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tv   Worldwide Exchange  CNBC  July 31, 2009 4:00am-6:00am EDT

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i'm christine tan. in asia, the nikkei jumps to a ten-month high and the rest of the region rallies as upbeat earnings views continue to pour in. >> i'm becky meehan.. in europe, the earnings season continues here. british airways says it sees no sign of improvement in the outlook. >> and i'm bertha coombs. the gdp figures are expected to show there are signs the recession may be waning. hello and welcome to cnbc's "worldwide exchange." let's start our market run with the ftse cnbc global 300 index
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which is tracking higher by 0.3%. translate that to what's going on in the individual bourses here in europe and we are looking at a mixed session, really. very modest gains for the ftse and the xetra dax. we're looking at very small declines for the cac and smi. a quick look at the currency markets, dollar/yen, 95.59. euro/dollar, 1.4112. sterling/dollar, 1.85. christine, how is it looking in asia? >> people seem to be investing in the stock markets here. the nikkei is up 1.9%, a ten-month tie. the kospi is up 1.5%. the shanghai composite is up 2772%. the hang seng is up 1.7%. property shares there rallying.
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in terms of crude oil picture, let's see how it is stacking up. 18 cents higher. $67.12 a barrel for my neck light sweet crude. brent is trading, as well, tacking on gains. actually, not. it's trading the other way, a bit choppy. $70.08 a barrel. bertha, it's a friday and it's always good to see you. >> it's always good to see you. it's a friday and we were looking at the futures this morning. it looks like the indices are set to extend their gains. it is the end of the month. we're likely to see a bit of window dressing. all of those fund managers who may have waited until the last minute to jump into the fray. we have one earnings report today from dow component chef ron and we've got the big gdp data. dow futures up about 29 points or so above fair value. we've got nasdaq futures up 4
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and s&p futures up about three points above fair value. we have economic data we're expecting this morning out of europe but one of the things that have treasuries looking good overall was that the seven-year auction went well. the two prior auctions had seen low grades. we've got ten-year bund yields down right now to 3.39%. the headline number is going to be the gdp data that comes out at 8:30 a.m. new york time.. second quarter gdp is projected to still be down anywhere from around 1% to 2%. however, that would certainly be a big percent from the down witching we saw. we've got gold inching up here, up about $3.95. if we continue, it will be gold's second day to the upside. christine. >> joining us now for market strategy, we have greg smith, managing director uk phat
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properties and enzero, as well. asian markets seem to be on a roll today thinking that maybe asia could lead the rest of the world into a recovery. are they right to think that way? >> i don't think so because i think that the global gdp numbers, the quality of them is just as tacky as the earnings that we're seeing coming through. in other words, the growth is being driven very much by government stimulus, not really by domestic demand and this kind of defies logic how demand can pick up if you have unemployment rising. it just doesn't work, i'm afraid. >> greg, what about you, do you think asia will possibly not be
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able to recover from the global economy? >> no. we've got the view that there will be supporting the global growth until the rest of the world recovers. i think particularly china and it was most encouraging to see the gdp numbers out there recently, by about 7%. i think the acome dafb commentary and fiscal stimulus is still feeding its way through and that's why they were saying it wasn't going to tighten in the nearly term. until the risk recovers, i think that's why you're seeing strength. >> we look at europe, the euro zone and we look at the u.s. whatever recovery we're seeing seems to be business led because they are cutting costs. can a business-led recovery, is
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that sustainable if you don't get consumers jumping in? >> well, i think here, it is fair to say that the earnings season is driving the market at the moment. and, you know, the bears would argue a lot of it has been due to cost cutting. but the recessionary environment we're in, those companies that make themselves leaner will be better leveraged to that earnings economic recovery when it kicks in. you may say cutting costs and cutting jobs in particular is hardly positive for the economy, but you know, companies need to be efficient and once theory efficient, it leads to an earnings increase or tracks competition. that's when you get the earnings. i think it's a necessary part of the recession and a bit of leveraged earnings when it comes.s. >> enzero, i saw you nodding
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your head.. what's your thought on that? >> well, i agree on the longer term. i think the leverage terms being made would be correct. i would suggest if you have people in places like los angeles and other places in the u.s. that can't pay their mortgages, there's hardly demand and dgp growth by the likes of less imports, higher inventories and government spending. now, i would also suggest on asia, yes, of course asia will grow faster than the rest of the world. we're not going to disagree with that. but i would not agree with the decoupling story to the extent that if the u.s. market takes the hit again or indeed the chinese market takes a hit, the other than will also take a hit and down we go again and that's what we've been you can
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suggesting to our clients that you will, in fact, find another crash coming.. it is in the offing. >> greg, let's talk about the treasuries, as well. the auctions earlier this week seem to raise a few concerns on the weak demand picture. but yesterday's seem to delay those concerns. what does this tell us at the moment? >> from our point of view, we're still concerned about the amount of supply coming to the market and the weeks and indeed the motz ahead. looking beyond that, looking longer term in terms of asset allocation, we're probably bearish on the bond picture and really, that's because of inflation which we're potentially going to get feeding through. obviously, there's no signs of that at the moment. but i think if you're bonded, we would be looking to underweight bonds over a one or two-year period. >> enzio, what are your thoughts from a bond perspective?
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i would also, again, agree, but i would suggest that the value argument has a very different perspective, namely that the u.s. government debt is rising to such an extent that our shorts on the u.s. treasuries have done rather well on the long bonds, on the 20-year bonds. so i think the action will be much more at the short end of the curve in terms of being safe while the long end will be tricky moving ahead but not because of inflation. it's because the u.s. government debt is rising far too quickly. >> thanks so much to both of you gentlemen. greg smith managing director of fat profits and also enzio von pfeil from
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ba says it sees more needs for cuts. they have cut operating costs by around 6.6% since last october to offset the plunge in passenger numbers.s. but the ceo says there's still much to be done.. the group is axing meals on its short air flights starting next week. meanwhile, air france reported a loss of $700 million. arranged confident in its outlook and issued interim dividend unchangeded from last year. shares in continental passed a plan to raise up to $2 billion in fresh capital.
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the company could lose its second ceo in less than a year as a power struggle continues between continental and its largest shareholder. there is only a simple majority to oust the ceo. >> rebecca, we've go a mixed bag of earnings coming from japan's banking sector. mufg says net profit rose 40% from a year ago largely due to an increase in overseas lending. shares saw a 4.4% gain ahead of the results, 566 japanese yen. on the flip side, the smaller rival mizuho financial loss reported a quarterly loss. despite that, shares closed 1.4%
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higher at 215 yen. core cpi fell by a record 1.7% in june from a year ago, making it the steepest decline in 4 1/2 years. the board has gathered steam for four straight months suggesting deflation may persist unless household demand picks up. meantime, the unemployment rate for the month of june rose to an unexpected 5.4%, the highest level in six years. elsewhere, china's $200 billion sovereign wealth fund cic is building up its hedge fund investment. they're planning to invest hundreds of millions of dollars with morgan stanley and blackstone group. the report says ci will allocate $500 million to blackstone and will ask morgan stanley to oversee additional funds.
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>> president obama said second quarter gdp figures are likely to show the economy contracted again, although at a slower pace.. forecasts call for a contraction of 1.5%, that compares to a decline of 5.5% in the first quarter. the chain weighted price index is expected to rise by 0.8% versus 2.8% in the previous quarter. the resident says improvement in the recent months in the banking system, residential and financial markets have quieted some fears about the world's largest economy. >> we have stepped away from the precipice. you know, as ben bernanke and others across the spectrum have indicated, we were in a position where we have gone into a great depression. i think those fears have abated. >> the president caution tess gdp numbers will show the recession has not ended.d.
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in fact, it's going to be our fourth down quarter. the huge problem, he says, remains to unemployment. disney's third quarter profits fell 26% but squeaked past estimates. however, revenues beat forecasts. ceo bob igar says the theme parks have clearly been impacted by the weak economy, although attendance rose 3%. the company says tv and ad sales are still soft. cost cutting could not keep las vegas sands out of the red in the second quarter. the casino giant reported a sharply higher loss. in frankfurt at this hour, disney and sands are both trading tractionally to the downside there, sands actually getting hard, down about 9%. well, the government's new cash for clunkers program,
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that's where they're paying for old cars, it's hit a major road block. it has run out of cash. for the past month, automakers have been offering a rebate up to $4,500 to people who trade in new vehicles for older markets. the government just began recognizing those sales this week. since then, the $1 billion fund has been run dry. what do you think, should they extend this program?m? write us. you can check and see and find out more about the cash for clunkers situation and everything else that's going on at and while you're there, drop us a line here at "worldwide exchange" at cnbc. coming up on "worldwide exchange," u.s. second quarter gdp takes center stage. investors seeking clarity on whether the recession is winding
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down. plus, ba's fight for survival continues. will cost cutting help to turn things around? and the great depression, the market rallied for 147 days straight. can we trust the current rally? stay with us. we know why we're here. to design the future of flight, inside and out. to build tomorrow's technology in amazing ways. and reshape the science of aerospace... forever. around the globe, the people of boeing... are working together -- for the dreams of generations to come. that's why we're here.
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thanks for staying with us on this show. we're joined by several of our reporters from around the globe. before we get to those people, joshua raymond is with us, citi index, to help us understand what's going on on the uk markets. >> good morning to you. it's been a quiet morning in comparison to where we were yesterday. sectorwise, oil stocks are a little lower, about 0.5% down. the miners and the financial stocks are keeping us afloat, though. in the last two days, the miners have been about 7% to 8% higher. if you're looking to where these gains have come from, they've firmly been dictated by the miners and financial stocks. reed we've seen up around 3% to 4%. that's obviously on bargain
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hunting. credit swiss has upgraded the media sector within europe. that has helped to facilitate buying. in terms of earnings, we've got british airways, one of the leading gainers about 3% to 4% higher, as well. obviously, the quarter fold losses were around 94 million pounds, not as bad as was expected. and anglo american also helping the miners, too. the eps came in higher than the market had expected, too. on the downside, we do have man group. man group had been cut by ubs on a sale. that's on a potential increased regulatory framework in terms of commodity trend. we've seen stories in that the last several days. we were waiting for the u.s. gdp figures. once those are out, we may see more volatility. back to you. >> thanks for that, joshua. let's take our trip around europe to start with patricia
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szarvas who is in frapg further. >> we just moved into negative territory after gaining about 11.5% for the month of july until yesterday's trading day. at the moment, 5,347.. in terms of big movers, watch out for continental. the tiremaker down about 5.4%. capital hike has been okayed yesterday at 1.5 billion euros. now we'll have to see who is going to be the next ceo of continental. that should be decided on the 12th of august. weighing in at the stock market at the moment, deutsche borse, daimler and tanker. watch out for vw. we just had numbers coming through for the first half of audi examine audi was one of those elements that pushed ahead quite nice. so they came through with first half net, down about 25% at 697. they keep their full year target, saying that they're going to have significant
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operating profit for 2009, however, at the same time, they are saying that the second half of 2009 should be rather challenging. so we'll have to see what the market will make of that announcement. apart from that, focus today will be very much on the second quarter gdp numbers in the u.s. on the up side, the dax could move towards the 6,000 level over the next few trading weeks. at the moment, as i said, trading around 5,350. that's germany for you. over to switzerland and carrie now. >> thanks, patricia. investors seem to be taking their profits of a very good trading week here in zurich. ubs, those shares are lower. that's ahead of some important events today. firstly, the providing judge
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will hold a conference called with ubs and the department of justice later today. he will want to find out if the two parties have been able to reach a deal or if they will be able to do so before monday. that's, of course, the day when the court hearings are scheduled in miami. well, he may also announce another delay of the court hearings to give the two parties more time to negotiate. secondly, our foreign minister is expected to meet her american counterpart, hillary clinton, in washington later on today. not too much is expected out of those talks for now. some people say that hillary clinton may not even want to touch on the issue of the tax dispute. let's move on and talk about roach. the fda has accepted the recent mission for strema. however, shares in roche are lower, down 0.6%. that's it from zurich right now.
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let's go to christine in singapore. >> carolin, thank you very much for that. asian markets ended the month on a positive note on hopes the global economy will be led out of a recession. the nikkei ended 1.9% higher at 10,356. strong earnings from tech titans like sony, fujitsu leading reports on the market, toyota has stated it will post a loss. blue chips helped to lift the kospi up by 1.5% to close at 1,557. shanghai stocks are bouncing back to mark their biggest one-day gain in two months. this as the china central bank reassured investors it would keep its monetary policy loose. the composite closed up 2.7% at
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3,412. meantime, the hang seng rose 1.7% to 20,573. the s&p/asx 200 closing up 1.28%, 4,244. on that note, let me send it over to you, bertha. >> today, the headline number here in the states is expected to drop by 1.5%. we have a couple other key data points on the calendar today.y. the second quarter employment index will be released at 8:30 p.m. then at 10:00 a.m., the july chicago pmi is out. analysts are looking for a reading of 43.5. that would be up from 39.3 in june. and as far as earnings, chevron dow component reporting second
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quarter results before the open. that's going to cap off a week of results from the oil majors. also reporting today, allergan, which makes botox, not that anyone here using that, calpine, instruction energy and wire houser. jc penlny will officially open the doors of its first store in manhattan today, just down the street from macy's in harold square. it's one block away from there, the first time they've ever come to the big apple. that's your global stock watch. coming up on "worldwide exchange," japan falls deeping into recession. will this twaft any recovery? plus the earnings reports continue. is it all about cost cutting and not about real gains? stay tuned.
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i'm sorry. i can't hear you very well.
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announcer: does someone you know have trouble hearing on the phone? dad. dad, let me help you with that, okay? announcer: now, a free phone service shows captions of everything a caller says. i'd like to make an appointment to see the doctor. announcer: to learn more about captioned telephone, call 1-800-552-7724 or go to our website. i'll see you at 3:00! announcer: captioned telephone - enjoy the phone again! i'm christine tan. in asia, japan slips deeper into deflation. core cpi falls at a record pace in june. >> i'm becky meehan. british airways saying it sees
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no signs of improvement in its outlook.k. >> and i'm bertha accumulates. gdp numbers are expected to show while the economy continues to struggle, there are signs the recession may be waning. let's get straight into the ftse cnbc global 00 index. the last time we checked, we were higher by 0.3%. we are coming off that level, but still up by 0.2%. the european bourses have been pretty flat this morning, just in small declines for the ftse and the dax and the cac is pretty much unchanged this morning. smi down by 0.25%. quick check on the forex markets, we're looking at dollar/yen 95.64. euro/dollar, about 1.4095 while sterling/dollar is at 1.6537. christine, how is it going in asia? >> becky, here in asia, markets have strong sessions and a lot of betts by investors with
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corporate earnings leading the way out of the hole into a recovery. nikkei 225 is up 1.9%. the kospi is up 1.5%.. the big winner today is clearly the shanghai market. this is one day after the central bank in beijing said it will continue to keep its monetary policy loose and despite bearish lending data, the market continues to soar. the bombay sensitive up 1.8%. overall, pretty strong gains here in asia. bertha. >> christine, here in the u.s., the markets, the major indices on pace for putting in fabulous forms. for the dow, it's the best july since 1939 when they started making color pictures. right now, we've got dow futures just a little above fair value. fass dak futures right now are up about 4 and s&p futures are just about 1 point or so ahead of fair value. we are going to get earnings
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from chevron. it's been a big week. 50% of the s&p will have been completed by the end of the day. we will have seen recovery in the bond market. we're getting data out of the euro zone momentarily. we've seen what was a much better bond auction yesterday here in the u.s. that seven-year went off very well with about 67% foreign participation, high contrast to what we saw with the five and the two-year. we've got the ten-year yield to 3.63%. second quarter gdp is the big headline of the day. president obama, in fact, says second quarter gdp figures are likely to show the economy once again contracted, although at a slower pace. forecasts are calling for a contraction of 1.5%, comparing to a decline of 0.5% in the first quarter.r. the chain weighted index is expected to have risen. the president says improvements in the recent months in the
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banking system, financial and credit markets have quieted some fears about the world's largest economy. >> we have stepped away from the precipice, you know, as ben bernanke and others across the spectrum have indicated, we were in a position where we could have gone into a great depression. i think those fears have abated. >> the president cautions the gdp numbers will not show the recession has ended because job losses are still a huge problem. what does it show if we see a big improvement today in gdp? james shugg is here to talk to us about it. thanks so much for joining us. we are expected to see a sharp difference in gdp, still down. it would be their fourth straight down quarter. but if we were down just 1%, it's almost a very big victory coming back from what we saw in q and q4 of last year..
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>> bertha, good morning. you're absolutely right. my sense is we'll probably see about a 2% annualized contraction. if it were to come in like you were suggesting, minus 1%, that could almost imply that on a monthly basis, the economy might have actually turned during the course of the second quarter. that's not really our thinking at this stage. if you look at all the business surveys and so on, they're still implying that the economy was contracting at the end of the second quarter. however, we think that at some point during the third quarter, we will see the turning point reached. our forecast, for what it's worth, is zero percent annualized for q3 gdp and we're biasing the risks to the upside there. that's not to say this is economic recovery.. what i'm saying is we're about at the point where we're going to see modest economic growth coming through. but in terms of recovery, if
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we're talking about 3% to had% away from the u.s. economy, that's a matter of three to four years away, we think. >> one of the issues is unemployment. we get the jobs report a week from today. but when we look at the weekly numbers, the continuing claims are starting to drop off. not substantially, but a lot of people say that. >> i think the problem at the moment is, as we always say around july/august, is that the auto sector layoffs always distort the numbers and have been a particularly big problem this year because of the earlier layoffs at chrysler and general motors related to their bankruptcy. so you really kap can't use the jobless claim numbers, either initial or continuing. also, i have to add there's a lot of people dropping off the continuing role because they've run out of benefits. so it's difficult to interpret
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what's happening in the labor market. >> and we're expecting some jobless data here for the euro zone, as well. will it be any easier to read through what's going on in the economic situation for the euro zone economy for these figures than it was for those u.s. numbers? >> absolutely. there's less distortion at play for the european numbers. we have to be careful. the german numbers that we saw this week for july included a statistical change which means we saw a fall in unemployment whereas the underlying situation, i can assure you with gdp shrinking 6% this year in germany is substantially weaker than that. so there are some distortions that pay and that's going to be more of an issue for july numbers. >> where are we on that cycle of inflation? >> these are july numbers. what we're going to see is a
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negative annual rate. this is probably going to prove to be the low point for german inflation. at last year's figures decline, the numbers will look very soft as the ecb has been warning us for some time. we're probably going to see a modest acceleration back into positive territory over the course of the next few months. >> james, this is christine here. in japan, we've got a ten-month high on corporate earnings but on the other hand, we have household spending remaining weak. when will all this good news from the corporate sector in japan start to filter through into the real economy? >> it's difficult to say because i think the corporate sector, to some extent, is benefiting from the improved regional
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performance that is starting to show through, not just in china, but in non-japan asia. i don't think it automatically follows that we're going to start to see comforting japanese economic numbers. our japanese specialist, he's telling me that we are likely to see a temporary bounce in gdp growth at some point around the second half of 2009. but he's looking for renewed negatives for japanese gdp heading into 2010 for a range of demographic reasons right to the appreciation of the yen that we've seen and other factors.s. so we actually remain. we remain pessimists on japan even if there is a temporary blip to the upside in the numbers. >> you're pessimistic on japan. we have bank numbers falling in july. any reason you think to be worried about liquidity in china? >> look, we are optimistic on
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china. one of the reasons being that the authorities there can simply push a button and make decrees about what economic policy needs to be done about all the angst that you see accompanying what needs to be done, for example, policy decisions in the u.s. or other parts of the western world. so we remain optimistic. the month to month data are noisy and not always frankly believable. the numbers that we do like to look at, for example, pmi surveys, just to mention one of a range of data supplies that we think are actually pretty trustworthy are actually pointing to ongoing acceleration in economic growth. however, there are risks ahead. there are always going to be risks in china.a. but aside from that, we are
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cautiously optimistic. >> james shugg, senior economist westpac bank, thanks for joining us. you have a good weekend. >> let's talk more about the country plunging into deflation as consumer goods continue to weaken in japan. the boj has forecast two years of deflation. what does our next guest think? we're joined from luca. first of all, we have consumer prices continuing to fall. unemployment, jobless rate at a near all-time high. are things likely to get much worse in the coming months in japan? >> no, i don't think so. i think that surprises are going to stabilize and inflation is going to -- deflation is going to stabilize. we will see a negative number of deflation on year on year price changes for quite some time. but following a little bit what happens in other countries in asia where we should see jump or
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just like an increase in deflation in the next six to 12 months, i think the numbers in japan will stabilize inflation. keep in mind that japanese companies and japanese consumers are used to deflation situation and so i think that deflation and moderate deflation around minus 0.5% is what you have to expect, which would be compatible with the rest of asia recording inflation rates about 3% to 4% a year. >> why do you think it will stabilize? is it because the stock market in japan had good corporate earnings? is that why you think things will stabilize? >> i actually think prices aren't going to stabilize by demand anywhere in the world.d. there are still a lot of investors everywhere in the world. before we see demand side price
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pressures, i think we are still going to have to wait for them for one or two years. however, we can see commodities rising, which by deaf in it nigz as a direct -- indetective impact on cpis everywhere according to the intensity of production and consumption and other commodities and this is the reason why we are seeing the stabilization in prices in japan and an increase in the pace of the rise of prices any where else in the nation.n. >> we've been speaking to various guests about consumer spending worldwide. what is the picture in japan for consumer spending, do you think? >> it's a nation that does not contribute positively to gdp,
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has not contributed positively to gdp for years. this was a regional choice. it was made at the '90s just at the end of the first phase of the japanese crisis in '95 where basically the choice was made of competitiveness or increase the competitiveness of firms slashing labor costs. basically by doing this, you make a very strok, externally competitive economy, but you also make a very, very weak consumer base. so i don't think that what we are expecting in the next few months or years will actually be a change in situation. the japanese consumer will remain among the more -- the weaker consumers around globally and this, once again, is not due to the fact that wages are lower or something else. it's due to the strategic choice that was made more than 15 years ago on competitiveness of japan and now japan is a little bit
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caught and cannot do anything else and improve competitiveness, especially now that the yen is appreciating so fast in the past few months. >> luca, it's bertha here in the u.s. we just saw a couple of headlines cross the japanese prime minister is vowing to bring about at least 2% growth by early 2011, which seems interesting so far away. with the election one month away, are we likely to see any new stimulus offers or anything that might try to help bring about better results to keeping the ruling party in power? >> well, first of all, the result of elections, they're e quite uncertain and japan could be in a situation in which basically economic policy and other policies can be stalled by
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political uncertainty. so first of all, i don't think that really japan needs another stimulus package. i think what it needs is continuing what it's doing and hoping that the market will start to sell the yen to get back some of the market shares that the japanese producers have definitely lost in the last six months at the expense of korean competitors, korean or other asian countries. i think the big problem was the appreciation of the yen apart from other structure proven problems that were recalled by your guest. this is what japan must hope, that the yen stabilizes or depreciates. i don't think there will be the need for another stimulus package, frankly.y. >> luca, thank you so much. we have to leave it there. let's head over live to mumbai
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and join ayesha faridi with the india business report. ayesha. >> thanks very much for that, christine. keeping up with the asian trend this morning, in fact, we've clocked a new year high for the nifty, so holding about that 4,600 mark conclusively. the broader markets doing a ditto soft 1% in the small cap indices. indecember, it is f&cg which is a big start this morning. we're seeing a gain of almost 2.5%. banks come second. state bank of india came out with stellar set of numbers. that counter is holding up. oil and gas off about almost 6 odd percent. meantime, a slew of midcap companies coming out with their numbers. midcap ip seems to be the flavor. most of these midcap counters are seeing a fair amount of run up in trade.e. lo though you have a couple of
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counters. we're given to understand that party and mtn, the deal may take a while longer to ratify. the companies are likely to extend the negotiation time by about 2 to 4 odd weeks. the party is definitely one stock which is in focus today. meantime, good going, it's the start of a new series in the futures options start so we are seeing a whole host of these realty plays which are really active and banking, of course, is quite the flavor of the day. the bank index is holding up with that. >> ayesha faridi, thank you for that. shanghai securities news says the country's banks have issued less than $73 billion worth of loans in july. that's compared to more than $1 trillion worth of new loans issued during the first six months of the year.
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earlier this week, shanghai markets went into free fall on wednesday on reports that the banking sector would be cutting lending targets for the second half of the year. today, the composite closing at 2.7%, a two-month high, 3,412. rebecca. >> ba says it sees no signs of improving conditions. the flight carrier has cut its operating cost by 6.6% since last october to offset the plunge in passenger numbers. but the ceo says there is still much to be done. the group is axing all meals on its short air flights. meanwhile, shares in air france klm took a hit this morning after posting first quarter losses of more than $700 million. bertha. >> met life reported its secretary quarterly loss although adjusted earnings beat forecasts. the company was hurt by a spike in investment losses.
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metlife has taken a beating over the past several months amid volatile markets. in frankfurt at this hour, met is trading up nearly 4%. christine. >> bertha, with thus news, videos, blogs, find markets friday at don't forget to watch "worldwide exchange" and stay with us, bertha. >> have you guys seen "up"? it was my favorite movie this spring, but apparently it didn't have all the magic that disney needed. the top line, not so hot. can cost cutting keep the kingdom alive? >> plus, we will get the check on all the latest in the currency markets, coming up next.
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♪ love stinks! hello, everyone. thanks for staying with us on "worldwide exchange." quick check on the currency markets right now. dollar/yen, 95.66 is where we stant stand at the moment.
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euro/dollar, 1.4089. let's get straight to our guests, sam stanley is here to talk to us about some issues. where do we stand on risk/appetite at the moment? >> risk/appetite is very, very high. the stock markets are overseeing rallying. they're continuing to overperform and as a result, people feel pretty good about investing in riskier currencies. at the moment, risk appetite is pretty much at the highest levels we've seen for quite some time. why do you find this interesting inspect. >> >> it's interesting given there's strength and weakness about the kiwi dollar.
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they've very much relied on ex ports and primary ex ports.s. there's a point about the soft commodities which they produce. it tends to get bundled in with the aussie dollar. so the new zealand dollar has gone through the roof based on the back of the aussie dollar. justification simply isn't near. the yield is less than australia, as well. so i think there's a clear indication to the market he's not happy with the kiwi at these levels and if the kiwi continues to be strong, they will cut interest rates in new zealand to push it lower.r. >> sam, this is christine. do you think that new zealand might cut its interest rates, over in australia, it seems inflation is stronger. do you think the rba australia will be the first in the world to get rates up? >> personally, i don't, no. i don't think they will hike rates in australia for a while. i see that obviously the data coming out of australia is quite
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phenomenal. retail sales, the figures coming out, are very, very encouraging. however, we are starting to see sign that's up employment is starting to take a bite. i'm not suggesting that they're going to cut rates in australia. i believe they'll leave it on hold for quite a while. it is possible they're going to hike rates, but i wouldn't see that happening until next year. >> sam, here in the states, obviously, q2 gdp is going to be the big headline.. what do you make this week of those treasury auctions? very interesting. on monday it went well. tuesday and wednesday tanked. yesterday suddenly we had foreign participation. we don't know who was and was not participating, but do you think china was a factor here this week? >> possibly. i mean, china has been in the press a lot this week. there's been a lot of talk about chinese unrest over the value of
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the u.s. dollar with what their action is with regard to u.s. treasuries. we know they hold a lot of u.s. treasuries and their reserves are growing. their reserves are getting bigger and bigger and it's causing a major problem with them. we estimate that between 65 and 70% of their reserves are held in u.s. dollars and we know that this is obviously causing them great concern and that was conveyed over to timothy geithner. it is quite possible the chinese are involved.d. it was very, very strange. we'll have to see what plays out. >> sam stanley, halo financial manager, thanks for coming by today. stay with us.
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i'm christine tan. in asia, the nikkei jumps to a ten-month high as upbeat earnings news continues to pour in. >> i'm becky meehan. the earnings slip in europe continues, too. >> and i'm bertha coombs.s. in the u.s. today, gdp figures are expected to show that the economy continues to struggle, but there may be signs a recession is starting to wane.
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>> well, let me tell you, we are waiting for data which is due out any second. euro zone inflation data, in fact. we're also waiting for unemployment figures, as well, also from the euro zone. we are just getting those cpi figures coming out now and the jobless figures all coming at once.. the euro zone july cpi forecast were for a decline of 0.6% compared to june's 0.1% and it looks like the figure is coming in at -- i can't actually see. . let's see if we can find it elsewhere. let's go with the jobless rate because we have those figures. the figures for the jobless rate coming in at 9.4% for june compared to 9.3% in may. 9.4% is better than the analysts had been expecting.
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so those figures are not too bad on the jobless front. let's see if we have the cpi data coming in and we'll bring you that figure as soon as we get it. let's get out to the u.s., though, for a bit more on what's going on in the market. >> thanks, becky.y. u.s. futures have been fairly flat here. they've been modestly to the up side and we continue to see that right now. dow futures up about 8 points above fair value, not moving very much at all on that european data. we've got chevron reporting earnings today and, of course, we have the big second quarter gdp number. let's take a look at how bonds are reacting. we have the ten-year bund lower here, the yield now at 3.38%.. of course, second quarter gdp is the big headline but we did see a big sigh of relief yesterday
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when the seven-year note auction went much better and saw a 67% foreign participation which was in better contrast to the two year and five-year. becky, what are the markets doing in reaction to those numbers there?e? >> the ftse cnbc global 300 index is a good place to start, bertha. earlier when we looked, it was just a fraction higher. we are at a level of higher by 0.2% at the moment. european bourses have been looking weak this morning compared to what we've seen over the past couple of weeks. we're seeing declines by svms 0.2% for us dax while the cac and the smi shutting below the ftse 100 almost entirely flat at this stage.e. let's take a check on the dollar rates, as well.
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we are looking at dollar/yen, 95.63. euro/dollar, 1.40 5 is where we're standing at the moment. and sterling/dollar at 1.6542. now out to christine with a look at the asian markets. >> hey, becky.y. strong earnings are helping to power the way. asia use could possibly lead the world into recovery, so that is putting confidence into the stock market. the nikkei 225 up 1.9%. kospi up 1.5%. the shanghai composite up 2.7% today. the hang seng is up 1.7%. the property stocks there continue to do well and the bombay sensitive index in india up 1.4%. nymex light sweet crude is ticking higher, boosting on oil demand, it is down, $66.34 a
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barrel. take a look at the sharp drop we're seeing on the chart there. brent is also trading lower, $69.20 a barrel. becky. >> let's recap the data out here in europe. the jobless figures we mentioned a moment ago, expected to be 9.7% for the jobless rate for june came in at 9.4%. a bit of a deterioration for may. euro zone cpi estimates a negative 0.6% compared to forecast of 0.4%. let's bring in bob parker now, vice chairman of asset management credit suisse. what do you make of the data that we've had out from the euro zone so far? >> i think on the inflation, the point to make is the die vergent trend we are now seeing between u.s. inflation and particularly the import price index in the states, which has jumped dramatically with the rising commodity prices and the weakness in the u.s. dollar. with these deflationary numbers
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that we have in europe. and what's clear is that the strength of the euro has completely offset the rise that we've had in the last two to three months in commodity prices plus weakness in demand in europe.. there is very little cost plus inflation. and i think that actually guarantees that the ecb first of all stays at 1% for the foreseeable future for its reference rate. i also think it guarantees that the ecb continues its policy of liquidity injections. the unemployment number was better than the market consensus. i actually don't take any positive note in that. the fact of the matter is that we are going to have for at least the next six months, if not longer, euro zone unemployment probably edging up towards 10%. and that is actually going to be a constraint on euro zone recovery because, obviously, it has a negative implication for consumption. >> let's also talk about the
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treasury auctions we've had this week in the u.s. it was a record week. there seemed to be some concern in the first two auctions that there was really weak demand. but then last night, seven year seems to be a different picture. what does that tell you what's going on there? >> obviously, the steepness of the yield curve and that clearly is pulling in both domestic and overseas investors. i think the other positive, which hasn't been highlighted much is because there is too much comment, i think, about the reliance on foreign investors. but one of the big themes in the u.s. economy over the past 60s months has been the move in the domestic savings ratio from being negative last november/december but the latest figure is plus 0.69%.%. and subsequently, i think k there's going to be more reliance on domestic investors. that's a positive for the market. what worries us about all government bond markets is that if we get, as we expect,
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stronger than expected economic data between now and year-end, plus we get after these very low inflation numbers, particularly in europe and asia some deterioration in inflationary expectations towards the end of the year and the beginning of next year, i think this yield curve could go steeper and it's entirely possible that after this period of stability with let's say ten-year treasuries trading 350 to perhaps 3.75%, towards the end of the year, you might get a breakout in yields towards 4%. >> interesting, bob. let's switch from treasuries to equities. we've seen the markets here have a spectacular july. i've noticed that we've seen a shift in rotation. the small caps have outperformed after the big cap tech being the leadership. is this rally for real?
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does it have legs or are you worried that we're overbought here? >> well, the argument that we could see a correction is based on the recent jump in the last 24 hours in the vix. and obviously, short-term, we are overbought. however, i think this rally has got legs. i do think that we will see trend upside in equity markets, at least taking a three-month view. and i would highlight positive factors of credit markets underpinning equity markets. better than expected economic data, as i mentioned just earlier, and i think there are going to be some positive surprises by the strength of economic recovery in the third quarter and the fourth quarter. plus, i think that this turn around that we've seen in corporate earnings growth and, of course, that has been a key catalyst in this rally over the past 2 1/2 weeks. i think we are going to see a trend improvement in most
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sectors in corporate earnings at least for the third quarter and the fourth quarter. with this mountain of cash that investors are still sitting on coming back progressively into market. >> all right. we're probably seeing some of that this week with a bit of window dressing. but let's talk about those earnings. they are cost-driven earnings. witness disney yesterday, their revenues came in short of that expectation. in terms of the economic economy, won't this run out of steam as we go into next year? >> the answer to your question is yes, i think this will run out of steam in the first half of 2010. one thing that concerns us is although there is a high probability of let's say recovery in the third quarter and the fourth quarter to 2% to 3% plus growth going into 2010, we've got a whole series of
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constraints on growth and the public expenditure will have to be reigned in. bank leverage has come down and will stay at lower levels. and you're quite right to say a large component of the positive corporate earnings that we've seen in the last few weeks being announced has been cost driven and one feature of this recession, which has been very different from previous recessions has been the speed with which companies have cut costs, cut inventories. that ironically could be an issue in the third quarter and fourth quarter.r. you're absolutely right to say there is a high probability that that is not going to be sustainable on a one to two-year time horizon. >> hey, bob, in your report, i see a chart on page 67 where it
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shows japan is riskier than china. why is that? >> the fist factor is the level of savings in china which are driving the equity markets. and one feature of the chinese market this year has not been foreign capital flows. it has not domestic savings.. let's not forget that the chinese savings ratio is close to 40%. and capital flows progressively this year in china have been moving out of bank deposits, out of money market funds into the equity market. i think the other two factors i would mention, the obvious one is the high level of state reserves. and if we take safe and cic together, we're now up to $3.2 trillion use u.s. i think the other factor is
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boosting the economy. whereas in the fourth quarter of 2008, the chinese economic clearly stalled. i think in the second half of this year, we will get back to 8% plus growth from n china. the equity market is currently looking is what overbought and the bank lending figures are looking stretched. those are the two risk factors in china. other than those two risk factors, i struggle to find anything negative about the chinese market.. >> problem, stick around, if you will. >> and we would like you to stick around, as well. we've got lots more coming up, including disney, the magic kingdom beating the street in the third quarter by a whisker. but can all that cost cutting keep the kingdom alive? ccccccccc
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welcome back to wgs "worldwide exchange." president oh back ma says second quarter gdp figures are likely to show the economy has contracted again, although at a lower pace. forecasts are calling for a contraction of 1.5%.. the chain weighted price index expected to have risen by 0.8%, compared to nearly 3% in the prior quarter.
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the president says improvements in recent months in the banking system, the financial and credit markets have quieted some fears about the world's largest economy. >> we have stepped away from the precipice as ben bernanke and others across the idea logical spectrum have indicated within we were in a position where we could have gone into a great depression. i think those fears have abated disney's profits fell, but squeaked past expected revenues. ceo's bob igar saying that theme parks have clearly been impacted
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by the weak economy. although attendance did rise 3%. tv ad sales are still very soft. sands expected a wider than expected loss. in frankfurt at this hour, disney shares have been trading to the down side. las vegas sands shares are down 9%. >> bertha, we've got a mixed bag of earnings. net profit for the fiscal first quarter rose 48% from a year ago. that's largely due to an increase in overseas lending. mufg's profits came in at $796 million in june as revenues surged more than $13 billion. and on the flip side, mizuho
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financial rose 1.42%. gas output fell 7% in the quarter. total remains confident in its outlook with dividends unchanged from last year. the company's underlying forecast beat forecasts despite being slashed in half from the previous year. >> news, videos, blogs and lots moving markets this friday. find them all at >> despite many of its employees working for no pay, british airways is trying to recover costs as quickly as its revenues fall. we'll have more details in our global stock watch. you have questions.
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and we're seen that in the oil sector coming off a little bit more now. and the main pull on the day is bg group. we've seen copper prices come off a little bit, too. and the miner have suffered there, as well. it says a lot about next week. uk banks reporting figures with barclay's on monday. but let's be honest, we've had a fantastic last three weeks in the ftse. if we can close above 46.40, we will be closing at just below nine-month highs. that can be very good for us. back to you. >> thank you very much for that, joshua. let's cross out now to frankfurt, patricia szarvas who is standing by with a look at the german trade today.
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>> the market is getting nervous ahead of those gdp figures out of the u.s. people are really just watching and waiting. and not risking anything at the moment, about 22 million shares have traded and i think if we close above the 5,300 level today, that's good enough for the month of july and gaining more than about 11.5% so far. daimler, tanking. immune issue re up this morning. daimler up about 0.8%. immune itch re as well ahead of reports. knf and siemans trading down substantially. continental worsening losses in terms of the share prices down almost 6%. 5.the% to be precise.
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there's a lot of speculation that in the next couple of weeks, we'll see the ceo changing. the latest we hear out of the business is the ceo will be replaced. they okayed a capital hike of $1.5 billion euros last night. that is frankfurt for you today. over in switzerland and carolin. >> thanks, patricia. we've seen a lot of profit taking this morning. we're down 0.1%. ubs is in focus today again and those shares are lower ahead of some important events today. firstly, our foreign minister will meet her u.s. counterpart, hillary clinton, in washington later on today. but not too much is currently expected out of those talks. because some people say that hillary clinton may not even want to elaborate on the issue
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of tax disputes too much at this point. the providing judge over the ubs case will have a status call with the lawyers and the department of justice and find out if the parties will be able to reach a settlement by monday. but he may also announce another delay of the case. that's it from here. now over to christine in singapore. >> carolin, thank you so much for that. asian markets are ending the month of july on a positive note. there are hopes the region will lead the global economy out of recession. in japan, stocks there closed at the highest level in ten months. the nikkei ended at 1.9%, 10,356. we had a lot of lending support from the market by sony and fujitsu. in south korea, foreign investors pouring money into the stock market. blue chips helped lift the kospi
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by 1.5%, 1,557. in shanghai, stocks are bouncing back to mark their biggest one-day gain in two months. all this despite bearish bank lending data. the shanghai composite up 3,412. meantime, the hang seng rose 1.7% and australian stocks rose to an eight-month high. the s&p/asx 200 closing up 1.28%. on that note, let me send it over to you, bertha. >> thanks, christine. today, the main headline will be the second quarter gdp number that's due out at 8:30 a.m. new york time.. we are expecting to see the fourth straight consecutive quarter of downside momentum in the economy, but not as bad. also today, we get the second quarter employment cost index. that's expected to show that bit of improvement there, as well. it's going to be released at
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8:30 a.m. new york time. it's forecast to have ris risen 0.3%. then at 10:00 a.m., the chicago pmi, purchasing manager's index is out. that is expected to come in at a reading of 43.3% compared to 39.9% last time around. chevron is the big dow component, capping off a week of results from the major oil companies. also reporting today, allergan, which makes botox. utility companies calpine and constellation energy along with weyerhaeuser. and today, jcpenney, the retailer, officially opens its doors of its first ever store in the big apple. it's 150,000 square feet and it's on 33rd and 6th avenue. if you've ever been to manhattan, you will note that that is just one block away from macy's flagship store. you think they're taking it to
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macy's? a little competition just down the block. they are going to offer an awful lot of specials, including same-day delivery for folks in manhattan because a lot of us don't have cars. that's your global stock watch this morning. >> and i'm on a flight down to see you, bertha. coming up next, the flight to earnings continues helping to prop up markets. is it about cost cutting or real growth?
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it's behalf past the hour. here are the top business stories from around the world. in the u.s., today's gdp figures expecteded to show the economy continues to struggle, but there may be signs a recession may be waning. >> i'm becky meehan. in europe, unemployment hits a ten-year high while inflation moves further into negative territory. >> and here in asia, the nikkei jump toes a ten-month high and upbeat earnings news continues to pour in.
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>> happy friday to you.u. the futures here in the states, they looked always though the major indices here are poised to extend that rally as we go into the last trading day of the month. we could see a bit of window dressing. we've got the dow boysed to put in its best july since judy garland came in singing over the rainbow back in 1939. nasdaq futures are flat, s&p futures are absolutely flat. we've got gdp data out at 8:30 new york time. that is expected to show that the second quarter economy shrank at around 2%, compared to a slide of 5.5% in the first quarter. it would be a big improvement. some are expecting if we take a look at the ten-year here, some are expecting we might see a
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one-year decline. we've got the ten year at 3.62%. becky, one of the things that helped was that we had a good seven-year auction yesterday with lots of foreign participation. this morning, of course, we're getting data out of europe there on inflation and unemployment. has that affected the markets at all? >> let's take a check. so these cries for protectionism and defense thereof seem to be gathering speed.. let's take a check on those european bourses, though. we are seeing some declines. let's call it unchanged, really, for the ftse, the cac and the smi. the dax at this stage is the market that seems to be moving
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lower by just about 0.25%. let's move on and talk about other markets. dollar/yen, 96.57. 1.4105 for euro dollar. christine, what is the update in asia? >> earnings momentum, showing asia can lead out of a recovery. the nikkei 225 up 1en 9%. the kospi up 1.5%. the shanghai market clearly a big winner today up 2.7%. there was talk about the central bank of china continuing to loosen monetary policy. the hang seng is up 1.7% and the bombay sensex is up 1%. in terms of oil, it is choppy trade ahead of the gdp data. nymex light sweet crude is trading lower, 0.55.
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$69.56 a barrel. brent is down, as well, to $69.56. >> joining us now, dodge dorland, chief investment officer at lander capital. and also with us this morning, bob. dodge, i want to start with you. we have seen these markets put an explosive performance in july. some people say some of it may be short driven, it may be fund managers trying to catch up. not all that much people really give it a fundamental thumbs up. a lot of folks basically say a lot of this is done with smoke and mirrors. what is your sense, are these earnings to be believed? is this rally to be pleased? >> everything bob said earlier is true. we believe with him completely. it can be for some part smoke
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and mirrors. there's a lot of liquidity on the side. those who have called for a turn around in the market to the downside have cost dearly. one has to be either in the market not flat but short. we expect what we'll hear this morning will support a continued look to the upside. >> so you're looking ahead to that second quarter gdp. what is your expectation? are there some folks thinking that it might be really good, that we might be down only 1%. >> i think that's pretty aggressive. 1.2 to 1.5, anything from 2% from the market's point of view and from the sentiment point of view will be enough to support a move to the upside. it should be quite constructive of the rest of the summer.
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>> we have had a strong month. what are your impressions? >> well, i think first of all, i have to make the point that we've seen significant outperformance by the nasdaq relative to the s&p and the s&p in turn overperformance relative to the dow. one seconder which we have been long since march, we stay long and obviously, the nasdaq is highly correlated for obvious reasons. and given our view of economic global recovery, we've taken the view that the i.t. sector is a very cheap call option on global economic recovery. so we're staying long the i.t. sector. if we're right and that after a not too bad gdp number today, i wouldn't necessarily say it's going to be a good number, but our view is a not too bad number, somewhere between 1% and 1.5% contraction.
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but if expectations start to build, the u.s. economy in the third quarter has positive gdp growth, i think there's a high probability that we'll come out 2% annualized in the third quarter. then i think that is going the attract further funds back into the market where we see very significant cash positions sitting on the sidelines because people don't trust this rally. >> dodge, do you agree with what bob was talking about, that you stay long in the i.t. sector? >> absolutely. as we get into the third and fourth quarter and where the cost savings becomes less important and revenues have to come back and prove themselves, that's when our concern is going to be. i think that's basically what bob is looking at for next year, as well. so from now until then, i.t. is a very good sector to be in and it's very hard to be short and it's one of the leading sectors now. we're very much overperforming in that area.
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>> well, we talk about cash on the sidelines. how much potential do you think is wrapped up in that theme that you pick out there? and what will it take to draw that out? >> i think one key factor is expectations of when the fed starts to raise interest rates. because if i'm sitting in a money market fund at the moment and my yield is somewhere between 0 and 25 basis points, i'm happy to do that, sit with that position on the expectation that yields may go higher in the near term. now, i think what is going to drag money out of money market funds is the increasing expectation that the fed is going to be behind the curve and it's only going to move very slowly. and i think a central case, if you ask the question, when does the fed start to raise interest rates again?? when do we go from this abnormally easy monetary policy, i think we're talking about the third quarter of 2010.
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so if i'm sitting on cash at the moment and i have the expectation of virtually earn ngs zee error for the next year, i am going to be strongly motivated to go back into equity yields. >> however, if i am in the real economy and i'm worried about losing my job, i may want to keep my money in the money market fund because i may be worried about losing it. dodge, what about the fact that we are likely to see unemployment tb to remain very high and consumers staying on the sidelines? >> absolutely. the economy is not, from a fundamental point of view paints a completely different picture. from the employment point of view, unemployment is still growing. it may be growing at a lower rate. that is a concern and that will probably affect the markets as we go into next year. whether or not the fed is able to start to decree interest
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rates, that may start an earnings center. until then, there's nothing there that is going to negatively impact the market. >> thank you so much for that, dodge dorland joining us from the u.s. and thank you to bob parker, asset management at chris sw credit suisse. bob, before we let you go, a final comment as we get to the end of the month? >> in terms of our positions, we remain structurally strong. we remain long investment grade corporate bonds and i think the rally there can continue.e. and i think this equity market, although very short-term, we're looking at a overbought, taking a three-month time wohorizon, i will be better than they are today. in addition, although we've seen
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significant gains in emerging equity markets, i think they are not looking too overstretched and i think those rallies could also be extended. >> bob, that you can very much for that. we appreciate you spending extended time with us this morning on "worldwide exchange." bob parker, vice chairman of asset management at credit suisse. christine. >> let's cross live to tokyo and check in on the trading day there with nozomu kitadai.i. >> hi, christine. tokyo stocks had a pretty good run today as investors focused on earnings.. the nikkei rose to 10,356 closing at its highest level since october last year. shares of japan's largest automaker rose 3%. for the first half of the fiscal
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year, denso expects a group net loss of 21 billion yen. that's better than the earlier projected 38 billion yen shortfall. denso shares have risen now by the seventh straight trading day. sony shares rose nearly 7% in response to its encouraging first quarter earnings announced after the bell yesterday. shares were boosted further after nomura securities upgraded the electronicsmakers ratings to the highest level on its three-point scale. brid bridgestone earnings rose on the announcement they plan to manufacture a silicone carabide waifer. meanwhile, the market ignored
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dismal data announced today. japan's jobless rate hit a six-year high in june. and core cpi sank year on year, declining for the fourth straight month. june housing starts were down 32% year on year, marking the seventh straight decline.e. that was the latest from tokyo. back to you, christine. >> thank you so much for that. you have a great weekend. still to come, jcpenney sets up shop in the big apple. is this the perfect opportunity to attract cash-strapped consumers? and before we let you go, here is a peek at the u.s. futures. we're shopping for car insurance, and our friends said we should start here. good friends -- we compare our progressive direct rates, apples to apples, against other top companies, to help you get the best price. how do you do that? with a touch of this button. can i try that?
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welcome back to krnsz cnbc's "worldwide exchange." here are some of the stories we've been watching from around the globe. did disney's third quarter profits fell 26%. on the top line, though, they did miss forecasts.s. weak dvd sales were the problem overshadowing the box office success. ceo bob igar says the theme parks have been impacted by the weak economy, although attendance did rise 3%. companies are seeing soft sales when it comes to tv advertising.
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and cost cutting couldn't keep las vegas sands out of the red in the second quarter.r. they didn't come up snake eyes, but close. continued declines in visitor traffic and gambling revenue. in frankfurt at this hour, disney and sands both trading to the down side. disney off by about 4% and las vegas sands down by about 9%. here in the u.s., the government's cash for clunkers program, well, it hits a major pothole. it's out of cash. for the past month, automakers have been offering a rebate of up to $4,500 for peach who trade in their more fuel efficient vehicles. and six days into it, the $1 billion fund has been exhausted. now, the white house says it is going to try to work with congress and extend funding and valid transactions made under
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the program will be honored. it will be interesting to see e how that impacts ford today. >> manufacturer michelin has sent shares higher. the group has cut hours on production to deal with slumping sales but says it will generate positive cash flow in the second half. >> it's still sort of a flat situation where we don't see the early signs of a real economic recovery. >> baj lending in china has reportedly fallen significantly in july.. that's according to state-owned shanghai securities news.. the report says the banks shares have issued $73 billion worth of loans in july, compared to $1 trillion worth of loans issued in the first half of the year.
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on the other side of this week, chinese mngts fell on reports that the banking sector would be cutting targets for the second half of the year. shanghai composite today closing up, 3,412.2. u.s. "squawk box" follows "worldwide exchange" for viewers in asia and the u.s. becky quick is joining us. what have you got for us today? stwl we've got traders jumping on the summer rally and our guest host today is a man who knows the markets very well. mario will get his thoughts on what's happening with this rally.y. plus, we have a big week in the bond markets, too. temporary yid reaction to billions of dollars in u.s. treasury auctions. now this morning, you can add a first year on second quarter gdp. we will have the numbers at 8:30 eastern. people are going to be watching this one to try and determine if we have seen the worst of the recession. also, jp penny takes manhattan. this is a retailer that's a
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fixture at malls across america, but not in new york city until today. the company is opening a score in the big apple today. jcpenney's ceo will join us live to talk about that. we also have auto nation's bob jackson. we'll talk to him about cash for clunkers, what it's meant over this past week, if he's expecting to see more money coming from congress, as well. "squawk box" is coming up at the top of the hour. rebecca, back over to you. >> becky, thank you for that. as if manhattan needs any more stores, right? >> a little busy. there have been a few stores that have never tried to make pushes in there. but taking manhattan, you know, this is a big deal for jcpenney. >> very posh. thanks very much for that, becky. bertha, over to you. >> becky, never enough stores,
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never enough shoes. you've got to get with the picture here.. up next, we'll take a look at second quarter gdp and look at what that might do for trading today. is the u.s. nearing an end to the recession? we'll get a full preview, coming up.
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let's take a look at the trading day ahead. we'll bring back doj dodge dorland. dodge, today the headlines will be about that second quarter gdp number. less bad could be pretty good for the markets, no? >> yes. as a relative level, it's much better than the absolute level. 1.5 -- between 1.2 and 1.5 would be really great. if it's that good, i suspect we'll have a slight pullback as the profit taking will come in, but that will be due to the buying opportunity. >> dodge, how would you grade the earning easy season in the u.s. so far? >> better than expected, rebecca. it's cost driven, it's not
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revenue produced. that will take us through to the end of the year. that's when revenues have to start to kick in. but for now, it's supporting a further move to the upside. >> dodge, christine here. this week's bond auction action tapped a respond midweek. but do you think it's going to be any better?? >> it might be. i suspect there's going to be more pressure and all the auctions going through to the end of the year. but again, it's more relative. as long as the response is relatively benign as opposed to absolutely terrific, we'll be fine. where it will really become important, christine, is flx year. >> and dodge, you know, today we've got the end of the month. we're likely to see some window dressing. next week, that big jobs report looms. what do we need to see to get people to continue with this momentum? >> we need less now than we're going to need in the fall and next year. as long as the numbers are
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still -- unemployment is still growing, as long as it's within a level of acceptance within 5% of expectations, the market will continue to perform well for now. the summer is a very benign period. we're going to a very quiet period in august, as you know. what we're really more concerned with is as we get to december. >> let's hope this one is a quiet august. it certainly wasn't a year ago. dodge dorland, thank you so much for joining us this morning.g. have a terrific weekend. >> thank you. >> we'll take one quick poke at the futures before we go here. right now, dow futures up about 7 points above fair value. pretty much flat on the nasdaq and s&p, but we have that second quarter gdp data looming. that's it for today's show and for the week. i'm bertha coombs in the u.s. becky, it's been grat anchoring with you. >> absolutely. it's been very night. i'm becky meehan in europe. >> and christine tan in asia.
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