Skip to main content

tv   Worldwide Exchange  CNBC  August 18, 2009 4:00am-6:00am EDT

4:00 am
looking in asia? >> a lot of the data dictated in the market occurred with what happened in the shanghai. this particular market up 0.2% for the nikkei 225 and the kospi. the shanghai composite paring off earlier losses to close 1.4% higher. the hang seng closed 0.8% higher and the bombay sensitive 30 index cloes closed up 1.5%. what is not on this chart is the taiwan market which closed lower. in terms of the recovery picture, a lot of concerns there, but the market seems to be closing back up. nymex light sweet crew up 59 cents. brent crude trading up 38 cents, $70.92 a barrel. bertha, good to see you. how are the futures looking today? >> looking much better.
4:01 am
it looks like we're taking a bit of a cue from what we've seen in asia and europe this morning. we've got dow futures right now about 70 points above fair value. we're going to hear from dow component home depot this morning. lowe's disappointed over the weekend. we heard over the weekend both warren buffett and eddie lambert had cut their allocations in home depot. so it will be interesting to see what the bid box retailer has to say today. we'll get housing starts, as well. a very busy day today. and watch apple, apple's board meeting today to decide who to replace on the board to replace eric smith, the google chairman who stepped down. taking a loot bond yields, the bund is trading flat ahead of that at 3.30%. and the ten-year note is back above 3.5% after closing below there yesterday at this hour. it's at 3.51%. we are going to get housing
4:02 am
starts and producing price indexes. so august is still very, very much a busy month for data. as far as gold is concerned, with the dollar move gold this morning is lower right now. we've got spot gold at $939.45, off about 0.9%. psychiatrist teen. >> hey, bertha. joining us now for market strategy, we have our panelist, david cosbow. and here in singapore, steven davis, ceo of javelin wealth management. steven, are you at all surprised at how big a role the shanghai market played today in dictating market direction here in data? is this a start of more to come? >> i don't think one should be at all surprised. i think the only thing that's a surprised is that it's taken as long as it has in order to have a relatively sharp, quick correction. i think overall, asian markets have all rallied extraordinarily strongly this year, and in
4:03 am
particular, obviously, since their lows of march 9th. so it's inevitable that we're going to see a degree of profit taking, readjustment of portfolios, call it what you will. i think on a longer term basis, the outlook looks roently positive and certainly our view remains that one should be using bouts of selling pressure to accumulate a bit more on weakness. >> david, do you agree with what stephen just said? >> yes, i think china is definitely important. there's no -- and, of course, they also own a time of treasury. and also, the shanghai composite was expecting 2009 lower and the fact that now the shanghai
4:04 am
composite is down almost 20% from the top almost two weeks ago could be a bit of a concern. for if we're just looking at stocks. looking at china, i think recently there's been a a lot of speculation about how large a degree the speculation inside of china in commodities has been playing out a factor in this market. definitely there's been a huge impact on australia and the perspective going forward for us, also, the anticipation for australia and we have some indications that even the western hedge funds have been becoming active as physical speculators inside of china with regard to commodities. and i think that's a bit worrying. because also, the way the stimulus packages have been working is that they really have not been active yesterday. so the big infrastructure projects have not begun yet.
4:05 am
so there is been a huge stockpiling of commodities in china recently. >> david, what is the european market's angle on the move we've seen originating from asia? should we expect the european market just to continue to track the asian markets or should we look for other factors to come in? >> i think china is a huge force in the market. don't get me wrong. it's actually, in our minds, a bit too big still. i think this whole stockpiling issue for commodities, at least, it will turn out to be a slightly less important factor moving forward because they can't possibly continue like they've been doing until now unless they get started o infrastructure projects. soot least on the commodity horizons -- >> sorry, i wanted to bring in stephen for his angle on that.
4:06 am
david saying maybe the china issue looms too large in the markets, if you like. what do you think? >> yes, i think that's certainly true. i think if one is looking ahead to the second had a of the year, a lot of the running is made by emerging markets. what you see is very expensive to an export-led recovery. as we move into the second half of the year, it's all about restocking in developed markets. so you can actually see a degree of market leadership rotating from the emerging markets in the first half of this year and into developed markets in the second half of this year and into the early part of 2010. also, i think the second half of the year will be much more of a stock picker's market. so instead of whole sale allocation markets, you'll be looking much more stock-specific as the year develops. >> stephen, this is burth bertha here in the u.s.
4:07 am
there is one investment group here, value line investments. in their survey, they are suggesting that people lower their equity value right now. they're saying lower it closer to 60%. they're taking a very bearish stance. they haven't done this since october 2000. what's your thought on that and what's your thought on what people should be looking at here as we head into the end of the third quarter and looking out to the fourth quarter? >> well, 60% looks pretty high to me. i think it's fair to say that virtually everybody has been pretty well underweight equities for a large chunk of this recovery. so there is a lot of cash still sloshing around the system. that's one of the reasons why these periodic sell-offs tend to be relatively well supported, perhaps earlier than anticipated. so from our perspective, as i
4:08 am
say, we're tending to argue in favor of raising equity allocations, but i would have to say we're nowhere near 60% at the moment. we're probably close on an average basis to between 40% or so from an equity profile with the rest of our portfolios being made up of exposure to cash bonds, high yield and convertibles, so a whole spread of investments across a well diversified portfolio. >> david, what kind of strategy would you suggest at this point? is this a time to start switching out, cashing out some of your winners and reallocating your funds? >> i would be reducing my stock exposure right now. the market is priced for per expect right now. the real economy really has to deliver some -- a huge krs in consumption in order for companies to make the earnings
4:09 am
that are being priced into the stock markets right now. depending on how you look at the earnings, i think you can argue that the real price earning for the s&p 500 is close to 100 by now. and i think that's a problem. it's not really cheep, in my opinion. and if you look at the expectations, everybody agreed that the revenues will be down. but at the same time, they expect the earnings to go up going forward. and that's a rather big discrepancy in these two, in my opinion. because you can only have earnings going higher on lover revenues to a certain degree because you cannot cut costs that much from the base, ets say, at the beginning of 2009. so i think it would be very difficult to honor these anticipatings going forward. >> thank you very much for that and i must say, you two look
4:10 am
like you were separated at birth. we like to make sure our experts at cnbc -- >> just trying to copy you. >> all right. thanks very much, david cars boll there, chief economist at saxo bank and stephen davies, ceo at javelin wealth management. >> let's move on. saab brand is looking at returning to swedish ownership. general motors is looking at selling its stake. there is swedish press reports saying a number of funding hurdles need to be crossed. the move comes two months after the company signed a letter of intent giving rights to produce the nep next generation of saabs for free. vestas reported weaker than
4:11 am
expected downturn in profit. but they said the credit crisis is easing and it's sticking with its full year forecast. t cnbc spoke to the ceo of the company about why he thinks the company is well positioned. you can look at kriemt as one thing, which is critical, but also look at the total cost of energy. we are faced with something where we need innovation and we have said a number of times that we believe the energy crisis is larger than the credit crisis. the shanghai market rose. everbright offered 520 million shares of 15% of expanded capital at a price of 21.08 yuan each. it's now valued at $10.5 billion or nearly 60 times it's earnings in 2008. everbright's gains were within
4:12 am
expectations but were pretty much lower compared to other ipos recently. analysts say this can be a signed that the appetite for new shares could be waning. air china is down. cathay pacific is down. citic pacific is down. stocks were reacting to news that air china upped its stake in cathay by 20%. the 813 million stake was bought from citic pacific. earlier, cathay's ceo told cnbc that air china looking to tear over cathay are unfounded and that they remain committed to the pacific. >> as a result of that, they've increased their share holding in the ongoing forward. having air china taking out citic's share is fine, as well.
4:13 am
as i said wab we now have two strong shareholders absolutely committed to aviation. >> checking shares, they're trading up 83.3 in hong kong, up 1.83%. christine, retailers could get a boost this month as the average retailer has put off its school shopping. sales and coupons have influenced nearly half the purchase this season already. some states have shifted tax-free shopping days into august and many schools will open later in september this year because of the timing of the labor day holiday. back to school is the industry's second bipgest selling period after christmas. u.s. authorities have busted what could be the largest identity theft case ever. involving more than 130 million credit and debit card numbers, an international case. three men, american albert
4:14 am
gonzalez and two russians hacked into the services of credit card processor heartland credit card services and four other companies. they stole realtime data as it was being entered by card holders. gonzalez, in jail for a separate case, had been working as a government informant. but he was also feeding information to criminals about ongoing investigations. if you want to know more about this story and it's a wild one, and all the day's news, be sure to check out cnbc.com. you can get videos, blogs, and drop us a line while you're there, worldwide@cnbc.com. >> coming up on "worldwide exchange," uk inflation is expected to fall in july. will this bump an additional $82 billion into the economy? plus, can china continue to drive the global recovery? and back to school story
4:15 am
against. shop sg yet to kick in according to a new survey released today. we'll assess the health of the consumer. stay with us. the mr. clean
4:16 am
4:17 am
magic eraser. welcome back to "worldwide
4:18 am
exchange." we are going to look at the equity markets right now globally and we're joined by our team to do that. sill vijay wadhwa is with us to speak about the german market. the french markets will be covered by stephane pedrazzi, of course. and we'll take a look at asia, a broad perspective. but first of all, let me tell you was going on here in the uk. now, yesterday and the day before, the trading day before that, we saw some declines for the ftse 100. we lost a fair bit of ground in that period. 3.2% we lost. today, though, the ftse 100 overall looks like this. we're seeing gains of 0.6%. off the highs of the session, but not too bad. when we've moved to the down side in the past few days, we've seen stocks taking a hit. today, commodities are gaining. rio tinto is over 3% higher. banking stocks, as well.
4:19 am
a couple other stocks to mention, pendragon game out with their results this morning. they reported not so good numbers on the face of it, their profit halved. they also said they're pretty optimistic about the second half, as well. we could see a bit of optimism coming through from some of the companies related to the likes of pendragon today is in the car retail space. let's get out to sylvia now in frankfurt and find out what's going on on the german trade. >> well, becky, in terms of the overall headline figures, it's a similar story to everything else. yet yesterday we got hit squarely on the head. we've seen from the u.s. over the weekend and over in asia. and today, like wide, there's recovery mode in the asian markets. the market remains technical. there's no two ways about it. we're still on the kind of levels where on the down side, we haven't got a great deal of pressure but on the outside, we
4:20 am
seem to be able to crack the hurdles on the up side around this 5,400 thereabout, 350, 60, and that's the kind of range on the upside that we've failed to get past of the past few weeks. in terms of what we're looking out for, the zew index, will it give us a similar picture? corporate news, not a lot to be had. dax 30 stocks, there are a few that slipped into minor territory now. stephane, what's up in paris? >> we've got a small recovery today on the french market. bear in mind that the cac 40 plus 3% over the last two sessions and also that the volumes are extremely limited in the french market, 240 million euros traded since the opening this morning.
4:21 am
it's much lower than the usual volumes we have at this time of the day. in toerchls a stock to watch, the company posted a 1.3% decline of its passenger traffic in july. but still, it's a smaller decline than what we've seen in june and in may. 3.6% decline in may. for 2009, expecting a small growth compared to the last year. adp down 2.3%. air france klm, which this morning was 1% higher on the opening is now flat on the french market. mixed session so far for the bank. christine lagarde, the finance minister wants to see moderation at their meeting next monday. in a radio interview against, lagarde said france could set the example. bnp paribas up 4.3% but credit
4:22 am
agri goal down 1.2%. what is up in this morning in singapore? let's have a look with adam. >> it's a very interesting trading session in asia for the most of it. the markets were fairly resistant. i have to say, it was a difficult journey to that point. once again, the market focus had been on the shanghai xotit following that dramatic fall we saw yesterday. everybody was watching to see how that market got up today and it certainly was a very rocky ride. we saw the shanghai composite dip in the asian trading session there. but then we saw a recovery in the commodity prices and that helped matters somewhat, pushing up some of the resource related stocks in china or limiting some of stocks over there. we had a new listing coming on to the market. this has been a big concern in terms of market liquidity and that was china everbright securities. coming into the market, it's the best performer today in terms of its ipo for the market.
4:23 am
but with a prospect of more competition coming into the equity market, at least in the brokerage space, we saw significant weakness across the other chinese brokerages on the shack high composite. the market sailed higher the. it broke that key 20,000 level there. in terms of stocks we're watching in hong kong, we have been in focus on this deal that air china increased its stake in cathay pacific to 29%. took the additional shares from citic pacific. in terms of north asia, these markets were moved in direct correlation to what was happening in shanghai, a very interesting trading pattern. the nikkei 225 managing to come back out of the red into the green by the end of the day. we tend to see people rotate out of those exporter stocks and into the dmeftic sent rick one. on that note, back to bertha in
4:24 am
the u.s. good morning, bertha. >> good morning, adam. here in the u.s., we get daddy on housing and inflation and the last of earnings season focused this week on retail. july ppi is out. producer prices are forecast to have fallen by 0.4% last month. the core ppi is expected to have inched up 0.1%. at 8:30, july housing starts will be released and they're forecast to be up 2.7% to 598,000. permits are expected to be up 0.5% to 573 dhous. and one day after its main rival, lowe's reported dismal results, home depot will be posting second quarter numbers before the opening bell. out before the open, retailers target, sacks and tjx, parent company of tj max and marshalls. after the close, we'll hear from hewlett packard and that is your global stock watch. >> coming up on "worldwide exchange," the campaign is officially under way.
4:25 am
politicians take to the streets of tokyo. ahead of this month's general elections, we will have the latest gdp data. we'll have any impact at the poll. >> plus, cpi data for the uk is due any minute, in fact. just when can we expect inflation to bottom out? we'll have the latest in just a couple of minutes. we'll be right back.
4:26 am
4:27 am
4:28 am
i'm christine tan. china's everbright staged a cooling today. >> and i'm becky meehan in europe. >> and i'm bertha coombs. in the u.s. today, the focus on housing. more evidence in the housing sector perhaps is at a turning point and results from home depot. >> we are bringing you the latest, breaking news. cpi data here in the uk hitting the wires. now it looks like july cpi is at zero on the month. it was forecast by 0.2% on the month. let's give you rpi. july core cpi, 0.1% on the
4:29 am
month. having been forecast down by 1.4% on the year. so cpi figures coming out, moving in the direction that we had expected. what's your reaction to those figures? >> well, they're moving in the right direction, as you said, which is downward. particularly the headline cpi six months down the road now below 2%. but it isn't down as much as we thought it would be and i think that the reasons are to do with the pound and with high food priets. >> and i'm terribly rude. i got to excited about the inflation data that i forgot to introduce you. trevor is a chooe economist at lloyd's tsb corporate markets. we are seeing a bit of movement, as well, in some of the markets on the back of this news. it looks like sterling is jumping a little after that hire
4:30 am
than expected cpi data. that is in contrast to what we saw yesterday when sterling took a hammer against the dollar. how do you think this inflation feeds into the picture across europe? it doesn't seem as though we have a two-speed european economy, germany, france, on one hand and the likes of spain on the other. >> yeah. well, part of the reason why the german figures bounced a bit, france has been slowed as much as some of the ear economies. but part of the reason why we've seen upward moves in germany and in france is that the falls have been quite severe, particularly in germany. and, of course, i think one swallow does not mean that we've seen more. so i suspect what we're likely to see is that the risk is a
4:31 am
small reduction in gdp growth in q3. i'm not convinced that it will follow through. at the eu level, we saw a fall in gdp at 0.1%. so i are r euro zone gdp is not out of the woods. consumer spending growth is still under pressure from rising unemployment and investment spending is still under pressure from falling global growth led by the ex ports side in manufacturing. and i'm not convinced that what we're seeing i think is leveling off. we're not yet in growth territory. we're a long way down from peaks. what we're seeing is we're bounding along the bottom. and it's too soon to say for sure that we're in a path to recovery. i expect that's partly what's feeding through into equity markets. >> can we just get a bit further into these numbers and look at rpi, as well. if i could get your impression
4:32 am
of what is happening with rpi. july rpi unchanged on the year. that brings us down 1.4%, which isn't as much of a decline as we had expected. that, again, is still higher than we've been expecting. why the die vergence between what we're expecting from these figures and what economists have generally been expected? >> well, i think the real key reason is that the real economy is weak. retail prices in the shops are falling. but we're still seeing higher food prices. and i think that sterling's depreciation of the year, although it's appreciated recently, it's still down against the dollar on the trade-weighted index. and i think that's feeding through to increasing food prices, which are up in a secular sense, anyway, because food prices simply aren't falling much. so i think that's coming through to leave uk prices, rather
4:33 am
stickier than in other countries. so our rpi and our cpi are not down by as much as they are in germany and they're not down by as much as they are in the u.s. and i think that that's the fundamental reason. which we need to be weak, of course, because that's required to help get growth going in the uk as a result, of course, of rising unemployment, of the dirth of liliquidity, that ther is an unwillingness of debt ratios which are already so high. >> hey, heavier, let me jump in. we are getting breaking data coming out from hong kong about unemployment, as well. it seems major july unemployment seems to be unchanged at 5.4%. everyone was expected 5.5%. a rise of 5.5%. a lot of people are saying uncertainty about the recovery in the economy, seeing firms remaining cautious in hiring while entering of fresh graduates will likely push the
4:34 am
rates higher in the summer months. trevor, when you see data like this coming out, does this somehow improve your outlook here in asia? >> i think that the recovery in asia is becoming pretty well enstretched. it's not going to happen in a smooth way. i think one would expect some setbacks and one would expect figures to be good and bad, but the trend is clearly pointing upward. i think part of the reason is that the asian economies had a better fiscal position. the increase in government spending is working through to our economy much more effectively. they have not been affected as much by the credit crisis and the increased trade occurs between the asian economies is also helping to butt res the growth that's saying place there and to protect them somewhat from the downturn that's occurred in the developed yeses. >> once the stimulus measures wears off in asia, is there a chance that the recovery will stall?
4:35 am
>> i think that has to be one of the concerns, christine, and i think it's a concern everywhere. rba came out and said something very similar. they, too, are worried about whether or not they need to raise interest rates or withdrawal some of the stimulus that's been put into the economy, that the recovery will fade. and i think that has to be a risk. and the focus, therefore, should be on looking very closely at what's happening to consumer spending and investment spending and not withdrawing the stimulus until it's clearly that final demand is beginning to show sign oefs kaft improvement and it isn't just being driven by the huge amount of government spending that's been going on. >> trevor, it's bertha. here in the u.s. today, we'll get a bit of barometer on final demand. we've got producer prices coming out. we'll see some inflation there, perhaps. and then we also have the housing starts number. which of these today is more important for you as far as trying to measure what's going on here in the u.s.?
4:36 am
>> well, for me, bertha, i think that the most important figure will be the housing stats. after all, it was the sharp reduction in the housing market which led the u.s. into its recession. the relation that the higher inflated prices for housing were unsustainable trigged the defaults which started the credit crisis. it's clearly that these markets are starting to show signs of life or at least no longer declining. the cutbacks in housing starts and in final completions have now been significantly paired back and are more in line with demand in the housing market. and i think that's why we're beginning to see some signs of recovery. but i think that we must look through the signs of strengthening and consider that what we're seeing overall, it seems to me, is a stabilization in these markets. that is incredibly good news.
4:37 am
after some period of consolidation, the next move in the house b market in the u.s. will be up. but i think it's going to take some time and i don't think we're going to see a significant recovery until next year. >> trevor, we'll have to leave it there. thank you very much for that global tour, as always. good to have you on the show, trevor williams, chief economist at lloyd's tsb markets. let's turn our attention to the national elections coming up at the end of this month in japan. official campaigning for general elections kicking off today as polls show a clear lead for the open session democrat party. primaries aso, the liberal democratic loses of the august 30th election, it will be the party's second defeat in more than five decades. for more, we're joined by ino gucci. thank you very much for being with us. prime minister tar row aso is arguing that it was his policies that helped the economy recovery from a recession in the second
4:38 am
quarter. do you think that is going to help the ldp's chances? >> well, i think it will help ldp somewhat, but not too much. i think the ldp will be defeated at this time. >> what do you think is going to swing the votes in the democratic party's favor? >> well, i think many. i think basically the populous has been somewhat -- by the way so many policy budget cuts in many areas, especially in social policy. and so this time, the bj will win somehow. >> do you think japanese voters are prepared for a change in government? are they prepared to usher in a new leadership at this stage, at a time when the economy is uncertain? >> i think the bureaucracy, some of the bureaucracy will oppose
4:39 am
some impediments to power transitions. but very difficult to say. >> it's becky in london here. how muchiggle room, if you like, how many different choices would a new party have when they came into government? i mean, they're facing the same problems as the existing power holders and they have to to a certain extent support similar policies in trying to prop up the economy. can we expect to see much difference if a new government does come in? >> there aren't too many differences, but in dvenths for the incoming bj, that is one. it is too much promise on social policy expenditure without giving career ways of giving increases for government
4:40 am
revenue. the second difficult with no basically uncharter ed policy package on security and defense. that is not easy to -- to somehow give a good package because within the party itself, the policy directions are disintegrated, programmented, very difficult for the party leadership to forge reasonably well packed policy on security and defense. >> it's bertha coombs here in the u.s. outside an outside investor, a lot of people would want to know if the dk party won, what would be their attitude towards the business community? would there be in the changes there that would impact an investor? >> not much, but i think it has some slightly stronger tendency
4:41 am
to -- not to liberalize extremely weak sectors like agriculture. and the second is that basically the difficulties that the party leader, one of the secretaries of the party leader is being investigated by corruption charges and then since mr. hatayama has admitted that he has done this and that prior to the election time, i think likely for the prosecutor's office will move forward to investigate him or around him much more deeply. >> this election will be closely watched and it will be very interesting to see who comes out of it. thank you very much for joining us. let's head over to india and
4:42 am
join ayesha faridi live for the india business report. >> thanks for that, christine. standing or staring at that 1.5% gain for both the sensex and the nifty. might i add, it has come off from the top of the day. we're almost staring at a 100 point rally for the nifty just about a while ago. technology has been weak in trade today. watch out for counters. unitech amongst the real estate space, it's almost a tug of war space. reliance industries, which has an extremely high weighted in the index, that counter is flattened. but the rest of the market is looking good. telecom is definitely in focus. reliance communications now, we are expecting up from our sources that reliance communications is in talk for source based information up now. but that counter is holding up. more update coming in part and
4:43 am
mtn, the deal is currently on and our sources indicate that the board will be meeting today. if it is conclusive, we can expect some agreement from the deal in the next ten days. the going has been good for that one. the metals space and the real estate space, unitech has made a come back in trade today. even yesterday when the nifty was down about 4%, this is one pocket which was holding very strong from the likes of reuters. all these counters are holding up today and sugar seems to have made a comeback in trade. with that, it's back to you. >> ayesha farther reedy live in mumbai, thank you for that. shares in china everbright securities rise more than 32%
4:44 am
smt shanghai market debut today. everbright offered 520 million shares of 15% of its expanded capital at a price of 21.08 yuan each. it's now valued at 25.6 billion dollars or nearly 60 times its earnings in 2008. everbright's earnings were within expectations. analysts say this could be a sign in the market for new shares could be waning. and for the world's largestmaker plastic soft drink bottles have confirmed it will buy rio tinto's alcan business. amcol will buy the asian pharmaceutical and tobacco businesses. revenue, meanwhile, saw a 3.7%
4:45 am
gauge. shares in amcor were lower today, as well. >> there were signs of a turn around in the commercial british real estate market today after a smaller than expected decline was reported by british land. the company's assets fell and the results were broadly in line with expectations. shares have been pretty flat this morning, but they have taken a bit of a turn lower in the past few minutes and are currently down by 2.4%. german investors are likely to be seen feeling much more cheerful. that is the expectation for the zew index shortly. the assessment of the current situation is expected to improve. economists predict a reading of minus 89 points.
4:46 am
those numbers are due out at 11:00 cet. >> cit reported a $1.6 billion second quarter loss as the lender borrowed money at a higher rate than it lent out. the century old company has been hurt by the liquidity crisis and fear they may disappear. cit has been working recently to avoid a bankruptcy filing. it was able to buy more time to restructure its finances monday, completing a tender offer for more than $1 billion in debt. cit stock is down 70% this year. yesterday, it closed down about 3.5%. reader's digest, one of the world's most recognizable brands have filed for chapter 11 bankruptcy protection. the one-time staple of coffee table in doctor's offices sold 18 million copies a month at its peak. the circulation is now less than half that as readers have
4:47 am
migrated to magazines catering to special interests. the company will be dain taken over by its lenders and will aim to reduce the debt load. you can get anything moving the market today at cnbc.com. coming up, lowe's posted disappointing second quarter numbers. will home depot and target follow chute. >> plus, stronger than expected uk inflation figures due sterling. we'll get the latest on the inflation markets very soon after this break. stay with us.
4:48 am
4:49 am
4:50 am
hello and welcome back to "worldwide exchange." quick check on the currency markets right now. we have joined by zeb bham. let's take a quick check on some of the rates to see where we stand before we get to particularly sterling/dollar. 1.6436 is where we stand with sterling edging up by just over 0.5% against the dollar. we are seeing a very different picture from what we saw yesterday when sterling was
4:51 am
being hit quite hard against the dollar. but i guess the cpi figures are having their impact, aren't they? >> yeah. i think that the currency markets overplayed or overreacts to the poor figures that came out towards the back end of last week. and then the correlation between sterling and risk appetite returned. that's the reason why we see the big swings in the currency markets. what does the cpi figure mean? i think considering the fact that this inflation or deflation is not so much of a worry because of this figure gives way to the possibilities that mervyn king may extend his quantitative easing program in the next round of meetings. if that happens, we're going to see more movement on sterling/dollar. for the movement, we are quite bullish. i think once the volleying comes back in concept, we see bigger
4:52 am
rallies in the equity markets, i think it will go to where the consensus view is in the market. if we continue to see sticky prices, will economists start to adjust their interest rates figures? but i guess they're factoring in the expectations inflation, not what we now know is decoupling. >> the difficulty is that the monetary policy injections as they've been putting in place is subject to the velocity of money theorem and that states how quickly do these policy measures feed into other figures. economists agree it take some time for these figures to feed into inflation. it just gives them in the short-term time for policymakers to give furg injections.
4:53 am
increasing money supply obviously increases inflation worries, but that is not going to feed in until next year at least or the mid part of next year. up until then, i think interest rates will stay relatively low. >> zeb, here in the u.s., i think the fed said they would keep interest rates low for some time. today we will get numbers on the ppi. where do you see the dollar here as we close out the summer? >> i think the ppi figure may come out better than expected, which would put pressure on the dollar examine take away some of the safe haven currency trade we've been seeing over the last couple of sessions. the rally in the stock markets has been on the low volume. september will be a very important month not only for the equities, but also on the dollar.
4:54 am
are we going to see a sustained recovery or a sustained rally? if we see that happening, then the dollar will be under continued pressure against the euro and against sterling, we'll see it lose ground. >> zeb, quickly, can you tell us how much support is the rba minutes giving to the aussie dollar? >> i think the saucy dollar has been the best performing currency over the majors for the last six or seven months. i think the outlook here against both of the majors is continued to stay within a range. it hasn't really broken out. against the japanese yen, the rba will strengthen this month or the month after. but again, it needs to be placed out against this carry trade. once there's confidence back in the market, funds will be moving away from the safe haven currency hes against the yen and the dollar moving towards the high yield on currencies which
4:55 am
would be the australian dollar and that will benefit the most. >> zeb bham, currency strategist at corporate afx. thank you so much. coming up next, everbright securities surges on the shanghai debut. but apparently its 30% rise was seen as disappointing. what does this mean? that as we focus on china, coming up next.
4:56 am
4:57 am
4:58 am
i'm christine tan. china everbright stages a subdued debut in shanghai. is this a sign of cooling investor demand? >> i'm becky meehan. european stock markets head higher, shrugging off yesterday's slump. >> and i'm berlth ya couples. investors look for more information that the housing data may be on the rise with results from housing giant home depot. august zew data is coming out. the current conditions survey indicates for august 7th, minus 70.2. not quite as bad as expected. the economic expectations came in at 56.1, which was ahead of expectations, a marked improvement on what we saw in
4:59 am
the previous months. the commentaries saying positive gdp in the second quarter has led to better assessments of the economic situation. for more on these numbers, we're joined by matthias kohler. a bigger improvement than expected, to be specific. can you run us through some of the factors behind that? >> yes, good morning. we're seeing that the economic perspective for germany have considerably improved this month. there are a few roens. first of all, incoming orders have continued to rise. this should lead to higher industry production in the next month. in line with that, the export oriented sectors have noticeably
5:00 am
improved this month. >> and yet, matthias, i have noticed, as well, there is a kind of -- a bit of tempering of the optimism, if you like. no reason for euphoria. the economy is likely only to recovery gradually. should we look ahead and see that expectations will taper off as people reconcile themselves with this gradual roefr that you see ahead? . >> yes. we think this improvement does not signal a large economic upswing in the next month. there are still risks to economic growth. for example, rising unemployment. furthermore, in the moment, economic growth is mainly driven by the stimulus packages of the governments around the world. in germany, particularly, coming consumption is still quite robust. >> where does this put germany in relation to other major
5:01 am
global economies? do you see that the german economy is recovering more xwikly than elsewhere or is the german economy moving with the tide? >> well, at the moment, it seems that the german economy is recovering relatively good or more quickly compared to other european economies, particularly those countries that are still suffering from the financial market crisis, like for instance, britain or ireland. but, well, in the future, the german economy is, of course, developing quite parallel to the world economy owing to its large export sector. >> matthias, thank you very much for speaking to us. just a recap, those figures have been -- well, they came in better than expected, some pretty upbeat commentary coming
5:02 am
from the zew. let's take a look at what impact we're seeing on the markets in general from these numbers. the ftse cnbc global 300 index is seeing a bit of a speak, 0.6% higher pretty much on that level. let's take a look and break it down by some of the individual markets. with the ftse 100 here in the uk, which has been a bit stronger than some of its peers today is high herb by 0.9%. the dax, the cac and the xhi similarly around those kinds of levels. interesting, too, what is going on with the dollar rates. particularly the impact we're seeing on the euro. ur euro is higher by 0.4% against the dollar. 1.4135. elsewhere, dollar/yen wrb 95.23. sterling is getting a lift from a separate set of data we had earlier on. that is helping sterling to gain about 0.6% against the dollar, 1.6441. bertha, how is it looking in the
5:03 am
states? >> futures have been pointing to roadway bound. if you're just joining us in the states, welcome or the start of your date here. we are seeing the futures down a little bit from the last half hour. we're down about 5 points or so since that data has moved out of europe. we have a very busy day today as far as the bund here. ten-year bund is at 3.33%. we've got the yield here at 3.52% on the ten-year note. as i mentioned today, housing will be in focus swchs praises. those are due out at 8:30 new york time. plenty more to come on the u.s. data later on, but let me introduce you to our guest. nick parsons is with us today head of australia national bank. he's within for the next hour,
5:04 am
hopefully, if he can stay. >> i can bear it. >> let's take a look at the zew data. you sat here listening to matthias kohler. what did you make about his comments? >> i thought he had a very good perspective on the recovery. yes, things are getting better, but let's not get carried away. the reason the zew was higher than the general market consensus is that the that consensus has been framed over the course of the last week. and it's over that period that we had the news of a return to growth in the german economy. let's remember what the zew measures. it's a survey of analyst expectations. so once you've got a return to growth, then the analyst expectations, they're analysts and managers of institutional equities. so therefore, the return to growth feeds through into the stock market performance. i think he's right in not to
5:05 am
read too much into it, but it's certainly consistent with the pattern that nos economies that were less leveraged are able to emerge from the financial crisis in a little better shape. >> nick, what should twe read into when it comes to the sell-off that we've seen over the last couple of days? is this, in your mind, a need correction? is it a bit of rebalancing or do you think we should be worried as we head into the fall? >> well, bertha, it's a very good question. i think there are two elements to the sell-off. the first as it relates to the composition of the global economic recovery. and the good news is we can at least talk about recovery now in the present tense rather than looking forward to it consistently. but that recovery has largely been based on cost cutting, job losses and if you like, shrinkage of overheads. there's been very little in
5:06 am
terms of volume, production and in sales. i think what we're seeing here is investors being a little concerned about the fact that the greeting may well be here, but it doesn't look like sustainable growth. it's either been driven by cost cutting or elsewhere, in particular, the auto sector, it's been driven by one of stimulus packages. the second concern is simply by looking at the calendar. you know, if you look at nearly all the financial crisis we've had in modern financial history, then they've all come in august or september. whether we start with the erm back in 1992, whether we take that through to russia, through to the sell-off that we saw two years ago and ultimately culminating in the collapse of lehman brothers last year, then all the financial crisis come in august and september. given the sheer scale of the rally that we've seen thus far,
5:07 am
then i think it's prudent just for investors to take some money off the table. but that money will come back and i think markets will end the year higher. looking at the calendar, bearing in mind september is traditionally a tricky month and worries about the composition of the recovery going forward. >> nick, we're going to leave it on that in and out. we'll talk more about the potential september surprises as you'll stay with us through this hour. nick parsons, head of strategy at national australia bank. still to come in this hour, tiny stocks recoup early losses, but investors remain cautious as signs emerge that big institutions may be pulling out of the market. can the reason pull the rest of the world out of recession? ccccc
5:08 am
5:09 am
5:10 am
welcome back. china stocks ended higher today. meanwhile, china's everbright shares staged a subdued debut. >> it's not what you expect from chinese ipos, right? it managed a rise to 2,910. that puts the year-to-date gains at 1.2%. property and financials underperformed.
5:11 am
take a look at everbright securities. the stock had a less than stellar debut, up 30%, but off its incident tra day high of 30 yuan. this is the weakest 30-day gain of eight ipos we've had this year. it was curbed by the uncertain outlook after a depressing monday performance. but the valuation was 50 times ipo earnings. now the market is back to where we were two months ago, which is to be expected. ahead of fundamentals, i should say, average pe ratios stood at 32 at the recent peak. they're at 27 now. this is because of the some of the liquidity that drove stocks up may be gone. we've got possibly a second board starting up in the fourth quarter. what is different about the chinese market is that the
5:12 am
market doesn't necessarily reflect the real economy. investors are more focused on policies. for example, when the market falls sharply, they expect regulators to step in and slow the pace of improving ipos and accelerate new mutual funds that they give the green light to. another thing is that there's no shorting option in china. investors are only make money when the ipo slows. >> allan, it's good to have you with us. before we get to the ipo story, i want to ask you about the china market. what can you tell us about the ever growing market clout coming from china? >> well, china for a long time was just a virtual unknown market to most people in the world. you would say an a share and people would think, asian share? now people know what an a-share
5:13 am
is and for good reason. it almost surpassed japan recently at the recent peak and is already far more liquid than any market in asia yap. this is a trend that we at marco polo is going to carry forward. we believe this is quite early in a secular bull cycle and tweer going to see big new highs in the coming years. >> that being said, allan, the kind of valuations are certainly too rich for a lot of foreign investors. >> they may be a little rich for foreign investors, but they're not able to participate mostly, other than about $25 billion u.s. dollars is now invested in china for foreigners. but for mainland chinese, valuations are fine. this is a liquidity driven
5:14 am
market. after the market fell about 73% from the 2007 peak to the 2008 trough. so we've now had quite a bounce back, but valuations, as you said, at 27 and they seem high. but by historymakers, the average peak for this market is about a 35. if you look at previous bull cycles, even 75, these levels are actually quite low as far as china is concerned. >> allan, this is christine again. when you talk about the china market growing, give us a sense of how large this market can be, say in a couple years' time. >> well, this market is about $2.8 trillion u.s. dollars. united states made up of about 1,600 companies. there's another 00 plus companies waiting to list, including major h-shared & that would love to get back into the mainland market. if you factor in earnings growth next year to be 20% plus, it's
5:15 am
way too early to look out to 2011, of course, but one would think before this market cycle is over, we will see very high pe levels and we will see the shanghai composite break 10,000. >> alan, it's bertha. we have seen china on the world stage because of its cash and reserves. given how strong it is and how dependent is u.s. is on chienl na right now, how is that going to change what china does as it moves forward here? are we seeing a real big shift right now? >> i think china is ultimately most concerned about china. you can read the headlines every day and i think china -- that itself. i'm not exactly sure what
5:16 am
particular areas you're focused on, whether it's currency or macroeconomic policy, but everything that china does is geared towards bringing china up the economic ladder. it has a long way to go. we still talk about china as a big country, a powerful country, but per capita income is still low. so there's a long way to go for china to move up the economic chain. >> alan, bearing that in mind, where should ingesters be looking for the best remaining value in china? >> well, value is a fairly relative term, but these market drawndowns are great opportunities for people who have been sitting on the sideline looking to get exposure. areas i think people should be looking at are securities brokerage companies, like the recent ipo is probably a little rich for most. huge turnover right now, $40
5:17 am
billion per day on average which surpasses the 2007 bull market peaks. a lot of ipos will be coming to market. another sector is steel, iron ore prices are falling. there's a lot of demand recovery in the property sector and the appliance sector, in the auto sector, machinery. so that's going to drive demand at the same time as caution going down. so i like the steal sector, as well. people should take a look at those. >> alan, we hear you. thank you very much for your time. good talking to you. it's bl been really great. lei, thank you very much for coming on the show, as well. >> and here in the u.s., back to school season hasn't quite started yet, according to the national retail federation. they say the average family has only finished about 41% of its
5:18 am
shopping at this point. one-third has yet to even start. sales coupons have recently influenced nearly half of the purchases so far this season. they say some states have shifted tax free shopping days into august and many cools will open in september this year because of the timing of the labor day holiday. so back to school is going to be a little bit later, the industry says that it's the second biggest selling period after christmas. >> sterling got a boost this morning against the dollar as headline uk inflation heralded above the expectation. prices were pretty sticky in july. consumer prices remains at an annual rate of 1.8%. economists had expected the rates to ease well below 5%. >> weir looking at a couple of stories in asia, as well, in terms of stories. we are looking at reliance,
5:19 am
thaerts. this particular story, shares in reliance communications are rising today. agency you can see, they're up 1.9%. according to reuters sources, india's number two mobile phone operator are looking at buying cue wayty telecom services zane. this comes after they failed to seal a deal with south africa's mtn. i'm sorry, there is something wrong with the prompter, of course. coming up next on the show, stay with us, we have plenty more news to come on the show. videos and blogs, anything moving markets today, you can find them all at cnbc.com. still to come, asian stocks claw back from earlier lows as investors forget about the strength of the global recovery. are we about to see a correction? and we will love to hear from you.
5:20 am
e-mail us worldwide@cnbc.com. uk ♪ singer:wanted to get myself a new cell phone ♪
5:21 am
5:22 am
♪ so i could hear myself as a ringtone ♪ ♪ who knew the store would go and check my credit score ♪ ♪ now all they let me have is this dinosaur ♪ ♪ hello hello hello can anybody hear me? ♪ ♪ i know i know i know i shoulda gone to ♪ ♪ free credit report dot com! ♪ that's where i shoulda gone! coulda got my knowledge on! ♪ ♪ vo: free credit score and report with enrollment in triple advantage. welcome back to the show. we are going to take a quick look around the global equity markets now to give you an impression of what's going on after the big sell-off that we saw yesterday. starting off in the uk, to check
5:23 am
on what's going on with the ftse 100, hire by about 0.6%. we are adding about 31, 32 poichts or so today. let's take a look at some of the movers. while i tell you whats been happening until the economic data, we had cpi earlier which shows prices are remaining sticky. but not by as much as has been anticipated by the economists, certainly. now, in terms of the movers, on the upside, we see plenty of the stocks were declining heavily yesterday, particularly those related to the commodity prices, basic resources stocks, metals and miners. ex trat ta, rio tinto, kazakhmy kazakhmy's. british land is down by about 2.7%. not enough to erase gains we're seeing elsewhere. but the company did come out with figures in which they said
5:24 am
their net asset value is down in the third quarter. >> thank you, becky. the volumes are limited on the french market today within, but the market is bounding back after the 3% decline we have over the last two sessions. the cac is up 0.6%. the company which runs the main airport of the french capital posted a decline of passenger traffic in july. traffic declined by more than 6%. also a few days ago, the company confirmed sales guidance expecting growth compared to last year. stock is up by 1.4%. air france klm is trading higher, up 1.2%. the banks are globally underperforming the french market today. the finance minister christine lagarde wants the french minute
5:25 am
star to make some moderation in policy for their meeting next monday that she will hold with bankers in france for the time being. societe generale is flat, bnp paribas is up by 0.5%. let's go to singapore for a quick view on the asian market with adam. >> thank you very much, stephane. it was not a straight line up and it was a choppy trading session to some, at least. it was a choppy mixed trading session for that market, as well. we have the nikkei 225, the broader topix and the kospi in south korea tracking movements in the shanghai composite today given the massive losses that we saw yesterday. remember, china is a big, big market for these economies in north asia.
5:26 am
they're certainly big trading partners, so that's not surprising on that front. in terms of the stocks we were watching, we saw strength in japan coming from the domestic plays. we saw rotation into those stocks. we tend to see that when there's a lot of market volatility. the yen was weaker and that helped the exporter stocks, particularly the auto ek and the chip stocks. on that note, back to the u.s. with bertha. >> thanks very much, adam. housing and inflation top the agenda today here in the states. at 8:30 new york time, we'll get the july ppi number. producer prices are forecast to have tall i by 0.4% in the last month. the core ppi, which strips out food and energy is expected to have inched up 0.1%. at 8:30, we're going to get july housing starts. those are forecast to have risen nearly 3% to an annual rate of 598,000.
5:27 am
building permits are expected to have built up by 0.5% to 573,000. one day after lowe's reported dismal results, home depot is up with second quarter numbers before the opening bell. watch for retailers target, saks fifth avenue, tjx, parent of tj max and marshall's. and after the close, we'll get the big tech bellwether hewlett packard. that's your global stock watch. coming up next on "worldwide exchange," are global equities on the brink of another leg down? we'll have analysis after the break.
5:28 am
5:29 am
it's a little more than half past the hour. here are the top business stories from around the world. in the u.s., investors look for evidence that the housing sector is at a turning point. >> i'm becky meehan. in europe, investors are shrugging off yesterday's slump. >> here in asia, china everbright shares are in focus.
5:30 am
the debut in shanghai, is it a sign of investor cooling in demand? >> hello and welcome to "worldwide exchange." if you're just joining us in the u.s., the futures are pointing to a bit of a bounceback. up about 65 points above fair value. as far as the dow, the s&p futures right now are just about 5 points above fair value. we're going to hear from home depot ahead of the open. not likely to be such a great mover. also, we are going to get data on housing starts, as well as the ppi. taking a look at the ten-year yield, it has moved up a bit. we were down below 3.5% yesterday. we are at 3.51% this morning. becky, it's been a busy morning for you with lots of data out this morning, out of the euro zone and the uk. >> yeah, it certainly has. we like it that way, though,
5:31 am
bertha. we like to keep busy around here. european bourses, we are still seeing a positive session with gains of about between 0.7% and 0.8% for the ftse 100 and for the some smi, actually. and between 0.6% and 0.7% for each of the dax and the cac. let's take a look at the dollar rates, dollar/yen, 95.22. euro slshl dorlt, 1.4119. sterling/dollar, 17643. christine, how is it going in asia? >> most asian markets here ended higher. a lot of it was deck tated by whatappening in the shanghai markets, of course. a lot of correlation between asia and china. the nikkei 225 s up 0.1%. kospi up 0.2%. the shanghai market reversing earlier declines, up 1.4%. the hang seng following track, up 0.8% and the bombay sensex is up 1.6%.
5:32 am
nymex light sweet crew, up 90 cents, $67.65 a barrel. brent is tacking on gains, as well. brent is right now trading at $71.24 a barrel. bertha, over to you. >> still with us is nick parsons out of london. bill, being a suffering red sox fan right now, i'm going to start with you. these markets looked as though they might be starting to pullback. what should we make of the movement we've seen over the last couple of weeks? is this just the august low volume, a little bit of correction, a little bit of profit taking? >> i think it's some of that. i think we may have a bit more to correct on the downside. but i think the good news is
5:33 am
that the march rally overall is still intact. i mean, our game plan really hasn't changed. we still think you may put on another leg to the upside, somewhere around 1,100, 1,050. we might map it out where 11 you know, 1150 is the upper end of the range. 900 ends up being fair value and 750 is the lower end of the range. so the key question is can we put one more move on the upside? we think there's a good chance you do that, but probably trade down a little bit before you go up again. >> nick, it sounds like he's pretty much in your camp i don't want to get into what kind of recovery this is, w, m, u, but what do you think? >> that's a rather tedious
5:34 am
debate. but if the sell-off does materialize, i'd say this is a tactical sell-off, rather than a strategic one. what i mean by that is if you look back at the you a item to winter of last year, then money that came out of the market was, perhaps, not going to go back in for quite some time. but i think here investors taking money off the table ahead of what could traditionally be ahead of the october sell-off. they're looking for a tactical selldown and that money, for sure, is going to go in. so i think we're going to end the year higher. the question is at what level do you buy it? could you have a deeper pullback? and my suggestion is that there's a lot of people who ly want that pullback. they want that pullback so they think get back in fourth fourth quarter.
5:35 am
>> bill, it's becky here. we have had some decent data coming out from the state, credit cards, the credit card defaults yesterday, for instance, looked pretty good, but the market still fell hard. what do you think could -- i mean, do you think that the asian markets will continue to drive the u.s. markets or what could come along to usurp that trend to push us forward next? >> i agree with the previous guest. i think you're seeing some people take some money off the table and, you know, we may see a little bit more ooh a correction here, but i don't see it to be anything major.
5:36 am
we're starting to see overall economic improvement in daes across the board. i don't think we've cleared all the hurdles, but we're moving in the right direction. as i said, i think you get a little bit more of a pullback here, but that just sets you up for this next leg to the upside. so i think we're in pretty good shape as long as we don't get any major disasters in terms of the labor market data and the housing data, i think we'll be okay. >> hey, bill, this is christine. in the meantime, are you telling people this pullback could be a time to buy into the market? >> yeah, well, as i said, i think we can putt pullback a little bit more. somewhere maybe as deep at 950, 900 in the s&p. and we'll use that as an opportunity to get back in. as i said, we don't see this as some sort of a multi year bull market. we look at this as kind of maybe one more leg to the up side.
5:37 am
as i said, 1100, 1150. and then i think that that pretty much does it. we think you have a very good opportunity to get the leg up. i don't think it's going to be as smooth as what we saw in july. once you start to get above 1,000, year in the longer term sell area. >> bill, thank you so much for joining us and nick parsons, as well, will continue to stay with us. right now, let's cross over live to tokyo and check in on the trading day there. >> hello, christine. tokyo stocks were mostly flat today.
5:38 am
the nikkei 225 started out lower but eventually picked up after seeing the shanghai index rebound. the yen weakening slightly against the dollar reassured investors, as well. among the top gainers were mizuho construction. the firm together with ihi had one order by the vietnamese government to build one of the world's longest cable bridges. casio computers rose 7% after casio raised its rating to the highest level. meanwhile, the commodity market in a downtrend related stocks such as iron and steel and metals were weak. mitsubishi was down 3% and stealmaker jfk holdings slipped more than 1%. finally, the general election nearly kicked off today as nearly 1400 people filed
5:39 am
candidacies to compete for seats in the lower house. >> thank you so much for that. bertha. >> still to come, the national retail federation says u.s. consumers have more back to school shopping to do. will this give retail sales a much needed boost? take a look at futures in the meantime. oh, hi! welcome to progressive.com. are you all right? a ferocious white whale wrecked my boat. well, i'm sure we can help you, captain... ahab. well, it looks like you haven't had a claim in over four years, so you don't have to pay a deductible. that means you saved $500! $500? i could get an electronic fish-finder. that's the spirit. saving you money on boat insurance. now that's progressive. call or click today.
5:40 am
5:41 am
5:42 am
welcome back to "worldwide exchange." here are some of the top stories that we've been watching from around the world. here in the u.s., retailers say they could get a much needed boost this month as many consumers have put off their back to school shopping. the national retail federation says the average family has only finished about 40% of its shopping. one-third hasn't even started. sales of coupons influenced nearly half the purchases so far this season and some states have shifted tax free shopping holidays into august and many schools will open later in september because of the timing of the labor day holiday that first weekend in september. so they say back to school will be a bit back ended. u.s. shorts have busted what could be the largest identity theft case ever, involving more than 130 million credit and debit card numbers.
5:43 am
three men, one american and two russians zapped into systems and stole realtime data as illustrate was being entered by card holders. gonzalez, who is in jail for a separate case is in jail in a separate case. and a inventorierble name, reader's digest has filed for chapter 11 bankruptcy protection. founded in 1922, the one-time staple of coffee tables in doctor's offices has filed for bankruptcy. the company was bought by private equity firm ripple holdi holdings.
5:44 am
german investors are feeling much more cheerful about the state of the economy according to the zew index. a much better than expected reading of 56.1 in august beat expects ooh 45. >> shares of china everbright securities rose more than 32% in their shanghai market debut today after raising $1.6 billion in its ipo. everbright offered more than 20 million shares off 15% of the expanded capital at a price of 1.5 yuan each. everbright gains were within expectations.
5:45 am
>> let's get a final thought now from nick parsons, head of national australia bank. he's been with us for almost the past hour. we have to let him go, unfortunately. but nick, there's been, as ever, heaps and heaps of news flow. what stands out in your mind? >> the absence of a consumer-driven recovery. there is nothing that suggests to us that the recovery is going to be sustained at the sort of pace of growth that we saw prior to the financial market crash, which brought all the global markets down. i would want to see some strength in the consumer. i'd like to see some volume growth. i'd like to see increases in output sales and volume rather than just a cost-driven recovery, which just helped to boost bottom lines. that said, however, i think we should remember that investors are primaried now for the september shock. and the september shopt shock usually comes, but the more you expect it, the less by definition of a surprise it will
5:46 am
be. my sense is that those investors taking the money off the table right now are really going to be looking to put it back to work at the end of september for the stage being set for possibly quite a strong fourth quarter rally. so i think this is a precautionary move. i don't think it heldz the start of a major down move as it did a year ago. i think it's a defensive proovt taking move and i think markets are well poised for the fourth quarter of the year. but that is contingent on the consumer stepping up and doing his other her piece. >> thanks so much for sharing that with us today, nick parsons, head of strategy at national australia bank. bertha. >> becky, up next, we'll take a look at the trading day on wall street. these days every penny counts with everything you buy. every head. every bite. every gallon. every shoe. every book. every cereal. well, maybe not every cereal. but every stem. every stitch. every tune. every toy. pretty much everything you buy
5:47 am
can help your savings account grow because keep the change from bank of america rounds up every debit card purchase to the next dollar and transfers the difference from your checking to savings account. it's one of the many ways we make saving money in tough times a whole lot easier.
5:48 am
all right. let's get a look at the u.s. trading day lady. from bell curve trading, joining us since the bottom of the hour,
5:49 am
we're going to save the talk on the red sox for a moment. we're going to get housing starts. folks seem to be excited that they're expecting a boost in housing starts. but don't we really want housing starts to stay flat so that we can work off the inventory? why is that good news? >> i think abdomen bertha, any sign of life in housing is good news. as i said earlier, i think the two things really have to come into play here for us to be able to save in terms of the economy, housing has to stabilize and i think the labor market has to stabilize opinion you know, we'll see. i mean, obviously, the lower starts, you keep the inventory down, but in my opinion, any sign of life here is a plus. so, you know, we'll see what we get today. i think the other thing that is really important is tomorrow we've got the beginning of the jackson hole meeting with the fed where they oftentimes lay out their bigger picture game plan for the rest of the year.
5:50 am
we'll see what bernanke has to say tomorrow. those are the two things that will really drive the trade for the rest of the week. >> hey, bill. home depot reports before the open. will it be almost a carbon copy of lowe's results? >> you know, probably a similar type theme. you know, my guess is a fairly similar theme. >> we have figures coming through from target, for instance. just interested to hear our previous guest, when he was talking about the take away they had from this earnings season and he's still concerned that the earnings have been very much driven by companies cutting back on costs and no real signs that we've seen from the consumer coming in with convictions. >> a lot of the earnings we see so far has been because of cost cutting. but i think that does set you up
5:51 am
well in the third and fourth quarter. any growth on the top line is going to be really magnified. so i think the cost cutting has probably run its course, but revenues and top line growth will increase and you'll see that, i think, reflected in the third and fourth quarters. >> you know, bill, we've been watching the detailed numbers coming in. they've been fairly disappointing. the retail federation says, hey, hold on, this year's back to school sales are going to happen later rather than sooner. do you buy it or is this just another case of the retailers using the calendar to make excuses? >> i think that, you know, the back to school season will be okay. it won't be anything outstanding, but it will be okay. i think as time goes on and we see stability in the markets and
5:52 am
stability in the consumer, it will start to come back. >> you know, you talk about stability in the market. it was interesting. nick parsons who had been on earlier with you had talked about how september is that time for the market's surprise. certainly that has been the case for the last two years running. what's your strategy as you look going into september? do you still believe the market has a leg up here? do you think the market has to take a leg down first? >> yeah, bertha. i mean, i think we still might correct a little bit more before we go higher. as i said, i wouldn't be surprised if we trade at teen as 920, 950 on the s&p. but again, we don't see this as a multi year bull market. basically, you know, as i said earlier, i think the upper end of the range in the s&p is 1100 to 1150. i think 900 ends up being fair
5:53 am
value and the lower end ends up being around 750. key question in our mind is do we get one more push to the upside? and to gailg gauge that, you have to focus on the march rally. that's the key trend that's driving everything in. in our opinion, i think the odds are good ta you get one more move to the upside. the question is, where do you set up for that? hopefully we pull back a little bit more. you know, we can buy in that 925, the 00 area to try to catch that last move, you know, to 1100, 1150. >> sounds good, bill. thanks so much for joining us this morning and get those red sox to start winning. bill strazzullo, bell curve trading out of boston. >> absolutely. >> that's it for us this morning. i'm bertha coombs here in the u.s. the futures are pointing to a modest recovery here at the open. stock futures are pretty much been about 65 points above fair value. that's it now. >> and i'm becky meehan in
5:54 am
europe. >> and here in asia, i'm christine tan. thanks for your company here on "worldwide exchange."
5:55 am
5:56 am
5:57 am
investors around the world are looking to bounceback from today's global sell-off. today, though, key data on housing and inflation. plus, a dow component on the docket. quarter le results expected from home depot within minutes as "squawk box" begins right now. ♪ it's the eye of the tiger it's the thrill of the fight ♪ ♪ rising up to the challenge of our rivals ♪ ♪ and the last known survivor is -- >> good morning, everybody, and welcome to "squawk box" here on
5:58 am
cnbc. i'm becky quick along with joe kernen and carl quintanilla. we've been watching the futures. the u.s. equity futures are in rally mode in morning after a bill sell-off. stocks are looking to bounce back after the s&p and dow both suffered their biggest one-day pullback since the beginning of july. the nasdaq seeing its sharpest drop since june 22nd. the risk aversion trade is back en vogue yesterday. the asian markets overnight, after a major sell-off again, these are the guys who led the way yesterday, right now you're going to see that they are in the green. you can check that out on the overseas. home depot is out with earnings right now. this is the dow component we've been waiting for. >> 54 cents and the estimate was for 59. revenue, i believe 19.1 versus 19.2. and we'll see what they say about guidance for the year, bup i do see, joe, that they see
5:59 am
fiscal '09 sales down 9%, about 9%. >> yeah. u.s. comp store sales negative 6.9%. i wasn't here yesterday, but i guess lowe's was disappointing. and they missed their numbers. >> they trimmed their expansion plan. >> is this a home depot better report than lowe's yesterday?ú >> we talk to the ceo yesterday. he said he raised the numbers for home depot last week because he's looking at where they've come. lowe's has not suffered some of the problems that home depot hac along the way, so he thinks home depot is a better place for the improvement. >> so the colors aren't quite as nice and -- >> well, you may not have as much money to fix up on the light fixture peps. >> so lowe's is seen as a little bit more -- right? is it it to the gentler home depot? >> so it's the female. >> so becky

163 Views

info Stream Only

Uploaded by TV Archive on