i'm christine tan. in asia yeah, the nikkei falls more than 2% as core machinery orders fall to a 2% low. and i'm ross westgate. the chinese president heads home early to deal with unrest. >> and i'm scott wapner in the u.s. alcoa leads the blue chips out of the starting gate kick off earnings season when it reports later today. hello and welcome to cnbc's "worldwide exchange." the earnings season kicks off later in the u.s. the g-8 is under way, as well, in italy. plenty of data coming out, as

well, all over the globe. we'll get to all of it during the course of today's show. the ftse cnbc global 00, currently down 25 points. we saw wall street hitting a ten-week low. at the close yesterday, the talk of a new stimulus plan. right now here in europe, an hour into the trading day, not quite as bad as the fall christine was talking about yesterday. down .7% for the cac who at the moment. insurance, financial goods and services are the weakest sectors on the urgent on the currency markets, the yen has hit its highest level against the euro and the dollar. dollar/yen, 94.20. euro/dollar, .3885. sterling/dollar, 1.6078 and the euro is firmer against the pound, as you can see. we continue pulling the risk appetite and the dollar and the yen continue to benefit,

christine. >> and the yen hitting the japanese exporters. let me tell you more about that. also the talk of a second stimulus package from the u.s. really keeping investors away from the markets. the kospi down 0.2%. the shanghai market lower 0.3%. profit taking in hong kong, down 0.8% as the bombay sensex continues to fall after yesterday's climb, down 2%. oil is falling as doubts about the strength of the global economy continue. rate now, $62.11 with nie neck down 82 cents and brent is lower 68 cents at $62.55 a barrel. the weekly u.s. inventory report will be out at 10:30 a.m. new york time. a dow jones forecast calls for oil to drop by 2.3 million barrels. gasoline and distillates to rise

by 900,000 and 1 many 9 million barrels respectively. scott, how are the u.s. futures looking? it is a big day here in the u.s. with the kickoff to earnings season. certainly would he we're coming off that 2% slide across the board yesterday here in the u.s. right now, the dow looking about 20 points above fair value or so. the nasdaq will be interesting to watch today on word that google is planning a new operating system. so that stock is going to be in focus today along with microsoft. we have treasury openings on tap today. let's take a look at the bund yield right now as we focus on treasuries. 3.27% where the ten-year bund is. let's focus on the ten-year treasuries because there is a ten-year auction today. demand continues to be fairly good for the auctions here in the united states. 3.44% is where the ten-year note

still stands here today. gold meantime, let's take a look here. we set ourselves up for earnings season and talk about that risk trade a lot. gold down 2 bucks, $920.95. ross. the g-8 kicks off today with a draft warning and there are signs of stabilization. the top eight economies are gathering in laquita, italy, for more than three days of talks where the economy and regulation are topping the agenda. but the chinese president has decided he will no longer attend the summit. he's heading home early to deal with riots that have left 167 dead. the measures follow deadly clashes between thousands of hand chinese and muslim -- in the country's worse ethnic

violence in decades. that's what's happening in china. what is happening in italy at the g-8? claudia, how do you think the departure of the chinese premier will impact the discussions? >> reporter: well, it's being said, ross, that it's going to lower the attention on some very big issues, first and foremost, the economy. but also the environment, an issue many were going to approach him on. but that's not the only thing going on here, ross. right now, we are so close to the touchdown of barack obama in rome, air force one is expected to land in just a few moments. after that, barack obama will come to this area where i am standing, just moments, meters away from where i am. i am in one of the old city of laquila. this has been the choice of the

venue, a very criticized choice. we are in the middle of the countryside, so very difficult to organize. we, the press, are staying about an hour and a half away from here. tens of thousands of people have been brought in because of security, security because of the remote area and because of after shocks hitting this area. it will only take three minutes to get out if there were any reason the need to get out. a little different for us, it could take us longer for the press and the people here. all these leaders are arriving. the general chancellor is arriving to laskata. once they get here, they're coming to laquila and ona, another city that is hit heavily by this earthquake. a lot of anticipation to this meeting. but the hu jintao absence, of course, is going to create a

little bit of change on the expectations from the final press conference. the environment is certainly one issue that he was going to be put to task on and things like currency, not on the agenda, but sernlt of interest to many. 40 presences, heads of states and delegation, very much in terms of numbers, a g-8 in a league of its own. back to you, ross. >> we'll check in with you later. thanks very much indeed, claudia. thanks very much indeed for joining us. taquala, i wonder whether i could start with you. just looking at where we are with the markets for the moment, we saw the u.s. down on stimulus plans. what will it mean for investors? does it diminish the fact that the chinese minister has left

the g-8? will it diminish the importance of it as far as investors are concerned? >> i think the g-8 summit will remain a key focus for investors for this week given the outlook of policy action, the short-term development of the equity market. there has been renewed talk about the need for a second stimulus package for the u.s. with that disappointment for the june report. it is understandable that the obama administration would want to take a further proactive measure to divide the domestic economy. but on the other hand, we believe this is going to be a difficult decision for obama to make given that further stimulus package would underpin the -- of the fiscal deficit and u.s.

governments is very tense to try to support the market confidence in the u.s. treasury if there is an uncontrolled expansion in the fiscal deficit, this is going to cause renewed concern in the market on the credibility of the u.s. dollar's outlook as well as the u.s. treasuries. so i think it is not going to be a easy decision for the u.s. admin stragsz to advocate a second piece of costimulus package. >> marquoli, there was talk of stimulus yesterday. was that really a reason to sell stocks or was it just an excuse? we saw the bond market and a couple of auctions went fairly well. >> well, our general view is that, you know, just to be back, it's, again wab quicker call

into the markets just to know the very legacy, there is no easy way out. we are in this position where the growth expectations are very, very volatile and fueled by large regional diversion. we have a caring of synchronized slowdown last year and now we are in a desynchronized recovery. so we are quite consistent to the recovery in the midterm. we know there are sudden -- to be seen, especially what we've seen as critical is the corporate investment for productivity that would be resumed in the coming months. and we are in the crossroads there. we are just waiting for the first -- you know, the earnings season for q2 in the u.s. and to see to what extent corporate will be ready to reinvent by the start of 2010. it's absolutely critical. this is the reason why we think there is so much volatility in

the market and this is also the reason why we have just, in the past, simply softened our defensive line. >> marc-ali, it's scott in the united states. you mentioned earnings here. what's the most important thing you want to hear come out of earnings for these companies? >> the most important things we want to hear from these earnings outlook is precisely that the company feels now ready not to just be in a kind of, you know, cost cutting strategy and being ready to invest now and especially, you know, focusing on productive oriented investment. as we know that we are experiencing a kind of change in growth, we know there is a lot of excess capacities to manage. but the very point is that we

need to see the corporate now are ready to go back to product investment and they are considering that margin pressures will ease over time especially by year-end. this absolutely for us is critical. >> and cheuk want, commodities seem to have run out with oil prices sliding. what's your outlook there for commodities? >> yeah. we believe the commodities sector will likely see a further correction in the short-term after the very strong rally of commodities in the second quarter, which is largely in line with the rally of risky assets. we expect there would be a short-term pullback and investors be focused on the demand outlook. but in regard to the outlook for oil price and commodity price

recovery, we believe we are moving towards the end of the recession and we are going to enter the global recovery in the next two quarters. so we expect commodity price, demand and outlook to see better outlook in the next few months. the near term correction is going to create buying opportunity for a long-term investor and we are particularly positive on precious metal and agricultural commodities because of the positive fundamental outlook. in the near term, oil and base metal will likely see more pressure because of the lackluster demand figure. but we expect the cyclical recovery will underpin a rebuff

in demand for industrial commodities as well as energy and this is going to underpin a recovery of oil price to our 12-month target of $80 to $80 per barrel. so we would advise investors to take advantage of the short-term pullback to rebuild position in energy commodities. >> okay. so you like energy, cheuk want, this is christine here. from where you sit, you're talking about countries like china and india. from where you sit, what insight can you give us that makes you think china will bring us out of this recovery? >> for the second half of the year, investors are mainly focused on the output. we have already seen the performance of the asian equity market. the global benchmark is largely undered pinned by the strong recovery output of the region,

mainly led by the early recovery of china and india. we expect china and india will remain the key engine to dry the cyclical trends in the region. so we expect there would be a short-term technical correction for the asian equity market in the next three months. but this is going to be a healthy consolidation. >> okay. >> and the with the consensus in earnings upgrades, we do see positive rating potential after the q3 corrections. >> cheuk-want, thank you very much indeed for that and marc-ali, as well. there we are showing pictures of air force one landing at the champino airport, one of the airports of rome and then they'll make their way over to la keel la. the bank of england has begun it's two-day meeting

today. policymakers are expected to inject another 25 billion pounds into the economy in order to tack trillion reseg. fresh data out this morning shows uk houses fell in june. consumer confidence rose last month, according to the nationwide. the white paper will unveil a mass of papers repeated to stop the credit crunch. alistair darling is expected to focus on banks having better capital reserves and on separating everyday banking from riskier activities. that full announcement is expected at 13:30 cet. shares of infineon are trading higher in germany after the company said it's going to sell its communication into golden gate capital to the

equivalent of $350 million. the move is an attempt to refinance and focus on core businesses such as energy efficiency, communications and security. despite this, some analysts remain concerned about infineon's cash position. ross, here in asia we had worse than expected economic data from japan, the world's second largest economy. we have data showing core private machinery orders hitting a record low in may to just overed 7 billion. this is the services sector scaled back spending in the face of weak domestic demand. meanwhile, the current account balance fell by the rest of the steeper than expected 34.3%. elsewhere, according to the chinese reviews, china steel mills have agreed to a 33% cut in iron ore prices. that's a smaller than expected

cut china was hoping for and is in lean with what bhp billiton struck with mills. china will adhere to the 33% cut for a six-month period rather than four years. alcoa reports second quarter numbers after the closing bell today, assuming its traditional role as the first blue chip company. alcoa is expected to report its third straight loss. although they have rebounded modestly in recent weeks. ceo clause klinefield says he's sooep seeing signs of a recovering or of a bottoming out in some sectors. alcoa stock is down 16% this year.

and you can get more news, videos and blogs on today's market-moving news at cnbc.com. still to come on the program, what will set the tone for earnings season? china's president had headed back to beijing from italy. what does this mean? the g-8 meeting continues to be live in italy. and oil prices rise for the second consecutive day. lllll

these are the pictures of air force one. it has just landed in rome to deliver tt barack obama to the g-8 meeting which is just outside the capital of italy. of course, we are having coverage of the g-8 over the next thee days. already, of course, the chinese premier have had to fly home. all right. we're just waiting for the president to get off the plane. let's see what's happening with the global equity markets. chloe will wrap things up for us

in asia. stephane is in paris, patricia is in germany and becky is in london. >> european markets in general look weak. the ftse 100 down inti .3%. definite off the lows in the session. let's take a look at some of the biggest decliners on the ftse 100. amongsted them we see shares of tullow oil dropping by 3.3%, one of the biggest decliners after petrofac. they came out today and said they see the first half heavy knew down by 23% largely due to lower pricing for oil and the stock is dropping back accordingly. 3i is trading lower, as well. the shares of 3i dropping by 2.75%. this company came out with a trading segment earlier on in which they told us that they have cut their debt by half, but

they continue to show the rate of investments. now to patricia for the german trade. well, our downward momentum is continuing, rebecca. the only thing we say is saving us is the low volume, about 15.9 million shares have traded. only s.a.p. and metro bucking that trend. on the downside, it is the financials as well as m.a.n. and immune itch re, it seems a couple of projects are stalling or might be stalling in the u.s. as well as brazil. at the moment, thyssenkrupp down about 1.4%. a big winner, though. look at infineon, 7.9%. to the upside. they managed to sell part of their business to the american private equity company called the golden gate capital for $250 million. it's the wire line communications business. the market is reacting positively because infineon is proactively trying to look out

for refinancing opportunities. and with this kind of deal, they have found that, as well. interesting, of course, you see all the costs are a little under pressure. it seems that the funds in terms of stimulus packages out here in germany are starting to run out in 2009. over to paris and stephane now. >> over in paris, regarding the french gdp for the second quarter, the central bank is expecting a 0.4% decline in the second quarter compared to the price forecast of 0.5% decline. but the market is lower once again with eads trading lower after the company announced that he's looking with acquisitions by the end of the year in the united states he could spend up to $500 million with an acquisition in communication training on unmanned system has been made by the ceo for morth america of eads. also trading lower, credit ag

agricole which is facing increasing pressure to sell part of its stake in italy. claims that the french bank is not complying with anti-trust regulations and asked the anti-trust authorities to look at the case in documents. credit agricole was supposed to bring back its stake to below 2% this year and the french bank has a 5 -- 8% stake in the italian bank. that's the story this morning in paris. over to chloe in singapore. >> thank you very much, stephane. plenty of negativity out here in asia. but the australian market did manage to close a point higher and especially getting some lift from some of the big banks there. and rio tinto higher by 1.8%. bear in mind, rio executives were detained in china, not even clear whether it was shanghai or beijing and at this moment, the

government is being pressed for reasons. in the greater china region, the hong kong market closing to the downside and banks getting -- especially the mainland banks to the down side, china merchant bank off nearly 4% on news according to sources that it might be a rights offer to the tune of $3 billion. let me wrap it up there for now and send it back to ross. >> thank you very much, indeed, for that, chloe. we're looking at president barack obama and the first lady stepping off of air force one. they have just landed in italy for the start of the g-8 meeting. claudia, there has been pressure talks in the uk that the italian government couldn't decide on the jean and they've handed it over to the u.s. government to decide what this agenda should be for this g-8. how is mr. burlisque going to respond to those reports? >> well, ross, he responded yesterday in his press

conference in a strong manner. he said that that news that came out from the guardian was a big mistake by a small newspaper. so he was very upset and said that the conference call was actually regarding the pittsburgh g-20 for september. so it had nothing to do with the g-8 that is being held starting now here in l'aquila. he talked about the food program saying that that was an italian idea that had been laid out and that the americans liked it, they're sort of adopting it. so he really was against and very disturbed by all this. of course, it can be expected. this is an agenda that many are concerned may not bring to very many concrete final statements on friday. >> okay. claudia, thanks very much, indeed, for that. that's the latest there. the president, as you can see, just got into the helicopter. i'm just noticing the cigna of the doors on that helicopter, christine. i don't know whether you noticed it. chunky.

>> i didn't, but thank you very much for pointing it out for us. i wouldn't have noticed it otherwise, ross. only you would have noticed something like that. coming up on the show, plenty of things to talk about. "worldwide exchange," japan's machinery orders falling to a record low in may. will this prompt the government to boost the economy? and preparations for the g-8 have been so chaotic that some say it's going to cause italy to be expelled from the group.

we are getting pictures that marine one is taking off to bring the president to the place of location of the g-8, which is l'aquila, which is 1 1/2 hours away from rome. there it is, taking off with president obama and his wife inside. here on "worldwide exchange," i'm christine tan. machinery orders fall to a record low. and i'm ross westgate. as christine was saying, the g-8 summit is getting off to a shaky start. the chinese president has had to head home early to deal with

unrest. and i'm scott wapner. alcoa kicks off the earnings season when it reports results later today. so welcome to the program. we are bank. the ftse cnbc global 300, today, is a little soggy. we're currently down 19 points. we saw, of course, u.s. markets closing down their ten-week lows yesterday. so an hour and a half into the trading session here in europe. we haven't quite followed that. in fact, the picture certainly turned around. we were down to well over .35% half an hour ago. right now, we've had a little bit of green on the board for the xetra dax. it's absolutely flat, of course. just getting a little bit more confidence than we had first thing this morning. on the currency markets, weaker equity markets in the u.s. and asia meant that the dollar/yen got stronger across the board. dollar/yen, 94.32. euro/dollar, 1.3902. sterling/dollar, just back over

1.61. so they're recovering earlier ground. but the yen, indeed, having an impact today. >> indeed in the japanese market. asian markets today, a really negative session. a lot of investors staying cautious. the talk of a second stimulus package from the u.s., keeping equity investors away from the markets. nikkei 225 down 2.4%, a six-week low. the kospi down .22%. the shanghai xotit down .3%. the hang shang down 0.8%. the bombay sensex continues to fall down 1.5%. a lot of questions about the speed of recovery, scott. >> yesterday was a steep slide is in the u.s., almost 2% across the board. there were concerns, as ross has been mentioning, of serious talk about a second stimulus package. we're on the brink of earnings today with alcoa after the bell. you see the futures have at least reversed from the dow

perspective. but they're still ahead of fair value by 15 points. nasdaq and s&p ahead one of the top stories that's going to be focused in the nasdaq today with koogel shares. quite an interesting story there. more treasury auctions today. so far, demand has been pretty good and that has given a bit of lift to the bond market. take a look at the ten-year note, by the way, and it's 3.44%. joining us now is darah maher. dara, i mentioned here about the stimulus talk that sort of took the steam out of the stock market yesterday. i'm curious, your thoughts on whether you think a second stimulus package in the u.s. is going to happen. >> whether it's needed or not, it has to be a possibility. one of the key elements i think is recognized is that you need to support confidence. we had a good second quarter, confidence is rising, but now it feels like things are drifting. maybe that's why we're getting this story floated again, this

carrot, if you like, in front of the market. if it looks like we're headed towards a double dip, just remember, we can protect the downside. i hope they don't. i hope this recovery is self-sustaining. but i think it provides an insurance mentality in the market. >> we stand ready to give more stimul stimulus, but of course, it reminds investors how bad things might be might be and in the short-term that might boost the u.s. dollar and in the long-term, it might make the problems even worse, wouldn't it? >> yeah. but whooefb here before. anytime we've had to rescue a bank, we're not sure whether we say it's great to rescue them or it needs recusing in the first instance. the same is true of a wider economy. for the most part, if we're in the environment where we're talking about a second stimulus

package or weaker numbers elsewhere, it should be in the environment where the dollar is doing better, risk assets are struggling until such time as we get a clearer picture. >> in that environment, commodities have this big run up and they were the focus for investors sort of making money in the recovery trade. what do you make of sort of the oil price swings that we're now seeing? oil is down for a fourth day in a row. >> yeah. but i guess what we're seeing is oil is reasonably consistent with the kind of the mood swings we're seeing. you talk about equity markets this morning, they start off down and now they're recovering. we cannot get any decent trend going here. we've had a few days where commodity prices are weaker, but conceivably next week we'll have a reason why commodity prices are pushing up. we're in a range trading environment in currencies and it feels to a degree in equity markets. but one over the most recent pass things have a pass mystic bias to it. >> daragh, hi.

on this show, we keep talking about green shoots. in aus trail yab with we had consumer sentiment surging in july. do you think things are looking better in australia? >> well, certainly they have been surprised by how well the economy has held up relative to their expectations for some of their global peers. i think the australian economy hinges on asia, hinges on demand, so we're not out of the woods yet, but the downturn has been less pronounced. i think rates have bottomed in australia, but i think the currency will struggle to make advances when you have equity markets trading higher. there's correlated there. what currencies do you like at this point? >> i'd way until after the banks of dmrntd tomorrow, get that quantitative easing announcement out of the way and look to buy sterling against the dollar.

anyone might be the dollar. you could look to accumulate again there. but the basic strategy is take your profit quickly when you get it, be it 50 bits, 100 bits. you're not going to have any long trends to capitalize on. you have to play the day. >> daragh, good talking with you. thank you very much for being with us. in japan, we had disappointing data in the form of machinery orders which weighed on investor confidence. joining us now is linda yare. good to have you with us. core private machinery orders falling unexpectedly. may current account data showed fallen imports and ex ports. are things getting much worse in japan? >> if there was a blip of a recovery just a short while ago, it's certainly very clear now that they're not out of the

woods. and for japan, i wouldn't call it a double dip. i would say a couple of weeks ago, there were some signs that the pace of export declines were slowing the pace of contraction and production were slowing. but i think the recent data shows the data just out today shows that they have very weak final demand supporting both business investments and ex ports. and if they don't get it from overseas, there's no evidence that consumer sentiment and the domestic economy can take up that slack. so i think japan unfortunately looks like it's headed for a very tough year. and the tankan survey confirms that saying firms that have been surveyed show they're going to cut back on the investment. so it won't be until next year before i think the news turns any better. japan has had a supplementary stimulus package to help boost the economy. why isn't it working? and should japan be doing more?

>> well, they are talking about another possible stimulus in the same way as the united states. i suppose, to give you one indicator of why it is tough for them, even in the united states, there's some evidence that the fed is going to the reign back the credit measures. but in japan, they're not p prepared to do that yet. even though there's a bit of a sign that banks have stopped hoarding cash, it's still a sign that the domestic measure res weak. they're trying to get some of the savings out of the households. but there's, again, very little evidence that's had much of an effect because cpi is negative, japan is very deflationary and people are putting off purchases. but i suppose the one insure thing about japan is typically older people don't save or consume because they no longer earn. yet japan is still unable to unlock consumption and get away from their long-term savings rates.

>> linda, it's scott in the u.s. if part of japan's recovery is predicated on a pick up in ex sports, where is that going to come from? which nation res likely to pick up their consumption of ex ports, especially if it looks as though the recovery here in the u.s. is puttering a bit? >> i think the only possible country res china and india. they're the only two major economies which will grow. if you faye them out of the developing countries fixture, developing countries will be in a recession this year, along with all major economies in the world including the united states and western europe. they're not going to be selling very much very soon to the americans or to the western europeans because, for instance, the u.s. consumer is now beginning to save. the savings rate has increased from just over 1% to something like 7% or 8% of disposable income. and that means no pick up in

consumption and stagnant demand in the u.s. for a little while. chinese car markets are beginning to pick up and the scrappish themes you see in western europe where people trade in their old cars for newer ones has had some effect in stimulating car production for companies like nissan and honda. and that's why we're getting a slight upward tick in the production figures. but unless that's sustained by real market like in china or india, it's not a sustainable recovery. >> which brings us back to that point about china making domestic consumption. the spenders need to save and the savers need to spend. so, you know, we don't need more stimulus in japan that gives us more concrete, right? we need the savers to spend. what is the most radical plan you could come up with? it could be tax policy, a huge incentive to spend and a huge

incentive to save. what could that be? >> if i knew that -- >> we could put a huge tax on savings, couldn't you? put an enormous tax on savings and cut vat completely. is anybody talking about that sort of stuff? >> they have talked about it. they have the tried variants of this. one of the reasons is this is a catch-22 situation for japan. 90% of its huge amounts of government debt is held dmeft theically. so if they were to tax savings too heavily, more of their bonds will have to be sold on global markets and gentleman pa pan is in a fiscal position. so they don't want to have the big changes in the savings culture. what they want is to have consumption rise on the back of an aging population. that should normally happen. >> i assume many of them have far too much money, more money than they need right now, right? >> yes, they do.

they're trying to make it easier to transfer wealth from the older again ralgz to the younger one. but the reason why there is no radical plan, it's because they've tried everything. japan is very dethe flagzary. people continue to put off purchases which has a knock on effect of depressing consumption. this is why western economy hes are so worried. we headed towards deflationary traps after bursting the bubble. >> linda, well answered. thank you very much for your views today, linda yueh. let's talk about india right now. ayesha joins us live from mumbai for the india business report. ayesha. >> thanks for that, christine. good bit of recovery, actually. we're still down about 70 odd points for the nifty. we had a cut of about almost 3%

for both the sensex and the nifty, putting into perspective the globe cues. they pulled back from 1.5% from the lows. it's the real estate sector, all those continuing to put pressure. not just that, but to have it across the metals market, as well. the metals index is deep down. the currency market is what is feeling the pinch right now. so the bond yield is currently lower than 7%, as well. and it slipped below that level, so that is one thing that most markets are actually watching out for. meantime, comments coming from the s&p saying that india's rating may be lowered given the fact that the fiscal consolidation is delayed this time around and the high deficit is clearly not sustainable this time, as well. it's said money may be returned to india come september. besides that, you're seeing a bit of buying coming in for the oil and cement space and the kind of intraspending thrust

that we saw in the budget. so some of those pockets are showing strength, but all in all, a weak market. with that, it's back to you. >> ayesha, thank you very much for that. indonesia's market res closed today as voters head to the polls for india's second presidential markets since 1988. exit polls show yonoyono pulling far ahead of the pack. meanwhile, over here in europe, the french justice minister says ubs will be in no means to comply with a u.s. court order demanding that it hand over client data. his comments come less than one week before the case is heard in

a court. >> ross, a judge has denial a motion to hold up general motors' plan to sell their assets to a new company. the ruling moves gm one step closer to completing the sale, which is expected on thursday. reports say federal mogul may be considering making a second pals at delphi. federal mogul in late may. and you can get more news, videos and blogs on today's market-moving news rat cnbc.com. coming up, more hints at a second stimulus plan. the majority leader of the house of representatives leaves the door open for furch measures, but are they needed? we will have the analysis. the yen and the dollar has been stronger again. we'll talk about that and what

does it mean for any currency discussion now that chinese prier left the g-8?

i'm sorry. i can't hear you very well. announcer: does someone you know have trouble hearing on the phone? dad. dad, let me help you with that, okay? announcer: now, a free phone service shows captions of everything a caller says. i'd like to make an appointment to see the doctor. announcer: to learn more about captioned telephone, call 1-800-552-7724 or go to our website. i'll see you at 3:00! announcer: captioned telephone - enjoy the phone again! a little earlier, the yen hit a six-week high against the dollar.

we were at 96.21. we're now at 94.15. we're seeing the pound and euro trying to call back from earlier losses, as well. thanks very much indeed for coming in. before we talk about the major crosses, let's talk about the impact of the g-8. already the french president came out yesterday suggesting that there will be no talk of currencies on the main agenda. and today the chinese premier has gone back home. >> it's not so much of a worry now seeing as the most vocal, china, regarding the diversification of their reserves. russia hasn't got an ally to speak about in currency, so i think that's slightly off the agenda. i don't necessarily see that much from the markets specifically from the g-8 meeting. which takes us back to sofrt i guess looking at stock markets, symptom markets seem to be

driving the currency markets at the moment. is anything going to change here for a while, or not? >> i think we're stuck in this story. it's just so amazing how quickly sentiment changes in this market. it was only last week that the markets were saying that the end is near for the recession and a week later it's saying it's bringing with it risk aversion and the main benefactors of that are the dollar and the yen. what's weighing on sterling at the moment is the possibility of the quantitative easing. that may be announced tomorrow. obviously like one of your previous commentators today, we are stuck in a range, 1.6045 to the down side and on the high side, maybe 1.6067. as long as we're stuck in that range, risk aversion will help the dollar and equity markets and avoid sterling and europe.

>> hey, zeb, this is christine. the japanese yen is at a six-week high. at what point do we get interversion from the boj? >> the japanese have a long history of intervening in the market to serve their own cause. i think if the yen appreciates considerably, back to where we were maybe towards the end of december, then there is the possibility for them to intervene. i think there may be verbal intervention and that may be an effect. but again, we're stuck in this range where, you know, risk aversion is a main factor that is driving the movement of the yen. as soon as we see sentiment change, we should see a move towards the yen appreciating again and we get more risk appetite in the market and people move to the equity markets. >> zeb, scott here in the u.s. we've discussed several times this morning how currency is

likely not to be on the agenda at the g-8. is there even a debate to be had of whether the u.s. or the dollar maintains its status as the recalled would's reserve currency? >> well, yes. i think the three main vocal companies that are speaking about this are russia, india and china and they're saying that, you know, the u.s. has been the main currency for too long for reserve banks. so yes, there is an argument to suggest that there should be a wider range of currencies used or maybe even a new currency that's used agency a reserve currency. but i think the countries in question are shooting themselves in the foot. if they start selling off a proportion of their dollar-backed assets, it will, you know, make the dollar weaker and that will weaken their overall position. and you have to bring in the political issue with this, as

well. there's far more political power in threatening to diversify away from the dollar than actually diversifying away from the dollar. so the political power in this diminishes as they move away from the dollar. so i don't expect that to happen quickly. it's going to be over a decade or maybe two decades. >> zeb, good to see you. thank you so much. coming up in the second hour of "worldwide exchange," the gdp figures are down out in the few moments. coming up, g-8 leaders meet in l'aquila to discuss how to beat global problems. the worls (announcer) leading companies

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swiffer duster extender reaches up to three feet, to go where othersan't. and traps d lockdust and allergens. swiffer cleans better or your . [ phone vibrat ] ♪ don'tou want me baby? i'm christine tan. in asia, the nikkei falls more than 2% as core machinery orders drop to a record low. i'm ross westgate. in europe, leaders gather for the g-8 meeting in italy, but the chinese leader is heading home to deal with unrest. and i'm scott wapner in the united states. alcoa starts it off kicking off earning seasons when it reports results later today.

all right. you're watching cnbc's "worldwide exchange." we're going to get data out of the euro zone in a moment. it's the revision of the gdp numbers and they're just coming out right now, as i can pick them up for you. essentially what we're seeing is euro zone q1 gdp down 2.5% on the quarter. the annual rate of decline is minus 4.9%. that has been revised from 4.8%. the q1 gdp on the quarter, i think, is as an unrevised number, if my figures are right. but we've seen a slight revision effectively on the annual. bob mckee is with us, chief economist at independent stratfy. bob, is that how you see it? >> what was expect, i think, ross, there wasn't going to be much revision. it looks as though it's a

rounding up on the near figure. so you probably find if you went another digit, it wasn't much of a change. what we're getting is the view that we knew that quarter was the worst for europe as it was for the u.s. and uk so it confirms what we knew about that particular period, probably the worst part of the recession so far. >> what sort of recovery? there are now questions, of course, about the strength of the recovery that we're now seeing. >> well, i think which we discussed before, and i'm sure other people have, is that there's been a lot of talk, maybe the worst is over, things will improve, we may have a v-shaped recovery so very quickly, the second quarter won't be as bad as the first quarter and by the fourth quarter, we'll be motoring again. but as we look at the date that's coming through, now we're into the third quarter, even the information that we have at the moment, we can see all the data is telling us that the recession continues. the pace of decline has slowed

up. but the decline is still there and taking the uk, for example, we had the manufacturing figures yesterday which was pretty poor and that would suggest that as we go into the third quarter, we're going to have probably negative gdp figures for many economies in the g-8 over the coming few months. and probably not going to see flattening out until the end of the year. >> bob, you're with us for the best part of the next hour, chief economist at independent strategy. let's bring you up to speed with what's happening on the global markets. scott has a look at the futures. scott. >> busy day here. we've been talking about alcoaic canning off earnings season across the bell. as you take a look here at futures, fair value right now, we're up above fair value across the board, about -- what is that, 15 points or so on the dow, nasdaq and the s&p look to be above fair value, as well. but there is a lot of focus in the u.s., clearly on earnings season and that talk that really

percolated yesterday and had an impact in the market on that possible second stimulus package that is being talked about at least in some circles. let's take a look at treasuries, as well. and we'll begin with the bund yield at 2.7%. treasuries are very much in focus here in the united states. another auction today. one yesterday well received, so that gave a little bit of a lift to the bond market. 3.44% is the yield on the ten-year. ross. >> this seems to be where we are in the markets. they're trading in global equities. the ftse cnbc 300 is currently down 20 points. an hour in, we are off sort of .5%. then we've rallied back from those levels. we're still down, but only marginally on the ftse 100. xetra dax, cac 40 off .5% at the moment. what we're currently seeing in terms of the weakest sectors are insurance, financial services,

banks, autos and telecoms. obviously, we're keeping an eye on what's going on in the g-8, as well. president obama, we just saw him take off in a helicopter and he's now in the limo. scott, is there a name? we had air force one, marine one, is there a name for the limo? >> is there a name for the limo? is there a name for the limo? you know what? if there is, it's escaping me. there probably is. but i guarantee you the doors on the limo are just as thick as they are on the helicopter, ross. >> well, that's the point i was making, scott. just how much armored plating is it? i don't know. maybe they call it drive one. i don't know. >> i like that. what is that, a cadillac one? caddie one? >> caddie one. >> christine. >> boys will be boys. boys, cars and helicopters. i don't know what it is about them. well, here in asia, getting

back to the equity markets, it was in a negative session. a lot of investors were uncertain about the global climate, unwilling to put money in the equity markets. also the talk of a second stimulus package putting investors on the sidelines. the nikkei 225 is down at six-week lows. the kospi off 0.2%. the shanghai down 0.3%. the hang seng falling 10.8%. the bombay sensex in india down 1.8%. oil was just below the $62 barrel mark. right now, $62.28 a barrel. and brent also falling, as well, in tandem with nymex. brent is now trading at $62.72 a barrel. on so how thick do you think the doo door is on the helicopter, ross? >> 12 inches, i suppose. they look pretty thick. apparently we're getting this confirmed that the name that the

secret service uses apparently is called the beast, the car. >> theater. >> is that right, is it? >> because it's part tank, part cadillac. so you can come up with your own, cata-tank, tank-alac. i like the beast. that gets the message across. >> that you could detonate a serious bomb underneath it. >> is it beast one and beast two? >> there's a whole fleet. there is a whole fleet. >> yeah. and they fly in with air force one, right? does it travel in the back of air force one? >> i think it does. or actually, you know, i don't know if it goes with air force one or leak marine one if it goes with one of those c-130 transport planes ahead of time since as i said, there is a fleet, so it probably goes with the latter. >> yeah, you're right. well, we're getting to the bottom of president obama's travel arrangements. bob mckee is still with us.

bob, look, one of the things -- we're going to talk about the earnings season coming up, as well well, and the g-8. while we're talking about president obama, is there anything out of the g-8 that you expect will change investors' views or change your views, if anything? >> probably not. i think the g-8 is covering the issues that matter, clearly, looking at the question of how far we are down the road on the economic recession and what sort of recovery we can get. it's looking at banking and financial regulation, what we need to do in the future to avoid a crisis before. it's looking at the question of global warming and climate change and what action needs to be taken. but all these issues need to be sdoided in g-20 in september if there's going to be in any global coordination and in copenhagen at the end of the year on global warning. in a way, this is the g-8 leaders trying to come up with some attitude to meet up with emerging economies later in the

year and in copenhagen and later in the year. and there's big differences on all these questions. >> lower prices about this yesterday dragged the u.s. market down. but just before that, the french president stamped very hard on the idea of talking about reserve currencies. how long will it be before we move to either a basket of reserve currencies or -- >> it's a long way away. the imf, for example, is now issue ago whole range of special bonds which does open the prospect for countries like china and india and others in a way to diversify. these bonds will be issued to central banks and governments around the world and will provide funds for emerging markets to help out in crisis. but those bonds have a basis with the u.s. dollar not being 100%. so in a way, a gradual

diversification now opens up countries like china, russia, india. they can get some of the diversification they want without having to ditch all their dollar reserves. >> hey, bob, it's scott wapner here in the u.s. you know, with all talk here about this possible second stimulus man, the obvious risk of that is inflating the deficit even further. and i noticed from your notes here that, you know, even before the talk of the second stimulus, you're down on the u.s. can you tell us why? >> well, i think first of all, the size of the debt and length of the recession and the inability to adjust to that requires so much deleveraging on the part of the households that they're going to have to cut back and pay down a lot more on the debts being built up in the previous period and bust.

and that means with savings arising even though we've had fiscal stimulus with b that's helped keep the consumer above the water line in the u.s., that's not going to the case in the second half of the year. the administration will have a further effect in this current quarter, but after that, it won't be there. >> if consumption in the u.s. falls back, what does it mean for japan and germany and all the other export-dominated countries? >> it means that they're faced with the problem they'd over the last year, they won't be able to sell ex ports, they won't be able to turn it around and gdp rates will be around flat or zero unless those economies can begin to stimulate the domestic consumer. so that is pretty unlikely. >> so bob, christine here. what kind of recovery are we

expecting? a v is out of the question. will it be a long l, a w? >> i guess i'm expecting quite a bottomed u is my major probability, mainly we'll bump along for the next couple of quarters and maybe we won't see any real turn up on recovery. although on base effects we might see some. but on a quarterly baefs, we won't see much at all and until probably into the first and second quarter of next year. after that, it dependant how cleansing of the banking system, how much deleveraging has gone on in the overindebted sectors. if that's taken place, then the ability for better growth lies ahead. but if all that's happened is a lot of that debt has shifted on to the governments when they have done little about trying to sort out their own huge increases in debt levels, then we could have a growth rate which is pretty feeble and weak compared to what we used to have before this crisis began at the

end of 2007. >> okay. bob, stick around. plenty more to come out with you. president obama, he's out of all his transport. he is now with the italian prime minister. there's a nice shot of the chandelier and there we go. so i think that's italian tv, is it, that we suddenly cut to? claudia. >> reporter: coming up from l'aquila in italy, g-8 leaders are continuing to arrive to tackle global environments.

canada's prime minister is urging nation toes deliver current measures before other plans. significant risks remain to economic and financial stability but there are signs of stajz. meanwhile, leaderses from the world's top 8 economies are still arriving in l'aquila where the regulation will top the agenda. but the chinese president, hu jint jintao, has decided he will no longer attend the summit. he's heading home to deal with riots. the measures follow deadly clashes between houses of hand

chinese and muslim ugiwars. joining us in the latest from italy is cnbc's claudia. just how much will the absence of the chinese premier impact discussions? >> well, that has been the topic all morning long, what are the effects of his absence. ultimately, certain issues that were going to be confronted may not. another big one is environment. a draft leak of the final communique is speculated to be containing a statement saying they have failed to agree to set a goal on gas emissions. now, other sources that we have spoken to say that that is not the case. so it's still unclear whether this is, in fact, going to be a statement that's going to be in the final communique. but if it were to be so and those goal setting were to fail, the absence of hu jintao could be one of the motives because they were certainly one of the countries that needed to face

this issue. the issue of the environment and how they were going to take part in reducing the gas emissions. they were expected not to commit, but at least to be confronted and to sit down and talk with the on her countries about this important issue. hu jintao's delegation will be there, but there will be a different weight on that. >> claudia, we are getting pictures that the italian prime minister is showing european leaders in areas of the earthquake destruction zone in la keel what. we are get ago crowd there, a lot of visitors and scenes there. my question to you is it looks pretty quiet from from where you are. logistics wise, has that been a nightmare? >> well, it's safe to say that the g-8 is very close to where i am, yet very, very far. the idea is that this ghost city that you see behind me where no one is allowed except emergency vehicles and right now the

leaders that are going to see what actually happened in this area. other than that, there's nothing going on here. this is the venue to bring attention to what has happened here to the earthquake and it has caused many logistic issues. up until yesterday, there were issues about getting passes to where people are staying. the press is very far away. these are all things that have made being here difficult. helicopters are flying up above because of the fact that the leaders are here. so just in the last 15 memberships, things have stepped up. the energy here, you can feel that things are happen. but logistics continues to be an issue. however, in the next hour, we'll be able to say whether this, in fact, on loojistical standpoint was very well handled. many people are involved in this organization. claudia, some of the pictures we are watching, mr.

valasconi, i'm just curious, do you have any sense on how much pressure may be put on merkel by either the united states or the uk to not to take the gas off any sort of stimulus efforts in germany too soon? and all this, of course, on the back drop that we're starting to hear about a second stimulus plan possibly in the united states? >> well, of course, she is certainly one that has put forth the idea that we must be careful, that in order to get a recovery and to get that recovery going, we must really watch out. so what kind of aid and how we move forward from here on out is very, very important. so clearly, there will be -- that will be the main focus, one of the main issues that these other leaders will be discussing with angela merkel since she is one of those that is pushing this as she is pushing for a global standard where she's trying to get laws put into place in order to prevent another crisis like this one. that will, of course, be one of the issues that she will be

highly confronted with. >> claudia, thank you very much for that. claudia pensote, talking to us about the g-8. you can get more news from the g-8 and all the stories we're covering today, as well, anything moving markets today at cnbc.com. there you have it. through our hidden corner, we're seeing pictures again of angela merkel. still co-tom, alcoa is expected to post a second third. quarter. . we'll bring you analysis. you have questions. who n give you the financial advi you need? where wi you find the stability and sources toeep you ahead of this pidly evolving world? these are tough quesons. at's why we brought togeth two of the most powerful names in the indus introducing morg stanley smith barney. here to rethink wealth management. re to swer... your questions. morgan stanley smith bary.

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okay. the g-8 meeting will start today in l'aquila. looking at these pictures of the town that suffered major earthquakes earlier in the year where the g-8 meeting has been switched to. you see the german chancellor angela merkel traveling through the town. right now, though, we're going to see the global equity markets ahead of the u.s. open a little later, kicking off with becky who is looking at the london market. becky. >> we are watching the london markets as they move a little more -- well within not positive, but less negative. the ftse 100 now stands down, but only about 5 or 6 points, pretty close, in fact, to the highs of the session so far

today. in the past several days, we've seen markets drifting along with no particular exception. today is no exception to that rule. on the downside, a couple of stocks that have been pulling us lower includes 3i which came out with a trading statement earlier on. they told us that they have cut their debt by half, continuing to have a cautious approach to the shares of the investment in that company. down by about 2% at this stage. tullow oil has been one of the big decliners on the market. they had a trading session out in which they said they see first half revenue falling by 23%. that has impacted shares of tullo. oh, there i am. i'm back. let's take a look at some of the gainers. we've seen gains coming through for a few defensive stocks which have given us a bit of relative strength as we got further into the day. gfk, for instance, is adding about 1.7% so far. now to patricia in frankfurt. >> we're still slightly down. but if you look at the charts so

far, we are moving down sideways, down about 0.2%. 25 million shares traded so far. e.on is still up there at 2.5%. interesting article out this morning that e.on is very interested in getting involved in the nuclear energy business, especially in france where this business is very big. and the tribune is reporting that they might look at a partnership. we'll have to ask stephane about this. plus, as well, watch out for hidelberg. looking pretty good. operating profit before write-downs, actually, 608 million. they do see the environment still very difficult. however, somewhat improving. it seems that they are looking at their finance and it looks a little better in terms of footing it out and the shares are on the rise at the moment, up 1.3%. amongst the biggest gainers, even though a small stock is infineon, up about 7.9% and really continuing the rally on the back of selling parts of

their business to a oouts private equity company and that has been signaled as we positive to the market. downside does get as well as deutsche borse. stephane. despite an announcement this morning that the gdp should shrink by 0.4% this year, that's better than the other forecast. in oerms of the individual stocks, eads is trading lower to the company. i did announce that credit agricole trading lower after the company is facing an increasing pressure to sell its stake. credit agricole was supposed to bring back the stake in the bank below 2% at the beginning of this year, but still, it holds more than the 5.5% in the

italian bank. also in focus, gdf is trading a bit higher. a few moments ago, the company announced that it's going to dispute the decision from the anti-trust regulators. they say they were planning on fining e.on and others to pay $350 million euro for limiting the competition in europe so the french company has decided to dispute to make an appeal of this decision. the stock is trading a bit higher. almost flat right non. over in chloe in singapore for the latest in the asian market. hi, chloe. >> thank you very much. we're getting more developments regarding the developments, the detention of four rio executives in china. at this moment, it looks like the four are to be charged by what is believed to be evidence of espionage and stealing state secrets from the chineses government. so far, the aus railan got was

viefd and that they will continue to support the detaped employees as their families. the various comments suggest there is no link between any commercial matters concerning rio and its aborted $19.5 billion tie yaup with china's state-owned chinalco and rio walked away from that deal. as far as the overall equity markets, very weak, especially japan with some of its economic data pointing to the downside especially machinery orders. on the other hand, in the greater china markets, we did see -- we did hear news about china merchant's bank and sources saying that they may be looking at a possible rights offer to the tune of $3 billion. that would be the biggest this year. so far, no banks have been selected and that is one of the reasons why that china banks listed on the downside. also worries that policy in

beijing could be curtailed at this point. let me send it over to scott. >> good morning to you, chloe. thanks. it's another quiet day for economic data as many of the inest havers may be starting to gear up for earnings season. there is one piece of data out. it's may consumer credit. 3:00 p.m. new york time is when that report will be released. charles evans will talk about the economy and nontraditional monetary policy at about 1:00 new york time this ranch. he's in south bend, indiana, the home of notre dame university. that's your goolobal stock watc. still to come, president hu jintao is home after riots break out. what does mean for the g-8 mmit? oof! i hope he s that insurance. lac! you really nit these days. well if you're hurt and can't work it pays you cash...

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it is 30 minutes past the hour. here are the top business stories on from around the world. in the u.s., alcoa leads the blue chips out of the starting gate kick off earnings season when it reports results later today. in europe, leaders gather for the g-8 meeting in italy,

but china's president heads home early the deal with unrest. and here in asia, the nikkei drops more than 2% as core machinery orders drop to a record low. >> let's get you set up for the u.s. trading day here. take a look at where the futures are holding out. we are above fair value by about 15 points or so. nasdaq and s&p futures look to be above fair value, as well. and as we've been mentioning throughout the morning, it's the g-8 that's on the agenda today. you have alcoa kicking off earnings season after the closing bell and certainly more talk about a possible second stimulus package in the united states. a busy day for treasury auctions, as well as most of these days do seem to be that way of late. take a look at the ten-year note. it is at 3.44%. ross, i'll send it over to you. >> yeah. it's been sort of a bit cautious, really, so far. we start in negative territory.

not as bad as what we saw in the likes of japan. as you see, sort of back to the flat line, really, for the ftse 100 earlier on. we're down a lot more than .5%. xetra dax off slightly at the moment. on the currency markets, yen versus the dollar currently around 94.22. euro/dollar is a little weaker and sterling/dollar is on the is .61 mark. christine. hey, ross, a negative session here in asia. we have the talk of a second stimulus package in the u.s., that kept investors on the sidelines. nikkei 225 down 2.4%. the kospi off 0.2%. the shanghai composite losing 0.3%. the hang seng down 0.8% sxwt bombay sensex continues to slide

2.8%. nymex light sweet crude, $62.22. and brent is drifting lower, as well, down 57 cents, $62.66 a barrel. scott. >> christine, thanks. joining us now is bob mckee and bill smead. bill, let me start with you. what do you make of the u.s. markets right now? >> a 2% slide right now and the stimulus talk seems to be unsettled a bit. >> we felt there would be a pull back in the market before workout didn't work so well. >> we thought that was a real

potential me for the economy. >> bob, you've said in your notes that the government, the u.s. gocht is in denial. i'd like your comments on that. bill, then i'd like you to react to that. >> i think what we're saying is that we've still got a tough few quarters to go ahead for the u.s. economy. there won't be much growth there, maybe further contraction over the next couple of quarters. earnings will reflect that. at the same time, a huge amount of the deleveraging, which is necessary in the u.s. economy, has been just switched to the government and the government balance sheet has expanded dramatically. there's going to be a huge amount of debt which is going to be financed once recovery begins and that will pose competition for the private sector looking for finance to grow, as well. what we're concerned about is once this recession ends, we'll end up with a decision where government will be competing with the private sector for available credit and that will keep growth low and drive up interest rates particularly for

bonds. >> we happen to agree that the next quarter is going to be relatively weak. but if you go back to a year ago in september, we've had this massive reset begin in september and october of last year where u.s. consumers have dramatically reigned in their spending. but beginning october 1st one start to compare with the prior year. and remember, growth happens to come from where you were if prior year. we think the economic recovery will show itself quite well in the fourth quarter of this year and the second thing that people haven't included in their thought process is you've cleansed the u.s. economy. you've eliminated a lot of bad behaviors and on a going forward basis, if you go slow and consistent growth for many years, you could well get higher price earnings ratios on the companies that do perform well. for example, we happen to like the drug sector. >> well, i think within equities, i'd be agreeing with bill on sectors like the drug sector because they continue, despite the environment, to have

the potential for good earnings grow eth. they're a very good sector. but i continue to be worried about the u.s. economy to return the sort of growth rates we had before this great recession we sizely because now we have a bick er debt and government will let that be financed by a higher situation. we could be in a situation in the hall, with 2% inflation, that that ratio could be reversed. so we get ratio of 2% while inflation is more like 3% or 4%. that is not a good environment, particularly for bonds, but makes it more difficult to get good returns out of equities, as well. >> yeah. we happen to believe in kind of the pimco view of the world that economic growth in the united states will be 1% or 2% in real terms for a lengthy period.

but if you go back and look in the aftermath of world war ii, it took a number of years to bay off that debt. we grew slowly in the 1950s. if you check the stock market al man knack you'll find stocks did fantastic in the 1950s when we paid off all that debt and grew slowly during that time period. >> bob, we're going to let you go in a second. just before we do, though, what's the investment plank, then, for independent strategies? >> our key investment plank is i think we agreed to some extent, bill, that the corporate sector is going to be key. we would look to corporate bonds as being a key investment recommendation at the moment. we would be away from government debt. i think particularly in the anglo-saxon economies, like the uk and the u.s. where the debt is going to be so much higher and we would be looking for currencies. we don't have that requirement

to deleverage and pay off that debt, which is the euro over the dollar and continue to be gobbleded against paper currencies. >> bob mckee, thank you so much for joining us. bill thank you, as well, bill smead. of course, world leaders are gathering, as well, for the g-8 meeting which kicks off today in italy. these are the pictures of where they're hosting it. l'aquila, the town that was devastated earlier this year by an earthquake. the g-8 was originally meeting elsewhere. then mr. berlasconi decided to change it. christine, time to go to tokyo. >> that's right, ross. live to tokyo and check in on the trading day there with who else? ken moriyasu with the nikkei.

>> the nikkei 225 closed 1.3% lower, the lowest closing in six weeks. mizuho corporate bank said today it will become the first non-chinese bank to handle yuan denominated cross border trade settlements. the move comes after the peoples bank of china lifted a bank last month. and in news that chokes the transportation industry, tin couple bent prt of jr west, the main railway company in west japan was indicted today over the 2005 train derailment that killed over 100 people. he was charged with partial

negligence. just minutes ago, yamasaki announced that he is resigning. last but not least, a residential neighborhood in has prevented success. a device is activated which produces a high frequency sound, much like the annoying sound of a mosquito. the noise is apparently only capable of working in people in the early 20s or younger. which means it won't work on me. >> i'm afraid it won't work for me, either. claudia. >> reporter: coming up from l'aquila within in italy, g-8 leaders have arrived. nor to come on "worldwide exchange." businesses more effiently,

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leaders in the world's top eight economies have been e-mail meeting today in l'aquila, italy. but the chinese president has decided he will no longer attend the summit. he's heading home early to deal

with ethnic riots that have left over 100 people dead. joining us live from the g-8 is claudia. >> reporter: finally, the time has come. the g-8 leaders, some have arrived. barack obama is odds way now. he is still in the helicopter. angela merkel is here, german chancellor and she is visiting the area. we now have more of a schedule of what will be going on. at lunchtime, they will be discussing the economy. it is expected at 3:00 or 4:00 we get a statement on the press conference. tonight in the evening there will be a first day conference. you mentioned hu jintao, he is the big absence that is felt. everybody has been talking about that this morning. what consequences will that have? it will have affects on issues like currency not officially on the agenda. will this, of course, be discussed in a different way? his delegation is here, but his

presence would have be been different. there is speculation of a draft of the final communique coming out from reuters saying that the g-8 has not found any official decision on the environment. so that is quite an important thing. if it were to be true. but our cnbc has spoken to canadian officials that say that that is not true. so it's still to be understood what impact that will have on the environment. so this is really what's getting the most attention here in l'aquila today. as the afternoon comes along, we will get more information about what's actually going on there within the walls of the very protected area that the leaders are going to be meeting in. and again, the economy will be at the top of the agenda. scott, over to you. >> claudia, thank you so much. a judge has denied a motion to hold up general motors' plan to sell its assets into a new

economy. the judge says appeals from bankruptcy court typically go first to federal district court. the ruling moves gm one step closer to completing the sale which is expected on thursday. federal mogul may be considering making a second pass at delphi. if financier broke off talks in late may. meantime, google takes direct aim at microsoft, preparing to launch a computer operating system that could compete with windows. the google chrome operating system is based on the open source lennox code. google plans to target the software at low end notebook computers. the company says users will be able to access the internet in just a few seconds. the chrome ox software will be vaiblt consumers in the second half of next year. take a look at google shares in frankfurt. they're likely to be an active

mover in the united states. google is currently trading at $287 a share. ka seeven know operator las vegas sands is upbeat about its prospects in the coming months. the ce owe says that business is improving in the area and is positive that its casino in india will open early next year. adleson added that the company is looking at a range of options to raise funds. one of them is a possible ipo of its macau asset. >> we need mortgage financing and then we want canty. altogether, it could be between $3 billion to $4 billion. >> and you can catch the full interview with eldin at 23:30 gmt or visit cnbc.com.

still to come, alcoa is expected to post a third consecutive loss or is the aloom anyone presence still a bellwether.

time to find out what's coming up on "squawk box" in just under nine minutes. becky is with us to tell us all. hey, beck. >> good morning, ross. good morning, everybody. we have another squawk special event you can't afford to miss today. from california california to illinois, states struggling to keep their governments and economies afloat. we have two of the country's most well regarded leaders joining us this morning. minnesota governor tim po lenty and tennessee governor ed rendell. plus, you've been talking about the g-8 all morning. world leaders gathering in italy today. cnbc is there. we'll be picking the brains of two people who have been there and done that. former secretary and a member of the president's council of economic advisers. crude realities this morning. opec releases its monthly energy report today. we're going to get to be getting

the inside scoop from the u.s. oil industry. the american petroleum institute's ceo will be joining us live. we've got plenty to talk about this morning. squawk is coming up at the top of the hour and haross, back ov to you thank you, becky. don't forget, as well, the bank of england begins its two-day rate setting meeting today. rates are expected to stay at the record lows, but we are looking for policymakers to inject another $10 billion pounds into the economy. uk house price fell 0.5% in june, taking prices down 15% in the three months to june. but it is the smallest annual rate of fall since november. and uk consumer confidence was up last month, according to the nationwide business society. at the same time, the british government is unlikely to touch the parliament which has been blamed in a plan to

spot the crisis and it will unveil a raft of measures aimed at trying to impede the credit crunch. and on separating every day banking from riskier activities. the full announcement is due to come out. >> ross, assuming its that additional roll autos the first bhu chip company of the season to report its results. alcoa is expected to report its third straight quarterly loss due largely to the sharp decline in aluminum prices. although they have rebounded modestly in recent weeks. the he ceo says he's seeing signs of a recovery or of a bottoming out in certain sector pes. after several delays,

treasury department may launch the ppip today. the government is expected to name up to ten fund managers who will buy distressed earnings from banks with federal backing. wilbur ross says he plans to participate in the program which he expects to be significantly scaled back. >> it looks as if it will be enough smaller programs. there must be originally talks that it's more likely to be $100 or $125 billion. >> many pooem banks have reportedly been reluctant to take tart part in the ppip. a judge has denied a motion to hold up general motors plan

to sell its assets to a new company that many be majority owned by the u.s. government. appeals from bankruptcy court typically go first to federal court. the judge -- i'm sorry, the ruling moves gm one step closer to completing the sale, which is expected on thursday. reports say federal mogul may be considering making a second pass at delphi. federal mogul, controlled by carl eye can, broke off auto parts mayor in day. >> let's take a look at the earnings front. taking a look at your futures, we're above ir value. that's it for today's show. i'm scwapner in the united states.

good morning. the g-8 gathering in italy toey name ths missing. we have a showdown, a tech titan, google unveiling a new computer operating system targeting archrival microsoft. and the markets at this hour, we have red arrows across most of europe and asia. u.s. equity futures are mixed as investors warm up for today's opening game of earnings season. "squawk box" begins right now. good mortgage, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and carl quintanilla.