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tv   Worldwide Exchange  CNBC  August 1, 2012 4:00am-6:00am EDT

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welcome to today's. my slips afalling orders. hbc marks nine straight months of contraction. investors welcome the tronger than expected capital yash yratio. >> we've managed the commercial revenues and as i said, very low interest. >> india gets a new finance minister but the country is grappling with the worst power outage in a decade.
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bmw issues a bullish outlook. next up, u.s. auto sales out later today. welcome to today's program. eurozone, pmi, the last week of 44.1, come weaker than that this morning at 44. the german and french number were lower than the flash. spain came in slightly stronger. it's deep in contraction territory. employment index as well in spain contracting at fastest rate since 2009. the new orders index, 42.8. flash was 42.9 as well.
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manufacturing plummeting and german manufacturing very much caught up in that as well. pulling euro/dollar off the high. last week the high 1.33. frederick joining us from hsbc research. there's no loit at the end of the tunnel as far as europe is concerned. everybody is very excited about what the ecb may do tomorrow. will we likely be disappointed? >> we think expectations are a little high in terms of the ecb, and for that matter the federal reserve. it's difficult to see them deliver game-changing action at this point. the ecb probably waiting for signals from policy makers, what their game plan is before they bring out big gun. same with the federal reserve, they probably want to see more
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data points until it swings into action. we think it's probably better to be cautious going into the next few trading days. >> we'll be back in a little bit for more. in the meantime, china's official pmi data differs from hsbc's private version but for economists the take away, the world's second largest economy may be hitting bottom. >> hsbc's pmi showed a slight improvement in activity while china underwhelmed. china's official pmi focusing on state-owned enterprises while hsb looks to medium to small companies. china manufacturing dropped to the lowest point in eight months. index contracted more deeply in july than june plummeting to 46.6. the hsbc/china pmi rose to
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highest reading since march. most indices showed a contraction. economists suggest china's economic slowdown may have hit bottom in the second quarter but many argue there's no question that china's manufacturing sector is doing very poorly and requires policy support. china's top leaders seem to be he can koeg the view. state media say the president and premier have promised to dial up fine-tuning in the second half of the year to prop up the economy. we may see a pickup reflected later this year. >> let's get back out to frederick newman. you heard this talk about china perhaps bottoming out. what's your view? he has some company. >> i like that. i like the fact he's getting attended to. >> we'll come back to him in a second. clearly the idea china hitting -- >> sorry about that.
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we like to attend to make sure everything's okay. give us your view on china. pmi out, a little weaker. policy leaders yesterday pledged extra support, fiscal and monetary. how much more stimulus are we going to get and how are investors going to react to that stimulus? >> well, i think the data today shows china's economy needs stimulus. at best we can it talk about a stabilization here. it's certainly not an acceleration rate most investors are hoping for. more stimulus is required at this point, and both monetary as well as fiscal. the last few days china's policymakers have made piecemeal announcements of projects, et cetera, and that will continue drip feed of individual projects being launched. not necessarily a big announcement of 1 or 2 trillion,
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more piecemeal but enough to push growth back up. >> i was surprised given the tone of the remarks out of china that we didn't see much of a market reaction. why do you think that is? >> i think the market is to some extent in a waiting see mode fort hsb and the fed. we're looking at what western banks are doing so turnover is weak. another reason local markets are not reacting because there's a lingering feeling, certainly on external side, things will get a lot tougher. today with korean exports out, weak indeed, that will also hit china at some point. therefore, we need much more stimulus. that's what investors are looking for. >> isn't that basically what china just promised? this was pretty clear, pretty stringent. i'm trying to figure out why they didn't put more of a bid
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into markets. >> i think in the past we're used to seeing numbers attached to stimulus program. 4 trillion in 2008. this time around it's piecemeal announce manies as we do more on infrastructure in the country, in the center of the country, we do a bit more rail investment but it's hard to quantify mouch is being done. i think that makes investors a little more cautious. it won't change because we don't think chinese will unveil big packages. inresters better get used to it. >> we'll be back. asia's third largest economy posted slowly manufacturing data in july. we have the details live from mumbai. >> indian manufacturing sector as well as witnessed a slowdown. hsbc manufacturing pmi has come
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in at 52.9 reading in you'll. 55 in june. that's a sharp decline on a month-on-month basis. it's still holding up to show expansion but slowing down. we've seen a moderation on the new order inflows and heading on to weak global cues, exports have fallen down. new export orders have fallen for the first time since october 2011. going forward with comment from hsb they say output will slow down and july orders have fal n en. there has been a slowdown in manufacturing, 52.9, worse was a reading of 55 in june. >> we'll be heading back out to india as well.
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power has been restored to most of the country after a blackout affecting hundreds of millions. south korea releases poor export figures. we'll number spain where catalonia suspended social service payments because of what it calls liquidity problems. that's coming up later. societe general took a hit. we're in paris with an explanation. good morning. >> good morning, ross. 42% decline for net profit that was below expectations. it's due mainly to an charge of 450 million euros on the second quarter on russian fund. revenue is higher, 6.3 billion ir rows for the quarter.
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cib unit took a hit in the second quarter because its net profits declined by 71%. the ceo of the bank still is satisfied with the results of the bank for the second quarter. >> i'm happy with the performance. the commercial revenues where we're solid and very low market risk. >> on the eurozone crisis he believes spain will not need a bailout and europe will not break up. he's expecting european central bank to help european governments dealing with this crisis. >> certainly the central bank can help, to give time as well as the banking s to adapt to this new world. >> they were cooperating with
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regulation authorities in possible mapgs. they say the libor scandal in the united kingdom will not help to rebuild credibility and confidence in the banking sector. with that, i send back to you. european banking federation has welcomed the move by the european commission to make manipulation of bench mark borrowing rates a crime. joining us by phone from brussels, secretary-general of the european banking federation. thank you for your time and for joining us. your reaction to the news that this investigation into libor fixing may be criminal and implications for the banking sector. >> you have to make a difference between on the one hand the investigation on the wrongdoing of some traders in some banks. on the other hand, the
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governments, such as libor. so, the criminal investigation is the traders and certainly not on the organizations running the benchmarks, like for the libor, british bank and ibor, european banking federation. the large number of the banks and more than 40 banks are also diverse, spread all over the eurozone and have different activities. therefore, also different interests. we think the risk of collusion is very, very low. of course, we're open to enhance the governance by introducing public oversight. we agree that public authorities, and it may be the ecb or european securities
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market authority, that could be the supervisor of the process. we are also open to see whether we can enhance or increase banks to make it mandatory for large banks to participate because it's now rather voluntary effort of these 43 banks to calculate the bench mark. so, we are open -- >> you actually say, you're open. look, the banking industry needed the libor scandal like a hole in the head on the back of everything else. where is this industry going to be in another two years? >> well, these are incidents.
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and it's something we have to overcome. we can overcome it, because as you said, the markets needed this kind of benchmark. we can, of course, try to calculate on real transactions. we are open to do that together with european commission and ecb, but it will certainly be difficult to find other bench marks given the same opportunities to the market participants, to judge the trend in the market. so, we can certainly do that. exercise. now, your question is probably broader. you need to realize we're in an economic downturn in europe and banks suffer from that. but an economic downturn is always then followed by an
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economic -- >> guido, real quickly, you talking about making it mandatory for more banks to participate but we've seen banks pulling out of a lot of these panels, whether in europe or asia. is there a sense, broadly speaking, more will want to reduce their exposure to lit rags and regulatory risk and are you trying to combat that in. >> well, certainly. we don't see that trend for the moment. all of the 40 -- lently we increased so it's now 45. so that trend went see. but it would certainly help if is somehow mandatory for large banks, with large deposits, for instance, with the central bank, the ecb, that these banks are
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really compelled to contribute. that would certainly enhance the quality of the benchmark for sure. >> all right. that's guido, secretary of the european banking federation. thank you for your shots. we'll see, ross f by the end of the year libor has moved to a more transparent benchmark rate. thanks for that. we're just over an hour into trading. european stocks are in the green despite pmi being nudged down marginally. ftse 100 up. xetra dax was off slightly yesterday, we're flat justice up over 0.1%. cac up a little, had a good july. ibex up a third of the a percent. check in with key bond yield
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italy having a bit of a rally today. yields lower in spain, 6.69. we've been lower, 7.7 was the level we hit last week. so much depend on the ecb meeting tomorrow morning and what they say. good auction today. the auction should go well while people are prepared to are a return on money. currency markets, euro dollar just above the 1.23 mark. dlash/yen is the move today. we had a two-month low on the back of the chinese pmi data. we're back up to four-month highs in aussie/dollar. we'll be looking at uk manufacturing pmi coming around in 15 minutes. before we get to kelley, let's
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go to singapore. for more reaction to the chinese data. >> reporter: asian markets showed mixed picture. chinese stocks got a break, shanghai rose 1%, boosted by hopes of policy easier. the country's securities regularity was encouraging companies to buy back shares. the hang sang index finished with modest gain of 0.1%. nikkei snapped a four-day winning session, down about 0.6%, a slew of disapointing earnings numbers really drag the market lower. company komahsu sacked people. investors plagued with caution
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ahead of the fed ecb meeting. weak pmi data out of china, key consumer as australia's resources hurt sentiment. farce off. kelly over to you. an official at bank of england says economists are to blame for the recession. others say the country should be following economic principles like music like bruce springsteen. let e-mail us at worldwi worldwidworldwide worldwide @cnbc. meanwhile, still to come, a new olympic record has been broken. michael fem has one more olympic lelgdzs than anyone in history. find out the latest from london 2012. [ male announcer ] this is the at&t network.
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latest results from olympics. michael phelps putting aside disappointment of not winning a gold by helping the men's 4x100
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relay. blistering from ryan lochte put the american team in control. he stormed away to win gold and a record 19 olympic medals even making him the most decorated olympian of all time. >> freudian slip -- i'll leave it. i won't make any comment about phelps and models. medals impressive. immediately after he won those 19, i could hear the cheer going around the stadium. final of the women's team gymnastics saw a strong american lineup against russia. u.s. team's routine started with a vault from jordyn wieber and the rest of the team dazzled with their performance. won the u.s. its first team's gymnastics medals since 1996 olympics. the u.s. team beat russia by five point. >> china and u.s. overall lead aboard with 23 medals. china on top because it's got
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more golds. big moment coming up today, we might get our first gold for team gb. >> you said you think they could have two or four medals. >> they have a shot of four golds. i'm reckoning we'll have two golds and two medals of two other colors. cycling and then the breaststroke 200 meter final tonight. >> it's a busy day. another shot. highlight from another packed day, including the men's 100 meter freestyle, preliminary of the men's hockey competition and great britain will also take the field as football, or soccer, tournament. >> we'll take a short break. still to come, we'll bring an interview with the chief executive at british investment conference. he'll talk about the impact of the games on brand uk. we've got important data as well.
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these are the headlines. china is flat. pmi slips. >> stock gen misses forecasts but stronger than expected capital ratio.
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india announces a new finance minister as the country grapples with worst power outage in a decade. pmi out of eurozone got nudged down. manufacturing pmi this morning as well is 45.4 in july, from a revised 45.5 in june. the reuters poll, 44.8, other. sharply weaker than you might have expected. sterling is falling. the lowest since may 2009. output index, 43.3 in july. massive fall in output. uk manufacturing pmi shows sharpest drop in export orders since february 2009. manufacturing looks to remain a major drag on overall economy. shrinking uk, shrinking at fastest rate is more than three years in july.
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remember, we've had three quarters of negative growth now in the uk. sterling down to 156.8 against dollar. euro slightly firmer. fx strategist at hsb. pretty poor manufacturing number, add into all the other poor manufacturing numbers we're getting elsewhere. i suppose the thing is, we've already had action from the bank of england so we don't expect anything in the near term. >> it's going to raise the probability of further action. we've had a sequence of pmi, sweden is the only exception. global, i don't to want say slowdown, global recession type of story. hsbc, we think the probability of the market are going to attach to some form of delivery,
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easing, it has to be alongside the rise with these numbers. >> the thing is, i guess the uk economy might get weaker. if two days off for the jubilee contributed -- made a big contribution in the second quarter, what are the two weeks off for olympics going to do? >> we need the visitors to be spending a chunk of money. i'm sure you saw the stories how quiet it is in the west end of london because everybody is in the east end. this pmi number means we're getting on too far a very soft start in the third quarter. the idea we had a second quarter ab ra aberration has been challenged. >> we're in the middle of a big week when a lot of central banks are expected to act, not deliver. does this tilt the odds more toward the bank of england? >> tilts the odds and raises
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expectations. as you said, the difficulty we may face is those expectations aren't matched in terms of delivery. this is a problem we have. a number this close to a bank of england rate tomorrow feels more critical to the outcome tomorrow. >> guess on services pmi, a much bigger component? >> yeah, i always get the sense manufacturing seems to capture the market's imagination. we have this weakness in the uk economy. the idea sterling is safe haven was frankly a little tricky to justify. i think this just underlines how weak an argument that is. >> how does the dollar help you trade through the fed, the ism and the adp as well? >> i think tread water through the numbers unless we get an absolute shocker because we want
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to see what the fed will say and do in terms of the policy reaction. most people i've spoken to on the trading side, they're wary of the fed trying to trade through euro/dollar. they're looking to things like dollar rather than necessarily looking at the more traditional euro/dollar angles. >> there's a fascinating piece saying switzerland is the new china given stockpiling of currency reserves. is this something policy makers around the world should be troubled by? >> the swiss seems to be accumulating euros. euro buyer of last resorts is the angles they talk about. it's not a risk immediately. but at the end of the day, they're accumulating assets would seem the rest of the world is less inclined to hold. that's a problem for down the road, but not now, i don't think. >> that's for your time this morning, sir.
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spain is still firmly in the grip of a crisis as business activity as shrunk for the 15th month running. pmi manufacturing index for july, 42.3, and that reading for spain was better than expected. a slight improvement from june, but still below that 50-point mark that separates expansion from contraction. julia has been following the latest on spain and she sent us this report. >> reporter: plenty of data from spain this week. i want to point out one from yesterday, the central government deficit data showed figures for the first half of the year exceeded the target for the entire year. that was down to the acceleration of transfer payments to some of these regions. we know three have already indicated they may need help. interesting that the largest and most indebted of those, catalonia, said yesterday it was going to suspend payment to some social security bodies.
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knees are subcy days it pays to care homes and hospitals. they said it would just be a short pert, and resume payments in september. the local media suggesting it could be in the region of 400 million euros and up to 100,000 people may not get paid this month. they also boycotted a meeting last night, a fiscal monetary policy meeting set to dcuss finances of the region. they apparently sent a letter to finance minister saying that if the eu is willing to give leeway to the entire deficit target for spain, then the region should see some benefit in that, too. they also walked away from that meeting where debt targets were agreed. plenty focused on restraining spending in this region. the open question is whether they manage to bring the deficit in at 6.3% this year. back to you. meanwhile in south korea, both exports and consumer inflation fell for the month of july. it could clear the way for a potential rate cut next week.
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we have the details from seoul. >> exports in korea plunged 8.8%, much more than estimates closer to 4%. that chopped the trade surplus in half from last month $2.7 billion. cpi also nose dived, growing at its lowest clip in 12 years at a mere 1.5%. inflation setting well below target following global food prices. yesterday's softer industrial output figure and south korea is facing a deluge of weak data. finance minister says he's not ruling out the possibility of economic growth slipping below 3%. add this up and may send clear signals of a rate cut thursday following july's surprise move which was the first cut in about
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three years. >> thanks for that. let's get more thoughts from our guest host, richard at hsbc. first is a response to some of these figures we've seen out of south korea. again, jibing with the chinese weakening. broadly speaking, how much is the region slowing? >> well, i think korea is a very important bellwether in general. with exports coming down sharply in july, that portends what the region is looking for in third quarter, down across the region. om see new export orders to continue to decline. that will be a big challenge this quarter because it will take a few more months for china to bring the economy back up and to put a floor on growth. we're looking very challenging two or three months ahead. >> you've drawn attention to the way in which a lot of these asian economies have been able
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to make income ganins over the last couple of decades. i wonder in this case if we start to see a slowing, how much of a challenge is that for these countries that are hoping to jump up in the ranks of developed markets? >> well, there has been some talk about the so-called middle income trap in asia. that is growth rates are slowing. not just for cyclical reasons but also structural reasons and that raises some concerns. some of these countries may struggle to break into the next income bracket achieved develop status, which is the intended goal for most of these countries. so, the broader slowdown in the global economy is a long term challenge for these economies. xhis like malaysia, thailand will have so to see much faster growth in the next five to ten years to achieve the goal of development market status by 20130 30. >> thanks. we'll leave it there for now. we'll be back in a little bit.
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reaction outside of the uk to pmi numbers. sterling trending lower against the euro and the dollar. what interesting is stocks across the board have also turned lower as well. we were up marginally. the ftse 100 reacting less. dax is down. ibex also turned down. the interesting component is the export orders down for the lowest since february 2009. >> posting the biggest drop. which is interesting because it does show how quickly europe's prices is coming home to roost. it's creating this big drop in orders in one month's time. >> that's being seen everywhere. everybody has been impacted. in japan, japanese pmi. >> take a look at the bond yields. we'll watch for more pressure on the periphery. >> they have gone up since i looked at them half an hour ago. >> lower on the day but still
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not anything near the relief levels policy makers hoped. 6.71 for spain. 6.04 for italy. gilts and bunds, they are rising as investors have moved out but coming back in. 1.32 on bund and 1.49 on gilt. >> the spanish are higher than when i looked at them higher. we were below 6%. the arrows -- i don't know if the arrows are reflecting the price. it is confusing. i apologize for that. euro/dollar is lower. the pound is the one that's moved higher. aussie dollar/u.s. dollar, still near the four-month high despite china pmi. standard chartered shares are trading higher after beating
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expectations with first half numbers. the bank posted a record pretax profit of almost $4 billion in the period and reaffirmed its target of annual double digit revenue growth. hankle raised it's guidance for the year. german consumer goods group also delivered sales of over 4 billion euros for the quarter. the ceo told us they're looking at a solid outlook for the year. >> we just had a quarter where we grew organically 4%. operating profit up by 18. eps of 23. basically we're looking upon a very solid year and we believe managing our cost line, we can improve earnings. capital is smarting from high financing cost and small gain from its portfolio. sou posted a 3.3% drop in second quarter but sales in china and singapore helped with a 16.5% jump in revenue.
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we spoke with the ceo in a first on cnbc interview and asked him if the company can sustain profits given the uncertain profit. >> basically two economies, singapore and china. in both countries residential sales have gone up in the second quarter. in china the expectation is the third and fourth quarter they'll have a turnaround. for shopping mall, the revenue is coming up very well. consumption is going up. sales improve by 15%. >> china's slowdown, is that having a material impact on your business on the ground there? >> it's slowing down in some part of the economy. i think what they have done is to re-engineer or recalibrate
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investments in railway, construction, and some of the infrastructure. they have actually put it back to some of the more productive sector. so, where there is a slowdown, our sectors are still very visibly healthy. >> so, is capital in growth mode in china or are you pulling back until you get greater clarity on the economic picture and also the regulatory landscape? >> well, actually, you know, i always say that the things that i regret in china is not doing enough. if you look at shopping mall, we have 57 shopping malls in china. i told my ceo we should do 100 in the next five years. they may have ups and downs if different quarters, but if you study how the government managed the economy, they're very quick adjusting it.
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on mid term to long term, i think china will very much grow. back to frederick. i'm just interesting if we've en asian earnings broadly that might be expected given the macro data or might we be braced for more worrisome headlines on that that front toward the end of the year? >> i think it remains challenging. we're seeing a stabilization of growth until the end of the year, but in terms of cost pressures that firms are facing, there are still complaints about rising wages in some corners, still rising rents, for example. so it is very difficult to generate a rebound in profits to the same degree that you generate economic growth. therefore, that could also
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explain why the market is hesitant in exploring first signs of stabilization. let's take a quick look at what's on the agenda in asia tomorrow. sony, sharp and suzuki reporting out of japan. hong kong, hutchinson will post results. meanwhile, still to come on the show, michael phelps has made olympic history, winning his 19th medal, 15 golds. are summer games helping britain win business? [ male announcer ] this is the at&t network. in here, every powerful collaboration is backed by an equally powerful and secure cloud.
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that cloud is in the network, so it can deliver all the power of the network itself. bringing people together to develop the best ideas -- and providing the apps and computing power to make new ideas real. it's the cloud from at&t. with new ways to work together, business works better. ♪
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welcome back to the program. earlier we asked if you thought we would be better off leaving the economy in the hands of rock stars after boe officials said economists were to blame for the recession, meanwhile australian treasury secretary said countries would be better off following principles of musicians like bruce springsteen. a tweet says, yes, the boss is
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exactly what the fed needs. bring on the boss. what do you think? let us know. e-mail us at worldwi worldwide, tweet us directly. >> an interesting thought. a telegraph suggests economists got it wrong 30 years leading up to it and central bankers got it wrong and need to apologize. another central banker talking, reporting an internal bund bank interview. most interesting comment. the bundis bank is the most active on the debate of future monetary, and they have a greater say at ecb than other central banks. so, we might have thought it, to come out and say it is a different thing. mr. wiedemann saying bundesbank
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having a greater say at ecb than other central banks. >> this is the internal, political posturing that you're not supposed to hear about. to the degree this was from an internal bundesbank interview, you can see why it's so plain spoken. nevertheless, it's clear that germany, they want this influence on the policy and think they have it. >> we defend our position with all possible means and at all levels. >> in that basically -- they don't. the ecb -- >> i'll tell you, i'd be ratcheting down my expectations -- i was pessimistic anyway, but listening to those conversations -- >> david mackey this morning writing from jpmorgan saying what is the ecb going to do tomorrow? most market participants have put behind them any action from the ecb, and the whole approach of the ecb in the last 2 1/2
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years, assuming the central bank is about to fire a huge bazooka. >> don't forget about, steve liesman had plenty on this yesterday from his source at bundesbank. if you want to read that, go online, and read steve's analysis of the bundesbank position. it basically backs up what wideman is -- wiedemann is saying. india says the country's electricity network has been restored back to full capacity after two days of massive outages. the blackout, worst recorded in the world, left over half of india's 1.2 billion people without power. we're joined from new delhi with the latest. it's extraordinary. it's like the entire population of the united states not having any electricity. who's getting the blame? who's going to fix it?
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>> as far as blame is concerned, at this point in time, the largest north indian state is being blamed for a large chunk of what we saw happen with north grid collapsing. what the power ministry is saying a couple of northern states overdrew more than what was allocated to them, which led to northern grid collapsing, then northeastern, and then a domino effect which left about 600 million indians without electricity for between six and eight hours. power has been restored across the country. all 21 state impacted by the outage 24 hours ago are back. all services, whether train or airlines, everyone is fully functional at this point in time. inquiry has been ordered by the power regulator and officials of the states are been summoned to the capital to explain what went wrong and why we saw this grid indiscipline, is what it's being
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called. let's hope we don't see any errant state overdrawing power again because that will lead to a similar situation. at this point in time, power ministry officials assuring indians that whatever was the problem is being looked at, rectified and an independent inquiry has been ordered into the incident and life should be back to normal. for now, all 21 states hit by the power outage, back to normal. >> thanks very much. let's get a quick thought of this from frederick, who's still with us. by this i mean comment from bundesbank that have our attention. is this indicative there's a fight tomorrow for more policy action? >> we think obviously the market is looking for policy action but it won't necessarily be answered. there's a lot of reluctance on behalf of central bankers within the central bank to really bring out the big guns before you see evidence that politicians have
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stopped and laid out a plan. i would think these reservations will hold way tomorrow, also during the decision, so we won't see a big move until about september. >> we'll leave it there for the time being. meantime, want to get back out to sharene -- >> let's just talk about the olympics. michael phelps has become most decorated olympian of all time after winning gold in men's 4x100 relay. medal count at record-breaking 19 which helped the ease of the disappointment of not winning an individual gold from london. what does brand uk mean? they say olympics will reinforce london's image of doing business. >> it's not in a dead end. it's a strong hub economy. it's before people want cisco
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and google to come and do business. there are things we can do better, like star tops and making sure incumbents don't stop them. i think it's a very good place to do business. it has to be two-way. we have to encourage people to bring growth and jobs in, like we've seen in the last couple days. you have to alter the patent of your investment and trade outside. >> a word about the olympics as an advertising man in the advertising business, what does it do in terms of brand uk and drumming up -- i use that word again -- leading into introducing greater investment, particularly with the russia house, brazil house and what's -- >> russia and brazil are interesting because they're both going to host games. russia will have winter olympics. the context of brazil with its world cup in '14 and rio 2016. it's interesting. you mention those two because
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those are two relatively faster growing, newer economies who can use these events to position their economies, just like chinese did at beijing, south africans did with the world cup in south africa. you see a different attitude. may sound bizarre to say, but it isn't. it changes people's perception. in the case of china, it reinforced the perception about china. people who do business in china knew before 2008 the strength of beijing, the strength of shanghai, the strength of the coastal region and knew the strength of china. half the world's population will watch television olympics during the course of the next few weeks. >> what does it do for brand uk? >> well, for brand uk i think it repositions britain as a more adventurous, more exciting, more interesting place for people to do business in. and it positions as a more advanced economy. the issue for is very much,
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we're a mature economy. the offer we have is a very different offer to a rio or beijing or whatever it happens to be. it's a hub. has the best geographical location for time zones. has the best time zone location. has not as perfect inf infrastructure as we like but technology, education, creative services. we claim it's the number one leader here. a lot of assets and attributes are stressed as a result of this. you see it with the olympics, you see it with the world cup, formula one. mature markets that have formula one races. there are growing markets. it repositions or positions a country -- which after all is just like a brand. a city has a brand. a country has a brand. and over time, it ebbs and flows with economic growth principally and population growth and images change. it gives us an opportunity to
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really position london as a destination for investment, for tourism, obviously, and as an opportunity around the rest of the world. >> i spoke with you last week, we'll have more from him over the course of the week, on how the advertising is looking with olympics and elections as well. still to come, we want to thank frederick for his time, and we'll talk with a guest who says the lie bother rigging scandal poses another threat to the global economy. [singing] hoveround takes me where i wanna go... where will it send me... one call to hoveround and you'll be singing too! pick up the phone and call hoveround, the premier power chair. hoveround makes it easier than any other power chair. hoveround is more maneuverable to get you through the tightest doors and hallways. more reliable. hoveround employees build your chair, deliver your
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welcome back to "worldwide exchange". headlines from around the world. aker to activity in china falls flat in july. hbc mark. s nine straight months of contraction. manufacturering in eurozone contract. investors do welcome stronger than expected capital ratio. ben bernanke wraps up his meeting and some say the central bank not ready to take action
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just yet. good morning to our u.s. viewers who may just be join canning can i -- joining us. we're in the green so far. we see the dow jones implied to open higher by about 35 point this morning. 11 higher on nasdaq and s&p trying to add two or three point itself. ftse global 300, glass session, trying to key off from asia into europe as to whether this talk of stimulus from china to support markets or has people a little spooked. if we want to look at the european board more closely, ftse 100 up 0.5. xetra dax up 0.14. cac up, and ibex down.
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>> disappointing pmi across the board. china, eurozone was revised from the flash numbers as well and uk sharply disappointing numbers. the lowest of the biggest contraction since may 2009, manufacturing pmi. bund yields, 1.34%. spanish yield, 6.68%. the record high in the euro last week, 7.75. ten-year did nudge up and back down 5.96. most people will probably sit tight as we go through u.s. numbers, the adp and fed later today when no real reason to give up major positions ahead of that. euro/dollar slightly stronger.
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we hit 123.90 high on friday. right now 123.12. dollar/yen got down to two-month low. just above that. aussie/dollar above the four-month high at 1.054 is where we stand. china's official pmi data, but for economists the takeaway is the world's second biggest economy may be hitting bottom. tracey chang has more. >> we're seeing a different picture this time. hsbc showed a slight improvement in activity while china's official survey underwhelmed. china's official pmi focuses on state-owned enterprises while hsbc looks into small and medium sized companies. manufacturing dropped to the
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lowest in eight months. new orders were hit very hard, including new export orders. contracted more deeply in july than june plunging to 46.6. the hsbc china pmi rose to highest reading since march but that reading still marked the ninth consecutive month below the expansionary level and subindices showed a contraction. some economists suggest china's economic slowdown may have hit bottom in the second question, but they say china's manufacturing sector is doing very poorly and needs support. china's top viewers seem to be echoing that, by dialing up policy tuning in the second half. year to proper up economy. we may see a pick uplater in the year. there's no rest in europe as
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business activity continues there. manufacturing pmi in britain fell much more than expected in july. joining us is chief economist at economist intelligence unit. this china figure in particular, while it did stay in expansi expansionary territory, just barely, indicates this slowing. >> you see china slowly quickly over the last year or so, partly uz because of what's happening in the rest of the world and partly what's going on domestically. not very long ago china was in a tightening mode. we think there will be a bit of a pickup because of the policy easing. they're eeing on the monetary side. they're leaving fiscal stuff to regional governments. we've seen cities and prove ins announce pretty big fiscal packages. if that isn't enough, we expect the central government to step in. they were reluctant to do that.
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they will step in if they have to --. >> they suggested they were going to. they said to expect more fiscal and monetary policy. what should investors price in, more rate cuts, reserve cuts? what's coming down the pipe? >> reserve cuts. i'm not sure how effective it is in a economy like china. we've seen recently a spate of fiscal injection packages from government. central government is reluctant to intervene. they would rather it's done in regions where they will step in if they have to. that ought to provide investors some confidence they aren't going down the tube. the question how hard central government has to move. >> let's move to policymakers in the states. fed wraps up two-day meeting today. decision due at 2:15 eastern. central bank expect to signal it's ready to take action but stopped short of launching those measures now. fed watchers believes they will
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tweak the language of expectations to keep rates low until well into 2015. is that your forecast for what's going to happen? >> i think that's right. the data is a little ambiguous. it's easy to get caught up in the bad job numbers, gdp numbers were weaker than they wanted. the housing market is not as pad as it was, if you look at income data picking up a bit. i think the fed would like more jobs market. we'll get some at the end of the week. i think they're probably going to hold but clearly prepared to act, probably more qe3 -- >> actually, out of the four options we've talked about, haven't we, and i know you hate the interest rate cut, which is the most likely out of the auctions? >> i think they'll act with more qe. it won't happen until later on. >> in what form? >> oh, i think -- well, they have the operation twist but i think that isn't going to be sufficient. i think you would see them intervene more aggressively. >> with mortgages or still with
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government bonds? >> government bonds. >> government bonds, okay. we'll see what impact that has. again, no major -- >> i don't know what that's going to do. we saw treasuries last week, ten-year hit a word low yield. >> i think the interesting thing is whether any of this has an impact other than what it's doing to market sentiment. it's really interesting. we're still in an environment -- you look at what's happened in europe since draghi steps in. in terms of long-run problems, these economies all face serious structural issues i don't see as the policymakers can do to change those things. we need to see more radical reforms in these economies but they take time. >> let's remind ourselves what's on the agenda in united states. adp employment rate, increase of 110,000 in private payroll. at 10 ak ism manufacturing index, construction spending as
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well. comcast reports results before opening bell. we'll get reports from avon, harley davidson, mastercard, time warner and after close we'll hear from met life and yelp. it's not a bad agenda today. >> no, that's a full one and i like the econ date data on it. an official at the of england says he the they are to be blamed for recession. would you rather have the boss or the bernanke running the economy? e-mail us here at worldwide, tweet us with your thoughts or anything else we've been discussing on the program this mornt @cnbcwex and you can reach us individually. >> maybe the boss would be better at releasing the animal spirits. still to come, some controversial comments from policy makers elsewhere.
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bundesbank president says the german bank is bigger at the ecb than rest. we'll talk about it when we come back. i look at her, and i just want to give her everything. yeah, you -- you know, everything can cost upwards of...[ whistles ] i did not want to think about that. relax, relax, relax. look at me, look at me. three words, dad -- e-trade financial consultants. so i can just go talk to 'em? just walk right in and talk to 'em. dude, those guys are pros. they'll hook you up with a solid plan. they'll -- wa-- wa-- wait a minute. bobby? bobby! what are you doing, man? i'm speed dating! [ male announcer ] get investing advice for your family at e-trade. a living, breathing intelligence helping business, do more business. in here, opportunities are created and protected. gonna need more wool! demand is instantly recognized and securely acted on across the company. around the world.
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welcome back.
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the world's feeling pmi pain as manufacturering in china, eurozone and uk contracts in july. societe generale misses forecast. and fed wraps up two-day policy meeting today with most economists expecting perhaps some small steps from the central bank. just data out of spain. july new car registrations down 17.2% on the year. spain, of course, firmly in the grip of the crisis as business activity shrunk for 15 month running and employment contracted at fastest rate since 2009. pmi manufacturing index for july, 42.3. reading was a little better than expected. maybe represents a slight improvement from june but still way below the 50 mark that separates expansion from contraction. we've been following the latest. >> reporter: plenty of data from spain this week. i want to point out one from
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yesterday. the central government deficit data showed the figures for the first half of the year actually exceeded the target for the entire year. that was down to the acceleration of transfer payments to some of these regions. we know three have already indicated that they may need help. interesting that the largest and most ingetted of those, catalonia, said yesterday it was going to suspend payment to social security bodies, subsidies it pays to care homes and hospitals. they said it would just be a short period. only about current liquidity and resume payments in september but local media suggests it could be in the range of 450 million euros and 100,000 people may not get paid this month. they boycotted a meeting last night, a fiscal monetary policy meeting set to discuss finances of the region. they apparently sent a letter to finance minister saying if the eu is willing to give leeway to the entire deficit target for spain, then the region should see benefit in that, too.
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in fact, plenty talking about restraining spending in these region. the open question is whether they manage to bring the deficit in at 6.3% this year. back to you. we numbers out of fiat industrial, shy of what analysts were forecasting, 2.84. revenue 6.62 billion. they were seen as well at 6.48 billion. feared industrial coming away with numbers shy of what analysts were looking for this morning. u.s. treasury secretary tim geithner says european leaders need to be, quote, more forceful and more creative in their efforts to tackle the region's debt cries. geithner told an audience in los angeles that ongoing fears about a breakup of the eu will hinder much needed reforms. >> if you leave the continent of europe, a major part of the economy, living on the edge the fear of collapse, then none of
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these reforms will work. >> geithner met with german finance minister and ecb president mario draghi on monday. they walked him through the plans they're trying to resolve the debt crisis. president obama reiterated his call for decisive action to end the eurozone crisis after a phone call with monti about economic headwind. a finnish newspaper, italian prime minister said italy may need a breathing break from high rates in the future. speaking ahead of a meeting with his finnish counterpart, monti suggests europe does not need special aid right now, saying frustrating reforms taken on far are not reflected in market rate. bundesbank stirred up the pot, controversial comments. in an internal interview recorded on june 29th. they said the german central bank has a bigger say at ecb and they would defend their position with everything they are.
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the bundesbank told cnbc the monetary strictly policy should focus on hitting resistance. robin is with us as well. it's worth pointing out, this is the thing, right, kelly, these comments, june 29th he said these things but the fact is, bundesbank has more say than any central bank. he must believe that even though he said it four weeks ago. >> i don't think it's any secret of this news. >> everyone believes it but no one says it in public. i guess what that means is what's going to happen tomorrow. the ecb itself, draghi, has made it clear he believes he's going to have to do something big. unfortunately, the bigger the step he want to take, less likely the bundesbank is going to support it. looking at options on the table for ecb to step into the market. he could do something small, which would be extremely disappointing to the market. >> what's small? >> ltro would be really small.
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that would be disappointing. restarting the security market program, the markets will be pretty neutral on that. the big thing is banking license for esm -- >> which tuesday -- >> said no way. >> the essence of the problem is none of these measures will do anything unless there's a sense they're backed by unlimited printing press basically. and banking license will get around that. they run into the problem of-r of firepower --. >> all it means they're prepared to move inkra meantly from where they are today. if they step in and restart it, what -- >> we're going to restart our flawed program. >> they kind of said they'll do whatever it takes. when you look at policy options available, they seem to have rolled out anything that might make any difference. i think tomorrow maybe they'll surprise us and everyone will be ecstatic but i think it's much more likely they'll going to
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disappoint everyone terribly. >> you wonder where that leaves us in three to six months' time. >> i mean, yeah, his chat brought him down about 100 bases points. why de make those comments if he can't follow through? >> i think at the time they were so alarmed -- >> or misinterpreted. it's risky to say they didn't have any deeper underlying meaning but i think at the time the really big fear is we would wake up one morning and spain would have lost capital access to markets and that would immediately push us into a wags where you'll be facing a default in spain. he was trying to jaw bone down yields to mean that that didn't happen. he's fixed a problem for a few week. but if we're going to fix it in -- clearly in the very long term, we need radical change in the economies. next couple of years we need more liquidity flowing. how will they engineer that? >> even as we're discussing this, germany's economy minister is backing up merkel and
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rejecting a banking license for the esm bailout fund. he says he expects the ecb to remain of maintaining price stability but says no to giving bailout funds a banking license. >> i thought the core function of any bank is to maintain stability of the financial system. >> whose financial system? >> the financial -- the eurozone financial system, right? >> draghi is trying to kind of steer a middle ground but the trouble is, and bundesbank interview has just come out, makes it clear within the governing council there is no consensus on what they can do. that's reflective of there being no political consensus across the eurozone. eurozone is staring into the abyss. it's multiple countries with their own agendas -- >> you have all of the countries and the bloc itself and not well defined. >> the worrying thing is it
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doesn't -- i wonder how clear it is to some politicians just how desperately bad the economies will get if the eurozone fractures. >> we have deexpressions in germany and greece -- >> we'll get into more of this in a little bit. still to come, a big day for u.s. auto with chrysler, gm, ford releasing. the u.s. auto will chug -- chug is a train analysis, isn't it? do you chug with cars?
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more numbers out of european bank. societe generale's numbers took a hit. shares are, however, trading higher. we've got more details from paris. >> the second quarter was a bit higher than expected but 3.6% lower. cib unit was also hit by the market turmoil in second quarter with 71% decline of net profit. the ceo talked about the debt
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crisis in europe. he believes spain will not need full bailout and eurozone will not break up. he also is expecting that the ecb will help governments in europe to deal with the crisis. >> certainly european central bank can help to give time again to governments as well as the banking sector to adapt to this new world. >> also confirmed the bank was cooperating with regulation authorities in europe in the probe of a possible euribor scandal and saying the lie bother scandal did not help to rebuild confidence in banking sector. let's get more from robin. your take on the lie bother scand -- libor scandals. >> i think the net will widen, and the clip saying it's a uk
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issue but it's not just a uk issue. banks all over the world will get sucked into this. likely u.s. banks, european banks. the long running question is whether this ends up in court and when the cost will be to the banking system. we have the issue of asymmetric risks. if we're in a position where they're have to pay out what could potentially be extraordinarily large settlements, another hit to the banking system, another need for capital raising, longer period before banks are robust enough to return to lending. >> a threat of instability across derivatives market? across lending markets keyed off libor rates if they adjust the way that rate is calculated? >> i think if we adjust going forward, which looks likely that's what's going to happen, i'm not sure we'll see any instability because of that adjustment. i think it will come around to
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wh to happen to contracts that existed because of legal action. i think it's retrospective but that doesn't alter the fact if the banking system takes another what could be a huge financial hit, the length of time it will take before balance sheet adjustment gets done will push out further and that will drag on the global economy. >> another xhenlt from german economic minister says he has no want to join inflation european union. >> because there's a lot of that. still to come, big automakers have been cruising around with the top down most of the year. strong sales in the u.s. how is weakness in europe affecting them? is it putting them back in the slow?
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welcome back to "worldwide exchange ". ben bernanke and fed wrap up a two-day meeting with most expecting the federal reserve ready to take action, just not right now. manufacturing, china, eurozone and uk contracts further in july. bundesbank president wiedemann stirs the pot by saying they have a bigger say at ecb than most. investors well welcome
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stronger than expected capital for societe generale. despite these comment out of germany, both from wiedemann and also from the economy minister, pushing back on the idea of big bazooka measure from the ecb later this week, we're seeing stocks open -- potentially open to the upside. dow jones is expected to open higher by 40 point. nasdaq higher by ten points. s&p trying to add a couple points as well. across europe, ftse 100 telling us it's up 0.5%. xetra dax up 1%. cac up and ibex off the lows from earlier in the session. >> keep your eyes on nokia stock, surging up 11%.
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there is speculation -- this is what reuters is saying. speculation that traders talking about lanovo, chinese pc company, may be interested in making a bid potentially. nokia, up 11% on speculation lanovo is interested. what are the experts telling us today about what investors should do? here are some recaps from cnbc already today. >> i feel like sterling, unbelievable story, shocking numbers. growth is terrible but the markets like sterling. seems to be some sort of safe haven play for europe. >> if you look at the overseas sales, over 70% plus of sales coming from outside the uk economy. we can go through big names, even the big banks, hsbc, the
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oil companies, the miners, these guys are not guys with big exposure to uk domestic economy. some of the domestic engineering companies, smaller companies, yes, i would be cautious on them. >> particularly like at this point china, which has not been in favor, and russia. we think these are cheap markets, whether it's priced forward. figures out on car reg strags across. french car registrations in the january through july, first half of the year period, were down 14% year-on-year. this according to the french carmakers association. renault, july new car registrations were down 6% from a year earlier. well, in fact, they might be down almost 11%.
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this is dow jones correcting its earlier report. spain meantime reporting its july new car registrations were down 17% in july. that followed a drop of just 12% from a year earlier in june. >> i think down 14% in france, suggesting it's getting worse. >> absolutely. meanwhile, company company surviving all this, bmw, confirming its outlook, targeting record sales across its brands for the rest of the yore. that is a bmw. company's net profit came in at 1.27 billion euros. also talking about hiring over 3,000 permanent workers now in germany as well. they've been in dispute about temporary contracts with the union. >> a nice bit of hiring news. we haven't had much of that lately. audi reports its 11.5% profit margin could be at risk if the situation in eurozone continues to deteriorate.
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they have confirmed the goal of equalling the profit. they think strong demand in china, u.s. and germany. fiat says it expects outlook for european car market to remain bleak for the rest of the year. the ceo says the firm will maintain enough normally high level of liquidity and avoid investments as a result. analysts expect a 20% drop in italian car sales for julyings also due to be released today. automakers will report july auto sales and expected to hold steady from june, up 10% from a year ago. heavy incentives and july 4th holiday sales may have prompted americans to replace cars. deputy editor-in-chief at reuters and former bureau chief from wall street journal. his latest book is called "engines of change:a history of
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american and 15 cars." >> is it still the american dream? which american carmakers today seem to be -- seem to be doing the best? >> chrysler is clearly on a strong rebound from near death a couple years ago. the whole american industry went through this wrenching restructuring in detroit that has not happened here in europe. the numbers you're quoting in europe about decline in car registrations shows the dichotomy between industries in america and europe is wide, very wide right now. >> do you think we're at a moment like we -- in europe like in the u.s. where the automakers needed a bailout, huge restructuring, triggered by the u.s. financial crisis. >> the problem is, you know, who's going to take the pain? in america, workers got laid off and lost job. executives got fired. plants got closed. dealers lost their franchises. taxpayers paid money.
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bondholders took a haircut. shareholders got wiped out at chrysler and gm. there was a lot of pain. i'm not sure the will exists in uk. >> the government has already -- >> it's unacceptable. come on, they have no choice. >> we had a guest on the program earlier saying he thinks there's 25% overcapacity in the european carmaker segment still. >> that's about right. the problem is, of course, what they really do when that happens is they're running factors far below capacity, which increases cost, reduces profits. this is a bleak outlook for this industry, especially because of the eurozone crisis continuing. >> it's different to the car manufacturing sector, which -- because the uk car industry got wiped out in the '70s and '80s and rebuilt by making cars for everybody else. you look at jaguar and land rover, japanese carmakers are based here and production at
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highest level for 30 years. >> exactly. england went through this incredible restructuring. frankly, what changed wasn't the -- the auto industry is still here under different and more effective ownership. >> i'm just curious if you're surprised by the strength of the u.s. auto segment and, you know, concerned about the vulnerability of --. >> the economy is the u.s. is growing and europe is clearly h shrinking. i think the interesting question going forward is over the last 30 years, the big change we see when you look at america financing is the way japan and korea have taken a substantial piece of the share away from local players. the big question is what's going to happen with chinese manufacturers. clearly, china -- america is a prize for them. are they going to crack it? >> they'll try at some point,
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certainly. they don't have the brand reputation or quality reputation to do this right now. i think this isn't going to be as early -- we're not talking a three, four situation. i think it will be better part of a decade. they're already in the biggest car market in the world. and the fastest growing car market in the world. where are your better business opportunities -- >> than right at home. >> exactly, at home. >> they're trying to crack western europe so they see advantages of getting into more sophisticated markets. >> there's a feeling they have to do this. i'm not sure if it's ego or rationality. i think it's going to be -- why would you want to come into europe right now? everyone in europe wants to get out of europe. >> we'll see if it takes off long term. paul, deputy editor-in-chief at reuters. >> what car is that on the picture of your book? >> a tail-finned cadillac. >> i love that. >> takes you back. >> 1959. >> to be specific.
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>> right. >> your car? >> my car is a bmw. >> that explains the sales strength. thanks again. >> germany -- we'll stay in germany. germany paying record low interest for five year. average yield 0.31%. they sold 3.35 billion of that. so the bid to cover 2.6. there was enough demand for a five-year that's yielding just over 0.3%. extraordinary, isn't it? >> everyone is looking at safe haven issue in europe. we're reporting about capital flow out of these peripheral countries. where will it go? >> it will be germany's for now. power has been fully
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restored in india after they suffered the worst blackout in history. [ male announcer ] this... is the at&t network. a living, breathing intelligence teaching data how to do more for business. [ beeping ] in here, data knows what to do. because the network finds it and tailors it across all the right points, automating all the right actions, to bring all the right results. [ whirring and beeping ] it's the at&t network -- doing more with data to help business do more for customers. ♪
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welcome back. we asked you if we would be better off leaving the economies in the hands of a rock star. mike has tweeted in to say, neither. bernanke and the boss are poor examples of a free market at work. if you agree, disagree, let us know what you think, thoughts about anything else you've heard on the program, let us know. shoot us at e-mail worldwide or tweet us or reach us directly. >> it's interesting as well, in charge of financial policy committee of england coming out with an interview in "daily telegraph" saying central economists have to put their hand up -- >> anything he says or interview he gives is one you should take time to read. >> measurvin king is refusing a
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inspection into the crisis. nokia stock today, there we go, up nearly 11%. traders are citing interest in the company from lenovo. other companies have been interested for patents or interest in buying the entire company. nokia has had its own particular issues as well. that's nokia this morning, fairly much in focus. you can see, up 10.35%. you are watching "worldwide exchange". these are your headline. the world's feeling pmi pain as manufacturing in china, eurozone and uk contracts in july. the head of the bundesbank stirring the pot, insisting german central bank has a bigger say at ecb than rest. the fed wraps up two-day meeting today with most economists expecting some small steps perhaps from the central bank.
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meanwhile, india's power ministry says the country's supply has been restored back to full capacity after two days of massive blackout. the worst blackout in the world left half of 1.2 billion people without power. basically, the entire population of the united states and more had no electricity. we're joined from mumbai with the latest. clearly, this is a lack of investment in the power grid system. who's to blame for this? what are the politics, the ramifications? >> there is inquiry why we've had two consecutive days of power grid failure. on monday it was just the northern grid, on tuesday it was the northern, eastern, northeastern. three regional grids failed
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impacting 1.6 billion people in india. the reason is not known. what people like to think are northern states had overdrawn power, monday than allotted to them, resulting in the power grid failure. that's the reason people attributing to it. there's a lot of free power given. many of the times it's given for farmers to irrigate their farms but it's misused. free power is used by them. that's misused. there has been overdrawing of power by the northern part of india, as a result of which 20 of the states were impacted over the past trading session. as of now, everything has been restored back to normal. 100% of the power is back. an interesting turn of events, at the very same time there has been a change of guard at power industry. we've got a new power ministry.
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back to the studio. >> thank you. brat tin is going to get its first gold medal. >> you think so? 0 for four -- five days -- >> the fifth day. >> first day, ross westgate thinks, on the record, ladies and gentlemen. >> we have somewhere to go to match the man, michael phelps winning most olympic medals, putting medal count at record-breaking 19. 15 are gold. undoubtedly help ease the disappointment of not yet winning an individual gold here in london. the final of the women's team gymnastics saw a strong american lineup facing off against russia. the u.s. team's routine started with a vault from team captain jordyn wieber and the rest of the team went on to daz well their performance, winning the
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u.s. team its first medal since 1996 olympics. it wasn't really close. the u.s. team beat russia by five points. so, china and usa sitting atop the leaderboard. china has more golds, that's the reason -- 13 collected for them. >> great performance, better than we were expecting, at this point. highlights from another packed day of olympic action today include the final of the men's 100-meter freestyle, preliminaries of the men's hockey competition and great britain will take the field as the football, or soccer, tournament continues. >> my eyes are on the rowing lake at eton downing because women's first chance -- >> yeah. still to come on the program, t.s. elliott famously said april is the longest month. it may be august that cast ace shadow on markets. >
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packed day on agenda for usa. adp employment out, at 10 a.m. ism manufacturing index and construction spending. we also get numbers from avon, harley davidson, mastercard and time warner. >> ahead of that, let's see where the market is trading. futures still pointed to the upside. dow jones implied to open higher by 37, 38 points. nasdaq adding 10. s&p 500 potentially adding a couple of point as well. and this, despite the fact with the lower close yesterday, the dow, nasdaq and s&p ended in the green for the month. the dog days of summer could stop that positive momentum. august has been the worst month
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for the s&p over the last 20 years. >> we might all have to work again. >> in order to have -- to be able to retire? emily sanders, ceo of sanders financial management joins us. what are you watching most closely today? we have the ism, and a preview on the employment front. what's going to drive the session? >> well, we're looking toward what happens tomorrow in the ecb. draghi has strongly hinted that, you know, he wouldn't accept anything less than strong action from the ecb. the market is trading up in anticipation of that. if there's any hint the ecb won't have teeth, that could really hurt the market today. >> emily, has the fed ever gotten less attention at the end of a two-day policy meeting? we'll hear from bernanke himself. no one seems to really care or be talking about it. >> that's because, you know,
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jackson hall is coming up at the end of august. really the consensus amongst economists, which we agree, which until after jackson hall happens, the fed is maybe only going to hint at policy changes. but probably won't do anything major until mid-september. >> just to be clear, we won't hear -- there's not a fed -- there's not a press conference, just the statement, the two-day policy meeting? >> is it extraordinary, emily, with all that u.s. data and all anybody cares about is what draghi is going to say. i just wonder whether we -- after the rallies we had since those comments this time last week, whether we have set ourselves up for a fall. >> probably, ross. most of the economic indicators are showing somewhat weakness, not just u.s., but globally as well. the globe is having an economic slowdown. there's no doubt about it.
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the extent has yet to be seen. there's a bit of optimism the past week. that's fine, well and good. but when you introduce the dog days of summer in august, we would certainly agree with that. don't expect anything momentous from the market in the month of august. >> let's just bring in robin with us. out of everything today in the states, what do you pick out? >> i mean, the fed obviously, but i think leaving that to one side, preview the employment data because we'll get that at the end of the week and we'll get an karindicator. when you talk about what everyone looks at, everyone looks at europe. the key issue is what would fed be doing if europe were out of the equation? they would say the economy is slower than we like but we hold pat. it's really about what's going on in europe. a lot of chatter about coordinated action. i guess jackson hole is the place that might get discussed. if we're disappointed tomorrow, whether the fed and ecb can get something together later in the
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month. >> how are you supposed to invest in this event risk? what do you do with your money? >> we're very cautious right now. we're hanging onto our bonds and starting to do some trimming of stocks, raising our cash positions. and our clients are feeling comfortable with that because going into august, as you say, and all the uncertainty in the u.s. over the fiscal cliff and other things that are as of yet unresolved by congress, it's probably a good time to just be holding onto the gains that we picked up in the last few weeks and keeping our powder dry to perhaps buy on weakness in the next few weeks. >> emily sanders, chairman and ceo of sanders financial management. robin, chief economist at intelligent view. thank you for your time. >> that's it for today's show. "squawk box" comes up next as they look at the data. >> we'll see if britain can win a gold medal. i'm freaking out man.
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announcement. is it -- another employment friday. i can't believe it, going to offer first read on the labor market in advance of friday's government release, which i was not ready for. it's wednesday, august 1, 2012. "squawk box" begins right now. ♪ flashing through the sand bar ♪ ♪ talking by the camp fire good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. yes, it is august 1


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