas helping them out there. is that a concern for european base manufacturers, you lose competitiveness because of higher energy bills over here? >> i think it is an opportunity for companies like ourselves who are very global and have a strong presence in north america as well. that will enable us to support the development of manufacturing in the u.s.
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i'm actually quite bullish that manufacturing going forward over some time, i think there is some cautiousness there, still, but due to energy costs. i think that's an opportunity for companies like ourselves. >> you're investing more there than you are in europe. >> you invest where the growth is. that's what you got to look at. and that means that will be an area for us looking for development going forward. even in europe, with the right technologies, you can invest as well in the market. i think you've got to use a big accelerator in your business. >> tom, drive easy on the scandinavian roads. thank you very much, tom johnstone, ceo at skf. sales for first half of the year down nearly 7% over the same period in 2012. fit was the worst performer, 13%
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drop. the u.s. carmaker ford bucked the trend reporting an 8% surge. we'll take a short break. seeing the results of the t-bill auction in spain. the prime minister mariano rajoy facing calls to resign over corruption. the reaction and latest from madrid.
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spanish prime minister mariano rajoy is refusing to step down. the leader of the opposition is accused the spanish prime minister of conniving with a criminal after it was revealed the premier sent text messages. mr. rajoy denies the messages show misconduct. >> translator: our institutions will not bow down to blackmail. i refer you to the evidence. i would also like to add that the two most important pillars of spanish politics at this time and place are its program of reforms, key to exit the crisis,
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and the political stability we have. as president of the government, i will not allow for any of these two to be damaged, neither the program of reform, nor the political stability. >> stephane is in madrid. just how toxic a mix is this for the government? >> well, there is no risk of ra r joy stepping down. but some leaders believe the situation is not beyond repair and that the best option for rajoy should be to prepare soft transition. initial term the market doesn't believe the -- of the prime minister stepping down. reaction yesterday was a quiet day here at the stock exchange. trading lower this morning. we have just a few minutes ago bond auction that was an interesting test for the market this morning. the yields on the 6 and 12 month treasury bill are a bit higher
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than last time. not out of control. they're just a little higher. so there is no real sign of neverousness on the market this morning. the implications are quite limited for the time being because even if rajoy was forced to step down, there is no need to organize new elections in spain because under the spanish constitution, ross, the ruling party can choose another leader without having to revote. the process could be rather simple. there is no risk that the popular party would take control of the congress here in spain. that's something important, of course, for the markets. and they would organize new elections which is very unlikely. the opposition would not benefit from the situation because according to a survey, yes, the ruling party, the popular party lost a lot of ground, only 25 people -- 25% of spanish people support the popular party, down from 44% when there was elected
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two years ago. a socialist party also is losing some ground. they have the support only from 22% of spanish people. so in the short-term, there is not a real political risk in spain. and if you look at the market reaction, for the time being, it is rather limited. yes, we're trading lower this morning on the ibex, but something you can see everywhere in europe. yesterday, here on the ground, the markets reaction was rather limited. today, ross, business as usual. the prime minister has a meeting with the key leaders of the country. all the ceos of the major companies in spain including all the banks, of course, but also companies that in total makes 35% of the spanish gdp have a meeting with the prime minister to discuss the economic situation and the upcoming reforms in spain. so business as usual. and in the short-term, no change, no risk to see rajoy stepping down. >> thanks for that. we'll catch you again later.
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bill grace snapped up more u.s. bonds. pimco's return fund, the world's biggest, increased their biggest bond fund. also marked the fund's worst performances, down 2.6%. all according to morning star. a final thought from michael. clearly waiting for bernanke this week. after going fairly hawkish in may and reinforcing that in june, he's peddling back a little bit in the last couple of weeks. u.s. yields topped at -- hit 2.75%. is that an upper limit for now? what happens over the next few months? >> i think for next months we're in a range of 2.40 to 275 for ten-year yields. the message will be similar to last week to try to calm down the fears about the fed raising rates and to maybe temper the tapering concerns. however, i think, you know, the market is inclined to lighten up on the fixed income holdings,
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which built up over the last couple of years. through the summer, we'll see gradual selling interests, taking this towards the top of the range and i think into the autumn would can see yields as high as 3%. the market is inclined in that direction. >> an opportunity for investors to off load? >> the only thing that would really stop that sort of situation as you characterized it is if the data in the u.s. prompted the fed to really push back tapering into next year. so that's the only game changer. >> michael good to see you today. michael gallagher from ida global. a short break. still to come is, as bere bernanke makes his way to capitol hill, our next guest says don't expect much deviation from the fed governor.
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this is "worldwide exchange." headlines from around the globe. equities in europe on the back foot of confidence data out now of germany. the real driver is earnings. for u.s. bellwethers due to report today. among those, goldman sachs, a look for signs of strength and investment banking to offset weakness in trading revenue. and what china slowdown? rio tinto, a record amount of iron ore in the second quarter. and new government plans to
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scrap australia's carbon tax. sxf told cnbc he's bullish about u.s. manufacturing despite uncertainty around the world as investors cheer the grurpoup's better than expected numbers. the latest snapshot investor sentiment in germany. july economic sentiment index 36.3. little weaker than the poll of 39.6. a dip down from june. the current conditions index 10.6, that's an uptick from 8.6. experts sticking to their overall positive forecast. the euro is down at a session low. let's get the reaction, more from the frankfurt stock exchange with annette, who is there. annette? >> if they're looking at the bond markets, we're seeing the
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bond futures actually -- the bond futures actually rising up after the cew data. and those as you pointed out, ross, are lower than expected. and the decline compared to the june rating. now at 36.3. one has to point out it is still above the average of 24.3. so those investor and analysts are still optimistic about the six months going forward, economic development here in the eurozone. that's what we're hearing from the cew institute, that the -- that people are still overall positive about the outlook for the german economy. looking at the current conditions, those came actually in better than expected. expected was the rating of nine index points, but the cew current conditions indicator now stands at 10.6.
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so investors and analysts perceive the current, of course, in the financial markets better than still expected in june. of course, that is due to the rally as well in the market side. and -- but looking at the expectations component, far more important is that there is a lot of insecurity again in the markets, a lot of insecurity most likely as well surrounding the tapering aspect of central banking policy. with that, ross, a little disappointment here from the german side. back to you. >> annette, thanks for that. this is where futures are after another record-breaking close last night on the u.s. equities market. the s&p 500 had the best win streak given the nasdaq the 14 straight day of gains, that's the best win streak since 1990. the dow pretty flat really as you expect. really going to be probably fairly cautious ahead of mr. bernanke tomorrow going to
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capitol hill. pretty flat. the nasdaq is at 1.5 points above fair value. the s&p 500 on fair value. futures don't get less indicative than that one. indicative of not much happening at the open. ftse 300 is flat. the ibex is down a percent this morning. still questioning what might go on with mariano rajoy. the cac quarante down .5%. number of individual stocks to look at this morning. telecom italia wants better regulatory conditions before moving ahead with the spin-off of its fixed line network. this is after local regulator cut the fee its rivals pay to access the grid. following a board meeting, the fwirl said the move created uncertainties and could affect the feasibility of the spin-off. the stock down 3.25%. commerzbank is up 2.6. the pap cher cites financial
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sources says the retail banking business is the main focus. away from those, other stocks we're looking at, banking sector, likely change in asia rules will have given italy's third biggest bank something of a lift. the foundation that controls it wants to scrap bylaws which prevent investors from owning more than 4%. support for the stock. skf, we spoke to the ceo earlier today, they're moving higher this morning. the company reporting better than expected earnings for the second quarter, helped by cost cuts. the ceo also telling us he's pretty bullish with u.s. manufacturing and the reshoring of u.s. manufacturing as well and something that should give the firms a bit of a kick. that's where he'll invest as well. bond markets, yields why they we were yesterday. gilt yields helped out lower this morning, 2.31% by inflation
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data not hitting the 3% mark. the annual rate of inflation came in at 2.9. which means mr. carney doesn't have to write a letter to the chancellor explaining why he's missing his target. currency markets, cost rates very much as we were this time yesterday. dollar/yen below 100. euro/dollar, 130.62. the range, 120 to 137. that's european trade. the wrap-up of the asian session for us out of singapore. sixuan? >> no big moves in asian markets today ahead of key earnings and data from the u.s. investors waiting for bernanke's comments later this week. the shanghai composite dipped in and out of negative territory before ending just marginally higher. japan's nikkei 225 basically played catch-up to the rally after a long weekend ending higher by 0.6%.
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but some profit taking on south korea's kospi down half a percent as some foreign investors snapped a three-day buying streak. as for individual movers, a few exporter stocks in tokyo made good gain thanks to weaker yen. canon and panasonic, both gained over 2%. and nintendo jumped over 5%. lingering worries about the chinese economy continue to put pressure on hong kong listed chinese lenders. there is also speculation that beijing may make some policy announcements after the state counsel's regular meeting tomorrow. and in australia, rio tinto gained 1.4% after posting record iron ore production numbers in q-2. uranium minor paladin surged over 7% thanks to record production and strong sales numbers. bhp bill ton added half a percent ahead of its output data tomorrow. ross, back to you. state side today, we have
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june cpi inflation numbers at 8:30. consumer prices forecast to rise .4% by .2% to outstrip food and energy. june industrial production and at 10:00, the monthly sentiment survey from the national association of home builders. ester george talks about agriculture and the economy at 2:15 eastern. on the earnings front, coca-cola, goldman sachs, johnson and johnson report earnings before the bell. after the close, we'll hear from yahoo! and csx. what do we make of earnings so far? dan greenhouse joins us from new york this bright morning. dan, good to see you as always. what is your own take of what you're hearing so far? bear in mind there is high expectations for the second half of the year. >> i think that's the most important thing to focus on. we know earnings in the second quarter aren't going to be particularly good. we know gdp growth in the second quarter wasn't particularly
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good. there is a fair bit of optimism built into the second half of the year. we're focused almost entirely on what companies had to say about the second half of the year and that that means eventually for stock prices. >> earnings so far have got off to a pretty decent start. a lot of bringing down of expectations prior to this earning season. what do you think of some of the comments you heard? >> well, the first thing to remember with respect to earnings season getting off to a good start is this is a game that everybody pretends they're not playing. and what i mean by that is we go into earnings season saying, well, the historical average is 61%. i'm making the number up, of companies that beat -- expectations are always set to be beat. in the depths of the crisis in the states, more than half of s&p 500 companies beat expectations. so there really isn't much to read into that as far as i'm concerned. but that said, with respect to the guidance, it really hasn't -- there really hasn't been enough companies, earnings really get started in the states
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here today, and over the next three weeks or so a much better view. so far things have been fine, but, again, you're only talking about maybe 20, 30 s&p 500 companies having reported. >> talk about the banks a little later. what are going to be the ones over the next week or so that really stick out for you? what are the ones that are going to kind of give you a real sense of where things are going? >> the big themes for us are going to -- were the big themes are dominated by, the one big theme, which is currency translation and currency fluctuati fluctuations. i want to see what global industrial companies have to say about currencies and their expectations for currencies going forward. i want to hear about companies that do business in latin america, what they see on the ground in brazil. and then, of course, anybody who does anything in china is going to be watching for signs that the slowdown is either accelerating or just continuing at its current management pace. >> we heard from tom johnson, he rins the world's biggest
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manufacturer skf and said it is mixed in china. some areas are doing very well but it is patchy. it seems to match what we get on some areas it looks great and others cause for concern. i don't know as an investor what you're supposed to do with that information. >> well, on the first thing i want to say is here in states, one of the funniest movies of all time includes a movie about ball bearings. i'm fighting the urge to make that joke. with respect to china, as an investor, i don't think there is anything you can do with it. the general story now in my opinion has shifted or i've been saying this for some time now, has shifted from is china slowing down to how much china is slowing down to now just a simple fact that policymakers are okay with the slowdown. and if you view things in that manner, a gdp level of 7.3% or 7.5% or 7.7% is roughly speaking irrelevant from an investment standpoint. growth is slowing down. stock market has been reflecting
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that over time. as an investor, the knee audienknenuances are irrelevant. >> volumes are very light. what does the stock market reflect right now? >> firstly, i can't believe that even at the heights of the dotcom bubble that we never have a similar rally to what we're experiencing now. we have to go all the way back as you said to the early 1990s. i find that utterly fascinating. but besides that, with respent to the volume argument, i don't read much into it. volumes have been trending lower the entire recovery here in the states. and it hasn't prevented the stock market from going up 140, 150%. so i don't see any reason to be any more skeptical today with respect to price appreciation and volumes that i might have been one quarter, two quarter or four quarters ago.
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>> there is a big sort of gorilla in the room. it is mr. bernanke's two-day testimony to congress. starts from tomorrow. wednesday testifying before the financial services committee on thursday before the senate banking committee. he's trying to rein -- may he was hawkish, then reined in that. what is your own take? are we trying to get to a point where we get -- we're so anecessary that toysed to tapering talk that we don't care what happens? is that what we're trying to do. >> i have a minority view. i don't think he's been hawkish. i think he's been consistent over the last couple of weeks. the problem is, i've been talking this with our clients for a better part of the year now, when you go away from things people understand like i'm going to buy a ton of bonds in an effort to hold down interest rates or just going to reduce the federal funds rate,
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the nuances and the specificity with which monetary policy is currently operating is really confusing to the average person, and even the typical wall street investor who follows this only on a surface level. they're dealing in very esoteric aspe aspects of monetary policy and a articulating how they're trying to do it is more difficult. what you end up with is a lot of people coming on cnbc and talking about how the fed is muddying the waters or the message is muddled. i disagree but that's because i read every single word every single one of these guys say including every paper written that led to the decision that has been made. i'm not surprised that people are saying, well, it is hawkish or confusing. i don't think that's the case. rates are going to be low in the states for a very long time.
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if they just came out and said it as specifically as that, and nothing else, i think things would be better. >> we do know that. it's the start -- >> you know that. you're on tv every day talking about the average person that focuses on ag businesses or chemical companies, or chinese industrials doesn't know that so specifically. they hear the fed will taper. they turn on tv and people are saying tapering is tightening when it is not and there is a bit of confusion. >> you say that. >> smarter than most, my friend. >> no, no. it is the start of a process. the trouble is markets are binary. you're either going one way or going the other. if we're no longer loosening, we're therefore de facto, they say we must be tightening. that's just -- >> i disagree with that. >> that's what -- that's the way it goes. like a switch. on or off. hard to deal with -- >> let me ask you this. if the fed cuts -- if the bank
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of england policy rate is 5% and they cut it to 4.5 and then 4, but next time they reduce rates it is to 3.75. 50, 50, 25, is that a tightening of policy? >> no. no, of course it is not. i'm not saying i disagree with you. i'm saying the markets decide, doing something less is a turning point. that's -- i'm not saying they're right. but that is a -- there is a binary view. >> i'll agree with you there the most important point is that the fed thinks it is setting policy, but that's not actually that's going on. the market decides what the policy is. >> all right. you're right. okay. good to have you on. we'll catch you later. we'll think about your ball bearings joke as well. the german chancellor angela merkel due to speak at an event. there it is. i hope -- despite of fears of a
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slowdown, one iron ore producer is refusing to feel the pinch. we'll talk about the production results when we come back.
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concerns over chinese demand and wet weather in australia couldn't stop rio tinto from
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churning out a record level of iron ore. they posted a 7% rise in iron ore output. despite volatile prices, more capacity is set to come on line in the third quarter. sam walsh has been looking to raise productivity while scaling back on future spending. copper production was up 10% on the year, despite setbacks from landslide at a key u.s. mine. rio tinto stock today in australia up 1.4%. also in a move welcomed by the big money companies in australia, the country's prime minister is planning to scrap the carbon tax. he'll need to be re-elected first. a top u.s. oil company ceo is planning to tell congress today that easing rules for using biofuels could help stabilize gas prices which is spiking for the second time this year. valero testifies at a senate hearing at 10:00 eastern. in his prepared remarks, he says
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the government's biofuel mandate is affecting prices for refined products. the renewable fuel standard calls for increasing amounts biofuels like ethanol to be blended into u.s. gas and diesel supplies. and as a result, we have been asking as governments face pressure to tackle climate change, is this a sign? there are tax dollars to dress item, someone will make it fashionable. keep responses coming on "worldwide exchange." e-mail worldwide@cnbc.com, tweet @cnbcwex or direct to me @rosswestgate. a recap of the headlines. if you just joined us, european equities in the red. germany's zew survey falling short of expect stations. goldman leads the way in earnings reports today. and miners have been bucking the trend as rio tinto digs up a record amount of iron ore and the government looks to scrap the carbon tax. i want to make things more secure.
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♪ unh ♪ ♪ hey! ♪ ♪ let's go! ♪ [ male announcer ] you can choose to blend in. ♪ ♪ yeah! yeah! yeah! or you can choose to blend out. ♪ oh, yeah-eah! ♪ the all-new 2014 lexus is. it's your move. joining us in the last, a recap. we had the latest snapshot of german investor confidence. weak german data, economic sentiment index down to 56.3. 36.3. expected to rise to 39.6.
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bill gross snapped up more u.s. bonds, pimco's return opportunity, the biggest bond fund increases its holdings of treasuries and mortgages many june. the month also marked the fund's worst performance since the financial crisis was down 2.5%. a record $9.6 billion from the fund in june, reducing its assets to around 268 billion according to morning star. dan greenhouse is with us. i had a guest on earlier, michael gallagher, the upper range for treasury yields, we don't have weak data which means the fed postpones tapering. if we're in -- going up towards the 3% range, in ten-year treasury yields in the autumn, what implications for stock investors? >> listen, two things. one, everybody on the treat is good at extrapolating recent trends. and ten-year treasuries might end the year 3%, i don't think
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so. increasingly more and more people see that as the case. now, that said, this idea that somehow higher yields are a threat to stock prices, current levels, is something that not only do i disagree with, but earth disagrees with you, reality disagrees not with you, but with the idea. the ten-year treasury is up somewhere -- was up somewhere around 100, 110 basis points or so. there is the chart. thank you. 100 to 110 basis points. the stock market was up 3% or 4%. the russell 2000, the small cap index in the states was up 8 or 9%. we just saw yields go up and stocks go up right with them. >> if we get higher yields, it is because the economy is going to do better. is that the underlying theory? >> that's part of it. that's part of it. as we talked about in the last segment, there is a fair bit of optimism built into the back half of the year. myself included. the last three quarters of gdp growth here in the states, two
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of them including the one we're in are going to be less than 1%. that's not really good in the third one was less than 2%. we had a very bad run here in the states and in the back half of the year, our gdp estimate is around 2.3, 2.4, 2.5. the street is around there. with that, yields are probably drifting higher. let's be clear. the spike in yields was because of what happened obviously in ben bernanke's press conference and didn't happen because suddenly payroll growth exploded or gdp growth printed up in the 4s. the expectation is for improvement in the back half of the year. and excuse me and beyond and that should be coincident with higher bond yields. we haven't gotten evidence yet of that improvement. it is all still expectations. >> all right. dan, have a cup of tea. or coffee, we'll take a short break. back with you in a second. it is a year since marissa mayer took the top job at yahoo!. what do we make of the performance so far?
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our next guest says she's likely to succeed where her predecessors have failed. why is that? we'll find out when we come back.
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you're watching "worldwide exchange." recap of the headlines this morning. stocks in europe mostly lower. real driver is earnings. four u.s. bellwethers reporting today. among those, investors are in goldman sachs earnings for signs of strength. china slowdown, rio tinto digz up a record amount of iron ore in the second quarter. and in another gauge of industrial sentiment, the ceo of the world's biggest ball bearings maker told me he's bullish on u.s. manufacturing, despite uncertainty around the world. the group also cheering the better than expected figures.
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if you're just joining us, welcome to the start of your global trading day. we focus on one stock reporting today. yahoo!. it has been a year since marissa mayer took the top job. we have seen a flurry of big acquisitions, sometimes announcing to purchase in one month. these include the 1.1 billion takeover of tumblr on the 17th of may this year. and also snapping up british new app summarily, which took place in the end of march. also made headlines over personnel cuts, and a fashion faux pas. investors have been happy with her performance. it hasn't really impacted the bottom line yet. look at where the stock has gone since she started. over in the end of july, last year, july last year, all the way up, 70% rally since she started the job. so what happens now for
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investors? has the easy money been made? joining us from cnbc hq, director of research and manager of the jacob internet fund. it is a big rally in the stock price. one has to wonder, you know, how -- what can she deliver now for investors to make more money, bearing in mind doesn't look like the earnings have changed an awful lot. >> that's a great question. clearly a lot of the reason for the stock performers in the past year has been a rise in the value, perceived value of the asian assets. both yahoo! japan, and more importantly ali baba, one of the largest chinese internet companies out there and still own 24% stake in that. from here on in, i think the easy money has been made, but i believe that marisa has done a good job increasing the value within core yahoo! as well. not so much yet, in terms of
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revenue and bottom line profits, but in terms of increasing morale, doing some smart, small acquisitions as well as big one in terms of tumblr. the stage has been set. just results probably will take a little longer as well. >> what do all the purchases going to do? wh how is this changing the culture of yahoo! and what does it do for attracting the talent to work at yahoo! rather than competitors? that's been a big thing. >> it has. she poached a lot impressive talent from the likes of google, the ceo, decastro, and she's also -- you put on that board, all the acquisitions she made. those are intelligent, smart, talented engineers and executives that she's now incorporating into the yahoo! business. you have to remember, yahoo! has been a damaged company for quite some time. so the fact that she's done this in a year's time, basically, given today is her anniversary,
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is an impressive feat. yahoo! was and remains somewhat of a struggling company. but the pizzazz and the glitter is back at yahoo! which is a very tough feat to do. many of the previous ceos that have tried to do similar things failed pretty spectacularly. >> look, what -- what happens now because as you said, what we're going to hear today, right, and then when are we going to see the transformation into the earnings, do you think? >> today i don't think we'll hear much. frankly, the metrics have been okay. i think we may see a little improvement in the core display business, which is a key factor because they have been losing share to the likes of google and facebook with the past several years. but i just don't think we'll see
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much improvement today. what we could see is maybe a little bit of a -- maybe a more defined strategy, perhaps some talk about how they're going to integrate tumblr and what they do with that property, which, again, was their biggest acquisition over the past several months. so i don't expect much on a revenue or profit line, but i don't think investors will yet be looking for improvement there. >> dan, any thoughts? >> i don't. i think jason makes a lot of good points and i'm just -- i'm going to say nothing and increase my value to the segment now. >> do you want to ask him a question? >> well, i think the better -- a good question would be what is it that yahoo! is going to do to differentiate itself from what it has been doing in the past? can it just simply do more of the same, but better or does it need to get into the types of things that google has been doing, google phone or any type
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of infrastructure they have been building. is there something different they can do? >> mobile is a key initiative of marisa, the tumblr acquisition gives them some much needed traffic and usage, but -- and almost all the acquisitions they have done have been kind of focussed in that area. so, you know, i think marisa knows full well they lagged behind the eight ball in mobile and need to step up their game. and social i think is kind of, again, tumblr fits the bill there. it is -- they're going to be struckling to catch up in that realm. i think yahoo! because the valuation, if you look at the asian assets and the cash they have on the balance sheet, they're only trading at three or four times cash flow of core yahoo!. they don't need to do too much to see the stock price rise incrementally from here. remember, we're actually getting close to the stock price that microsoft valued them at way back when the whole acquisition debacle happened.
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i think that if yahoo! sticks to its knitting and continues to, you know, make these acquisitions, which could increase traffic and usage, i think that we're going to see the top line begin to grow. it has been flat for a very long time. so even minimal revenue growth will be great. >> dan, good to see you. thanks for that. we'll let you go. dan, good question. do this more often. thank you very much, guys. >> value added. >> all right. let's show you where we stand. u.s. futures just joined us this morning after we had that nasdaq, extraordinary we never had a 14-day winning streak for the nasdaq in the dotcom boom. longest winning streak since 1990. right now, the nasdaq is pretty flat really, just two points above fair value. the dow at the moment is 12 points above fair value. caught fairly flat for the open at the moment. european equities have been a little bit mixed. about the best levels of the day. up eight points, nine points.
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the ftse maybe up a quarter. the cac quarante down about a third. fairly mixed. it is the best levels of the day. what are investors to do today? as we wait for mr. bernanke over the next couple of days, here is a recap of what some of the experts have already told us on cnbc. >> markets will go up if rajoy works on. why? the back stop is that you then get the omt, you then get the ecb and eu to come in and properly reflate, recapitalize the spanish banks. >> raw materials are up 40% year on year. it kept copper strong for the past ten years. that is gone.
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we sold a million tons of the main supply coming to market in the next year. that's huge. we'll be running a corporate surplus. >> -- things aren't great in the global economy. you get to the averages, tough to push on much further. the other point is, what are your other asset classes? you got treasuries yielding over 2.5%. nothing on cash. and corporate credit pretty skinny spreads. it is almost the reverse contest in equities. >> still to come, dell's fate may be up for grabs as investors debate whether to go with michael dell's buyout bid or take a gamble on carl icahn's effort. we'll have more. [ kitt ] you know what's impressive?
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michael dell's bid to take the pc maker private suffered another hit ahead of thursday's shareholder vote. let's get the latest. jackie is with us this morning from cnbc hq in the states. good morning. >> good morning, ross. t rowe price is the lacest big share holder to voice opposition to the $24.4 billion buyout offer from michael dell in
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silver lake partners. the asset manager which owns a 4.4% stake in the pc maker says it doesn't reflect the value of the company. they came out against the deal in february with this latest move investors holding at least 19% of dell stock have said they oppose the buyout. the most public, of course, being carl icahn. that is setting up a showdown with dell and silver lake who said they won't pay more. dell hosting a special shareholder meeting in texas on thursday. that starts at 9:00 a.m. eastern time. the board committee discussed postponing the vote if it is clear the deal will be defeated. that could give michael dell and silver lake, also the board, more time to convince investors to change their minds. the vote has unique elements. michael dell controls roughly 16% of the company's stock. but he can't cast a ballot. that's due to special provisions that the board imposed to protect them against claims that they gave him a sweetheart deal.
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because of the sideline shares of dell and other insiders holders of 42% of the shares must vote in favor of the buyout. icahn continues to wage a war to block the deal, partnering with southeastern asset management. his latest counterproposal came on friday. valuing dell at $15 to $18 a share, including a warrant to give shareholders the right to buy additional shares at $20 over time. in a letter to shareholders on monday, he accused dell's board of using scare tactics and pointing out the risks of his offer in that it would require the entire board to be voted out for it to be implemented. we're check on shares of dell, how they're trading in germany, down north of 1%. i'll be covering the dell shareholder meeting on thursday morning. so we'll be live in round rock, texas, and will bring you the latest. >> good stuff. look forward to hearing what happens. thanks, jackie. recap of the headlines,
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european equities mostly in the red after germany's business survey missed expectations. goldman leads the way in another round of big u.s. earnings today. and rio tinto rallies on record iron ore output as australia scraps a carbon tax, further boosting miners. the u.s. senate wrapped talks. vote is scheduled to begin at 11:00 eastern today. nominees are richard cordray and the new labor secretary and epa director. democrats say if all seven aren't confirmed, they'll threaten it use the nuclear option to change the number of votes needed to block filibusters from 60 to 51. the a s a simple majority. top u.s. oil company plans to tell congress today that easing rules for using biofuels
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could help stabilize gas prices which is spiking for the second time this year. bill testifies at a senate hearing at 10:00 a.m. eastern. in his prepared remarks, he says the government's biofuel mandate is affecting prices for refined product. the renewable fuel standard call for an increasing amount of biofuel to be blended into u.s. gas and diesel supplies. we have been asking you, as governments face pressure to tackle growth over climate change, is green energy falling out of fashion. if u.s. oil production expand as forecast, more costly green energy will be side tracked. join the conversation, e-mail us worldwide@cnbc.com, tweet @cnbcwex or direct to me, @rosswestgate. p.j. also e-mailed in to say, green energy made sense, just not financial sense. still to come, goldman sachs gets set to report second quarter earnings around 90 minutes.
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we'll preview the investment bank's numbers when we come back.
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just joining us this morning, european equities mixed. we have come up off the session lows, ftse up 10 points. xetra dax down ten points. xetra dax had slightly weaker investor confidence as evidence by the zew survey. cac quarante down half of 1%. u.s. futures, indicated pretty flat for the open and they still are. the dow is currently 11 points above fair value. s&p is just about .75, follows the best eight-day win streak since 2004.
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on agenda, june cpi out at 8:30 eastern. consumer prices, inflation forecast to rise 4%, you strip out food and energy. 9:15, june industrial production. at 10:00, the monthly sentiment survey from the national association of home builders. also kansas city fed president esther george speaks about agriculture and the economy at 2:15. coca-cola, goldman sachs and johnson and johnson report earnings before the opening bell. after the close, we expect yahoo! we'll hear from them and csx. back to goldman. it reports second quarter figures at 7:30. the company should be earning around $2.86 a share. revenue just under $8 billion. martin morrissey joins us now. dan greenhouse with us as well. good to see you. what do you think about
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goldman's trading performance? >> what we have seen so far when you look at jpmorgan and citigroup is that with the volcker rule kind of looming out there for these broker dealers within these big money center banks, they have avoided taking positions. so-so far what we have seen say better than expected performance, especially when the significant spike in interest rates could create some losses and fixed income. if goldman can avoid that, we think they can earn more than $3 today, significantly beating what you just said in the 288, 290 range that the street expects. >> so you're looking for something to beat. if they do that, how does that set them up for the second part of the year? >> well, what we're going to see is that customer flows and activities are picking up. if they have been able to avoid the position losses, it starts to set them up for a strong back into the year when the economy starts to get some traction. we start to see rotation of investors off the sidelines, and goldman sachs is there to make a
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market in a lot of these different areas that are starting to -- at least get some fresh breath of fresh air here. >> you say over the last two years, large cap banks have consistently beaten market expectations and therefore they have pushed street estimates higher. can you -- do you expect that kind of outperformance to continue? >> well, so far we're three for three. each of the banks have exceeded expectations. we have seen eight straight quarters where the group as a whole has beat what the mash rk expected. that's natural for the recovery mode we're seeing. as we're seeing not so much on the revenue side yet, first, credit costs and then started to see expenses coming in. we're what we' we're seeing momentum that will carry us into the next phase of the recovery. >> if we get more of an uptick in interest rates, if they -- are you saying that's less of an
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issue because we have seem to have dealt with it fairly well in this quarter? >> exactly. because what we're doing here is we're forcing these money center banks to pull their broker dealer activities in, and not take positions in the marketplace. now, the side effect of that is we have more volatility in the markets because you don't have those principle players to be able to step in and kind of moderate what is happening in the marketplace, taking positions, knowing there is an overreaction that they can make money out of. they're not able to do that. it increases volatility. but on the other side what it does is lessens the losses that they experience in these periods of shock or big booms in the marketplace. >> are you surprised by the performance of these guys? >> well, no. i think the point about them consistently beating expectations is entirely valid. the issue as was brought up is about sales and trading revenue, for a lost the big banks, that's been something of an issue and in the last quarter, i'm
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interested to see what happened as the quarter ended in volatility increase. did we see a pickup in activity at some of the banks or pullback? generally speaking, if i can ask one quick question, deal-making volume, volume in the second quarter was down around 11% or so. which one of these banks and if you can focus on goldman specifically, i guess, are managing that slower environment better than the others. >> last quarter goldman sachs did better as investment banking showed a 20% increase. so that's one of the things we're looking to trigger in today's report. are they continuing to build on that momentum. and though we're not seeing the m & a activity yet, we're seeing other deals, a lot of debt issuance, restructuring and refinance of capital. so there is a lot of investment banking activity to be had in the marketplace. if they can continue to see that picking up, m and a will follow through as we get to the back end of this year going into 2014
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and 2015. >> you like the guys we're hearing from, who don't you like in your space? >> well, we have some of these regional banks that are interest rate plays, but they have exposure to short-term interest rates. they need the fed funds rate to go higher. the market is kind of overvalued that interest rate rise into the earning because they don't really get anything until the fed tightens the fed funds rate, which they told us won't be until 2015. a lot of value pulled into the stock prices, but you may not see the earnings reflect that for a year or two down the road. >> okay. good to see you. thank you for joining us from memphis. just about wraps up "worldwide exchange." cnbc is also building up to its delivering alpha conference, which kicks off tomorrow, just in time for mr. bernanke going to congress as well. that's it for today's edition of "worldwide exchange."
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"squawk box" coming up next with a countdown to the opening markets state side. whatever happens, have a profitable day.
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today's top stories, earnings, the economy and global market. quarterly results before the bell from goldman sachs. coca-cola and johnson and johnson. plus, a key read on inflation. today is tuesday, july 16th, 2013. and "squawk box" begins right now. ♪ ♪ welcome back your dreams are your ticket out ♪ >> good morning, everybody. welcome to "squawk box" here on
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cnbc. i'm pebecky quick with joe kern and andrew ross sorkin. the s&p is now in its strongest eight-day winning streak since november of 2004. that is hard to believe, but if you missed it, people think at this point you look back to what happened, wow, that was a quick correction and stocks are back at incredible levels. the nasdaq logged its best eight-day run since july of 2011. and the u.s. equity futures this morning, if you want to look, you'll see they are indicated slight lly higher. we have a number of earnings coming out today that could impact where trading is headed. some household names that will be getting before the bell include coca-cola, goldman sachs, and johnson and johnson. then after the close today, yahoo! and csx among the names set to report. as always, we'll bring you the numbers and instant analysis. among our newsmakers this morning, coke cfo joining us live at

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