Investors taking profits ahead of this weekends parliamentary election. The motor city gets weighed down under a mountain of debt. Detroit filing for theargest municipal bankruptcy in u. S. History. Hi, everybody. Welcome to the program. We have got two hours together. Finance ministers gathering now at the g20 meeting in moscow and theyre expected to ratchet up the crackdown on Corporate Tax avoidance. Now, later today, the oecd will be unveiling an action plan aimed at tackling Profit Shifting, which has thrown some of the largest multinationals into the spotlight. Lets get the details with julia chatterley from moscow with more. Julia, a lot on the agenda and taxes definitely one of the issues theyre going to be talking about by the looks of things. Absolutely. Huge agenda. Growth, jobs and tax avoidance. As you said, the oecd just about to announce their proposals to targeting tax avoidance by the large corporations in the g20. You cut to the heart of it when you said a Profit Shifting. Ultimately at the heart of this is their proposal to make corporations pay tax in the jurisdiction where the value is created or the product sold is created to prevent this Profit Shifting into lower tax rate jurisdictions. It is tough to get the g20 to agree on anything. Given the economic environment, particularly given the political pressure around the likes of apple and amazon and google, it does seem to be consensus we can push forward and get some kind of agreement at the next g20 summit when the leaders meet here in september. But, of course, there are huge issues surrounding this, not something that can be addressed at the g20 level or the oecd level, needs to be an international thing. Always going to be a jurisdiction where there is lower tax rates. To benefit from that, people have to be forced to make these measures. Otherwise youre just not going to see the level of compliance. Need a supervisory body. The other thing ultimately implementation. Plenty of things to discuss. Im going to dive in the press conference now and ill be talking to the secretarygeneral of the oecd and the director general of the iol later on in the show. Plenty coming up. But for now, back to you. Say hi. Well be hearing from you throughout the show. Thank you for that, julia. Julia chatterley live out of moscow. To get you up to speed with the other issues that were following today, regulators from g20 nations unveiled a list of nine insurers they believe are too big to fail, thats as part of new rules theyll now have to hold more capital from 2019 to cover risks they pose to the Financial System should they go bust. Aig, is among those identified and theyll face tougher supervision. Youve got aviva trading higher, despite a bit of weakness in european Early Morning trades. As usual, you can find us on email. The email address is on screen for you right now, worldwide cnbc. Com. Thats the email address. Were also on twitter, of course, cnbcwex. The city of detroit, though, filed chapter nine, the largest municipal bankruptcy in u. S. History. The one time center of the u. S. Auto industry and motown music scene, they have been crippled by more than 18 billion in debt. Detroit lost 25 of its population in the last decade. Hundreds of buildings are abandoned, services are crumbling and a number of retirees outrank the citys active workers by a 2 to 1 ratio. The bankruptcy filing sets the stage for a court fight with thousands of creditors. Detroits emergency manager says he saw no other option. This is a problem that has been more than 60 years in the making. There is 18 billion of debt total. Even if we took 200 million a year out of a 1 billion budget which we cant do because we shut down every pothole, plow another street of snow or anything else, it would take 68 years to pay off the debt. Even just 11 billion in unsecured debt, thats almost 52 years to pay off the debt. I beat debt. Orr says the bankruptcy should be completed by the fall of 2014. The big three u. S. Automakers all issued statements of support for the city. While they have some offices and plants located there, only gm is actually headquartered in detroit. A white house spokesperson says president obama is monitoring the situation and were going to be talking more about detroit coming up in a second hour of this show. Stay tuned for that. Moodys has affirmed the u. S. aaa Credit Rating going from stable to negative. They cite the surprising drop in the budget deficit. The u. S. Is on track to report its lowest annual deficit in five years. Moodys had cut its outlook to negative in 2011, but never went as far as s p which stripped the u. S. Of its aaa rating the same year, you might recall. Japans Ruling Liberal Democratic Party is widely expected to secure a convincing majority in japans upper house election this sunday. Political watchers say a positive outcome for the ldp would mean a return to the old one party dominated system and end the bickering in the japanese parliament. It is going to be a big weekend regardless to the elections. Thats right. I think this election is significant because it is likely to end six years of political gridlock that has led to paralysis in parliament here in japan. Anytime any kind of reform agenda was put to the table, it did not get passed. So the prospect of another victory by shinzo abe, the Prime Minister and his liberal democratic party, potentially ends this Hung Parliament situation that has been dogging japan for the last six years. I think it is unfair to corps relate the movement that we see in the equity market today which was down about 1. 5 . Any kind of reading into the outcome of the election. You have to remember the market has been up, you know, for the last week, week and a little bit longer than that. And entered bull territory, technically, earlier on this morning. It is not as if to say that after the selection there is going to be immediate reform agenda. I think people are pointing out the significance or goal post down the line. One of them which will be probably a Cabinet Reshuffle happening in september, will be interested in seeing how many socalled reformers will be getting cabinet posts after this reshuffle. I think it is also important to note some of the number of seats they will win. 121 are up for grabs in this election on sunday. Majority is likely on their own, by the ldp. Whether or not they get a twothirds majority of that vote will be critical as well, because that is the number needed to submit revisions to a National Referendum should that occur in the future. I think the economic agenda, this is the one they have been billing since the last seven months, fiscal stimulus, massive earlier on this year, and this monetary stimulus later on by the bank of japan, and the data clearly showed that it is starting to work. You have 4. 1 growth in the First Quarter of this calendar year, which is better than any other industrialized nation. But there is some chatter, of course, among economists about whether or not that momentum is going to hold in the latter half this year and whether or not it will be Strong Enough to weather an anticipated consumption tax hike that is scheduled in 2014. And i think this if they do back track on that, that would be a very negative signal, i think, to send out to the financial markets, especially at a time when the central bank is effectively underwriting the government debt. Lots of interesting issues to delve into. Thank you very much. Is japan drowning . And is shinzo abe the only man with a lifeline. According to one analyst, he is. Check out what the experts are telling us about sundays election in japan, head online, cnbc. Com, where you can find that piece of analysis. You can follow us also on twitter cnbcworld. Were just looking at some flashes hitting the wires. Merkel saying the euro crisis is not over yet. Just be aware that merkel is speaking out of frankfurt. You see the live pictures coming through right now. Joining us, though, on japan, if we head back and continue our discussion on japan, is nicholas smith, the director and strategist from the clsa group. Good to see you. A lot of analysis out there, a lot of people, they would argue the dpj lost the election last time around, the last election. And as opposed to having the actual ldp party winning, do you think this time when looking at what Prime Minister abe is up against that people are warming to abes party on its own merits . Absolutely, yeah. I mean on the day before the lower house elections in december, the support for the ldp was 24 . Now it is 48 . So certainly the support numbers are showing a lot of support. You look at the support for the Prime Minister himself, and you can see that hes got 16 points higher support than koizumi did, and hes always talked the great hope for japan. So, no, i think the support is very, very strong indeed. People are impressed with whats going on. What do you think a win would mean for Prime Minister abe . And is he going to be pushing ahead aggressively with the reform strategies that many say are needed . Absolutely, yes. I think anyone looking at mr. Abe at the moment would say the man is working himself towards an early grave. Hes certainly working very, very hard indeed and hes saying i am not going to slow down for this election, which suggests, i think, that pretty early on next week well get a speech out of him on where he wants to go from here. So fears that hell be reclining on the beach towel and disappearing for the summer recess, i dont think thats going to happen. So i think the chances are were going to get a goldilocks result. If he has too high a support, he would end up people worrying he was going to try and change the constitution. If it is too low, he could end up in policy gridlock. I think all the polls are suggesting it is very nicely in the middle. So he can move fast and efficiently, but he wont be tempted to take his eye off what all the voters are asking for in the polls and thats get going on the economy. It is really about abeomics and people throwing their support behind the weight of abeomics at the moment. Are we going to see more policy reaction from the bank of japan, do you think . I think thats a pretty stee decent point to say everything abe is trying to do, whether the hiking of the consumption tax on all fools day next year or whether were talking about the structure reforms, all of these are, of course, deflationary. So youve got the bank of japan printing money to try to get japan out of this deflation problem that it had. And it is going to start getting a head wind from after these elections. So, yeah, i think it would be helpful if the bank of japan would accelerate what it is doing, but for me the most important thing is that it gets over its rhetoric problems, so you remember, of course, they were saying i think we have done enough for now and everyone in the stock market was saying, no, that wasnt what you should have said. What you should have said is we will do anything that is necessary, which is the way that the draghi, for example, had been beautifully putting it for investors in europe. Nicholas, just looking at a chart of the nikkei and the dollar yen here as youve been speaking. The nikkei higher by over 10 over the last three months. The dollar yen, since the beginning of this year, up by approximately well, the dollar up by some 15 against the yen. Are these trends in tact . Has this been an abe win priced into the market now that we continue to see equities head north and the yen heading south . I would have thought that from i mean, interesting you say that there is a trend there, because, of course, since bernanke day, bday on the 22nd of may, the end has been absolutely all over the place. But, yeah, i think that generally if youre printing it quite the rate that the bank of japan is printing it ought to drift lower, but it seems to have lost momentum. So i thought probably 105 yen by the end of the year. Nicholas, thank you very much for being with us. Nicholas smith, director and strategist from clsa. We need to take a look at how other asian markets are faring, heading into this important weekend and what were looking at here, the hang seng index overnight, adding a couple of gains to trade, but then it ends there, shanghai composite off by 1. 5 . The nikkei 225 off by approximately 1. 5 as well. Really taking a lot of stride from the earnings momentum or lack of earnings momentum. Big state side did disappoint in the overnight session. You saw google and microsoft both disappointing. Here in europe, of course, were looking at a primarily red start to the session. We ended on a higher note yesterday, when you and i spoke at the european close last night, but off by some. 4 at the moment. We still have a whole session to go. So hang in there. We have got our main European Equity markets trading lower, in the region of half a percent, a little less the ftse 100, off by. 4 percentage point. Currency, the yen, nicholas making a good point, the yen has been all over the place since may, although some still would argue we are looking at a yen downtrend. The eurodollar flat to a little higher. A lot of people looking very closely at what the outcome is of the g20 session, of course, and whether or not we get any more indications on the health of the overall european economy as well. Dollar yen flat to lower. Aussie dollar higher against the greenback and sterling trading relatively flat against the u. S. Dollar too. Still to come, though, here on todays show, as the motor city officially is declaring bankruptcy, we hear from a Municipal Bond expert live from detroit in the next hour. Also, big miss for microsoft earnings as mentioned. Well be hearing from one analyst who is sounding alarm bells over the groups bread and butter windows segment. And that comes through at 11 30 cet on the channel. Well also be dialing in the vodafone Second Quarter results ahead of a big week for uk earnings. Henry dickson is with us in around 20 minutes time. And as you heard, as japan is awaiting the outcome of the upper house elections this weekend, we take a closer look at the yen trade with steven engla england. Hell be joining us at the top of the next hour. We will see you in a moment. 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. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. Hi. Everybody. Welcome back. It is friday. Lets talk about google, Second Quarter revenue missing expectations for the company. As the search giant struggles to curb a drop in ad prices, thats among one of the issues that theyre really coming to terms with. Julia boresten has more from los angeles. Google shares traded down 5 after hours. For the Company Reported lower than expected revenue and earnings. Googles revenue coming in at 14. 11 billion, not the 14. 42 billion expected while earnings per share were 9. 56 compared to the 10. 78 wall street had anticipated. On the earnings call, there was a lot of talk about the success of android. Ceo larry page announcing that over 900 million Android Devices have been activated and at 1. 5 million are activated every day. They also talked about the success of chrome, with 750 million users worldwide. Now, page stressed the transition google is seeing from the desktop to mobile, and what an opportunity it is. But the shift to mobile is also proving a challenge. It is one reason the aggregate cost per click declined for the seventh consecutive quarter for google. 6 down from a year ago, thats more than double the decline in wall street expected and also declined 2 from the prior quarter. On the earnings call, google talked about how the company is trying to evolve into a Cross Platform service to improve tools for advertisers and also to diversify into nonad businesses. The tone on the call was upbeat, but investors did not seem to agree. Google shares falling 4 in after hours trade. You can see here, frankfurt listing the shares off by approximately 5 this morning. Microsofts Fourth Quarter earnings and revenue both missed forecasts on the continued slump in the pc sales segment. The company also took a 900 million writedown for the inventory of its unsold surface tablets. The device was meant as a challenge to apples ipad when it was launched along with windows 8 last october. Earlier this week, microsoft cut prices on the surface, windows 8 also hasnt sold well and the company is launching a revamped version later on this year. Microsoft in after hours trade off by 5 here this morning in frankfurt, trade off by almost 6. 5 . Shares of vodafone have been trading higher after the worlds second largest mobile operator confirmed its guidance for the year, despite posting a 3. 5 decline in Service Revenue for the quarter. Weakness in some key European Markets including germany, italy and spain continue the way on results with a drop in revenue of more than 14 across the periphery. Vodafone signaled plans to broaden its product rank, which include the acquisition of deutschland in a bit to capture new market share. Shares of indias largest i. T. Services exporter hitting an all time high today, up by more than 5 . Were currently a little higher than that over the last seven days or so, up by almost 12 . This is after tcs beat expectations by reporting a quarterly profit of 640 million. That is 17 higher from where it was a year ago. The Company Posted the highest Sales Volumes in seven quarters fueled by strong u. S. Demand. And chinese officials have visited belgian pharmaceutical giant ucb. A spokesperson for the company said it was one of several companies being investigated. The probe comes after Chinese Police accused glaxo smith glyn of bribing doctors. Eunice yoon has more from beijing. Reporter this isnt something you see every day on chinese tv. This week, staterun cc tv featured an interview with an executive of british drug giant glaxosmithkline, being questioned after detention, shocking the International Business community in china. What is going on with gsk is really unprecedented. Ive never seen the government go so strongly and loudly after one company. It makes such a big deal out of it in a criminal way. Reporter the alleged crime, bribery of doctors, officials and hospitals in the hundreds of millions of dollars. Four glaxo executives have been detained. The finance director, a foreign national, ordered not to skip town, part of the crackdown on the first foreign firm to be ensnared in beijings anticorruption drive. It is like catching a big fish, this lawyer says, its a warning. One industry in need of a cleanup, health care. Walk into a hospital, and dysfunction is evident right from the start. This is where people buy tickets to see the doctor. They normally cost a dollar, but scalpers will sell them to you for 85. The salary of our doctors is about 1,000 a month, he says, commercial bribery in chinas drug sector is very common. It is an open secret. Big pharma has faced trouble breaking into this market, complaining the local drugmakers are entrenched in the hospital system. Now glaxo scandal is feeding the perception among International Firms china is even less welcoming. What may be happening is that theyre going after Foreign Companies right now to soften up the political ground because theyre going to be going after state enterprise later in the year. Reporter a tipoff of possibly even bigger change. Eunice yoon, cnbc, beijing. Now, of course, two major sporting events are well under way in the uk. How could you possibly miss them . At the lords ground in london, englands ian bell hit his third consecutive asher. He fell for 109 marking the first of a three wicked spell in 31 minutes. England closed the day on 289 for 7. In golf, the u. S. S Zach Johnson is topping the leaderboard at the british open at muirfield in scotland at 5 under par. He takes the oneshot lead into the second round, a shot ahead of spains Rafael Cabrera and fellow american mark omeara. The day didnt pass without controversy over complaints of the state of the greens in the dry weather and the difficulty of pin positions. Wonder if thats just an excuse. One i use all the time. Off the course at golf british open, the uk government has now weighed in on concerns over sexism at the tournament. Muirfield, the host club based in scotland, has a man only member policy. The uk Prime MinisterDavid Cameron has said that such policies are out of step with modern times while his cultural secretary maria miller says shell be boycotting the event. We want to know, can a private club do whatever it wants . Is it legal to associate with the people that you want to associate with or should that rule be changed or should it be illegal to bar entry based on gender . Join the conversation on Worldwide Exchange, get in touch directly with us by email, worldwide cnbc. Com or by twitter cnbcwex or also find me directly on twitter loui twitter louisabojesen. Should we be looking at mixed man and woman groups given the times we live in . Still to come, vodafone is feeling the pifrm frnch from eu weakness. Will the strategy pay off . Well be discussing this with henry dixon after the break. We used to live with a bear. [growl] wed always have to go everywhere with it. Get in the front. We drive. It was so embarrasing that we just wanted to say, well, go away. Shoo bear. But we cant really tell bears what to do. Moooooommmmmm then one day, it was just gone. Mom [announcer] you are how you sleep. Tempurpedic. Hello, everybody. Welcome back. Youre watching Worldwide Exchange. Im louisa bojesen. European markets in the red. Vodafone holding on to gains after they confirm guidance despite taking a revenue hit in europe. Corporate tax avoidance topping the agenda as g20 bankers and finance ministers meet in moscow. Were joned by t ejoined by the oecd. Big swings on the nikkei 225. Japans benchmark index reversing earlier gains to fall as much as 2. 7 as investors take profits ahead of this weekends parliamentary elections. And the motor city gets wade down under a mountain of debt. Detroit files for the largest municipal bankruptcy in u. S. History. Hi, everybody. Welcome back. Just checking in on the European Equity markets this morning, we closed yesterday on a slightly higher note and opening this morning on a slightly lower note. Well up in trading for an hour and a half now and looking at losses of somewhere in the region of half a percentage point or so. Not a huge move on europes equity markets but a little bit of profit taking into the weekend. Tenyear bond yields a little mixed. The tenyear bond yield heading flat to a bit higher. Looking at spain rising by a bit, 4. 6 . U. S. Treasuries and gilts relatively unmoved. U. S. Treasuries still around 2. 5 . This past week we all have been following on from what ben bernanke had to say with regards to the general economy and more importantly whether or not theyre on track to start scaling back quantitative easing and basically he told us that all depends on the data and depends on how they think things are faring here come a couple of months from now. The currency markets, though, pretty unchanged at the moment too. Dollar yen, a little lower. Euro dollar, flat to a tad higher in trade this morning. G20 going on as mentioned as well. Just want to update you on the flash were getting through on the wires via the g20. The uks finance minister George Osborne indicating an oscd tax agency plan represents a major step forward. That being one of the big issues that is being discussed there, tax avoidance is well on the top of the agenda at g20 and crossing back out to moscow in the next hour or so. Shares of vodafone trading higher after the worlds second largest mobile operator confirmed its guidance for the year. Thats despite posting a 3. 5 decline in Service Revenue for the quarter. Weakness in some of the key European Market includesing germany, italy and spain continue to weigh on results with the drop in revenue of more than 14 across the periphery. In addition, vodafone signaled it plans to broaden its product rank which includes the acquisition of deutschland in a bid to capture new market share. This is coming ahead of a busy week for uk companies with the pharma giant glaxosmithkline reporting on wednesday, rollsroyce, and others due to report on thursday. Just write that behind your ear for future use next week. Joining us in the studio is henry dixon, fund manager. Hi, henry. Good morning. Straight off the back of the cricket game you went to yesterday. Indeed, yes. Straight in talking about vodafone this morning, confirming their guidance for the year, deutschland trying to get into new markets by the look of things. Are they on track . I think so. I think the case study has been so good, i think what we have seen with verizon is the networkers are outperforming those on investing. We are, because of our data hungry nature we are now with our smartphones, you want the best network. And i was sitting with a friend yesterday at cricket, and he couldnt get his mobile to work, where my vodafone worked just about okay. What we have seen i bet the one cricket game, mine didnt work either. What we see is disappointing trends in the periphery. We ask how long can italy and spain print minus t, midt numbers on a revenue basis. Probably the slight surprise was germany, weakness there, 5 to 6 down, which i think is the only surprise number in there. But elsewhere, verizon continues to be ahead and that remains an undervalued asset in this company. Do you think there will be a difference for fist half and second half of the year for Companies Like vodafone . We hear the expectations are low for the first half of the year, and could make you think whether or not it will be a tougher year to complete. I think so. I think probably we sat down on jan 1 and relative to their expect takings across the market have come back 4 to 5 . Probably i think we can have some sort of beat with regards to estimates across the whole market into the second half and into what looked like improving economies, actually. I think we say hopefully at long last, estimates, being revised down the last two and a half years, but i think we probably look at assets being as very much believable than they were six months ago. And how does vodafone sit in the sector compared to other piers . The absolute market, you could have really lost a huge amount of money in european, shares are heavily down, vodafone continues to rise nicely and have good dividend. Dividends elsewhere are being cut. The key strategic question we have to ask ourselves, investors, so much of the value is in verizon and a mexican standoff with vodafone thinking its worth in the region of 140 billion, and i agree with them, and verizon wanting to make a bid near 100 billion mark. But this is, you know, a significant asset, it represents twothirds of the vodafone market cap in our opinion. And if that was to come back in the form of a special dividend, which i think shareholders put a lot of pressure on them to do, it is an enormous payday, could be the biggest payday in stock market history. How long was the game that you went to yesterday . All day, yeah. You wouldnt understand, you can watch the game for what, best part of six, seven hours and be fascinated by it. The fascination bit that i dont quite understand. Steve is a huge cricket fan. Very difficult play to explain to europeans about cricket. I went to a game. And i left after 12 hours. They still hadnt finished. My patience was running out. Anyway, youre staying with us, henry. Chinese officials, they visited belgian pharmaceutical giant ucb. A spokesperson for the company said it was one of several companies being investigated. The probe comes after Chinese Police accused glaxosmithkline of bribing local officials and doctors to raise sales prices of their drugs. Eunice yoon filed this report in beijing. Actually, do you know, well get that report to you a little later on. Henry, talking about glaxosmithkline extremely good run this year. Astonishing first signs of estimates improving. We started to see the first signs of actually estimate upgrades at glaxo for well over two years now. I think starting to do some work behind the scenes, it is also a little bit of small m a, might be selling the aid. So few things starting to go glaxos way. I think there is starting to see some sort of payback from what has been incredibly disappointing three, four, five years on the r d front. That could be starting to bear fruit. Now it is murky with regards to bribing doctors locally in china. I fear it has been part of the industry for a long time. I was going to say, maybe to many not a big surprise that this is an issue in the industry, but you wonder whether or not theyll be able to move on from it or separate it from the rest of glaxos business and move on quite quickly. There has been a lot of work done in the developed world to make the process of drug acceptance and drug testing very much less sort of more, if you like, open to sort of, you know, slight tweets which we probably shouldnt be there, but i think this is really a very disappointing and slightly grim story where it is not just bribery. I think a few other things will be mentioned. But not glaxos finest day. Is it hugely relevant, no. International sales still not a big part of it and they continue to grow. But not a great story. What is the position for glaxo right now with regards to patents running out or patent strength and with regards to new potential blockbusters in the pipeline . I think good question. I think as we look at european space, probably glaxo is not in the best position, you might look at Something Like roche out there. But in the uk, you look at it relative to astro zeneca, a new chief coming in. You say glaxo has miles coming out than astro, but no doubt about it. And staying with us for a while longer. Get your email questions through for henry if you have any. Find us on email, worldwide cnbc. Com. Thats the email address. Find us on twitter as well, louisabojesen. Lets move on, sharp is hoping to raise a billion dollars from share sales as the struggling Electronics Maker looks for partnerships to bolster finances. Sharp hopes to seek funds from housing maker lexo group for 100 million each by issuing new shares by the end of september. Sharp and lexo established a joint venture for solar cells and l. E. D. Lights. The japanese Electronics Maker also formed the business tieup in may to enter into robot operations. Auto parts maker denso is seen as a potential investor. Sharp hopes to increase joint production and strength at partner schaaps with partners. The capital ratio sank to 6 in march. Since the companys undergoing pressure to strengthen its capital, it is also considering carrying out a public Share Offering to raise about 1 billion targeting overseas investors as main buyers. Sharp shares hit a sevenweek high today as investors bought the stocks on hopes that these efforts could improve the electronicsmakers finances. Thank you very much for that. Well speak soon again. We need to continue our look at what is on the agenda in asia next week. Hsbc will be releasing flash estimate for china. July manufacturing pmi on wednesday. On thursday, japans Prime Minister shinzo abe will make a trip to Southeast Asia visiting malaysia, singapore and the philippines. And then on friday, south koreas tech giant Samsung Electronics is going to be posting its Second Quarter earnings. Boeings dreamliner 787 had another incident yesterday. Japan Airlines Flight to tokyo returned to boston after flying for five hours because of mechanical alert coming on. The plane landed safely and Authorities Say that it is not an emergency, it was just a fuel pump issue. Jal says the flight went back as a standard precautionary measure. In this news, spooking boeing investors initially but ending with some gains, up by 2. 7 on close. Japan airlines losing 1 in tokyos session today. Investigators looking into the fire on a 787 dreamliner at Londons Heathrow airport last week, they may have identified the cause. They claim that an emergency beacon made by Honeywell International could be the source, and they have called for it to be turned off. Boeings dreamliner has been plagued by problems since january with aircraft grounded after an issue with batteries. Boeing shares rallied in yesterdays trade before then heading lower in after hours trade. And today on cnbc. Com, the fed chairman ben bernanke admits he doesnt understand gold prices, but could push above the 1,300 mark. The precious metal analyst telling cnbc the man from asia could provide clues to the Precious Metals direction. Get predicts on our website. Also, more of us are willing to pay for perks on a plane. I know i am. Thats according to a new study found that found that air travelers are splurging on Onboard Services like never before. Priority boarding and in Flight Entertainment are among the most popular perks. You can catch that full story on cnbc. Com. Plus also, move over, burger bars, the new trend in fancy fast food involves hot dogs and champagne. Nice. Yep. Londoners are loving it. Read more about the business of casual, classy dining at cnbc. Com as well. Do you like casual but classy . Are you a burgers and or a hot dog and champagne kind of guy . No, i think im probably my favorite, mexican, i think taco bell is the biggest chain in america, so we hope you replicate that success in the uk and i feel i should have a huge amount of credit because we went traveling together 15 years ago in mexico. It was your idea. There is always time. You can do both. You can do mexican food by night, Asset Management by day. Quite possibly. Never know. Ill take a cut from that idea. Still to come on the show, angry protesters clashing with riot police in spain as anticorruption demonstrations turn violent in a week marred by political scandals. The latest from madrid with stephane in a couple of minutes. Keep your emails coming through at Worldwide Exchange. [ 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. Its time to do everything better than before. The new blackberry q10. Hi, everyone. Welcome back to the program here on this friday. Im louisa bojesen, keeping you up to speed with chancellor merkel speaking in frankfurt, talking about how the euro crisis is in the over. She also talks about how p. R. I. S. M. Is being investigated by the authorities after spy scandals they say that germany is a country of freedom, not surveillance. And chancellor merkel indicating the International Law must address the speed of technology development. These are some of the issues being spoken about in frankfurt right now by the german chancellor merkel. Staying in europe, portugals government defeated a vote of no confidence in parliament yesterday. The move tabled by the green party was beaten by 13187. This comes as the three main parties continue emergency talks to keep an euimf bailout on track before sundays deadline. The countrys president is confident an agreement can be reached. Germanys finance minister praised reforms. Mr. Schaeuble said he was impressed by the progress in the region, but also warned greece to stop lobbying for some of its debts to be written off. And just heading a little further south than germany and looking at what the italian Prime Minister has been saying. Mr. Leta asking parliament to back the interior minister in a no confidence vote. A number of no confidence votes taking place across europe. You heard about portuguese and now out of italy that leta is asking the parliament to back the interior minister in a no confidence vote, and also repeating that Police Reports showing the government and the interior minister are not involved in the kazakh deportation, another story making the rounds earlier this week. Now, there were scenes of violence on the streets of madrid overnight as protesters calling for the resignation of Prime MinisterMariano Rajoy clashed with police. Stephane is in madrid. Bring us up to date with the late happenings taking place in madrid and spain. Good morning. Thats the flyer, the small flyer for the demonstration yesterday. I dont know if you can read it, i dont know if you read spanish, it says the mafia has to go. That was the code for the demonstration yesterday, promoting this demonstration against the Spanish Government on the social networks. Thousands of people gathered yesterday evening by the headquarters of the Popular Party in central madrid calling for the resignation of the president Mariano Rajoy on the back of the allegations that he received some Cash Payments from slush fund before his party won the elections two years ago. The demonstration which started as a Peaceful Movement yesterday became much more violent later towards midnight. Some demonstrator clashed with the police. People have been injured and some of them have been arrested by the police. Mariano rajoy said earlier this week he would not resign. He hasnt made a decision yet whether or he will appear before the parliament. The lower house of the spanish parliament, to give some explanations about the reports on this slush fund within the Popular Party. The decision will be probably be next wednesday, depending on the outcome, the socialist party announced it would call a vote of no confidence against the Prime Minister. This morning we have more elements on this scandal. A newspaper is reporting that three construction companies, all of them listed on the ibex, made a series of donations to the Popular Party back in 2006, but they ask for their names to be removed from the listing because it is illegal in spain when youre a Construction Company having contracts with Public Administration to make donations to political parties. Over to you. Stephane, good seeing you. Thank you very much. Stephane pedrazzi getting us the latest out of madrid. Henry dixon is still with us. I have your research, ive read it thoroughly. You like tesco, you like icap, why . I think what we have seen has been a tale of chronic overinvestment now for well over a decade. In tescos case, probably twice to market cap in expansionary caps in the last ten years, which we think is way too much. The british food market should be static, we dont see huge growth. What were calling for now is an Investment Case is very, very much predicated on a discount to an asset base, we think we have to replicate, thats before you ascribe any value to the brand and, you know, as a stated brand isnt where it was two or three years ago, but what were asking for is less investment and more returns to shareholders. We think not only incredibly interesting if you like, this is a share that will double, a share that will deliver attra attractive and rising dividend to us, supporting the shortterm asset base and we see it very out of favor and near the lows where it was 18 months ago after profit warning and much Better Business today. Youre saying look closer at tesco, the big uk retailer. Icap . I think in general we had exchanges, we started to pick up in some markets which have been very, very calm for a long period of time. Equity issuances on the agenda, a good thing, more volatility in Interest Rates. If you like, we had a couple of markets comatose by Central Bank Action bid, Interest Rates or equity issuance, starting to see the turn there. Relative to history, these businesses are not expensively valued. Okay. On the other side, though, then you reduce your holding in itv. Why do you think now the right time to start selling out of itv . It had such a fabulous run. It is almost double now over last 12 months. I think it is a valuation call. Definitely like to rotate out of what was done well and into the areas that have done very poorly. Been able to buy itv, i dont know what turn print that is. But it is a sevenday that were looking at. This is this year. So i think this year up 50 , we thought it was a moment right to take profits and move on to areas of the market that hadnt done so well. I think in general if you look at second half, the areas of the market havent done well arent incredibly cheap, so we highlight banks, we highlight some of the mining sectors, and historically have done incredibly well under a rising yield environment. It looks like were starting to enter that phase. Ability now as an active manager to put together a portfolio that is absolute value, i think relatively standing weaker value and should and has done historically very well under a rising yield environment. Staying in the uk, henry, an investor in abu dhabi who stepped in to help barclays has now sold his shares in the Bank According to the ft. He quietly sold his 7 stake three years ago. Barclays raised around 3. 7 billion pounds from abu dhabi and cut ties back in 2008 to avoid taking a government bailout. Shares of barclays ending the session yesterday higher and also a bit higher in trade today. Barclays, henry . One we like actually. Has been a bit of a lag on the sector. But it is one we like. This state, you have to give them some credit was taken at about 180 a share, would have had some cues upon and dividends since then. The share price touched almost 50 p but bounced back nicely. One we definitely like. It could be interesting, you know, the sovereign wealth funds getting ducks in a line for what would be a substantial pacing this year as well. Looking at about 20 billion pounds is the place the government stake at this current price. And i think thats probably potentially the story behind this is that theyre getting their firepower ready for what will be a new issuance of the bank from the government. I would have thought by the end of the year. Are you still in the camp saying that selling out of rbs as opposed to lloyds, thats too early . Rbs very, very much too early. I think as i say investors in mind, i think rbs looks confusing. I think you can find cheaper constituent parts elsewhere in the world and i encourage you to do that. We look at barclays now as a standout value play in the domestic sector. Lloyds, extra 20 premium, quite expensive and more expensive than hsbc, which is owed to us and the other one we highlight is hsbc in the uk. Thank you very much. Do you think that there should be men only clubs . No, i think youre within the punch distance from me, right. No, i think you look at the men only clubs in the west end probably are under bait a bit o pressure and it is a good thing. We have to move ahead in the times. Thats what you wanted me to say. I cant say anything else. Henry, thank you very much. A pleasure talking to you today. Have a lovely weekend. Enjoy the sunshine. Henry dixon from matterly Asset Management. Can a private club do what it wants . Should it be illegal to bar entry based on gender. Freedom of association is a good thing, but surely we should say the same thing to women only gyms. If you want to join the conversation on Worldwide Exchange, get in touch with us by email, worldwide cnbc. Com or twitter, cnbcwex or directly to me louisabojesen, no women only gyms. Now coming up on the show, all the latest from the g20 in moscow coming up. Interviews lined up with the secretarygeneral of the oecd. Hi, everybody. Welcome back. Youre still watching Worldwide Exchange. Im louisa bojesen. These are the headlines from around the world. The motor city gets weighed down under a mountain of debt. Detroit filing for the largest mup bankruptcy in u. S. History. Corporate tax avoidance topping the agenda as the g20 Central Banks and finance ministers meet in moscow. Were joined by the head of the oecd off the back of the press conference. Big swings on the nikkei 225. Japans benchmark index reversing earlier gains to fall by 2. 7 as investors take profits ahead of this weekends parliamentary elections. And the tech sector could be under pressure today. Further pressure as google and microsoft both slide after reporting disappointing earnings. Finance ministers gathering at the g20 meeting in moscow. As we have been hearing, they are expected to be talking a lot more about tax avoidance, ratcheting up the crackdown on Corporate Tax avoidance really. And well be covering a lot more of that here throughout the session on the channel as well. Hello, everybody. Yes, welcome back. If youre just joining us, fantastic friday, very happy to have you with us. Finance ministers are gathered at the g20 meeting in moscow, expected to really ratchet up the crackdown on Corporate Tax avoidance. Later today, the oecd will be unveiling an action plan aimed at tackling Profit Shifting which has thrown some of the largest multinationals into the spotlight. Just want to get you up to speed, or keep you up to speed with what Angela Merkel has been saying out of frankfurt. We were telling you about the last hour, the german chancellor speaking how the Financial Sector has to do its part by the ftt, how the euro crisis is not over yet. Merkel also talking about p. R. I. S. M. And saying it is still being investigated by the german authorities. This after a number of spying scandals having hit the news here within the last couple of weeks. Germany is a country of freedom, not surveillance, says Angela Merkel. International law has to dreadd the speed of technological development. The greek debt writedown would create a massive insecurity in the eurozone. On european closing bell, the evening show here in europe, i was speaking to the former deputy greek finance minister about whether or not there should be a debt writedown and he was strongly advising there should be, saying, look, we cant pay our debts and you need to be looking at another haircut still to come. So that surely is going to be spoken about once again. Lets move on, because here in the studio, steven england, the global head of g10 strategy, a city, and he stepped in to talk about what is going on in currencies. Hi, steven. Lets talk about the yen. We have this upper house collection this weekend, broadly assumed that Prime Minister abe is going to run off with a victory there. Are we going to see following yen weakness on the back of this or are we going to see yen strength . Well, there is a debate on that. I come down on the side that we could see yen weakness on the back of it because one of the big policy planks they have is Foreign Policy and a stronger japan. They have trade difficulties with china. Trade with china is deteriorating rapidly. If china perceives them as taking Foreign Policy actions that are kind of against their interests, it is going to fall even further. If we are looking at more yen weakness, how much more and how much is already priced in already . Well, were at 100 and we have been there for a while. I certainly think that the policies that the boj is putting in place could take it to 110. I expect at a certain point theyll give Forward Guidance as everyone else is giving Forward Guidance but it will that be Interest Rates stay low for a very, very, very long time. And so looking now at a state of the currency markets, not a lot is happening in currencies, despite the fact that bernanke struck up a dovish tone, dovish tone we had before, reiterated this past week, are we wait and see mode, now waiting for the big rounds of Economic Data that are going to be hitting our screens here within the next couple of weeks including the payrolls and including ism figures . It is a quiet summertime lull were in. I think Market Participants are beginning to expect the summertime lull. Whenever you expect such a lull, things happen quicker than you expect. I think there is a view that, you know, the september ism, the september labor market data will determine whether tapering goes ahead. There is a strong expectation that it will begin despite the feds dovish rhetoric. Yeah. Coming back to what is taking place in europe, so we heard yesterday in portugal that the center right ruling coalition, they easily beat this no confidence vote. Demonstrating, some might say, a restored unity. Is that what is taking place now . Is that helping to support the euro or is it really this dollar store and this fed story and the story about potential tapering and whether or not it could happen by the end of this year. I would say the market is focused on the fed largely. What they have been ignoring, you know, disappointing outcomes in european fiscal conditions in italy and portugal, elsewhere, greece, talking about potential writedowns down the road. I think what is going what is happening is the market can only focus on one thing at a time. Now the fed is the focus. But even though European Economic outcomes are about as bad, no worse than expected, i think the fiscal outcomes are surprising to the downside and that could be a problem later in the year. Okay. Youre staying with us, steven. Well come back and chat a bit more. But just in the meantime, julia chatterley is in moscow, covering the g20 meeting that is taking place. Julia, youve got a special guest joining you. Yes, we have just let out of the tech conference, talking about addressing the issue of global tax avoidance. Im actually joined by the secretarygeneral of the oecd. Thank you for joining us. The uk was there, the germans were there, the french were there, the russians were there. Where were the americans in the press conference . Because these were the three ministers who started it all, and they have been pushing into financing it, and they were joined by the host, by the russian minister, who put on the agenda last february, and who is going to take it to the leaders next september. It was appropriate. These are the three musketeers, and they were joined by mr. Siwan because they were the host. Do you have the full backing of the u. S. Despite their absolutely. This comes first from the g20, finance ministers, then it was not only accepted, but it was actually we got a mandate from the g8, from the political leaders, not just the finance ministers, and they in their communique said take it it the g20, continue working with the g20 and now do it with the finance ministers, we take it to the g20 leaders. Now, remember the g8 are a subset of the 20 because they understand that this has to be shared. But it is not just about you have 85 of the world economy. It has to be far broader than that. It is not going to like our global forum on tax exchange information. We started with a small group, we took it to the g20 and now 120 countries are exchanging Tax Information on request. And they are migrating towards Automatic Exchange of information. This was possible because of the g20. So Profit Shifting or the fight against base erosion and Profit Shifting is going to be possible because the g20 are behind it. It is going to be voluntary though or forced, a supervisory body to make sure the countries comply . All the countries are going to be looking at their own rules, own codes, regulations in their tax laws. And the exercise has to make it possible without harmonizing tax rates. And leaving the full sovereignty of countries to define their tax policies, to make it possible for a concerted International Effort to happen. Otherwise it is not going to happen. Why . Because if the guy next door is not doing it, you just move next door. And this is what happened with the individuals, you know. They were moving from one place to the other until there was no place to hide. And now they probably come to the conclusion theyre going to pay their taxes. Same thing will happen with the companies. Not going to happen in two years. Well, in two years we should have completed the template, should have completed the effort. Remember, we had seven years of this situation, and as somebody suggested today, well, we did not have digital companies, we did not have all the i. T. And internet 70 years ago. What were doing is catching up in a way. The regulators are always behind the industry that theyre regulating. And the industry is always moving faster. So this is catchup, but catchup big time. The oecd is also publishing their employment report, another huge issue particularly for the eurozone. How good is the g20 in addressing this issue, does it come down to the National Governments to implement policy . The g20 is all about National Governments because it doesnt take particular decisions. There is no body just talk. No. Once you talk, and everybody agrees, and you can look at the communiques, then decisions follow in International Organizations, and also decisions follow at the national level, which are consistent with those decisions. And then we take stock and we do it all over again. So the question is, this is a way to create awareness based on objective indicators, based on measurements, on analysis, on comparetories which the International Organizations provide, like the oecd, and then once the leaders, the finance ministers, the labor ministers are meeting in moscow also today, looking at employment, once the ministers give their accommodation to the political leaders, they adopt the accommodations and go and make sure that it happens. The other subjective conversation is fed tapering and the global spillover effect. Do you think the u. S. Has an obligation to consider the fallout of the changes in Monetary Policy . Frankly whats wrong with normali normality . Imagine that you have been on steroids for two or three years, you had to take your cortisone and suddenly, you know, the doctor says, you know, im going to be reducing the doses. And by one years time, youre probably going to be without. Have your carrots, take your vegetables, do your exercise, have a Healthy Lifestyle and it will be all right. Youre no longer going to use the medicine and then you go crying and you start lamenting and bemoaning the fact youre going to be normal again. Whats wrong with normal . We want to go back to normality. They take into consideration the spillover effect. But first and foremost, we all have a stake in the u. S. Getting back to growth. But a part of that is to allow emerging markets to continue to grow and not suffer the kind of tightening effects they have seen over the last few months. Doesnt that have to be a consideration or is it just about normalcy and have to get on with it . The best service that the United States can provide to the emerging markets of the world, to the developing countries of the world, and even to the developed countries of the world and its own g8 and g20 partners is to recover their vibrancy, growth, capacity to create jobs, and this is what is this is about. It is good that they will no longer need to be on steroids. You know, it is amazing, but the United States, with all the sequestration, the fiscal cliffs and everything else, theyre still creating jobs every month, and theyre still growing 2 to 2. 5 . Theyre probably leaving 1 on the but in the process, theyre reducing the debt, which is a good thing. Ultimately it is about the u. S. Getting on with their policy and everybody else just has to deal with it. That was the secretarygeneral of the oecd. Back to you. I could have sworn it was dr. Gurria, i like that. Eat your carrots, take your vegetables. I like that. Julia, thank you very much. Talk to you soon. An apple a day. An apple a day does indeed keep the doctor away. Global markets report indicating that the u. S. Markets are called a little bit lower to slightly mixed on the open. We still got a couple of hours to go before the u. S. Markets come on to tap. Our European Markets well up in trading this morning, the last trading day of the week. And here were lower across the board, but down by only half a percentage point or so. We closed slightly lower yesterday, digesting some of this weeks news. Also digesting some earnings that have been out. Overnight, we saw google and microsoft disappointing and the japanese nikkei also at twomonth highs too, but not taking any cues from japan here in europe this morning. The currency rates, they are were looking at repositioning ahead of the Prime Ministers very important upper house election coming up on sunday. Right now, dollar yen, flat to a little lower. Looking at the aussie dollar, flat to higher. Same for steriling in the corner and euro dollar, flat to lower as well. The asian markets as mentioned in the overnight session, just looking at a little red for the asian markets, the nikkei 225 off by 1. 5 . 14. 589. Important weekend for the japanese. It is largely an tticipated the Prime Minister shinzo abe will run off with a victory. Coming up, right here on the channel, we have got much more analysis. Were going to leave you a look with a look at how futures, how theyre trading, though, ahead of the open on wall street. The open being negative across the board at the moment. Also, talking more about detroit having to file for bankruptcy. Thats coming up here within the next half an hour as well. [ male announcer ] come to the golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. This is the pursuit orfection. Welcome back. Youre watching Worldwide Exchange. Im louisa bojesen. Good morning. If youre just joining us, it is friday, a Beautiful Day outside in london. These are your headlines. Detroit officially declaring bankruptcy marking the largest municipal filing in u. S. History. Japanese stocks closing out a volatile session in the red, ahead of a closely watched election thats going to be taking place in parliament this weekend. Tech stocks could come under pressure after google and microsoft disappoint on earnings. Now, the city of detroit has filed chapter 9, the largest municipal bankruptcy in u. S. History. The one time center of the u. S. Auto industry and motown music scene has now been crippled by more than 18 billion in debt. Detroit has lost 25 of its population in the past decade, hundreds of buildings are now abandoned, services are crumbling and the number of retirees outrank the citys active workers by a 2 to 1 ratio. Thats a lot. Bankruptcy filing sets the stage for a court fight with thousands of creditors. Detroits emergency manager is saying he saw no other option. This is a problem that has been more than 60 years in the making. There is 18 billion of debt total. Even if we took 200 million a year out of a 1 billion budget, which we cant do because we shut down every pothole, another street of snow or anything else, it would take 68 years to pay off the debt. Even just 11 billion in unsecured debt, thats almost 52 years to pay off the debt. I beat debt. Now, orr is saying the bankruptcy should be completed by the fall of 2014. And coming up later, here this hour, how will detroits filing impact the wider u. S. Muni bond market. Well get insight from a top bond expert, alexandria levonthal. Stay with us for that. Lets laook at whats on today agenda in the United States. No Economic Data, so investors are going to be focusing on other stuff and another round of earnings out before the opening bell. Ge, schlumberger, honeywell, interpublic, state street and sun trust to mention a couple of the biggies. A lot to follow. Still to come, emerging market currencies, they have taken a battering in recent weeks. Some of them hitting record lows. Is it time to bet on the emerging markets . Well discuss that with our host here in the studio, Steven Englander after the break. Well leave you with a view of the heat map to see how the European Markets, how theyre trading right now. [ 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. Its time to do everything better than before. The new blackberry q10. Its time. Hi, everybody. Welcome back. Still watching Worldwide Exchange here on a friday. Im louisa bojesen. We have Steven Englander with us, from citi. You were just saying, steven, that you have a currency angle on tax avoidance, which im assuming some might find quite surprising. Well, a lot of u. S. Firms have lots of money trapped abroad because u. S. Tax laws advises them to keep it in low tax jurisdictions. If those incentives are removed, money will go back to the u. S. And from the firm viewpoint there is a tradeoff, because they dont pay taxes in shortterm, or pay less taxes by using the incentives in the law, but they can use the money productively at home where they need it. So were the money to come back, i think it would be very dollar positive not because of the currency impact, because it would allow the firms to use their capital better. Okay. Okay. And angel gurria was speaking here 15 minutes ago on the channel, his viewpoints, some agree, some disagree. Which camp are you in with regards to i suspect hes providing a minority view in the room, possibly only with the uk with the u. S. On his side. If youre in an emerging country, youre already in the cyclical slowdown and structural weaknesses are being revealed in many emerging economies. And on top of that, you had the backing up of longterm Interest Rates which you certainly did not need right now. And i think we want you to become virtuous, but not so fast, very, very slowly. And just coming back to fed tapering, you say we want to become virtualists. Stuck between a rock and a hard place. They need to start tapering at some point, cant keep pumping 85 billion into the economy every single month. And especially if Interest Rates start heading higher, then you get trapped at some stage. So but at the same time, the Economic Data isnt as stable as what could be wished for at the moment. The u. S. Is doing what it should be doing right now, given they cant do anything differently is my point. I think the fed makes policy for the u. S. And they make no secret about it. Both when they started qe, i think, many emerging countries said, look, this is not something we need right now. You should take some of our interests into consideration. And now that theyre pulling it back, theyre saying this is really not a tightening, not a liquidity currency we need right now. Do it very, very slowly. So it may be appropriate for the u. S. Were very optimistic on u. S. Growth. It is the rest of the world that is coming under pressure because of it. Steven, thank you very much, for being with us. We appreciate it. Steven englander, global head of g10 strategy from citi. Why are you here . Can i ask you, do you think that women and men should be able to play in clubs together and golf clubs and things like that or should we have like a men only clubs . I see no reason for single sex club. On the other hand, you know, there are, you know, private people can do what they want. There are there is the freedom to meet with people that you want, but my personal view, you know, multi coed. Very politically correct answers this morning sitting next to me. We have been asking whether a private club can do when it wants, should it be illegal to bar entry based on gender. Freedom of association is a good thing. We should say the same thing to women only gyms. John tweets, louisa, all health clubs should be inclusive, not barring any gender. Loads more comments coming through. Keep them coming. Find us on Worldwide Exchange. Get in touch by email, worldwide cnbc. Com, or find us also on twitter cnbcwex, or louisabojesen. Microsoft suffering from tablet troubles, well talk more microsoft in a couple of moments. 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. Hi, everybody. Welcome back. Youre still watching cnbcs Worldwide Exchange. Im louisa bojesen. These are your headlines from around the world. The motor city gets weighed down under a mountain of debt. Detroit filing for the largest municipal bankruptcy in u. S. History. Corporate tax avoidance topping the agenda as g20 central bankers and finance ministers meet in moscow. Angela gurria, the secretarygeneral of the oecd, is telling cnbc the International Effort wont compromise sovereign rights. The exercise has to make it possible without harmonizing tax rates, and leaving the full sovereignty of countries to define their tax policies to make it possible for a concerted International Effort. Big swings on the nikkei 225. Japans benchmark index reversing earlier gains to fall as much as 2. 7 as investors take profits ahead of this weekends parliamentary election. The tech sector as well could be under pressure, further pressure. Google and microsoft both slide after reporting disappointing earnings. Hi, everybody. Welcome back. If youre just joining us, welcome to the show. Hope you have a great day set up ahead of you. Were looking at our u. S. Futures now indicating slightly lower market open, state side. Still a couple of hours to go. Thats what were looking at right now. Those google figures and the microsoft figures going to be dominating the agenda when it comes to technology trade. Well be talking about that in a couple of seconds. European markets, well, we have been trading lower in this mornings trade. The ftse moved, retracing some losses, trading slightly higher at the moment. The cac 40 off by half a percent. Same story for the xetra dax and the ftse 100. How do you make money, though, in these markets . This is what some of the experts have been telling us here throughout the morning. High yield debt went down to below 5 average in the u. S. Before bernanke started speaking in may. Shot up 7, but back down close to 6 again now. So at a certain level that does look more interesting, but still quite good. We have moderately decent growth in the u. S. And accommodative central bank. Valuations i dont think are stretched. Nothing on the horizon tells me were going to a bear market. Have issues like portugal right now in terms of its political problems. It is a bit difficult, but beyond that, assuming that they get beyond that difficulty, i would say growing value, constructive in terms of periphery. Longterm love affair very much in tact. 12 to 24 month fees, Revenue Growth in terms of the compounding nature of these companies is very, very solid. I worry a little bit, we got a bounce from the lows, were going to q2, a little bumpy and normally stocks a lot like driving around a big fat mercedes. I think q2 will feel look a flat tire. Some earlier views put together for you there. Microsofts Fourth Quarter earnings and revenue both missing forecasts on the continued slump in the pc sales segment. The company also took a 900 million writedown for the inventory of unsold surface tablets. The device was meant as a challenge to apples ipad, when it was launched along with windows 8 this past october. Earlier this week, microsoft cut prices on the surface. Windows 8 also hasnt sold well and the company is launching a revamped version later on this year. Joining us from cnbcs headquarters is daniel ives, good to see you. In your own words, why do you think microsofts numbers were so disappointing . I think it is a combination. The pc head winds are real strong and they obviously play into that market. But really windows 8 has been very underwhelming so far. That was going to be the growth catalyst that was going to get top line going again. And so far it has not met expectations. No, it hasnt. But i guess what is surprising to some is that it doesnt seem like there are any segments that are performing as they should be at the moment. Is that a Fair Assessment . Yeah, i mean, look, they missed across the board. This was the worst quarter ive seen of microsoft in years. And to some extent, they announced the reorg. It shows they definitely have some work to do. I think the biggest concern is around windows. Thats the bread and butter of microsoft, and so far it is definitely not looking good in terms of windows 8 and the trajectory there. No, so what do they need to do then . They launched surface. They launched windows 8 and neither have been very successful so far. Relaunching these relaunches going to help, going to see any difference made to the surface push. Yeah, because right now, i mean, they threw a big party, sent out the invites, invited the band and no one came. So right now it is about some new products, edot one could be a catalyst. The cuts on surface hoping that that could stimulate demand, but thus far, you fknow, they talke a good talk, it comes down to walking the walk. And these products are not successful, in six or nine months, the optimism in microsoft is definitely going to start to wain. And then it comes back to whether or not the pc market, the health of the pc market is going to at any point start to turn. Were really moving from kind of a pc market to tablet market and you have to follow on that trend, or otherwise youre left out. Are they going to show us big changes in r d and other new product developments . They have the reorg they announced. In theory that will stimulate new product demand, but we dont see that in the near term, tablet cannibalization continues to be the issue, away from the pc. Surface was going to be their answer. So far it is not come out of the gates, you know, as strong as anyone was expecting, especially the bulls. So i think now it is really about they made their bets on windows 8, made their bets on surface, they have some new products coming out, but in the near term, and it speaks to shares being down today, you dont have the optimism around new products that are going to turn growth around. At least in the next three to six months. Daniel, thank you very much. Daniel ives at fbr capital markets. Coming up next, were staying in the u. S. Detroit in dire straits. We examine the fallout from the city filing for the largest municipal bankruptcy in u. S. History. What will it mean for bond holders especially . See you in a second. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids thats right for you, including the lexus es and ct hybrids. This is the pursuit of perfon. [ kitt ] you know whats impressive . 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 . Hi, everybody. Glad youre with us. Good morning. If youre just joining us, im louisa bojesen. Detroit officially declaring bankruptcy, marking the largest municipal filing in u. S. History. Japanese stocks closing out a volatile day in the red ahead of closely watched elections in parliament on sunday. And tech stocks could come under further pressure after google and microsoft disappoint on earnings. Now, as youve been hearing, the city of detroit has been weighed down by billions of dollars in debt, and it is now filed for chapter 9 and what is the largest municipal bankruptcy in u. S. History. Sima moody is live state side with the latest. How unexpected was this and what can you tell us . Give us some of the details. Louisa, detroit was the one time center of the u. S. Auto industry and the motown hit music machine in the 1960s. The city has been crippled by an estimated 18. 5 billion in debt, which could be chalked up to several reasons. Detroits population has dropped by 25 in the past decade, cutting into tax revenues, a quarter of the citys buildings are abandoned and Public Services have crumbled. The ranks of retirees now outnumber the citys active workers by a more than 2 to 1 ratio. Local and state Officials Say while they wanted to avoid this move, they saw no other option. One of the things that i want to say to our citizens is that as tough as this is, i really didnt want to go in this direction, but now that we are here, we have to make the best of it. People ive been trying to work through to a resolution in good faith for some time now and as rod was going through, he mentioned the fact that the view that many people may say this is the lowest point in detroits history, but if we werent to do this, the way i view it, detroit would continue going downhill. And so isnt it time to say lets stop. The bankruptcy filing sets the stage for a court fight with more than 100,000 creditors that could run into the hundreds of millions of dollars. The creditors are expected to face huge losses and the future of public pension and Health Benefits hangs in the balance. The citys emergency manager kevyn orr was on the cuddler report last nights and hopes detroit can emerge from bankruptcy in the fall of 2014. The thing that we have got to get away from is the crushing debt that were carrying around on our backs. There are enough books and reports and analyses out there about what brought detroit to the position its in. But im looking forward to getting the city on a path for sustainable to grow and deliver services so it can continue to get back to the great city that it still is and thrive. Now, the three the big three u. S. Automakers all issued statements of support for the city, while they have some offices and plants located there. Only gm is only headquartered in detroit. A white house spokesperson says president obama is monitoring the situation. Louisa, back to you. Thank you very much. Alexandria lebenthal joins us on the phone. What is the impact on Municipal Bond holders from the news that chapter 9 has been declared from detroit . Well, youve got about 17 billion in debt outstanding, and it will be interesting because up to this point, the bond holders had been faced with taking ten cents on the dollar for their bonds. So they were not looking forward to taking that and had thought that bankruptcy was probably the better option. So, you know, earlier there was a comment about negotiating good faith and i think the bond holders felt they werent negotiating in good faith, because bonds are supposed to be the first obligation that a city, a state, a town, has and kevyn orr had put the bonds on the same par as every other obligation that the city had. Yeah, so in other words instead of agreeing to the terms, the bond holders, they would rather go to Bankruptcy Court . Yes. And, you know, now it is obviously up to a judge to decide, but judges typically are going to look back at past cases and go to precedent and what the judge is likely to do is look and see what happened in the past. And one of the interesting cases is to look back at a similar case in new york city in the 1970s, and i grew up in new york city in the 70s and it wasnt a pretty place then, lack of services and dilapidated buildings. And it was at that time that a court case came out that said that hardship is no defense, bonds must be paid, it is first obligation of a municipality. We always think of these types of bonds as being backed by taxes. I guess the issue now is, you cant tax a city that has no more to give. Yes. You know, that is obviously the main point here. However, what is important to note is that what happened with detroit is that the city went from paying debt service on its bonds and having the money to Pay Debt Service on its bonds to the emergency manager or all of a sudden saying were not paying 39 million in bond interests, thats it, were stopping paying the bonds. And one of the things that is supposed to happen aside from raising taxes is to look at selling assets and other things that can be done before you actually say there is absolutely no money to pay the bonds and that hasnt beenen to yet. Thats an important distinction to note. Alexandria, thank you very much for your time. Alexandria lebenthal. The International Labor organization has urged g20 policymakers to focus on job creation when they meet in moscow later on today. Total unemployment for the g20 economies hit 93 million earlier this year as the countries continue to battle with sluggish growth. My colleague julia is in moscow. Julia, the u. S. , the treasury secretary also having been really adamant and urging europe to really get on course, not just with growth, but precisely with unemployment. Absolutely. From the conversations ive had here, certainly the real push here is coming from the u. S. To address the issue of jobs, but best person to talk to about that is director general, guy rider. He joins me now. Thank you so much. Deja vu this morning. I sit through growth and labor summits in europe, we come out with grand statements and ultimately nothing happens. It appears nothing happens. Were wasting our time today . I dont think we all would be here if we thought in advance we were wasting our time. I do share your view that the meeting itself doesnt have value unless action follows from it. And i just have come from the labor ministers g20 meeting and the mood was very much that, okay, the meeting was great, but everything depends on what we do next. They spent the last part of this morning talking about the action to follow. Youre not the only one who thinks that way. Not just about the g20, down to the National Governments, isnt it . An individual implementation of their own plans to address jobs and growth. Clearly. The action has to come at the national level, but there is advantage in the g20 acting in a coordinating manner. You get a bigger bang for the buck if youre acting together and going in the same direction. So we have been looking at how the task force on employment, which is part of the g20 structures is going to work, going forward, going to the australian presidency, i think there is some momentum in the g20 labor strand at the moment. But it does need following through, no doubt about it. You said to a six months ago we passed the corner in the financial aspect of this crisis. Now we have to focus on jobs and growth. We have gone backwards since then, havent we . I think youre absolutely right. The g20 was born back to 08, 09 to deal with a financial crisis. At that time, the g20 said it could pull together in a way that really changed the game. I said this morning to the labor ministers, today were in the same position, but the issue is people, the issue is labor, not finance. Thats no reason to mean to say the effort should be less. Not doing enough, are we . We have gone backwards. It is quite alarming to see that over the last 12 months as youve indicated unemployment has not gone down. It has gone up. Were at 93 million unemployed. We havent got the growth in the economy. And the fact that the latest growth forecasts from the imf are downward revision means that unless we do change course on labor issues, the situation will continue to get worse rather than better. Thats a harsh reality. It is a reality that should be pushing policymakers forward. A lot of focus on the u. S. And timing of their tapering. One of the key issues with regards to that is Unemployment Rate. We have a report that says if the Participation Rate stayed the same as it was at the beginning of the crisis, Unemployment Rate would be 11. 5 . They still got huge issues too, dont they . The United States does. And, by the way, the departure of workers from the labor force discouraged workers is actually a bigger problem in absolute terms than increased unemployment since the crisis broke. Youre absolutely right to point to the people as simply getting out of the labor force. They got to be brought back in. The open unemployment figures are certainly in some i wways a understatement to the problem. The United States has issues. Everybody has issues to be honest with you. I think the fact that the u. S. Is linking its monetary policies to Labor Market Outcomes is encouraging. I think they are moving in the right way, but no doubt there is a road still to be traveled. By then, not a lot of people. Guy ryder, thank you so much. Back to you, louisa, jack lew pushing the or promoting the need to push forward on jobs and growth, but they have issues themselves too. Back to you. Definitely. Thank you. Thanks a lot. Is tapering talk causing companies to rush out of their flotations on to the stock market . Coming up, we talk the latest flurry of ipos. Stay with us here on the channel. 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 . Hi, everyone. Welcome back. Online coupon group retail me not has priced its ipo at 21 a share, the midpoint of the expected range. The company which offers digital coupons from more than 60,000 retailers and brands raised about 191 million. Retail me not is expected to begin trading today on the nasdaq under the Ticker Symbol sale. Flotation comes amid a flurry of Public Offerings this week and next and dan mac is with us from boston. A whole flurry of ipos. Whats going on . There is a whole flurry. Retail me not, we had a bunch this week and then a lot more expected next week, 11 on tap for next week. Partially a bit of overlag from july fourth holiday where you have two weeks off, cant price during the july fourth week and no one can road show. But in general what is going on, youve got a bull market and youve got some concerns, i think, particularly among the vcs and private equity folks who often sponsor a lot of companies that if tapering comes, et cetera, the bull market could slow down a bit, maybe make it a bit tougher for companies to get out or get out successfully. What do you think happens after the summertime . This is then an issue of the companies wanting to get their companies on to the market, while were still seeing the bullishness out there. What happens for the rest of the year . Do we continue with this momentum . I think we probably should. If you look historically, summer is traditionally slow for ipos. Largely legitimately because of vacation. Bankers arent working, ceos sometimes this is when theyre taking time off. That Third Quarter is when we see the big spike in ipo activity. At the very least, we should maintain through that. Are there any companies, looking at the list here, are there any companies that kind of stand out for you, where you think, this one is really one to watch, this one looks really interesting. There are a lot of names here, like, you me, see me next month, the bricks mortar. The big one in the next week will be grander moderno. It is listed in lima. It will list in the states. In terms of size, that will be very large. Something called jones energy coming next week. In general, though, interesting, we are not seeing yet that big issuer that Everybody Knows, particularly from the tech side, which is so often what we think of with ipos. Twitter, drop box, spotify, et cetera. Were not seeing any of those in the pipeline yet and there seem to be expectations that if and when the companies price, it is all going to be next year. Early, maybe mid2014. So i think what were going to see for the rest of this year is a lot of companies kind of like retail me not or like you me which are good, strong, youngish tech companies, but not ones that Everybody Knows or that is going to make the front page of the magazines. Dan, great stuff. Well look out for these ipos. Dan primack, Senior Editor at fortune joining us from boston. We need to just leave you with a little bit of a look on what is ahead on todays agenda. State side. Youve got no Economic Data, so instead were looking at earnings, likes of ge, schlumberger, honeywell, interpublic, ng ingersollrand, state street and public. Thats it for todays show. Im louisa bojesen. Thank you very much for watching Worldwide Exchange. Well see you next week, same time, same place. Good morning. Todays top stories, stocks, more record highs. Once again. But the two tech giants that reported after the bell, both taking it on the chin. Nasdaq much higher than it has been in recent years. Well have results from microsoft and google. Both disappointing investors. And detroit files the largest municipal bankruptcy in u. S. History. It is friday, july 19th, 2013. And squawk box begins right now. Got to lose your mind in detroit good morning, welcome to squawk box on cnbc. Im becky quick with joe kernen, Andrew Ross Sorkin is off today. Well have a live report in a moment, but first, a look at the markets this morning. The dow, the s p and the russell 2,000 all closing at record highs yesterday. The dow was up by 78 points. Even more notable, the dow industrials and the s p 500 hit intraday highs for the first time in nearly two months. But the picture changed after the bell. There was a lot of high profile news, you can see the futures are indicated lower this morning. Dow futures down by 28 points. This came after some earnings misses from google and microsoft. Not to mention that detroit news. Joe will have a recap of those earnings reports after this, but, again, the u. S. Equity futures, now the dow futures down by 27 points, s p 500 off by 4 1 2 points and the nasdaq down by close to 30 points. General electric, the dow component set to report