Transcripts For CNBC Worldwide Exchange 20140624

And the number the headline number for the Business Front index, 109. 7. Thats, again, the reuters Consensus Forecast for 110. 2. So missing expectations. Current conditions index, 1. 48 in june. Again, below consensus expectations, calling for 15. The expectations index, 104. 4 excuse me, 104. 8 in june and, again, thats below forecasts, reuters consensus calling for 104. 9. I guess to a large extent this was to be expected given the softer pmis we saw yesterday. It follows the survey we had for this month, too. We will dig into some of the more details about that. Scott, weaker there on some of these german numbers from the ifo survey in this month. I think its very much in line with the pmi as we saw earlier this week. I think that maybe reflects the fact that you have a lot of your political answers going on. Right now, we have the situation in the middle east. I think many corporates are concerned about Oil Prices Going forward and, of course, i would say when i look at ua, we see this kind of end of the recession, that we still have lots of problems and lots of political problems. And the ecb, even with the stimulus its add hasnt done much right now and needs to look to add more . Korea. Im very concerned about Inflation Expectations. Inflation, you could say that is history. The central bank cannot do anything about the current inflation rate. Inflation expect ages tell you something about the future, how those corporates can change their consumption behavior and i think Inflation Expectations are at too low levels right now. We have especially a problem in germany, i would say, because low inflation in germany makes this rebalancing even more difficult. So i think they have to do more. What does that mean for qe . I think that has to do more qe. I think that should be the most efficient instrument, if you would like to change the direction for Inflation Expectations and also if you would like to get the weaker euro. And i think that finally the ecb, draghi, he has to start focusing more on the euro, the strength of the euro. Its a negative factor for exporters, but is a negative factor for inflation. With a strong currency, you get this disinflationary fourses. But right on queue, the ifo, more clarity here, reiterating exactly what you said about geopolitics and the tail risks, the German Economy fears the impact of ukraine and the iraq crisis. Japans Prime Minister shinzo abe may finally be about to fire the third hour in an attempt to get back on track. The press conference is scheduled for late this afternoon in tokyo. Abes third arrow has always been aimed at structural reform. However, reports are surfacing that todays focus will look at deregulating the labor market. Lets get more with the chief economist at seb still with us. This is going to be a very hard sell for the abe administration, given the fact that they have some very deeply entrenched interests. When is it going to start to be material . That is a very good question. I think what we have seen so far, we have delivered the first two arrows. Thats the easy part, to get the more expensive fiscal policy and to print money. But the big challenge for japan, that is, of course, aging population, that the amount of labor is sinking. And i can see only two solutions to that kind of problem. The first solution is to see if you can krez productivity in japan. But we are at quite high levels. And the second solution is to increase womens participation in the labor market. Thats a huge, huge source. To get women out in the labor market, you have to change the factor around the house and the family. Maybe either because tax changes, benefits, etcetera, and i think its quite interesting that japan is looking at to see how we have been able to increase the labor and supply and participation in labor market. The bottom line, in the eurozone, is Structural Reforms take time and you dont see the impact of them in a year into 18 months, you need to look towards further forward than that. In the case of abe, if youre about the message that hes sending here. So is he going to get the message right as far as what theyre actually hoping to achieve and what can he do shortterm to at least sell that message . And is he doing it . I think that he will probably if hes addressing these kinds of problems, i think that could be kind of a relief for japan. But i think it will take a very long time to see the effect of this. And the aging population, thats a problem that they have right now. We cannot wait for the solution. If we could say that, well, in 10 wrb 15 years time from now then we are going to have these problems in japan. I can see hes kind of long political processes and that it will take a very long time to see the results. But im quite concerned about japan. The cuts in the Corporate Tax rate for enterprise, is that long . I think its a long way to well, it will not increase, but it will help to get maybe a hopefully stronger economy and also improve the situation for the corporate sector. But i think that you have to think about the mentally how to change the point. I think that the head of chiefs of society in japan. Speaking of concerns about abe nomics, head to our website to find out why one economist thinks abe nomics could ultimately fail. Also coming up on todays show, mumbai calling with indias new government looking to boost trade. We speak to the Bombay Stock Exchange ceo on luring foreign investment. Find out why yahoo s big boss ended up having dinner for one at the Arts Festival in cannes last week. Finally, see the latest at the sleeping mobile industry, it involves nothing more than the lesser words. We are joined by the ceo later on in the show. Im looking forward to that one. Hedge funds have had a difficult first half of 2014 with struggling returns. Not helped by the unrest in russia and ukraine. The great and the good of the economy have gathered in monaco. Karen drew the short draw and joins us from monaco now. Karen, hearing what you told us earlier and the managers focusing on special situations, they are outperforming, it seems, their peers on the macro front. Do you think they can turn it around in the balance of the year . The Specialist Fund managers are having a very good time. But these are people who look at the longterm performance. Longterm performance is made up of different parts, different volatilities thp theyre enjoying the past three months. But lets talk more about that. A fund manager who invests partly in Global Markets, 100 billion in management, henrik, welcome, great to see you. Thank you, karen. Nice to be here. Its not a bad gig. Now one spent a lot of time going after u. S. Money the likes of frontier markets. How significant has the sentiment shift and how willing are investors to engage in these markets . Large u. S. Institutions dont take shortterm bids. Theyve been diversifying their portfolio systemically over the last few years. Even in the emerging market pullback of last year, we havent seen a slowdown simply because they are so far from being balanced and, therefore, being according to the future weight of the global economy. There is a message in that chasing markets higher is not necessarily always the right approach. Some people feel as though emerging markets are just not ready for an investment, they feel like its too early to buy in emerging markets. Do you think thats true . Or do you see opportunity right now . If you look at the relative performance of the last 12 to 24 months or even longer, emerging markets have been derating relative to developed markets. If youre a longterm investor, this is an opportunity to expose yourself to a change in the World Economy which is not disputed any more. We have been talking about the fact that the largest the weight of the World Economy would be in asia and some people would have been called your profit. Its a bit like global warming. Similarly, the emerging market exposure challenge is there and Institutional Investors understand it very well. Many people think africa could hold some kind of gospel teaching, as well. 37 billion is the amount of money you have invested in africa. Where do you see the upside . This is a market that some people say have enormous barriers to increase. Africa has done quite well over the last decade when it came from undiscovered continent to now a news worthy item. And i would say going forward, africa faces a number of challenges simply because things dont go up in a Straight Line and it does struggle to absorb large money. So its an extremely specialist area. But if you look ahead, where is the next 1 billion market after india . Well, that is the african continent. It has divided subsa hair ras desert into three large play blocks. You have to be willing to engage liquid and nonliquid and this is not for the day trader. Phoenix would say tough yield debt products, money has gone into emerging market equities, so the next is a spill over to frontier markets. Do you think thats true . I think i can argue with you that high quality mid sized local companies are having to borrow mope at roar expensive rates, particularly if they want to fund in dollars compared to, say, low Quality Companies in the development world. The countries are pretty sound. You stay away when the record bond issues happen. But i find the stress, youll be able to buy at sensible prices and, of course, you have a very, very Strong National Balance Sheet as opposed tot developed world which remains overleveraged. Can i ask you quickly about some geopolitical events . Weve been russia, ewe crepe, now insurgencies, but even across the country of africa theres been different terrorism acts, as well. Why do you think retailers are want to go invest in Global Markets despite some of these concerns . I think geopolitics is back in a big way and geopolitical risk is back. That doesnt mean opportunities are going away. An example is russia. It was taken to absurdly cheap levels earlier this year and its still extremely cheap. In the end, investment is about your ender price and timing. The risk really is background. So it brings a kind of volatility which were not seeing displayed in the vix yet that can be used to access markets that havent accessed. I thank you very much for joining us. The ceo of investec management. Youre just here for the day, about 24 hours. So ill let you go and peel off and have a swim before you leave monaco. Its a pretty idyllic spot. Its a tough job, but someone has to do it, karen. Thanks for that. In m a news, syngenta is trading higher. Mon san toe was considering a 40 billion takeover from the firm. Syngenta has no comment to make on the news when contacted by cnbc. The two Companies Held preliminary talk bes the deal before sib again ta walks away. Thats according to reports from Bloomberg News which said talks fizzled out in may. The tax location for switzerland was said to be a key note factor for the u. S. Company. Meanwhile, ges Ceo Jeff Immelt is expected to join other ceos after General Electric significantly resigned the company aefs offer for alstom. Stephane is outside the plant now. Theyve managed to organize this event in just 24 hours. They agreed to do the deal. Am i missing something . Perhaps it was organized earlier, but the board of alstom said over the weekend that it would accept the offer from General Electric. Today, the ceo will visit an alstom factory where the turbines are built. These turbines are used in the french power plant. Its part of the agreement that was sealed over the weekend. Now, jessie mills will explain the strategy of ge in france. Hes due to talk to the press after this visit. The ceo perhaps will give an indication about what the company is going to do with the cash because at the end of the day, there will be less cash than expected. Ge will pay a bit more than 12 billion euros to buy most of the power business of alstom. But the French Company will have to invest 3. 5 billion euros with General Electric and it will have to pay a bit more than 600 Million Euros to buy the rail signaling business from General Electric at the end of the day. There will be less cash than expected and perhaps less cash than what we thought for the shareholders of alstom. Thats the reason why. Yesterday the share price was down more than 4 . That was the reaction of this deal over the weekend. So perhaps of that point well get some information from the ceo of alstom who is going to attend the visit in this building right behind me. Stephane, try to tell us about the workers, as well, and how they feel about this deal since french jobs were so central. Stay tuned as we head back out to monaco for the worlds large just fund forums, well hear from charn cho. Humans. Even when we cross our ts and dot our is, we still run into problems. Thats why Liberty Mutual insurance offers accident forgiveness with our auto policies. If you qualify, your rates wont go up due to your first accident. Because making mistakes is only human, and so are we. We also offer new car replacement, so if you total your new car, well give you the money for a new one. Call Liberty Mutual insurance at. And ask us all about our auto features, like guaranteed repairs, where if you get into an accident and use one of our certified repair shops, the repairs are guaranteed for life. So call. To talk with an Insurance Expert about everything that comes standard with our base auto policy. And if you switch, you could save up to 423. Liberty Mutual Insurance responsibility. Whats your policy . Welcome back to worldwide exchange. Markets are evenly split between the losers and the gainers with the stoxx 600 relatively unchanged if in market session so far today. The german ifo coming in below expect ages 109. 7 versus 110. 2. Very little move as far as the euro or the market is concerned right now. A bit of a strength of core in the weakness of the periphery. Slight movements. Low volumes of gain comparing yesterdays session, too. Lets have a look at the Foreign Exchange market. All the focus today on both whats going on in sterling. Weve got mark carneys testimony this morning at 10 30 cet. How is he going to justify that shift to a more hawkish start we got on june 12th . And, of course, dollar yen, we were talking about this earlier on the show. Were waiting to find out what abe can do. That exactly is the big story. Thats informing the trading session for the nikkei 225, tokyo equities so broadly. Ending fairley flat. The markets are looking for some spans and some clarity later on today. About half an hour or so from now, we should hear from the japanese Prime Minister on the third face of this longer Term Economic program which could include a phased tax cut, pension reform and also some other longer Term Economics including possibly more flexibility in the labor market. Thats going to be a very tough sell from the unions perspective in japan. So deeply entrenched interests there. The nikkei backing away from fivemonth highs at the settlement. The kospi strong, the outperformance factor up by 1 . The shanghai composite stable at 2033. But the s p asx 200, got some news from bhp looking at further cuts in its iron ore division. Were looking at the miners because of what has been happening in south africa, the fivemonth platinum strike is over. There should be some stability returning into the pgms market and the miners following that, one, as well. Back to you now, jules. Sri, thank you. Now lets get straight out to karen cho in monaco. Karen. Thank you very much, julia. Pollen to talk about here. Jim mccochran joins us. Normally you would be in the studio. Lovely back drop today. Lovely back drop. Glad to be with you. What sort of sentiment were looking at, you were saying you dont think theyre as foolish as i think they are. Well, i think after five years of really Strong Equity markets and particularly strong last year, you would think that everyone would be fully into the market and saying, hey, its great. But were not actually seeing that. I think there are quite a few people around who have money on the sidelines and who are thinking, hey, i want to start back before i or maybe its not as good as it appears. So i would say sentiment is kind of mixed which gives me some confidence that maybe theres still more to go in this bull market. In terms of some of the decisions or strategies, people are saying should see strength with the upside . Well, the upside is really from the ecb. Its in contrast to the u. S. So theres a very good fundamental for the equity market. I think in the case of the european markets, the ecb did the right thing earlier this month when they went to negative rates on balances with the ecb. They cut the blending rate further. That means that the ecb is really pushing the european banks to lend and get the economy going, get the eurozone economy going. However, the european banks cant really do as much as they need to. There needs to be other sources of credit creation. With too much debt in europe still, i feel that although the ecb will push the market up with some kind soft moves, i think that may be an opportunity to sell because i dont see where the growth is coming from in europe. That is in contrast to the u. S. But i see another couple of years of pretty good growth in that economy. You can see this stretch higher for the s p 500. Lets get over to japanese equity as one of the other asset opportunities. Shinzo abe has been talking today and talking about the third arrow and delivering reform which the market said has been missing which is why we didnt get the currency depreciation the market had expected. Thats right. Do you think were going to see the performance we had last year with japanese stocks at 57 . It was staggering. It was staggering. The run a lot of what may have happened this year. The market really got ahead of itself at the end of the laugh year in japan. If mr. Abe can bring that third arrow into play, then you can see some pretty good performance from here. But i think its very dmentant on the currency. At 102 yen to the dollar, its still painful for japanese business. They need 1110 or 1115. Thats what you need to see a really good performance in japan. Very quickly because were running out of time, youre giving a couple of speeches today. Whats the message youre giving about flows in and out of the mainland . The message i would give is that some of the proposed regulatory changes, notably mutual recognition, mainland funds being sold in hong kong, hong kong funds being available for sale in china, those are, in principal, very attractive changes. But i do think the chinese will hedge it around a bit with some regulatory rules to slow it down because theyre very concerned about volatility in the renminbi. Ultimately, the chinese individuals would be big investors in Global Markets. Thank you very much for joining us today. Ill let you get back to the conference to prepare for those two big speeches youre giving. Back to you. Thats the latest live in monaco. Ill see you later on in the program the. Thank you so much. Were looking forward to it. Still to come on the show, the bank of england compared a uk recovery to success at the football world cup. Will mark carneys defense to a better job of keeping a grilling mp . Well discuss right after the break. Shares in syngenta jump higher on the talks that u. S. Rival monsanto has considered a 40 billion bid for the firm. U. S. Secretary of state john kerry urges leaders in iraqi and kurdistan to be set for a new government. Shinzo abe prepares to fire his third arrow as the nikkei retreats from a fivemonth high ahead of those Prime Ministers growth plans expected this morning. And bank of england Governor Carney appears before uk lawmakers. How will he defend his new curb of the timing of a rate move . So one of the best performers in the European Elections, Prime Minister renzi of italy speaking this morning in parliament. She said the European Election results is a very loud alarm signal, very interesting because he was meant to be seen as perhaps someone who supported cameron against the role of the jeanclaude curve. He said its impossible to see who should be the Commission Head without knowing who is going to be in the top spots. So perhaps theres an olive branch for david cameron. We know hes someone who wants to put a bit of leeway on the deficits and that was seen as something he could get away with asking for if he signed off on the appointment. Very interesting. See whether cameron pushes for a vote. Lets quickly get to more Corporate News now. Shares in belgium firm thrombogenic rules out sale. In february, they said they were exploring strategic options. However, its now said its settled on remaining a stand alone firm. The ceos of directv and at t head to capitol hill to testify about the merits of their proposed 49 billion memorier. They also say the combined company will sxan High Speed Broadband Service to at least 15 million customers mostly in rural areas. Critics say the merger would stifle Consumer Choices. In the session today, at t slightly higher by around 4 . Directv losing by around 0. 3 . Last week we told you about the new app yo the startup which apparently began life as a joke, it allows users to do nothing but say yo to one another. But its seen a huge amount of. Layerty topping the charts, even securing over 1 million in Venture Capital money. Over the weekend, hackers exposed a security flaw in the app. Later on in the show, well be joined by the apps cofounder live from san francisco. Instead of yo, it should be yikes. I dont. What am i saying to you . Yo. Youre very hip. Anyway, whats the weirdest app youve seen lately . Get in touch with us here on worldwide exchange. Worldwide cnbc. Com, cnbcwex or directly to julia or me. You can yo us if you want. Move on now, japans Prime Minister shinzo abe is set to hold a press conference in the next hour. Its expected he will unveil a third arrow of its abe nomics Growth Strategy. The story live from tokyo now. The japanese government last week released a draft of its new Growth Strategy. The third arrow plan is expected to unveil four main parts boosting regulations and employment, agriculture and health care. The Corporate Tax rates now as high as 35. 6 of 4 for tokyo based companies. But the government will seek to cut that to the 20 level over the next several years. In hopes of attracting foreign investment. The government is going to crack bedrock regulations that have long resisted change. The first part of a performance employment, nonmanagerial employees earning at least 100,000 a year are to qualify for a new pay scheme that rewards for results rather than hours works. Its proposing steps to bring in more women and foreigners into the workforce. In terms of japans long protected agriculture sector, the government will overhaul arguing co regulatorregulators first time in 60 years. The group is seen as a barrier to direct local farming. In health care, patients are to have greater freedom to combine naturally ensured treatments with out of pocket treatments. Prime minister abe is emphasizing that hell make sure to carry them out in order to lead japan to sustainable growth. Back to you, sri. Thank you very much for that. Lets get more now from jane foley. Jane, good to see you. The third arrow, they are very longer term structural changes. But in the here and now, does the japanese economy and the export sector need a weaker yen . Well, yes, for japan, so many countries now would like a weaker currency. If you look at europe, we have a disinflationary environment. Even in north america, theres a little bit more inflation in that. You go back six months or so, you could see some disinflation. The problem is, its very difficult for the japanese to engineer a weaker yen. The dollar is such a weak currency. Does the japanese economy need a stronger dollar . Yes, it probably does in the same way the eurozone would need a stroker dollar, too. What about positioning as far as tying that in with expectations of abe. I dont think the market is because you can go back to the 1990s, theres a lot of analysis about what is wrong with the japanese economy. Generally speaking, there will be conclusions that come to well, they need structural reform. Everybody knows that. Are we going to see this massive appetite or are the tip of the iceberg . I think its probably the tip of the iceberg. I dont think were going to see a huge amount of measures, particularly with respect to the labor market. How close are you watching what the Government Pension Fund does with its nearly 1. 3 trillion in assets . Getting assets into the accounts market, its going to be a very gradual one. But ultimately, this will be a yen negative story, will it not . Yings. Theres this negative flow argument. But its a relative positioning of the bank of japan. Well see some disappointment this year that maybe the bank of japan are more upbeat than the market anticipated, that the markets will pair back its quantitative easing from the bank of japan. If we stop and look and see what the bank of japan is doing, its a huge amount of monetary stimulus. It has no idea that its going to start paying that back as the fed continues to taper, as the fed moves towards a hike, a relative amount of easing at the bank of japan is doing will become even more apartment. So i think there is a weakening story out there, but i think this is probably very gradual and maybe not one for this month. Jane, stay right with us. Because the bank of englands governor mark carney is appearing before the Treasury Select Committee. The governor is expected to be grilled on the may Inflation Report which claims the banks economy is on its way back. Many investors will listen to see when theyre going to start raise benchmark Interest Rates. Were waiting for mark carney to start speaking. I think hes being bruised at this stage. Net mortgage lending, 1. 2 billion, this data just coming in. Thats the lowest since august of 2013. But, of course, we know the bank of england has been teetering with mortgage availability in some of the conditions attached to that. So some of that is to be expected. What we are seeing is lending to nonfinancial firms rising for the First Time Since september 2013. At least that is a good sign right now. Lets get a quick comment from helia. This is a massive session. Its not going to be a statement, as you would have seen. Its a question and answer egz session and this is a threehour monster time that they have with the governor and its not just mark carney. But youre right, he will be quizzed ahead of this thursdays publication of the Financial Stability report. He wont be able to comment on that. But he wont be able to get away with not talking about Interest Rate hikes and what that means for the uk economy, especially when it comes to mortgages. I think thats going to be key for the treasury. If we look back to may and the tone that was coming out in there and we look at what happened on june 12th, how are you going to justify that shift . Someone is going so ask him. Well, look, i think andrew, who chairs the Treasury Select Committee has been impatient with Forward Guidance to begin with. Another Forward Guidance to even more unclear version. Carney, who will have been in his seat for about a year to the date almost, has been let down in transparency. It was going to be clearer with the market, clooer clearer with business owner. And i think mps today will be giving him a very fierce grilling over his Communications Style and why that seems to have been flipflopping from the last two years. Of course, his argument would be just to say quickly that the economy is a success and that is the only standard by which you should be judging him. And thats the point, you have to catch up with the market. You have to catch up with the data. So yes, you can argue that but at the same time, he had to get at least in line or at some point ahead of the curb, surely. There is a danger that with mile and mr. Bean sorry, peeg, as well, that there could be some dissonance there. They may not necessarily speak with one voice. And recently, its been fairley consistent. But i think the plot thickens because that cpi which we had a couple of weeks ago was weak. Listen listen in now because mr. Carney is speaking. The relative gap as we sit here today is probably about 16 points. We published that in our quarterly bulletin estimating that a quarter of that could be represented by measurement and theres a few aspects of that and ill touch on them briefly. First with the just missed measurements of output, some of that subsequently we would expect to be with revisions of data, final data would come in. But some are more substantive. An example which is about to be fixed by the ons would be the treatment of r d which is treated in an intermediate consumption as opposed to investment. So that is a secular underestimation of output which as i say is about we expect to be adjusted in the revisions coming up to methodology in the fall. Other challenge owes on productivity added by value sector, its one that the bang has done work on, capturing value added more broadly in the Services Sector is quite challenging as youre well aware. 70 of output is from the Services Sectors. It is less likely that theres measurement around the labor input component. Thats more readily measured. But the last point ill make in terms of these estimates, when i quote 16 , ill quoting relative to a precrisis trend and this smings have changed relative to the financial crisis. For example, in Financial Services is one of the toughest areas to measure. Another example is oil output which has been on some secular down path. And so that would affect it, as well. Just to summarize, with that estimate of that issue is about a quarter of the material now. But it is certainly not the does not explain the majority of the productivity. Thank you very much. Andy love. What the basic labor markets are as you have anticipated in the main Inflation Report. Well, theres many aspects to that data. In terms of the pace of job creation continues to be strong, as youre aware. Employment growth is stell running at a record pace. But what was weaker and notable was average weekly earnings, the wage data in effect, was softer than our expect ages and adds to a run of hard data around wages, actual data arent wages that has been softer than we would expected. Thats important for the forecast because our expectation is that there will be an accelerate entering into the second half of this year into 2015 which would help support consumption. So taken together, that data presents some cross currents for the open. This update up to the Spare Capacity in the economy . Taken in isolation, which is always tainted, but taken in isolation, the developments on the way lets leave mark carney there. This is going to go on for three hours. We will continue to bring you the headlines as they come. He did mention when he was talking about the labor market that its notable that the latest wage data has been softer than our expectations. To come back to you, you mentioned the key word inflation, softer than they had expected and the wage data softer, too. So it has to be data dependent, doesnt it . If you look at the minutes, they do talk about Wage Inflation. Wage inflation is a sign of slack in the labor market. Perhaps a little more slack than they have anticipated. If youre looking at the cpi prints, 1. 5 , thats relatively low 50 target. And in my mind, as long as the macro projection numbers are keeping up or has inflation down, i think theres still a good reason for them not to hike into that. There ever two things that are difficult. While you were cpi ott at 11. 5 , you have asset bubbles at 9. 9 . Those are an increased worry for the economy. Not just because prices are going up, but what the governor and the bank of england are concerned about is the level of debt that people are accumulating and how that remember that we had in terms of disposable income we were up at 1160 . That has come down to 140 . But according to obrs forecast, thats going to go up again. Thats not a very healthy or a very balanced economy. The other thing to say is its just something very strange going on in the uk economy. Because when you think about it, unemployment is falling at this incredibly fast paced. But youve got zero Wage Inflation and theres a slight mismatch in whats happening. Because you would imagine if you were offering an alternative job, you would say to your boss, well, i wont leave if you give me some more money. But that doesnt seem to be happening. Outside, im just curious as to how important that wage component is in terms of policymakers. As Governor Carney said, wage data is softer than expectations. Does that mean the rate hikes gets pushed out further into the horizon . Well, i think that you it certainly doesnt create more inflation repressures. I think what it does, though, is it creates concerns about affordability. And thats where you see the bank takes these draftic measures that were going to see or spengt to see introduced on thursday. That is really taking a swing at the mortgage market. Really, it means that those changes which weve talked about before in london, of course, one in five people would not be able to get the mortgages that they want. And thats all about currently being worried that people are accelerating the amount of debt they can get, that theyre not getting the salaries to pay for it. We have to back up, but the bottom line is, after what carney said on june 12th, the market has shifted its Expectations Quite dramatically. Based on wage growth, is the market getting ahead of itself or do you think he meant to do that . I think he meant to do it, but looking at the cpi data, that is a risk that the market is getting ahead of itself. This is very data dependent. I think if there is continuation of disinflation, as long as there are signs that the market is beginning to which there are now, then i think they can probably delay. Is he a good governor . We got some numbers, when he was with the bank of canada, he was a hawk. He had a lot of macro numbers which had showed signs of success in canada. So from that point of view, i think there is a precedence and i think right now the market is still giving him the benefit of the doubt. Sterling back to 170. As weve been talking. Jane, fantastic to have you on, jane foley at rabobank. As sri just mentioned there, sterling is under a little bit of pressure. But it is now back below that 170 level, 1. 6992. Minimal moves, but it is back below 1. 70. Still to come on the show, boost investment in india. Well speak to the ceo of the bond based stock exchange, coming up. [ chainsaw buzzing ] humans. Sometimes, life trips us up. Sometimes, we trip ourselves up. And although the mistakes may seem to just keep coming at you, so do the solutions. Like multipolicy discounts from Liberty Mutual insurance. Save up to 10 just for combining your auto and home insurance. Call Liberty Mutual insurance at. To speak with an Insurance Expert and ask about all the personalized savings available for when you get married, move into a new house, or add a car to your policy. Personalized coverage and savings all the things humans need to make our world a little less imperfect. Call. And ask about all the ways you could save. Liberty Mutual Insurance responsibility. Whats your policy . Japans Prime Minister shin sdwoe abe is unveiling the details of the third steps in his plan, the socalled third arrow. Right now, hes suggesting hell cut the Corporate Tax rate starting next april. Weve had some of the details on that already. Theyre going to revise the tax system to promote more women in the workforce. The gpis, the pension fund will appropriately revise its portfolio as quickly as possible. We can deal with some more clarity on that. Japan will immediately take measures to strengthen the governance of the pension fund. Were talking about shifting assets from equities into other assets right now. We were talking about that earlier. And the message here right now appears to be that the Growth Strategy contains very little drastically new for the draft. Your thoughts on this . Drastically different. I would say that the market expectation had been a lot more prompt. They wanted something more urgent. I would say thats basically done on the first and second arrow. The third arrow consisted as you pointed out a lot to do with structural transitional type changes. It is a very positive thing. So he is trying to basically tackle the walls that have been withholding japan from modernization especially, for example, in with the pib. I want to pick up on this move to try and encourage greater market flexibility. That is going to be a very, very tough sell because the abe administration. It does involve liberalization to help Companies Fire people. In terms of a time frame, when are we going to see that . Especially in japan, its difficult to get reemployment. Thats the only country in the world where you see a correlation between jobless rate and suicide rate. If you dont do it now, when are they going to propel this move . If they dont conduck these now, theyll never be able to do it. And i could make this point about any of them. Hes going to address the Pension System as quickly as possible. He needs to tie some of these things down. Absolutely. And thats one of the things from last year. He came up in june and came up a big disappointment, very negative in the market. This time around, they know how to cope with it. I think theyve learned their lesson from the mistakes last year. You can see theyre taking into account on how the market reacts. We have to take a quick break, but youre going to be staying with us, so well discuss this far more after the break. Plenty more discussion coming up. Carney, well give you the latest comments on that, more on japan and the second hour of worldwide exchange. Stay with us. Geicos been helping people save money for over 75 years. Theyve really stood the test of time. Much like these majestic rocky mountains. Which must be named after the. That would be rocky the flying squirrel, mr. Gecko sir. Obviously ahh come on bullwinkle, theyre named after. First president george rockington that doesnt even make any sense. Mr. Uhh. Winkle. Geico. Fifteen minutes could save you fifteen percent or more on Car Insurance. 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. Welcome to worldwide exchange. Shinzo abe fires his third arrow. Japans Prime Minister confirms hell cut Corporation Tax to less than 30 . Mark carney says Interest Rate rises will be limited and gradual. The bank of england governor says he expects stronger growth in the second half of the year but amid weak data that was softer than expected. Wage data in effect was softer than our expectations and add to a run of hard data around the actual data around wages. That has been softer than we had expected. Shares in swiss agri giant syngenta jumps higher on reports u. S. Rival monsanto is considering a 40 billion for the firm. John query urges leaders to be part of the National Government as a july deadline is set for new leadership in baghdad. Announcer youre watching worldwide exchange, bringing you you bis Business News from around the global. Japans Prime Minister shinzo abe has unveiled the third step in his economic front. Lets bring you up to speed with some of the highlights. That will cut the Corporate Tax rate below 30 in phases over the next several years. As far as the allocation of the Government Pension Fund is concerned, remember, just under 1. 3 trillion in as et. Gpis will revise that as quickly as possible. So we dont have any real detail about the tame frame for this, but they are shifting into mover areas. Japan will take measures to strengthen gpis. And in terms of the dem dprafices, japan will promote more women in the workforce. Theres not a great deal here. At what point are we going to see the trickle down effects of all this into the real economy . And we have to also add that interpretation is key here. It will take time. Next year, the year after, could be years and years after. But before that, we were seeing organic growth kicking in. You could see all the statistics, including Capital Expenditure is showing very good price. His measures would give a very good following for that japanese exporters and would induce a lot of Foreign Direct Investment into japan. This is aimed at their target for 2020. The market might be disappointed, but if you really read, there is a good plateau for what is emerging. The deregulation for workforce migrants and there are lots of hints to the future Growth Perspective right now. Does this all take the burden of responsibility off mr. Korodo or the bank of japan or do they have more work to do to try to engineer a still softer yep . Ive been hearing that 110 dollar yen is 110, 115 is really what the corporate sector needs ford to make japanese exports more competitive. I would say thats what they want. Theyre well over the breaking point at 100, so its not a problem. That should come up with his policies. As you noted earlier, it comes with more Implementation Details and how theyre going to progress it. The boj right now is a role of more standing by the side. If we see, for example, excessively negative whiplash to the tax increase we saw in april, if we see that in april june period, theyre ready to basically come with a positive. Because by end of this year in november or december, the government has to come with a decision to raise the tax again by 2 in consumption tax to 10 by october 2015. They have to keep the momentum going until that time or they wouldnt be justified. The government wouldnt have the justification of raising the rates. It will be a joint concerted effort. This morning, under pressure as far as the uk and german markets are concerned. Minor losses and gains, you can see there at the french market. The ftse under a bit more pressure, 0. 6 . We had that weaker than expected ifo business 109. 7 versus 110 expected weaker on the expectations, too. Theres very little change as far as the equity markets are concerned. Mark carney is testifying this morning on his hawkish shift that we got in the early part of june, noting that wage growth in particular, the wage data is not as strong as they were expecting and thats going to be fundamental to a sustained consumption of growth recovery. Hes saying, look, the timing of these rate hikes will be driven by the data. They are data dependant. What that has given us is a drop below that 170 left in sterling. About 0. 3 lower. So no significant moves. But it is obviously a significant level that weve dropped below. Lets have a look at u. S. Futures this morning. Two down on the s p snapping a sixday session. Under a little pressure as far as the futures are concerned. The dow just shy of 28 points lower and the nasdaq five points lower this morning, too. Consumer confidence a host of fed speak, too. Lets bring you up to speed with todays agenda. In the united states, we have caseshiller home prices out at 9 00 a. M. Eastern. New existing home sales data followed yesterday, too. At 10 00 a. M. , we get new may home sales data expected to drive 0. 5 . Well get june Consumer Confidence and a trail of fed officials as i mentioned there, Vice President charles plosser, bill dudley and frans john williams. As for earnings, look for numbers today from carnival and drugstore chain walgreen. Lets get set up for the u. S. Markets. Steve, you heard julia just outline the data dockets and the fed speakers, as well. Are they govern to move to meet on the markets . Well see if those specific items move the needle. The housing data has been something that weve been getting a little bit more comfortable with positive data. And i think that could help. If the fed decides to throw a curveball in there, that can be an issue, but earnings could be a net positive. How close are we to watching investors watching what happens outside in the u. S. . Should that give you a bit more conviction about companies that have a Large International footprint, like caterpillar . I think its sector dependent. You mentioned a name like caterpillar. Surely the folks that are watching the heavy industrials, the Capital Equipment side, which has been a little bit soft, theyre going to watch that very closely. Again, that has been soft. Youve seen that in the tech sector, absent semi conductors, software has been quite a drag on that sector. So if we can see some more growth on pacific rim and also continued pick up in europe, i think those two sectors in particular could be quite strong. Steve, dont get me wrong. I like a good rally just as much as the next man. But how strong is the risk off the correction given what is happening in iraq and the knock on effects of the price of oil . Are the markets doing a fairley commendable job of climbing this wall of worry . Yeah. The melt up continues. Its primarily driven here, in our view, by the Credit Availability from the central bank. So until that saturdays to ease back and it looks like, you know, the tapering is in place but its not yet noticeable, that can continue. This correction is always there. I dont think that an issue like isis running wild in Northern Iraq is that would be the tipping point. Although we do think that theres still risk to oil of about 15 to 30 on that depending on how far they get. But equity markets on their own, i think they should continue. All right. Noted, sir. Thank you very much indeed for that. Thank you. Analysts are weighing in on how much they think alibaba could be worth. Morningstar thinks the offer to raise 26 billion. Valuing the company at 220 billion. That would make it the biggest ipo ever on chinas record. Now, u. S. Authorities are seeking information from two companies in connection with an Insider Trading probe of carl icahn. Pro golfer Phil Mickelson and Las Vegas Billy walters, its reported clorox got a request from the s. E. C. In 2011. Investigators are examining trades around july of that year when icahn offered to buy the company. Back in 2012. None of the men have been charged. Dean foods says its conducting its own investigation. Thats where dean foods shares are trading on your screen, as you can see in germany, the listing in frankfurt off by 0. 8 . Still to come on the show, will modis pro business reforms help boost Business Investment in india . Well see. Humans. Even when we cross our ts and dot our is, we still run into problems. Thats why Liberty Mutual insurance offers accident forgiveness with our auto policies. If you qualify, your rates wont go up due to your first accident. Because making mistakes is only human, and so are we. We also offer new car replacement, so if you total your new car, well give you the money for a new one. Call Liberty Mutual insurance at. And ask us all about our auto features, like guaranteed repairs, where if you get into an accident and use one of our certified repair shops, the repairs are guaranteed for life. So call. To talk with an Insurance Expert about everything that comes standard with our base auto policy. And if you switch, you could save up to 423. Liberty Mutual Insurance responsibility. Whats your policy . Welcome to worldwide exchange. Bank of England Governor Mark carney tells uk lawmakers interest raits rate rises will be limited and gradual. Reports suggest monsanto considered a 40 billion bid for swiss firm syngenta. Were seeing a selloff in dubai today. Its the biggest daily loss since last august. Abe rab tech earlier confirmed reports of large layoffs at the Company Following the reputation of its ceo last week. That story has hurt sentiment throughout the dubai construction market. Well keep you updated on that story as it develops. The formal request for securities transaction comes on top of modis first budget to be unveiled on july 10th. Joining us now is the ceo of the bondbased stock exchange, ashi. Do you think the government will deliver in terms of what you are looking for . If so, how deep do you think it will be . What we have been telling is that in case you want to promote investment and speculation, if you cant cut the might reduce the index on the investment situation that is the delivery based and include it on the options and futures and so on and so forth. So we are asking for more if you can please reduce the tax. But if you cant, give us later on the delivery based prediction so that more and more people move over into options and futures and that will come into the ipo and so on and so forth. So lets take the most favorable scenario. If they do deliver on what you are seeking, how much in terms of volume investment is that going to split up . Investors come in. Today many of them are currently trading in futures and option market. When we bring them down, they start getting the flavor of what is that required to be listing in the long run . And once that happens, india acquires their only 1. 5 trillion to invest over the next seven, eight years, and probably half of it will come out of the markets. Thats a massive sum. Overall in the equity markets, who are you targeten ring here i guess is the question . In fact, over the last 20 years, Foreign Investors always had more faith in Indian Markets than even some of us had. So today, 20 of Indian Markets are owned by the foreigners, what we call fra, Foreign Investors. If you were a foreign investor, now june 1 on wards, we have created a new frame so that in Portfolio Investment in which not only institutions can invest, but the family officers and even investors of foreign origin can invest in india. Thats a massive game changer. We believe thats going to get money from japan, from u. S. And uk coming into the indian market in a big way. The turbulence the second half of the year, based on modi and what he can achieve, are you worried that he has a finite window to act . He has begun very cautiously. He has taken some steps in the markets perspective or even from social perspective, he would call all the leaders which are unheard of. Pakistan, so on and so forth. Similarly, it has increased rates. Effectively, hes telling people saying, you elected me, let me go on. I may become unpopular, but i need to do this for the country. I dont think he will be playing for shortterm. Its not 2020. Its going to be a death match. A long process. Thank you. Thank you so much. Still to come on the show, bull markets dont die of old age. That was the rallying cry from the Goldman Sachs back in february. Find out if she tells us the same thing now. 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 welcome back to worldwide exchange. Seemingly on the down side after bucking six sessions of rallying. The dow jones jut over 48 points lower, s p over 6 points lower and nasdaq 11 points lower. Data, Consumer Confidence and fed speak to watch for today. Right now, following the trend of the european markets here, too. In february, Goldman Sachs says she remained positive on the u. S. Equities as theres nothing positive on the horizon to devalue the stock market. Karen, under the spotlight or at least the burning monaco sun. Well, in fact, it just turned a little windy and a bit overcast which is not ideal. But let me bring in david coschi. Yesterday we had an interesting day in markets. We saw homes rising more than expected. This is a very different tone after what we saw last week. Is the market trying to question the turning of Interest Rates . We were quite encouraged to see that strong housing data because weve been saying fort a long time that the Housing Market would recover. Linked to that, we expect rates to go up sometime next year. Our portfolios have been positioned for this strong u. S. Recovery. The bottom line is that we like flow assets and we like underweight assets for fed liquidity because of this coming Interest Rate rise. If you were going to chart u. S. Markets for us, where would we be on the charts . Obviously, a lot of risk assets across the u. S. , whether thats equity markets or credit markets have already priced in a lot of this recovery. So i would say were further into this story. However, we still do like u. S. Equity. Were very selective about what sectors to own. We particularly like the ones here for growth that we see beneficiaries of cap ex and Information Technology comes to mind there. And in the credit space, we have some positioning in credit and in high yields in particular. But we do think you need to be cautious because it is further into the story. So were hedging out Interest Rate risks. Is this unlikelyhood of a black swan into the markets, some people are cautious here at the formus, others are diving into the exposure looking for longterm investment. Is there a longterm that could change sentiment that were not watching . I think theres always a possibility for tail risks in the markets. Thats one of the reasons to have a robustly diversified p t portfol portfolio, which we do. I would say geopolitics is rising around the world. The situation in rashg, you have Ukraine Russia and issues in asia, too. So we are concerned about potential issues with geopolitical risks. You have a natural hem here. Injury a longterm strategic position oil and copper. Yeah. Why is that when so many people are selling off those assets . This is a great question and im glad you used the word strategic. Our positioning is part of our strategic allocation on exposure. The exact reason to own it is because of a lot of these geopolitical issues out there. Owning them is a good hedge if there are flareup necessary this region. Oil is obvious. Thats why we own that. In terms of copper, the reason for owning that is a hedge in disappointment to chinese growth. Now, at the risk of being caught up in conference, let me bring up one of the buzz words, mega trends. One of the areas youre looking at is the role of women in terms of profitability for some of the asset managers. Where do you see the Growth Potential . Its such a broad topic when he is women are providing the opportunities down the track. Giving credit where its due. The headline behind that report is basically that a 300 billion credit gap exists for female led small and Medium Enterprises across the developing world. We did some work to show we could add up to is 12 for income capita in places like brazil and vietnam gaining savps 12 . I end with by saying these gains are particularly important where we know these countries are growing below trend. These countries cant afford to perpetuate the barriers facing women now in their economy. Theyre meant to be the fiscally responsible one. Why are they not giving credit to men in the same position. So one major reason is legal and regulatory barriers. So of all the countries you looked at, 90 of them had at least one gap in how they treated women and men. Ill give you one basic example, which would be property rights. In a number of these countries, women dont have collateral rights. Thank you so much for joining us. Kately koch from Goldman Sachs. With that, were going to go chase some sun and what youre supposed to do here in monaco, which i think is a little bit of socializing. Enjoy it while you can, contain. Looks fun. Thank you very much for that. Next on worldwide exchange, its yo joke. We assess the future of the yo app. Were joined by cofounder and ceo or arbel. Coming up next. What does an apron have to do with Car Insurance . An apron is hard work. An apron is pride in what you do. An apron is not quitting until youve made something a little better. What does an apron have to do with Car Insurance . For us, everything. Welcome to worldwide exchange. Im julia chatterley. And im sri jegarajah. Japans Prime Minister saying he will touch Corporation Taxes to less than 30 . Mark carney tells u. S. Lawmakers uk interest raises will be gradual. He expects stronger growth in the second half, but admits recently wage data has been softer than expected. Wage data was softer than our expectations and adds to a run of hard data around wages actual data around wages that has been softer than we had expected. Shares of swiss agri giant syngenta jumped higher on word that monsanto offered a 40 billion bid for the firm. And a july deadline is set for new leadership in baghdad. Just tuning in, thanks for joining us here on worldwide exchange. A quick look at the u. S. Futures ahead of the market open. Losing a bit of ground over the next hour or so. The dow jones lower by 45 points and the nasdaq lower. Both the dow and the s p snapping a sixday rally, ending slightly lower. Not much to talk about in low volumes in yesterdays trading session. Plenty of data. Housing, Consumer Confidence and fed speak. Over in europe, losing a bit of ground here, but relatively unchanged. Ifo survey and expectations and sentiment data from germany weaker than expected this morning. Weve heard mark carney talking about the situation as far as rate rises are concerned and saying, look, its going to be data dependentant. Primary shinzo abe has fired his third arrow. Jap japans p. M. Has released the latest tactics to unveil the economy. Meanwhile, mark carney says gradual rate rises are more important than the date of the first hike. Carney appears to have switched his position once again less than two weeks after saying rates could rise faster than expected. Sterling has taken a slide on the comments. Carney did admit that recent data could suggest the economy has more Spare Capacity than the bank had expected. The wage data in effect was softer than our expectations and add to a run that has been softer than expected. Can an app still be called a joke when it raises over 1 million in beven Capital Funding and over 1 million users in four days . The communication tool yo did just that and its proving divisive in the tech community. And the security issues, where does it go from here. The cofounder of the app joins us from san francisco. Talk to me about the hacking situation. Is the situation now resolved and is the app secure . Forbes wrote the hacking situation isnt a disaster. Its a catastrophe. How are you going to prove them wrong . Where do you go from here . Well, you have to understand, first of all, we did take it seriously, but we dont store a lot of personal information on you. I mean, the only personal information that we have on you is your phone number only if you use the fine friend feature and even then we dont have your full name or your email address or anything. So yes, if you have used the find friends feature, then your phone number got leaked without your name and without your email address. So thats it. But now its fixed, so now everything is fine. What comes after yo . Well, after yo, we plan that you will be able to get notifications from whatever interests you. Yo isnt just an app that says yo. It is a notification. Do you see this as a shorter way of adding out to somebody . Currently, we dont feel like adder other features and links and locations and photos. If you want that, there are a lot of other apps that you can get it on. Twitter and facebook and whatsapp and others. But the Different Things about yo is that its just yo. There is nothing else. So basically, the notification itself is everything you you need to know. That is what is so special. I also believe why people dont understand usually. Some people understand it, some people dont. Some people think its a complete gimmick and youre laughing all the way to the bank. Can i ask how much of that 1 million youve invested personally . Zero. Im not money personally. Were taking the whole money that we raised into building the company to the next year. We didnt touch any money to ourselves. Thank you so much for chatting with us, or abel and, yo, you talk to your guests now. Go with the flow, yo. Space, the yahoo Ceo Marissa Mayer arrived about two hours late to a private dinner. The gathering was a chance for clients to get the firsthand update on what yahoo had to offer. The wall street journal says she had fallen asleep. She was so late, some guests had already left. It happens, jewel yeah, to the best of us, especially to you and i when we have to wake up early in the morning. Or when each other is talking. Would it bother you if i said, sorry, didnt turn up for work . I guess thats the benefit to being the boss. Last month, amazon cut off orders for movies. The wall street journal says amazon has been seeking more favorable pricing terms. The company is still embroiled in a contract dispute removing preorders of several titles including j. K. Rowlings upcoming book, the silk worm. Coming up, one analyst says alley ban ba could be the biggest offering ever. Well explore whats behind that valuation, coming up next. Great rates for great rides. Geico motorcycle, see how muou could save. Welcome back to worldwide exchange. These are your headlines. Abe fires the third arrow embarking on a path to cut japans Corporate Tax rate to below 30 . Bank of england Governor Carney sends sterling lower telling uk lawmakers Interest Rates will rise gaully. And mon san toe considered a 40 billion bid for swiss firm syngenta. U. S. Secretary of state john kerry has touched down in Iraqi Kurdistan where he is urging leaders not to give up on the political process in baghdad. Yesterday, kerry met with a deadline of july the 1st with a formation of a new government. Backing in iraq could help secure the country, but insisted baghdad would need to form an exclusive government. This is a critical moment for iraqs future. It is a moment of decision for iraqs leaders and its a moment of great urgency. A car bombing in beirut left a number of people injured. It caused a human firm. It comes a week after another suicide bombing in beirut killed a policemen and injured 30 others. Hadley gamble is beirut, lebanon, to give us the latest. Can you give us a sense of who may be responsible for this latest suicide bombing attack and how the situation fits more broadly with the situation in iraq and potential spillovers to other regional countries . Morning, julia. So basically what were seeing here in lebanon last nights car bomb targeted in the city mainly shia southern district. And this is the type of coming just days after another car bomb at an Army Checkpoint near the syrian border. What is believed to have been a failed attempt to take out the head of the Lebanese Security forces. Basically what you have are sunni, groups believed to be targeting major members of the lebanese government and of society and the security forces, as well. Theres no doubt that what is happening here is just another sign of the destabilization that can begin to cripple the region as these isis militants cement a real foothold and weve seen them now in control of much of iraqs western border thats some 300 miles. Secretary of state john kerry saying how crucial it is for isis futures. Now you have the last time americans secured baghdad, they did it with some 80,000 troops. Now theyre bringing in 300 advisers. So the iraqis are going to need to take some measure of responsibility here, including perhaps a counteroffensive. Isis now is claim to go be that whole refinery. I spoke with one iraqi diplomate earlier this morning. If isis militants were able to get that refinery working again, to the whole of Northern Iraq and were seeing fuel availability declining. Were not talking about fuel for cars, but for homes and generators and businesses. And, of course, another major concern for the iraqis, a dam in that area im told by the same iraqi officials that iraqis have withdrawn from the area. If the lights go out in baghdad, that could make it difficult for effective measures by the iraqi government. I was told by one iraqi that this is sort of like nigeria on steroids. Weve seen nigeria ruled by weakness and corruption on all sides. Its the same thing youre seeing in iraq. Its quite clear that the situation is diminishing, but not just in bag, but in neighboring countries, as well. Stiging in the region, were seeing a selloff on the main index, the worst daily decline since last august down 8 . Arab tech earlier confirmed reports of a large layoff at the Company Following the resignation of its ceo last week. That ongone story has hurt sentiment throughout the dubai construction market. We are in a preramadan period. M a news elsewhere, swiss agriculture giant syngenta is trading higher on reports that u. S. Rival monsanto was considering a 40 billion takeover bid for the company. Syngenta had no comment to make on the news after being contacted by cnbc. That is calling for reports from Bloomberg News which said the talks fizzled out in lay mate. The ceos of at t and directv head to capitol hill today to testify before a Senate Subcommittee about the merits of their proposed 40 billion merger. They plan to say the deal could lead for major problems for consumers. It would expand High Speed Services to at least 15 million customers mostly in rural areas. Critics say the merger would buy the competition and Consumer Choices at t relatively unchanged. Directv slightly underperforming by 0. 2 . Meanwhile, frances government is claiming victory in the alstom takeover after forcing ge to significantly revise its offer for the companys energy assets. Alstom and ge boards agreed to the terms of the deal over the weekend. But not everyone sees this as a tie tieup. Cnbcs jim cramer has his own message for ges jeff immelt. Ge, im begging you. Walk away from alstom. Its crazy. You dont need this kind of headache. Alibabas ipo is expected to be as hot as the temperatures when the ecommerce giant lists shares this summer. Thats leading analysts to put some sky high valuations on the companys value. Courtney reagan has more on this. Good morning. Brokerage firms are coming up with their own estimates of how much alibaba could be worth when it goes public. The latest is the morning show which expects the ipo to raise 26 billion. It could value the Chinese Company at 220 billion. Incidentally, only ten stocks in the s p 500 have a higher market cap, including apple, exxon mobil and microsoft. At that point, alibaba would be the biggest ipo in history topping the bank of chinas 22 billion haul and shanghai in hong kong in 2010. It would bead out the largest u. S. Ipo to date. Visa krb which raised 19. 8 been in 2008 and the tech ipo facebook which brought in 16 billion in 2012. Morningstar says its estimate is based on reports alibaba is likely to offer 12 of the company in the ipo. The firm estimates alibaba will post annual Revenue Growth of 33 and expand growth margins from 47 to 49 over the next five years. But some investors have questioned whether alibabas are sustainable. Alibaba conceded in an updated ipo filing earlier this month. Morningstar thinks alibaba can sustain profit margins. Morningstar also believes chinese ecommerce market has plenty of room for growth, expecting the companys morning sales to double in 2020. The companys valuation was put at 230 billion last month, lower than the previous estimate of 245 billion before alibaba filed its ipo documents. Whenever it happened and whatever it will be, it will be big. Julia, back to you. Courtney, absolutely. Thanks. Now, going tore a strong, one of the most popular tunes of all time is on the Auction Block today. Southbys selling a draft of like a Rolling Stone which bob dylan wrote on hotel stationary back in washington before recording it back in 1975. This draft, this includes notes and dooldzs is expected to fetch up to 2 million. Other rock and roll items up for bid include Elvis Presley clothing. Thank you very much, julia. Elvis has left the building. Anyway, coming up sales of existing homes in the u. S. Forecast for may. We speak to the National Association of home builders, coming up next opinion. Humans. Even when we cross our ts and dot our is, we still run into problems. Thats why Liberty Mutual insurance offers accident forgiveness with our auto policies. If you qualify, your rates wont go up due to your first accident. Because making mistakes is only human, and so are we. We also offer new car replacement, so if you total your new car, well give you the money for a new one. Call Liberty Mutual insurance at. And ask us all about our auto features, like guaranteed repairs, where if you get into an accident and use one of our certified repair shops, the repairs are guaranteed for life. So call. To talk with an Insurance Expert about everything that comes standard with our base auto policy. And if you switch, you could save up to 423. Liberty Mutual Insurance responsibility. Whats your policy . The eu agreed to grant albania status of candidate for membership. Thank you for fighting for the right to be in the eu. Trust in the u. S. Property market surged in may. The National Association of realtors announced yesterday that existing home sales grew by 4. 9 the , the largest increase since august 2011. Lets get more now with the economist at the National Association of home builders. Rob, as a first time buyer, they are conspicuous and absent right now. When do you think theyre going to return . Well, we need strong job growth, we need wage growth for those younger, first time buyers. Theyre at 27 market share for existing homes. They should be 40 . A few months of good job growth and well start to see some of that pent up demand unlocked. And one of the big wild cards, of course, are rising bond yields. Saw what that did for the knock on effect of mortgage rates. Do you think that they are in check now or could they reservice and push higher and pose a risk for the Housing Market as we get closer towards that ultimate rate hike by the fed . Sfwh we saw the impact that had in the Housing Market. The rates remain historically low and it is a good time to buy. Is it too early to say were looking at some kind of sustained stability in the market . Yeah. I think in may you are certainly seeing kind of a catch up due to delays that occurred because of the winter. The beginning on the year was bad, so some of the gains, were seeing a continuation of the organic recovery. Great to chat with you, National Association of home builders. Now, on a programming note, make sure to stay tuned to squawk on the street. Well be joined by adee da ceo in an exclusive interview. Its iconic, isnt it . Iconic brand. Thats it. Thats it for todays show. Im julia chatterley the. And im sri jegarajah. Thanks for joining us. Ank you dr defending our country. Thank you for your sacrifice and thank you for your bravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance can be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. Good morning. The Insider Trading probe surrounding an activist, a gambler and a golfer. All walked into a bar. And the u. S. Export import bank under scrutiny in capitol hill. Now theres an investigation into possible gifts and kickbacks for federal contracts. It is tuesday, june 24th, 2014. Squawk box begins right now. Goodmorning, everybody. Welcome to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. Stocks bouncing around to start the week, but the bulls are quietly in control. So far this year, the dow is up 2 . The s p has add more than 6 . And the nasdaq is higher by 5 . This morning, if you check out the futures, youll see at this hour things are indicated lower. The dow futures indicated down by 50 points. And the tenyear at this point looks like it is yielding. 2. 595 . Its still sitting just below 2. 6 . Were continue to go watch gold prices. The commodity now higher four straight sessions closing yesterday at its highest level since mid april. Among the tests for the markets today, we have some economic numbers coming out