Transcripts For CNBC Worldwide Exchange 20130708

Francisco. Shares of arii Asiana Airlines a skrugtruggle between the Muslim Brotherhood and the army intensifies. All right. Welcome to you. Start of a new trading week here on worldwide exchange. Just over an hour into the trading day, were certainly waited to the upside of nearly or more than 91 advancers out pacing decliners now. Gains toward the end of last week. The ftse last week up 2. 5 . Best week since january. Right now up with the best levels of the morning so far as well. Ftse up another 1 today helped no doubt by andy murrays historic win at wimbledon. First time in 77 years british male champ at wimbledon. Portugal, up nearly 2 as well on the bond markets. Still looking at the fallout, of course, from last weeks jobs report. Much stronger tenur eer 10year. Went up to 2. 75 on friday. Which is the highest since 2011. The spread the widest since 2006. A steeper yield curve normally is what you should get if you think the economy is going to be improving. Currently markets, dollar index up at a threeyear high today. Dollar yen, just a little bit low. 101. 14. We got up to 101. 54, sort of the may highs for this year. Euro dollar, pretty poor week for the pound last week. Down 2. 85 against u. S. Dollar. Now 1. 4883. People talking about low 1. 40s for cable. Ausse dollar 90. 58. Lets get more on where we stand with the first trading day of the week in asia. An update on singapore. Its a risk off mode across asia over earnings jitters and fed tapering fears. Markets were sold off heavily ahead of key data tomorrow. The weakness really came after beijing decided to tighten fresh credit to injuries struggling with overcapacity. Investors also fret authorities could restart the process very soon. The shanghai composite tumbled 2. 4 today. Hang seng in hong kong lost 1. 3 . Banking shares bodiroadly weake. Many think this will make the sector more competitive and could possibly hurt lenders net interest margins. In japan shares of softbank had quite a volatile day of trade. Rising as much at 1. 7 before ending down by 3. 4 . The turnaround really happened after s ps downgrade of the stock by two notches. For the broader nikkei 225 also extended weakness in late trade. The index lost 1. 4 today. Meanwhile the regions resources shares also lost ground, atrackiatrack i attracting weaker commodity prices. Chinas largest gold miner tumbled almost 7 after profit warning. Atlas iron and newcrest also took the brunt of the selling today. Thank you for that. Well catch up with you later. Weve been watching events, fast moving events in egypt. These are the latest shots of tahrir square. Were also getting well be out with the latest on that and reports of those deaths as well. Tanks apparently still blocking the bridge. At the same time, tension is very much on greece as well. The eu and imf also discussi ii possible cuts as part of the Fiscal Program as athens has been in talks for the last weeks. Amidst complaints from the eu it had not met reform targets under the terms of its bailout. The imf says details of the deal are likely to emerge before finance ministers sit down today in brussels. Julia is in brussels with her thoughts and the latest. Hi. Reporter good morn ing. As you said, the Euro Group Working Group trying to thrush out the details. V. A. T. On interest sales, that was one of the key election promises from the government. It may seem like a strange request. It is something they promise they are fighting for that. The big thing, of course, the Public Sector reforms cutting down the bloated Public Sector. One of the agreements was 25,000 Civil Servants to go on administrative leave and ultimately lose their jobs this year if they cant be transferred to other places. That apparently got an agreement among the troika and the greek officials over the weekend. There are just a few details still being thrashed out weve seen. Ultimately whats whats at stake here is an 8. 1 billion euro sum of money. 4. 8 billion euros to come from the eu. 1. 8 billion to come from the imf. Ultimately theyre expected to get this money, though it will come through in two separate tranches. A carrot and stick approach as far as the greeks are concerned. Yes, we can reach a deal today. Also weve seen with this Greek Program in months gone past we can agree to things. The problem is the impleme implementation and whether they can push through on Public Sector reforms. Its caused a splintering of the coalition over the last few weeks. The Prime Minister likely to struggle with the implementation of this even if we do get an agreement. Back to you. What are they saying about portugal . Reporter its interesting. Its going to be the new finance ministers first meeting with her euro group colleagues. The message is going to be clear from brussels, they need to keep up with the reforms and keep the focus on regaining bond market access. Of course we now have this new deputy finance minister, someone who tried to back away from austerity. Hes now in charge of the negotiations with the troika. I think we have to see how the negotiations go forward and just how far they can, if anything, step back from the austerity program. So i think as with greece, okay for now, but implementation risks Going Forward. Sure youre right. Good to see you. Thanks for that. Well be back with you later in the program. Portugals Prime Minister reshuffled his cabinet over the weekend. He promoted the man who threatened to bring down the government to deputy Prime Minister. He will also help coordinate economic policy. The eu commissioner has praised the portuguese government for providing political stability. European economist at Morgan Stanley, thanks for joining us. Last week we thought the government would fall. Clearly its a positive at the moment that they havent. Are they going to do any better job, though, at delivering the reform needed for the package . Thats the key question. And whether this will happen remains to be seen. Yes, this agreement, if confirmed by the president of the portuguese republic, would be positive when it comes to diminishing near term risk of political instability. When it comes to the reform momentum and the ability to deliver on muchneeded reforms, its an open question. Portugal so far has been described as a good student. One that has delivered on some reforms. Also on spending cuts. Even though the deficit targets have been revised twice because of these appointments on the tax revenue side. So with a new chief negotiator of the troika program keen to see some changes to the adjustment portugal is to go through, whether the reform momentum will be maintained is a key focus of Financial Markets. Yeah. Is that the key . While youve moderated your view on portuguese debt from bullish to neutral . Yes. Thats exactly right. We are more cautious at this stage. That is a theme that goes beyond portugal. But when it comes to the specifics of politics and policy in this country, we moderated our view because of domestic political concerns. Because of possible developments, not necessarily in the right direction, when it comes to the reform momentum. And also finally because of external factors such as a rise in core because of fears of early fed tapering. Do you think what we saw last week in portugal was just the cds playing politics in terms of trying to soften the terms . Or how big is the risk of the government breaking up . Well, i wouldnt expect the major changes in policy in the near term because there is not really alternative to the current path. This meeting of the euro Group Finance ministers will be the first with the new finance minister. But what is clear from the recent developments is that there is some sort of austerity fatigue going on there. Yes. Well have to see. I guess well have to see how the politics plays out. At the same time, just talking about yields specifically, clearly we saw response last week from the ecb and the bank of england to try and depress yields again. How much is the ecb and euro policymakers in danger of losing control of bond yields because of fed policy . Actually, i think what the ecb has done is quite important. They introduced some more concrete Forward Guidance and with an easing bias. Especially mentioning the deposit rate and talking more broadly about all the key policy rates that will stay either at the current level or will be lower with the 50 basis point threshold. The current level of the rate not seen as the lower bound. Thats, of course, our own consensus call for another ecb rate cut. And the reason, one key risk that has been introduced to the to the forecast, which is the tightening in the monetary and also Financial Market conditions because of developments elsewhere outside of the eurozone, including fed tapering. That is quite a shift. The ecb effectively is guiding towards extra monetary easing towards lower interest rates. Thanks for that. Just talking about the ecb, weve heard from mr. Novotny on the ecbs governing council. Talking about a bank bail in plan beginning in 2015 as well. Hes saying efforts to strengthen the Financial Sector are needed to ensure financial recovery. Also talking about stress tests showing solid results for the overall Austrian Bank sector. Individual banks remain conspicuous as well. Weve also got some other comments out from the troika. Well also talk about greece and eu aid as well. Have we got those points on screen . Theyve agreed to the they have agreed to the bail out tranche, apparently. Right. Conditional on approval. Right. Details emerging over the event that led to the crash of the Asiana Airlines boeing 777 in San Francisco over the weekend. Nbcs john yang has more. Reporter ke cly clues revea. Recordings of cockpit conversations seem to show the crew thought everything was fine until about seven seconds before landing when one crew member calms for increased speed. Then three seconds later they get a warning that the plane is about to stall, lose its ability to fly. A second and a half before impact, a call to abort the landing. But its too late. The approach speed was 137 knots. And the question was whether or not we had the lowest speed that the crew achieved. I will tell you that the speed was significantly below 137 knots. And were not talking about a few knots. Reporter National Transportation safety board investigators recovered the cockpit voice and flight data recorders. The socalled black boxes. From the wreckage and sent them to washington overnight. Theyve also inspected the wreckage inside and out. The boeing 777 was ending a 10 1 2 hour flight from seoul, south korea, on its final approach to runway 28 left over San Francisco bay. At least one passenger sensed something was wrong. I was looking out the window because i was just looking. I could realize we were too low. Basically it sound like we were about to land in the water. Reporter witnesses said the planes tail hit the seawall beyond the end of the runway. The rest of the fuselage slammed down on the pavement, breaking off a piece of the landing gear. Officials say that when the tail broke off, two passengers, 16yearold girls from china, were thrown from the plane and killed. The crashs only fatalities. They were part of a middle school group coming for a summer camp. Once the plane came to rest, survivors began their evacuation. A scene described by the pilot of another flight. We see people and i think we should they need attention. Theyre alive and Walking Around. United 885 heavy, roger. You said people are Walking Around outside the airplane right now . Yes, some people look like theyre struggling. Roger, we have emergency responding. Reporter it seemed to come in too low and too slow. For whatever reason the pilot didnt or couldnt correct it. At some point the aircraft begins to settle and the pilot will immediately pick up on that. If hes very close to the runway, theres no time to recover. Reporter investigators still have to corroborate what they heard in these conversations. But this could be a big piece of the puzzle. Lets get more in seoul with reaction to the event. Hi, ross. Take a look at how Asian Airlines shares closed today. Down by close to 6 after losing as much as 10 at a point in the days trading. Of course, in reaction to that crash landing of its jetliner. Markets seem to have this consensus for now that this case will pose at least a shortterm risk for the airline and the stock price which was, by the way, already struggling this year because of other factors like the strengthening of the korean one and pickup in oil prices. A couple of local brokerages lowered their target prices this morning on the countrys number two carrier as well, citing the damage caused by Asian Airlines and notified the boards operator will be that said, will be more than 137 billion korean one. But, of course, there are some on the defensives like Morgan Stanley that said its tprematue at this point and investors need to take a slower approach. The damage to the reputation is real key, of course. Asiana on its part tried to dodge finger pointing to the fact the pilot was training into this model boeing 777, saying he is a very capable pilot and that hes had apple mple experience that job. In pyongyang other news making progress on opening the joint kaesong Industrial Zone. South korean Business Owners will visit the Industrial Park for inspection checks on wednesday and working level talks will resume later this week. The kaesong Industrial Zone was shut back in april. Tensions between the two neighbors hit a fever pitch. Protesters were out in force in cairo and alexandria last night. 42 dead and 322 injured after clashes between promorsi and antimorsi supporters turned violent. Joining us with the latest, youssef, whats happening right now . Reporter well, ross, the military is still on high alert. We saw tanks move about this part of the area as well. You mentioned the violence. 42 people kimmed according kil Health Officials. Most of that violence concentrated outside the Republican Guard bar ricks in cairo where it appears the army might have gotten involved. The army describes it in a statement as an attempted terrorist attack that killed one of its soldiers and appeared to have gotten quite violent. Were seeing already a response to what some have described as one of the few islamist parties of note in this transitional road map process. They have announced their withdrawal through their spokesperson on the verified twitter account. He said that decision came in light of what they described as the Republican Guard shootings and what ultimately led to the massacre. It is clear, ross, that this may lead as well to a delay in some of the cabinet announcements. Remember, we had two options for the position of Prime Minister and president. One was mohammed elbaradei. On the other hand, a locally well known figure and respected not so much internationally known, but still a man who has experience with investment and investors. That could be a very strong sign in which direction the army wants to take this country. At the moment tensions are just running very, very high. If islamists are feeling sidelined. They feel like theres a crackdown going on. You mentioned the egyptian central banker going to abu dahbi. Under Mohamed Morsi the situations was not very good. They had soured to a very, very bad extent. Now theyre opening a new page. Youre seeing an attempt to tap that potential for aid and assistance. The financial position clearly is going to be impacted by this. Ive seen reports suggesting its even worse than some thought. Reporter well, that would be a sign of that. Youre looking at foreign currency reserves. 33 billion before january 2011. That has dropped by more than half, ross, to just below 15 billion. Most of it is going to be in gold and sdrs in less than three months worth of imports. Those fell by another 1. 1 billion in june. That shows you the struggle to keep the system running. Because now it is really at its knees. The egyptian pound which the central bank has been trying to support by injecting dollars in the market, its starting to lose its grip as well despite some of the positive and encouraging sentiment we had before the weekend. We are still waiting for the stock market to open in the next 15 to 20 minutes or so to see how investors are taking this escalation in violence. Not just in cairo, but across the country in the sainai and alexandria and other parts of egypt. Thank you very much. Meanwhile, amidst lingering fears about middle east supply disruptions brent may test 110 a barrel this week according to cnbcs latest survey of oil market sentiment. To find out more head to our website, cnbc. Com. You can also follow us on twitter cnbcworld. Also on todays show well speak to will independence lead to brighter days . Also, Japanese Mobile operator softbank is back in focus as Credit Rating agency s p slashes its status to junk citing the multibillion acquisition of sprint next teel well speak to the International Chamber of commerce. The use trade talks kickoff today amidst allegations of spying. Whats at stake . Well head out to new york citys alcoa kicks off earning season. Well look at earnings. Look ahead with jpmorgans chief equity strategist at 11 30 ce terks. Plenty more to come on worldwide exchange. [ kitt ] you know whats impressive . A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . Continuing. And even mr. Dralhi four months saying second half recovery saying recovery will start by the end of the year. Everyones kicking the can of recovery a bit further down the road. Exactly what youve had for the last two years. You see continuing on these downgrades. Okay. One of the implications is what weve priced in, then. Therefore stock valuations. The valuations are as high as theyve been in a long time. I think thats going to be the overriding issue. You look at a number of the bigger sectors. Theyve had continued outperformance. Yet theyve all rerated. The only sector that has actually derated this year is the Mining Sector where youve had earnings downgrades more than theyve fallen this year. Yeah. Youve talked about banks, materials, autos doing fairly well in the recent the recent moves. Theres a thing here. The u. S. Economy clearly is yield curves are steepening. There clearly is a belief we are getting a sustainable economic recovery in play there. I suppose the other question is, is whether whether prices reflect that or its going to be stronger . I think the u. S. Could continue, could carry on. Europe because of theyre equally exposed to emerging markets which has obviously seen the benefit of qe will also see the end of qe weighing on them. Again, the monetary sectors, auto sect rs which have benefited from the asian growth are the ones that are most at risk. Okay. Plenty more to drill through, nick. Stay with us for the first part of the show today. Meanwhile, Eliot Spitzer wants back. Yes, he wants back in the political game. The former new york governor announced hes running for new york city comp controller. Spitzer has until thursday to get enough signatures to secure a spot on the ballot. He resigned in 2008 after being caught patronizing prostitutes. He says hell ask the public for forgiveness. Spitzer says hell also try to raise the profile of the co comptroll Comptrollers Office using its power to audit city agencies. Whats your view . Has he made who in your view has made the greatest political comeback . Send us your views. Email us worldwide cnbc. Com. Tweet. Or direct to me rosswestgate. Meanwhile, something much more important. Under blazing hot skies, andy murray has won the wimbledon championship in straight sets against novak djokovic. The win ends britains 77 year wait for mens champion at the all england club. 26yearold scot beat the worlds number one seed in what murray described as the toughest game of his life. 1977. 77 year wait. It was the 7th of the seventh as well yesterday. Still to come on the show, will independence from siemens shine the light on osram as the Lighting Company goes public . Well be joined by the ceo right after this. Meanwhile, these are the headlines from around the globe. European stocks from the trend with portugal leading the rally todays theme istemasek look big share of lloyds. New details shift the focus from mechanical to pilot area. Asiana airlines down nearly 6 in seoul. 42 people are killed in the attack on the Republican Guard headquarters in egypt according to the ministry of health as the struggle between the Muslim Brotherhood and the army intensifies. All right. European equities are firm this morning. A short while ago we were at the best levels of the day. Ftse 100 up 1 . Up 2. 5 last week. The best week since january. X etra dax up 1. 3 . Yields a little bit lower than where we were on friday. 10year treasury yields went up to 2. 75 . Highest since 2011. Just below that a moment ago at 2. 7 . Bund yields 1. 7 . Spanish yields are slightly lower. On the currency markets dollar index up near a threeyear high. Dollar yen back near 101. Euro dollar at a sevenweek low. Sterling down nearly 3 . Heading down towards the lower end of the 140 range. Osram light made its debut today. Started trading 24 euros which gave the Company Market value around 2. 5 billion. Siemens is spinning off osram. Wolfgang dehen joins us from fra frankfort. Im guessing now the hard work really starts. Whats your hopes for the year . Well, you know, we have given the guidance out, first of all, good afternoon. Good morning to all of you. This is once a day in the lifetime of a ceo that you can ring the bell. When you look into the performance of the company over the last half year, i think we did okay. So we expect that we see moderate growth coming up. And that we also will do good on our bottom line. So we are approaching break even turg the course of the remainder of the year. Yeah. Look, clearly there are investors who have to sell today because, you know, i guess adrs and others because youre not going to be in the dax. Do you expect do you expect pressure on the share price because of that . Well, we all know that this is a technicality, and we would expect that. So what i would expect that mid and long term we see a development of the stock which is based on the fair price. Look, osrams got to adjust to newer technologies, light emitting diodes. How much of a restructuring job do you have on your hands . Well, we are in a transformation from the traditional technologies into l. E. D. Technologies. So but we are used to that. So we are working since 40 years in the l. E. D. Space. We are solid number two in the market. We have been a solid number two in the market over the last decade. So we are used to drive the technology change. And its our ambition also to drive it. Youre cutting 8,000 jobs. Youre reducing the number of factories to 33 from 43. How else are you going to make the company more efficient and streamline operations . Well, i think we see new competition coming up. L. E. D. Is suggesting that light becomes faster. We need to streamline the company. We did a lot already in the past. It will be an ongoing one when it comes to the Traditional Technology being fazed out over the next decades. Its ongoing running and keeping pace with technology and also competition. You talk about technology a lot, innovation. What is the whats the big leap that, you know, were going to see in lighting in terms of innovation and technology . Well, were going to see that over the next ten years, so to speak, l. E. D. Technology will take over the majority of all markets. It started with 18 . We will see a fast progress in that area. But theres not no reason at all that were going to participate on that trend. Its a 20 rose rate. Year over year i think thats the market to be in. Yeah. In terms of sort of strategy in terms of growing the business, youre going to look at i mean, i dont know. Are you just going to look at an organic focus for this and new markets, or will there be suppliers and will there be Component Companies that will be of interest . Well, first of all, we have a good positioning in all the different steps of the value chain. So we are now concentrating on our transformation program. And then well see how the company is performing. Just finally, weve got a german election coming up, of course, later in the year. Is that going to make a difference to german corporate confidence . Well, im not commenting on those, lets say, external trends. So we will drive our agenda, and im sure that we will successfully trooif our agenda. We appreciate your time this morn ing. Congratulations on the spinoff. Wolfgang dehen, ceo at osram. Keeping an eye on egypt. The market open has been delayed. So well keep our eyes on that. Opening lower this morning as well. Right. Lloyds Banking Group shares moving higher, meanwhile, in trade. Media reports are looking whether singapore investor temasek may buy a major share. Temasek approached britain about taking a 10 stake worth 6. 7 according to unnamed sources. Reuters say no such approach was made. Both temasek and lloyds have declined to comment. Mexican billionaire carlos slim has set his sights on smartphone am maker shazam. This is apparently slims First Investment in the uk company. As part of the deal shazam will be preloaded on handsets sold by American Mobile from later this year. With a green light from the fcc japans softbank is stepping up plans to approve sprint. Credit agencies arent on board. From the nikkei, more in tokyo. Hello, ross. Yes, nikkei reported today that softbank ceo says hell pull 16 billion of capital into sprint in the next two years to strengthen its high speed network. His goal is to revitalize sprint to become a more serious competitor against verizon and at t. Lt coverage is key since data traffic is surging with more people using smartphones. Areas currently covered by sprint are less than a fifth of that of verizon. He also wants to open a joint r d center in california as early as this year with an initial stock of several hundred engineers drawn from birth companies to Development Software and hardware. Financing is a concern since the takeover will weigh softbank down with 60 billion worth of interest bearing date. Despite the takeover s p downgraded softbank to junk grade. Shares dropped in the tokyo market today back to you, ross. Carl icahn is accusing dells special Board Committee of using scare tactics to push around michael dells 24. 4 billion buyout deal. In a letter to investors on friday icahn says it seems that no one has less confidence in dell than dell itself. Icahn was responding to comments from the company that hps performance is superior to dells and trends in the pc business could hurt dells planned transformation into a profitable i. T. Provider. Dell stock is up. 6 . Still with us is nick x anders as well. When you look at the yur stock 600s provisions as well, how is it were pushing out the recovery phase . Thats kind of what weve seen in the last couple of years. How is this performance going to compare with that . Its interesting, look at the revisions this year versus the last two years theyre a little more extreme. The last few years theyve been in the magnitude of 5 . Equity markets have had a similar sort of performance to this point. The difference in 2011 down 12 . 2012 ended up 15 . The main difference there being the fact that mr. Draghi said he was going to do whatever it takes to stabilize the zone. He continues to say the same thing. And i would hasten to add that with negative growth its not surprising that hes saying that. Whereas the feds continued taper. But i think my feeling is this years going to end up more looking like 2011 because youve got the emerging markets issues. Youre obviously seeing the issues in europe still havent sorted themselves out. And and the revisions negative earnings revisions. How does this push pull of fed policy and the ecb, you know, and policy elsewhere, i mean, its not just the ecb. Ecb, the bank of england, japan, and that push pull with the fed, how does that play out for equities . We clearly see how its impacting emerging markets. If nothing else its going to increase volatility. Youre at the Inflection Point in the u. S. Yes, i know were not going to have a new rate cut any rate hikes for at least two years, until 2015. We havent had a rate cut since 2008. Thats sort of a secondary issue. The fact that all this extra money has helped push the equity markets higher. The fact that theyre draining it. You look at japan, theyre basically the qe junkies homeland right now. Theyre the ones continuing the whole policy. In europe theres very few ways to play it, one of them being reno. Why reno . Its got the stake. Exposure there. Weakening currency will help them. Thats sort of a main program. Does the strengthening dollar that weve got, is that going to play a part in your it should help it should offset some of the weakness within the eurozone. I wouldnt be surprised if in the u. S. Earning numbers you see them shaving a couple cents off the outlook for the second half saying currency will affect this by one or two cents. But nothing dramatic. But it should yes, it should help. Again, thats offset by the lowering growth in asia. Over in hong kong thousands of property agents are in the streets protesting the citys measures to cull real estate prices. They say governments policies brought the market to a standstill. Smaller agencies could go bust. Hong kong has rolled out numerous rounds of measures to deter speculators. But housing prices in hong kong still amongst the higher in the world having soared 120 since 2008. Couldnt imagine a demonstration of a state agency in london. What on earth that would be. Today on cnbc. Com a perfect storm is brewing for hong kongs Real Estate Market according to to an economist at hsbc. Hes forecasting a 10 to 20 correction in house prices. More on that story on cnbc. Com. Also still to come, talks regarding what the british Prime Minister David Cameron calls the biggest bilateral trade deal in history begin in washington today. Well hear from the International Chamber of commerce about that when we come back. I want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs. Our Business Needs more cases. [ male announcer ] where do you want to take your business . I need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, Small Business solutions from at t have the security you need to get you there. Call us. We can show you how at t solutions can help you do what you do. Even better. Spitzer wants back in the political game. The former new york governor announced hes running for new york city compcomptroller. He resigned in 2008 after being caught patronizing with prostitutes. Earlier we asked who in your view has made the greatest political comeback. Michael dukakis. Email us at worldwide cnbc. Com. Shares of the worlds biggest tin producer took a bit of a pounding today. Chinas yunnan tin said theyre investigating the chairman for serious discipline breaches. The government has used similar language in the past to describe its corruption probes. Tin operations havent been affected. Analysts say the drop may also stem from a recent price slump. That announcement comes a day after a court in beijing found chinas Railway Minister he was handed a suspended death sentence for his crimes. Prosecutors accused him of taking more that be 1 10 milli in bribes. He has been expelled from the communist party last year. As far as the agenda in asia tomorrow chinas economy will be back in the spotlight with june inflation data set for release. Well get an update on corporate sentiment in australia as the nab Business Survey comes out. In taiwan Tech Companies Au Electronics and compau post june sales. U. S. And eu today kickoff long awaited talks intended to create the worlds biggest free trade deal. It would cover 50 of Global Economic output. Executive secretary of the commission on trade and investment policy at the International Chamber of commerce joins us from paris. Nicolle, thanks for joining us. How long will these talks take before they conclude in a deal, do you think . Well, they wont be concluded this year, i can assure you that. With but with a high level of Political Engagement, the regulato regulatory harmoniization issues can be overcome. Nobodys under the illusion this will be easy . What will be the hardest part . Nontariff barriers. Customs procedures and behind the border regulatory restriction. The eu and u. S. Have been talking about this for years. But with the high level of Political Engagement, we may be able to see some movement, perhaps in the next two to three years. In france theres been some, you know, debate about the culture which the European Commission have told them theyre going to have to give up trying to protect the media industries. How much of a block will that be . Again, that depends on the level of Political Engagement that is afforded by each side. Concessions will have to be made on each side. Again, these are going to be rather difficult talks. But we are hopeful that, you know, with the economy in a fragile state right now, this eu u. S. Trade deal represents positive signalsiing by governments to the private sector. Something we most definitely welcome. This comes as were getting tit for tat retaliation between china and the eu over solar panels. Other areas now coming under this. Yes. This is something that we at the International Chamber of commerce definitely are not in favor of. We object to the broader implications. And it should be avoided by wto members. Especially g20 member countries who should be leading by example and taking initiatives that create greater openness to crossborder trade and investment. These actions damage the Global Business environment and prospects for a Stronger Economic recovery. Precisely when greater trade flows for and investment could provide a debt free and much needed boost to World Economic growth and job creation. Yeah. I mean, in that light, if youve got this eu u. S. Accord in, just how big a deal would it be in terms of, you know, generating growth . In the terms of the eu u. S. Trade deal, we have not actually done the numbers. But on the multilateral front, we have crunched the numbers. And i can tell you that multilateral trade negotiations are also under way right now. And there is a Ministerial Conference coming up in december. The g20 will be looking at this issue. The International Chamber of commerce is urging g20 countries to urge other wto members to reach a final agreement on trade facilitation. And this could result in gdp increases of approximately 960 billion. And create over 18 million jobs worldwide. So for the International Chamber of commerce, we we like yun literal trade liberalization, bilateral agreements, region all agreements and multilateral agreements. Yeah. Wed all like that. Still, of course, as you say, still have failed with the latest doha round and wto talks. How big a problem has the wto got . Well, there are very few issues that need to be resolved for trade facilitation. And these could be achieved by december of 2013 when the next Ministerial Conference. We at the International Chamber of commerce representing 6. 5 Million Companies worldwide will be going to bali. And we are working with the wto and member governments for a trade facilitation agreement. Again, its going to be a debt free stimulus package for the entire world. 576 billion would go to developing countries. And 475 billion would go to developed countries. This is something we need. We need a positive signaling by g20 countries and also all countries in an increasingly globalized world. Nicolle, thanks for that. Final thoughts here from nick xande rer xander. Nick, as we wait for alcoa today, i dont know how much clearly it has some import for the resource sector. Yeah. Its going to have import. More importantly what they say about the outlook for china and asia Going Forward in terms of demand. We know that expectations are low for alcoa. And theyll have to do pretty well to not miss. And im sorry. Theyll have to do bad to miss. I think what they say about the outlook Going Forward will be much more important for them. As it will throughout this. Look, right now with the gains weve already had in, with this battle between Central Banks at the moment, what is the right strategy . Because, i mean, youre more pessimistic than many about the rest of the year. Yeah. Again, i think i think buying volatility in some way, shape or form is the right way to go. I think the dollar will continue to strengthen. I think yields will continue to go higher as the u. S. Data continues to improve. But europe will be relatively stagnant. Do you think equities have to be stagnant because the economy is . No. But theyve had a very good run so far. They havent done as well as american equities. They shouldnt have. The reason being mr. Draghis done a very good job of talking up the markets over the last year. Your banks are up 40 , 50 . Theyre trading, you know, 60 higher p. E. Value than they were a year ago. But nothing has happened with earnings. Their earnings are still falling. So theyve rerated. Theyve gone from nine times to 13 times earnings on nothing but fluff. Can we find firms with just large single u. S. Exposure . Would they be better off or have they already rated higher anyway . There are some industrials, you know, you look at the likes of eds has a big dollar exposure. Rollsroyce as well. Any Companies Like that that have big u. S. Exposure and to dollar earnings, they will they will outperform. And the ones who european markets, european economy, still avoid those. And the same for emerging markets. Okay. Nick, good to see you. Thanks for joining us. Head of u. S. Equity strategies at btig. Email us worldwide cnbc. Com. Also still to come on the program today, two people have died following the failed landing of a south korean boeing 777 at San Francisco airport. Well be in seoul for Market Reaction to the tragedy when we come back in a few moments time. Well also have the very latest on the markets. Pretty good, solid day today in terms of an up for the week. Ftse 100 up over 2. 5 last week. Best week since january last year. This morning up about 1 as well. Futures seem to be trending higher as well for the first trading day of the week. Its post the employment report. Also the latest, as well, on egypt. Deaths over the weekend in clashes between the army and supporters of Mohamed Morsi. [. 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. Its time to do everything better than before. The new blackberry q10. S time. Youre watching worldwide exchange. Im ross westgate. European stocks buck the fwloebal trend. Portugal leading the rally one hour into trade or two hours into trade as the troika agrees to give greece the next tranche of aid. Conditions apply. New details shift the focus from mechanical to pilot error in the crash of a south korean jetliner in San Francisco. Shares of Asiana Airlines down nearly 6 in seoul. 42 people are killed in an attack on the Republican Guard headquarters in egypt. According to the ministry of health its a struggle between the Muslim Brotherhood and the army intensities. All right. If youve just joined us welcome to the Global Trading day. Futures are pointing higher. Right now the dow as you can see is some 67 points above fair value. This last week of the dow 1. 15 . Nasdaq at the moment around about 14 points above fair value. S p 500 at the moment is around 6. 5 points above fair value. The ftse cnbc global 300 trading higher. European equities pretty good start to the week if youre long on the market. Ftse 100 now up about 1 . Well call that 1 . It was up 2. 5 last week. The best week since january. X etra dax up 1. 6 . Ibex up 1. 4. The portuguese psi 20 also up 1. 5 . For now looks like the portuguese government is fwoing to hold a promotion for some in the coalition as well. We keep our eyes on the bond markets. Big spike in yields last week. 2. 75 on the 10year. Highest yield since 2011. Right now below that. Just below the 2. 7 mark. That 210 spread is the widest since 2006. Steepening yields, of course, normally what you would get if the economy really was improving as well. Spanish yields slightly lower today. 4. 62 as well. Currency markets, dollar index up near threeyear highs. Dollar yen 101. 29. Aussie dollar. Pretty poor week for the pound last week. A lot of people talking about mid 140s as a target now for cable as well. Euro dollar just on this side. See where we stand at the moment. 1. 239 thats where we stand in european trade. Lets go to singapore for the update on asia. Sichuan . Thank you, ross. Asian markets sharply lower this monday hurt by u. S. Tapering fears and beijings plan to rebalance its economy. The Chinese Government basically said it will no longer extend credit to sectors that struggle with overcapacity. The news put pressure on chinese banks. Bank of china and icbcs Hong Kong Listed shares both down about 2 . A few other troubled stocks to tell you about. Chinas Rongsheng Heavy Industries plunged today on chatter beijing will not step in to keep the company afloat as the shipbuilding business has overcapacity issues and the stock has already lost about 33 over the past three sessions on concerns over its profit warning. Workers laid off and also the cash crunch situation. In japan mobile carrier softbank also lost ground after Standard Poors downgraded the stock to junk inciting the expensive deal to buy sprint nextel. Asiana airlines tumbled nearly 6 today after one of its planes crashed in San Francisco over the weekend. Australian gold miners down sharply today as price of the precious metal remain under pressure. Newcrest mining, kings jb gate and alacel gold all tanked over 7 . Back to you. Asiana Airlines Says the pilot at the controls of the jet that crashed in San Francisco the spokesperson says he had nearly 10,000 hours flying other planes. But only around 43 on the 777. Was landing one for the first time at that airport. Head of the national trapgs safety board says the black box shows the plane was flying too slowly to reach the runway and began to stall right before the pilot made a futile effort to abort the landing. Prior to impact, there was a stick shaker that activated. This is both an oral and a physical cue to the crew that they are approaching a stall. Its called a stick shaker, but theres a yoke that the pilots are holding. That yoke vibrates or shakes. It is telling them that a stall is approaching. That activated four seconds prior to impact. Of the 307 people onboard, 305 survived. Officials are investigating whether one of the victims was struck and killed by an Emergency Vehicle rushing to the scene after she was thrown from the plane on to the runway. This is the first major jet crash in the u. S. Since november 2001 when an American Airlines flight crashed on takeoff from new york to jfk. The latest for us from seoul as well with more on the Market Reaction. Whats been happening with the stock . Well, investors showed an Immediate Reaction to the asiana jetliners crash landing over the weekend. Looking pretty spooked by the potential damage to its reputation. Do note that we are in the summer peak Holiday Season with the highest demand of the year, potentially. If that demand moves to other airlines, for example, korean air, and simple reaction to this news flow, that cannot bode well for this for the countrys number two flag ship carrier. Asiana on its part tried to dodge potential finger pointing to the fact that the pilot was training into this model boeing 777. And that he had, you know with the ceo saying hes very capable and has had ample experience with his job with the total flight hours of over 9,000. But that didnt do much. When its shares were already struggling, by the way, this year because of other factors like the currency factor and a pick up in oil prices. Of course, there are some on the defensives like Morgan Stanley this morning that said its too premature at this point, and investors need to take a wait and see approach until the probe results will come out. And were, of course, all eyes and ears on anything that will come out of the probe on what went wrong with the plane. Ross, back to you now. Thanks for that. Meanwhile, at least five people are dead and 40 still missing after a train carrying crude oil derail and exploded a town in quebec saturday. The train which didnt have an engineer on board at the time was hauling 72 cars of crude from north dakota to eastern canada. It rolled downhill from its overnight parking spot, picked up speed and derailed at a curve. Four cars caught on fire and exploded destroying dozens of buildings. Foul play hasnt been ruled out. The canadian Prime Minister Stephen Harper who visited the scene sunday says it looked like a war zone. U. S. Earnings season officially kicks off this afternoon when alcoa reports Second Quarter results after the bell. Overall earnings expectations are pretty low as companies have been cutting back forecasts. Analysts now predict results for the s p 500 rose 3 just three months ago. They thought earnings would rise near 7 . Technical materials such as alcoa expected to drag down the growth. Alcoas forecast to post flat Second Quarter as Aluminum Prices fell 10 . Agenda, may Consumer Credit figures out around 3 00 eastern. Also reporting groupo telivisa and wd40. Eliot spitzer wants back in the political game. Hes running for new york city comptroller. He resigned in 2008 after being caught patronizing prostitutes. He says he will ask the public for forgiveness. Spitzer says hell try to raise the profile of the Comptrollers Office using its power to audit city agencies. Weve been asking who in your view has made one of the greatest political comebacks. One of our viewers tweeted win ston churchill knew now to stage a good comeback. He did. If you want to join the conversation, get in touch with us. Email worldwide cnbc. Com. Tweet cnbcwex. Well head out to brussels for the very latest after this break. [ male announcer ] the allnew 2014 lexus is. This is your move. The troika of International Lenders says its afwreeed to the next tranche of bailout funds for greece. A joint statement included the caveat that the funds would be approved subject to conditions that greek reforms were behind in some areas. Were in brussels where theyre debating these issues. How stringent are the conditions going to be . Reporter well, stage one complete, ross. We know theyre behind on some of the issues of reforming the Public Sector in particular. This is something thats reached an agreement over the weekend. It involves 4,000 Civil Servant job cuts and a 25,000 Civil Servants to be reallocated or ultimately, if thats not possible, fired by the end of this year, too. Yes, we can reach an agreement here in brussels. Its the implementation risks that we face in greece. After the agreements yesterday, actually, the mayor of athens was attacked by protesters. So we know whats happened with the coalition over the last couple of weeks. Its actually splintered as a result of trying to enforce these job cuts. Implementation risk around greece is the key issue Going Forward. But ultimately what we are expecting today is to see this tranche of money agreed probably going to come in tranches broken down ultimately over the next couple of months. The carrot and stick approach as far as greece is concerned. But good news as far as this is concerned. Ultimately a number of analysts ive spoken to about this ultimately were going to be looking at an adjustment to this bailout process irrespective of what the troika is saying today as we go into the next review in the autumn, ross. Look, also we the portuguese Prime Minister reshuffling his cabinet over the weekend as well. Is there going to be any ease to the Adjustment Program for portugal if politically its going to become harder for them to deliver the Current Program . Reporter its a great question, ross. If you compare them to the likes of greece obviously theyve made greater progress so youd expect them to get further leeway. The European Commission at least to be more able to give them leeway. But right now, you know, if you look at the adjustment process ultimately the message from brussels is going to be stick to the reforms and actually the leeway just isnt there as far as the Bailout Program is. But youre absolutely right. Youve now got a guy as deputy Prime Minister who ultimately tried to back away from the austerity measures. You have to wonder what kind of concessions the Prime Minister had to make in order to keep him in the government. Okay for now. Similar story as greece. But ultimately implementation most definitely Going Forward. For now, thanks very much for that. Recap of the headlines today. Troika says yesterday to greeces next aid payment. Strings are attached. New details suggest human error for the crash of a south korean jetliner this weekend in San Francisco. At least 42 people confirmed dead as violence erupts in egypt. Other stories were following. Lloyds banking shares moving higher in trade. Media reports looking into whether temasek may buy a major stake in lloyds Banking Group from the british government. Sunday times reported temasek approached britain about taking a 10 stake worth 6. 7 billion according to unnamed sources. Reuters industry contacts say no such approach was made. Temasek and lloyds have declined to comment. The mexican billionaire carlos slim has set his sights on Smartphone App maker shazam. Hell be investing 40 million in the british based firm. Apparently slims First Investment in the uk company. As part of the deal shazam will be preloaded on handsets sold by American Mobile from later this year. Carl icahn is accusing dells special Board Committee of using scare tactics to push michael dells 24. 4 billion buy out deal. In a let tore investors late friday icahn says to us it seems no one has less confidence in dell than dell itself. Icahn was responding to comments from the company that hps performance is superior to dells and trends in the pc business could hurt dells planned transformation into a profitable i. T. Provider. Dell stock just up marginally. A short break. Still to come, protests between promorsi and antimorsi supporters turned violent last night. The latest out of cairo right after this. [ male announcer ]. 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. Its time to do everything better than before. The new blackberry q10. Its time. [ agent smith ] ive Found Software that intrigues me. It appears its an agent of good. [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] hooking up the country whelping business run now a waiting room is just a room. Trains they haul everything, safely and on time. Tracks they connect the factories built along the lines. And that means jobs, lots of people, making lots and lots of things. Lets get your business rolling now, everybody sing. Norfolk southern whats your function . Helping this big country move ahead as one Norfolk Southern hows that function . Egyptian shares opened lower today after protests in cairo and alexandria turned violent last night with the countrys Health Ministry reporting 42 dead and 322 injured. Were in cairo with the latest. Whats occurred this morning after reports of those deaths . Unfortunately, we have just lost him. We will attempt to get that report back. Lets just remind you where we stand with u. S. Futures. After a pretty good week last week, the dow up 1. 5 on the week. Ftse up 2. 5 as well. The u. S. Futures this morning are indicated that were going to open a little bit higher. Were implied higher on the s p 500 by eight points. Dow jones currently up 73 points above fair value. Nasdaq implied higher by 14 points. The ftse had the best week since january last week. Not only the unemployment report but comments out from the bank of england that they had essentially keep rates low. Right now up about a percent. The xetra dax up 2 . Cac 40 up 1. 5 and ftse mib up 1. 1 . We saw a big spread widening between 2s and 10s. The widest since 2006. Not necessarily a bad thing. Thats what you get if you believe the economy is fundamentally improving. Treasury yields at the moment below those levels at 2. 71 . 10year gilt yields just below the 2. 5 mark as well. Just reminder where we stand with currency markets. Dollar index is up at threeyear highs. Dollar yen 101. 54. Not far away from the late may highs at the moment, 101. 33. Euro dollar at 1. 2844. 1. 2836 was the sevenweek low on friday. And cable sterling dollar 1. 4903. 1. 38 handle a little earlier as well. Meanwhile the rupee hit another record low against the u. S. Dollar. Now 61. 02. Reports from traders say the rbi likely stepped in to sell u. S. Dollars through state run banks to try to extend the slide. Hasnt had much on an impact, though. India needs, of course, capital inflows to fund the current account deficit. The Prime Minister mr. Singh says hell meet with Industry Leaders to address the problem. Other emerging market currencies being hit fairly strongly by fed tapering fears as well. Dollar up against the thai baht and philippines currency as well. Lets go back to egypt. Weve reestablished contact. Lets just reframe the question again. Following those reports of deaths in those clashes, what is happening now . Reporter well, its a very fluid situation. Again, theyre pointing fingers at each other. The promorsi demonstrators say they were fired upon during predawn prayers. The soldiers in the military are speaking of an armed terrorist attack, an attempted one that they were able to rebuff and probably causing a lot of the fatalities that we saw. Again, a lot happening on the political front as a result. Youre seeing the newer party, which is an Islamist Salafist party that was taking part in this transition, in this road map, was in fact objecting to the appointment of the what would have been the Prime Minister Mohamed Elbaradei or xe yad baja elson. Theyve been Holding Things up in those talks. Now theyre saying theyre withdrawing completely because of what they describe as a Republican Guard massacre. Youre also seeing the Muslim Brotherhood through the freedom and Justice Party official page on facebook calling for an uprising. And we may have a press statement, a press conference from the Muslim Brotherhood shortly. Well have to wait and see what they say there. And what could be expected. You pointed out, of course, whats happening on the egyptian stock exchange. Investors nervous this is an escalation. Remember, we have seen violence in the nights before. This violence where 42 people have been killed according to Health Officials is a whole new level of violence. Yeah. Where does this leave the political process if the if the parties pulled out . We seem to be whats the danger of us sliding into some kind of civil war here . Reporter well, the risks are very real, ross. I think civil war is probably still a bit of a strong word to use. But the risk looms nonetheless if policymakers are unable to turn things around and bring everybody to the table. When a key islamist Political Party drops out of the political process and the Muslim Brotherhood is already ousted, and on the sidelines of the political process, that, of course, creates additional tensions and additional risks. It is also clear the cabinet announcements have been delayed as a result of whats happening. It was expected to be announced later today. We dont have an announcement yet. It could be delayed even further until they get their head around this situation. Actually, take control of this situation. Because at the moment the violence is not just in cairo. Youre also seeing it in alexandria and in certain parts of sinai. Ross . All right. Thanks for that, yousef. Latest from cairo. Our apologies as well for the interruption earlier. Meanwhile, mr. Elbaradei has condemned the egyptian killings and is urging an independent probe into what has gone on. Away from egypt, in hong kong thousands of property agents have been taking to the streets to protest the citys measures to cull real estate prices. They say governments policies have brought the market to a standstill. Smaller property agencies could go bust. Theyve ruled out numerous rounds of measures to deter speculators in recent years. House prices in hong kong are still amongst the highest in the world having soared 120 since 2008. Shares of the worlds biggest tin has taken a bit of a pounding. Chinas yunnan tin says theyre investigating its chair for serious discipline breaches. The government used similar language in the past to describe its corruption probes. Tin operations havent been affected. Analysts say the drop may also stem from a recent price slump. The court in beijing just delivered a suspended death sentence on chinas former Railway Minister after he was found guilty of corruption and abuse of power. He was sacked from his post and expelled from the communist party last year. Prosecutors accused him of taking more than 10 million in bribes over a 25year period. Still to come on the program, the u. S. Is still reeling from the Asiana Airlines crash landing that happened over the weekend. Well go to San Francisco for the latest. Youre watching worldwide exchange. Im ross westgate. Today european stocks buck the global trend, rallying in early trade as International Lenders agree to give greece the next tranche of aid. But say conditions will apply. The money could be paid in installments. We shift the focus from mechanical to pilot area in the crash in San Francisco. Asiana shares down 6 in seoul. 42 People Killed in the attack on the Republican Guard headquarters in egypt according to the ministry of health as the struggle between the Muslim Brotherhood and the army intensifies. All right. A warm welcome to you if you just joined us this morning. U. S. Futures are indicated higher after gains last week. The dow up 1. 5 last week. S p 500 at the moment is over ten points above fair value. The nasdaq at the moment is 18. 5 points above fair value. The dow as you can see is around some 94 points above fair value. The ftse 100 last week had its best gains since early january. The ftse cnbc global 300 a little firmer up by eight points. The ftse about a percent gain to add from the 2. 5 gains from last week as well. Right now you can see where we stand. Up 1. 2 . Pretty much at the best levels of the session. Xetra dax up 2. 3 . Ibex up 1. 7 . As well the psi in portugal up 1. 7 . Thats where we stand right now ahead of the u. S. Open. What are investors to do at the beginning of this Fresh Trading week . A recap of some of the thoughts of the guests weve already had on today. We like equities and have for some time as opposed to the bond market. Particularly developed market equities. Weve been positive on u. S. Equities for some time in large part from the reasons i talked about in the last segment. At these levels, though, it might be it might interest some people to start nibbling at some of the higher rate bonds. Rerated our view because of domestic political concerns, possible developments not necessarily in the right direction when it comes to reform momentum. And finally because of external factors that show a rise in core yields because of fear of fed tapering. China from high double, you know, low double digits growth to now 7 , 7. 5 . So, you know, why take the added risk premium in e. M. At the moment when the best game in town is to be long likes of s p, ftse, nikkei, and even european related stocks. Asiana airlines meanwhile says the pilot at the controls of the jet that crashed in San Francisco saturday had little experience flying the boeing 777. Spokesperson says he had nearly 10,000 hours flying other planes but only around 43 on the 777. And was landing one for the first time at that airport. Ahead of the National Transportation safety board says the black box recorder shows the plane was flying too slowly to reach the runway and began to stall right before the pilot made a futile effort to abort the landing. Prior to impact, there was a stick shaker that activated. This is both an oral and a physical cue to the crew that they are approaching a stall. Its called a stick shaker, but theres a yoke that the pilots are holding, and that yoke vibrates or shakes, and it is telling them that a stall is approaching. That activated four seconds prior to impact. Of the 307 people on board 305 survived. Officials are investigating whether one of the victims was struck and killed by an Emergency Vehicle rushing to the scene after she was thrown from the plane on to the runway. Its the first major jet crash in the u. S. Since 2001 when an American Airlines flight crashed on takeoff from new york jfk. In korea Asiana Airlines stock down nearly 6 . Lets get more. Joining us on the line from San Francisco, our very own phil lebeau. Phil, thanks for joining us. The speculation now turns to pilot error. What implications, if any, for the plane manufacturer boeing and the 777 . Reporter ross, i think that based on what we heard so far, and its still early, theres still no final determination of cause, and so things could change dramatically in the days, weeks and months ahead. But based on what weve heard so far this sounds like a tragic, terrible accident. And the early indication is that there is some form of pilot error. But, again, that needs to be, you know, finalized by the ntsb. And were very early in the investigation. But it does not appear as though there is a design defect, malfunction, anything related to the manufacturing of this 777. And as a result, i think youre going to see little, if any, reaction in terms of the stock of boeing and the longterm implications for boeing. The interesting thing here, phil, is i dont know a lot about planes. But, you know theres enough systems on board planes theoretically these planes should be able to land themselves. To have an accident like this where it was just too low and not going fast enough seems extraordinary. Reporter it does seem extraordinary. We take for granted that when pilots are flying planes, the assumption that many of us make is, well, he puts it on autopilot and just glides it right into the airport. And thats not always the case. At the end of the day, you want your pilot to be able to maneuver the airplane, to make the changes that are necessary. And not just glide the plane in. Again, its so early, ross, that we dont know definitively whether or not the ultimate cause here will be pilot error. But the early indication is that there is a tragic number of decisions that were made in terms of this plane on final approach that ultimately led to this accident. It was the glide slope system on or off at San Francisco at the moment . Reporter it was off. And the airline was aware of it. And it was going to be off it shall it was turned off june 4th for construction that was being done here at the airport. Was going to be off at least and still is off until sometime in late august. But the ntsb chairwoman made the point, and she said it several times yesterday, there are enough other systems and enough other pieces of technology both on the ground and in the airplane to assist the pilot in bringing the plane in. Remember, this was a perfectly clear, Beautiful Day here in San Francisco. So it wasnt inclement weather where you could say, well, they didnt have all the assistance they needed in order to bring this plane in for a safe landing. This was a vfr, visual flight read, landing. And they should have been able to bring this in. Almost every pilot will tell you that there is nothing here that should have caused this accident. At least, well, you know, it could have been a lot more than just the two fatalities that we had, phil. I suppose thats the thing to be thankful for. Thanks very much, indeed, for that. Phil lebeau calling us from San Francisco. The u. S. Earnings season initially kicks off this afternoon when alcoa reports Second Quarter results after the closing bell. Companies have been cutting back forecasts. Analysts now predict results of the s p 500 rose 3 just three months ago. They thought earnings would rise nearly 7 . Tech and materials such as alcoa expected to drag down growth. Alcoas forecast posted flat Second Quarter profits as aluminum price fell around 10 . Thomas lee, chief u. S. Equity strategist at jpmorgan. Good to see you. Thanks for joining us. A lot of Companies Going into around the First Quarter earnings were saying, you know, revenues are down, but dont worry. Things will pick up. Well make up for it in the second part of the year. How much doubt is there about whether that is going to happen . I mean, i think theres a lot of doubt from investors perspective about earnings. We havent had a lot of top line growth as youve mentioned. Companies have really been delivering these results through cost cutting. But i think q2 is going to still surprise us to the upside. I think thats still been the story. You still have enough Companies Generating top line growth. But as we think about what happened over the past six months, i think some of the things that are encouraging is, you know, the u. S. Has actually held up pretty well despite sequestration. And with europe, i think there are some signs that even if theres policy turmoil, i think the Industrial Production side of the economy is actually starting to improve. Is there a sense overall, i think its so, i mean, overall i think were going to be pleasantly surprised with q2. I think its, you know, really what were expecting is companies to really affirm the idea the second half should start to see better top line growth. Are we going to see better performances from u. S. Focused businesses . Bearing in mind we still havent seen a big impact on emerging markets. Theres still not much growth out of europe. Thats right. I mean, thats you know, increasingly thats a story that i think investors do believe. Is that u. S. Is holding up better. We can see it in a lot of the end markets. Whether its autos or housing strengthening. You know, the u. S. Financial system is actually pretty well capitalized. Its really showing through bank earnings. Of course, theres some concerns about rising rates and the impact it would have on capital markets, though. Kind of what is interesting is weve seen this weve got on to bond yields in a moment. We clearly have seen a backup in rates. There seems to be in impact yet on autos or the home sector either. So, i mean, but will investors will bawary of those . Theyve had a good run, those sectors. Will they be wary of a backup in rates impacting them . I think that where rates may have more Immediate Impact is really in the housing sector because Mortgage Rates have risen. You know, we still feel confident there is enough pent up demand in housing that, you know, household formation has been delayed, that housing still has some legs. Historically when rates rise the initial one of the groups thats initially hit the hardest is the housing sector. I think there could be exceptions this time because of pent up demand. Thats where we see it. I think on the auto side there is, you know, improving construction activity. That really drives light truck sales. Thats going to help the auto sector. Especially because its a much higher margin segment. Thomas, your chance to get a cup of coffee or tea, whatever is your poison this time of day. Well take a short break. Well come back to you. Also still to come, the u. S. Treasury department is being hit by another lawsuit over the bailout of fannie and freddie. More on that when we come back. A recap of the headlines from around the world. The troika says yes to greeces next aid payment but strings are attached. New details suggest human error for the crash of a south korean jetliner this weekend in San Francisco. Plus at least 42 people confirmed dead as violence erupts in egypt. Other stories were following today, oil giant bp will appear in a u. S. Court today to argue business individuals arent affected by the 2010 spill are profiting from its cleanup fund. Claims filed against bps Oil Compensation fund have risen by 18 over the last six weeks to reach nearly 200,000. The fund will be accepting new claims until april according to bps agreements with u. S. Courts. Bp set aside nearly 8 billion in its accounts for cleanup costs, fines and compensation. Shares in bp are down 29 since the spill. Glnchts carl icahn is accusing dells special Board Committee of using square tactics to push Founder Michael dells 24. 5 billion buyout deal. In a letter to investors on friday icahn says to us it seems that no one has less confidence in dell than dell itself. Icahn was responding to comments from the company that hps performance is superior to dells and trends in the pc business could hurt dells planned transformation into a profitable i. T. Provider. Plus thompson riters will no longer give an elite group of investors an early peek at the university of michigans consumer senment survey after new york regulators began investigating the arrangement. The company has been giving top paid subscribers a two second advance notice on the survey. A deal reported by the wall street journal last month. Analysis of trading on the data show 7 million shares bet on the market dropping within a second of Thompson Reuters releasing the report. Just down marginally. The u. S. Government is being hit with a new lawsuit over the bailout of fannie may and freddie mac. Good morning, courtney. Good morning, ross. A hedge fund is suing the u. S. Treasury over changes made last year to bailout terms of fannie and fraed eddie. They claim they violated a 2008 law that put the lenders into whats known as conservatorship as Housing Market losses surged during the financial crisis. The government agreed to inject billions of dollars into the companies to keep them afloat. In return the treasury got a new class of preferred shares that initially paid a 10 dividend and warrants to buy about 80 of fannie and freddies common stock. Last august treasury amended those terms, instead forcing the firms to hand over nearly all of their profits as a dividend starting this year. Fannie and freddie dont have to make Dividend Payments until when theyre unprofitable. As a result they cant redeem any of the preferred shares the government has taken. Perry which began investing in fannie and freddie in 2010 claims as the Companies Returned profitability last year the government moved to ensure treasury would be the sole beneficiary of the improved balance sheets. The suit also claims the dividend sweep amounts to a new stock purchase, something treasury didnt have the authority to do in 2010. Perry says the fhfa as fannie and freddies conservator overstepped bounds to protect their assets when it let all their profits go to the government. Perry capital manages money for retirement plans, college endowments, foundations, Insurance Companies and other public and private investors. T the hedge fund has made several investments in the housing sector. Theres lots tangled up in this. Were just learning the basis now. An interesting note hereor you, ross. Did you know that perry capitals founder is actually his uncle is jimmy cane of bear stearns if you can connect that family tree. Didnt know that. Ive been slightly out in the clouds anyway this morning, court, because of andy murrays victory at wimbledon. Oh, yeah. That was very exciting. Very exciting. I forgot about that. Yeah. Yes, i know. Good stuff. Thanks very much, indeed, for that, court. Good to see you this morning zblmpk. Eliot spitzer wants back in the political game. The former new york governor announced hes running for city comptroller. He has until thursday to get enough signatures to secure a spot on the ballot. Spitzer resigned in 2008 after being caught patronizing with prostitutes. He says hell ask the public for forgiveness but will try to raise the profile of the Comptrollers Office using its power to audit city agencies. Throughout the show weve been asking who in your view made some of the greatest political comebacks. Someone tweeted alexander hamilton. Keep your responses coming here on worldwide exchange. Tweet cnbcwex. No competition at the u. S. Box office this weekend as millions trampled the man in the black mask and his indian companion. Yufr verseals despicable me 2 opened to an estimated 141 million adding to the 155 million its made overseas. Disneys lone ranger starring johnny depp was far behind with a 49 million debut. Still to come, were still on the cusp of earnings season. How will that flood of results impact the markets recent run . Well be over in the bond pits in chicago ahead of todays trading. Hey, buddy . Oh, hey, flo. You want to see something cool . Snapshot, from progressive. My Insurance Company told me not to talk to people like you. You always do what they tell you . No. Try it, and see what your good driving can save you. You dont even have to switch. Unless youre scared. Im not scared, its. You know we can still see you. No, you cant. Pretty sure we can. Try snapshot today no pressure. [ whirring ] [ dog barks ] i want to treat more dogs. Our Business Needs more cases. [ male announcer ] where do you want to take your business . I need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, Small Business solutions from at t have the security you need to get you there. Call us. We can show you how at t solutions can help you do what you do. Even better. Okay. If youve just joined us this morning european equities are up this morning, about a percent for the ftse 100. Up 2. 5 last week. Best week since january for the ftse. X etra dax up over 2 . Dow is currently some 88 points above fair value. Nasdaq around 18 points above fair value. S p 500 is trending ten points higher. Of course, on friday, of course, we had a big selloff on the bond markets following that strongly expected payrolls report. Yields spiked amid fears the fed will begin tapering sooner than thought. Goldman sachs now expects the 10year treasury yield to rise to 4 by 2016. The sale of the the scale of the selloff has other analysts worried as well. Theyve told cnbc. Com yields are fast approaching a pain threshold for the fed and could stop a recovery in the Housing Market. Thomas lee from jpmorgan is still with us. Mike, thanks for joining us. The spreads between 2s and 10s the widest since 2006. What do you think of this tbill rise . Well, it was long overdue. And as expected, what really happened was so much was priced in immediately at the first sniff of any higher rates or impending growth down the pipeline economically. Im not surprised. I think the biggest resip ro cat of all of this over the last week and a half by two weeks has been the dollar and how its relationship right now in a trading scenario carries through with strength in crude oil, the selloff in in precious metals, of course, and then lastly the s p, of course, back above the 50day moving average and looking strong in front of earnings season. I think its those relationships that are important. But most important is that gap lower in treasuries. It was it was absolutely impressive. And they shoved as much down the pipe as they could as you saw these yieldings get all the way out to 270 in the 10s. Doesnt seem to be much in the relationship between the dollar and crude . Thats broken down. One thing of note in crude oil front month spreads historically this time of year are 20 cents, 30 cents wide. The difference between, like, the september and october contract. Right now those are at 1. 19. Were almost four times through what is historical because of the demand for something up front. Because of either impending news out of the middle east or just the defiance of saying the back month contracts are seeing less demand because they think crudes going to come back off this rally much later in the year. Thats very significant. We watch that in relation to the dollar the spread more than the actual outright contracts. Thomas, lets bring you back in as well. How much higher do yields go before or are they an impediment for u. S. Equities . I mean, theres you know, theres obviously the economic impact. And, you know, were already going to begin to feel it with higher rates on mortgages and all of cost of financing. But when you think about where rates are today, theyre still pretty low by historical stan tards. So i dont think this is a threat to the recovery. On the Financial Market side clearly theres a lot of adjustment taking place because of some of the delevering. As funds sort of move out of fixed income. But stocks still have an argument to rerate against bonds even here. I think the most important metric i look at is the high yield market. And with current high yield where it is today, on yield to worst, if i avert it to look at p. E, roughly high yields trading around a 14 p. E. , historically if you normalize the relationship, equity markets should be closer to a 17 to 19 p. E. Theres still room for stocks to rate higher based on relative p. E. Yeah. Of course, steepening your curve should be good for the bank sector. Michael, final thought from you. Whats going to be your highlight this week . I think were going to see a pleasant surprise across the board here on earnings i think thats going to work merry with whats just mentioned, p. E. S on the broad indexes. Lets take the lead from the dollar. Watch the s p really start to perform again here as we start the week. Okay. Michael, good stuff. Thanks for much, steve. Michael gurka. Thomas, good to see you this morning. Chief u. S. Equities strategist at jpmorgan. Thats just about it for todays edition of worldwide x change. Coming up next, of course, squa squawk box. Whatever happens, we hope you have a profitable day. On worldwide exchange, for now, goodbye. Good morning. More details emerging in the weekend crash of asiana flight 214 in San Francisco this weekend. The crew apparently tried to abort the landing before hitting the seawall. More on that in a moment. Thompson roiter suspends the Early Release of Consumer Sentiment data at the request of the new York Attorney general. Ready or not, speaking of new York Attorney generals or some other story involving a former one of those. Right now earnings season is upon us. Its monday, july 8th, 2013, and squawk box begins right now. Good morning, everyone. Welcome to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. We have a big week about to unfold for the markets. This comes after fridays jobs report. Now investors are bracing for earnings season. Guess what . Alcoa officially kicks things off this afternoon. On friday we look at Quarterly Results from banking giants jpmorgan and wells fargo. Right now if you take a look at the markets, as we get started on a monday morning, youre already looking at some sharp upside potential here. Dow futures are indicated up by about 92 points right now. The s p futures are up by 11. 5. Again, this is kind of continuing what we saw after that jobs report on friday. Markets initially looking at it as a little bit of a concern because they thought maybe the fed would be tapering sooner rather than later. But right now it does look like things are indicated higher. If you check out the 10year note right now couldnt believe the yield when i saw it last. Right now yielding 2. 704 . Pulled back slightly from the high it hit back on friday when