Deutschland. A pair of u. S. Tech stocks could be in the spotlight today as netflix fails to wow analysts with latest results and investors get set for another quarterly decline in apples profits. Good morning, everyone. It is a brandnew edition of worldwide exchange. And on todays show, Turkeys Central Bank could take steps to ease investors fears in its latest Rate Decision today after a popular protest rocked markets last month. Morgan stanleys head of economics for the region joins us at 10 30 cet. And the bull run is on for u. S. Mna according to a new survey which says co confidence is on the rebound. We bring you the release first on cnbc. Thats coming up in the next hour. And telenora launches a share pieback after Second Quarter earns beat. We get the full story with the ceo live from norway in just under an hour. Netflix shares take a hit. Julia boorstin brings us an exclusive interview with the ceo straight from Silicon Valley at 11 30 cet. And there appear to be limits how slow beijing is willing to let china grow. The chinese premier reportedly told state council that 7 is the economys slowest tolerable growth rate. The report by the beijing news isnt the first time a 7 growth rates been tossed around. Over the weekend, xinua said they were set to double. We got these comments or reportly got the comments from the chinese premier and there is always this assumption in the market that the chinese officials were okay with chinese growth slowing, but apparently not by as much. Were these comments a surprise to you im not so surprised by them to be honest. I think 7 should be seen as something of a in what the chinese leadership wants. To be honest, it is doo baitable whether theyre going to ever print numbers that are much below the 7 mark. It is possible well get a 6 handle. We have to focus on what the underlying trend in the economy is doing and there is a famous wikileaks report which actually suggested the chinese premier was thinking in terms of the three key variables for chinese underlying growth being electricity, production, credit growth, and certainly there was another factor which momentarily escapes me. But if you look at the underlying factors, you can see there the actual trend in chinese growth is still, i would say, around 7 at the current stage. Going forward, though, i think we have to look at the composition of growth. I think thats really what investors are going to be focused on. Because china has been running with investment contributing half of gdp growth every year now for the last six years, ever since the financial crisis began. That led to very, very rapid gains in investment spending in china. That is going to have to correct. But, what is the problem with sub 7 growth in china. I talked to the ceo of swatch before and he said all we want is growth to be sustainable. We dont even care whether growth is double digit or whatever, whether it is revenues for swatch in this case, we want it to be sustainable. So slowdown is good. I think thats correct in that the chinese authorities want to suddenly reduce the dependency on debt, on credit, for growth. I think there is a lot of concern here. If you look at the ratio of private sector debt to gdp in the case of china, the last five years it has gone up by nearly 50 Percentage Points and running now at 163 . Thats the same ratio, by the way, that you find in the United States, japan and in the euro area. So they have actually achieved what growth they had since the financial crisis with debt. I think now there is a desire to actually reduce the focus on debtdriven growth and that means reduce focus on investment. But at the same time, china is going to want to boost consumption as a source of growth, even though it has been contributing a lot. That can be achieved through, for example, the service sector, can be achieved through more deregulation here through Health Care Opportunities like that. I think also we have to reckon the fact that china, even though it has been all along growing exports very substantially, it might actually still want to step up its exports to provide further growth. Thats a big issue for the advanced economy. Hold that thought. Were getting flashes from the pa bank of spain. Second quarter gdp on annual basis down 0. 8 1. 8 after the 2 drop First Quarter t seems a the spanish economy. Were looking at q2 being better than q1 and should see positive growth, particularly in germany, the bundesbank German Economy in q2. This is consistent. Industrial production in the euro area on a quarter on quarter basis has actually shown some gain in q2 versus q1. Thats reflected even in an economy suffering as much from the contraction and real estate sector. It is welcome news. I think the question is really where are we going to go in the second half of the year . Is this momentum that started to emerge, this more positive, going to continue through into the second half of the year or is it going to require a lot more stimulus to come through from the ecb on a later stage. More breaking news, though not necessarily in your expertise, ryan air and air linjia, neverending story, rain a ryan air offers to sell to another airline. All right. Lets check in on how markets are trading in asia. Li sixuan is in singapore. Were seeing a lot of green on the charts there. Youre right. A very strong session in asia led by chinese shares boosted by premier lis comments. The shanghai composite jumped to almost 2 and the hang sang hong kong gained 2. 3 . Elsewhere, japan, south korea and australia, those shares all ended in positive territory. In china, as you can see from the first row here, banking shares made a strong rebound on both mainland and hong kong forces. Local analysts suggest the Interest Rate reforms will have limbed impact on the shortterm while lower Interest Rates will support growth in the real economy. The property sector which has a relatively high dependence on Bank Lendings also enjoyed the rally. China merchants gained almost 6 . And Chinese Railway stocks also chugged ahead on hopes of a supportive measures. Cfr corporation gained over 8 . On to japan, mobile carrier softbank was the outperformer on the nikkei 225. Soared by 5 after reports that it will raise the bet 35 million u. S. Dollars to stock new smartphone hand sets. South Korean Technology shares also rallied ahead of earnings results. Lg electronics gained almost 4 and Samsung Electronics rallied almost 3 . Let me quickly show you gold miners. They continued to gain stream, tracking the rally in gold prices. Australias new crest laser gold and kingsgate jumped 3 to 5 in todays session. Back to you. Thank you so much for that. Lets take a look at whats going on with the european markets because we did start in positive territory, although we are losing some of those earlier gains. The just modestly higher by. 1. We are seeing gainers and losers evenly split. The cac 40 showing gains. The ibex 35 strong, well come to some mna stories later on. The ftse 100 in the uk flat, remember that yesterday we were trading at sevenweek highs. This morning, we are getting a little bit of support from those chinese comments as well. Now, lets take a look at commodities because a lot happening in that space. Particularly with regards to the oil. Brent crude losing a little bit down by. 1 . The more interesting one is wti, now down by twothirds of 1 after that fantastic rally over the last four weeks that 16 month high briefly lifting the price above that of brent. The last time we saw that happening was three years ago. I want to show you a spot gold, 1331, up by another 2. 9 . What an impressive rally. Were close to the onemonth highs and that in large part is down to the weaker dollar. Speaking of the dollar, heres what is happening in the dollar yen space. Currently changing hands at 99. 45. Back below that crucial 100 level, down by. 2 . We are seeing some dollar weakness across the board on the back of the disappointing, slightly disappointing existing home sales. The aussie dollar against the u. S. Dollar, 92. 57, up slightly ahead of inflation data we will be getting tomorrow. That could open the door for more easing. All right. Lets take a look at earnings. Netflix headland a big day for u. S. Earnings yesterday reporting better than expected Second Quarter profits thanks to a boost in subscribers. The tech watch continues with apple reporting after the bell today. Economic bellwether u. P. S. Also reporting today before the open. And lots going on in europe as well. Telenora in norway presented Second Quarter results better than analysts forecasted. Maintaining full year guidance and revealed it will buy back around 1 of all outstanding stock. And kpn, look at that, up by 5. 3 on the dutch market. Saw its operating profit and sales fall in the Second Quarter because of Lower Consumer spending, but shares are soaring for a different reason because the dutch firm announced it was selling its a plus unit to telephone ca deutschland. And swatch, just talked to the ceo not too long ago, has beaten forecasts with the 6. 1 annualized rise in first half net profit. The worlds biggest watchmaker expected a strong second half adding the integration of Harry Winston will become noticeable in the latter part of the year. And st micro reported the seventh straight net loss. Sales fell 4. 8 , but managed to meet forecasts. Speaking earlier on cnbc in an exclusive interview, the ceo said he expected Company Performance to improve dramatically in the Third Quarter. We expect them moving from next quarter, tremendous improvement and in addition to quebec, profit. It is really not related to what is today the ability on the smartphone market. We see many products, et cetera, and in the recent weeks we have seen a softening in the smartphone market. Still with us is julian callow at barclays. We have seen a slew of earnings from the u. S. I believe some 25 of the s p 500 have reported. Higher than afrnl number of companies have actually beaten. Revenue is looking a little light. It is a positive trend. Is that in line with what youre expecting for the u. S. Economy . Is there a big disconnect that you cant explain right now or is it all just in line with what you are seeing . I think the earnings are a little better. As you say on the revenue side, things are a little lighter. That fits in that the u. S. Economy is set to grow by about 2 or slightly less this year. Got to remember that the u. S. Is suffering a lot from very intensive fiscal consolidation. We estimate the personal tax hikes that happened at the start of this year combined with the impact of sequestration is nearly 2 of u. S. Gdp. At the same time, though, there are some very good signs coming through on the investment equation in the United States, both on the housing, you get some housing numbers again today, but youre seeing house prices up 12 year on year. As well on the investment side, i think were starting to see some much better intentions to invest in the United States and there is no doubt that the whole shale gas revolution is really galvanizing some renewed investment renaissance in u. S. Manufacturing. I think therefore earnings are more domestically into the United States are going to be doing better, at the global level, certainly were going to be seeing as we have already seen yesterday some pockets of weakness, and there will be concern about the emerging economies, also concern still about lackluster domestic growth coming through in europe. You make a very good point with regards to domestic exposure versus international exposure. I want to come back to the Housing Market. Existing home sales were a bit of a disappointment. We saw a decline, but prices actually rose to a fiveyear high. Do you feel that the recovery in the Housing Market is going to be choked off by the higher Mortgage Rates . We have looked at this very carefully. Mortgage rates are up 100 basis points over the last eight weeks or so. That must be having some impact and already you can see that Mortgage Applications for refinancing have really come down very sharply here. So there is a very large monetary tightening and that will be expressly the Housing Market. Still has the Housing Market got enough momentum here . A lot will depend on the evolution of the unemployment rate, if it continues to come down, things continue to tighten, house prices are actually still very affordable here. That will help confidence and so the Housing Market momentum will become a lot less, but at the same time, it shouldnt really stall out and start to unwind, i think. A couple of analysts are over the last 24 hours have actually said, well, the existing wholesale numbers are actually bad to the extend that the fed is actually going to hold off and tapering in september. Do you agree with that or do you still believe that we are going to ill call it still very much that the fed will start to taper in september. It clearly has come a long way. What you got to remember is the way the fed evaluates how it is actually weighing out different factors, unemployment, growth, inflation, are now its Financial Stability. How do you mix all those up. Thats really the question here now. It seems to us the fed has more concern about Financial Stability in the size of its balance sheet. It does want to start to taper. Only probably by a modest amount coming through at the september meeting. The economy probably wont even notice. Probably only if it is only around 5 or 10 billion, i dont think i think to be honest it is already priced in the bond market. Look at longterm Interest Rates, they have risen sharply here. You can say the markets anticipate it. For the fed to start going back is going to raise more questions. As an issue of communication here, and to be honest, the fed is finding it a bit clefrnin ch there. Well be covering a lot more ground over the next 45 minutes, i believe. Thats how long youre going to be staying with us. Julian callow, chief International Economist at barclays. Find out what the mining giant results say about chinas growth outlook. Well be live in hong kong after the break. And coming up, a first on cnbc interview with telenor ceo Jon Frederick baksaas. [ male announcer ] ive seen incredible things. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. Shares of the worlds fourth largest iron ore producer fortescue jumped nearly 2 in australia today. This despite the fact that the Group Forecast stronger margins in the coming months on the back of higher demand from china. Joining us now is andrew driskill, regional and China Resources analyst and head of Resources Research at clsa. Julian callow, chief International Economist at barclays is still with us. Thank you for taking the time to speak to us today. In my introduction there to you, i said it is forecasting higher numbers on the back of higher demand from china. And just ten minutes ago we were talking about weakness coming from china. What am i missing here . Well, look, i think with regard to demand in china this year for commodities it has been pretty well in line with our expectations. We have seen some strong investments in infrastructure, the Consumer Sectors have done well. But the picture has been mixed. Residential construction and power consumption has been a little soft. If you look at iron ore prices, they have staged quite an impressive recovery. Iron ore up 13 so far in july. That is the biggest jump since december. Im a little surprised by this, because, again, day after day, we talk about the concerns coming from china. So do you feel that the fortescue, the rio tinto, the bhps of the world will be a completely different story from the other slowdown were seeing in china . Look, i dont think so. Were perhaps a little surprised as well by the strength in iron ore in the last month or so. I think that reflects the fact that Steel Production hasnt reduced much so far, that iron ore inventories are relatively low. Were probably seeing a little bit of a restocking cycle on better sentiment among the Trading Community and the steel mills. But, look, in terms of the outlook in the second half of this year, we think more of the same. For Commodity Markets were looking for steel demand to grow about 5 to 6 this year. We expect base metal demand to be midhigh single digit and thats a reasonable clip, but much slower than the level of demand growth we have seen in recent years from china. And i think investors recognize that a structural shift is well under way to a slower level of Economic Growth and a less commodities intensive level of growth. Market commodity supply has been growing, we have seen market shipped into surplus, and we have seen prices fall as cost curves are compressed. It is julian here. Lets talk a bit more about where the markets are shifting and in particular where the demand is coming from. Because for so long we have been seeing chinese Steel Production