Investigation after a possible breach of antitrust laws. And taking a gamble, shares in gtech rides as it coughs up nearly 5 billion to stop Machine Operator itt. A warm welcome to worldwide exchange. Taking you back through some of the losses we saw through yesterdays trading sessions. The stoxx europe 600 off 0. 5 in trading. Lets have a look at some individual markets this morning. Right now weve got the ftse 100 and the xetra dax higher by around 0. 5 . I want to point out the psi market, a gain in portugal pounce bouncing up 1. 3 . The real force is a Holding Company owned by the santo group. There were reports yesterday that theerp potentially looking for applying for creditor protection right now. Theyve missed a repayment to telecom this morning. Were talking you through all the details of this and what it means a little later in the show. But first, look at whats going on as far as the top movers in the second are concerned. Icaps falling year on year with conditions continuing to affect their trading. Its an ongoing issue right now for the company. Seeing that stock down just over 0. 25 . Moving over to royal mail and tnt, both receiving notice from french competition authorities about a possible antitrust breach. Right now, royal mail down 1. 7 . Tnt express 3. 2 lower this morning. Asml Holding Company, a mixed bag. The stocks trading lower as the outlook for revenue was disappointing. The company did announce strong Second Quarter profits with margins above guidance. Foern Exchange Markets this morning, we did see the dollar showing a big turn yesterday showing Janet Yellens comments. Yellen stepping back it seems from a focus on the longterm unemployment levels in the u. S. From her comments, too, is that rates could rise sooner than theyre currently anticipating if we see a further pick up as far as the Unemployment Rate is concerned. But i have to say, we heard that from the june fomc meeting. Im not sure how much news is in there. Also highlighting concerns about tech stocks, too. Right now, euro dollar, 1. 3550 is the level right now. We have uk unemployment and wage data this morning. It will be very interesting as far as inflation is concerned. Yesterday, 1. 7146 the level, so back above that 1. 71 level right now. Plenty to show you from the show. Lets find out whats going on in asia right now. Sri, all about china data. It is, indeed. Let me pick up from where you left off on the conversation about janet yellen. Yes, the currency markets and the dollar seem to pick up on the hawkish hints. But when the dust finally settled on the first day of her testimony, it was very clear the markets liked what they heard. She was sticking to the dovish script. It was a bit of a departure, but it wasnt a radical shift in terms of tone. However, we are seeing some pockets of weakness. The earnings season is of great interest, of course, to the asian markets. And the intel effect, stronger headlines figures and the more optimistic guidance. Helping some of the chips related issues, the nikkei still coming to the weakness towards the downside about 16 points right now. Lets talk about that china data that you are referring to. On the whole, it did poirnt to stabilization. Thats because we have seen the stimulus measures. But the clear and present danger is emanating from the property market, it still looks weak and a lot of economists are telling us that the economy still needs some further action from the pboc, some bolder measures, and theyre not ruling out a nationwide cut in the rrr. Take a look at the other markets that are outperforming. Jakarta markets, almost 1 . July the 22nd, is going to be an important date for your calendar for the political side of the spectrum, which should inform the future movement in these markets. Because remember we had a very indee sizive election about a week or so ago. So not a clear winner between jako jakowi. There should be a ruling on that the 22nd to declare a winner and put some of this uncertainty to rest. Then whoever wins can get down to the hard grass of structural reform in the economy. Overall, a fairley confident session out here in asia. The nikkei 225 and the shanghai composite are lower, centered of the chinese banking sector. And i believe this will be supportive to revise the liquidity conditions facing some other private sector, including the Public Development sector. And if this liquidity can channel through transmit from the interbank markets to the real economy, i think the effect would be very positive. And despite the property sector remains a risk, but the growth momentum can be sustained in the second half of the year. They look at the loan growth yesterday and they beat expect akdzs. I wonder whether we get to a situation where the credit creation continues to appoint where new loans are separately fully absorbed by the rollover. What then . That could be the case. Actually, in the first half of the year, we have seen many Property Developers continue to raise funding in the offshore markets. The issuance by then in hong kong or other parts of asia in the first half of the year. And at that point, the liquidity needs of the property sector. But actually, that reflects that the demand for properties in china has not dropped. Actually, in the medium term, the property demand in china will continue to be very positive because of the urbanization drive. What we have seen in the third half or in recent months for properties this year is a cyclical down turn of the property sector. The property cycle will come back, although we expect this time around the down turn of the property cycle may be longer than the one weve seep in the end of 2010. You only buy the china story, youre upgrading your forecast. I look at the equity market and i wonder whats wrong with investors if we buy into your story here. I think we are facing a dilemma. The growth rate may be a bit high, but we worry that the growth rate is too high. Were thinking about the overall message last year, we actually wanted to see that china growth lower in order to boost reform. It seems to us that the strong going in the Second Quarter comes with the reform measures, but rather the government like to see some shortterm boost of the economy to prevent the downside risk. We expect next year china should grow to set the target of the growth rate to 7. 5 in order to achieve the more Sustainable Growth hold out in the future. Lets see what the state council and mpc will approve a lower growth target next year. And you raise an important question. Is growth too high . Raymond, we have to leave it there. Cnbc and Institution Investors will kick off the Fourth Annual alpha conference today. U. S. Treasury secretary jack lew is set to deliver the opening keynote address. Other speakers include new jersey governor chris christie, and carl icahn. Tune into cnbc all day for coverage of the event. Israeli Prime Minister Benjamin Netanyahu says it will intensify its gaza defensive. Yesterdays ceasefire has now collapsed. Hadley joins us now. This is one of the options that we discussed in yesterdays show, that the ceasefire doesnt show because of various factions and concerns in hamas. Where does this leave us now . A complete lack of leadership from hamas as a cohesive organization. Many of these hamas politicians dont understand that at some point theyre going to have to negotiate. At some point theyre going to need to talk about the Border Crossings. What theyre really concerned about is the Border Crossing with israel, the Border Crossing with egypt. So they understand that at some point, even if we have a hes fire, it will be nothing if we cant survive. Unfortunately, you dont see any leadership from anyone including the head of the government who is supposed to be in cairo today. But no one is giving a cohesive narrative. Theres no actual strategy. Yesterday i was saying to you whether or not this is an opportune time for them to target. We know that theyre now targeting hamas leadership and the air strike res ongoing, unfortunately. Israeli is condemning hamas, the u. S. Is condemning hamas for not coming to the table to negotiate. At this point, i dont think youre going do see in the near future any kind of solution. Well leave israel right there for now. Meanwhile, radically about iraqs efforts to form a new government. It seems weve had a break through. A minor one. Hes a moderate sunni speaking to a senior iraqi diplomate. Hes saying this is someone they can work with in the parliament, the deputy speakers, as well, kerd. So they really are trying on the face of it to have a more cohesive unity government. All of the factions involved. So until they get this settled, theres no hope for the future services to have a real strategy. The longer this takes, the longer were going to see problems in iraq. Can we make any kind of judgment about how more able to we are now to form a government based on the choice of this speaker and what this government will look like in terms of competition . Certainly, these are the first steps. Iran and saudi arabia, the neighbors, this is what they had wanted. This is an absolute stipulation on the part of them that we will be pushing sunni tribesmen to work with the new government. We will push other sunni publishenans to engage with the new government and use our influence to make that happen. This is a positive step in the right direct. Come up on todays show, we speak to the airbus ceo and foond out why he didnt counting on the ecb to deal with the strength of the euro. Joe biden says more investments are being made against russia. Plus, tackling the cost of safe travel. We find out why boeing is leading a new space race. And creating the perfect home via your smoen. We meet the founder of the Home Improvement app. Stay with us. Having the cloud allows us to rapid prototype a lot of ideas. Being able to pay as we go was crucial for a start up. Having to fork out a lot of money up front was risky. You can launch a feature really quick, and if the feature doesnt work, we havent lost anything and we can have something up and running in days. And this would not be possible without the cloud. We are now supporting over 25 million users each month. Ideas can be tried and tried again on the ibm cloud. The ibm cloud is the cloud for business. When youre voting for this summers top 100 shows and movies with xfinity on demand, beep, beep, beep. Watch to vote for family values on family movie night. This message paid for and approved by xfinitys family hits. Tell me the whole thing again, i wasnt listening. Watch to vote with xfinity on demand. For this summers top 100 shows and movies. And remember, the only thing to fear is fear itself, and spoilers for shows you havent seen yet. Global. Pandemic. Royal mail and tnt express are both being investigated over a possible breach of antitrust laws. Royal mail says it cannot yet determine the amount of potential losses, but has warned it could be material. Stephane joins us now. Welcome to london. Take us through what we know so far. Its a broader investigation on the french delivery service. Tnt is investigating weather this for a full year at least. We know it started in 2010. The french competition is looking at a possible anticompetitive behavior not only from tnt express, but also from gls, which is part of the Royal Mail Group and also from fedex. All companies, both of them, tnt and gls concerned that they received a statement of objection. And both of they say them say that its too early to estimate the amount and the range of the potential find. Tnt express says it cannot be excluded, that it will be fined. Potentially, they could be fined up to 10 of their we are talking about a significant amount. The french competition authorities declined to comment on the ongoing issue. They never make comments about ongoing probes. Its a case of watch the space. Yeah, watch the space, obviously. And theres a new competition governor, as well. We want to switch positions looking for competition in brussels. Stephane is going to come back. Well get you back very shortly. For now, thank you. Now, a holing company for the santo family has failed to pay more than 8 million in debt that it owed to portugal telecom. Portugal telecom says it will pursue Legal Options for securing the debt. However, it says the memorier remains on track after a memory ran du memorandum of understanding was signed. Were expecting to see some kind of a situation as far as the Espirito Santos family was concerned. Is this the ongoing fallout . Well, this is the owner of the bank. And it is expected that you see at the ownership level, as you know, theres a Family Office that owns now more than 20 . Its similar to what we saw in the past with italy where there is a foundation owning a lot of the bank and the foundation has financial issues. In this case, the ownership has been produced at the time from over 30 a year ago. Bank of portugal, the central bank, has been on the case for over two years. We have to distinguish. The danger is that having such a large stake, the owners may have directed the bank to land in an uneconomical way. And we know some of the exposure that they have to angola. The exposure was 30 of the angola portfolio, which represents 10 and we know tongue of the best lent companies. But in any case, if you take these numbers together, we have to compare them with a 6 that portugal has. This is not a systemic situation for pore tu fall. Lets separate it out now. What you were talking about there, we separate out the bank and look at the Holding Companies read now, citi was saying this morning were potentially looking at one of the most significant defaults of a european corporate that weve seen in many years. Is that what were looking out . Separate out the banks here. I dont think the Holding Companies classify the corporate. And the ownership of the bonds is also relatively limited. So the network placed over 2 billion from the Holding Companies. Half of that to reach investors. So there is around 900 to 1 billion exposure. Obviously, investors from these bonds at the Holding Companies, thats Going Forward of these bonds. So it doesnt have a financial liability to pay these bonds, but it could be fine because you have some of those to retail investors. Having said that, its unlikely regulators would find the bank and the bank in the past has made money and has been able to raise capital and may do so again as the central bank was saying today. So you have to take this into account. And weve said and the emergency has acknowledged now that the size of the exposure right now for bank santo has to a certain extent that the portuguese government has set aside the 6 billion euros. The structure of the Holding Company involvement, the cross ownership that were seeing in portugal right now is similar to what were seeing in italy. Whats the risk of similar issues even down to a few regularities probably at the Holding Company level happening in italy . Well, look, a lot of people have lost a lot of faith. Generally speaking, Corporate Bond markets are losing liquidity. Broker dealers are less able to trade, to take risk in trading because of higher regulation. So if you have a bad news in one country, can spread out rather quickly. But this is not a contagion risk. And the risk here is structural. Theres more Bank Branches than anywhere else in the world. The first thing you do is recapitalize. Thats the first line of defense. Then you need to consolidate and it takes time. And the stress test is coming through in november. There is a lesson from this. But its an opportunity for investors to get long on the good banks. So were still long on portugal. Great to get your perspective. Hold your supply of kitka tbars. Hershey is raising randy prizes 8 due to soaring commodity costs. Analysts say hersheys move could trigger similar announcements by nestle. With clock hat priets on the rise, will you cut it out . Are you kidding me . Or is that sugar rush just too good to give up . Get in touch with us via email, twitter or direct to me, jchatterlycnbc. Stay with us. Welcome back to worldwide exchange. China gdp expands in the Second Quarter, hitting government growth targets and beating some forecasts. Investors ask if more stimulus will be needed to support growth this year. Portugals telecom says it will pursue legal openings against Espirito Santos for missing nearly 900 Million Euros payment. Royal mail and tnt are under investigation. And taking a gamble, gtech rise as it coughs up nearly 5 billion to buy itt. Weve had uk unemployment and Earnings Data out this morning. Weve got three months unemployment coming out at 6. 5 . That was as expected according to analysts right now. Weve got the jobless claimant countdown, 36,000 in june. Thats at 3. 1 of the workforce. It was forecast down 26. 500. That was weaker than expected. If we look at average earnings, three months to may, plus 0. 7 . It was forecast also at 0. 7 . Do you think coming in line with expect ages and coming off in april, the three months to april average earnings was 0. 9 . So it is coming in from the three months to april right now. Weve got sterling right now at a session low, trading what 1. 7120 right now, the levels. So weak wage growth is the bottom line there. Unemployment rate coming in at expected, 6. 5 . Now, joni from cibc joins us now. Good morning. Good morning. Unemployment continues to drop. Becoming a bit of a headache for mark carney when we see weakness in wages. We scroll back to last summer when carney introduced the Unemployment Rate. Thats now down to 6. 5 . The labor market is conditioning to tighten. The problem is, of course, this lack of wages growth. I think thats going to be the interesting discussion point Going Forward. I think thats going to be the big swing factor which could suggest these numbers are light in terms of actual reality. Two things there. If you do incorporate the selfemployed people, dont they generally take wage cuts to come out of employment . So that lowers your wages rather than raises them. I think the average earns are 12 not the 10 if you incorporate the selfemployed. And i think the selfemployed accelerates the trough. In terms of the trough, it would magnify the loss in income because of the fact that if youre in selfemployment and youre operating effectively on a zero cost basis, then youre most likely to take wage cuts. I think at the same time, if you take or extrapolate the improving macro fundamentals, you look at the sumgszs in terms of the growth forecast and the timing of the labor market. I think as the employment and the growth option comes through, i think that will be a favorable wind swing in income growth. I think youre going to see a great volatility if you were to include the selfemployment numbers. But clearly they are relatively disappointing. Theres a bonus element to these numbers, as well, coming out. Well, there are still distortions. And i think that still makes the picture a little difficult to see. But i think still the reality is, of course, as we are still seeing the supply of labor coming into the workforce being relatively sizable, thats still allowing employers to hold off some really high wages at this particular point. The question is when does the Tipping Point come . Because, of course, if you juxtapose the earnings number this morning, real earnings are again going down. Thats going to be another headwind for consumption. I just wonder what we saw in the prices yesterday, the expectation is that rates will be cut sooner rather than later. Is that an argument that this isnt a temporary blip as far as inflation is concerned and the trend follow tess Growth Numbers quite frankly that were seeing here. If you look at Something Like the brc data and the cpi, those are rather disappointing in june. What weve found is that retailers are anticipate ago stronger june and perhaps the reality is they were hoping not to have to introduce the discount you get during that time of the year. Whether thats enough to offset the basis is an interesting question. That may well imply that we pass the trough in the cycle. And that, of course, just provides another headache for the bank of england when you consider the degree in the economy. That his thats a difficult measure to quantify. What about sterling here . We saw it pop higher on the Inflation Numbers yesterday under a bit of pressure on the unemployment. If youre looking against the euro or some of the dollar blog currencies, i think if we see small moves higher in the u. S. , we sell it. And i think dips in sterling aussie are buying opportunities. Its a bit more tricky. I think that gives you an opportunity if we were to see it again for that move. Well see it play out. Great to chat with you, jeremy. At the European Market trading session this morning, the German Market just shy of 1 now. But we caught the back end of the selloff in the u. S. Markets and them they rallied in. You would expect if there is a takeback authority, as far as the trading session is concerned, move on to the bond markets yesterday. Were just talking about it there, 37 r5 now, so 25 basis points high from what we were seeing last week. Foreign schan rates this morning, we did see the market higher as markets reflected on what janet yellen said. Citi today saying the buy here is to be long the dollar into that meeting. 1. 35 a 51. Sterling the pressure this morning, 1. 7135. The Unemployment Rate coming in 6. 5 . But a bit of softness wleeding through as far as average earnings are concerned. The italian lottery gtech is buying itt technology. Gtech says the deal will be transformational for the business. Shares in gtech are trading higher. Claudia is in malan. Take us through the details of the deal. Yes. Investors seem to appreciate this deal that is going to help gtech broaden its production aspect as well as its customer base. What this xheens is a 4. 7 billion euro deal and this means that theyre going to be holding 80 of the newly merged group that is listed on the new york stock exchange. The new group will have 6 billion euros in revenues, 2 billion in ebitda. It is expected the stock is under revision in terms of the target price, that they are going to benefit up to 200 Million Euros in synergies are going to be coming out in the deal. The italian operator will it leader in italy and europe is going to broaden its bases. We were saying in the social gaining, this group produces a slot. The slot machines are down, so for that group for igt, this has been a weak couple of years. But the domestic market for gtech is weak, as well. So this is expected again. This is a deal that seems to be appreciated by the market. Higher by 3. 47 . This is a deal that was in the works and this finalzation this morning helps boost the markets today on the ftse mib that is higher by 1. 3 . Casino sales beat analysts expectations along with price cuts in its french hyper market. Shares are up 6 this year . Elsewhere, mike ashley has pulled out of a boepus share scheme. The retailers executive chairman said recent speculation is behind the withdraw. Boeing is looking at building a taxi that will get people to the space station. Hey, welcome to the spacecraft. Tony wasnt even born when the Space Shuttle program began. You know were making history again. Now hes part of the team at boeing trying to build its replacement. So noel. Noel. Has that ever been done before . Never been done before. Boeing is competing against spacex to fly to the space station. Nasa wants one ready to go by 20117. Spacex has so far grabbed most of the headlines in the competition, offering up a capsule and rocket which elon musk basically created from the ground up. Boeing, however, is offering nasa a system which has worked in the past. I think you have to be error free, bringing in flight proven hardware and Technology Drives down the risk. Even the space suits is traditional. Orange as always been the new black. Look at this, a samsung tablet, all the astronauts will have them if boeing wins. And thats a big if. Each company has had to invest its own money. Thats part of nasas plan. Space adventures would like to use a seat for tour i have thes. So boeing has added things like blue lighting used on its customer air lines. Were almost at an inflexion point in space travel going from the military travel to space flight. Nasa should announce a winner next month, but if boeing loses, its reportedly preparing for layoffs. A sign that space has changed with budget and figuring out how to survive in this new era really is rocket science. Jane wells, cnbc Business News, houston, texas. We have to take a quick braet. Next on worldwide exchange, we speak to the ceo of the airbus group as their new model has orders at the air show. Were back in two. 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 groups ceo has booked its latest deal with airbus. Airbus expects Delta Air Lines to place an order for the more fuel efficient model. Stephane, what are we talking here in terms of numbers . Are we looking at guidance being raised . Yeah. Its in a good way rather than setting too high for this target. Thats the target from enders and actually the company is nearly there. If you take into account the order placed by asia, 50 units. Plus perhaps an announcement shortly. They talk about it, because the announcement will come shortly. Theyve announced so far this week. The Company Hopes to deliver and to deliver the orders below the number of deliveries. Thats 600 and something, thats the target. Well have to watch the monetary chief. This is what they were taking about the euro and how theyre managing to reshape the bit. They did it in the past. Its not a huge amount. Perhaps selling mover planes to be less exposed to the exchange rate. Its what the ceo of the airbus group told me at the air show. Thats the strength of the euro, he is not a problem. Its certainly much better than to have a euro dollar of 1 to 1 or 11. 20, 1. 35 or 1. 36 as were headed now. I think the company has to do the best it can to relaunch the program back in 2007 because of the weakness of the dollar. I think the company has to continue its internationalization. If you look around, a lot of Global Companies out of europe have deployed much of their manufacturing, engineering, much more outside europe to be less dependent on these currency things. And yes, it would be nice if the European Central bank would help us here. I wouldnt count on it. It hasnt happened in the past and sometimes be careful what you wish for. Youre not exactly sure what intervention would lead to. Now, the main thing for the company is to drive down its costs in many areas. Is it problematic for you . Well, it mablgs roughly 1 billion. Its a significant issue to us. I wouldnt count the central bank or anybody else would bail us out of this situation. The best thing they could do is drive down costs. The french finance minister is calling for a rebalancing of the currencies. Would you be able to sell more brains in euros . Absolutely. Were doing that already to some of our important european customers and i very much hope that in the future we can gradually increase the volume we are doing in europe. To avoid the planks of the euro or is it to avoid u. S. Regulations . No, not u. S. Regulations, but to be less dependent on the Currency Exchange between the dollar and the euro and i think were making new progress. We had a couple of customers like lufthansa who have been willing to do these kind of deals. Qatar is blaming airbus for delays on poor quality and thats really, julia, because it the customer of the airbus 350. I was just told that they were a very demanding client. Demanding. It sounds good when you say it. Airbus has to remove the old kitchen and the toilet to replace the floor and put it back in place. Thats the on him official explanation for the delay. Really . It is. Tough to impress. Well, its a bit of a price hike, you can be picky, you know . Absolutely. The customer is always right. The bavng will be headquartered in shanghai and its fist president will come from india. They will be paid equally by five countries. The white house says joe biden and ukraine discussed the separatists and escalation in the coming days. Joining me on set is markina. Martina, weve got nato saying russia is amassing troops on the board he, that theyre doing one thing and saying another. What are you telling clients here and what are they asking you . They already are looking at their local teens. And the real challenge for them is forecasting. How deep is the economy going to is slump . What is the effect going to be on rush na . This action pulled out of the region in ewe crepe and have been affected by it. The companies have pulled out . Not out of the market, but some of the regions where they cant distribute their products, for example. You cant actually sell there. Youre saying here for the bottom line is that actually despite whats going on, russia isnt less attractive to investors . Really . Its a more difficult market to invest in. We need to think about the kind of company they work with. Theyre there for the market in terms of very large population, very large middle class, about 6 million people. You have a lot of demand. This is lower for companies experiencing before the crisis with ukraine, and their longterm assumptions need to change. But russia is still a very important part of their portfolio and theyre not pulling out of the market. Its interesting. Weve seen president putins popularity ratings increase off the back of this. I look at some of these policies enacted cracking down the expression and swearing. And i just wonder what hes doing as far as the country is concerned here while using his high level of popularity to shape and create and influence here to a greater extent than he already have. I wonder if this is an opportunity to distract the russian government from the more popular problem. Now, of course, nobody is watching the economy so much. You has a lot of popular support. This is operatism earlier this year. Eventually the crisis in ukraine is going to abate. Theyre going to need to face the consequences of the economic growth. Is there going bow so much more pressure placed on the west . Yet again, were talking about sanctions again in russia. Russia wants to reach an agreement with ukraine and with the west that mooechs means ukraine doesnt enjoy, for example. Ultimately, russia wants a deal. The question is how far is this escalation of violence going to go . And would russia be forced to go through Eastern Ukraine in a western scenario . I think ukraine is going to be a big Growth Market after all of this is over. And russia . Russia, an opportunity in the Consumer Sector in energy. Its just a question of expectations. And the kind of investment we need in order to get to russia. Its great to get your view here, martina. Now lets recap some top news out of china. Chinas Second Quarter gdp spapded 7. 5 in Second Quarter. We also got strong investment and industrial output numbers. Our retail sales was inline with expectations. And china is moving off vietnams coast closer to the eye legion. The move could reduce tension between beijing and what annoy in the shortterm. They did find signs of oil and gas. Lets give you a look at whats on the agenda tomorrow. Business leaders from around the globe are descending on australia for the b20 meeting kicks off. David jones has a date with the courts tomorrow, meanwhile. Now the federal court anticipates consent is the last heard of before the deal goes through. Now, we have going to take a quick break, but still to come on the show, janet yellen triggered a in the selloff. Will see be more cautious for the day . Well take a look at how the u. S. Futures are opening ahead of the u. S. Open. Welcome to worldwide exchange. Im julia chatterley. Janet yellen is back on capitol hill. Yahoo hits the speed bump on the road to recovery. As Second Quarter earnings missed forecasts on another big decline in ad revenues. Intel says the worst may be over for the pc industry. Second quarter profits rise 40 as the company ships the Record Numbers shipped. And china gdp expands in the Second Quarter, hitting government growth targets and beating some forecasts. But investors think more stimulus will be needed to support growth this year. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. If youre just tuning in, thanks for joining us here on worldwide exchange. Youre looking at a live shot now on washington. Yellen will be back on capitol hill for a second day today. Ahead of that, lets give you a look at how the markets are fairing ahead of the u. S. Open. Futures indicating 57 points higher for the dow. The s p 5006 points higher. Relatively unchanged at the end of an interesting session yesterday. The nasdaq, 20 points higher, too. There were glimmers of hawkishness from yellen yesterday. Suggestions we may see rates rising sooner rather than later. Relatively unchanged for the dow and the s p 500. The nasdaq losing 0. 5 . Jp mor p p morgan adden 33 yes. Beating expectations on that more than anything else. Weve got bank of america to focus on today, so lots for investors to digest right now. Lots going on as far as the markets are concerned. 6. 5 right now. Balancing these crucial factors. A continuing recovery going on in that market, 3 gains for the psi market. Lets have a look at the foreign Exchange Markets. Gains, glimmers of hawkishness in the markets at least taking from some of yellens comments. Also still kernts about whats going on in portugal and the Holding Companies the bank is at the bottom of the food chain there. Theres still a focus for the portuguese market. Sterling, too, under a little bit of pressure. I mentioned the average Earnings Data putting a bit of pressure there. Were still above that 1. 71, the figure. Thats the european wrap. What about the Asian Session . Skree, gis all the details. Hi there, julia. Once again, the focus was on the china data. It was pretty solid. Second quarter gdp coming in at 7. 4 . It was better than expected. Also an improvement on the year on year basis and month on month. But remember that the markets and the economists that weve been speaking to do believe bolder measures are yet needed to consolidate this recovery in the broader Chinese Markets. Especially in the property sector which still remains the weak link in the broader economic system. The markets seem to largely ignore the data, which was curious. The shanghai composite was down marginally. What we saw there were some of the defense related i. T. Issues. Lets leave the focus on the nikkei. The nikkei 225 under a little bit of pressure, as well. No great shapes here. The currency markets are going to be quite interesting. Julia, you were talking about the dollar sentiment reviving somewhat because of that hawkish till that yellen gave. Q a on day two should be quite interesting. We should see some volatility in the dollar crosses. Lets not forget the data, as well. If Industrial Production coming out of the u. S. Is strong, if the fed beige book is upbeat, we could see further dollar gains. Yen may retrace and a weaker yen may be positive for the export related issues on the nikkei 225. Very quickly, the composite was at a 14month high. Election commissions, deadline through october 22nd, that is when they will declare the outright winner of the president ial election. The market is pricing in a victory when that day comes. Jakarta composite up by almost 1 . Shares were shaken yesterday following comments by janet yellen. The fed chair said valuations are, quote, stretched. She was asked whether low Interest Rates are contributing to asset bubbles. Low Interest Rates, i think, have had a positive effect on helping the recovery. But, of course, we have to be careful about looking for situations where low rates may be incensing behavior that could be dangerous to financial stability. And i particularly outlined in my remarks an area like leveraged lending where we are seeing a marked deterioration in underwriting standards and it looks like it may be part of reach for yield and were trying to deal with that through supervisory through supervisory means. The fed chairman took a cautious tone about the u. S. Economy after being quizzed about the timing of a rate hike. What we would be looking at is the progress were making towards our two congress equally mandated objectives, maximum employment and price stability or our 2 inflation goal. So theres no formula and theres no mechanical answers that i can give you about when the fift rate increase will occur. The chair woman and founder of chentrico global joins me now. What was your take on yellen as far as the comments were concerned . Glimmers of hawkishness . I think there were there were concerns there. I am fearful that the fed will either the fed has a bad track record. Theyre either going to be too late or too soon. Certainly weve heard commentary for at least several weeks now from James Bullard out of the st. Louis fed saying that we should expect or could expect a rate hike by 21 of 2015. The right now, the markets are set in mid 2015 to be at 11 by the end of 2015. Its still pretty mild if you think about it. So i didnt take a lot out of what she was saying, but i found it interesting that she was pointing to the continued drop in unemployment as a sign of positive. I think theres actually still a lot of concerns that i have certainly for the economy at the moment. Talk about that. So, for example, were seeing, for example, imf and world bank lowering their expectations for u. S. Growth for a total of 2014. And what theyre saying is that the winter freeze that we had, all of that activity that was lost is now lost forever. And that really, i dont think, has been taken into the markets at all. The markets are still quite brilliant. If you look at earnings right now, too, 8 anticipated pick up in earnings right now. Just a small fraction of that right now is about sales at 3 rather than what were seeing in terms of buybacks in m a. Thats a crucial problem, too, surely. Thats enormous, youre absolutely right. I think the expectation is Something Like 4 for revenue, which is extraordinary considering were coming in under 3 revenue growth. And the majority of that is, as you said, the result of the buybacks. Whats more important is were seeing a drop in buyback activity which tends to precede negative returns in the market or at least a you know, some kind of a decline in the market. The markets have been due for a bit of a pullback, at the very least. Theyve sluffed off every bit of the bad news that has come. Do you think based on what janet yellen said there that theyre going to be that much more sensitive to data just because she suggested the up employment and whether or not theyll have to pull rate hikes closer to the current levels or the current stage . You know, i think that if we were to see more discussion about that, i think that would be i think the markets would what about the june minutes . Its not new. Weve already heard this. Right. So for the market to pull this out, i think strange. Although yellen has been watching a fine line. Because she has times has said shes concerned about the strength of the market and the Unemployment Rate. And then shes also said we dont want to pull out too soon because we dont want to derail the recovery. So weve actually heard right now shes leaning in the other direction and shes been sort of very slowly trying to walk a very fine line. But i think that if you look at the participation rate, if you look at the growth in wages, those arent necessarily supportive of a strong recovery right now. We talked about stretch valuations and were going to come back to that. For now, on the earnings front, too, intel says the worst may be over for the pc industry. Broader profits and revenues by 8 beat forecasts and the company shipped a Record Number of chips. Fo stacey smith says pcs have stabilized and he expects shrinking demand in thien na and other countries to rebound as it has in the u. S. The market generally is being driven bay couple of trends. Its being driven by the consumer and its being driven by devices becoming more personal. For us, that means we have to push costs down, we ever to push batly life up. Youre seeing it with our product lineup. So theres no blinking for us. Were moving into tablets, were moving into thinner, lighter form factors. Thats where the market is going and the thats where the company is going. Intel rose 4 in after hours. We have a look at how they perform in the German Market session, if we can have a look at that. Is that coming . Yes, it is. Great. Up 6. 2 . So even more activity than we saw in after hours in u. S. Trading yesterday. Yahoo s Second Quarter profits fell missing forecasts by a penny. Revenue fell 3 , the fourth decline in five quarters. Display ad revenue full 7 and average prices dropped 24 . Yahoo blames trouble selling. The new ad system. The companys Third Quarter revenue outlook is also below forecasts. Yahoo is finding it hard to say goodbye to alibaba. It goes public in the u. S. In the summer. Yahoo trading right now in the german session, down by 1. 7 . They are weighing a decline it seems in the broader business by managing to hold on to a bit more of alibaba right now. Staying in tech, apple is teaming up with ibm in a play that could make it a major player in the business market. It will develop apps to run on apples system. Big blue will sell apple products to a vast number of business clients. Apple will provide support for the ibm app. The partnership is about transforming enterprise. Just the consumers that write me every day and say what a difference weve made in their lives. We want to play a part of that in business. Were doing that to some degree today, but arguably, there is a new level to achieve in business. So i think this is great for apple and ibm, but more importantly, its great for customers. Ibm and apple rose in after hours while blackberry selling its performance in the german session. Ibm up just over 1. 7 . Blackberry down 3. 2 . Lets give you a look at todays agenda in the united states. The june ppi is out at 8 30 eastern. At 9 15, we get june Industrial Production while at 10 00 a. M. , its the data from the National Association of home builders. Its another big day for earn g earnings as bank of america, u. S. Bank corp, blackrock and schwaw are out before the opening bell. Whats the longterm outlook for china . Stay tuned. Chocolate is very individual. White chocolate lovers dont like dark chocolate. Milk chocolate lovers dont necessarily like dark or white. Before we couldnt really allow the consumer to customize their chocolate. We needed a scalable Cloud Solution allowing them to select what they are looking for. Now there is endless opportunity to indulge. Customization is made with the ibm cloud. The ibm cloud is the cloud for business. Welcome back to worldwide exchange. These are your headlines. Janet yellen returns to the hill after raising tech value concerns. Yahoo misses on earnings as advertising revenues tumble and Government Spending boosts chinas gdp. The situation developments now with regards to the sanctions on russia. We know the u. S. Is already talking about it. Some comments now i tell seems from the european side. A draft statement from the eu leaders currently going on in brussels suggests that the leaders are going to ask the European Investment bank to suspend financing of new russian Public Sector projects. Theyre asking to consider halting cooperation products with russia except Civil Society projects. Theyre going to try and seek measures to Block International investments in crime na. Certainly piling on the pressure and the situation with crimea, itself. Theyre going to broaden sanctions to target entity thats undermine ukraines sovereignty. Give you a bit of perspective on this, the recipient of the london based ebrd, thats the European Bank for reconstruction and Development Funds and they lend 11. 8 billion euros to russia last year. So to give you a bit of an understanding of what the scale of money is that were talking about right now. Well continue to keep you updated as the comments come through. Now, leaders have signed a new deal to create a Development Bank in a 100 billion dollar Emergency Reserve Fund for the region. The bank will be headquartered in shanghai and its president will come from india. The subscribed capital will pay equally by the five countries. This as we learned that chinas economy grew 757 year on year in the Second Quarter, slightly above expectations and faster than the pace registered in q1. Gina is still with us. Questions about the quality right now of chinese growth when its about government stimulus thats continue to go maintain rates. Absolutely. This is about government stimulus. Youve seen continued lending by state controlled banks. Which sort of supports that idea. At the same time, were seeing a slow down in the property sector and there is concern there may have to be even more stimulus in order to maintain targets for yearend with the slowdown in the property sector and that remains an enormous risk to those numbers. Its interesting because we had an analyst on earlier in the show saying we were going the meet this 757 growth target right now. The question we always seem to ask is whether or not theyre meeting a target just because they say they are. Do you have any sense of that and whether it matters . I think a lot of this continues to be debt on top of debt. A rolling loan gathers no debt. And that is what has been happening in china for many, many years. The bad del debt problem continues to pile up and theyre adding on top of that. Youre asking about the quality of that growth. Im not sure its strong. I wanted ed to ask you abou whats going on in the equity market. It seems the equity markets is surprising. They see that at all or at least dont see it coming any time soon. Whats going on right now and do you think there is potential for investment in the Chinese Market particularly given some of the data we appear to be seeing now . Well, certainly the equity markets sell off quite dramatically. And i think from a valuation perspecti perspective, it probably represented some interesting opportunities for investors because they certainly were sort of pricing for catastrophe. And, in fact, we know that the government has always stepped in and provided support where necessary. And that will likely continue. The likelihood of a hard landing in china is small just because theres so much political will behind the determination to hit these numbers. Now, that doesnt mean that there isnt going to be an inevitable event that has to happen at some point, but it can be moderated with the reserves that china has for a very long time and you have to remember that. We have seen significant gains made in the last few months. I look at the s p market again and i look at bond prices and both are rallying again and i wonder whether were seeing the same kind of heated inflows that our fair weather friends when things get to particularly when youve got markets like the u. S. Talking about rate rises. I think a lot of that has been a search for yield. Youve seen very, very low rates obviously in the u. S. And the continued showers in the debt markets has been about that. The equity markets have been about cheap valuations. Those valuations are not as cheap as they were. But there is still growth in emerging market economies. I think even after we see rate hikes in the u. S. , they could still look interesting. The debt markets, however, would be a lot more vulnerable. Gina, youre staying with us. We have to take a quick break. Still to come on this show, thinking about renovating your home . Well talk to the ceo of houzz, next. You cant always see them. But its our job to find them. The answers. The solutions. The innovations. All waiting to help us build Something Better. Something more amazing. A safer, cleaner, brighter future. At boeing, thats what building Something Better is all about. Home diagnose app houzz has been helping homeowners remodel their houses since 2009. It now has over 200 monthly users and 16 million mobile app downloads. It valued the company at more than 2 billion. Joining us now, the ceo and founder of houzz. Welcome. Explain a little bit about how the platform works, bringing together contractors, architects and homeowners. So houzz in general is a 21st century way to design your home. Imagine 3. 5 million pictures, and these pictures tell you everything about who did this. How they did it. You can ask questions, you can contact the people that created the space. See all the products and materials and paint colors and just let it all. Its just wonder land for all the people that want to design their home in a better way. And how big or small jobs are we talking if youre matching people to contractors . We just have a very, very Big Community of both homeowners and professionals, architects, designers, contractors, basis renovation people and theyre collaborating with each other and using the tools to make lots of homes beautiful. And the project can be small as designing your little bedroom or big like building your very, very big house and everything in between. So youre starting up in the uk for today. Congratulations. Thank you. Youre looking at house prices rising here in the uk and thinking theres more capital for people to spend to look at these kinds of things. Were looking at our community. Which is very fortunate. In 2015, 35 of our users came already from other countries out of the u. S. Its very, very big. You have a renovation nation here. 82 of uk users said that in the next two years, they are planning to redesign their homes. 41 said they were planning to renovate their homes. So its very, very big and people are very, very excited to have us locally here. You just said when we came into this that your valuation seems to be around the 3 billion figure. Are you monetizing this . How are you monetizing it . We do have in the u. S. Revenue channels. We work with all the big brands of the industry leaderses of their images as well as we have a problem for all the Small Businesses or professionals to build their brands locally. So we monetize business. Are you making profits . One of the incentives of being a private company is that the were not but were doing very well, thank you. You started this business for a reason because you wanted to do this yourself. Is there a message there for other entrepreneurs out there and finding an idea where the value independently . Actually, it was my husband and i that cofounded it after we had our first project trying to make our process better. And it just grew and many people wanted to join that project. So we actually decided to turn it into a real company. So bootstrapping and finding out if your idea is a good one, its a good idea. Ati, great to have you on the show, and good luck. Thank you. Now im going to give you a look at the u. S. Equity futures as we head towards the open. Right now, the s p 500 higher by 6 points, the dow jones 5 points and the nasdaq 21 points higher. Were going to take a quick break. Spokesperson you can get a 1,000 turbocharged reward card with a new volkswagen turbo. So why are we so obsessed with turbo . Because theres nothing more exhilarating than a powerful ride. And you can get that in places you might not expect. Like the passat. And also in the funtodrive jetta. In fact, volkswagen has sold more turbos than any other brand over the last ten years. That is a lot of turbo. Vo hurry in and you can get a 1,000 turbocharged reward card when you lease a new 2014 passat s for 219 a month. Welcome to worldwide exchange. Im julia chatterley. These are your headlines from around the world. Janet yellen is back on capitol hill today a day after the fed warns the valuations of some tests and other high flying stocks may be a bit stretched. Yahoo hits a speed bump on its road to recovery. Second quarter earnings missed forecasts on another big decline in ad revenues. Intel says the worst may be over for the pc industry. Second quarter profits rise 40 as the company ships a Record Number of chips. And leaders dropped out a range of fresh sanctions against russia. European investment banks and the ebrd are both being asked to stop financing projects in the country. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. If youre just tuning in, thanks for joinings us here on worldwide exchange. Youre looking at a live shot of washington. Janet yellen back on capitol hill for a second round today ahead of that. Lets give you a look at how the markets are faring ahead of the open. Right now, dow futures indicating higher by around 53 points. Markets unchanged in yesterdays trading session. Initial selloff rallying into the close on the back of yellens comments and plenty of earnings. The banks outperforming a gain in yesterdays trading session. The s p 500 right now indicating higher by around six points and the nasdaq lower in yesterdays trading session by around 0. 5 . Today indicating higher on the futures by around 21 points. The European Markets this morning, ill give you a look at those now. 2100, gaining 1 point. We saw unemployment coming in at 6. 5 . A bit of softness still on wages. One of the key concerns for mark carney here is the timing of rate hikes. When will he be able to do that if wages are still soft . The french markets gaining today and were seeing gains for the portuguese markets, despite some ongoing concerns still about the Holding Companies. Right now, very contained in the portuguese market and the Overall Index gaining today. The yen is how do you make money in these markets . Listen in to what experts have been telling us. More recently in the lft two months, weve seen a return of global investors. And Investment Grade bonds. And from europe, as well. So thats coming back. I think the slowdown in the China Economy had a me work effect on mining prices and stocks and all the rest as the economy slowed. I think its also important to remember that the economy is still growing at 7. 5 . So its still consuming a lot of materials than we saw. I think its probably swung too far in the negative direction. The prices actually for the doubles and so on. Since 2011, weve seen prices which means europeans can sort of come back in. The company shipped a Record Number of chips. Intel expects Third Quarter revenue to top analysts estimates. The cfo, stacey smith, says pcs are stabilized and he expects shrinking demand from china and other companies to rebound as it has in the u. S. Market generally is being driven by a couple of trends. Its being driven by the consumer and being driven by devices becoming more personal. For us, that means we have to push costs down, we have to push battery life up. Youre seeing it with our product lineup. Were moving into tablets, were moving into more mobile pcs, thats where the market is going on and thats where the company is going. Have a look at how its performing in the German Markets higher, by 6. 5 . Yesterdays Second Quarter profits fell, missing forecasts by a penny for yahoo . Yahoo reporting after the bell, results came up shorter than expectations on the top and bottom line. Earnings per share of 37 cents were a penny light. The companys guidance for the Third Quarter was less than expected. On the earnings call, Marissa Mayer kicked things off by talking about her vision for transforming the company. T not a singular event. It is a series of events and quarters, some more challenging than others and some more successful than others and it will take time. In the case of yahoo identified said in the past that we believe a transformation of this size and scale will take multiple years and we continue to believe that is the case today. Even though, given our top priority of longterm sustainability growth, we are not satisfied. Mayer talks about the companys strengths and mobile and the potential for advertising that allibaba was i the spotlight. Along with its earnings, yahoo announced the plans to reduce the number of shares from 208 million to 140 million and said that the company is committed to return at least half of the after tax proceeds to shareholders. Back over to you. Apple is teaming up with ibm in a partnership that could make the iphonemaker a major player in the business market. Ibm will develop more than 150 arms to run on the apple system. Big blue will sell the product to a vast number of its business clients. Apple ceo tim cook tells cnbc the partnership is about transforming enterprise. Just the consumers that write me every day and say what a difference weve made in their lives, we want to play a part of that in business. Were doing that to some degree today, but arguably, there is a new level to achieve in business. So i think this is taet for apple and ibm, but more importantly, its great for customers. Ibm and apple rose in after hours while blackberry fell and that momentum continuing as you can see in the german session, apple up just shy of 2 . Ibm, similar story and blackberry down over 3. 2 . Tech shares were shaking yesterday following comments by janet yellen. Fed chair says valuations in the sector are, quote, stretched. Gina is still with us. Pointing out the limit aegzs of her own easing monetary policy, but its a problem since april when we got that initial selloff. Absolutely. And that off continually in the small cap names. And so the tech sector in the russell 2,000 has an enormous number of companies that had either no or negative earnings. That has been under way in terms of watching that correction happening. But we havent yet seen that expand up into the large cap spaces and the larger names. So we still have extraordinary valuations out in the nasdaq, out in the s p 500. Too high valuations . Some of them are extremely high and some are not. You mentioned apple, for example. Apple is quite cheap relative to other tech names. And so i think their move is going to be very important for them. But there are other names, like tesla, that are still a bit of an option on whether or not elon musk is going to be able to provide 100 years worth of infrastructure into a brand new industry, the electric car industry. Whether or not you believe valuations are safe in the tech sector, lets bring it back to janet yellen, to the issue at least. She said in the recent weeks that were not going to raise rates to pop bubbles, were going to use macro prudential tools. Can we expect them to point out hot spots and how much of a focus should it be for investors . It wasnt that much of a pullback from these stockes. No, it wasnt. And i think if you look at how much pullback needs to happen, we still have a ways to go. I think irwin, a contributor at the New York Times commented and called this the everything bubble. Everything right now is expensive. Which is making it very, very hard for investors to figure out where to put their money. The question is which bubble is going to pop first and thats a bit of an event risk rather than something you can invest in fundamentally. A lot you can look at where fundamentals are a bit of a eye gathering. Gina, thank you for joining us. Alan mulally has landed a new gig two weeks after giving up his ceo of ford. Hes joining googles board. Google hopes its Android Software will become the norm for everything from texting to media and cars. Google has spent several years develop ago selfdriving car. Google in the German Market session today higher by around 0. 9 . Lets take a look at todays other top stories. New documents show General Motors kept mostly silent on crashes involving faulty ignition switches. Gms response toes safety regulators cast doubts about how forthright it was over those effective parts as it repeatedly found ways not to answer questions about what led to crashes. On thursday, gms top lawyer will testify at the Senate Hearing along with Ceo Mary Barra and the head of adelle phi which supplies the ignition switches. So underperforming the broader general market. Tesla has confirmed that it does see a new electric mobile to compete with the bmw3 series. The car is expected to deunveiled in 2016 and go on sale the year after. Its rolling out its new model x next year. Its expected to be 20 smaller than the current model s. It should cost around 35,000 thanks to cheaper battery technology. Tesla trading in the German Market session higher by 0. 6 . Coming up, talking car phone tax inversions, u. S. Secretary jack lew is pushing congress to crack down on companies that are using to try and avoid paying higher corporate taxes. Well discuss the details after the break. Welcome back to worldwide exchange. These are your headlines. Janet yellen returns to the hill after raising tech value concerns. Yahoo misses on earnings. As advertising revenue tumbles and Government Spending boosts chinas gdp. Some other stories were watching, russia is being targeted by eu leaders wielding a new range of sanctions. The European Investment bank and the ebrd are both being asked to stop financing projects in the country. To get some context, russia has tra di traditionally been the bank for reDevelopment Funds. They lend 1. 8 billion euros there last year. The white house is urging congress to curb moves. Mary is at cnbc hq with all the details. Good morning, julia. I think a lot of people are going to be talking about this. Very few people are neutral about this issue. The Obama Administration is urmging lawmakers to take immediate action to the socalled tax inversion deals. Treasury jekt jack lew says congress should pass legislation to shut down this abuse of our tax system. Inversions have become an attractive use for companies. A companys foreign earnings are subject to u. S. Taxes when theyre repatriated to america. Jack lew says what we need as a nation is a new sense of economic patriotism where we all rise or fall together. We should not be providing support for corporations that seek to shift their profits oversea toes avoid paying their fair share of taxes. U. S. Drugstore chain walgreens is considering an inversion in switzerland. More than 50 u. S. Companies reincorporated overseas for the past decade. Most of them by 2008. A new study estimates the u. S. Could lose about 20 billion in revenue over a decade if it doesnt limit tax inversions. The Obama Administration has suggested raising the threshold for Foreign Ownership required for such a deal from 50 to 20 . Thats been backed by liberal democrats including senator ron biden. But republicans and some democrats favor limiting inversion through u. S. Tax reform. Julia, back to you. Jack lel will give the delivering speech today. Now, the space age is back on. Boeing is competing to build a taxi to the International Space station which should be cheaper than the 70 million nasa currently spends paying the russians for the journey. Hey. Hey. Welcome to the spacecraft. Tony wasnt even born when the Space Shuttle program began. You know were making history again. Now hes part of a team at boeing trying to build its replacements. So noels. No welds. Has that ever been done before . Never been done before. Boeing is competing to build a space taxi to the International Space station which will be cheaper to fly than the 70 million a seat nasa is currently paying the russians. Nasa wants one ready to go by 2017. Safex has currently caught the majority of the headlines in the competition. Boeing, however, is offering nasa is system base odd what is worked in the past. Bringing in flight crews and hardware and Technology Drives down the risk. Even the space suits look tradition. There are some differences. This is a samsung tablet, a galaxy. All the astronauts will have them if boeing wins. And thats a big if. Nasa has seeded all three companies and each company has to invest some of its own money. Leasing space on a capsule it help develop allowing the builder to keep the kaus capsule and the remaining space. Bigelow air space would like to lease the whole thing to set up space habitats. Boeing has added things like blue lighting. Almost like a deflection point in space travel, going from the military like interiors and to the commercial airlines feel. Nasa should announce a winner next month, but if boeing loses, its already reportedly bracing for layoffs. I think it would be important to close that business a sign that space has changed with budgets and figuring out how to survive in this new era, it really is rocket science. So now its asking for creditor protection. We are seeing the portuguese market higher this morning. We have seen portugal raising six month and 12month debt this morning. Six month yield coming in at 0. 24 . The last time they auctioned debt that rate was 0. 43 . So a 20 basis point improvement in terms of the cost between march and the current level. In portugal, its a 12 month yield coming in at 45 basis points. They did last issue it in june. You get a sense that the bleed out in terms of funding costs in the last month or so. But also the improvement that weve seen since march of this year and the current date. Lets have a look at u. S. Futures as we head towards the open of the u. S. Equity market. Right now, taking back from the losses that we saw of the up changed session yesterday, right now, s p 5006 points higher and the nasdaq 22 points higher and the dow jones 57 points higher. Joaning us now is christine short, director at s p capital iq. 2 expectations were the financials were going to let us down this quarter. So far what weve seen has beat on the top and bottom line for some of these banks. Its true. Weve seen some impressive results from the bank. Financials are still expected to be the laggard for the season. However, if you look back last week when wells fargo kicked off earnings season for the banks, they met on the bottom line, beat revenues, and all the banks this week had impressive beats for earnings and revenues. I think despite that, the reason were still seeing financials as a lacker is because of the year on over year comparison. So theres still a challenging environment out there for banks. Whereas it was much better in the Second Quarter of 2013. Theyre seeing challenges with the u. S. Housing recovery that hasnt quite recovered as much as people had thought, sort of stagnated at this point. You can see that in low mortgage applications, in low mortgage originations, which many of the banks have mentioned in their press releases, youve got lower net interest revenues. Thats due to the prolonged low Interest Rate environment that banks are dealing with, lower trading volumes for currencies and bonds. And then, of course, you have some of these large litigation fees stemming from the mortgage crisis. Can i ask you what this has done for the overall growth race of the sector because weve got bank of america, weve got Berkshire Hathway to look forward to, too. Yeah. Even with the beats, production has seen a financial growth rate come down. So just last week, we were expecting negative 1. 5 for financials. Were now looking at negative 3 . A lot of this does ride on bank of america, which i think is a wild card. Just like week, we were expecting they would post 25 cents a share. Today theyre looking at only about 7 cents a share. You can see analyst ves gone in and ratcheted down their estimates for bank of america. Were not sure what that litigation fee is going to be today. Last quarter youll really it was 6 billion and that impacted not only the banks, but the overall financial sector. Well be interested to see that report this morning. Its gn great to chat with you. Dont forget, jack lew is giving the opening key note speech at the delivering alpha conference at 8 30 a. M. Eastern on squawk bo box. Thats it for todays show. Thanks for watching worldwide exchange. Im julia chatterley. Ill see you back here tomorrow. Announcer welcome to this special edition of squawk box, live from new york city, the site of cnbc and Institutional Investors Fourth Annual delivering al fan conference. Joe, becky and andrew in the middle of all the action, getting ready for a virtual whos who of the investor community. Lee cooperman, ken griffin, carl icahn and a mystery guest. It all gets started right now on squawk box. Good morning, everybody. Welcome to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. We are at the pierre hotel today. Were getting ready for the delivering alpha conference. Weve got a huge lineup coming up today, including a live key note speech with treasury secretary jack lew. Secretary lew plans to call on Financial Firm toes be more vigilant on cyber attacks. Theres the issue of tax inversions. Well have more on that coming up in just a moment. Among our other headliners this morning, the man who runs floridas pension plans, ash williams. Nearly every Hedge Fund Manager is in attendance at delivering alpha today, they will be clamoring to get his business. Coming up at 7 00 eastern time, we have lee cooperman. Hes the only investor that has been a part of every delivering alpha event
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