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tv   Worldwide Exchange  CNBC  September 3, 2009 4:00am-6:00am EDT

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seemingly have been recovering towards the past month or so. whether or not you believe it, that's a different story. euro/dollar, 1.4290. not much reaction in the euro after this pmi data. the ftse cnbc 300 index, a bit higher today, by spp 0.15%. let me show you what we're doing when it comes to the markets out there. you've got all of our main markets trading lower and the cac 40 being flat to just a little higher as i speak. nevertheless, we are seeing quite a big jump in the underlying stocks out there on the back of the huge jump in gold. the currency markets, a bit more going on here with the
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currencies seeing quite a bit of interest ahead of the ecb interest rate decision. 1.4289 on the dollar and the question is whether or not we'll get any word from trichet on the measures that have been put in place for the economy. christine, you and i e-mailed yesterday and spoke about what to wear. >> just wear yesterday. suit a bit of gray, just mix things up a little bit. overall, markets here are not in the yesterday, most of them in the green. this nikkei 225 is down just a bit. stronger yen taking a hit on the exporters. the kospi is finishing flat. the shanghai composite surging almost 5% to end 4.8% higher. we had some talk about bank
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lending in august. a slight drop-off in lending, but still pretty song considering what the market is factoring in. the hang seng is up 1.2% and the sensex is up 0.3%. nymex light sweet crude is roughly above the $68 mark. a steep fall in u.s. gas inventories helped to offset a smaller than expected drop in crude. $68.17 a barm. mike, how coordinate are the with the rest of the girls? >> i did not get the gray on black or gray or black on pink or red memo, obviously. but things are looking brighter here in the united states as far as the futures are concerned. not a dramatic move, but it looks like at least at the open, we might break the four-day losing streak. the dow, by the way, has not
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been down four days straight since june and the s&p 500 hasn't been down four days in a row since may. so, again, the futures are pointing towards a slightly higher open at this very hour. with stocks continuing to sell off, ininvestors continuing to roll into the treasury market, let's take a look at the yield on the bund right now. rising at 3.25%. but yesterday, especially on the back of the fed minutes coming out midafternoon time, we did see the price of the benchmark ten-year t-note go up and the yield continue to decline to its lowest yield in about two months. but now it's back on the uptick. the real story is what happened in gold yesterday because of what was going on in the stock market, because of heightened fears about inflation. we did see gold jump almost $22 an ounce more than 2% to
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$976.60. this was his highest settling price since early june, so nearly a three-month high here. but we are seeing a bit of a pullback in morning at $97..55 at the moment down just a fraction. louisa, over to you. >> the ecb will probably keep record rates on hold. the market is expected to sound more optimistic. survey data has been upbeat and figures have shown that germany and france came out of recession in the second quarter. silvia wadhwa joins us in frankfurt following the ecb development to come, and we've had the bank out of sweden a half an hour ago keeping rates steady and saying they're going to stay there for a year. what are we going to hear from trichet again? is he going to tell us not to get carried away? >> well, he usually tells us this kind of thing.
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rates on hold is the taking. he's not going to tell us for how long, they're never going to commit that much and yet you don't have to be a fortune teller to suspect that they're going to be more upbeat than the last ones we heard because the last ones may be the trough of economic forecasting, were very glum and very pessimistic. interesting to see how upbeat the projections for 2010 are going to be, because so far what we heard out of various ecb counselors to trichet himself all said don't be too optimistic. there could be setbacks in the economy. we'll have to wait and see how optimistic they're going to be today to get an indication for interest rates.
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>> still via, thank you very much. joining us now, ubert pave, chief economist and strategist at asian cantor fitzgerald and christian blaabjerg. christian, the ecb in its rate decision today, it's probably going to leave rates on hold at 1%. how closely will you be listening in to the comments that trichet has yet to give us in the press conference? >> i think the market has an indication of where they're heading to. and i think in particular, it's heavy quantitative easing. so the question is what are they going to do? will they indicate an exit strategy? so that is a tough one at this stage. >> and also, of course, with this tenure that you're talking about, they're set to hand out a large pile of cash at the end of the month and it will be interesting to see if they try
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to do more than 1%. if they charge more than 1 perz, is it a given that rates are going to go up within the next six months to a year inspect. >> i think it would be an indication that after underwriting for the whole financial sector in europe, the ecb would be less generous and that would mean that we'll see sooner or later the bond yield going up a bit. nevertheless, money will be provided generously by the central bank and that will limit the upside in the yield going forward. >> uve, yesterday, of course, we got the latest from the fed's newest meeting saying things are looking better, the downside risk is clearer, and we expect a slow and gradual and there could
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still be trouble ahead. do you agree with the u.s.'s decision at this point? >> yes, we do. i think basically there are certain upsides there. the manufacturing sector in the united states seems to be recovering. there seems to be some kind of bottom to be made in how to -- prices overall seem to be falling. there are still some potential hiccups in financials, especially the commercial mortgages sector gives us some concerns. we don't exactly know what is in the bank portfolio at this time. that's always a worry. and i think the sell-off we saw a couple of days ago in the
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united states relates to hiccups that we've seen there. >> there are a lot of concerns, especially about what's going to happen with the commercial real estate exposure. whether or not this early september sell-off has become a self-fulfilling prophesy, you believe investors should continue buying on these dips. tell me why. >> i think there is plainly too much liquidity in the system. i think everybody is in a situation where he or she has to think how to invest and put on the cash. and equity markets are up. i think there will be some pressure from the institutional side to buy into these markets and despite all potential negative news and the seasonal issues, i think there is some upside lift. on that concern, he think it's about buying some of the cyclicals, getting back into the markets if they will make a low, either now in september or rather in october.
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>> can we talk about m&a? we've got a drugmaker buying for $2.6 million. this follows tekeda buying another company last year. do you think pharmaceutical companies are looking cheap and attractive for japanese firms? >> well, there is a strong yen right now, which helps a lot. the other thing is, i think there are very important synergies. the amount of research they conduct, the amount of money they're willing to spend, perhaps, on new products is more cautious than in the united states. and a small company like
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sepracore which has some potential upside there in terms of the wrong products they put in, this is a good match. >> do you think a strong yen that ube was mentioning could be a strong move to acquire companies overseas? >> it's a theme we'll follow up on quite soon, as well. yes, i think there is a certain case for that. i think there are other areas which are more appealing. i would rather be in some of the japanese small caps and some of the retailers and some of the domestic stocks rather than going for these m&a stories abroad. on a cultural basis, this has been proved that this is a difficult thing to merge. >> christian gattika and uber
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pave from asia cantor fitzgerald. before we move on, my director just came out and gave me this. he gave me that because i'm a bit of an eggplant when it comes to remembering our actual e-mail address. this is for me to remember and you to write in and ask any questions you have for our guests and we'll pose them to you. now, the french unemployment rate has risen to 9.5% in the second quarter, hitting a ten-year high. a deterioration in the labor market hurt earnings at the biggest recruitment firm, hayes. revenues fell by 4%. hayes says that operations in continental europe continues to struggle, but there are initial signs of stability in the uk and asia pacific.
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hayes lower by more than 3.5%, as said. pernod racard has reported a profit rise, roughly in line with a reuters poll. however, the french spirits group says the economic environment will remain tough in the second half. >> japan's dainippon has confirmed they will buy sepracor for $276 billion. it says that the u.s. company has agreed to its offer price, which represents a 26.7% premium to its september 1st share price. this also means japan's number seven drugmaker will get a 1,000 strong sales force to promote its key schizophrenia drug in
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the u.s. market. shares gained 1.2% at dainppo no. in china, new lending, of course, by the top four banks totaled $23.4 billion in august, slightly lower than in july. meanwhile, the company's banking regulator has stopped approving new for banks whose capital ratio is below the%. the beijing stimulus and fiscal monetary policies are having a positive impact, but warned of the risks posed by the insurgent in lending. mike. >> okay, okay. so that was >> treasury secretary tim geithner says he will urge g-20
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members to the rules for banks. geithner says he's not seeking an immediate agreement because it's too soon to clamp down on a financial sector that is still struggling to return to normal lending. geithner says efforts have paid off, but they need to continue to provide sizable report until there are signs of a recovery. >> and philly fed central bank president charles plosser says whether or not the fed will raise interest rates next year will depend on the recovery. markets rpt at fluid as they were two years ago and may never flow easily again. he's already concerned commercial real estate will drag down the recovery. >> we've had a very massive shock to this economy and to some degree, it's a permanent shock or at least it's going to be very persistent.
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therefore, the notion that the level of output is going to get back up to some path that we were on before i think is pretty -- it's probably not true. >> plosser says the fed must engineer a careful strategy from its various stimulus programs along with the need from higher interest rates or run the risk of higher inflation. many economists don't think the fed will move on rates before 11 and that when plosser is a voter on the fomc. >> coming up here on "worldwide exchange," timothy geithner says they've pulled back from the brink, but the there and a long way to go. stocks in asia remain a little struggling. was yesterday's weaker than expected u.s. jobs numbers a bad omen for the economy? and interest rate decisions dominate in europe today.
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how cautious is jean claude trichet set to be? we're live with more stay tuned.
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welcome back. you are still watching "worldwide exchange." on to our global roundup of the equity market, let's try to pin the tail on the donkey today. rebecca. >> hayes coming out with their figures today, profits falling pretty hard. second half conditions have been tough. they see a bit of disability coming through in asia, the uk and they're chickening out saying they're in a recovery. let me mention a retailer of box and music, as well. like-for-like sales have declined by some 1.8%. they're stealing market share from the companies that were denied recently. market share really getting a boost from those companies. hmv just down by about 1.75%
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today, though. how is it looking in germany, patricia? >> here, the market is quiet as a mouth. we're absolutely flat lining at the moment. the dax at 5,322. however, somebody that is not quiet like a mouse is the ceo of deutsche bank. and he said that the progress is being made by banks with regards to the crisis that we have seen and we are still living through. and that there is definitely some reform going on of the financial market system on a global level, of course. this is still going to be an international concern for quite some time. no real reaction. the stock has been up all day, really, up about 1.4% as we speak. the cyclical stocks are among the main gainers such as
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thyssenkrupp. so there is no more downward pressure as much as seen before. the worst performance really suffering a downgrade from one of the brokers at basf, down about 3%. that's frankfurt. over to paris. stephane. in paris, no bulls, no bears. something in between for the french market. i don't know what kind of animal this could be. but the session is very quiet for the cac 40. we have an interesting session so far. it was the biggest gainer in the opening this morning. it's now the biggest decliner in the cac 40. the company posted a better than expected earnings for the full year, up 13% thanks to the acquisition of absolut vodka and they warn that the economy will remain challenging in 2009 and 2010.
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now regarding the debt level, the ceo says he will not make a cash call to the shareholders but will rely on the free cash flow generation to lower the debt level. this stock is higher, despite the planes being fitted with goodyear tires. let's have a look at the asian markets with adam. >> the stop, the former was the shanghai composite rocketing up about 4.8% here. the market got a boost in sentiment after the vice chairman of the chinese regulatory commission said that the market was healthy and that the regulatory authorities will do all it takes to promote the steady development of the equity
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market. his prominence got a showing off the meters and the case when they wanted to talk up the markets there. it had something to do with technical buying. nevertheless, we saw strong buying that helped push up the hang seng and the h-share index as we saw gains across the board after gold rose to $980 an ounce overnight. the dog of the session was the japanese market. tracking the losses on waum street, but the big reason for the sell-off was the yen versus the u.s. dollar. that did push down the exporter stocks as well as the financials. there's an ongoing concern about the financial troubles in the u.s. spurring out to the commercial real estate space. on that note, back to you, mike. good morning. >> thanks, adam. good afternoon to you. investors will get another pair of reports today that could show
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improvement in the u.s. economy. there could be push me/pull you with the retail reports out later. weekly jobless claims are out at 8:30 new york time, forecast to drop by 5,000 to a hotel of 565,000. at 10:00, the august ism services index will be released. analysts looking for a pull up of 48. vice president joe biden will speak about the state of the economy and the stimulus package in washington at 10:00 in the morning. dallas fed president richard fisher is talking about the economy at u.s. santa barbara at 7:00 new york time. u.s. retailers are reporting august same-store sales today. back to school shopping is not expected to help there. the consensus is for sales to
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drop with teen apparel hurting the worst. coming up on "worldwide exchange," chinese stocks jump after hearing that the market is healthy, but is this simply a bit to talk up equities? >> and jean-claude trichet is expected to talk up information today. we'll be live in europe ahead of the interest rate decision.
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i'm christine tan. in asia, shanghai stocks put up almost 5% on hopes of government support for the market. >> i'm louisa bojesen. the european central bank faces opposition as french unemployment hits a new ten-year high. >> i'm mike huckman in the united states. the markets look to the services sector to try to pull the market out of a four-day losing streak. >> good morning. we just tweaked up a little bit and we saw a new bright spot. we're looking at the uk august
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services pmi. according to sources, higher by 54.1. it was forecast at 54. and just to compare to what we saw in july was 53.2, then. so we are seeing the uk services data higher. we are sterling hit a session high off of this data, 1.6 42. let's talk to james shugg on this. we're just continuing to steady as she goes with this, james. >> i think that's a fair assessment, although, you have to look at it in context. remember the fourth quarter of last year, the first quarter of this year for the uk and europe were exceptionally weak. really, you could only categorize it was happening in the data flow as evidence that, well, the european economy is bottoming out and the uk economy
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possibly posting some growth in the third quarter. a very modest percentage gain in the third quarter following the extraordinary steep declines in previous quarters is still not very impressive for me. >> james, you're staying with us luckily. james will be with us here for the next bit of time. in the meantime, i want to show you what we're doing on the markets. the ftse cnbc global 300 index having come off its session highs, higher, just indicating that most of our european markets have been trading into slight positive territory. it has been a relatively flattish start. these are flat markets right now. we've seen quite a bit of activity in the basic resource sector with a big jump there in the underlying price of gold leading to buying in these stocks. the euro/dollar, ahead of the ecb rate decision with a bit of buying into the euro ahead of
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the no change expectation from the ecb, 1.4292 is what we're looking at the at the moment. the real question is whether or not trichet will give us an indication of the unwinding of the qe programs that have been put in place. christine, how about asia? >> hey, louisa. dollar/yen at seven-month highs. the yen is really strong dragging down the exporters in japan and that took a beating out of the japanese market. the kospi remaining flat. surging up more than 5% before pulling back just a little bit. we had reports of bank lending, although falling back a little bit remain robust for the month of august. that is encouraging investors there. a good showing overall with the exception of japan. mike. >> christine, we have less than
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five hours to go before the opening bell, but it does look like we might break this four-day winning streak. the dow is down 30 points yesterday, but during the day, it had slight gains, it had slight losses, it crossed euro 108 times yesterday and, of course, with the continued sell-off in ekds, investors continue to try to take safe hash he in the treasury market. and the yield fell to its lowest level, 3.39%. they're taking shelter in gold which saw its biggest one-day point and percentage gain since march 19th of this year. today, theory, you're seeing it retreat just a bit at $977.70 per troy ounce. so let's get back to james shugg, senior economist at
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westpac. i'm wondering, the market was spooked yesterday by the adp jobs report. was that an accurate and good precursors for the government's monthly jobs report tomorrow or do you think there could be some die verge i didn't answerence here to the up side or to the downside? >> we're not changing our forecast for a 150,000 decline in payrolls, in the official data tomorrow. that is the adp number -- we didn't have enough in the market to change our forecast. adp does sometimes get it right. what we have more faith is is the jobs components of the various business surveys. the ism, which we've seen for the factory sector and we're going to get the services one later today. those surveys that we've got up
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till now, actually, a very consistent with our forecast for a 150,000 payroll decline. we're reasonably optimistic that we're going to see another decent surprise in the payrolls number tomorrow. >> interesting. and moving on to another big topic, even though he's not going to be a voting member of the fomc until way out in 2011, philly fed president charlie plosser told cnbc in an interview yesterday that interest rates may need to be jacked up eventually, not imminently, but eventually in a rapid fashion to fend off inflag. do you agree with his take on the situation? >> yes. and that's something that we've been arguing for a long time. it's not going to happen any time soon, but when rates go up in the u.s. and indeed probably the uk, as well, they're going to be having some -- they're going to be going up fairly quickly. remember, policy has an emergency setting at the moment and the emergency looks like it's largely over.
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that doesn't mean it's appropriate to take the policy away just yet because it is a stimulative policy that's helping to deliver the more positive growth outcomes that we're seeing at the moment. but one central bank makes the judgment that the growth can be self-sustaining without the emergency setting in policy. i think it's entire appropriate for them to be fairly aggressive without removing that emergency policy stance. so you could see a 200 to 300 point basis tienting and the world within the space of a year which i think some would regard as rapid tightening. >> james, let's talk about the economy. you're familiar, of course, with the trade deficit widening, imports grew more than ex ports. a sign that the domestic economy is picking up. >> we're not in that camp. probably not until the early part of next year.
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you're right, there is a pick up in imports coming through. we think it's largely going into inventories. for us, the bigger issue is that the fiscal stimulus, which took the form of one off payments in disease and april, july sectors of the community, that impact is now fading in terms of the impact on spending. so we still think there's some risk. as the partial data comes through, demonstrating that is a likelihood, i think the rba will feel there's no urgency in tightening rates just yet. >> james, when i look at the service sector pmi for the euro zone this morning that was just published, we're once again seeing spain and italy lagging behind germany and france, for example, and other places in the
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euro zone, as well. >> quiet in the gdp numbers, as well. >> we did. but are we going to see even more than that, more of a gap in europe? >> you have to be careful talking about a gap when you're coming off such incredibly large swings in these economies over the last few quarters. as i said earlier, just because you're starting to see a bit of growth emerging in germany and france before some of the other european economies started to show growth, given where you're coming from, the absolute huge sky of the collapse in activity since the fourth quarter of last year, i think it's inevitable you'll see a mismatch in terms of the timing of who actually bounces before someone else. so i'm not yet at the point where i'm thinking we're about to see that sort of discrepancy emerge. the other factor is there's these car scrappage schemes. that is providing a big boost to german activity whereas the french fund is going to last
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longer. maybe there's not so much urgency in france about getting your new car. certainly, that is a distorting factor, i think, in terms of the numbers coming through. there are a lot of one offs to consider. >> james shugg, thank you so much. >> chinese stocks rallied nearly 5% today after some reassuring comments, offering strong lending data from china's top four banks. some concerns remain about the risk for surge emerge. stewart is joining us now. it's good to have you with us. we have the baj data continuing to fall in august, but less sharply than before. you think the surge in bank lending is tapering off? >> we saw a tremendous volume of bank lending in the first hard of this year. we saw a hotel of 7.4 trillion yuan, which is about 45% of half
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a year's gdp in china. this is virtually unpress kepted as the amount of bank lending being pushed through in china. what's been happening in the last couple of months, july and august, is it's come back to our more normal levels. i think this can be expected as the aftermath. >> authorities are not resting on their laurels still. they are refusing banks below 9% to start new lines of business or open new brunches. do you think this is going to have further impact in clamping down bank lending? >> i wouldn't say clamping down. i think it will have a bit of an effect of the 14 listed chinese banks, only three of them as far as we know have capital ratios of less than 9%. and that's shenzhen development bank, minzen bank and these are interesting banks, but by no
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mooerchbs means the largest. this clamping down is a new prodigal to encourage new rates within the bank and i'm sure it will have an effect. >> stewart, this is louisa in london. i've been talking to people about more and more of these types of companies that are left to operate, despite the fact that they're facing a default, essentially. are you worried about that in asia? >> not nearly as word about that as i would be in europe or in the united states. many companies in asia went into this global financial crisis with pretty strong balance sheets. asia is in a much better position now than it was decades ago. so i don't think there's too many zombie companies, as you put it, in asia to worry about
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compared with other parts of the world. we're going to continue to see quite strong growth, i think, over the next 12 months in most of asia. japan, of course, is a different story. economic growth could accelerate from 8% this year to 9% next year in real terms. >> stewart, let's talk about more. do you think china can avoid making the same mistake? >> yes. i think one of the reasons that china was keen to expand the credit facilities as rapidly as they did, it's not so much to lep individual householders, it's basically to stop property companies in china going bust or getting into financial difficult and that's something that they have done. in china right now, price inflation is negative. it's about minus 1.8% for retail prices over the last 12 months,
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but that's not the same as assets inflation. so house prices in many cities have been closed to the all-time highs. in some cities, it is weaker. commercial property has been a little bit weak, perhaps in shanghai, but expect it to improve. so as always with china, it's difficult to generalize, but i certainly wouldn't say that there's a property bubble about to burst in china. >> all right, stuart, we'll have to leave it there. thank you very much for talking to us on "worldwide exchange." stuart leckie, and now let's hop over to india and talk to ayesha faridi. >> thanks, christine. the nifty is just about latching on to gains of about 0.5%. 4628 on the index right now. 0.2% for the bombay sensitive. the action is in the broader
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universe. you have the midcap indices and the small cap understand sis, massively in favor of the advantage. big gainers today, metals, real estate, it's dragging the industries at this point in time, you have the autos in health care. that is dragging the indices down. economic data coming in, the week on week figures have coming in at 0.21% versus negati negative 0.95%. that's a significant jump that we are seeing. the wpi for oil commodities has jumped up and manufactured good inflation has come in higher at this point in time. reliance communications is one big gainer in trade today. now it's the business subsidiary of reliance. with that, it's back to you.
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>> thank you for that. elsewhere, south korea's woori finance banking and brokerage unit ames to pump a total of $300 million into the blackstone fund and hopes to be an ally in blackstone's futures acquisition deals. the firm will focus on investing in north america, europe and other regions. blackstone shares lost 1.8% in trade and woori finance up 8.53%, 15,900 yuan. japan's dainippon will buy supracor for about $276 billion. is says the u.s. company has agreed to its offer price. the friendly deal would boost
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sales of drugs. meanwhile, sepracor shares jumped 26% before being halted in new york trade, 22.80. louisa. >> a trial conducted with the swine flu vaccine showed a strong response even after one dose. it proved to work in 80 or 100 patients tested after one dose. with fears for a lack of supply rising, a single shot immunization would stretch out substantially. although the epidemic seems mild at present, health officials are concerned that it will return in a very dangerous way in the fall. infineon wants to reach its goal as early as the fourth quarter of next year. the chipmaker is expected to
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rejoin the dax index when the frankfurt tock exchange conducts its periodic review today. that would mean a return to the benchmark index for infineon six months after it was removed, mike. >> hovnanian posted a narrower third quarter loss on third quarter write-downs. its contract cancellation rate improved and prices for existing homes appear to be stabilizing. but the company says stiff head winds do remain, most notably the sxiration of the $8,000 tax credit for first time home buyers. industry watcheser think sales could slow when that program ends in disease. is cerberus capital will ban investors from pulling their money for a three-year period. cerberus wants to prevent the
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big withdrawal that followed the heavy losses that the firm took on acquisitions of chrysler and gmac. on tuesday, cerberus downplayed market speculation that some of its hedge funds are in danger of default. coming up, all eyes on the ecb, which is expected to keep rates on hold today. but will tree shape dampen talk of a full below economic recovery? >> i think you currency fans out there, you'll want to sneak a peek at this.
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welcome back. you are still watching "worldwide exchange" here on cnbc. we've seen more activity in sterling against the dollar this morning on the back of strong service sector pmi, close to two-year highs. so a bit of a spike upwards there. 0.61% at the moment. stephen gallo is joining us for a closer look at was going on with the currencies. stephen, i want to start with risk appetite and if we don't see the support of rising risk appetite, which currencies should we look at? >> what we could be enteringing
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is period where market participants start to second-guess the durability and the sustainability of the recovery. what's clear is that we're getting a nice pop in the second half of the year based on restocking, based on inventory rebuilding. but obviously, the question going forward, and this is a parent in the fomc minutes last night, i think, they are worried about the longer term picture for growth. so to answer your question, i would say no, we're not to the end of risk appetite. i think market participants going forward, provided there isn't any major relapse in financial conditions will be seeking to take on some risk. but you know, the durability and the sustainability of the recovery is in question and that might lead to a sort of down leg in equity markets, so to speak, at least in the near term. >> stephen, good morning. it's mike huckman in the states. >> hi, mike. >> what is the dramatic move in gold yesterday mean for the currency markets and specifically for the dollar? >> well, i mean, rises like we
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saw yesterday in the price of spot gold, clearly it's going to mean a weaker dollar over the medium to longer term, just on the basis of the fact that the dollar will move inversely to what happens to dollar denominated prices. but i would say yesterday it doesn't signal too much in terms of what market participants are thinking yet. clearly you'll see more upward moves in the price of gold if there are structural fears that start to mount. i.e., worries over the fiscal deficit, worries over too much quantitative easing rather than too little, worries about the inflation outlook. so none of those things are too prominent in the market sort of right on the market's radar screen right now. we think that the price of gold will continue to do well particularly as the dollar loses its status. but again, these are medium to longer term issues and we haven't seen too much of these issues being paid attention to by the market just yet.
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>> stephen, hi. dollar/yen at seven-month highs. is this short lived? >> dollar/yen? we like dollar/yen at these levels. we're below 95. we've been predicting that there would be weakness in dollar/yen for some time. obviously, market participants are latching on to the fact that we had a crushi ining dpj victon japan. clearly going forward, we think the dollar is going to have problems moving higher versus the yen. one of the things we need to see is we need to see japanese investors start to snatch up u.s. financial assets again. and for dollar/yen to move significantly higher. as far as we're concerned, there isn't too much evidence of that yet. one of the things might be a full blown recovery in the states, but that's a long way off at this point. >> stephen, how much is trichet going to give away by the ecb's exit strategy and what do you do
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with the euro today? >> louisa, i'm not worried about that at all. i'm more worried about the bank of england and how the federal reserve are going to handle this. as far as i'm concerned, the euro will continue to do well over the next six, 12, 18 months. do i think trichet is ready to sound the all clear yet? no. obviously, the governing council is worried. but clearly the splits will be moving ahead. i wouldn't be surprised to see a change in trichet's language. he might describe interest rates as being exceptionally low and that will indicate that rates are going to move up from that point. >> steven, we'll have to leave it there. you're looking very fresh from your holiday. thank you very much for joining us today. >> take care. >> we're going for a quick break. coming up next, we will bring you up to speed with the top stories making headlines across the globe. >> also, has a mini revival on
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high street spending stalled? (announcer) we understand. you need to save money.
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i'm christine tan. in asia, shanghai stocks put on massive gains up almost 5% in hopes of the government support.
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will july retail sales due out boost confidence or dampen hopes of a recovery? and i'm mike huckman in the united states. where investors will be looking to data on unemployment and the services sector to try to break the market out of a four-day losing streak. >> welcome back, everyone. you are still watching "worldwide exchange." just glancing at those euro zone retail figures@as they hit our wires, sales falling during the month of july. we're looking at a bit of a tick down, 0.2% on the month, down 0.8% on the year. it was forecast to be down by more year on year, 2.3% was what economists had been looking for. june sales we vised to flat zero on the month and 2% on the year. let's bring james shugg back in,
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senior economist from west pack stepping back in to talk about these retail sales figures. so falling less than forecast on the year and more than expected on the month. >> you have to remember, too, european retail sales numbers don't include autos. as in many other jurisdictions around the world, there's a lot of spending on cars going on at the moment. when people buy cars, they tend to have to pullback, at least temporarily on other spending. there is still a significant outlay involved there, even with the various discounts and incentives and so on being offered at the moment. so i think an element is that but i think there is a underlying comment. why would you be expecting any sort of strength in the european consumer story in the third quarter of 2009? there's still a lot of concern about what's going on in the
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global economy. we know credit for the private sector is at its lowest pace on record. >> james, we're now around the table. rich wilson is joining us, as well. he'll be with us for the remainder of the hour. richard, we were talking about whether or not to -- hello, by the way. i hate it when people ignore when someone says hello. i did it myself. we were talking about whether or not this is a consumer led recovery that people were talking about. we're moving away from that being the notion that we're waiting for the consumer to lead us out of this? >> i think james is right, there's a huge discrepancy in the u.s. retail sales data that came out from europe. and i don't know whether you agree with me, james, but if you look at yesterday's gdp data, consumption was 0.2% instead of flat. and clearly, i think i'm right
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in saying auto sales will be within that consumption figure and they won't be in the retail sales figures. >> that's right. >> and i think that explains the difference between yesterday's better than consumption data and today's worse than expected retail sales data. to my mind, no, this is not a consumer led recovery and you have the cash for clunkers program as a one off, if you will. and that's the point. >> before we hear any more on this, i want to update you, the eocb has decided to up their economic forecast and they see recover at hand, quote/unquote. central banks shouldn't tighten until late 2010. i think many are anticipating 2010 to be the earliest. and they now see g-7 gdp minus 2.7% in 2009.
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they go through each different -- the main economies at the moment. but in general, they're saying recovery in emerging markets is gaining pace and inventories may no longer be a drag. and i think we had one of the big economic growth boosting sales numbers. we are going to get august same store chain stores here in the states later this morning. do you expect the trend to mirror what we just you saw come out over there or do you think that the story is different here in the states? >> who would like to take that one? >> well, look, we don't have to forecast that number, but certainly, given that autos have been a big part of the spending story in the last couple of months in the u.s., i would expect nonauto retailings to be pretty soft.
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so i wouldn't be looking for any restrength to be revealed by those numbers. consistent with the story that when people are spending on cars, they won't be spending elsewhere. on top of that, as well, you have a client that is constrained. >> can i add something to that? mike, that would be as follows. i think i'm right in saying obviously, we've got the august numbers coming up and then we've got the september numbers. i'm pretty sure that september will be the last tough comparison year over year. when we go into october, i agree with what james says, i don't think we should expect anything earth shattering, but bear in mind, the comps get very, very easy. and that will flatter a lot of the chain store sales numbers as we head into the fall. >> james, thank you very much for being with us, james shugg,
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senior economist at westpac. looking at the ftse global, let me underline, the eoec is underlining that the uk 2009 contraction is deeper than forecast and they're looking at italy, candy and the uk contracting during the third quarter. they see japan, europe and france growing. we're seeing the ftse cnbc global 300 index bouncing higher at the moment. now putting on a few more gains. we had stronger than anticipated service sector. pmi out for the euro zone and that's helped our bourses nicely along. the smi is lagging a little bit mind. and the dollar cross rates, we were just talking to stephen gallo about his views ahead of the ecb rate decision and we're seeing euro/dollar trading up by 0.3 fers, 1.4306. mike.
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>> louisa, it was jpmorgan that raised estimates for the current quarter. it's being raised to 4% previously. we're sitting at 3% again. and for the next quarter, raising the outlook to 3% growth and previously they were sitting at 2.5%. that said, we look like wire going to, at least at the open this morning, break the four-day losing streak that we've seen across the board here in the states. dow hasn't seen that long of a losing streak since june and the s&p 500 hasn't been down that time day in a row since may. with the stock sell-off, investors continue to try to take safe haven in the treasuries market. right now, the bund yield is rising, though, at 3772% and as far as the benchmark ten-year
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treasury note is concerned, we'll get that up in just a second. we are seeing the same trend there with the yield ticking up to .35%. the real story, though, is the big, huge move that we saw in gold. gold is up, by the way, $25 per troy ounce just over the past few days. up, obviously, two days in a row and it switched around actually this morning. it was trading lower earlier and now the up trend is continuing at $983.45 an ounce. christine, over to you. >> hey, mike, the eocd is saying it sees prospects of japan pulling out deflation even next year, but believes deflation is not a serious risk elsewhere. of course, this is what's happening in japan. deflation continues to be a problem in terms of the market. the nikkei is down 0.6%. the strong yen rising because of risk aversion. the kospi remaining flat.
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shanghai composite is up 4.8%. the hang seng is up 1.2% and the bombay sensex is up 0.3%. this is how the picture is looking for oil. nymex light sweet crude is holding steady at $1.16 at $69.21. and brent is moving just a little bit higher by 83 cents, $68.49 a barrel. louisa. >> the ecb will probably keep interest rates on hold at 1% later today. the central bank is expected to sound more optimistic will the economic outlook. figures have shown that germany and france came out of recession in the second quarter. let's talk more about the ecb. richard wilson is still with us. also, incidentally, taking your questions, richard, i want to talk about
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inflation briefly because we've had a whole bunch of comments out from various u.s. officials here over the past 24 hours. some of them indicating that inflation isn't a worry currently and that we're doing wrong in looking towards inflation. but of course, either we pull back too early and we stunt the recovery or we let it go on too long and we risk ugly heads of inflation rearing. >> i think the greater risk to my mind is the risk of deflation and greater inflation. if you look, louisa, at the details of the minutes that came out last night, i don't think we should expect anything radical very soon in terms of withdrawal of stimulus being offered to the u.s. economy. at the same time, we were talking about the gold move, $25 on the troy ounce in a couple of days. i think that's emblem attic of a greater risk aversion, perhaps moving in ahead of friday's nonfarms and ahead of everybody coming back after the labor day
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weekend last week. >> despite not having support for neither oil or the equity market. >> there's no real reason i can see for gold to have the move it is. we are going into a seasonally stronger period for gold. you've got the indian wedding season coming up, which when gold tends to outperform d other commodities. but other than that, i think it's a reaction to a chinese market that i know we had a 5% move today in china, but monday's 7% move to the downside clearly rattled a lot of people. and i think it's not a coincidence that you have the fed minutes coming out and them sounding off on the risks of inflation at the same time as chinese investors get a little bit rattled, a little bit more risk averse, so i think the two go hand in hand from my mind. but coming back to what i said at the beginning, i think the risk of deflation is far greater than the risk of a temporary uptick in inflation caused by the extension of these stimulus
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packages which are so important to avoiding a double dip scenario. >> the indian wedding season affect in the gold market, had not heard that before, richard. i'd like to move on to the topic of m&a. we've had four deals in as many days. the latest one being a biopharma deal overnight. we had one in tech earlier this week, we had one in the oil patch, we had one in entertainment and media. what is that telling us about the state of things here? >> i think, mike, it's telling you that u.s. corporates in general are in very, very strong cash positions. their balance sheets are steady. they've learned the lessons in terms of having balance sheets that are overextended. and some of them are beginning to see acquisition multiples come into a range where they feel comfortable on a three-year view, that the acquisitions they do can be return. and by that, i mean they can earn a return on capital. and i think the trigger -- i'm
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not sure what the trigger is. i don't know whether these corporations look at their cash balances earning nothing. and remember, that's a huge stick. equity market valuations have come down intha, but clearly we're well off the lows and i think the stick is that they earn nothing on the cash balances they're sitting on. so i think that tells us something about corporate america's appetite for doing deals here and i would expect the deal calendar to pick up significantly as we go into september. >> richard, you're saying with us. we'll get more strategy from you. coming up, though, the ecb is meeting today and is likely to keep rates on hold. we'll have more with silvia wadhwa, live out of frankfurt.
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welcome back. the ecb is expecting to keep interest rates on hold at a record 1% today. but will jean-claude trichet tell us more about an economic recovery? sylvia joins us with more on this. recovery is now at happened according to the ecb. >> the ecb certainly has played down the story so far.
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we have to be very careful. needless to say, new round of stock projections must be better than the ones in june. the june ones were the trough of the economic recession. and everything we've seen since then is from the ecb. i think they're probably going to be on the cautious side. so far, they have avoided any talk about exit strategy, but there are murmurings that that might change. >> sylvia, just a question on your view as to whether you think the timing of this eocd data on european economic growth, whether that is significant given obviously the ecb later today and what clues
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that might lead us to deduce in terms of whether trichet could become more hawkish. i think that could be extremely concerning if you were to become more hawkish. do you have a view there? >> absolutely concerning. so far the ecb has been very cautious. that is my take on why they've been so cautious on the economic conditions. but then we've heard that jean claude trichet is holding a conference at the ecb conference here tomorrow that is headlined the ecb's exit strategy. and if the ecb starts openly talking about exit strategy, i wonder what that means. we hope we get some clues out of the press conference. so far, it would surprise me if the ecb were going to come in more hawkish because they want to prevent the bond markets from turning into hiking.
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>> sylvia, thank you so much. and richard is still with us for the remainder of the program. >> still to come ahead of the ecb rate decision meeting, should jean-claude trichet deliver statements on the economic outlook? how will that help? stick around.
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hello, everybody. welcome back. you are watching "worldwide exchange." on to our global look at the equity markets now, we have rebecca in london, patricia in frankfurt, stephane in paris and adam is in singapore. kick us off, rebecca. >> they say 2009's contraction will be deeper than previously forecast. third quarter gdp is seen declining at an annualized rate of 1%, flat for the fourth quarter of the year. so it's seen contracting in the fourth quarter. we're currently higher by 3 or 4 points or so. on the upside, we see basic metals and resources, lonmin,
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fresnillo, gaining gound today. elsewhere, we'll be speaking to the ceo later on cnbc for hayes. hayes is a recruiting company reporting second half positions have been particularly tough. it's been the most difficult year they've ever experienced in their history. they stop short of calling a recovery and say in continental europe, shares of hayes are particularly difficult. patricia, how is it looking in germany? >> let me pick you with what you just said about the uk. different picture altogether for germany. they think the previous expectation was for contract of of 6.1%. that was back in june where now they say they think the economy should only contract by 0.8%. on the opel story, the german government is speaking to the
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government and saying they're open to keeping opel with gm and they're open to any kind of investors, foreign investors coming into opel and that, of course, on the back of that story we heard rumors that maybe the uk as well as poland and spain are prepared to put up as much as 1 billion euros to safeguard gm operations out here. volkswagen losing about 3%. over to stephane. >> thank you very much, patricia. the eocd raised its economic forecast for the french economy. that's to compare with the previous forecast of a 3% drop for the gdp this year, and that's consistent with what the finance minister, christine lagarde announced a couple of days ago. she said the french government was about to revise up its forecast for the year. it has new impact on the market. another company posted a
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stronger than expected earnings for the full year, but the company warned that the next coming year would be different. down at 3.3%. that's the story in paris. let's have a look now at the asian markets with adam in singapore. >> thank you very much, stephane. it was a balancing between the bulls and the bears, but it was a one-way bed in shanghai today. take a look at the markets, higher by about 4.8% here. market sentiment getting a boost after the vice chairman's regulatory comments yesterday saying that the market is very, very healthy, with indeed, and that the regulator will do all it can. but the gains in shanghai didn't quite translate to gains elsewhere in asia.
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japan was peaker here today. south korea managed to close up in the green. it showed the economy had increased its fastest pace in 5 1/2 years. but back to japan, a stronger pace was weighing down on the exporter stocks where we saw the yen versus the u.s. dollar above that level. the banking stocks were particularly weak in japan. there's ongoing concerns about u.s. financials with the kbw index dropping 5% yesterday. there's concerns about now commercial mortgages are the next few to drop. remember, japanese banks do have exposure to some american banks. on that note, it's back to the states with mike. >> thanks, adam. definitely a lot of talk about that commercial stuff. investors will get another pair of reports today that could show improvement in the u.s. economy. weekly jobless claims are out at 8:30 new york time, forecast to drop by 5,000 to a total of 565,000. at 10:00, the august ism services index will be released.
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analysts looking for a reading of 48, up from 46.4 in july. then at 4:30 in the afternoon, the fed puts out its weekly report on its balance sheet. vice president joe biden will speak about the state of the economy and the progress of the government stimulus package at an event that's being hosted by the brookings institute in washington at 10:00 in the morning. dallas fed president richard fisher is talking about the economy at the university of california santa barbara. u.s. retailers are reporting august same-store school shopping today. sales are expected to drop more than 4% industry wise with teen apparel and department stores fairing the worst. that is your global stock watch. christine. >> a recovery lies ahead, but it is unsure what shape it might take. we'll assess the likely
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scenarios. >> and housing is bouncing with, the message from jp morgan. do you agree? e-mail upbeat rock ♪ singer:wanted to get myself a new cell phone ♪ ♪ 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.
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it is 30 minutes past the hour. here are the top business stories from around the world. in the united states, investors looking to data on unemployment and the services sector try to break the market out of a four-day losing streak. sfwh hello, everyone. more signs of a global economy emerge as the eocd ups its economies with gdp growth seen in the third and fourth quarter. >> and here in asia, shanghai stocks put on massive gains, up almost 5% on host of government support for the markets. >> welcome back to "worldwide exchange." here about four hours time until the opening bell, in the united states, with it does, indeed, look like at least at the open
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that we could be poised to break that four-day losing streak for the dow and the s&p 500, at least for four days. it was three days down in a row for the nasdaq. let's take a look at the treasury market because we did see the yield on the benchmark ten-year t-note fall to its lowest level yesterday in nearly two months as investors rushed into government debt to avoid the stock market. but that's reversing a bit this morning. the yield rising at 3.34%. but the big story has remained gold. there was a huge surge in the price of gold yesterday as investors sought this safer asset more so than equities. we saw a whole basket of gold related stocks moving higher, as well. and the trend is continuing this morning, right now sitting at $981.55 an ounce and for what our guest host has called in part due to the indian wedding season effect. louisa. >> yes. thank you, mike. i wanted to bring our attention
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to the deutsche postbank at the moment because we're seeing a bit of a spike in buying in deutsche postbank. shares, there is some talk apparently that deutsche bank could be making an offer for the outstanding shares in deutsche postbank that it doesn't already own, hence the renewed buying interest in deutsche postbank. but deutsche postbank declining to give a comment on what is so far just market talk. our european bourses, we've seen a relatively flattish story this morning. a little more buying here as we head towards mid day time and only to turn around as i say that. flat to a little bit lower. we saw a smiek upwards after the better than anticipated pmi services sector as well as for the uk. let me state of ohio you the dollar cross rates. still seeing a lot of interest in sterling in comparison to the other crosses. ahead of that important uk ecb
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rate decision later on, christine. >> and that's going to be true, christine. >> at the moment, down 0.6%. of course, risk aversion is he the sending the japanese yen stronger, hitting the exporters, pulling the nikkei down, the shanghai market surging almost 5%, closing down 4.8%. we're still pretty strong for the month of august. and the hang seng index is trading marginally lower, 1.63%. nymex light sweet crude is climbing, $68.96 a barrel. take a look at the spike in the last couple of minutes or so. and brent crude is trading up 61 cents, $68.27 a barrel. mike. >> and joining us now is david dietze, the president and chief
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investment strategist at point financial services and richard wilson from thread needle asset management is still with us. dave, we've seen this huge move in gold. do you think investors are going to continue to roll into the goal, role into the dollar, and she'll themselves against what might happen in the september and october in the equity markets. >> certainly, no question about it, there is some concern after being up 48% since march, coming into this week, i think 93% of all s&p 500 stocks were above their 50-day moving average. of course, you have the spookiness of septembers in the past. i think there is some risk aversion develop, some movement into gold. but i don't think it's going to be a long lasting trend. i think a lot of people, of course, have talked about the movement in gold coming from the
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fact that it's the wedding season in india. to me, that underscores the healthiness, the increasing healthiness of the global economy that consumers overseas can, in fact, consider gold for their weddings. i think that ultimately when we factor in the very low inflation trends, the surgeance to gold and the dollar is not going to continue for too long. >> so let's talk about stocks, then. do you think that investors should be buying on the dips that we've seen this week thus far or do you think that we're in store for an even bigger correction on the stock market? >> well, certainly with the market up six months in a row, 48%, a movement back down to let's say 950 on the s&p 500, probably healthy. but longer term, there's a lot to favor on the equity market. we're down 20% on the s&p.
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we're still at levels that were first touched about a decade ago, 35% counsel from the top. so i think equities have been the laggered. and i think one thing investors are considering, if not equities, then what? at the start of the year, junk bonds, that's down to 11. corporate bonds, investment grade as much as 10, that's down to just over 5. money market yields are virtually zero. given the fact that we've got about 34% of the value of all stocks now in money market funds, heck, that's more than what we saw about 29% at the start of the last bull market. i think you're going to see continuing buying on the dips as investors look to equities as the asset class. and i think the other key thing here is we are starting to see an improvement in global economies, and so that is providing a solid fundamental back drop. >> hey, david, this is christine. i'm looking at a deal between japanese firm dianippon buying
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sepacore. do you think m&a is going to drive this market higher? >> yeah. you know, we've seen four deems in the last four days and that underscores a couple of things. one, improving confidence in the board room. and i think that balance sheets have improved, liquidity is together. to me, that is very bulis, especially when you cup it with the consumer is very sparse. i think the spark money is continuing to see opportunities, the retail money hasn't quite caught on. that could lay the groundwork for better markets going forward. >> would you agree with this, richard? >> like david said, louisa, i am still bulis on the market. i have been for a number of months now and hopefully i've explained that view when i've been on your program.
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what i would say is i think the mngt needs to become more discriminating. jpmorgan was out with an interesting piece yesterday that analyzed the ism. the manufacturing number went above 50 and new orders continued to sxan at an aggressive rate. typically, the majority hat until they get through five professionals. cyclicals still out3r6r78 defenses by 35% after the ism hits above 50. and i think that, to me, suggests we might come in a period of market row tagsz here. to david's point, we should remain bulis on the market for the stimulus reasons. the continued loose monetary policy, etcetera, all of the good things that we know about.
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but that we get to market rotation as perhaps some of these names that have reached real evaluations that bake in expectations and if they fail to put in those expect ages, then perhaps the market goes back to more defensive names that have been left behind. >> i like what you're saying, richard. one sector that we would highlight would be the health care sector. that, of course, is not well correlated to the troubles with the global economy has been under a cloud because of the specter of health care reform. but this is a sector where you still have very low valuations, growth potential, good dividends, and i think that the last time that we've seen this depression in the area back in the early 1990s, ultimately that was a great opportunity to jump in. so i would urge investors to rotate to some of these helthd care names. as the deal that was announced this morning shows, there's
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increasing consolidation in that area. >> this discussion is getting more interesting. david, i want you to continue staying with us, david dietze, president and chief investment strategist at point view financial and richard, we want you to continue, as well. right now, we're going to check in on the trading day with kitadai. >> the yen's tolls took a toll on exporters. the dollar brief fell to a 6 1/2 month low here, partly on weaker than expected u.s. jobs data overnight. worries about the u.s. economy led traders to dump auto shares like honda motor and mitsubishi ufj financial group. the market was supported by nonferus metal stocks. another issue that bucked the
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down trend was niepemme business report that it will allow others to attend the meeting. in other news, the japanese government is considering smibing the economy recovery is did you have. the growth is expected to stress the troubling state of the job market here is that ex ports have been bound for asia yn countries has been -- >> thank you so much for that, now zummy. mike. >> still to come on "worldwide exchange," youtube turns to hollywood. but can it finally make money by
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streaming new movies on line? sure. u.s. futures are on trap to only break a four-year losing strike. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.
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welcome back to cnbc aes "worldwide exchange." here are some of the top stories
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we're watching from around the world. hovnanian posted a narrower than expected loss on third quarter write-downs. prices for existing homes appear to be stabilizing. but the company says stiff head winds remain, most notably, the sxiration of the federal $8,000 tax credit for first-time home buyers. industry buyers think sales could slow in november and investors appear to be concerned about that because hovnanian fell 9%. youtube can could soon have a new coming attraction. they're in talks with hollywood studios to stream similar movies on line. youtube has other titles and they tend to be revenue source.
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ghouling shares down opinion. >> thank you. richard, i was clicking an e-mail from a viewer saying, i don't think where people are looking, a little bit of positivity coming through. do you agree, are we getting ahead of ourselves or not? >> certainly stocks have reacted favorably to the upside. in any deeply cyclical sector such as machinery, housing, it doesn't matter what. if you have housing, the home building companies, you only that moderately. if we move back to the prior lows, and we're now there yet, from the early '90s lows to around the early '80s low, if we
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move back to that level, that still represents something like a 20% increase. and i think that will be man fasted in a degree of housing activity that he is first -- what i would say is that clearly, the upside kb a lot greater than people expect. and i don't think any of the analysts on wall street will have done the numbers appropriately to gauge that upside. so where i sit, i am long of black & decker, aye long as l & m. >> all right, richard wills yn,
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thank you opinionsome coming to get him. u.s. "squawk box" follows "worldwide exchange" in asia, europe and the united states. >> good morning. today we'll be talking about the state of the state. our guest host today is minnesota governor tim pawlenty. he could be the candidate with the best shot to take on president obama in 2012. also about the president's health care plan, so he'll be joining us starting at 7:00 a.m. eastern time. we've got a lot to talk about today. plus, we have the governors from two battle grown states. florida governor charlie whisk and budget gaps that are out there. every single friday, we learn about a couple of banks that have to be taken over by the fdic. what about the banks that are
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throwing. but that run pale sales examine we are everyoning crossco friday's job reports. louisa, back over to you. >> interesting like a centimeter worm, as we know in europe. thank you very much, becky. >> thank you very much. >> inching like a centimeter. >> there you go. >> i did not inhale. coming up, u.s. weekly jobless claims are due later this morning with yesterday anticipates mab report have a bad oat many?
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let's get a look ahead to the u.s. trading day and bring back david dietze, president and chief investment strategist at point view financial services. and earlier, david, you said that global economies have improving. yesterday the adp job report disappointed. the market clearly fearful about tomorrow's government jobs report for the month. if people don't have jobs,
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they're not spending money, they're not driving the economy. so there's a disconnect there, yes? >> absolutely. in terms of this all-important jobs number that we'll be releasing tomorrow, we already know probably the worst case of a major falloff in unemployment is probably overlooking. we have now seen a major uptick in manufacturing. for all the, we had the first riding of about jul of 20207. i don't think unemployment improvement can be too far along. and, of course, that's a lagging indicator. secondly, it's not just about the u.s. economy. it's about the global economy. we have seen such strength in india and china, which never, of course, went into recession. is so i think that helps explain the disconnect between the
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strength and the stock market and this unemployment situation here. >> that said, here in the u.s. today, though, we are going to get weekly jobless claims numbers as well as monthly same-store sales do you think the market is going to do anything or is the in ovp on the overhang. >>ite just for a free report. you think that's less important. in terms of the chain sales, that will be very important. as you pointed out, the consumer is about 70% of the economy. however, last month, everyone was out buying cars because of the very agagenerous cash for clunkers program. so i think that pulled away the some sales from nonauto wrlted
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retailer, and therefore, i think the market will be somewhat conceptual of any really weak chain sales figures balls of that. with you certainly people are praising for what they'll ee so the unbloat projects. >> it's interesting with that treasury down to 3.29%, obviously, they're not bracing for inflation. they are, perhaps, bracing for some sort of weakness in the economy. but from, you know, an equity point of view, i think that helps justify the more elevated valuation that's we now see in the equity market. because even at 19 times earnings, so so-called return on equities relative to what you can get at a better industry.
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i think they can help forward the from going h. let's take one last look at the futures over tomorrow's big jobs report. we are on track to break the recent losing day for the stakes. i'm mike huckman in the united states. >> and i'm christine tan. thank you so much for your company on "worldwide exchange." c
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morning good morning, everyone. and let's get to work. weekly claims top today's
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economic agenda. at this hour, a mixed picture of red and green arrows in europe and asia overnight. equity futures suggest a positive start on wall street. that said, "squawk box" begins right now. good morning, everybody, and welcome to "squawk box" here on cnbc. i'm becky quick. joe and carl are off today. we've got mandy drury and john harwood. they'll be spending the day with me and it's great to have you here. >> it's almost musical chairs. >> mandy is the stable body at this point. she's been here for almost two weeks. >> and i don't have to go and sit in that icebox in washington, d.c. where i do my road trip shows. >> we are thrilled to have you here. >> it's great to be on set on the signature program. >> wow. you're welcome back any day,
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john. getting off to a great start already. we have plenty of things going on today. we have a key read of the nation's consumer. analysts on oofrg are looking for a drop of 3.9%. by the way, it is a chemo for the retailers. many industry watchers say back to school sales could set the tone for the holiday season. things are kiging off a little earlier this year. as we've come to expect, costco is out of the gate. out for the numbers for the month, the largest warehouse numbers in the nation reporting same store sales down by 2% last month. that is better than the 6% drop analysts had been looking for. overall, we are expect ago drop for the same-store sales for the month of august. if so, that would be several months in a row that you're looking at drops. now, there is good news in that. it means you're up against easier comps starting the next month. maybe you'll start to see a little bit of a turn. >> exactly. but beyond retail and the consumer, a busy


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