Transcripts For CNBC Worldwide Exchange 20140804

Conducts more air strikes putting pressure on donetsk. Youre watching Worldwide Exchange. Bringing you Business News from around the globe. A warm welcome to Worldwide Exchange. Heres whats coming up on todays show, a gold rush to cut costs. This is australias second biggest gold mine in the country. Also, could a political crisis in bulgaria be putting the trouble of ktb in doubt . And as investors await michael kors earnings, we learn what could be killing the handbag brand . Portugal unveiled a rescue plan protecting taxpayers to leave junior bondholders carrying the can. The countrys biggest lender will be split into a good bank and a bad box holding the toxic assets linked to the business empire. The bs shares are currently suspended after a record 3. 6 billion euro loss was posted last week. The European Mission says the bailout is in line with the eu state rules. To shares in pierre, we are looking at the beginning of the session this morning with Portugal Telecom shares under water, but now this is showing the cash injection from the revolution and Government Funds already set aside. So obviously we have the revolution, the ongoing dealing with the situation as far as the bank is concerned still raising questions about the border of the porch portugese market. After the losses we saw in fridays session, we are seeing 4. 5 losses for the German Market. It seems a long way away at this stage, but right now we are relatively unchanged with the cac higher by. 35 . Well look at the individual stocks on the move in the trading session. Leading the stocks in europe this morning, axa is just shy of 3 . Hugo boss is just shy of 1 . And adidas is underperforming so far. The price target was slashed so significantly below with a recommendation changing from a buy to a sell. The dollar is under pressure on friday after we got the weaker than expected payroll number to give support to the u. S. Market, in particular on fridays session they weakened into the close. Euro dollar is trading at 1. 3425. The ecb, the bank of england and the bank of japan meeting. We had stronger than expected retail sales from australia to give a bounce to the currency, but seemingly getting right back in there, we have to try to talk the currency down a little bit this week. We are bringing it together and did have the data in the u. S. A lot of questions being asked about the case of the u. S. Recovery. The question is, are we back to good news for the u. S. Economy being bad news for equity markets . Listen to what Dennis Gartman told us earlier. The fed is not wanting to raise the short end of the curve for another year anyway. The long end of the curve was probably going to do reasonably better. The positive slope to the curve is something the fed likes to see happen. They would like to talk about inflation to drop the back end of the curve higher and keep a slower curve intact, but lets all be calm and not be panicked at this point. If i turn from being quite bullish of stocks to neutral last week, and i have to tell you, i never thought we would see the market fall several hundred dow points over the course of several days. I got lucky and am turning back to being bullish again. Joining us is the ceo of pimi pimico, thank you for joining me. A dose of reality that seems shortlived after looking at the market this is morning. What are your thoughts . Well, we have an environment of liquidity and Market Sentiment where you clearly feel the liquidity front, particularly with this as much as that rates would rise earlier than we believe in any case with any mutual scenario. You did have a 4 gdp number, but at the same time the unemployment number are not where they need to be in order for the fed to move. So thats one thing. On the economy side, youve also got mixed data. So in europe you see good sentiment data. In china you see a little bit of revival with the target, but the reality is theres quite a bit of softness across the board. All of this means when we are in an environment of very low volatility like we were before and markets are in favor of violation, you will have spikes of volatility to build equity positions if you do not have them. And it will look scary. Because when the news comes, they can be geopolitical. But if you have the stocks that you like and see the air pockets as i call them, you really should step in and buy. As far as your concern is, you have to be selective as to where you are. Where should investors be looking . If you look at the global space, i think there are a lot of things happening. Particularly within emerging markets. You have, with the russian news being still very problematic, you have a shift towards china. So i think chinas market has underperformed a lot. And youre seeing some measures that are being put in place in the shortterm, i think that could be seen quite positively by investors. So i think if you have nothing in china on the very tactical basis, you should add japan is an interesting year because people are really doubting economics. The market has underperformed but youre seeing some interesting things. The region of japan is lower than that of the u. S. , and we have not seen that in many, many years. If you have very underweight in japan, thats an area to add to. Theres one thing im intrigued by, the fact that 127 companies in japan have signed this stewardship code. And that code means they are committed or a portion of those are committed to have two end pen depdent directors on their board. So that could signal a shift that would help us. And i still like pockets in the u. S. And europe, particularly the insurance policy sector. If we bring it back to europe and we were just talking about the portuguese sector, how much of a concern is that because we still look like a debt to gdp of 132 . Shipping, they finally have the money, particularly give the or gener argentinian situation, how worried should we be . I think its like phase three. We had the near death experience and the real panic, if you want, in the first phase of the market. Then phase two, things are not going to end. The system is still there with a lot of liquidity and measures put in place. And people just rushed in. As you know, i have driven yields to very low level, really. And i think we are in phase three where we are saying, wait a minute, yes, we have had the second move but theres still some areas with issues. I think that phase is very healthy and i think we need that. If you look at what is happening with, yes, we are protecting or preserving if you want the most senior bondholder, but otherwise the cost is being born by a lot of other investors. I think if you look at porch gal, its very clear that the economy still has a lot of restructuring to do to try to gather momentum and strength. And that was visible to everybody. Do you think that could be the point when we know the european sector is healthy again when we have a situation like this and do bring in the senior bondholders, because we are not afraid of the systemic implications . Im not sure that has longterm implications, but i think whats important is this is happening ahead of october. And i see this happening as an interesting move, same as hsbc, the u. K. Banking system is in a much better space in general. You start to secret growth. You are seeing an end to this provisioning. You know, buy or decline, but if you look at the letter that hsbc sent to usborne and the deadline on the current commerce areas, we are still in the mecca of designing the european Banking System over the next few years. We are going to come back to that point. As you just mentioned, hsbc will report their top earnings in a couple minutes time. The bank will report an 11 increase in profits and increase visions for ppi claims. Well break down the results right after the break. Stay with us, we are back in two. The cadillac summer collection is here. During the cadillac summers best event, lease this all new 2014 cts for around 459 a month or purchase with 0 apr and make this the summer of style. We are just awaiting for hsbc to report earnings. Take us through the numbers here. We are expecting the profits to be down around 11 . They had bleak numbers in q1 down 20 . And you want to look at the difference business lines, whether its the markets business which is now over a third of hsbcs business. That would see a change in the headwinds of others being affected. And then you can talk about are they getting the 12 return on equity that they have had. No, they are a bit shy, but still this is part of the twoyear turnaround where chef shaved a lot of costs out of the business, in fact, roughly around 5 billion of costs a year, 40,000 jobs have gone. But thats taken out the turnover. Net profits coming in at 9. 3 billion dollars. First operating profits at 11. 06 billion dollars. So that is shy of expectations there. Pretax profits, 12. 3 billion dollars. Again, a touch shy of expectations on that one, too. Lets look at what we are seeing for italian equity, as far as their capital ratio is concerned, 11. 3 up from 10. 9 on that one. So the balance has always been a strong case. We know they have a strong balance sheet, but we were just talking right before getting the numbers about revenues being hit by all of this costcutting progr program. So it would be interesting to know what the turnaround number is. Expectations it is down near 9 . It has not beaten that and is a bit shy as it is in the profits. Yeah, im just trying to find here the individual earlier we had news that Douglas Flint, chairman of hsbc, had written both to the chancellor of the u. K. And to the bank of england asking for a bit of leniency when it comes to refinancing the banks because that deadline for 2019 he says has put in jeopardy because of the market review going on at the same time. Big Regulatory Risk still in banks. As far as underlying revenues, 31. 35 billion dollars. Down 3 billion from the prior year. As far as revenues are concerned, we have seen that drop as far as the consensus is concerned. The theme from last week will be legacy issues, are we going to see a ppi provision being written in. Remember, thats week we saw horrific numbers out of barclays. Now we are at 23 billion pounds. Thats just for ppi. And remember, weve got other investigations, we have fx going on at the same time. So the bank story, unfortunately for investors, remains one where even if you are seeing a return to growth in an environment where if you have Interest Rates going up, much better, you still have the legacy costs. This is a problem for the entire sector, not just in the u. K. But also in europe. I think this is a phase where a lot of the issues and excesses that we have seen in the past are coming out. And we have making the framework for the banks in europe over the next five years. We are in the mix of it. So theres two things for me. Im thinking about the first one that well see if that letter is actually answered in a positive way. Because i think if it is, it means quite a few things in terms of legal cost and legal pressure that is going on and the realization is going to be the same to give a little breathing room. The second thing is im thinking as an investor, if i see such drops in stocks, would i want to pick them up . On the theme of rates will rise, although with the mutual view, i think it will be slower than what people expect. I like the insurance policy sector very much. I think i do. If i saw air pockets with sharp declines in businesses that are otherwise seen as quite the franchise, i would be happy to stop picking them up, but i want to see a price reaction to that. A shed price is relative to what is going on in the u. K. Economy. We know what percent is in asia for this stock in particular, so it doesnt benefit to the same Asia Business is twice as big as the u. K. Business. If you look at hsbcs performance versus the ftse 100, it lags that against its peers. Many are seeing much more of the upside, but the question is, the businesses that have been, be it asia or latin america, are they better set up in the future to deliver what they saw would be a 12 return on equity. And i think when talking about hsbc, you cant discount the fact that though it has its own corporate government or management issues, is a lot cheaper by many analysts gue guestimate, so it is kind of the price as well. They are remaining positive for the outlook for the markets. Slightly increasing the forecast for the mainland gdp in china. 7. 5 goes backing to what you were making. I know the primary focus in the latin america businesses is mexico and brazil, but the other thing that would be interesting is it if impacts argentina and what they are saying about that. The comments from the chief exec will be interest on that. They dont have a massive business there, but of course that is an issue for the whole region. So very important to see what they say on that. And whether these kind of big macro moves that are going on at the moment are going to stop affecting Companies Like hsbc. I want to finish the discussion about the letter that was talked about as far as mark carney is concerned and just stopping the separation right now because of the business and the competition issues as far as lending is concerned, what are your thoughts on this . Then im coming to you. I think its going to be under a lot of scrutiny, the deadline of 1919 is quite some way off anyway. Its just doing it for what i think the point is is that they may have to up cur legal fees to refund the fact that they may have to dispose of them later on, i. E. , does that make sense. From that perspective it is something quite reasonable. From the regulators perspective, we have to see theres Something Else they want to achieve from this, with other banks as well. We have always made exceptions, right . They are not saying to stop what is in the process. What they are saying is given that we have given the Market Authority investigation into accounts for deposits or lending, should they be putting that out by some margin so that what they are not doing is changing business line but then they are told sub constituently by the market authorities, you have to sell entire sections of your revenue saying these two things could create a clash that is very costly for banks when it doesnt need to be. And i think it will be very important to see how the chancellor responds. They are raising the important questions here. A couple more lines filtering through, raising the dividend to 29 per share rather than 27 cents per share. They are cooperating thus far. Thank you and well have you back shortly. Now porch gal unveiled a 4. 9 billion euro rescue plan protecting taxpayers but leaving shareholders and junior bondholders carrying the can. The countrys biggest lender will be spread into the good bank and those in the will look to the bad bank. The bailout is in line with eu state aid rules. Now we are joined on the phone we edward hugh calling from barcelona. Edward, thank you for joining us. If we look at the new structure of who is running the bank, it felt like a nationalization anyway. Im wondering what your thoughts are on the solution here. Reporter good morning, julia. Nice to be back with you. Well, really, i agree with you and it seems this is defective in whats happening. Im not, let say, informed about the deal to go into comment at that level. But i mean, i would draw attention to two issues, the first is that the markets are now financing these sovereigns. And that means the conditionality of what can be exerted over time is not what it was before. I mean, the second place n particular portugal and italy, are running or showing debt levels which are not your responsibility. And it will push down the shortterm growth expectations, which is surely going to be the case. And really begins to raise a question of are we going to see the restructuring . I mean, if we are, who is going to be carrying the can . The ecb or the bondholders. Edward, im here in the studio do. You have a sense of who is next . Do you have in your mind another bank in europe to go through the same process that you have seen going through the last week . No, because im not really a Bank Specialist in that sense. Im much more on the macro side of the macro with implications. He used to be we are not anticipating any shocks there, but thats what is going on with the daytoday basis. I was here a month ago and people were asking, is this the euro crisis back again, and i said no, this is just a warming. But heres another stage into a situation. Its the the euro debt cards are hurling back towards us again. The numbers on the front, macroeconomic numbers out of greece the last few minutes are shocking. People need to confirm the situation that maybe the Financial Sector and the equities in the country are quite positive, but if the people are living on a day to day basis with up sustainable situations, this is only going on for as long as it can. Waerd, you just said they are on the cusp of sustainability as far as debt is concerned. Is it sustainable to have debt at 132 . And i want to bring in the argentinian side of this. Im a bit weary of committing myself on what they might be because of legal questions in the royalty of that, im not competent but yes, exactly, this raises the whole issue with being fascinating because it brings around the idea that the countries could be going after the euro and everything will be okay tomorrow and the markets could be forgotten. Sing, argentina. But when i talk about this clearly, if you have another program with the imf, their debt sustainability is and can be paid back. They have gone through that point, but the problem is at the moment the markets are sustaining them on the idea that somehow or other magically the ecb is not only going to buy bonds but will take the losses in the private sector. There are a lot of questions to be asked about this. Edward, great to talk to you, independent economist. Still to come on the show, from electronics to edibles, taking their chances on some ra ra radishes. Well have the latest details from tokyo coming up. Youre watching Worldwide Exchange bringing you Business News from around the globe. Welcome back. Here are your headlines. Portugal puts a bid on the table to move their shares to the top of the European Markets. Shares in hsbc turn negative after pretax profits drop slightly more than expected. The bank is cooperating with various fx investigations as it sets aside 2 billion in provisions so far this year. The Ukrainian Army intensifies pressure on the prorussian rebels in donetsk. They are conducting exercises with over 100 aircraft. And the worst Ebola Outbreak in history threatens to overshadow president obamas u. S. africa summit as the two heads of state pull out of the washington event. I see a slight turn in the European Markets in the last 20 minutes or so. But stocks are under water by. 10 . Just shy of. 40 there for xetra. We are looking at the tenyear, we are higher by. 02 for the tenyear u. S. Treasury. Foreign exchange rates, the dollar did lose steam after fridays session after the slightly better than expected payroll report. They will continue to see some of the dollar positive, but right now weve got euro similar unchanged at 134. 25 level. 77 rise in the price of gold is here providing an optimistic backdrop to the 2014 deale dealers. Matt is at the event for us. This is the preeminent mining conference in the southern hemisphere. And the first day, just about to wrap up, so im sure you can see everybody heading out to the pub. Now, behind me, this is really a sense of caution optimism here. You are mentioning the rise in the gold prices that we are seeing and the nickel prices up about 30 . Despite the fact they are out of the headwinds, particularly in australia as we see the end of the mining with the investment boom and the domestics economy picking up a bit of slack. We also had comments as well from a former governor of the bank of england who made the keynote address here at the forum who said he doesnt see any headlining in china any time soon. Now, renown for being in the gold field, we thought it was a Good Opportunity to take a look at one companys gold mine. This is Northern Star resources a couple years ago only had one mine, but it has brought up a huge range of used mines now. And its actually baring a little bit of fruit. Take a look. The annual production is forecasting as much as 600,000 ounce this is year. And Northern Star resources has been on a spending spree acquiring gold mining sites across australia divested by other miners proving one mines trash is indeed anothers treasure. It is a strength of the company to take an asset and look for opportunities. It is about drilling and finding the extensions and then mining it. So if you stop drilling, eventually you may find it. This is one of Northern Stars recent acquisitions. The canal located just outside of calgouli. They also acquired the field situated on the other side of the town center. While it may be over 20 years old, the canal still has plenty more to cover. Mine has moved underground and Northern Star estimates the sight has two years to run. These are older assets but when youve been around for 20 year years, lets just say Northern Star is expecting big wins. They are hoping the pegasus discovery could contain 100 median ounces of gold. It is currently conducting further drilling and is very upbeat on how much, maybe below the service. We are expecting the first the excitement has gone from the early stage discovery all the way to mining in such a short space of time. Reporter on the possibility of more acquisitions, Northern Star will be keeping an eye out for any other diamonds in the rough. So just one miner in this part of the country that looks like it has with akey with the news we got from the keynote adirection. He spoke to us about a range of things that wouldnt be drawn on mark carneys performance. The bank of england would have a successor to lloyd king, but i did ask them about Monetary Policy and we talked about Interest Rates, probably not necessarily an effective rule to grow the economy considering they need zero. Take a listen to what some of them have to say. I think we have to accept that Central Banks are no longer viable in 2006 to now. And i think it would be a drastic mistake to raise the tax but i dont think any economy can get out of this on its own. It would involve a coordinated effort to move back to a bigger bounce in the economy. Plenty more on what lord king had to say on cnbc. Com as well. Jules, off to the pub, see you later. After you go. Great to talk to you. A sevenhour truce has been accepted in the case. Hadley gamble is joining us now, are we going to see troops pulling out as a result of completing the majority of their operations as far as the u. S. Is saying. Its interesting, the sunday shows i try to watch to engage u. S. Public opinion because you can see more from the foundation than watching facebook, twitter, et cetera. We didnt see Prime Minister netanyahu again so hes clearly very busy at home. But what it is really telling me, when you hook at the news coming from deer spiegel in terms of secretary carry, which is in the terms of israel spying on him. Governments spy on other governments, no big surprise, but to put that out at this point will weigh on the terms of public opinion. Depending on which side of the aisle your opinion falls on, i think in the United States you are not going the see that big of a movement. It will be something that in the United States specifically we have been doing that with our friends for a long time. I think that hell have increasing problems and hell start to feel that. Certainly in the eu, over time, that they may take action on this because they have been speaking about it for so long. They have failed to do it yet, but in terms of the smaller things in the ergonomics and putting products on the part of the eu. It will be interesting to see what the eu is going forward. Well comment here because theres a couple things that you mentioned and shell begin with facebook and social media. That didnt involve you in the ge, ostpolitical crisis. Its changing the landscape mme. This is in two parts versus the liquidity in the system, meaning a lot of the investors are there but it has not really had an impact on the markets. Thats one thing. The second thing is then new, this is a conflict going on for many years and it has social media. You can see how this is turning the planet. And looking at this much more closely, its a popular grassroots way of looking at the conflict. And this is up chartered territory as you said because it has led to conclusions that nobody expected in the beginning, but i think we have to follow this closely. Another thing that i think would be interesting to watch is how the kurds in syria, and then you can see social media getting this kind of a story. It gives dimension to what is happening in turkey. They may play a big part in the elections coming up in the next week. Obviously, there are two currents that could be a deciding factor in the vote. And that relationship has changed over the last decade. It is certainly an enemy witness turkey, but the Energy Situation has changed all of that. And now with the relationship developed with the kurdish relation government, many are come together to make this agreement work. And that has changed the dynamic of the curve. Can i bring these all together to talk about volatility . What we have seen with the slight pickup over the last month was highs and lows. What does this mean . This means that we will have air pockets. There will be air, yes. That surprises the market. If you look at the last few weeks, the expectations along with ge, ost politics, geopolitics added to volatility, we have to be aware of this. Longterm liquidity is strong in a low rate environment. You should take out the page of those, but be very disciplined in terms of price points because they could be bigger volatility air pockets depending on what is happening, but the case is still quite strong. Great to have you back. Later on the show members to mark 100 years of the german invasion of belgium. Here are live pictures from belgium. Well look at these pictures as we head to a short break. You can see princess katy there. We have to take a quick break and will be back in two. The ca illac summer collection is here. During the cadillac summers best event, lease this 2014 ats for around 299 a month and make this the summer of style. Welcome back to Worldwide Exchange. Hsbc has supported a 12 drop in profits for the first month to top 3 billion. That was slightly below forecasts. They are facing unprecedented demands on staff from regulating reforms. They are slightly underperforming for the u. K. Market. Heinz saw revenue climb to 50 billion operating profits for investors to Pay Attention to with the derivatives beating forecast. Berk shooishire ended with a hu amount of cash. Chinas Services Sector saw an expansion but slower than junes reading. New orders rose at a weakly pace suggesting one of the bright spots of the economy could be slowing. That data follows last weeks Sharp Manufacturing recovery to the strongest growth in 18 months. Panasonic better known for electronics is taking its chance on lettuces and radishes. They will build a vegetable factory in the western part of the country. Heres the storyline from tokyo, makiko . Yes, equipped with a system to control the light and optimal situation, the crops can be harvested in a shorter period of time. Lettuce, radish, baby spinach and cherry tomatoes and basil. They have a restaurant chain operating three stores in singapore. It also aimed to increase the variety of crops that can be grown on site, especially those being shipped from japan since they can be produced at half the cost. The firm seeing the fresh market be farmland is limited and only 8 of vegetables consumed are produced in the country. Panasonic is looking to exporting the system to other countries in southeast asia. And thats what is going on. Back to you. Ktb is setting its bonds to mature this friday and the default is looking likely. The government took over and shut down operations by june. The only opposition for bondholders is to be open for regulators. With the Prime Minister resigning last week and the countrys biggest banking crisis, you get to resolve things a little earlier. Joining joining us now onset, what is this showing us . This is now a bank that is under a special administration. This can be extended for six months. Because of what the political debate was of is whether there should be a nationalization of ktb and then pay off the garden holders or they should seat according to the bellybanking core and stay out of what i have guarantee guaranteed here. Right now the parliament is in the process of disillusion, it should be resolved by wednesday. And the caretaking government should be appointed. And now its time for special legislation at the bank. What are you talking about . Theres one option. Buy out the remaining four or the government does it. In this case, they brought a board with recreational damage. They were marketing to investors and managed to raise 1. 5 billion euros with the situation being fine, but what about sentiment . How can they do with this this week without raising border consensus . Actually, our government looks pretty disfunctional from my point of view. The only damage to extend those is to have the southern reputation to buy out the bonds. But at least that can be done and is a physically reserve toot so. Well, they have the money to do that. And stay there, the you crepan troops are maintaining their stance. We have conducted Russian Military exercises with 100 aircraft close to the border with ukraine. What are we seeing as far as ukraine is concerned . Is this a breakthrough to a possible stronghold . They have been losing ground for three or four weeks. They have probably lost 50 of the land controlled. Right now this shows shes not a stronghold. And you have to make sure that the main thing, the axis is taking the supplies. This is not forthcoming but the situation has not changed significantly. Deutsche bank was saying the shortterm correlation between the rtf in russia is why it plummeted into negative territory. If youre looking for a place to buy from the fed, buy russia. Then the market rallied by a third. Youre laughing, what are your thoughts . I like the correlations there. But theres some paper and thats what you do when running. Clearly, they are important from the statistical stan andpoint, but given the length of the russian issue and a difficulty in seeing how they reserve, especially after the Malaysian Airline plane shut down because that brought the eu much closer than a political standpoint in the u. S. So now this is moving the dialogue or the topic to a very different view. What you have seen in the market is people selling the russian markets to make room for the chinese market. It seems that this is on the good news of this happening, so theres always the this doesnt mean the russian market is not a place to have money, but clearly given the volatility might be able to buy things cheaper at some point in time. Perfect. Thank you. And still to come on Worldwide Exchange, after the market set up last week, well discuss the market risks right after the break. Stay with us. Welcome to Worldwide Exchange. Im julia chatny and these are your headlines from around the world. 4. 9 billion is set to the side by bes to spin off a bad bank. We are on buffett watch. Berkshire hataway continues to pile up a mountain of cash. 55 billion for possible investments. And the worst Ebola Outbreak in history threatens to overshadow president obamas africa summit as two heads of state pull out of the washington event. Youre watching Worldwide Exchange bringing you Business News from around the globe. If you are just tuning in, thank you for joining us on Worldwide Exchange. With a look at how the markets are faring, despite the weakest u. S. Stocks on friday and the worst weekly decline down 2. 7 , we do seem to be having a bounce in the futures right now. The dow futures are indicating higher by 23 points. The s p 500 higher by 4 points. And the nasdaq also higher by 6. 5 points. Very little on the data. It is all about Central Banks. Elsewhere this week, we do have Services Sector isn data that well continue to watchout for that. More coming up this week as far as indications on the Employment Situation and wages in the u. S. , which caused some of the consternation that we saw in last weeks session and that supported the session on friday, too. Well look at the European Market. We have lost a bit of steam as the session progresses. Right now the xetra dax is lower. 30 . The cac is higher by. 40 . And we are seeing gains for the portuguese market. Good bank and bad Bank Solution now for this bank lifting the border markets with a. 30 gape. Well look at bond rates as we are watching whats going on as far as portugal is concerned. We are continuing to see yields tighten by four basis points, 3. 63. Yes, theres a separation as far as the sovereign and the individual bank is concerned being redeployed by the market this morning. Tenyear yield trading at just over that level. Heres whats going on as far as the Foreign Exchange markets are. We have seen a little bit of strength pulling back as a result of the slightly weaker than expected Employment Data on friday. Right now euro dollar is trading 1. 3426. We have bounced off the eightmonth lows. We are still seeing the ausi dollar slightly stronger. Again, watch for the push as far as currency strength is concerned. We are still looking at this as far as the u. S. Markets are concerned and the data. Are we back to good news for the economy but is bad news for the equity market. Listen to what Dennis Gartman told us earlier. The fed is not wanting to raise the short end of the curve for another year anyway. The long end of the curve is probably going to do reasonably better. The positive slope to the curve is something the fed likes to see happen. They would love to talk at inflation to drive the back end of the curve higher to keep the positive slope curve intact, but lets all be calm and not be panicked at this point. I was they turn from being quite bullish of stocks to being neutral last week, and i never thought we would see the market fall several hundred dow points over the kocourse of three or fr days and i got very lucky. Michael, do you share dennis sentiment sneer. Pretty much, yes. I was looking for a downside move at some point. And early last week i put out a note sort of saying watch out below, but not that far below. Really, my downside target for this move would be 1880, 1890, sort of the 130day moving average which is where the market has been along the way. We are twothirds along the way there. And i do think well start basing at some point soon. At this point, a lot of the data was offset by the employment numbers on friday. So were not going to get into rate chaos any time soon like we had a year ago. You pointed out some of the weakness we had in the likes of the transport stocks. If it is not these sectors that lead us higher, what does . I think thats one of the Great Questions right now. You know, as to how this market finds leadership going forward. As you were suggesting, that sector defines the first half rally coming out of the february correction. It was really the transport that led the dow which led the s p 500 and so forth all the way up. Now they are coming all the way down. What im really looking for in terms of the Broader Market sort of reassembling themselves is the small caps to short of hold near the 1100 level with more stability in the nasdaq. Then well see how the leadership evolves in the second half, but i would expect eventually small caps to do well. But again, the conditions there is that we dont see a lot of rate volatility and generally construct the economic news, which i think is going to be pretty probable given the fed and the inflation data we have been seeing. Earnings, 65 beating on revenues. Average earnings 5. 6 . Coming into the earnings season we were asking the question of whether or not it justifies in some way the rally we have already seen or whether it gives us enough to rally further. Are we getting the answer now that it is just justifying how far weve come . I think thats right. The earnings season really is one so far that has been one of the best earnings season we have had in several quarters. And, you know, thats pretty impressive. I think what essentially happens is that the market prebought the expectations back in the may june rally. And you had really overextended conditions, not just technically but with sentiment levels as well. So the fact that it started not performing, the equity markets did not perform well against the backdrop of generally strong earnings and also revenue beats as well, suggest to me that the market needs a reset as it periodically does. And again, i think thats probably the 130day moving average as sort of the worst case for this move, this corrective cycle. We did see a 34 increase in the vix last week, even with brief periods in the pickup of volatility it pulls back, but we see it make higher lows. Whats the read for investors right now as far as a slight pick up in volatility . Yeah, well, when you talk about the vix and other volatility measures, you have to step back and look at what is happening with Interest Rate volatility, which undermines all of the equity volatility. And what is interesting is if you look at the treasury volatility and also some of the major currency volatilities, just like we started the second half of the year coming out of the fourth of july weekend, we started to see higher lows getting formed. And i think there was ultimate ly this coming down to how is the fed going to faceoff against noticeably higher inflation several months in, and i think thats really the question mark that the markets really have to struggling with, and not just volatility levels but also equity price levels as we look into the second half of the year. If we are starting to see that this Interest Rate genie is coming out of the bottle, thats really going to be the enduring theme here and sort of downward pressure on equities and upward pressure on the volatility level. Thats, in one word, the core issue for volatility. But we look to treasury volatility to look where the equity volatility is going to be going. Absolutely. Its the crux rather than the individual market, but are we, is the question, when youre talking about the fed right now, but as far as investors are concerned, they are questioning now whether or not the fed is going to handle on this or at least is in control of the exit policy here and the timing as far as when they do start going forward. Investors are questioning whether they are in control surely. Right. That is the 64 question hovering over the markets. Its been hovering over the markets for a few years, really. Can the fed and other Central Banks exit these strategies as easily as they entered them. Clearly its not as easy to exit as it has been to enter. But again, you know, the thing that really is going to drive that, how much tension is ultimately created for the markets in that dynamic is really, you know, how the inflation data is coming. So if you look at the data last week in the gdp report, really shocking people to the upside with the 4 trend. Then shortly after you get the jobs report that basically went the other way. It really wasnt a bad report but certainly didnt confirm acceleration in wage growth or in any of the key sort of Wage Inflation metrix. That is very focused on what im looking at. So it seems for the moment that we are going to be slower going forwards to give the fed a lot more time and therefore the markets more time to sort of process this how are they going to gracefully exit this. But look, at some point its going to be very clear, in the next 12 to 18 months, that dialogue is going to get a lot more factored in. And the question is, you know, if rates do start climbing, at what rate do they start climbing, and if its and then what rate can corporations and individuals here in the United States sort of handle a process, a higher rate environment. Thats really the single biggest question in my mind for the equity markets. Its a question well continue to ask, great to talk to you, michael. Well give you a look at what is to come, no Economic Data today but a few earnings reports on cardinal health, michael kors, aig and marathon oil after the close. Well look at some of the other top stories today, portugal unveiled a 4. 9 billion euro plan protecting taxpayers but leaving bondholders and junior bondholders carrying the can. And the good bank will be renamed novo banco. And the novo banco eventually to be sold to private investors. This comes after they posted a record 3. 6 billion euro loss last week. The European Commission said the bailout is in line with eu state rules. Bp has filed a petition with the u. S. Supreme court to intervene in the battle over who should get monetary damages related to the 2010 oil spill. They are asking to enforce requirements of parties filing claims to prove they can join the classaction settlement. Bp also wants the court to reverse Lower Court Decisions approving the settlement with individuals and businesses who werent financially harmed by the spill. A group led by Goldman Sachs is reportedly close to a deal to buy a stake in chats instant message i messaging. The banks are looking for ways to cut costs. The apps are free. Coming up on Worldwide Exchange, well analyze Warren Buffetts Second Quarter results. Stay with us. Thank ythank you for defendiyour sacrifice. And thank you for your bravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance can be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. Welcome back to Worldwide Exchange. These are your headlines. Msbc posts drops in profits. Portugal putting 4. 9 billion on the table to rescue santo. And the Ebola Outbreak threatens to overshadow president obama at the first african summit. Berkshire hathaways profit rose after a stock swap deal earlier this year. Revenues rose to nearly 50 billion. Operating profits urged berkshire to pay more attention to including swings in the value of investments and derivatives rising 11 beating forecasts. Berkshire ended with more than 55 billion in cash. Berkshire class a shares traded in the German Market session higher by 41 . Hsbc is facing unprecedented demands on staff and regulatory reforms. Shares are trading lower by just shy of. 50 . We have seen it pick up now. Hadley is joining us again, what are they saying . On that point of regulation and excessive concerns, they were saying theres a creeping concern that staff are increasingly worried about the penalties when things go wrong. We are many the business of risk taking and in the firm thats what we believe, but theres a sense that regulators have a zero appetite when it comes to risks, so hes reopen forcing the idea that, look, we are getting to the point where we have gone too far the other way. People are worried about doing anything whether it is selling products, whether its managing clients, and he was stressing the point that actually banks are in the business of managing risk. So to be risk adverse, it is very dangerous. On that point on the ring fencing who is talking about these timetable for root fencing is complicated by this markets investigation. And if we are going to have this review in the next 20 months, it could mean significant structural change. And that implies lots more cost, deeply frustrating. A couple more points to bring you uptodate. Concerns for the regions, talking about the fact that the middle east is a huge concern for them, especially in regard to isis and what that might mean for the gulf states in the region. We talked about argentina in terms of risk currently but it could have an effect with ukraine imposing sanctions but say a small exposure. On china you were talking about the fact that they had greater results. And we never saw china as having a hard landing. And we are seeing that coming through. We wont see a global shock from the likes of shadow banking in china where lots of people very quickly, you talked about regulatory reform, what is the number as far as this year is concerned, what are they saying about that . They were just saying its become unbearably high at the moment with the costs in the hundreds of millions per year and increasing evermore. No end in sight . No end in sight. And this is their concern. They were saying that at the moment, because one of the complaints obviously with hsbc is that their revenue numbers come down, and they were saying, look, what we are doing is going to help revenue down the line. We are derisking our portfolio. We are being we have gone from unsecure lending to secure lending in many instances. And later on when it comes to the next revolution of bank troubles, we should be better placed, safer. So good news maybe on that front. This reminds me of 30,000 employees to deal with by the end of this year, the focus is on regulation rather than what their core business was, and i think thats the point hes making in the call. For whatever reason, given history, that their focus is now on i think for the industry, the industry is can we change culture without creating people that cant manage risk at all, that are too afraid to do anything. Hadley, great to talk to you. Now we have to take a quick break, but still to come on the show, the biggest event between the u. S. President and African Leaders gets underway in washington. Well discuss the implications of investing in africa. Stay with us. 826 people have died from the latest outbreak of the ebola virus in africa. There is no known cure to the disease. The World Health Organization plans to fly hundreds more medical staff into west africa to stem the spread of the disease. The u. S. Doctor who was struck with ebola is recovering at the atlanta hospital. Ge plans to informs 2 billion in africa by 2018 on developing facilities for skills training. This announcement comes as president obama kicks off a twoday leadership in africa today. They warn that this could hurt companies trying to do business in africa. The u. S. Is the only major block that trades with africa. Joining me, tom, great to have you on the show. Theres a reduction throughout the financial crisis, and this has to do with the Shale Oil Revolution as far as the u. S. Is concerned. The oil is taking profits down from 100 billion six years ago to at most 15 billion this year. Thats had a dramatic shift on the u. S. African trade. It has. Historically, the u. S. Has take an lot of oil to balance dependence on the insecure middle east. And the rise in shale gas is the increasing ability of the u. S. To defund to meet the energy demands from shale and has had a huge impact on that dynamic, but thats almost one of the reasons we now say the u. S. Government is getting more involved with needing u. S. Investments in africa through the summit today. I think historically Big Oil Companies have been on the continent for 25 years if not longer, and historically are looking after results that are bigger and well enough to fight their own battles. As we move on to growth, they focus more on providing export to the consumer markets. Theres recognition in the u. S. Government that the u. S. Will need their support to achieve the Market Opportunities that are there. We are talking about seven out of ten growing in the last decade, but as far as all of africa is concerned, it doesnt help that the ebola situation is broken at the same time. How does obama handle the pr around this, in particular . Well, it is very difficult. Its a great shame from the perception perspective. To talk about ebola briefly, the recent outbreak is huge. Its the single biggest outbreak of ebola on record and it is a major problem, particularly if youre living between guinea, sierra leone and liberia. They do not have sources adequate to deal with the crisis, so Global Resources are being sent there now to deal with the crisis. But this comes at the same time as the u. S. And africa lead this summit. It shouldnt deter investors or limit their appetite. This just needs to be addressed and is a problem living in the Rural Community in Northern Guinea buzz doesnt impact the perception, but it shouldnt deter what do we see deals struck, what are you expecting . We are going to see positive things like a mismatch between what the u. S. Government wants to achieve and what the african government expects. I think the african government expects there to be major deals signed, large commitments in terms of concession lending or export credit being provided for opportunities in africa. And thats what they have come to expect from china. I think the u. S. Government is key to make a strong statement but some of the statements from obama have been trying to temper expectations. So i think its an important milestone. And this is a great springboard for u. S. africa relations, but whether we see major deals from the u. S. Government perspective are less and less. I think we wont see much from the u. S. Corporate. Whether the u. S. Government is happy or prepared to match ch a chinas 10 billion in concessional loans, i dont think so. Thats a Crucial Point as well, trying to get in there, at least at the same time as china and not be late to the party as far as that is concerned. Tom, great to talk to you. Now we have to take a quick break, but still to come on the show, in vogue or overexposed . Michael kors will report before the bell. Some say the firm is about to lose its cool. Well discuss it. And this is how the futures are trading ahead of the opening on wall street. Welcome to Worldwide Exchange. Im julia chatny and these are your headlines from around the world. 4. 9 billion put on the table creating a bad bank for toxic assets sending shares to the top of the European Markets. Hsbc turns negative after profits drop slightly more than expected. The bank is cooperating with various setbacks and investigations as it sets back 2 billion in provisions this year. We are on buffett watch. Berkshire hathaway beats forecasts as the Company Continues to all up a mountain of cash. 55 billion for possible investments. And the worst Ebola Outbreak in history threatens to overshadow president obamas u. S. africa summit as two heads of state come out for the washington event. Youre watching Worldwide Exchange bringing you Business News from around the globe. If youre just tuning in, thank you for joining us on the show. A look at how the futures are trading ahead of the open. Right now we are seeing green across the board. We are indicating higher by 27 points higher for the dow, six points higher for the s p, and the nasdaq is higher by nine points following the s p 500s worst weekly decline down 2. 7 last week. We saw all sectors in the red including the industrials losing 3. 6 . The russell losing as well down 7. 7 during that time. And we saw a spike in volatility. Since march of 2009, the s p has lost 1 or more 169 times. On average, on those days, if you had bought the dip, the next day you would gain a quarter percent. The next 30 days you gain just shy of 4 . And the next 90 days you gain just shy of 10 . Lets look at the European Market right now gaping. 20 for the u. K. Market. Thats under a bit of water falling from the 4. 5 losses we saw in last weeks trading. The question is, how do you make money . Listen to what experts have been telling us this morning. Maybe its associated with the high cost capital in the long end, well autoget crushed, equities will be in big trouble. So the big question for us is, is this suregrade volatility is same way we saw in the u. K. And new zealand . We can cope with a moderately stronger dollar. The bonds are holding gapes. Its the long end of stocks getting taken out. In other words, its starting to think the fed is beyond the curve. Then thats a different ballgame than we see right on the carpet. Last year we saw the ability for writedowns, so i think earnings will be very poor and ultimately whatever i think as an economist, i think the earnings go where the market goes and i think it has slow growth coming forth. Portugal in dollars, we found interesting spanish and australian bonds in sterling and peripheral debt in euros, so we have a little bit left but we have made good money. Fashion an accessories brand michael kors is expected to report First Quarter later. The firm is expected to post a rise in earnings but some analysts are saying some are losing interest in the signature bags and watches. Joining us from new york, just take us to your forecast as you are on the top end of michael kors guidance, but a touch shy on consensus. Well, theres a lot of moving parts from the looks of earnings, but in general we are in line with consensus. We expect the company to have robust top line growth and robust profitability. The growth is getting a little more expensive for them as they build new stores in europe. And so thats a little bit of a drag on earnings, but only a modest one. We expect to see 20 same store sales, which is an explosive number by any standards. And europe is a big driver here where we are seeing extraordinary numbers. As you look around, you can probably see that the brand is catching on in a way that no american priced brand we know of ever has. Stick with the numbers for now, there was confusion or concern generate bid the Gross Margins last quart we are gains in the wholesale and declines in the retail due to freight expenses. What are you expecting as far as margins are concerned and detail in margin normalization. I wouldnt call it margin normalization. I want to make it clear, margin normalization is not margins going back to a specific level. It is normalization just in the sense that this company has been reporting extraordinarily unprecedent unprecedentedly high margins because the market has been selling at such a high velocity. They keep talking about marginal normalization. It say that is youre not going to have to ongoing basis at the low level offprice sales you are seeing, but we are looking for over 100 basis points of margin erosion, which is very modest. In general, we think the bid this year is extremely strong. We know the business is extremely strong and think well see that in a few hours in the report. Your growth at this conference has complications with demand accelerate and then you start to see promotional things feed in as well. Surveys are pointing toward this as far as michael kors is concerned. I look at the share price and wonder if the concerns are being reflected in the share price, yet youll still bullish, why . Okay. Theres a lot of issues you just asked a lot of questions at once. The margin, the inventory is coming off the last quarter were not high. The up eveinventories were up 6 thats a scary number except when you look at the fact that sales were up 53 . Thats not thats fine. Because when you open new stores, youre going to have potentially inventory growth slightly higher than sales, which is what we have here, because a store has to open fully inventoried and then generate the sales. So i dont have concerns about inventory growth. Other concerns in terms of surveys, we run lots of people do surveys and we have a robust survey we have been running for well over a year. We see there, and this is crucial, i know the wall street journal has a story today on kors but didnt really address this. Unfortunately for coach, just a company i know well and admire greatly, unfortunately for coach they have been quite open about the fact that they continue to give up market share. And coach and its analysts meeting in june talked about how they would have total same store sales down in the minus, high minus 20s. Thats a lot of market share to give. And that share is going to lots of places but a lot of it is going to michael kors. 18 now, north american handbags and the accessories. Well have to see, fay landers, great to talk to you. In other earnings news, Berkshire Hathaways profits rose to nearly 50 billion. Operating profits urged investors to pay more attention to them because they exclude swing miss the value of investments and derivatives rising 11 to beat forecasts. They ended with over 55 billion worth of cash. Well take a look at berkshire trading higher by 1. 3 . Hsbc has reported a 12 droft in profits for the first half to 12. 3 billion. That figure was slightly below forecasts. The lender says its facing unprecedented demands on its staff and operations from regulatory reforms. Hsbcs chairman Douglas Flint says theres a growing danger at risk aversion creeping into decision making. Shares are trading higher by 2. 5 . Elsewhere, portugal unveiled a 9 billion rescue plan for santo protecting taxpayers but leaving junior bondholders carrying the can. The countrys biggest lender is split into a good bank to be named novo banco. The eu shares are currently suspended after talks over the weekend come after they posted a record 3. 6 billion loss last week. Coming up, jumping on the bandwagon not wanting to be left behind, activist investors are getting in on the tax inversion, including the data involving a major hotel change. All the details after the break. c thank ythank you for defendiyour sacrifice. And thank you for your bravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance can be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. Here are your headlines, hsbc posted a drop in profits under regulatory pressure. And portugal puts 4. 9 billion on the table to rescue santo. And the Ebola Outbreak threatens to overshadow president obamas first u. S. african summit. Israel is unilaterally declaring a sevenhour truce in the gaza strip to refacilitate the reentry of humanitarian aid. This is after a weekend attack on a u. N. School was called a criminal act. Reporter as the violence continues with civilians trapped in the middle, israels strategy of selfdefense is becoming less defensive in world opinion. In berlin, propalestinian marchs. In cozumel, free gaza signs. And demonstrators are covering themselves in red paint. This weeks cover of the economist a warning that israel could be winning the battle but losing the war. As images are shown around the world, a real problem for Prime Minister benjamin netanyahu. You have to reach the conclusion no set of talking points, however compelling they are from israels point of view, can somehow stand up and matchup to the pictures. Which is why most of the International Community is reacting quite negatively to say the least towards what is going on in gaza. Reporter here in the u. S. Israel enjoys strong support. The new polling shows 43 of americans sympathize with the israelis in the current conflict. 14 with the palestinians. 43 are unsure, but the generational divide is striking. Among the americans under 45, support for israel drops to 33 . Among 18 to 29yearolds, 27 . The longer it drags on, the global risk is slipping further as president obama cautioned friday. Part of the reason we have been pushing so hard for a ceasefire is precisely because it gets hard to reconcile israels legitimate need to defend itself with our concern with those civilians. Reporter right now israelis overwhelmingly support their governments push into gaza to eliminate the hamas tunnels but they dont want a permanent stay. No israelis would want that, and i think the Prime Minister knows that. Reporter most arab leaders are rooting for israel to eliminate the hamas threat which they see as a potential threat to them as well. That was Andrea Mitchell reporting there. Hadley is joining us again. Well bring in the article suggesting that the israelis were tapping or at least listening in on john kerrys conversations last year. We have been tracking his progress on the ceasefire talks and negotiations, so where does that leave us . Unfortunately, it seems to be another example of his bumbling, maybe not a personal bumbling, but in terms of his impact of what hes done in the last year or so. Governments spy on other governments, this is nothing new. If you were talking renegotiating borders as part of the peace negotiations, of course israel is going to be interested and they are going to spy on other governments, this is not new. But this does make israel look like this, unless you are in the United States with an overwhelming support for americans, if you are outside of the United States, however, this is just another example of israel going too far. And what is the impact . Well, i think in the shortterm youre still going to see violence. I think that the medium to longterm you talked about a response from europe and wanted to followup quickly on that. What kind of response from europe are you expecting to put you under pressure . In the sense that we may yet again see a strongly worded statement, strong words on whats happening, but i think they have to do something because at least in terms of what we are seeing across europe right now in all the demonstrations, we have seen the outpourings on twitter and facebook in favor of the palestinians and their cause, i think certainly the eu at some point will wake up and make at least some kind of a statement. I want to quickly tie in the libyan situation where what we are seeing now in particular. Just a line on this. Whats happening in libya is absolutely no surprise and nobody wants to touch wit a tenfoot pole because you remember the United States leading from behind thing, hillary clinton, this was spoesed to be one of the big hallmarks of her time as secretary of state and shes barely saying anything about this. This is a country whose own Prime Minister was kidnapped by malitias in the last year. So this is a country in great distress. If anyone goes near it, they have to go in for the longer term and nobody is willing to do that right now. Activist investors want in on the craze even if they have to engineer the deals themselves. Occ Courtney Reagan is here with all the details. I can barely wait, tell us more. These are always exciting. The wish list of activist investors often reflects what is the hot trend in the market. Last year they pressured companies to buy back stocks and now they want them to cut their back bills by buying foreign rivals and reincooperating overseas. They have hired an Investment Bank to drum up restaurant from u. S. Hotel chains to buy u. K. Interc u. K. Intercontinental company. Shareholders of the company being acquired must get at least 20 of the combined equity in stock. Activists have tried various ways to get companies to lower taxes and push restaurants to put Real Estate Holdings in Real Estate Investment trusts, and they have also urged Energy Companies to create Master Limited par neer in ships with their pipe lines. And valeant is taking a stake in walgreens. Analysts say this could cut walgreens tax rate by more than a third. Bill ackman cited tax benefits as part of the rational to buy allergan but so far those efforts have been unwelcomed. Mark kato doesnt believe u. S. Lawmakers will act any time soon. Speculation about a deal has sbrichb intercontinentals shares up 9 this year but they are down 2 on the situation right now. Back to you. We have to take a quick break. Well have a look at how u. S. Futures are trading. It was the worst weekly decline in two years. The s p 500 down 2. 7 , but right now the futures are eating into the losses we saw on fridays session. We are back in two minutes. Stay with us. Welcome back to world wild exchange. Heading to the open of the u. S. Equity markets flooring back losses from fridays session, the s p 500 is down a third of a percent. After the worst weekly decline in two years, and we have a chief strategist joining us from chicago, allen, final feelings here . You want to lean on the 1900 level of the s p. In that target of 2000, we didnt quite get there, so 1900 is an important level of support to lean on here. I do like the action we saw on friday where it opened steady, went sharply lower and then came back to positive. At the end of the day we were down a third of a percent, but we got that back this morning. So very interesting to look at things on a weekly basis to see if we can get back above 1950 in the s p. And if the vix can get back to where it was in july. If you look at the volatility also seeing higher lows as far as volatility is concerned in the rates market, what are you watching specifically to look for that . Well, thats when i saw what was interesting in the vix. Maybe issues up ahead with the bottoming of the vix. The last time the market hah had highs there were no lows. Im an old school guy. The bond market did not see flight to quality on thursday. It was actually negative. But you are not seeing a rush in the treasury with unwinding from a reward to risk standpoint. This is a buy. I like some good down stocks. Mcdonalds, pfizer, dupont. Perfect. Well watch it over the next 24 hours. Alan, chief optimist strategist at bullseye options. Thats it for todays show. Im julia chatny. And well leave you with a ceremony there in belgium. Good morning. Welcome to squawk box. A fresh week for wall street after the s p was pushed to the worst Weekly Performance in two years. And israel has a sevenhour ceasefire to allow humanitarian aid into the country. Its only seven hours. And the doctor being treated for the ebola virus is improving in atlanta. It is monday, august 4, 2014. Squawk box begins right now. Good morning and welcome to squawk box. Im kayla toushy along with andrew rosssorkin. The dow, s p 500 and nasdaq ended lower. Volatility picking up the socalled fear gauge. Thats the vix that jumped more than 35 for the week largely on friday due to concerns over the health of one of portugals biggest banks. Well get to that story in a second, but futures for this morning are solidly into the green if they were to open right now. The s p would open by six. The dow would open by 36 points. And the nasdaq would be up 11 1 2 points. In global news, portugal is rescuing Banco Espirito santo. Its a 6. 6 billion bailout. The troubled financial giant will be split into a good bank and a bad bank. The major european averages in early trading on the back of the news have been mixed. They were sharply higher when the news was first unveiled late last night. The ftse,