Saudi arabia online, the lowest cost facility on this planet. And on top of it, there are legacy issues like the one that we are removing this quarter, trying to remove this quarter, with a new initiations. We also have global news today. China consumer inflation picking up more than expected in june. But deflation remains for a 16th straight month. Countrys central bank is seen keeping policy largely neutral in the near term as a result of that. Here say look at the major asian markets today. The nikkei recouping all of the previous days decline, shy of a new sixweek high. There is a boj policy meeting there tomorrow. Two reports to note, at 7 30 eastern time, the nfi survey of Small Business sentiment, well get that. At 10 00, the Labor Department will release its survey of job openings and Labor Turnover in may. Joe . Andrew. Yes, sir. How are you . How do you solve a problem like alcoa . I guess it is maria, though. A 7 stock, 8 billion market cap. And i like kline felt. He acknowledges we cant do anything, nothing to do with us. Just aluminum prices. 7 youll take, right . Right. But, yeah, but it is a dow component. Do you keep it in there because it is you saw who is going in, not into the dow but the other index, oracle getting kicked out and tesla going in. Why is oracle getting kicked out . I dont know. Oracle is being kicked out. Oracle was ill do a little moving to the nyse. That makes sense. Tesla is coming in. Did you see that . Yeah, it is weird. The highest percentage of government involvement of any company, right . But i wonder, alcoa, how much we still get from that. They make planes out of composite thats true too. Like sellgene, 8 billion and cant control what happens, just control the cost. So it is just weird. It is the first who would you like to put in . I can think of a lot of different people. I would start with april. If you had apple, what would you i dont know. The market cap is 50 times the size. It seems more important to our economy. In corporate news, a number of headliners on the neverending dell story. Glass lewis and eagan jones are joining iss in recommending that dell shareholders vote for the proposed sale transaction. It is 13. 65 a share in cash. Dell shareholder what the heck is that, andrew . Pze pzena. Penza. Because pzena would be different. It would. It will vote against the buyout offer calling it unreasonable. Who is penza . Some guy . Yesterday it was yesterday. Southeastern and carl icahn, that could be anything, had urged led im sorry, dell stockholders to vote against the transaction. All things d reports that microsoft will announce a division restructure on thursday. Steve balmer also is said to want to alter the structure of microsoft segment reporting. And Barnes Nobles ceo resigned. News comes amid a slump in nook sales. The book sales. The bookstore chain failed to compete against the like of amazon, apple, google in the ereader and the tablet market. You have a nook. I have a kindle and an ipad. Thats different. You should be very worried about this situation as a book author. I dont know if you read the piece in the New York Times earlier this week about how amazon is starting to raise prices on books. Oh. Not good if youre trying to sell your book not trying to sell anything, not really. Not at this point. You still you still how often do you get a check . I think it is quarterly. Maybe quarterly or half every six months. Theyre small now, arent they . Still not bad. It is good for the family. Really . Not you use it for tips for the people that work for you or you can youre not going to say no, thats not mine. Thats a good book to buy, your teacher said what . You have my blake kernen, available on blog today about entrepreneurs. How much are they charging . In the huffington post. Let me try again. See if you can blake blogged today in the huffington po post about entrepreneurial ship where were you trying to go is this. Trying to sell her book. Were like two clock radios sometimes, talking to one another, both turned on loud and poor rebecca is sitting here going do i get you dont get paid enough. It is good. I get to wake up slowly while you banter and come into the news. I was supposed to i promised that you would be talking about markets today. Okay. Id like to. I know. When we do talk about that, if you had to pick one market since you looked at so many different ones and all unrelated, which ones would you look at today . I think the tenyear yield is driving everything now. Today i would stay focused on the bond market. If im taking a look over the next six months, oneyear, im going to be focused on emerging market equities. I think the love affair with bricks for now is over. Someone yesterday said it is not over j. Jim oneil. Jim oneil, the man who made the term bricks. Yeah. Hes written a few books. He has a book. A couple of books. Yeah. Im not saying that gold will find a floor eventually. People will always want to have something for the unknown unknowns, but with Rising Interest Rates that doesnt help me. The floor could be 700. I dont think well get that far. Not near term. It is hard to tell. Yesterday, whenever i see cnbc talking about it, the thing at the bottom said, has gold found a bottom . I would put at the bottom, how low can gold go. That would be my thing. And thats the way we look at things. On apple, on the way apple down from 800 to 390 it was, you know, 700, has it hit a bottom. Is this the bottom . Is the bottom . 500, every time we reported on it, it was is this a bottom instead of how low can it go. Let me tell you what im doing, thats rather than me pontificating, we have about 1 , under 1 allocation of gold in our clients portfolios, smallest we have had in years. We keep a residual there as part of the tail risk assets we own in aggregate. I dont think we take it to zero. Im not looking to add it at these price levels. At the margin, it could go down further. What are you locking at over there . Well talk about banking news . If you must. Regulators are expected to propose stricter rules for banks. Were going to be talking to mr. Buvet later. They want eight of the nations largest banks to meet a tougher measure of health to reduce the threat that they will pose to the financial system. Ca kate kelly reported yesterday, theyre expected to raise the ratio from 5 or 2. 5 to 3 . That could have a pretty interesting impact. Tony fratto and others pushing back as you would imagine, arguing this will take credit out of the system at a time when things are fragile already. I dont know if you agree or degr disagree. It would be a pity if thats the case. Thats one of the things we need to see to get the economy to have more traction, more breadth than just homes and autos and the consumer. So if thats an unintended consequence of them trying to rein in risk, that would be a shame. Do you buy it . Or do you think banks are saying, look, the only time we make money is when were leveraged. The more leverage you take out of the system, the less money we make . Thats the business. Right. The question is what is the ideal amount of leverage . 5 the magic number, 3 . I havent seen if you want a banking story, this is the british banking story is more interesting, dont you think . The wall street reporting on the front page there . You wanted to can you explain to the audience what is on the front page . Ill read it right now. Youve been wanting to do this for a while. Senior bankers who are reckless in taking risks could face prison terms in the uk under a plan how do they define risk . Thats a good question. Shakespeare kill the no, thats kill the lawyers. What about this . We have tlilawyers that watc this program. I know. And youre from a law family. I am too, when i think about it. Bankers, people have hated banks since the beginning of the country. But fdr was very outspoken about this. What is supposed to happen is the bank goes out of business and shareholders lose all their money and you lose your job. Are you supposed to go and get a big strapping cell mate as your punishment for risk . Taking up risk . Thats the big. He certain levels of risk taking, they go to jail already in the u. S. Not not all the time, but whats criminal and whats not and what intent is and whether youre if youre defrauding investors or customers, thats different. If this is just who decides . You give someone a Business Loan that doesnt work out it was risky. Lets say for solar energy. The biggest risk the banks take, which nobody likes to admit, is the loan book. Thats the mortgages, businesses, loans to businesses thats the real risk. All this other stuff, you know, is risky. It is a whole different level in terms of magnitude. What about risk of other types of companies, other sectors of the economy that are taking risk with investments or different expansion plans. Should the obama officials that lent the half a billion to should they go to jail . Is that risky or reckless . Michelle obama is now pushing greek yogurt. I eat it every day. She wants people to eat greek yogurt. Specifically . In the schools now, greek yogurt for everybody. Chibani, a big seller on this, still a private company. Garies agay genzler is layi proposals for swap rules. The new rules would require banks operating abroad to hold more capital. Some commissioners fear this would hurt the competitiveness of u. S. Banks. There has been a big debate going on inside the cftc including bart chilten who has come on about this. And Big Questions about the future of gary gensler and if hell remain the head of the firm. The dow closed at 15,224. Indicated higher this morning. Well check on the futures. So we have digested that move in the tenyear and were almost back to it is working. It is working. What . We always said the near term it would be rocky and then long term maybe when do we say ben bernanke, hes done this right, we have been complaining. Were not going to know years from now. Hasnt done any tapering yet. Just getting warmed up. 4 trillion were handling. It is working this week. It is going to be a bumpy summer. We have speeches, we have more meetings, we have to figure out who the next fed chairman is, thats what do you think, by the way, our friend mm, morning money, did you see the isnt cnbc more of an expert than split cpolitico on economi matters. What is ben saying today . That story we read yesterday which we did read about Larry Summers being a real possibility is actually a real possibility, meaning we sort of, i think, pew p poohpoohed it a little bit. You did a week ago, it was out last week, wasnt it . We talked about it more so last week, that Larry Summers how do you think his confirmation would go . I think it would be a tough one. I like him personally a lot, but i think it would be a tough, tough road. By the way. It was a tough road for ben bernanke the second round. Tim geithner would face the same thing. Hes making 400,000 for giving two speeches. Doing just fine. Yelin, i think she would have the easiest time in. Thats one factor. Dont you think the gop would try to block her nomination . Yelin for being too dovish . I dont think they could. I think larry would have a harder time. He height comight come on. He would come on squawk. We consider him a friend of the show. I dont know if it would be good for the country, but good for you. Am i doing this . Okay. It is good for me. Joe kernen. Oil board. It used to be that guys like fisher and others pointed to oil going up for no reason as one of the negative effects of qe. And now we dont talk about that anymore. Somehow were at 103. The economy isnt horrible, obviously. But europe, it is not like europe is going gangbusters, not like china looks great. And here we are stubbornly above 103 and you wonder what some of the markets i dont know how it ends. It doesnt have to be the train wreck with qe doesnt have to be inflation. The train wreck could be trying to unwind and Something Else happens. Im not sure what it would be or how it happened. People like krugman say everybody has been wrong, qe has been negative, no inflation, were not out of this yet and nobody knows how it will turn out. Im going to beat my dead horse with emerging markets. Think about a stronger dollar, think about rising yields in the u. S. And how people are taking money out of emerging market debt because the carry isnt as interesting. Growth is slow. Because their currencies are getting weaker, brazil will raise rates this week. Turkey tightens. We think about how big em is today. When clients ask me what keeps you up at night, this is one. What could make this go badly wrong . If you had enough growth and political problems combined in a number of big enough emerging Market Companies and aggregate that could half of them are dependent, mostly on china. How many are dependent mostly on china . All the commodity exporters and all the asian region. That hasnt gotten as big as some thought it could. I think china will get through this. They want to rebalance and slow down growth a little bit. Rising rates here . You get the stronger dollar with that too and lower commodities. That trifecta that together i think are creating some pain for emerging markets. If it got bad enough that could feed through back into the developed markets and certainly as something were going to hear a lot about during earnings season. Okay. Want to go west . Time for the Global Markets report where Ross Westgate is in london. Good morning, ross. Good a good name there. I like it. My middle one. I like yours, good morning to you. Similar gains to yesterday. Advancers outpaced decliners here by a ratio of 8 to 1. Not quite up at the session. Getting back down towards the session low. Ftse yesterday up about a percent. Earlier on we were repeating that gain. Little below at the moment. Just up. 9, the cac up twothirds. Ftse up about a third. Look at the sectors earlier on today, no sectors in negative resources. Basic resources leading the way. This is sectors. Resources still up this morning. Inflation data out of china stronger than expected for the month of june. 2. 7 . Looking for 2. 5. A lot of that coming through in food prices. Producer prices actually fell, so not quite the worry we might have thought previously. Just telecoms fairly flat at the moment. Lvmh one stock in focus today. The french luxury goods group, up 2. 2 . They announced theyre spending 2 billion to buy loro piana. Not often you get stock going up when it makes a buy. Silvio ferragamo up 1. 68 . Were getting a phrase that may be made in italy but not owned in italy as a lot of fashion houses coming under the spotlight as a result of that deal as well. Greece has got their money. Well have to see how they meet the conditions. That did help greek, lower today. Spanish yields, a little higher, yielding 4. 73 . But they have got their money and portuguese government is holding firm as well at the moment. Currency markets today fairly steady, posting nonfarm payrolls. Eyes on sterling. We had for the first time today weaker than expected data out of the uk. First time in a while coming in slightly less than we thought. Thats where we stand in europe. Do you want to spend your poor bankers to prison if they take too much risk . How do you measure reckless . I dont know. What is the difference between reckless and incompetent . I dont know. What is the answer . What is going to happen, ross . I dont think it is going to get into law because of that particular issue. Doesnt anyone ever think about these things before they start youre so you fly off half cocked over there in that country sometimes. I watch the way they like to float no, politicians like to float ideas, right, they like to float them out to see what the reception is and then make a decision. I watch those two houses you have and we have two also that are starkly different, but it is like a fight every day in the house of commons, isnt there . You need to get a little more civilized. It is an adversarial chamber, two sides facing each other and get joke and all that kind of stuff. On the bankers side, they have also talked about whether they should put the burden of proof on the banker to prove that he wasnt reckless. Not sure that will happen. That takes away the innocence until proven guilty. And they dont want to do this in any other industry, right . No, just in banking. The other question is, on the one side, if you are in danger of going to prison because youre reckless, what does that do to your Risk Strategy . What if you actually do something to do we save torture for, like, madoff . If you got reckless, they make the wrong move, they go to prison, what do you do for actual malfeasance and fraud . It is hardly going to encourage you to expand your loan book, which is funny enough, exactly what politicians bang on about all the time. Ross dude, you still i was just there. You still got that stuff in the tower of london. Not being used. People are milling by, looking at it. It is ready to go. Really. The iron maiden, there is a lot of things that are ready to go right in that place. Right . The tower has been underused for too long, joe. Right . You got the facilities sitting there idle. All right, were going to right in the city. Youre right. It is the perfect position. I thought that was crazy. Thank you. Thank him. And whats coming up. Thank you, ross. Coming up, could there be a market Storm Brewing in the form of Quarterly Results . Well get a forecast on that. A real storm developing in the caribbean and could be headed for florida. Say hello to chantel. Squawk box coming right back. We have a Tropical Storm developing, lets get the National Forecast from the weather channels alex wallace. It is it is july 9th or something. Is that where we are . Were on c. Is that normal . Slow . Where are sfwwe . Running maybe one or two storms above normal at this point. It is not unheard of, but certainly a quick start to things. Three named storms at this point. Well talk about chantel in a second. Update on the northeast, unsettled, a storm system hanging around that will keep us a little showery and stormy for the day. Best chances back across the interior areas of the northeast. But even up and down 95, the threat for storms in place there. Into the south, just a very muggy humid time and with all that moisture in the atmosphere, we get to the afternoons, those storms will begin to pop up. Nothing organized, but keep that umbrella handy. Made it in places like atlanta, back towards charlotte and even around birmingham. Then as we track our way to the middle of the country, heat the Story Building the ridge of High Pressure here. Triple digit numbers pretty wides