Transcripts For CNBC Worldwide Exchange 20130709

June. The data suggests that they will sit tight for the time being. And alcoa gets the u. S. Earnings season off to a good start. Posted better than expected adjusted results and also backing its Global Demand forecasts. Warm welcome. It is tuesday, the 9th of july. Plenty to come on todays show. Well be in egypt. Protesters are expected to take to the streets again today. Could a timetable for elections bring some stability . Expansion is back on the agenda. This is according to the latest cfo survey from deloitte. Are those in top jobs all talk and no action . Well talk at 10 30 cet. Alcoa kicked off u. S. Earnings season on a bullish note. But what can we expect from others . Well get a view there. The head of the worlds Biggest Exchange operator terry duffy, president of cme group joins us in studio. Has his eye on an m a deal. Tune in to find out. Thoughts or comments about any of those views, please email us at worldwide cnbc. Com. First up, greece is being granted another round of aid from its International Lenders bug payments will be staggered as the troika is unconvinced the speed of reforms in athens. The deal has been welcomed. We got the package. We got the approved package we had in the may program. Okay. So we are fully satisfied. Of course, if somebody wants to give us 10 more billion, we would welcome this. Right. Okay. Jules is in brussel and joins us with more. Will they meet the terms of this one . If the past is anything to go by, theyre going to struggle on the private sector reforms and the Public Sector reforms. 4,000 job cuts they have to achieve by the end of this year. Ive tried to talk to finance ministers about the risks of implementation here, particularly, of course, given what we have seen in the Coalition Government over the last two weeks. But, you know, status quo remains. They have given them the money and greece has to perform. But there is not going to be any tension in here in the eurozone ahead of the german elections. It was as expected. Remember the First Tranche 2. 5 billion euros, has to be in place, actually they have to go to parliament and pass a number of the measures before july 19th in order to qualify for that 2. 5 billion euros. Were initially going to struggle to do that. No mean feat given the majority the government now do have, but the other question, of course, is the imfs continued involvement beyond their next tranche and whether ultimately there is a funding gap being created here. We actually spoke to the president of the europe group yesterday and he said there is no funding gap right now. I also did speak to the head of the imf Christine Lagarde and asked her, given what we have seen in portugal and portugal and greece over the last few weeks, have the firewalls that have been put in place been sufficient that domestic issues can remain precisely that, a domestic issue as far as the market is concerned. Listen in. Clearly what has been done over last few months in europe has improved its capacity to resist contagion, spillover from one domestic scene to another. The fact that the firewall, the european stability mechanism was built and developed has is a strong indication of that. But contagion risk does remain . We try to study spillover effects of policies decided in one country to the rest of the economy. And it exists. It happens, because countries are linked to each other either through trade or investment, or currencies and the case of the eurozone, the currency area is obviously, you know, forming a single region, which has its own rules and consequences. The focus today has been on greece. Given the political and the social backdrop, would you agree that the Implementation Risk for the reforms is as high as it has ever been . You know, when i look at greece, im very impressed by the efforts that have been undertaken to restore the fiscal situation of the country. It may well be that by the end of 2013 greece will be in primary surplus, which is an amazing achievement. Now, a lot needs to be done, whether you talk about the tax reform, the tax authoritys reform, whether you talk about the continuation of the privatization program, whether you talk about the management of the public service, all of that is still on the table, and work in progress and needs to be continued. But there have been clear achievements on that particular case. If you look at greece now, given those achievements, do you think ultimately it can afford a further writedown of debts . We have a list of actions that have been taken, a few more prior actions before we actually submit the program to the board at the end of july and then well see. As i said, one step at a time. There is definitely a recognition of the progress that greece has made with the finance ministers talking yesterday. But i struggle to find talking about the possibility of bailout number three when we get to the next review in the autumn. Implementation risk is a significant issue here in greece. For now, back to you. Jules, thanks very much for now. Alcoa Second Quarter net loss related to plant closures but adjusted results beat forecasts as revenue fell 2 because of low aluminum prices. Sales to the auto and Aerospace Sector grew. Alcoa sees Global Demand growing 7 this year for aluminum products. There are some exciting opportunities in the auto, aerospace, Consumer Electronics. Then we come down on the upstream business, which we can control the aluminum price. What we can control is where we are on the cost curve, coming down, closing facilities, curtailing those that are high cost, bringing saudi arabia online, the lowest cost facility on this planet. On top of it, there are legacy issues like the one were removing this quarter, trying to remove with the new initiations. Thats what were doing. Alcoa up 1 after hours in frankfurt and up about 8 . Been focusing on munich re today after the flooding we have seen. Munich had insured market loss above 3 billion euros. Lets get more on that. Annette is in frankfurt. Theyre talking about an Overall Economic loss of 12 billion euros caused by the floods in center, Eastern Europe and say the bulk of the insured losses of 3 billion euros had been in germany. Of course, that is because germany is in highly ensured market where the other markets in central europe. And theyre as well saying they give an update on what that means for the net profit in terms of their payments with their Second Quarter results. So all and all, theyre as well saying for the whole industry, natural disasters caused 45 billion u. S. Dollar in economic losses, and 12 billion insured losses in first half of this year. Compared to last year, thats quite a bit, because last year we have seen literally no losses, almost no natural catastrophes for the big re insurers worldwide which led them to quite suppressed price rounds in january as well and in april. The negative side, of course, now will see probably net income from reinsurers being a bit weighed down by those losses, but on the other side, we most likely will see higher prices when they start to negotiate them in october. With that, back to you. Over in france, citron shares moving higher despite a drop in first half. Many more details from the paris bureau. Why is the stock up . We had a good surprise, if you look at international sale, sales were up 21 in latin america, three times the growth of the cost sector in that part of the globe. And also the group was able to report a 32 increase in sales in china. The volumes are still very limited, but that is a strong growth. We knew the situation was negative in europe, but didnt know about that Strong International results outside in the world. And thats the reason why it is trading higher despite the negative announcement that came, nearly 10 contraction for sales in First Six Months of the year. Driven by a 13 contraction in europe. In europe, they were outperforming really the cost sector, the market shrank by 7 . In terms of outlook, we had a good surprise. They did not cut their forecasts for europe this year, still planning contraction of up to 5 , the same forecast at the beginning of the year, which means the cost of the carmaker believes the situation in europe will gradually improve towards the end of the year. We have two surprise, one for international safety, other for the outlook for the end of the year in europe. Over to you. Stephan, thanks for that. Bring up todays Global Markets report. Certainly weighted once again to the upside. Only around 40 odd stocks in negative territory. It is sunny, hence the color of my suit. As far as individual bosses are concerned, ftse 100 today is up about another percent adding to the 1. 1 gain yesterday. 74 points higher. Ibex up half a percent with the cac as well. Number of individual stocks worth looking at. Lmvh adding to italian luxury to its line. 80 stake in italys high end Fashion Group for around 2 billion euros. Thought the move could boost their appeal in asia. Lvmh up 1. 7 , unusual for a company like that to be up when youre the acquirer. And Salvatore Ferragamo up 2. 5 . Other stocks will go up with it as well. Bond markets today, and we keep our eyes, of course, on spanish yields, 4. 66 , where we were yesterday. 10year greek yields are lower, still above 10 . 10. 71 . Keep our eyes on the uk. Industrial production figures coming out in 20 minutes or so as well. Treasury yields worth noting, back down during yesterdays session. Hit the high of 2. 75, currently down to 2. 64. On the currency markets, dollar index hit highs yesterday. More contained today. Aussie dollar, moved away from last week. Dollar yen, 101. 21, where we were this time yesterday. 101. 54 the late may high. Pretty contained at the moment on currency markets. Lets recap that Asian Session for you. Sixuan with us in singapore. Thank you, ross. Global rebound taking asian stocks along for the ride. Japan was the top performer today, jumping 2. 6 to close at 6 1 2 week high. Weeker yen propped up export stocks like nissan. Retailers industrials and financials are all broadly high, but olympus got hammered. Down 5. 4 today on news that the company is raising more than a billion dollars to expand its medical equipment business. China markets made a modest rebound today. The countrys june factory prices remain sluggish, while inflation picked up steam from the relatively low base during last year. Lets not forget trade data is out tomorrow and investors are also eyeing more corporate earnings. Pboc refrained from pumping liquidity into the Banking System, but the sevenday repo rate eased to less than 4 . So pulling back from the lofty levels of over 11 we saw a few weeks ago. Banking shares gained ground in todays session, but developers were among the worst performers. We got very sluggish transaction. Volumes data for first week of july hurt by the tight liquidity condition. A quick check on miners in the region. Some lost nearly 10 in yesterdays session and rebounded today thanks to a higher gold prices. Back to you, ross. Thanks for that, sixuan. In china, higher food prices causing inflation to go up more than expected. Cpi climbed 2. 7 in june from a year ago. Producer prices did fall down to 2. 7 . Analysts say this latest inflation data further cements the view that china is not likely to move on rates for some time. Joining us from hong kong, chief economist at anz. Thank you for joining us, lee gang. Lets look at the number. Most of the inflation seems to have been driven by food prices. So what view will be taken by the pboc . Yes. If you look at the number it has rebounded slightly. But if you look at subsequential basis, there is no Inflationary Pressure at all in the chinese economy. If you then look at ppi inflation, it continues to fall for the 16 consecutive months, suggesting that in china, demand has been quite weak, requires some policy support in the near term. Do you think do you think the pboc will be considering easing . Well, the markets have been looking for policy easing for some time. Although if you look at interbank rate, it has fallen somewhat, but compared to the average in the First Six Months, still quite high at around overnight repo rate at around 3. 5 against average around 3 . We have already seen that high interbank rate have started to spill over to the real sector. Auto dealers are more concerned about credit crunch. They started to retrench lending to customers. Certain high risk sector will face significant credit crunch going forward. That will further dampen chinas real Economic Growth down the road. All these indicators suggest that perhaps pboc need to turn its policy to support chinas real economy in the second half. You believe there will be more credit rationing and therefore less credit . Indeed. Credit rationing has already started in some high risk sectors. And in this round of credit rationing, small and Medium Enterprises will tend to be affected even more, given that they have already affected by rising factor prices such as energy, labor costs, land prices. In addition to that, they have been appreciateiaing at a stead pace. If you look at chinas competitiveness against other asian economies it has been losing. So thats the reason why we think that despite current term pboc has been reluctant to support real growth, but real Economic Activity as suggested by ppi inflation remain quite sluggish. If there is no policy support in the second half for the chinese Economic Growth could well fall below 7. 5 as targeted this year. Whats interesting, if you look at this credit rationing, clearly on the one side, they want to dampen down the secondary the shadow Financial Sector. On the other hand, we need a lot of financial reform. What are they going to do . What are policies going to do to reform the Financial Sector which is going to be so important . Indeed, china will have to push forward Interest Rate liberalization. One of the major costs for the shadow banking activity in china was largely due to Interest Rate control. If banks have to pay very low deposit rates and if to prevent deposits from leaving the Banking System, this is the reason why banks have been engaging in off Balance Sheet activity in the name of shadow banking. In addition to that, china will have to even the regulation and the Financial System. At this moment, the Banking System has been put on heavy regulation, banks would have to have high reserve requirement ratio, high capital adequacy ratio. Meanwhile, a very harsh lone to deposit ratio at 75 . Meanwhile, nonbank Financial Institutions can flourish with heavy regulation in the Banking System. So thats why cbic may have to even have the regulation evenly across the Financial System. Finally, china need to liberalize its debt capital market, allowing those large firms to issue bonds in the there is a lot to do. By doing so, the chinas costs of funding can be reduced and as a result productivity can rise as a result. Okay. Liu ligang, thank you for joining us. Chinas benchmark index can provide clues to confidence in the region. One analyst says the shanghai composite is a good gauge of sentiment as the country sees more growth. Hsbc cut its gdp forecasts for the region. Learn more about the banks downgrade online. Follow us on twitter cnbcwex. Political deadlock in egypt allowed violence to erupt. Can a solution be found . For the latest after this break. [ male announcer ] its time. Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. 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Com to find out where a hoveround can take you egypts Muslim Brotherhood is calling for more protests today after 51 people were killed when the army opened fire on supporters of the former president morsi on monday. Meanwhile, the countrys interim leader is pledging to move swiftly with a timetable for elections. Joining us with the very latest, yousef is in cairo. Yousef . The army remains on high alert as the Muslim Brotherhood plans nationwide protests. This comes just 24 hours before the start of the holy month of ramadan. Tensions are running high. The Muslim Brotherhood say they would like a reinstatement of Mohamed Morsi, who they say is the legitimate president of this country. The Transitional Government under the president ali mansour is going on. A sixmonth period until parliamentary elections, giving them five months to write up a constitution. And worry is that is not enough time to come up with something that will last, number one. And number two, there are worries about inclusiveness of the drafting process. So the problem you have here is that the Islamist Party, or the only Islamist Party taking part in this Transitional Government has pulled out because of what they have described as a Republican Guard massacre. And also about who will run this show. Yes, you have an interim president , but what about the rest of the cabinet. Who is going to be the Prime Minister . Who is going to be the minister of finance as country is in dire need for cash . Now, more names are being floated for Prime Minister. We had mohamed elbaradei. Today, samir wudwan, we spoke to him about the closure of the stock exchange. He would be a good or solid candidate, thats what experts tell me in terms of putting the country on track, making it more investor friendly. The Exchange Closing 3. 5 down yesterday. Keep an eye on that. And also lastly, ross, make sure you follow me on twitte twitter youseftv for the latest developments throughout the day. I am and we will. Thank you, yousef. Joining us with more, ali rubaid. Thank you for joining us. What do you make of the latest moves . How hard is it going to be, bear in mind this position we now are in between the Muslim Brotherhood and the army. Certainly the situation remains very fluid. And we still have an absence of dialogue between the different parties and contender parties. And there is no clear framework to take the National Dialogue forward. Now, certainly, the fact that yesterdays unfortunate event have more or less sort of created a form of shock to egyptians and there is a momentum to try and find some form of national committee, like what you heard yesterday, calling for that, but the fact is that under ground we have a large part of the population who does not recognize a legitimacy of this new president , new government. So the situation is really still very unclear and uncertain. Having said that, i think one should look also at the International Context and how the rest of the world has been responding to it. And that, by itself, should affect the momentum towards the national conciliation. I think the u. S. Yesterday sort of gave a message of calling for nonviolence by the Muslim Brotherhood, calling the army to for more discipline. Certainly there are diplomatic efforts trying to reach a solution, but it is still unclear where were going at this stage. What role does egypts external financing needs play here and where indeed do they get the external financing from . External financing means egypt is the critical issues. They are certainly large. Our estimates range at least for the next fiscal year that just starts now at around 18 to 19 billion. And if you look at where egypts sources of financing comes with tourism, now completely per tesched by what disrupted by the current event capital flows are still not there, egypt will need to rely on external debt creating flows to close its financing gap. And this, around we are talking about at least 7 to 8 billion within the next 12 months that egypt needs in order to stabilize the reserve at the current level. We all know that reserve level in egypt are very low. There are less than 2. 5 months of good of imports of goods and services. And we know that egypt has important external debt maturities to repay over the next 12 months. A package of both sort of supporting the liquidity crunch, and also starting economic revival is absolutely needed with the support of regional and International Partners to put the economy back on track. Okay. Thank you for that. Good to see you. Alia at barclays. Still to come on the program, have uk cfos have their appetite for risk back . According to the latest die d se survey, they are hungry and ready to do something. [ agent smith ] ive Found Software that intrigues me. It appears its an agent of good. [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] headlines from around the globe, another day in the green for european stocks, buoyed by news that greece escaped defaults. Shares in the luxury giant trade higher after it paid 2 billion euros to take a majority stake in factory prices continue to fall. Pboc may sit tight. And alcoa gets the u. S. Earnings season off to a good start. They posted better than expected adjusted results. It is backing its Global Demand forecasts. For a change, uk data is a little weaker than expected. Manufacturing output for may contracted down. 8 on the month, forecast to rise. 3. Industrial production is flat on the month, forecast to rise. 2 . So that is somewhat disappointing after a string of better than expected data. But there is optimism about the recovery. Rick is forecasting u. S. Housing prices will rise. Predicting a 4 increase in Property Values over the next five years. On the high street, retail sales up 2. 9 in june, that steady pace lower than mays 3. 4 rise. Believe it or not, expansion may be back on the agenda in britains board rooms, this is according to the latest deloitte Financial Officer survey. Joining us for more, chief economist at deloitte, thank you for coming in. Are cfos, are companies, after years of hoarding and cost cutting, ready to splash the cash . Is that what youre saying . Well, it certainly is the case that there has been a change in the priorities of big companies. Youre right. The last five years has all been about strengthening Balance Sheets. What were seeing in this survey is a shift toward expansion. Second consecutive quarter in which we have seen that. Interestingly it has been driven by uk facing companies. Not the international companies, which the last few years have been more optimistic than companies focused on the uk. So i think it is a sign not only of greater expansion, and also greater optimism. What does expansion mean in terms of policy and investment then . Well, it is a willingness to hire, to do m a and to undertake Capital Expenditure and organic expansion as well, move into new markets and introduce new products. And how much optimism do we need for them to translate what is the Optimism Level like for them to translate that into real action . Well, we surveyed both how they feel, so how what is that perception of risk and what is the Risk Appetite and how do they feel about prospects of business. We also saw how they plan to run their Balance Sheet, which is a much more important question. That is all about, you know, actual decisions and what in terms of their own Balance Sheets, they are shifting towards expansion. So our measure of expansion is a twoyear high. The interesting thing is, very good telegraph today saying we have growth, and the Tour De France is about to start, the weather is great, everything is feeling great, but we have we do not have sustainable growth, not being underpinned by longterm investment. Does your survey suggest we actually might now start to get the investment led growth which we need . Yeah, i mean, the investments being the missing element in the uk. And the expectations of investment led recovery for last three years just hasnt happened. What this survey suggests is that companies are much more willing to take risk, more willing than anytime in the last six years, and actually investment is becoming a much greater priority. In terms of where cfos are, many attitudes back to where they were in early 2011. Time when it looked as though the world was going to see a sustainable recovery before the double dip, before the concerns of doesnt mean, okay, so, yeah, we know they were wrong. Absolutely. So a tinge of caution about that. I think what comes out of the survey is that perceptions of risk are still elevated. Certainly they dont think that theyre back to the world pre2007. This is a survey of larger companies, they have never had a they never had a problem accessing credit. Im wondering, you talk about they continue to talk about an improvement in companys financing conditions, but didnt have a problem with that anyway. How important is that on the margin . They had a big problem in 20082009. Everybody did, yeah. What were now seeing is that for these youre right. It is a third of the entire equity market, serving 135 countries, but these are the biggest countries in the uk. And they are unconstrained by capital concerns. These are also the companies which have a lot of cash. So i think the what comes out of this survey is that the constraint is not so much a shortage of capital of cash, a shortage of opportunities and perceptions of risk. What were now seeing is the perceptions of risk are diminishing. Lets hope that change in perception of risk leads to an increase in investment. Thank you for that. If you want to read more about why uk cfos are more optimistic, read about it on cnbc. Com. More announcements of deloittes latest survey. Peter vose steps down next year. The Dutch National held various roles during his 30year tenure with the oil giant including positions in africa, malaysia and the United States. The appointment becomes effective on january 1st. As far as royal dutch shares are concerned, just up about a percent in line with the market. Olympus shares have taken a hit on news the Camera Company is tapping the market for more than a billion dollars of fresh capital. They are also planning to issue new shares to expand its medical equipment business. The companys been trying to turn its fortunes around following an accounting scandal two years ago. The japanese government stepped up its guard against chinas aggressive foreign policy. With more on Prime Minister abe, sushiko is with us. Japans Defense Ministry is adopting a far more vigilant tone in the countrys annual defense white paper. The report stated china is engaging in dangerous actions around the japanese controlled se senkaku islands. The paper also expressed concern over north Koreas Nuclear and missile capabilities. The government is planning to update its longterm defense policy at the end of 2013. The white paper touched on the possibility of enabling japan to launch preemptive attacks on enemy bases abroad. It also stressed that the alliance with the u. S. Is indispensable to keep peace and stability in the region. Ross, back to you. Thanks for that. Release the hounds. Tvs going to the dogs. Literally. Dog tv, believe it or not, is the First Network aimed at what is termed mans best friend. It is coming to a set near you. A 24hour channel, going to be available in the u. S. To directv satellite customers next month. It has canine friendly programs, scientifically approved to provide company for fido when you leave him or her at home alone. Content created to specifically stimulate a dogs vision and hearing and support their natural behavior patterns. Something wrong with saying ive got a tv show to support a dogs natural behavior patterns, watching tv is a natural behavior. I dont know. Maybe it is only me. Has tv gone to the dogs . Let us know what you think, email us worldwide cnbc. Com, tweet us at rosswestgate. Still to come, Telecom Italia looking to win approval to spin off its land line grid. I want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs. Our Business Needs more cases. [ male announcer ] where do you want to take your business . I need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, Small Business solutions from at t have the security you need to get you there. Call us. We can show you how at t solutions can help you do what you do. Even better. Hong kong may be attracting another big lister. Chinas bank is looking to raise around 1 billion there. The city lender has been stymied by freeze on new land offerings, waiting five years to hit the market. In february, reuters report Hong Kong Ipo would happen this year, but on a smaller scale. Also a surprising turn around for german Real Estate Company deutsche addington. Last week they blamed poor market conditions. Annette has more for us in frankfurt. Half the volume theyre bringing to the market and lower the price, so now apparently the whole thing is quite attractive for Institutional Investors. Reuters and dow jones both report that already by today the share may conclude and that Institutional Investors are tapping into the offer. And if theyre saying it may conclude, that means that the shared size is actually twice over subscribed, what brokers mean by that. Lets have a look at the business itself. Deutsche addington is the biggest housing real estate owner in germany. They started to buy off railway houses in 2001. And looking at the time spent from 2001 to now, of course the private equity owner guy hence needs to find an exit is now. And, of course, that pricing now is not very attractive. Looking at the valuation which implies a discount to its asset position, which is not normal compared to his peers. Now we have valuation for the whole company, and at the current pricing, which were right now seeing here on the board at roughly 3. 8 billion euros. That asset of the company are at 4. 25 billion euros. So probably there is a little bit of pressure as well here because theyre really desperately need a cheaper refinancing, ross. Yeah. And, lets talk about we spoke to the ceo yesterday, the unit spun off, had a bumpy first day of trading. Things are better today. Whats going on . They have been quiet, some analysts saying that it is a good buy and they have increased the target price, Credit Suisse is saying 44 euros and ubs came out with a note, they didnt have a look at yet, which was at least optimistic. And positive about the share price development. And were seeing shares really jumping on that. Yesterday still every commentator was very negative on the outlook for the company because, of course, through the sheer structuring of the transaction that if you had ten semen shares, you got one share in your portfolio that would have meant as well there was no clear decision to buy into the issue. So the likelihood that youre selling it again is quite high. That was the overall theme yesterday. Today seems a total different world for the shares. It does. Annette, for now, thank you. Mamalaysias retailer is riding an economic pickup. Aon saw net profit up to 130 million. Strong sales of its top value budget brand helped its bottom li line. Shares rose 1. 7 ahead of the results out after the market close. Lmh is adding italian luxury to its line. It brought a stake for 2 billion euros. It is thought it could boost its appeal in asia. Investors have given the new look a thumbs up. Shares in the luxury giant are trading higher. Lets get more on what it might mean for the rest of the italian luxury sector. Claudio is in milan. Are stocks reacting to this announcement . Yes, ross, they are. This deal really does once again recognize that italian luxury and fashion brands are very m a significant in the sense that what was paid for was according to the market the fair price for loro piana. They have revenues for an 80 stake. At 3. 9 times revenues and as far as it is concerned, theyre expecting for 2013, 140 million, thats 19. 3 times. So as far as the numbers are concerned, theyre pretty much in line with what you can expect for a majority stake. They do have an option to buy the remaining 20 that the family will continue to hold for the time being. The group is being valued at 2. 7 billion euros. It is an opportunity for both. As you were saying, the stock in paris is reacting well. So they appreciate the deal, but so does loro piana. They feel the internationalization of the group, which holds 130 stores so far, will benefit from being part of a larger group. Many synergies will help them to become a bigger group. The Family Holding the stake will be a 20 stake of something much larger. Just to give you an idea of the number of stores that they have in the world is 480. So there is certainly room to grow in terms of maximizing and somehow selling more of their products. Theyre known for cashmere, high quality products. The company is 90 years old. For italy, it is certainly a loss. One more brand that leads illustrate italy. And there is concern for the fact that these brands may continue to outflow from italy to other countries. The telecommunications watchdog acome is reviewing a spinoff of the land line network to bring down its debt burden. It comes after the company abandoned merger talks with hutchison last week citing unsuitable conditions ahead of negotiations. Theyre under pressure to revamp after a decline in First Quarter profits. The stock is down more than 20 so far this year. Joining us for more, francesco, research analyst. Good to see you. Thank you for joining us. Remind us, why is owning the wire network here, the fiber network, so much of a problem for Telecom Italia . Effectively, because they own the network, they own the grid, they can be pretty much anywhere in italy and this creates a competitive imbalance for all the other Broadband Companies in italy such as fast web. So regulation is designed to advantage the wholesale players and the players other than Telecom Italia. They cant execute their turn around plan while they still own the grid. They cant be as aggressive as they would like to be. Thats right, yeah. So what are the chances of them being allowed to do bt were allowed to do it. And probably big part of bt, changing its fortunes around. What are the chances theyll get approval . We believe that bt is actually very good example. We believe if they get approval, it would be with conditions similar to bt and open reach where open reach is effectively a separate company that has to treat bt the same as it treats any other company when providing network infrastructure. And we believe that a similar solution would suit Telecom Italia. If that were to happen, would we see discussions with three come back to the table, do you think . How much was how much was the reason why the talks broke down . This was definitely the reason why the talks broke down. And wouldnt rule out wouldnt rule out that it might come back. And then what else would the company have to do . Telecom italia . Yeah. Well, i mean, they would also probably look to sell off part of the nearly spun off company in order to draw down debt. Do we think what are the chances we think of them getting this ruling . Well, it depends. I mean, there is also the question of shareholder approval, which we believe telephonicia which holds 10 of Telecom Italia probably wouldnt approve. Why . Because they dont want the competition . What is their issue . Theyre probably looking to get rid of their stake in Telecom Italia themselves and any move to split up the company would devalue their own stake. And then sell that sell the stake in the remaining bits of three . They could i dont know, but could be, but well just have to see what the regulator says. Francesco, thank you very much. Chinas coal miner wants to take its Australian Unit private. Offering to buy the shares it doesnt already own, 22 of the company, for 182 million. They will need a stamp approval before the review board before going ahead. Shares jumped more than 4 in sydney, but Parent Company hong kong fell on the news. Indonesia has given the green light to free port to restart underground operations at its copper mine. The company stopped production nearly two months ago after a tunnel cavein killed 28 people. Free port indonesias chief says it will need a month before the mining hits full speed. A recap of what is on the agenda in asia tomorrow. The bank of japan kicks off its two day policy meeting and the bank of thailand makes its Interest Rate decision. Well get june trade figures out of china after export figures slowed in may following a trackdown on false reporting. And asia air x makes its trading debut after 310 million ipo. We had a percent gain for the ftse yesterday, similar amounts today. And for the xetra dax and cac, a little less. On the bond markets, treasury yield where we moved down to during the session yesterday after hitting a twoyear high. Not a huge reaction on the tenyear to the weaker than expected production. On the currency markets, as you were from this time yesterday. Dollar yen around 101 mark. Eurodollar, 128. Sterling, back below 140. What is interesting, that weak industrial data did sell. Sterling has strong data and weak data. Before we go, a quick reminder of the question we have been asking today. Has tv gone to the dogs . A new tv channel just for dogs. Email us, worldwide cnbc. Com, tweet at rosswestgate. Still to come, imf chief Christine Lagarde told cnbc shes pretty impressed by the efforts of greece to get its finances in order. Is everyone else so delighted . Well have the latest from the last meeting of the summer when we come back. Youre watching worldwide exchange. The headlines today, alcoa gets the u. S. Earnings season off to a good start. Posting better than expected adjusted results. It is backing its Global Demand forecasts. Let day in the green for european equitiesyies buoyed bys from greece. No buyers regret for lmvh. Trading high after 2 billion euros from majority stake in the cashmere retailer loro piana. Quick elections as authorities try to quell violence in egypt. Support goes behind the former finance minister as interim Prime Minister. All right, if youre just joining us, welcome to the start of your Global Trading day. We had gains yesterday for european stocks, gains today and right now futures as well. Higher for u. S. Equities. Currently around 66 points above fair value for the dow. The nasdaq is nearly 15 points above fair value. Sorry, 14 points. The s p 500 is over 8 points above fair value. Ftse 100 had gains of 1. 1 during the session. Global 300 up 24 points. Right now the ftse is up another percent at the moment, along with the xetra dax as well. The xetra dax up 83 points. Slightly less, but important gains for ibex and cac, up 2. 75. You can see a little by higher, the luxury giant announcing it is taking an 18 stake in the high end Fashion Group lor loro piana. Ferragamo moving higher up 2. 2 , both well known to my producers. As far as bond markets are concerned, greek ten year yields, little lower today, above 10 . They are getting the next tranche of aid with conditions. Well get the latest on that from jules in brussels. We keep our eyes on treasury yields as well. 2. 65 , a little lower. We had a big move up to 2. 75 , that tenyear high, so the twoyear high we had on the tenyear. And then the move lower during the session yesterday, thats where were starting today as we look towards the u. S. Session as well. On the currency markets, not a lot in the last 24 hours aft 24 the big moves post the employment report. Late may high during yesterday and eurodollar, 128. 67, just up from the 128. 06 level on friday. Over in china, higher food prices have caused inflation to tick up more than expected. Cpi climbed 2. 7 in june from a year ago, Producer Prices continue to slide down 2. 7 . Analysts say this latest inflation data further cements the view that china is not likely to move on rates for some time. Much of that inflation was down to food prices. Lets get more on the asian reaction to that and the rest of the session. Sixuan is with us in singapore. Those china worries still linger, but asian stocks bounced back following the global rebound in europe and the u. S. Australias asx 200 hit a fiveweek high, up 1. 5 as miners tracked global Commodity Prices higher. But the nikkei 225 was the standout performer today to close at 6 1 2 week high. Japanese blue chips may good gains. Most of the big banks and automakers climbed 2 or more, helped by the weaker yen against the greenback. Olympus down today, lower by 5. 4 , after the Company Announced plans to raise more than a billion dollars in fresh capital. Chinas key indices managed to end in the green, despite higher than expected cpi data. Property shares did badly, sentiment was hurt after reports that a number of property firms have suspended trading while seeking refinancing. Latest data also showed more than 60 of chinas 40 major cities saw declining housing transaction volumes in the first week of july. That hurt by the tight liquidity condition. And in australia, shares jumped more than 4 today after its parent said it wants to take this unit private. But shares in hong kong fell on the news, down 3. 3 today. And thats an update of the asian markets. Back to you. Thank you for that. Greece is granted another round of aid from its International Lenders but payments will be staggered as the troika is unconvinced by the speed of reforms in athens. Jules is in brussels with the latest comments surrounding this. They have some money. Conditionalities everything or not as this crisis tells us. They try, dont they . It was very much a carrot and stick approach. Thats what we were expecting and thats what we have got. All sorts of conditions attached and in timing too for the First Tranche, the first 2. 5 billion euros to come to greece in july. It means that greece first have to pass all sorts of measures in parliament by july 19th. And given what we have seen over the last two weeks, the splintering of the coalition and the slim majority the government have, thats no mean feat. This is the process that were going to have to go through. And ultimately as you quite rightly said, Implementation Risk is the key point. I spoke to Christine Lagarde, the head of the imf after the meeting yesterday and said to her given the political and social backdrop now in greece, are these Implementation Risks around this reform as high as they have ever been . Listen to what she had to say. When i look at greece, im very impressed by the efforts that have been undertaken to restore the fiscal situation of the country. It may well be that by the end of 2013 greece will be in primary surplus, an amazing achievement. Now, a lot needs to be done, whether you talk about the tax reform, the tax authorities reform, whether you talk about the continuation of the privatization program, whether you talk about the management of the public service, all of that is still on the table, and work in progress. And needs to be continued. But there have been clear achievements on that particular case. So there was a lot made of the fact that theyre hoping to see growth in greece next year. And theyre mentioning that theyll reach a primary surplus this year. I spoke to the president and asked him if were doing enough to still support growth in greece and he said he believes we are. And that greece are on the right track. But, yes, Implementation Risk around the reforms continues. Ross, back to you. Okay, jules, thanks for that. Stay with us. Also with us in the studio, peter. Portuguese government, were back renegotiating with greece. Clearly there is still a problem with politicians delivering what is required of them in terms of meeting conditionalities. What happens . Do we keep changing conditions, keep changing politicians . The germans keep paying . I dont think the Implementation Risk will go away because the scale of the challenge that they face is so large. But i actually agree with what Christine Lagarde said. Often you get the impression that greece has been sitting on the back sides doing nothing. Their structural deficit at the start of the crisis was 10 of gdp and now virtually at zero. The problem is they have got to move to get Something Like a structural surplus of 5 if theyre going to get their debt coming down. Lots more to do. And with the politics as it is, it is always going to be a challenge. The right plan. Is the medicine still the right medicine or not . I think the difficulty is for countries like greece and portugal who need to go to the rest of the eu to fund themselves, it is difficult for them to say, well, do it a little bit more slowly. Whenever they do their fiscal tightening more slowly, it means someone else has to stump up the cash and thats germany. We know theyre up against the limits of how much theyre prepared to give. I think there are other countries in europe, germany, the uk, where perhaps fiscal austerity could be scaled back a little bit and leave a policy like the u. S. Would probably be helpful. I think for the periphery countries, it is much more difficult, because theyre not in the market, someone else has to stump up the cash and at the moment, thats germany. Peter, do you think were at the stage in europe where given the firewalls we have in place, domestic issues that happened in the likes of portugal and greece can remain domestic issues for the markets here, particularly in light of the movements in the market we saw surrounding portugal and greece in the last few weeks. Absolutely. I think some of these political rumblings that we have seen in the countries in the last couple of weeks a year ago would have caused real really spooked the markets. I think it has been striking how little it has really affected yields. And, again, were seeing rumblings of that political crisis in spain again, over corruption charges. That hasnt really hit yields yet either. So i think the markets are having a bit more of a grownup approach to this sovereign crisis and taking the ecb and other policymakers at their word that theyll do whatever it takes to get this done. But that doesnt mean these political crises arent worth paying attention to, because they could derail the whole show if they got bad enough, but at the moment, i think markets are taking them at their word. Does that give them then more leeway in europe to push a bit harder if we have isolated some level of contagion risk, do you think . Well, i think what theyre trying to do is push hard on the structural reform front, because in the end, thats going to be something that delivers growth, but on the fiscal side, i think they realized that going too hard on that can be counterproductives and that why we have seen a lot of countries getting more wiggle room, countries like france, spain, getting a little bit more time to bring their deficit down. And i think thats probably the sensible approach to take. Okay. Peter, thank you for now, jules. Lets get jules, youve spoken to Christine Lagarde about the u. S. Economy as well. What does she have to say . I askeder in light of the high hopes of the recovery in the u. S. , particularly in light of the tapering talks, listen in to what she had to say. We are clearly seeing an economy that is recovering. If you look at the housing sector, the construction sector, if you look at the automotive industry, there is clear recovery under way. The unemployment numbers are on a much more positive trend than they were. And this is clearly a very good sign for the two critical matters. Either for that country or for any country at the moment, which is growth and jobs. So taper talk is timely. No, i wouldnt say timely, not timely. Im making im observing the Current Situation of the economy. And i should certainly acknowledge the fact that Central Banks in general and the fed in particular have played their part in restoring and helping restore the situation. Christine lagarde there coy on the timing of fed tapering, ross. For now, back to you. Thanks for that, jules. Your views on this, how much we saw last week the ecb and bank of england coming out and talking about rates staying low for a while. Are they terrified or how worried are they that the fed will import its Monetary Policy over here . I dont think the feds the rise and they cant do anything about it. Thats what theyre seeing in the markets. I dont think the fed are intending to do that. But the markets rightly or wrongly are extrapolating what the fed are talking about, assuming the ecb and the bank will do the same thing. I think they have been working incredibly hard to disabuse that motion and we have seen a little bit of a fallback in yields on the european front but not enough. Where we saw the interest and the reaction immediately after the comments was in the belly of the curve, in the fiveyear. And currency weakened as well, which was helpful. But the u. S. Economy is in a re different position. And lets remember, all the fed are talking about is slowing down the rate at which theyre adding stimulus. Not actually at the moment tapering is about talking about 4 treasury yield by 2016. Is that well, to 2. 75 a couple of days ago. It is possible, yeah. Thats it can only get there if we have a healthy economy. Yeah. And if there is a healthy economy, the fed will be quite right to raise rates and everybody should be pleased about that. But the mistake is to assume that europe is in the same position as the u. S. It is not. There is a lot more tightening measures that still needed in this part of the world. Half the u. S. Has to go up. I think the general drift, they go up and down together. Peter, thank you for joining us. Release the hounds. Tv is going to the dogs. Dog tv, yes, you heard it here, dog tv is the First Network aimed at mans best friend. The 24hour channel will be available in the u. S. To directv satellite customers next month. S that canine friendly programming that scientifically is approved to provide company for your dog when you leave him or her alone. Content created to support their natural behave yoior patterns, to watch tv made for dogs. We have been asking whether you think this is a mad idea or good idea. Tweet, it is a great dane hour. Keep your responses coming here at worldwide exchange, email at worldwide cnbc. Com or tweet at cnbcwex or rosswestgate. The airlines jet that crash landed this weekend was traveling at least 25 slower than it should have been. More details when we come back. Recap of the headlines. Prices to the upside as aluminum giant kicks off the u. S. Earnings season. Greece escapes default again. And violence continues in egypt as parties start work towards an interim government. And still to come, the cme group is the largest publicly traded exchange in the world. Does it need to get that bigger . The companys terry duffy will be with us on set in a few moments. And that means jobs, lots of people, making lots and lots of things. Lets get your business rolling now, everybody sing. Norfolk southern whats your function . Helping this big country move ahead as one Norfolk Southern hows that function . Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . [ male announcer ] some things are designed to draw crowds. Others are designed to leave them behind. The allnew 2014 lexus is. Its your move. Merger between Intercontinental Exchange and ico europe next is reaching the final stages of an agreement. It puts pressure on cme group to up its presence in the european derivatives market. And it just so happens that terry duffy, president of cme is in europe, joining us now on set. Good to see you. Good to see you, ross. Thank you. Is that what youre doing . Are you worried about life and deciding you got to beef up your derivatives exposure now . We have been in london since the 80s but we have increased our presence throughout europe and in london over the last several year. We get a lot of revenue out of london, especially in other parts of europe and including asia. North america is our base, being in chicago and new york. This is a big part of the region. Cme is a global company. Absolutely. You got there through m a and now look at life they might get rid of the other bits. Look, you still m a is not over for you guys, right . You pop over to frankfurt, pop over to germany on this trip . No. Im going to be in london and geneva and back in chicago. I wont be. And we did a lot of transactions going back to 07. And then again in 08 with the new york mercantile exchange, the most diverse Asset Classes of any other institution and paid huge dividends. We put the pieces of the puzzle back in place and now were seeing the dividends more and the fed move on whether it is on rates, starting to get Energy Prices again yield at wti and present spreads come closer together. Thats amazing move, now nearly everybody last year was saying it is going to widen because of shale and here we are with spreads for five or six years. Articles written all over the world saying tli is the benchmark. Thats absolutely true. The Risk Management vehicle for crude oil products. You would have to say that though, right . You dont have any choice. The interesting thing is, actually, as we get more volatility in Energy Markets and see what is going on in the middle east, im presuming actually that causes more contracts to be portrayed. It does. Volatility is a component of it. As you know. What is strange about energy, a lot of other products, Interest Rates or food products, they have all been at historical different prices. Food prices have been high, Energy Prices have been high, from rates low. Thats a pattern going on for three or four years at a time. We have never normally seen that. If we have a big spike in prices, we see it normally come back to a normalized range. We havent seen that. A lot of people are confused what is the way youre supposed to risk manage your products, on food, energy or Interest Rates, which keeps them more attracted to a company like cme group because you cannot afford to have that risk on your Balance Sheet. Are you one of the few organizations that has no fear of rates norpallizing in the u. S. Im presuming if rates normalize, more people will want to hedge that risk. Were seeing that just by some of the conversations coming out of the u. S. Fed. He makes a few remarks and obviously we do 27. 5 million contracts in one day. When you have prices sitting at historical lows for four or five years and then the Federal Reserve chairman makes a comment, were going to see volatility and action. Thats what were seeing at the cme group. It makes you very comfortable. It does. It does. I hate it to be, you know, no winners for anything. At the same time, we have got a big move, one of the bigger things that has come out besides low Interest Rates is this move to take otc trades on to into clearinghouses as well. So the banks are critical of that. Are they just winching because theyre losing some of the market or there is some fears here. Paul tucker has written about this. We do need recovery resolution plans, need to know the clearinghouses have financial strength. And clearinghouses do have financial strength. What paul is referring to is he does not want to have a risk to the bottom, which we dont either. I was very adamant in the dodd frank regulation when i was testifying that we wanted to make certain we did not have to accept all that came into the clearinghouse. So the swaps we taken in, we make sure we have the capital we can to do the performance of the contract. If not, were not going to accept it, not going to take the risk from a bilateral transaction that used to sit on a bachgnks Balance Sheet, tranr it and say life is good. We feel very confident that with the five days margin and that we can manage the risk with the products, but what you dont do is transfer risk from one entity to the other and thats not what were doing. When you when the bilateral transaction on the banks books, sometimes they dont do the same Risk Management as a neutral facilitator Risk Management would do, like cme group or another exchange. We dont care if the market goes up or down. We want to make sure the payments are done each and every day and done properly. Some will say you got pretty low reserves for the amount that youre we probably have one of the biggest reserves of any exchange in the world. I dont mean you specifically, clearinghouses generally have low reserves. No. I wouldnt say thats true. We take the money efficient to do the Risk Management of the product, dont take more, dont take less. Were in a very capital intensive system that we live in, in the Financial System around the world, and there is no sense in taking extra and no sense in cutting it either. We believe we have the proper amount to do the Risk Management. Final question, just from everybody talked to in the im ared einterested in your s of the resilience of the economy. Is it real . Is this what we have been here a few times before. You listen to the couple of different pundits, but unemployment is down. The problem is we have some prices that are still skewed, which would say that recovery is not completely over with. Housing has been up as people talked about, huge asset as you know in the United States. But the same time, also where the assets have come up in real estate are also where they were most depressed. So when were seeing double digit gains in real estate values, also coming from the areas of southwest or in florida or other places that got so decimated there in the crisis, but at the same time, way overinflated too. I think the markets in general have traded very well. The markets in the u. S. As you know, the stock markets and around the world have gone up. A lot of participants havent been in the market, havent believed in the rally. We cleaned up some inventory in real estate and another way to do that is to flush out the system. Terry good to see you. Let us no he if yknow if you do plane to germany. Ill call you. Thank you. Terry duffy, have a good trip. We have some weather for you as well. Thank you. Still to come, Second Quarter results setting the bar for the rest of the u. S. Earnings season. Well preview expectations for other big names. And other market insights. Plenty more to come. Futures are indicating another upward start for u. S. Equities today. I want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs. Our Business Needs more cases. [ male announcer ] where do you want to take your business . I need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, Small Business solutions from at t have the security you need to get you there. Call us. We can show you how at t solutions can help you do what you do. Even better. Youre watching worldwide exchange. The headlines today. Alcoa gets the u. S. Earnings season off to a good start. Better than expected adjusted results. Backing its Global Demand forecasts. European equities back near threeweek highs buoyed by knne that greece escaped default. A promise of quick elections as authorities try to quell violence in egypt. As the countrys second biggest is throws support behind the finance minister as interim Prime Minister. The dow up 88. S p up 8. 5 points yesterday. Higher once again on u. S. Futures. Now the s p is currently trading another 8 points above fair value. Nasdaq is around 13. The dow at the moment is some 67 points above fair value. It has been an upward session for Global Equities as well today. European equities, percent move higher for the ftse. Another percent now with the xetra dax as well. The ftse and the cac in italy and france also a little higher around. 75. Thats how were set state side. What are investors to do today as european equities are up near threeweek highs. Here is a recap of some of the thoughts we already had on cnbc today. Looking at europe, i would say it is a leading edge in earlies of having new products, in terms of bringing newer fashion to stores which excites consumers. It has exposure. 50 , plus growth of equity into the newer market. Very strong deflation, all that stuff, but, you know, it is very, very slow. And thats why equities are interesting. And now after the collection in bond markets, you know, theyre better in credits and in government bonds, yes. And a lot of money is basically by regulation, allocated to fixed income. It is more attractive than it has been months ago. An unusual degree about emerging Market Equities at the moment. The key, i think, to hang on to is that they look pretty cheap. And if you look back over the last ten or 15 years, actually the key thing about emerging markets is that you should be more willing to take risk when everyone is nervous. Alcoa reported a Second Quarter net loss on restructuring costs. But adjusted results beat forecasts as revenue fell 2 , mostly because of lower aluminum prices. Sales to the auto and Aerospace Sector grew. Alcoa sees Global Demand for aluminum products growing 7 this year. There are some exciting opportunities in the auto, aerospace, Consumer Electronics are some of those. We come down on the upstream business. What we can control is where we are on the cost curve. Coming down, closing the facilities, curtailing those at a high cost, bringing serb ini arabia online. On top of it, there are legacy issues like the one were removing this quarter. Thats what were doing. Joining us for more is jeff sort, chief investment strategist at raymond james. Good to see you. Thank you for joining us as always. They talk about alcoa, solid demand from the aerospace and commercial transportation sectors. What do you take away from that . Well, i think the it is endemic of what has been going on. The revenues are a little shy. I think in the First Quarter of the s p 500, 58 of the Companies Reported beat their lowered earnings estimates, but 52 beat their revenue estimates. Yeah, look, alcoa is no longer a proxy for Economic Growth. Its results watched because it is the first of the companys reporting. What is going to be important for you for the rest of this for this earnings season . A lot of companies, we saw revenues hit in the First Quarter and they kept saying, dont worry, well make it up towards the end of the year. Have you got concerns they wont . Well, after the end of the First Quarter, earnings estimates for the s p 500 were slated to be up about 4. 2 . Expectations have been lowered on that right now. Theyre estimated as of last friday to be up 0. 8 of a percent. So they lowered expectations pretty much dramatically on the earnings side and the revenue side. So it is going to be interesting to see if the s p 500 can come in and actually beat those lower estimates. Which sectors do you think are most vulnerable to misses . I think materials, industrials and technology are most likely to miss out of the ten macro sectors. The financials, even though they look better than they have, they have a because of what has happened in the bond market, i think there is Something Like 22 or 23 billion in a category called Assets Available for sale that they have losses on because of what happened in may and june. Yeah, well, they make that up with a steepening yield curve. Thats fair. The Mortgage Rates are up 120, 1. 2 since the beginning of may. Checked that yesterday for this mornings letter. And we havent even heard from the builders. They havent seen any slowdowns. If youre not going to get any slowdown on 120 bit backup in rate, it will be very profitable for the banks net interest margin. Winners and losers in that. Jeff, stay there, well come back to you. Good to see you. More to come. Floods in alberta, canada and storms in oklahoma may cost more than 6 billion. Annette is in frankfurt with more details. Theyre saying the overinsured damage is to together 6 billion euros from both incidents from the floods and the oklahoma tornadoes. That means of course i have to say it is not quite true what i said right now. It is insured losses of roughly 2. 5 billion economic damage, how they call it, the overall damage is roughly 6 billion euros. For the industry, it is the recent update of along the lines as well what they said regarding the european floods here, the estimates are a bit higher. Theyre saying it is roughly 12 billion euros in economic losses in europe because of the flooding in central and Eastern Europe with germany being the most affected market. Germany is a lot more insured than its Eastern European counterparts. So essentially what theyre saying, the season, of course, we have been seeing all these pictures of floods, has been not the best one for reinsurers, but the economic the insured losses are still at a contained stage. For that, back to you. Thanks for that. U. S. Investigators continue to gather more nfinformation about the possible cause of the Asiana Airlines flight in San Francisco. Phil lebeau has the latest from the scene. Reporter three days after the crash of asiana 214 here at San Francisco international airport, it is clear the investigation is focused on the last minute and a half before the crash and why the plane was going so low and so slow. In fact, the ntsb explains that the plane at 1600 feet, 82 seconds before impact, the auto pilot was disengaged. 34 seconds before crash, the air speed was 134 knots. 137 knots is the target speed for landing the plane. And just above the level of the runway with three seconds before impact, the air speed was all the way down to 103 knots, once again, a clear indication of how the plane was virtually stalling. Here is the ntsb chairman talking about the investigation and understanding what the pilots were doing. We want to make sure we understand what was happening and we want to talk to them about whether they were hand flying the airplane, whether the auto pilot was on, what kind of reliance they might have had on automation within the cockpit, and how well they understood the automation and what it was supposed to do. The ntsb is looking into the training and experience of one pilot in particular. He was at the controls before the plane crashed. The ntsb is interviewing the entire crew on monday afternoon here in San Francisco. The pilot in question, by the way, has almost 10,000 hours of flying experience, but just 43 flying the 777. Asiana says you need 60 hours of flight time and ten takeoffs and landings to qualify as a captain in the 777 and the pilot as we mentioned had just under 10,000 hours. We expect that on tuesday the ntsb will have more detail and information regarding the interviews, the investigators are conducting with the pilots of this plane, to give us a better sense of what happened in the final minute before the plane hit the seawall here at San Francisco international airport. Thats the latest from here. Back to you. Phil lebeau from San Francisco. 13 people are now confirmed dead and 15 missing in the small canadian town where a train derailed. Crews continue to work on putting out hot spots. Reports say air brakes on the oil tankers car failed because they were powered by an engine shut off. Firefighters were called in late friday night to deal with the blaze and one of the trains engines shortly before the accident occurred. Still to come, one u. S. Retailer closes the books on its ceo. Well look at the future of barnes and noble next. Norfolk southern whats your function . Hooking up the country helping business run trains they haul everything, safely and on time. Tracks they connect the factories built along the lines. And that means jobs, lots of people, making lots and lots of things. Lets get your business rolling now, everybody sing. Norfolk southern whats your function . Helping this big country move ahead as one Norfolk Southern hows that function . Lets recap the headlines today for you. Alcoa surprises to the upside as the aluminum giant kicks off the u. S. Earnings season. Greece escapes default again. And violence continues in egypt as parties start warrick towards an interrorism government. And there is some changes at the top of one big u. S. Retail chain today. With more, Courtney Reagan is at cnbc hq in the states. Barnes noble ceo William Lynch resigned as the bookstore chain continues to struggle with the tablet and reader. The company hasnt named his replacement. Lynch was hired from the Home Shopping network where he was president of hsns Online Business and previously worked for palm. Lynch helped expand the Digital Offering and launched the nook as a competitor to the kindle and apples ipad, but in the latest quarter, barnes noble posted a 34 drop in nook sales and announced while it would still make new black and white ereaders, it will farm out manufacturing on the nook color touch screen tablets to a third party. The chairman and founder says the company is reviewing its Strategic Plan and in february rougeo, who owns a 30 stake said he wanted to buy barnes noble physical sites but not the nook. Microsoft and pierson are minority investors in the nook business and analysts say there is some speculation that either could buy the unit outright. Barnes noble is the largest u. S. Bookstore chain with 700 stores. You look at the shares here in early trading overseas, it looks like were under pressure by 4. 75 , but up 2. 2 over the last two three months. But this is one of the last remaining bookstores that is still standing, that has a national presence. And as you can see from some of the numbers, it has been under pressure for some time. Remains to be seen what happens to the industry, let alone barnes noble under the new developments. What happens to books . Longterm . Right. Books in general. Ereaders and stuff. Well see. Thanks. Good to see you. Other firms were looking t at. The company is expected to face tough questions about its future after posting disappointing First Quarter results which sparked a 28 drop in the stock. Some slinvestors say they must look at all options. Blackberry shares are down 19 this year. Microsoft is expected to announce a big restructuring on thursday. All Things Digital says the exact timing could change. The move is due this week. Late last year steve balmer signalled in a letter to shareholders he aimed to reorganize the company with a focus on services and devices for consumers and businesses. Microsoft up half a percent in frankfurt. Still to come, will ongoing uncertainty in egypt affect the price of oil . [ agent smith ] ive Found Software that intrigues me. It appears its an agent of good. [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] egypts Muslim Brotherhood is calling for more protests today after 51 people were killed as the army opened fire on supporters of former president morsi on monday. Joining us with the latest in cairo, yousef gamal eldin. The situation is changing all the time. What is happening at the moment . Well, ross, the promorsi demonstrators are rallying again and called for demonstrations nationwide to try to convince the army to bring back their president Mohamed Morsi after he was ousted a few days ago. They say he is the legitimate leader of the country. They called for an uprising and they have made it clear that they will use the army as necessary, some of their followers of the Muslim Brotherhood to headache thbrot r brotherhood to make that happen. Questions about the progress, the Transitional Government is making under interim president mansour. He has not announced a cabinet yet. There are several delays that occurred. And a lot of that has to do with the fact that the Islamist Party has pulled out. Thats taken legitimacy out of the Transitional Government. Some names floating around for Prime Minister, mohamed al elbaradei. It is a very fluid situation on the ground. The United States is watching very closely. White house spokesperson did make it clear, however, that they are going to review the situation carefully. And then make their decision. The Exchange Trading to the upside and reaction to the decree announced earlier today which did provide some detail about the road map looking at about 6 months until it is over with elections. Ross . Yousef, thanks for that. Thats the latest from cairo. Ahead of the u. S. Open, european equities up again, a percent yesterday for the ftse. Similar gains now for that in the xetra dax and futures are also indicating another upward start this morning. The dow is around about 56 points above fair value, around 12 1 2 for the nasdaq. Jeff still with us from raymond james. Jeff, look, by and large, despite the wobbles we had, the rally is in tact for this year. Youve always talked about july, midjuly being an interesting time, difficult time for the markets. You to sti do you still share that view and why . Yeah, i do. We have been talking for the past three months that the s p ought to be okay into midjuly. There are some minor timing points on july 11th and 12th, major timing point on july 19th that theyre derived both quantitatively and from technical timing models. If you look for the news backdrop that might cause the first meaningful decline of the year, youve got ben bernanke speaking in front of the Congressional Finance Committee on the 17th. The next day on the 18th, he speaks in front of the Senate Finance committee. I think he could rattle the markets again. Youve also got as we talked about earlier earnings coming out, expectations have dropped rather dramatically from up 4. 2 about three months ago for the s p 500 to only up. 8 right now. You have had this backup in Interest Rates, this caused some worry. So i think it is a good time to build a little cash. I do think if we do get a decent decline here, i think it is for buying. I think the economy resets and strengthens in the back half of the year. I think stocks will be higher by years end. How important is it going to be, the next bernanke testimony to congress . Well, depends whether he rattles the markets with when he says again. When i listened to the chairman, i did not get the impression he was going to raise rates anytime soon. He said that any move by the fed would be data dependent. I take him on his word. I dont think he tapers anytime soon as well. Especially given what has happened in the Interest Rate complex. Though the employment picture was looking fairly better, right . Look, are you comfortable are you comfortable with the tapering and the economic picture going together . I dont think ben bernanke will taper anytime this year. I find myself in the rear position of agreeing with rabiny on cnbc a couple of weeks ago. I think i was on right before him. He doesnt think the fed does anything this year with regard to reducing its assets purchases. Jeff, good to see you as always. Thank you for joining us. We have been asking today, has tv gone to the dogs . Plans to launch a 24 hour tv service for doggies. A lot of tweets in. Dog tv a great idea but monetizing will be an issue. Bad enough to fight the family for the big screen, now ive got to compete with the dog too. Im afraid you have. Thats it for worldwide exchange. Squawk box is up next. Unh hey lets go [ male announcer ] you can choose to blend in. Yeah yeah yeah or you can choose to blend out. Oh, yeaheah the allnew 2014 lexus is. Ts your move. Good morning. Alcoa kicks off earnings season with a beef that analysts caution this reporting period is likely to be less spectacular than previous ones. Well forecasts already being peared back. New rules for the banks. The fdic set to announce plans today to require 5 leverage. And gold prices rising. The most it has in seven sessions this morning. Bulli it is tuesday, july 9th, 2013. And squawk box begins right now. Good morning. Welcome to squawk box here on cnbc. Im Andrew Ross Sorkin with joe kernen. Becky has some enjoy something good time off today. Well see her soon. Our guest host, rebecca patterson, chief investment officer, well talk to her about the markets in a moment. First, lets get you up to speed. Joe just mentioned alcoa, the largest aluminum produce, posting better than expected earnings and the company saying it still sees Global Demand for aluminum products growing 7 this year driven by the aerospace and commercial transportation sectors. The ceo on closing bell yesterday. There are some exciting opportunities in the auto, aerospace, Consumer Electronics are some of those. We come down on the upstream business, which we can control the aluminum price. What we can control is where we are on the cost curve. Were copping down