The Parent CompanyDeutsche Telecom jumps at the open. Display youre watching worldwide exchange, bringing you Business News from around the globe. Good morning. Welcome. It has been a busy morning. So far, some of the steepest boards in spain, portugal and switzerland. You can see still sharply lower, about 0. 6 off the major markets. The ftse mib off 0. 3 . French, italian and german pmis suggesting a fall from the june level right across the charts. But it were a trace on the manufacturing side. To the u. S. Markets, it was a choppy session statewide. The argentinean default. You had concerns around geopolitical tensions, still with fresh sanctions and then the ripple effects across markets. Earnings werent particularly strong, either. We saw the s p, the dow and the nasdaq around n session and a jump in the vix as a result. The vix up 23 . On the data front, interesting to note, u. S. Labor costs according to their biggest gain in more than 4 1 2 years in the Second Quarter. A little bit of sign of wage pressure starting to creep into the system. Initial claims and Unemployment Benefits rising by 23,000. When you see more people joining the unemployment cue, youve got cost rising on the labor side. This is the jobs story today as we chase nonfarm payrolls later on. A couple of stocks to tell but and the moves out there. The French Telecom company iliad placed a bid for tmobile in the u. S. The surprise buyout could trigger a bidding war with sprint corp. Which has a deal on the table for tmobile. It offered 15 billion in cash for a 56. 6 stake in tmobile which is owned by Deutsche Telecom. Two china pmis both staging a recovery. The final hsbc figure was marginally down on the flash estimates while the official pmi came in stronger than expected. Those readings at 51. 7. You can see the reaction across on asian markets. The shanghai composite has been trading a little lower in the session today. In fact, i think stateside its having more of an impact on these markets than the data points. Bond markets shaping up like this, youve got prices down across the charts. Yield in u. S. Treasury, 2. 57 . Its been elevated to gdp numbers came in at 4 in the Second Quarter. Could see some price actions there on the back of the u. S. Nonfarm payrolls. Bonds, 1. 17 . 2. 6 gilts and in italy, tracking below that 3 mark, but slightly more elevated there on the charts this morning. Foreign exchange markets, were still seeing some strengths in the u. S. Dollar story. 1. 338el 2 euro dollar. 102 yen. The aussie is still below. 93. And slightly softer in sterling. Joining me now, galtan with insignia, perhaps you can give us a sense of your feelings on markets today. Why was there such a strong reaction . Why such a sell down in one session . I think some of the be lated action to markets maybe brought on by all the other news i think as we saw yesterday. Argentina, ieps, etcetera. But the reality is that this issue of Central Bank Policy exhaustion remains with us. But at the same time, then we potentially have tightening. Its just a relation of the same. We didnt see much of a change in turn from the fed. Theres been a slight hint about some of the inflation. It doesnt suggest the fed is going to take the punch bowl away anytime soon. Given that we have come from 2009 with every central bank prt much pumping the monetary figures in, its all that policy. What is the additional policy . So youve got that back drop and the markets are trying to figure out whether growth is going to reach a selfsustaining level. But if it does, that results in Interest Rate volatility. Or volatility related to Interest Rates rising. Its suggesting the seasonals are performing like clockwork that we now see softening up in the period. You make the point that the equity markets are relatively fully valued at this point. I question when you see the earnings stateside starting to outperform, theres been decent numbers across the board and one of the concerns on valuations were the earnings side. But the earnings are coming through. The earnings have been okay. And we have seen a 10 growth of earnings from a quarterly year on year basis. But nonetheless, markets are up in excess of that and theyve already expanded. There have been very few periods of time where the s p has traded sustainablely with valuations such as the forward looking multiple for an extended period of time. So, yes, you know, its fully valued to, you know and we just have to take that on board. The only spikes weve seen above these have been only that, spikes. Theres been different performances by the sectors, as well. Utilities down 7 odd percent across the course of the month. Telecoms and techs are the only two sectors that gained in july. Were not talking about a broad brushstroke here because not every stock has gone once in recent weeks and months. Thats right. Correlation has been remarkably low. As you said, as liquidity does dry up and as we see some volatility, then i think these coalitions will pick up. You had see as growth is picking up, some of the cyclicals that are lower price stocks will do better. But at the same time, their defensives will perform better, as well. We had the flash 12i789s out a short time ago in germany and they were all showing that weve pulled back from the june manufacturing highs and july is looking a little softer. This combined with the very low inflation reading we had yesterday, how wobbly is the european story . Its still got a long ways to go. And the ecb, as weve said in our notes, is still behind the curve. The additional impact were going to see is nowhere near whats required to actually if they truly wanted to get inflation back up. In, they need proper qe. But again, you know, this whole question of draghi going down the same route that everybody else has in terms of Central Banks and t pumping the system with liquidity but we know a lot of money was coming over stateside. But is the expectation now under what the market has hoped . Yeah. I think the outlook for europe is still questionable. And i think its been their flows that were seeing back into the u. S. As a result of the money coming out. Its to a certain degree warranted, yes. Would you stay in touch with us today. cnbckaren is my direct twitter handle. Also coming up, Robert Walters, all this on u. S. Nonfarm payrolls today. Holidays are coming as we search for christmas products on uk. Co. Can you believe it . Who shops for christmas presents in august . Weventd out why businesses should be prepared. Plus, gopro and focus will get a snapshot of the Earnings Report as a public company. And its not all about u. S. Jobs. Heading out to the july auto sales, we preview the numbers. Can the industry continue to excel . All that and more on todays worldwide exchange. Youve been hearing that a lot in recent days and the latest today is around socgen. Despite the companys ties to russia. It contributed positively to the french Bank Earnings and the ceo sounded positive he could take advantage of the banks in russia. This has been positive for the company by the sounds of things today, stephane. Absolutely. The contribution from russia was 15 Million Euros for the results of Societe Generale in the Second Quarter. Its a small part of the business, but its a positive contribution with the lower cost to russia. Socgen posted profits just shy of 8 . As you mentioned, the russian operations, the french bank says it will remain committed to the country, to russia, and it will comply with international sanctions. I caught up with the ceo of the bank for the equity to discuss its exposure to the russian markets. In russia, you see an increase of tensions. We continue to take advantage of the development of this market. We are adapting to the current second chances. We had a positive contribution of russia, Second Quarter. We had good revenues, decrease risk. We are going to, again, comply with the rules, with the sanctions. We are going to adapt with the new deals, the new transactions. But we think we can adapt in this activity fundamentally in the longterm, take advantage of our presence in russia. The potential impact of the russian sanction from your business . Its a bit premature. Overall, let me say it is probably, again, less infrastructure projects, probably, again, a slowdown in the economy. But, again, we think that we can service our franchises, in particular all the business in with the mortgage, with the consumer loans and transform the we have new services to offer to our clients. What is today your exposure to russia . Big exposure at the end of the day. 3 in russia. Exposure. So, again, we have limited our exposure and we brought you that going forward. In terms of financial forecast, its less than 5 of our total net profit with an expected revenue in 2016. Do you do you feel that political sanctions are always compatible with the reality of the business . There are sanctions and we will comply with the sanctions, we will comply with the rules. And the cost of risk in the Second Quarter was at the lowest level since 2008. Societe generale is confident its going to decrease again in the Second Quarter. 200 Million Euros to cover its litigation costs and that brings the provisions to 900 Million Euros so far. Over to you. Stephane, thank you very much. Meantime, the question marks around china and the mainland, look how strong is growth while manufacturing has climbed to a sevenmonth high, building evidence that the reforms are now making their mark. I voted for culture. With a k. how are you . I voted for plausible deniability. I didnt kill her, david. And i voted for decisive military action. America, you cast your votes. Now, go to xfinity on demand and select the peoples hotlist to see this summers top 100 shows and movies. I voted bank of ireland is in focus today. Earlier, we spoke to the ceo and asked whether there was anything interesting attached to bank. Our strategy is to ensure that were at a customer loans funned by customer deposits and our capital and our liquid assets are funded by the markets, even three or four years ago, we always tried to resist the temptation of a Central Bank Money because, you know, that can be unsustainable if you base a strategy around that. So i dont think that we will be significant participants in that you have to be very careful to make sure you can wean yourself off. But obviously, if theres an opportunity to do a small level of a carry trade, well look at that. The red line shares are hitting higher after the Car InsuranceCompany Posted an 8 increase in first half pretax profit coming in at 225 million pounds. The share price up almost 4 . But in the meantime, areva shares down 16 to cut its outlook for the first year after posting a loss of 694 Million Euros for the first half. The statecontrolled energy group has closed its loss making solar power unit, focusing instead on nuclear. On the back ooh that, squawk box spoke to the ceo and asked when does the Nuclear Industry in crisis . No, were not situation. Weve generated positive cash flow for the second actually in a row which has not happened for the company for eight years before that. So i think its quite an achievement that we are proud of. This is a restoration of the financial equity realm of the company. The net loss was incurred to brand new levels, actually, where we take strong actions like joint ventures or some of the activities. Its the share price responding, as well, up 2 . Beating analyst expectations. Speaking earlier, the axa ceo was asked about bond holdings. Our business is too much. Assets and liabilities. To be in a position to deliver to policyholders what they expect in the long run. If we hold subwinds, its because they in principal were to led other chas of assets and we minimize the gap which reduces very much the risk if rates were to come up. Let me pick up on that about risk reduction. In duration, yes, we have been releasing duration pretty much for a while now. But looking at the high yield side of things, the cash were seeing move out of there. We seem concerned with the debt rising, too, so we are looking at those positions. This time, there doesnt seem to be any evidence of default around the corner when you look at the cycle about Interest Rate hikes. Thats right. A reversal came in as a result of qe. So a reduction in liquidity, high yield being one of the most susceptible ones. Lets just come back to the earnings because were seeing the turn from a bunch of different companies. Theres been better numbers coming through with some of the beaten up corporates. Bank of ireland. Youve still got negative numbers coming through from the Nuclear Industry, but the insurance industry. Its patchy across the board. How do you feel about the things that have got here in europe . Yes. I think the risk there, those that have been able to deliver better earnings because of better financial asset performance such as the bond. So that would be the insurers, the banks that have typically taken up and boosted margins. But on the other side where we are looking at Consumer Companies where you need top and bottom line growth, youre seeing problems still at the top line and at the bottom line level. Part of that is due to the euro and where it is in comparison to other currencies. But part of it is just the fact that right now we havent got enough operational gearing to deliver those upside surprises that we want to see. The level of growth is just too low at the moment. We probably shouldnt be surprised because stateside, even with the economic picture, it is looking challenged, as well. Galtum, stay right there. I want to look at the other stories. Indias factory pmi rose to 53 in july from 51. 5 in june. Its highest sips february 2013. However, the strong leading wealth are tempered by a sharp increase in the cost of raw materials. Import prices rose at their fastest pace since january. Meantime, manufacturing in japan expanded slower in july than estimated. The market pmi readings fell to a seasonally adjusted 15. 5 to 50. 8. Slow manufacturing comes after a drop in Consumer Spending and a larger than expected decline in june. Back to emerging market and the two chinese pmi readings out this morning, both showed the Manufacturing Sector of staging a recovery. The latest figures are lower on the flash estimate but still in expansionary territory. The official numbers came in stronger than expected, both hit at 51. 7. Which is quite remarkable because theres been a lot of concerns about this hard landing taking place in china. Joining us now out of hong kong today is darius goss. The numbers out of china suggest we are seeing some strength in these economies. How strong is it in your book . I think the second half of the year will be better for the biggest emerging markets in asia. When it comes to india, its a lot to do with the optimism that the new government and the Prime Minister will manage the economy better. So business men are more upbeat on outlooks. In china, grow with the stimulus. Its continuing this until the bank continues to ease monetary policy, as well. We expect a better environment in this part of the world and the rest of 2014. The securities with a bit of number crunching, anytime you get pmi in the 51 to 52 region, it signals a climb of about 8 . Saying this sets up up nicely for the fed quarter, remains that potentially have an eight handle to deal with when the market has been looking at all forms of different contraction back towards that 7 mark. Do you think china could be the surprise catalyst in the Third Quarter . Yoj we are going to get to the 8 primarily because manufacturing is heavy and decreasing share internal gdp. There are other parts of the market which are not doing so well. We have state tallies last night showing an unusual drop in home prices in china. And this sector is here, it accounts for almost a third of chinese growth. So look at the negative outcome here, it can outweigh the gains in manufacturing. Which means growth will be balanced better in the first half, but its not going to hit 8 . It will be around 7. 5 . Do you feel more confident as the numbers flow through in china or do you think its dealing with the books . On one side, its better to see these numbers. At the same time, it does mean that theyre not going to look to the economy any further than what theyve already done. And i, too, have been very concerned about the expansion and story and how that deflates and how thats going to play out and how thats going to impact growth and what defaults were going to see if the can market does in terms of assets and the shadow banking. The question is whether the central bank ties the noose around some of these corporates will have high leverage in china or whether they allow the mainland to simply grow out. If the revenues coming in, sometimes theyre not all that challenging. I think that the execution in china involves a lot of risk. But the debt has increased dramatically over the past years. Overall growth in chinese debt, not growth, but levels over 200 of gdp, which is compared to what we see in developed countries. Debt levels have been achieved in a short period of time, which means a lot of bad debt has accumulated. And we are seeing rising cases of default on year default among Wealth Management products, even corporate bonds. This is going to increase volatility in the past few markets in china going forward. But its something we have to live with. And the good news is that the government continues to put such a high degree of control over the economy. Mostly they will be able to manage the volatility. Appreciate the comments, darius. Thank you to galtum who has been with us for the first half of the program. Investors with insignia wealth. Still to come, what about sprint which has put a