Transcripts For CNBC Worldwide Exchange 20140602

And the stimulus plan should not yet declare victory in the recovery. And denying all allegations over its winning bid to hold the 2020 world cup. The state has been hit by a string of corruption flicks. Youre watching Worldwide Exchange. Bringing you Business News from around the globe. Hello. A warm welcome to you. Welcome to the first Worldwide Exchange of june and this week. We kick off with data right at the top of the show with the final may pmi numbers out of the eurozone that came in at 52. 2, weaker than the flash. The 52. 5. Remember 53. 4 in april. So this number is down to a sixmonth low. The final manufacturing pmi index is 53. 4 in the flash. And the final pmi index is 53. 4. They are saying more than they initially thought last month. Whats interesting is we get the breakdown from the individual countries. The italian may manufacturing pmi, 53. 2. That is weaker than expected 53. 7. So if youre looking for some reasons why this is a little bit lower, thats the reason. We are seeing the french manufacture shrinking again in may. Greek activity expanded in may, but the euro dollar is down for lows on the year at 1. 36. And remember in midfebruary, we are below that level and have seen a big increase in the data ahead of the ucsb meeting this week, whether they will take action. How far will that go . More action on that data. Meanwhile, new yorks leading banking regulator is demanding the bank fire some Senior Executives over allegations the french bank violated u. S. Sanctions. Stephane has more in paris, whats the reaction there, stephane . Reporter well, the reaction is that the french president Francois Hollande will discuss this with barack obama. He will be here for the anniversary of dday, but obviously francoi, hollande wants to talk about this. Over the weekend, the french minister open ly criticize ed t United States saying the french wouldnt be pushed around with the United States. But they are upset with the level of the bnp and what they would have to pay in the United States. That it would be much higher than other banks pay in a similar situation. Last week they were reporting that the u. S. Department of justice was asking for 10 billion from bnp paribas. And the top regulator of new york is asking for the french bank to fire some of its Senior Executives, including some members of the top management. Last but not least, the french bank would have to plead guilty which means it could lose on a temporary basis the license in the United States to clear the u. S. Dollar for a while. They are mentioning today, perhaps 90 days, 3 months, that would be a lot for bnp. The financial system, the bnp palibas is the Third Largest which is why french regulators want to bring this case to u. S. President barack obama. Yes, a lot of concerns in france about that story. And now its at the top level and quite interesting to see that Francois Hollande who promised two years ago to lead the world in finance, today hes about to step in to defend the french bank. Interesting. Yeah, well see what happens. More to come on that and more reaction, stephane, thank you. Also, according to the sunday times, japans matsui and mitsubishi have long sought two american banks owned by bnp and av acquired citizens bank. For the pharmaceuticals, orion signed a deal with Germanys Bayer to develop a new cancer drug. The two firms will develop the drug together. Orion is eligible for large royalties from the drug sale. Glaxosmithkline is looking to develop a new cancer drug. Katherine boil has more for us. Absolutely. I said it the right way, i think. Why is this significant . Well, ross, this is really interesting. This tells us a number of really interesting things, but the way the relationship between big phrma and other companies are evolving. Now you have quite an interesting deal where they have to be paid over a number of milestones over a few years. So gsk is minimizing their exposure to risk. It could mean a big payday, but it means a lot of milestones need to be met before that happens. And whats interesting is how much interest is in this oncology space. There are a lot of people in the marketplace saying this could potentially be 60 of cancer treatments in the next ten years and will be done using this particular kind of drug. Can you explain hold up different oncology is . It is essentially training the body to fight back against cancer. It is quite difficult and im totally simpfullying this for scientists watching, but thats the kind of simplified version of it. Basically encourage the bodies to fight back. Exactly. They would train the tcells which the body uses to fight back and can treat a number of cancers for which at the minute the treatment is aggressive therapy, things like multiple myeloma and will essentially make canser into a chronic condition to be lived with much like hiv has become in the west. So this could be a shift in the way cancer is treated. In regards to the companies involved, one hope that is the treatment works out because it would be groundbreaking. Thank you for that, katherine. Shes been writing about this on cnbc. Com. You can get all that. Glaxosmithklines deal shows this about the pharmaceutical market. Meanwhile, we are just an hour and eight minutes into the new trading month. Yes, folks, june is here, should we have sold in may . When they talk about selling in may, we never know whether its the first or 31st of may that you should be selling, so was friday the time to sell as we saw the u. S. Indices clock four months of gains off fresh record highs . We are an hour and eight minutes into the session, by ratio of 7 2. The ftse was up. 40 last year. It is up. 25 this morning. The dax is up. 23. Here are the stocks that i was talking about. They have launch 1 billion euros in exchange for bonds or new or existing shares. The first 600 million charge is set to mature in january of 2019. The final set of bonds near 400 euros will mature in 2020. Tesco, the british grocer, is off. 33 . It cant put a stop to falling sales. This is according to a sunday times report. The supermarket is expected to report a quarter decline of 4 on wednesday. Tesco has also signed a deal with Houser Frazier which will allow it to try to reverse a sales slump. The wild move with tesco down a third. Henkel is up. 79 . They are buying sexy hair and kenra for 370 million. The acquisition will make it the biggest player in the professional hair market. Bond yields, thats what we have been focusing on over the last week. This morning, why dont we have treasury yields up . Thats a mistake, but the 11month treasury yields are down 2. 42 . Since then we have backed up a bit, but we are falling 60 basis points over the course of the year. And well come back to the treasury yields, thank you very much. On the currency markets, euro dollar, this is where we stand, down to a low 1. 36 is where we stand. And getting down to the low points for the year. Remember, 136. 15 is where we were midfebruary. Dollar yen, a little firmer near 102. We have the china pmi data out at 51. 1. New orders, the fastest growth since november. More on that from sri in a moment. Aussie dollar,. 93. And in asia sri is there, but as i understand it, sri, no china or hong kong markets in play today. Thats right, ross. They are all off dragon boats, i understand, but well look at the local details of the numbers with a bit more clarity. The china pmi is a fivemonth high for activity. And you have to say that it suggests stabilization in the second largest economy, but not so fast. A fair few alternative metrix are telling us a different story trading well below 100 a ton, near 92. The lowest so far this year. That tells me its still considerable slack in the system in china, arguably, where is the demand with prices so low. Nevertheless, the markets are up and running, like what they saw with the china data. The eightweek highs there, 300point gain, well over 2 . A weaker yen is helping as well, but heres the thing, not a great deal of volume was behind the trade today. So low conviction buying is the real how i would characterize it to the sentiment of the japanese market. Elsewhere, a strong session for the bank in southeast asia. On the ground, things are still looking very fluid. Theres a number of anticoop protests, but the government is starting to get down to the brass tax of Economic Management and have outlined some of the elections. I want to highlight this one, the bombay sensex having a strong day today up 2 . A big emphasis there on the budget that we should get around early july. A lot of conviction trades in the inr as well. A lot of people believe this is a Top Performing currency in the region because of modinomics, but the budget is a big test for modis government. Ross, let me just tell you this. The focus, of course, will be on the ecb and the payrolls on the external movers for the regional markets, but there will be some very specific regional data thats coming out, especially with china. We still have the hsbc factory numbers to cope with later on in the week. So will that be any congruency or will the hsbc numbers point to contraction . Ill leave you on that food for thought. Back to you. Yes, thank you for that, sri. Catch you later. Well pick up on the china data. Chris is here with us for the first part of the program. Nice to see you. So sri is saying, look, we have china pmi at fiveyear lows, you just pointed out these numbers that dont make it sync up. I am watching this down over a twoyear low and am slightly skeptical on the pmi data that never matches what is happening to the west of the economy. You look at the construction and housing side, its been really soft. Housing starts are contracting at a fast pace. And also the housing data is quite poor. So i find it hard to believe that thats the genuine picture. Maybe thats what allinal is telling us. The chinese Housing Market is a bit like the titanic, which is why it is tough to be in the real estate sector, but then the reports is the securities journal suggesting they are looking of a chinese version of qe. So there clearly are a lot more concerns. Theres a lot more going on at the surface than we realize. I think the bank head as well made similar comments about the chinese Housing Market a couple weeks ago. It is central. Investment is 50 of gdp in china and a third is housing construction. So it really is very simple to the economy, central to the financial system. So, yeah, it is key. And i think its under the surface more going on than we realize. What is your view, obviously china is dependent on external demand. We havent switched it over. We saw a slight weaker manufacturing pmi, which is clearly eternal factors. What are we thinking about the externals . Well, china and lots of the economies feed off china now. It used to be one fed off the states and now its china. Global growth is okay, but the asian part is softer. Otherwise being germany, i suspect they are telling us that. Chris, stay there. Were going to get into this u. S. Debt yield discussion. Yep. This is after u. S. Stocks scored the best gapes in three months in may. The s p 500 at record highs and nasdaq at 3 1 2 year highs. And the sell in may and go away, i never know. When you talk about sell in may, no one has ever told me, sell at the beginning of may or the end of may, right . The first of may to, i think, the end of september, on average, thats negative. Yeah. But its not sell on the first of may. The point is, its a four to fivemonth period where you dont make much. Because you could argue, should you have sold last friday, right . That would be an interesting timeframe. I suspect you should sell on the ecb announcement, would be my guess. Okay. We are asking you, nevertheless, whether well have a june boom rather than a june sweep. So, chris is thinking, probably june swoon is his call. What would you do this month . Join the conversation and email us at worldwide cnbc. Com. Or you can tweet m me rosswestgate. Also on todays show, the military is seeing thousands of troops sent to bank koch with no elections in the next year. An we also look to san francisco, apples ceo tim cook is looking at the size of our homes. Stay tuned to find out more from the apple developers. The feds 2 up nation target should not be seen as a ceiling and it could go higher. This according to the chicago fed president Charles Evans. Hes been speaking at a conference in istanbul. He also expects tapering to be completed by the end of the year. At the same time, spains government is expected to sign off on a 6. 3 billion euro plan this week aimed to tackle rampant unemployment and making companies more competitive. The Corporate Tax will be cut to 25 alongside a jobs packet to include investments in transport and industrial production. So that sets us up for the introduction to the Goldman Sachs global macro conference in london. Jeff cutmore is joining us from there this morning. I dont know where you want to start, jeff, because its a big week. Wherever you look across the macro landscape. Absolutely. Ill pick it up on that point about spain that you were making, because theres this issue over what the market is saying as it relates to yields. Obviously, there is a view, if you take the pricing off the sovereign yield, that things are getting a whole lot better, but of course we know that some of the numbers are still quite ugly. And spain, point of fact, dead to gdp in excess of 90 still, and thats not talking about the Unemployment Rate or some of the challenges with growth at this stage. So we know mhes likely to pull the trigger on stimulating and credit lending expansion, but the trouble is the markets are telling us a somewhat different story. And if you listen to that tax cut program that now mr. Hoyt wants to bring in, you would think it is looking okay. Not necessarily everyone agrees with that. We spoke to them earlier at the Goldman Sachs event and this is what he had to say. Its too early to declare victory. Its too early to declare in spain that we are back to a normal fiscal situation where you can use fiscal policy aggressively to try to influence the cycle. I think there probably is some scope for welltargeted measures, particularly the intent of the Spanish Program if it is assigned to be growth oriented and overall fiscally neutral. The other big story this week, of course, will be the u. S. After that rot up First Quarter gdp revision. Ross, were going to talk about the outlook for nonfarm payrolls this week. Will may bring a decline from that big number in april . John hatseus will join us shortly. Back to you. More on that, thats coming up. Chris, still wondering what the ecb should do this week . Should do or probably will do. They flagged it pretty well, havent they . We are going to get a cut in the race. Thats interesting. It is whether they do some kind of funding for lending or whether they stop talking seriously about a framework for qe or whether they believe it is necessary. They may announce the back pocket qe if they need it, which would be quite interesting, but we have already seen the u. S. Starting to react to that. Not surprising, i think that will continue. But, yeah, its sort of if you are in that mindset, its too little, too late, isnt it . Instead of classic ecb. I suspect the moment has passed and they probably should have done it a year ago. Well, of yours, we want to get out to turkey. Stay there. Protests in turkey clashed over the weekend on the First Anniversary of the deadly government protests. The flashpoint of the 2013 protests, tear gas was fired at a number of people with a number of them arrested. This was sparked by Police Crackdown on rallies against the redevelopment of the square leaving three people dead and thousands injured. Joining us with his thoughts, the credit analyst at commerce bank. Postulus, thank you for joining us. What is your view for turkish debt instruments . Well, clearly what we have seen the last events, the First Anniversary for the markets has been clearly a lot more milder than the events that we have seen in the build up of the march municipal elections and also during the corruption early in december and january. So it is evident that investors are getting more accustomed to the ongoing Political Risks because the bottom line is that International Investors are not so much concerned about the ongoing Political Uncertainty but rather of the fundamentals and sentiment in the economy. And that, in fact, has remained fairly resilient so far. Meanwhile, the central bank took the usual steps a while ago tight anything policy, they had to sure up the turkish there, and now they are under pressure to be cutting rates. Are they going to be losing credibility with investors . Well, theres obviously discussions about the credibility of the central bank. And its inevitable given that the country is going through a long election cycle and the government is obviously trying to put pressure on the central bank. This is evident, even the Prime Minister itself and other members of the government, are openly criticizing and even urging the central bank to take more action, particularly on the race. So from that point of view, i think although we dont have tangible evidence but there are clear signs that the central bank, to some extent, is influenced by the political forces. This trend is likely to continue as we still have the president ial as well as the parliamentary elections going forward. What is that going to do for the lira . Well, regarding the lira, obviously the it used to be, as you remember, one of the heaviest short trades, especially after the emergency rate hike. But now the situation changes abruptly. And now actually it has become more of the most crowded long trades. On one hand, there are some risks. The Political Risk although the premiums have reprised very fast and may have gone a bit far. Because the Political Risk made there obviously is a lot more moderate than before. And inflation continues to disappoint. We have treasury yields jumping above 2. 8 . There is a risk again that the pressures of the lira would emerge. On the other hand, the central bank by living the upper end of the corridor at 12 , it has left some head room to play around with the rates. Because they are concerned about the lira. In that case, of course, well see another reaction of the rate and then the central bank will be questioning the credibility. Thank you for that from commerce bank. We have comments coming out from the Russian Foreign minister, mr. Lavrov, who says russia will submit a draft to the u. N. Security council on monday calling for an immediate end to violence in ukraine. The draft resolution would also call for humanitarian corridors in the east of the country as well. More on that to come. Also still to come, wallets at the ready. A new report says the emerging report says consumers are ready to splash the cash. Where . Well get details after this. Fame, makes a man take things over fame, lets him loose, hard to swallow fame, puts you there where things are hollow the evolution of luxury continues. The next generation 2015 escalade. Fame youre watching Worldwide Exchange. Bringing you Business News from around the globe. Headlines from around the globe. Another selloff for bnp. U. S. Regulators go after management after leading allegation that is the french bankers violated u. S. Sanctions. France kicks back saying they wont be bullied by an allie. The battle for cancer drugs heats up. Glaxo smith klesmithkline devel deal to help make a Prostate Cancer medicine. And putting out a bid for the 2016 world cup. The state has been hit by a string of corruption claims. We have quite a bit of british data out, sterling slightly weaker after this. The may manufacturing pmi is coming to 57, weaker than the forecast 57. 5. The pmi manufacturing is 57. 3. It has dipped down just a little bit. It is still a pretty strong expansion number. Perhaps even more interesting is that the u. K. Mortgage approvals are coming lower than expected. 62,918. Thats for the month of april. The lowest since july 2013. And in march, they were 66,563. The total mortgage lending in april, 1. 75 billion, pretty much as expected. Consumer credit up. 66 billion pounds versus the 1 billion we saw in march. Thats less than expected as well. Lets get Quick Reaction from chris to mortgage approvals. Everybody has been looking at this saying, dont expect anything. I wonder actually whether that mortgage approvals number takes the pressure off them to do something. Yes, perhaps in the shortterm. The view will probably be this is related to shortterm factors to do with the mmr delaying things, i would imagine. So it would probably give them a reason to wave some more months data. Just remind everybody that this has changed the underwriting activity. It is complicated to get a mortgage now. So maybe thats the first sign thats happened. We also got some spanish news. The spanish Prime Minister is announcing the abdication of King Juan Carlos. The king will make his own statement later today. Prince felipe will be crowned soon, so King Juan Carlos is deciding it is time for him to abdicate in favor of his son, prince felipe. This is proceeding the democracy in spain. Anyway, King Juan Carlos is stepping down in favor of his son. No announcement in this country on whether we will follow suit. More on that to come. Meanwhile, heres where we stand with the European Equity markets. We are flat to slightly higher. The ftse 100 up a third percent. The ftse is up a third. And the bond markets, weve been concentrating on treasury yields, 2. 48 is where we stand. A tick up from where we were last thursday hitting an 11month low on the tenyear yield. Slightly stronger data on friday from the midwest. Business activity ticked higher. And on the currenty markets, euro dollar is down to low 1. 36. Thats ahead of the ecb meeting on thursday. Sterling is also off slightly with the mortgage approval data. And we have more comments out from mr. Lavrov, the Russian Foreign minister in the last ten minutes or so. Suggesting that russia will submit a draft u. N. Security Council Resolution calling for immediate end to violence in the ukraine. That should be submitted today. The draft resolution will also include a call for humanitarian corridors in east ukraine as well. If thats not enough, chinas official pmi reached a fivemonth high. May coming in at 50. 8. Strengthening foreign demand landed an uptick in new orders growing at the fastest pace since last november. Samantha loring has this report. Reporter looking at the pmi for 13 of the 9 subsidies approved. Most notably, a sixmonth high of 52. 3. That is a gauge of foreign as well as domestic demand. Everyone is looking at that figure. And they are looking at the export figure to prove the sub index sitting at 49. 3. So its still indicating contraction. Still indicating weaker demand from the internation markets, but still an improvement there. On the business side, that deteriorated during the month causing for worry. The unemployment index slipped back to 48. 2. So jobs are still being shared in chinas manufacturing phase, but overall just looking at the figure, most are pointing to the fact of stabilization in the manufacturing space. Many saying that targeted stimulus coming through from beijing is starting to feed through and saying that others are also reflecting improvements in the economy. And just keep in mind, this all comes back on the back on the latest read coming through from beijing on the economy saying they are still looking at targeted stimulus into specific sectors. And beijing announcing a new mini stimulus plan, if you can call it that, at selected banks targeted the agricultural space and specifically targeting small businesses. So that, of course, is hoping to boost credit into the small firm space. So thats what we are seeing right now. We are seeing more stimulus come through from beijing. Its targeted and well keep your eye out for hsbcs pmi, the final prints are coming through tomorrow. Thats the latest on the chinese pmi. Meanwhile, the new emerging market is confident and apparently ready to splash some cash according to the new report out from Standard Charter which surveyed affluent businesses in the current market. Thank you so much for coming in. You looked at indonesia, india, nigeria, ghana and kenya. What were the marked contrasts between the countries . I think a lot of the key points are very similar. Of course, a lot of people want to save more and then they want to spend more. And at the same time, they want to have another motorcycle and a car. They want to educate their children. But what was really interesting is that indonesians, for example, really give a lot of emphasis on saving a lot more over certain african countries like nigeria, a lot of it was how to buy new things, how to get a new car, how to get better clothes, those are the real issues that the nigerians and ghanans are looking at. Thats the cop thatntrast you d. The western businesses are trying to tap into this, so who will benefit . If they go traveling, who will pick up on this . You have to remember, this is going to the ecd. 1. 6 billion people will be joining the middle class. And 80 of this will come from asia and africa by 2030. Now this is a massive number, almost 2 billion people. And these people want everything. They would want new goods, so of course the manufacturing sector, if you look at nigeria, for example, a portion of the business set up there. The rest is in ghana and africa. And apple is talking about china overtaking the u. S. As being the biggest apple market. These are not just local Production Centers anymore. They are centers for final consumption. So yes, of course, gold is a final product, but also travel. If you talk about travel, then europe is a hard destination for tourism. For all of these countries, not just on holidays but also business travel. Then if you look at education, if you look at Financial Services, all of these will benefit. So the global producer even in the west can really benefit from the rise of emerging markets. What about have you done the survey before to see shifts and trends or interpretations that you can show us . This is the first of its kind. Its really trying to find the middle class and trying to look at the aspirations. It is really a unique service that has been done. And well, of course, keep looking at this because this is clearly a critical 80 of the new emerging middle class. The new urbanized class will come from these areas. So clearly well continue to track this, but it was just really to look at what are they really focusing on. What are the aspirations . And its fascinating to see that it ranges from more technology to more education to try to save more, what do you do with your wealth and Financial Services will be a lot of importance in these countries. Particularly in Financial Services as well. Well see what happens. So will you do another one next year . Well, this one seems to be quite popular. So i think yeah. That would be good. Thank you for that. Nice job from Standard Charter. Qatar denied wrongdoing over the bid to host the 2020 world cup. This follows a slew of corruption allegations reported in the sunday times. The newspaper claims to have obtained a large number of emails documenting payments from a former highranking qatar official to lend their support. Well get more from youcef in dubai. They say the individual never represented their interest. Nevertheless, if the sunday times comes out to say here are the documents that prove payments were made totaling 4 to 5 million pounds, what happens next . Because the head of the faa came out to say qatar should be stripped of the world cup. Well, ross, the story is gaping momentum very rapidly. Keep in mind there are controversies ongoing surrounding the countrys labor rights and we also had a public discussion on whether qatav the right place to host a sporting event in the summer. And now a very detailed trail of corruption and bribery by mohommad ben hamad, a former qatari football official. I have seen some of the documents, they are very detailed to include Financial Transactions and the communication which has emails as well is very, very brazen. I suggest you take a look again. It is important to point out that cnbc is not independently verifying the documentation published by the sunday times. Qatars body overseeing preparations for the world cup, they have come out to issue a denial of any wrongdoing. Again, their statement making it clear that mohommad ben hamad played no official role until the 2020 bid. As is the case of the executive committee. Our bid team had to convince mr. Hay mad of our bid. This contrasts with what the sunday times quls put out pointing to ben haman lobbying for qatar long before the decision was made. You mentioned the voices we heard, including Vice President jim boyce, who says this could demand a recount. We are expecting this to take place between the chief ethics investor and qatar football officials to make for a very tense session. Of course, the broader fallout is still to be expected and to be seen. Because after all, qatar centered much of the 200 billion spending spree over the next two years on this major event. Yeah. An awful lot to come out of this one. Thank you for that, youcef. More on the story is the leading sports writer, jonathan taylor. What do you make of this as the chairman says the process was corrupt. They should look at the world cup being rebid. How go you start the investigation into this . Well, theres already an investigation. Michael garcia is looking at it already. This is very significant new evidence. No one can tell simply from looking at the sunday times whether its true or not true, but what they can say is there is a clear case to answer and its a case that needs to be put in detail to the people involved and for them to either be able to answer it or they cant. Theres a very clear process in the rules set out to do that. And Michael Garcia is already looking at the situation. So now hes got a fair amount more work to do. Did you say Michael Garcia is in charge of his own Ethics Committee . Is his separate enough to do this . And people believe sometimes its better to get an outsider in. What is his form . Its very significant, cia, very, very significant background, they are appointed as part of the feat for not being independent enough. So hes an independent investigator. And he would then present the case to a separate set of judges who are on the earthics committee. Now, time will tell as to how they are, but certainly on paper and on the tv and background reputation right here. Thank you for that. Great to speak to you, jonathan taylor. Well take a short break. When we come back, more to come from geoff at the Goldman Sachs macro conference. Absolutely. We have heard what Charles Evans says about tapering and about the inflation ceiling. When we come back, well talk more about the direction of the travel for the u. S. Company running into these nonfarm payroll numbers at the end of the week. Well be right back from the Goldman Sachs macro conference. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. The timing of the u. S. Rate hike will depend on u. S. Inflation according to charles evan speaking at a conference in istanbul. He says the hike could come next year or the year after. What do they make of that at the Goldman Sachs macro conference in london . Jeffrey has the answers for us. Jeff . I wish i had the answers but we have a chief economist here to help us out with this conversation. You get right. Thats a bit of a shame. Well try to get back to jeffrey there. We have chris watley here to answer the same question. What are longer data treasury yields telling us, chris . They have fallen 60 basis points this year. They are telling us that we could be getting cyclical inflation pushes, but they are telling us theres too much debt in the world. And i think we are going to go back to the same debate we had in 05 and 06 about the bond yield conundrum and then the fact that it was being driven by rising debt. And today i think a lot of the growth is driven by the speculative activity. 3 if you believe the world is structurally deflation in their is quite attractive as it was earlier this year, 4 . So inflation is trending at one, thats interesting i would say thats fair value. Broadly fair value. I mean, i would be looking to go short if we get down to 225, 230, but they are not out of the ballpark. To go back to the comments, are they taking too benign a view of inflation . No, i think structurally we need to cut indebtness levels based upon the matrix. So inflation will pick up cyclicly, but really n the longterm, we have to deal with the core structure problems in the world economy. And cap economics believes treasury yields are going to move back up to 3 , 3. 25 over the course of the next year or so. And that would be very worrying, wouldnt it . A move to 3 is fine or 3. 25 . Thats the way we started the year. The question is whether you go to 5 or 5. 5 . The other question is, will the u. S. Become more like japan, which personally i dont think it will, but japan is at. 7 . Clearly thats more of a question for the european bonds much lower. So, yeah, i think we found sort of a new normal range, if you like, for u. S. Treasuries. 2. 25 to 3. 25. Whats the indication for stocks . Stocks, i mean, i think the other thing that bond yields are telling us is that qe is slowing. And every time qe slows, bond yields go down or up. So that for me is telling us stocks are rolling over as well. As i say, i think well reach a high on u. S. Equities on thursday on the ecb announcement. Good to see you, chris. From long view economics. Now back out to jeff, as you started speaking to him, we fixed the problem. Yeah, i think the technology conspireing to try to defeat us here, but we will not be beaten. The chief economist at Goldman Sachs is here. Good morning to you. Good morning. Your calls on the nonfarm payrolls are interesting here. You see the Unemployment Rate higher than the 6. 4 consensus, but you also see the jobs number as a little lower than the 219 that i think the market is predicting, why is that . Slightly on the jobs number, i mean, we are at 210,000, so thats not far very far away. And quite a bit lower than the last number. The last number looked a little like payback after the winter. So i dont think thats the underlying trend. On the Unemployment Rate, the key question is what happens to participation. If labor force precipitation retracing the decline we saw in april, then you will get some retracement of the drop in the Unemployment Rate as well. Yes we have mr. Evans saying this morning, tapering continues. Well be finished before the turn of the year here and making some more bullish noises about the state of the u. S. Economy. But this participation conundrum hasnt been fixed. We do not know how much Spare Capacity there is in the u. S. Economy. Thats right. Thats one of the uncertainties in looking at the u. S. Economic outlook. I think, my confidence that well see decent cyclical recovery with better Growth Numbers despite the weak Fourth Quarter gdp report, my confidence there is relatively high, but i think as far as the question of Spare Capacity, how much do we have left, theres definitely room for debate. Our viewers have a lot of Spare Capacity. I think president evans thinks theres a lot of Spare Capacity on the same side of the debate, but its very hard to know for sure how much. The First Quarter number as he preferenced was a bit of a stinker on the revision here. This minus 1 , but everybody has tried to scratch it out and say, its special factors, low inventory regrowth, bad weather conditions. Are you confident that we can just exit and look to 3 for the remaining three quarters . Well, you can never be absolutely confident in terms of whats going to happen. So that would be presumptious, but a lot of the business surveys, like various income measures that i would always want to consult in totality rather than just the gdp report. If we do that and look at our proprietary measures of economic activity, we did see a slowdown in january, december, february, from close to 3 to about 2 . But we have seen the reacceleration since and that slowdown is not nearly as pronounced as in the gdp report. Its been a pleasure. Thank you for waiting for us while we sorted out technology. Pleasure having you with us this morning. The chief economist here at Goldman Sachs. Back to you on that. We got yen in there at the end. Still to come, what is happening with the u. S. This week . How are we going to kickoff trade after four months of gapes . The nasdaq is up 3 for the month of may. Well get into it. Futures are a tick higher again this morning for u. S. Equities. The second hour of Worldwide Exchange is coming right up. This is Worldwide Exchange. Im ross westgate. The headlines, a surprise move announced by the Prime Minister to be succeeded by his son, prince felipe. Another selloff for bnp. U. S. Regulators go after the french banks management after allegations it violated u. S. Sanctions. France is kicking back to say it will not be bullied by an allie. And u. S. Authorities are also reporting possible Insider Trading involved with the professional golfer Phil Mickelson. And a reputed vegas gambler. Mickelson says hes done nothing wrong. Plus qatar is denying accusations over the winning bid to host the 2020 world cup. The state has been hit by a string of corruption. Youre watching Worldwide Exchange. Bringing you Business News from around the globe. And a very good morning if youre in north america. Welcome to the start of the Global Trading week here on cnbc. The start of a new trading month, june, has arrived after pretty good may. U. S. Indices. Four months of gains for the s p and dow with fresh record highs as well. Nasdaq up 3 as well. The dow today is 23 points above fair value. It was up. 80 in may. The s p was a point above fair value. 1. 2 last week. And the nasdaq is up 3 in the month of may. Up 4 last week just above fair value. Nothing significant to call at the moment. Here we stand with treasury yields and the European Equity markets first. The ftse 100 is up. 25 . The dax is up. 10 . The ftse mlb is up. 33 . The treasury yields, the jobs number at the end of the week. Forecast to be near 15,000 on friday following the 288,000 increase in april. And as far as currency markets are concerned, the Movement Today is on euro dollar now below 1. 36. We were at 1. 3615. We are below that now heading to the euro ecb meeting on thursday. What will they do . Today, we had the final printing of pmis. Over the week, the flash estimate. Lets get more on whats happening in asia today with reaction to the china pmi at fivemonth lows. Sri has all the details out of singapore. Sri . Hi, ross. Thats right. The leadership came from china data over the weekend on sunday. These are factory activity numbers. The pmi had a fivemonth high. So the markets like that, even though the Greater China markets are shutting the boating, but the week highs for the index going up 300 points. So knocking on the door of 15,000. They have to say, because the great china markets were out today, volume has been thinner on the ground. You can argue this is conviction buy. Nevertheless, ill say this. The china data will inform the move and the trading direction this week. We have the hsbcs official pmi. Their own set of factory data is coming out later this week. So we are looking for cooperation there. If we dont get it, it could undermine the gains we have seen today. Ross, thats where we stand. Back to you. Thank you for that, sri. Good stuff. Thats the latest out of asia. The spanish Prime Minister has announced that key juan carlos is going to abdicate with prince felipe taking over the thrown. Juan carlos was crowned king of spain two days later in 1995. He became spains first king to visit the states. He has suffered with Health Issues over the last few years and hes undergone five operations in 18 months. Stephane is in paris keeping his eyes on spain as more details on why this may be happening. Stephane, i think everybody figured he wouldnt take his pla place. This is pretty much in the heart of europe. It is a bit sad to see this. The best way, the way you want to pass the power to his son for decades after being respected and supported by spanish people. Remember, hes the one who managed the transition of the country from dictator to democracy after the death of the king in 1975. He also managed to save democracy when the department faced a coop in 1991, but his reputation has been damaged by a series of scandal. First a scandal of corruption involving his own daughter. And when the country was facing the crises and also a lot of rumors about his love and exceptional life. So i mean the best way, put the pri prices on the whole system, you can see everywhere in the city of madrid. A lot of flags from the windows, and this is something you wouldnt imagine ten years ago in spain. There is a growing number of people who would support the this in spain. What is going to happen next, the king is due to make a statement later today. The Prime Minister will hold a Cabinet Meeting tomorrow. And then later well have details about the way prince felipe will become the next in charge. The changing of the guard there in spain. Thank you. The chicago president Charlie Evans is speaking at a conference in istanbul and says the hike could come next year or the year after. He added that the 2 up nation target shouldnt be seen as a ceiling and could go higher. John sylvia is joining us from charlotte, north carolina. Very good morning to you. Nice to see you. Mr. Evans says this is dependent on inflation, but if you look at treasury yields at the moment, they are clearly not worried about inflation. Yeah, i think president evans statements is a wakeup call to the bond market. It does appear from his point of view they are looking at slightly higher at 2 . Is there real value in the market. In terms of a tenyear treasury. I think inflation is a dominating factor, but i would guess which is raised in 2015 and not 2016. Do you think that this means we have structural deflation there. What do you think of that . I disagree. Theres some global influences here over time. But i think from the investment perspective over the next six months to a year, i would expect Interest Rates to move slightly higher. You are going to see the pce deflator, the benchmark the fed used for holcy. Im going to drift up to 20 of spring on Interest Rates. From here, it seems like like the only way is up. But i saw 60 basis points since then. Why do you think we have seen this decline in yields . Well, i think there are a couple of things. One, you always get something. And we have to look at what we expected relative to what we got. Certainly, we didnt get the Economic Growth that many people have talked about. In part because of the weather. I appreciate that. But there were if global was look at wages, they are drifting up. Youll see that on friday. And then finally, simply Global Political events are really going to put a damper. And i think in terms of the econom economics, those are the factors. But i think they are more shortterm and not longterm. This week we get a better ism number starting today. And then of course employment numbers are 2. 30 or so. Its a big week. Thank you for meeting up with us. Phil mickelson says hes cooperating with a u. S. Insider trading probe that involves him, carl icon and billy waters. On friday the report says they are looking into trades hes made on clorox at 11. Thats when the company was about to look into the business relationship with nichols but does i have done nothing wrong. Im fully cooperating with the fbi agents and im happy to do so in the future until this gets resolved. But for right now, and hopefully it will be soon, but for right now i cant talk much about it. Its not going to change the way i carry myself. Honestly, i have done nothing wrong. Im not going to walk around any other way. Right. Well have more on that. Meanwhile, reports say the probe began as part of the u. S. Governments broader crackdown on Insider Trading. They approached him at the Teterboro Airport last year to ask about his trading activities. Heres another probe underway and this incident is heating up as well with the top banking regulator demanding that the bank fire some Senior Executives over allegations it violated u. S. Sanctions. The france military for parliament theresry saying france will not allow itself to be pushed by its allie. This is before president obama visits paris later this week. The shares are lower, down 1. 6 in paris. And qatar is denying allegations of wrongdoing over its bid to host the 2022 world cup. It follows a slew of corruption allegations from the sunday times. The newspaper claims to have obtained a large number of emails from a former highranking official rngts for their support. The allegations have racked up in pressure to consider ordering a rerun for the 2020 world cup. Well get the latest on this coming up in 15 minutes time. After finding the average group in 2002, now we are 7. 5 under management. Jeff will have more right after the break. Fame, makes a man take things over fame, lets him loose, hard to swallow fame, puts you there where things are hollow the evolution of luxury continues. The next generation 2015 escalade. Fame recap of the headlines, after nearly 40 years on the throne, spains king is abdic e abdicating. And the pressure is on for Phil Mickelson. They are looking into possible Insider Trading involving the golfer and a famous gambler. With u. S. Treasury yields down at 1. 4 range and stocks in the u. S. Up at record highs, where can investors find value . Lets get back out to the Goldman Sachs macro conference in london. Jeff has been speaking to others there. Jeff . We are catching one the economists to get a view of where to go with the ecb with the jobs number at the end of the week and to really get a sense of how this house sees growth moving from here. But its not only Goldman Sachs speakers at this conference. And im pleased to have the opportunity to speak with the founder of a private equity business, abraaj group. As you look around the world at the moment, which are you most excited about from the private equity standpoint . By definition of the markets in which we operate, we call the Global Equity market, simply because twothirds of the Global Growth in the coming decade is going to come from there. Thats where most of the excitement is going to get generated as well. Some of it has been from the wrong reasons. You have a coup in thailand, a new government in egypt that everybodys a little bit weary about. And, of course, russia continues to be an issue in terms of risk analysis. Are you demanding a higher return on capital for going into these faster growing economies that do have challenges . Actually, what we are doing is generating a higher return on investment in these markets because, again, going back to the terminology, its wrong to look at this from investing. Every market is dynamic and the opportunities can be from where we see growth and stability. And the stability is very important for investment activity. So today, yes, there has been a coup in thailand, but the understo fundamental economics provide a lot of optimism. Specifically in columbia, peru, chile and mexico are superb. When you look around the world, there are interesting markets for investment. The Global Economy does seem to be improving at this point, but this week could be a watershed week for how we continue to analyze central bank activity. How nervous or otherwise are you that mr. Dragge will deliver for the ecb and the jobs number on friday will show that growth is normal and recovering . I think im optimistic on that front. I think that the low is in a little bit of a neutral phrase, its watching and waiting from a political perspective. We are looking to see what happens in the g7 summit, what continues to happen in the unfolding issues in russia. These are the standoffs. So i think thats going to be as important as job numbers, but the reality is the sort of Public Market is sitting and waiting and watching. Some people are taking profits as a little bit of increase in the markets recently, but that is more just rebalancing. How would you describe your current investment attitude when it comes to the opportunities that youre seeing here . Cautious, firmly to the flow on the accelerator . Give us a sense of your view of the world. I think it is looking at longterm in the course of years, arguably a decade or so, for us when we are investing into the markets, we are seeing the opportunity over three, five and sevenyear horizon. And it is all around Growth Capital and the opportunity that has been generated to find Global Growth in the future. And twothirds of the Global Growth and the majority of the increasing classes in the planet are occurring in the markets. Then the demand factors are very, very strong to drive corporate activity. Wellers be, best of luck wit speech. I know you are talking later on. Well wrap it up from the Goldman Sachs conference, ross, and send it back to you. Jeff, thank you very much for that. Plenty more on the website on that conference. And the troops and Police Officers continue to be preventing protests. The military has banned assembly of five or more people since launching a coup late last month. The groups of protesters are still trying to gather in defiance of the order on sunday. On friday, thailands army chief outlined plans to reconcile the nations divided fiscal sanctions and said elections could be held only after a year or so. Today the index in thailand is up 1. 3 from the last 30 days. Meanwhile pror, protesters turkey clashed with police in a antiprotest demonstration. The flashpoint of the 2013 protests occurred with a number of people arrested. Last years protest was sparked by a crackdown of the redevelopment of the square. At least three people were dead and thousands injured. Still to come on the show, its the world cup 2022. Is it going to be up for grabs again . Well get the latest from the middle east as they capped their original bid is accused of foul play. [ male announcer ] whether it takes 200,000 parts, 800,000 hours of supercomputing time, 3 million lines of code, 40,000 sets of eyes, or a million sleepless nights. Whether its building the worlds most advanced satellite, the space station, or the next leap in unmanned systems. At boeing, one thing never changes. Our passion to make it real. U. S. Futures are indicating pretty flat start this morning after the gains last week. The dow is up 22 points after closing up last week. The s p is up by a point, it was up 2 in may. The nasdaq is up higher by a point as well, it was up 3 in may. The first gain in three months for the nasdaq there in the u. S. Now qatar has denied allegations of wrongdoing over its bid to host the 2022 world cup. This follows a slew of corruption allegations. It has been reported in this weekends sunday times. The newspaper claims to have obtained a large number of emails which document payments from a former highranking qatar football official and the reward for their support. The allegations have wrapped up pressure for them to consider ordering a rerun of the vote to host the 2022 world cup. Joining us from the middle east in dubai, youcef has more on this story. They have come out to say if the allegations are proven right, they have to have a rerun of the vote meaning qatar wouldnt get it. What is between here and there, do you think . Well, its clear that the story is still evolving. And theres no doubt they are moving closer to such an event. You already have a lot of controversy whether this is the right place to do an event in the summer. Then you have the labor rights issues dragging on over the last couple of years. And now the sunday times painting this trail of bribery that involves the former football official mohommad amman. He is not a controversial figure as much as it clearly shows. Because if you look at the fact he was handed a life sentence earlier on for conflict of interest as president of the acc, so he himself has been involved already in a lot of pesky issues. What they are questioning is to what extent did he know about the ongoing process with qatar. He said hes respecting the state of qatar during the bidding process. Thats what the sunday times sheds light on. I have looked through a lot of the documentation, a lot of emails and brazen communication. You would be shocked if you read some of the material. Again, cnbc has not been able to independently verify any of it, but it raised a lot of questions. Qatar drew the Supreme Court for delivery and has made it clear that it has nothing to do with that. Its denied all allegations of wrongdoing. And also made it clear that it has to convince hayman about qatars position to host the world cup. In any case, theres a lot of unanswered questions. We have to see how the meeting evolves between Michael Garcia and the chief ethics investigator and the qatari football officials slated for later today. And also for the Financial Markets in the gulf under pressure trading slightly to the downside in qatar. Because remember, the qatari event, the world cup in 2022 is essential to the Infrastructure Spending spree to the tune of 200 billion. Yeah. Thats a big deal. Thank you for that, yousef. Plenty more to come on that. Still to come, new york states top banking regulator wants heads to roll. What is the reaction in france . Well find out. Show em the curve. Its beautiful. Its more than that. Its perfect. Introducing curved Ultra High Definition Television from samsung. This is Worldwide Exchange. Here are the headlines from around the globe. Another selloff of bnp. Regulators are going after the leading management following allegations the french bank violated u. S. Sanctions. U. S. Authorities are also reportedly investigating possible Insider Trading involving professional golfer Phil Mickelson. Karl icon and the reputed las vegas gambler. Mickelson and icon say they have done nothing wrong. And qatar denies allegations of wrongdoing over the bid to host the world cup 2022. The state has been hit by corruption flings. And spains King Juan Carlos is to abdicate after 40 years on the throne in a surprise move announced by the countrys Prime Minister. Hell be succeeded by his son, prince felipe. Youre watching Worldwide Exchange. Bringing you Business News from around the globe. And good morning. Youre joining us at the start of trading in june after a pretty good may for u. S. Equities. Four months of gapes we are now seeing for the dow and s p. The dow is up. 80 in the month of may. Its currently higher by another 22 points this morning. The s p was up 2 in the month of may. At the beginning of june, it was higher by just under a point. And the nasdaq finally getting its first gain in three months, although 3 in may is just under a point as well. So fairly cautious start indicated. This is where we stand with the European Equity markets. The ftse 100 is up. 26 . The cac is down. 13 . Slightly disappointing numbers out of manufacturing just coming in weaker than expected. And same goes for manufacturing pmi, still strong in the u. K. Up slightly. Mortgage approvals were up a bit as well. Well hear more later this week. Thats where we stand on the european equities. Meanwhile, new yorks leading banking regulator the s demanding the bank fire Senior Executives over allegations that they violated u. S. Sanctions. What do they make of this in paris . Stephane has more from the capital. What is the reaction, stephane . This comes on top of what we already know. They will have to pay a significant fine, 10 billion euros according to the wall street journal last week. A and the bank could lose its license in the United States if found guilty. That would have an impact on the United States and would be available for a short period of time to clear the u. S. Dollar. And thats making the french authorities to look at the case. Even the president Francois Hollande wants to discuss the case with barack obama. Hell be in france at the end of the week for the celebration of dday. And Francois Hollande wants to discuss the case over the weekend. A junior minister openly criticized the u. S. Criminal probe against bnp palibas saying france would not allow itself to be pushed around by the United States. The french official believed that will be close to 10 billion. And it would be much higher than what other banks are paying in the past in similar cases. So yes, ross, its a big story for pnb palibas, but i guess we are going to talk about it in the next couple of weeks. Yeah, we will. That will keep us rolling. Stephane, thank you. Meanwhile, japans big banks also are reporting bnp palibas of allegations. They have also reportedly expressed an interest in acquiring citizens bank. Glaxosmithkline announced a deal to look into a new cancer drug that could be worth more than 350 million over a sevenyear period. At the same time, the finished drugmaker orion signed a deal to develop a new Prostate Cancer drug. Orion says the agreement will look into the profit outlook. According to a statement, the two firms will develop this together with bayer contributing to the joint development costs. Orion is eligible for large royalties from the drugs sale. Orion is up 12 . Meanwhile, the annual meeting of the American Society of clinical oncology or asco is underway in chicago. Its the biggest gathering of cancer doctors where they release key data. Astrazeneca came out with positive results for its experimental lung cancer drug. And treatment for leukemia improved survival. Pfizer also is looking into the drug that works better than standard therapy keeping cancer from returning in young women with early stage breast cancer. Cnbc will have coverage from there throughout the day today. Lets go back out to the Goldman Sachs conference in london. Jeff is joined by michael sherwood. Hes not, sorry, jeff . No, ross, thats not happening. I can tell you thats not happening, so well not be having that conversation right now, but ross, i did have a number of very interesting chats with senior economists here at Goldman Sachs throughout the morning. And there are over a thousand of their clients attending this event. And all of them, i suspect, are trying to work out what happens next. Because we have seen this vieification in the market between those who believe in the normal economy and want to buy risk and those who dont. And they have increasingly been buying bonds and driving down yields, so the economists here are just trying to help many of the clients steer their way through this difficult market environment. And it has to be said, the house view is largely that we are in a normalized recovery phase that indeed we will see the u. S. Do 3 this year. I caught up with francesco gazarelli and asked what is working. Lets listen to this clip. A lot of people have lost money in that trade. The best opportunity is for it to be found in relative trades, for instance, europe on the long side, u. S. On the short side or up nation in japan, things of that sort. So more tactical views. Bear markets are difficult to make money in. So it has been quite challenging year to date here. And we have seen this rapid rotation beneath the indices. Value has been leading for a little while, but obviously a lot of Market Participants say, you know, you cannot have value run for too long ahead of growth if we get a proper Economic Cycle here. Growth should step back in the driving seat. So the challenge then is if you believe in growth, where are the earnings . And Peter Oppenheimer has been critical of what we have seen so far, revisions on the European Growth story through corporate earnings. Peter, though, thinks we will see a pickup in the growth glide path in profitability. I asked him about that, lets have a quick listen in to what he had to say. In terms of the leading indicators, we actually have seen improvement for a while now in our own global leading indication. The global saks one has been pointing to recovery, the headline and the momentum of both picking up. And that goes pretty well for recovery, certainly in the developed economies as we move through into the Second Quarter and beyond. I think the problem is the actual hard data has been weaker than expected. It may be good reasons for it in the states and so on, but the leading indicators certainly have been picking up. And were fairly confident that this recovery will be coming through. Inflation, however, is remaining very low. Perhaps even surprising on the downside. And that has to do with plenty of Spare Capacity for some to of the cyclical factors, but also structural factors as well related to impact of technology, changes in Commodity Prices and so on. And at the end of the day, this is really, i think, a support for equitieequities. There you go. Peter oppenheimer there. Ross, ill send it back to you, but its been interesting collecting the views of the economists and strategists here at Goldman Sachs. Lets hope they are on the money because i think the last thing a lot of us want to see is a world thats forecast by these falling yields in the bond market. If that turns out to be the world we experience in the second half of the year, then that is going to be very challenging for the investment community. Back to you. Yeah, raising concerns about whether the structural disinflation is in the globe. Jeff, good stuff. Thank you for that. Thats the latest from Goldman Sachs. More online at cnbc. Com. And in other news, the spanish Prime Minister announced king carlos will abdicate with prince felipe taking over. He became the king in 1975. Hes credited with returning the nation to democracy. He became spains first reigning monarch to visit the United States as well. And so often attempted coup in 1981. He has suffered with Health Issues over the last year. Hes had five operations in just 18 months. Still to come, from the links to possible inside trader. Reports say u. S. Authorities are looking into business dealings involving one of the worlds most recognizable professional golfers. More details are coming up. [ female announcer ] theres a gap out there. Thats keeping you from the healthcare you deserve. At humana, we believe if healthcare changes, if it becomes simpler. If frustration and paperwork decrease. If grandparents get to live at home instead of in a home. The gap begins to close. So lets simplify things. Lets close the gap between people and care. Lets close the gap between people and care. Drivers want to go further with their electrical vehicles. But you cant take a trip from lisbon to stockholm if you cant plan and recharge along the way. The European Commission is using cloud to make this possible. Creating a single charging and Billing Network across 28 countries. So drivers can travel as far as they want to go and when they want to go. [ male announcer ] great rates for great rides. Geico motorcycle, see how much you could save. A recap of the stories. Spains king is to abdicate after many years on the throne. And pressure is on pro golfer Phil Mickelson as authorities are looking into possible Insider Trading involving the golfer, karl ikan and a las vegas gambler. Yes, Phil Mickelson had more to focus on this weekend other than the field at the pga memorial tournament in dublin, ohio. Bertha has more for us at cnbc hq. Bertha, yes, it wasnt the normal question and answer session for phil at the press conference. No, he didnt do very well. But that was not the main headliner or focus. The pro golfer and fivetime major tournament winner is cooperating with the Insider Trading program that involves him, carl icon and Billy Walters. On friday the fcc said they are looking into bidding he made on clorox in 2011 that came at a time when carl icon was trying to take over the company. He later dropped the proxy fight and they are also looking into trades with another food company that do not involve icon. He addressed the shoe on saturday. I have done absolutely nothing wrong. Thats why i am fully cooperating with the fbi agents and am happy to do so in the future until this gets resolved. But for right now, hopefully it will be soon, but for right now i really cant talk much about it. Its not going to change the way i carry myself. Honestly, i have done nothing wrong. Im not going to walk around any other way. Carl icahn says to cnbc hes unaware of any investigation and says he does not know mickelson personally. In a statement, carl icahn says im pretty proud of my 50 year unblemished record and have never given out insider information. Walters and mickelson sometimes play golf together. Walters seen here in a 60 minutes piece from 2011 is not commenting on the allegations. Hes legendary in Sports Betting circles feared by sports books operators as one of the few people who consistently win. Walters told 60 minutes hes never had a losing year. He and a group of betters were indicted in the 1980s for allegedly running a bookmaking scheme but he was acquitted. Walters was also indicted in 1998 on Money Laundering charges later dismissed. Reports say the probe began three years ago and is part of the u. S. Governments broader crackdown on Insider Trading. The New York Times says the fbi approached mickelson at new jerseys Teterboro Airport last year to ask about his trading activities. Mickelson, of course, does Pay Attention to wall street. He actually is a viewer of cnbc, has been on the network at times. So its not as though investing is something foreign to him, but again, he is denying all allegations and is cooperating with the investigation. As you say, finished well down the field at memorial. He hasnt had a great season anyway with a bad back. Next week is the u. S. Open as well. Are you a golfer or not . You might have guessed, i am a bit of one. The one time i went out and was hitting, i got stung by a bee. And that kind of put an end to my golfing career. They are not normally related. I dont believe you can blame the bee. I guess, but it just seemed like it was an omen to give it up. Okay. If at first you dont succeed, go do something else. Exactly. Good to see you, bertha. Have a good day. To some of the other stories we are following, the General Motors board meets in detroit as the automaker prepares to take the next steps in dealing with the massive ignition switch recall that could include possible discipline for the current former executives who played a role in the recall and the Victims Compensation fund overseen by ken feinberg. Gm is also expected to release results from an independent report on the recall by a former u. S. Attorney. General motors stock in frankfurt is up just over 1 . And apples annual Worldwide Developers conference starts in san francisco. The ceo tim cook will be begin giving the keynote speech at 1 00 p. M. They are going to unveil a new version of the ios mobile software and a new development for pcs. The company may also unveil a new health app to pull data from third Party Fitness and heart monitoring hardware that will most likely connect to a smart watch that apple could release later this year. Apple currently up. 80 . Throughout history, witches have been getting a bad wrap, but hollywood is trying to show they are not all evil. The latest example is the disney movie maleficent starring Angelina Jolie as the fairy queen from sleeping beauty. It also added 100 million from overseas markets. Disney has two more live versions of previous animated films for next year, cinderella and the jungle book. Get out your checkbook. The annual lunch to win with Warren Buffett kicked off sunday night. How much is it worth . Well take a look, next. This morning it was announced that the king of spain is abdicating for political reasons, not health reasons. The decision was taken at the beginning of the year. More on that. And we understand that Angela Merkel in all her discussions is trying to secure a majority of support for jane paul to become the next commission president. This follows reports over the weekend that david cameron, the british Prime Minister, is doing his best to block that appointment. So that political round of discussions goes on in europe. Meanwhile, as we head into a key week of u. S. Data, whats the sentiment ahead of fridays jobs numbers . Jeff is at the conference in london and asked the chief economist exactly that. On the jobs number, i mean, we are at 210,000, so thats not very far away. And it is quite a bit lower than the last number. The last number to us looked a little like payback after the winter. So i dont think that is the underlying trend. On the Unemployment Rate, the key question really is what happens with participation. If Labor Force Participation retracing some of the decline that we saw in april, then you will get some retracement of the drop in the Unemployment Rate as well. At the end of the week, plenty between now and then. Ben is joining us with his preview. Ben, its a new month as well. June starts after a pretty good may. What happens now . Higher highs and higher lows, for the most part, i would assume. Again, this is under the assumption that the past is an indication of what well see in the future with the fact of the matter being that really none of the underlying fundamental contributing factors to this rally that we have been seeing, this kind of mind boggling rally, if you will, really is sustainable at this point. Im considering again the factors continue to be the same with the low Interest Rate environments present. And for the most part, again, it we are seeing an interesting situation develop as the nasdaq is recently caught up with the trend that we were seeing in the activity to the upside and the s ps. They were leading the way and nagging a bit. Right now the nasdaq has caught up with it as we see the divergence resolve, but we are waiting to see how the russell reacts. Normally the russell gives it a little bit more credit and weight, but considering we are seeing the dow and the nasdaq and exhibiting the strength into alltime highs, i have to still go on record saying the only reason to sell this market is if you dont like money. Yeah. Its a fair point, ben. Good to see you. Well see how it plays out there in chicago. Thats it for Worldwide Exchange. Squawk box is coming right up. Have a wonderful day. Good morning and welcome to squawk box. An Insider Trading probe has been launched with carl icahn, Phil Mickelson and Billy Walters at the center of the investigation. The epa is expected to propose a 30 cut in emissions at power plants. And we are about to kick off a big week for Economic Data including the jobs report. It is monday, june 2nd, 2014. And squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc. Im becky quick alongside joe kernan and andrew rosssorkin. News of a probe has become public. Investigators have been looking at whether carl icahn tipped Billy Walters on several stocks including clorox. A big report coming up in minutes. And the epa is looking to cut Carbon Monoxide emissions from existing power plants by 30 by the year 2030. Those proposed reductions will be based on 2005 emissions. The official announcement by the epa administrator is set for 10 00 a. M. This morning. And billionaire lewis katz has died in a plane crash and went on to buy the new jersey debts and new jersey devils. Most recently he was the coowner of the philadelphia inquirer. Katz and six others died when a jet crashed and went into flames on saturday night. That plane never made