Skip to main content

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

4:00 am
4:01 am
i'm maura fogarty. in asia, shanghai stocks dropped 3% as steel stocks get hit by reports that may impose duties on chinese manufacturers. and i'm ross westgate in europe. >> and i'm julia boorstin. s.e.c. is asking agencies to apply to a new set of rules to supply transparency.
4:02 am
hello and welcome to cnbc's "worldwide exchange." global equities a little softer today, but we've had a pretty good run of it. this is where we stand on the cnbc ftse 100, down 4,355. not as weak as what we've seen in asia. very slim losses, indeed. the ftse 100 down, indee indeed, 0.13%. the ftse has been up for five consecutive days. and up over 3.5% in the last three days. food and beverage is one of the strongest exits today along with health care. today, dollar yen is back over 9 is, 91.20. euro/dollar pulling back from its year high, down to back below 1.47, 1.4667.
4:03 am
sterling/dollar was around 1.65, today is .63. >> here in asia kra, ross, after that massive rally we saw yesterday, we are seeing share prices here pulling back a little bit. china is one of the biggest losers today by more than 3%. we had some numbers out sales the u.s. may impose more tariffs on chinese steel products. the kospi, though, did manage to gain about 0.25%. meantime, oil prices right now, you can see how nymex light sweet crude is doing on this friday morning european time, $71.82 is where nymex light sweet crude stands at the moment. brent crude futures stands at $70.93. good morning, julia. >> good morning, maura. looks like futures are pointing down for the dow, nasdaq 100 and the s&p 500, looking towards a
4:04 am
slightly lower open. this comes as the markets take a pause. the markets did break their three-day winning streak yesterday and end quite lower. take a look at treasury yields. the bund is down 0.012 to 3.33%. and the u.s. treasuries are at 3.93%, up 0.005. this comes as the government announced $ 12 billion of auctions of 2, two and seven-year notes next week. >> to our first guest to talk about market strategy, we have matt king, grand bibby is managing director at richmond asset management. grant, let me start with you. you expect to see more upside for these markets. we had a bit of a down day today. is that part of the natural breather that we should be seeing? and how much more upside do you expect?
4:05 am
>> well, we had a 3 1/2 to 4-month consolidation. and in the last few days to a week, we've seen more and more markets break to the upside. for me, we should see quite a powerful end to the year. on a momentum analysis, we know there's more money wishing to get into the market. a lot of people thought there may be a w pullback in the markets. this is not happening. so i think this is just a pause and then we're going to see further action next week. >> max, your thoughts? >> well, we remain premium to bull short-term in equities. and we just think the markets have run past enough in the time being and relook for a better opportunity in the next few weeks. >> let's talk about currencies. graham, i understand you expect the dollar to continue to move downward to 72. what's your projection for the dollar and the rest of the
4:06 am
markets? >> well, you know, since march, which is when we went fully back invested on the equity front, that then tipped off the next cyclical downturn in the u.s. dollar and our forecast -- our first forecast, i would say, has been 72 on the u.s. dollar. so as the flip side of that, you would expect to see the australian dollar and the canadian dollar especially strengthening. at the moment, gold is, again, sort of a mirror image of the dollar as opposed to an investment vehicle right now. so i think it's steady as she goes with the dollar and that means a decline as opposed to an absolute collapse in the dollar. >> max, what do you think, do you agree with graham on the dollar? >> up to a point. we remain cautious on the dollar but positive on gold. but we do think that in the longer term, the dollar is quite cheap. so we don't think this bear market is going on forever. we think the u.s. will resolve some of the issues dragging the
4:07 am
currencies down. we don't know when, but we're looking out for it. >> i suppose to sell the dollar, you have to sell it against something, haven't you? >> yes. >> or you have to buy it against something else. therefore, china pegged a lot of currencies in asia are pegged. and it's growth in europe and japan really going to be better than that out of the states? >> no, but the yen and the euro go up as a default currency, not because it's fundamental justification. if people want to sell the dollar, they'll push up the euro and the yen. longer term, it doesn't make sense, we agree. >> graham, if the dollar -- if you're right and the dollar does continue to weaken, what pressure does that put on the chinese and more pressure on the u.s./chinese relationship? >> the dollar is always a relative thing, as you say. sometimes things are strengthening just as a factor of the weakness. where the real strength is
4:08 am
coming in at the moment is in the australian dollar and canadian dollar. as you know, the australian dollar unbelievably went down towards the 60 region and now we're at 86. on the china front, i think, you know, i think no matter what china wants to do, china has been securing its long-term future by locking in xhotdty price webs natural gas prices, oil prices, so i think, you know, it's in no one's interest for the dollar to collapse. it's nobody's interest for the u.s. economy to do anything but continue. there might be slightly strained relationships, but this one has to stay married. >> talk about the dollar and the yuan. >> i think it's a lot of joe
4:09 am
borning token, you know, talking gesturing, if you like. i know this paper currency, maybe that's not going to work. it's probably a long way off yet. when the yuan becomes floating, it will be a lot stronger. at one stage, the british pound was more significant that know it is now and at some stage it will change to someone else. but that time is quite a way off. >> graham, we'll will you go. max, you're going to stick around. i want to ask you a little later, as well, if you're interested in taking profits if you're in so early. lloyd'sbacking group as dismissed rumors that it will not be able to back out of full participation in britain's asset scheme. it says it is in talks with the government to scale back its
4:10 am
participation in the plan. it was originally set up to avoid credit losses. shares of lloyd's today opened lower. they've recouped some of those earlier losses. they've off about 1% at the moment. meanwhile, eu leaders are meeting in brussels and they found one voice for the g-20 summit next tweak in pittsburgh. what have they come up with? >> well, ross, with it sounds like a very populist idea, doesn't it? it sounds like a way to tell the europeans that they are doing something, they are fighting against the creators of this economic crisis. but, in fact, this is the idea i had when i went to this european summit yesterday. but when i went and spoke to the
4:11 am
ministers, they told me they are not only talking about the bonuses, but how to be sure that risk is not going to be taken as careless as it was happening until last year or until the beginning of this crisis two years ago. so they want to change the whole culture, not just the banking culture. i spoke to the prime minister. he is now holding the eu rotating presidency. and he told me that the bonus culture is over, but it is not only about that. it's also about changing the way europe and the world behave with the banking system and the banking system with the social system in europe, frank. he explains the bonuses idea better. >> i think we need a cap for the bonuses. as part of your income or part of the revenue of the company you're working or part of the income of that company. i hope to see a european agreement on this.
4:12 am
we, of course, know that the united states is very often against this idea. >> the swedish prime minister just said he knows going to the g-20 asked for a system to cap bank bonuses isn't going to be that easy because the u.s. doesn't necessarily want to have a capping system for the bonus. but for once, the european union has found a union on its voice. even gordon brown, the uk prime minister was here. he didn't say he doesn't agree with that idea and he left the meeting without talking to the journalists. but he will go to the u.s. with respecting and even agreeing with the french president, nicolas sarkozy and the german chancellor, angela merkel to really put on pressure to have a capping system for bank bonuses. >> okay. caroline, thanks for that. max, what do you make of this?
4:13 am
it's sort of hard to work out the politics from the rest? >> what the politicians have doing is an enormous distraction exercise. it's being obsessed about bonuses which is absolutely irrelevant to sorting out the problems in the world banking system. they don't want to think about what is needed to correct the huge failures which have been evading governments all around the world in the last two years. >> but that's because it happened on their watch. the leaders are all responsible for investigators and they don't want to investigate it too closely. >> they're in denial. the only people that are using common sense are some of the central bankers. we have some xlents about looking at issues like regulating bank's balance sheets
4:14 am
and capital requirements. that's the way we should be going forward. also about issues with securities can be held on bank balance sheets or will they have to be segregated. they're the ones who are thinking about the issues tomorrow and all this talk about banking bonuses. it might be interesting, but it's irrelevant to the problems we faced in the last two years. >> max, you're sticking around. maura. here in japan, some necessary for you. the country's new finance minister fujii says a review of the government's $154 billion budget could result in a reduced government bond issuance for this fiscal year. he did stop short of saying by how much. fujii hopes to save several trillion yen after reviewing the current budget and ames to compile next year's budget by the end of december. he says yukio hatoyama has ordered all cabinet members to
4:15 am
rid them of wasteful spending. aiful is down after being asked to reschedule payments on $3 billion worth of loans, saying it faced difficulties in raising loans. despite closing outlets, cutting jobs in response to the tougher jobs market, it says it still needs to work on restructuring. the s.e.c. wants to start new rules to provide for transparency. agencies have come under huge criticism for their role in financial crisis. this will apply regardless of whether agencies are paid by
4:16 am
insurers or investors. creators of financial products must now share data with all credit ratings agencies. the wall street journal reports that the federal reserve is proposing new rules to limit wall street's banking compensation. this in an effort to make sure there are no harmful incentives pushing employees to take on too much risk. a final proposal is too many weeks away. >> thanks, julia. still to come on today's program, gordon brown has been accused of hiding public debt. trade tensions between the u.s. and china are escalating. what are the chances of a full scale war, though? bbbbbbbbbbbbbb
4:17 am
4:18 am
4:19 am
so a little bit weaker for global equities today. let's find out exactly where we stand right now with our team of reporters starting off with becky in london. >> thanks, ross. we are watching the ftse 100 closely today because after a strong buildup, we had a fresh closing 2009 yesterday. things are looking kind of unchanged. we opened lower and then the markets turned higher in the uk.
4:20 am
currently standing around the unchanged level. let's check on the movers, though. shares of kingfisher have been pretty strong today, currently trucking higher by 1.8%. there's been plenty of price target increases by the likes of socgen, citi upping their price target to 300 and the impacts on kingfisher is kickly parent. also for unileaver, higher by about 2%, as well. basic resources, though, seem to be providing the downside this morning. we're seeing the likes of tullow oil, some of the metal or mining companies providing that weakness today with declines of almost 3%, in fact, some of those. patricia szarvas is in frankfurt with more on frankfurt. how is it going? >> we're running a little lower after running about 5% for the
4:21 am
month. it is the banks at the moment that are under pressure. so commerzbank down about 2%, a classic case, if you will, for profit taking. and commerzbank down also about 2%. then we also have those stocks related to commodities, steel stocks in particular, k&s, for example, and salzgitter down about 1.5%. on the other hand, yesterday we heard positive comments in terms of the market. they're seeing a bit of revival going forward, so today that stock is trading up about 2%. deutsche borse is up about 0.8% again. we have an article out in the financial times talking about a chinese technology company looking at listing at the german stock exchange. munich re and merck, still on the positive side. and i have to say, prezennia is amongst the stronger stocks yesterday. the reason being also the
4:22 am
development of the health care reform in the u.s. could benefit also european health care stocks. this is what is hang here right now. tui, a little under pressure. yesterday after the bought, moody's did cut their credit rateling. that's frankfurt. over to paris and stephane. >> and that is still a negative session for the friends session. airbus raised its expectations for the next year expecting 25,000 aircraft to be sold on this period. however, it's a limited increase if you compare to the previous guidance. the commercial director of airbus wants some airlines could postpone or cancel their orders because of the economic crisis and he warns that airbus may have to cut generalities production. the stock is now off by 2%. trading lower, the bank despite the positive announcement this
4:23 am
morning from goldman sachs which raised its price target for all the french banks except for societe generale with a positive rating, a buy rating. societe generale is down 1.6% despite this positive anoinsment this morning. renau renault, the french carmaker is going to simplify its structure to help with the current market conditions. the newspaper is quoting the coo of the carmaker who wants to adapt renault to the market's expectation for the next year. renault is expecting an 8% to 10% decline in terms of sales for the next year. the stock is trading a bit lower, down 0.4%. now, let's get some news from switzerland with caroline in zurich. >> thank you, stephane. our market is trading lower, down about 0.2%. in terms of the winners and the losers, while the defensive stocks, especially the pharma
4:24 am
stocks are outperforming the market, novartis and roche trading higher. nestle is up higher here. on the down side, we're seeing ubs down almost 2%. let me tell you, this triple witching is having an impact on the market while we're seeing significant interests. avb and novartis is trading at the pinning levels. ubs is currently down 2% and a pinning level probably somewhere around 19. let's stay with ubs. the swiss exchange is launching an investigation into ubs about a possible breach of disclosure rules here. no details have been released, but this probably refers to the major announcement of late subprime losses back in 2007. analysts say it's really just another inconvenient piece of news out for the company. that's it from zurich for the moment. now over to adam in singapore.
4:25 am
>> thank you very much, caroline. asian markets ended the week limiting the losses in the japanese equity market, particularly in the banking stocks, a sector that had been under tremendous pressure all week on political concerns and concerns of a new government coming in. the new blanking minister said he wants a moratorium and wants some of the loans to individuals and small businesses. because they have been struggling. there are lingering concerns about the credit spilling into the consumer lending space because they want a moratorium or a delay in repaying $3 million to some of their bankers. moving on to south korea, that was one of the top performers, though, in north asia. coming off the day, closing below that 1,700 level, the
4:26 am
kospi marching to three-month highs. particularly the foreign buyers swooped into this market. and across in the greater china region, it was a softer picture there, particularly for the shanghai composite at one stage was down at the worst, 3.9% on lingering concerns about more share issuances in this market. china metallurgical coming online next week and the steel stocks were very, very week indeed on the talk that the u.s. might slap more duties and recently come out the steel companies in china are cutting back on production. on that note, it's back to julia in the u.s. >> today in the u.s., we're looking ahead to a quadruple witching day. this phenomenon occurs in stock index options, u.s. futures, individual stock options and individual stock futures expire
4:27 am
at the same time. this happens once a quarter and usually creates price markets in the individual stocks. also today, we'll hear from key economic figures being held at georgetown university in washington, d.c. all eyes will be on the key note addresses from f did i c woman sheila bair, mary schapiro and larry summers. that's your global stock watch. maura, over to you. >> coming on "worldwide exchange," trade tensions between the u.s. and china are on the rise. how will they impact the g-20 discussions next week? we'll have the analysis for you. >> and we're about to get insight into the uk data next week. we'll have your analysis right after this. um bill--
4:28 am
why is dick butkus here? i hired him to speak. a lot of fortune 500 companies use him. but-- i'm your only employee. we're gonna start using fedex to ship globally-- that means billions of potential customers. we're gonna be huge. good morning! you know business is a lot like football... i just don't understand... i'm sorry dick butkus. (announcer) we understand. you want to grow internationally. fedex express
4:29 am
4:30 am
i'm maura fogarty. in asia, shanghai stocks dropped 3% as steel shares get hit by reports the u.s. may impose duties on chinese-made steel products. >> i'm ross westgate. here in europe, lloyd's banking group dismisses talks it will not be allowed to exit the banking scheme. it says it can scale back participation. >> and in the u.s., the s.e.c. is wanting to apply a new set of rules to increase transparency.
4:31 am
>> global equities a little softer today. in europe, actually, we've got marginal losses down around 8 points, having its best quarter ever since incision back in 1984. just about to get a look into the state of finances in the uk. just had numbers out from the council of mortgage lenders. but with all the arguments and all the cuts in public spending, what is going on with the state of the public finance, as well? 16.1 billion pounds, a little bit more than perhaps we were looking for. it's expected around 12.5% and it was 9.9 a year ago. it's the worst august on record. it's actually the third worst month ever. the public sector net cash requirements was 1074 billion. it was 5.1 billion a year ago. it's almost double.
4:32 am
and the central government receipts have so far fallen 9.2% on the year. so basically tax receipts are getting better. i'm afraid it's a deterioration in public finance. sterling is chewing those numbers over. michael taylor is with us. michael, the chancellor said the total would be around 2.5 billion. >> we're we'll be talking 295, 300,000 pounds for the fiscal year. >> what do you think of this figure, receipts down 9.2%. they're not getting any money on taxes. >> absolutely. of course, the uk treasury became somewhat dependent on the tax revenues from the financial services and from a booming
4:33 am
housing market, both of which have gone into a significant rever reverse. that is wunl of the reasons why the deterioration in the uk public services has been somewhat greater than that in other dwopz economies. so it really is a serious deterioration. >> how much pressure might there be on deterioration before the general election if this rate of decline continues? >> yeah, i think that could well occur, especially if the economy does come out of recession as we expect. the pressure to do something will undoubtedly intensify. most of it will come once a new government has been installed. just to show you where we are on global equities, ftse cnbc global 300 is down 15 points.
4:34 am
europe, not as bad as the asian session today and mild losses, indeed. the ftse 100 had tiptoed into it. less profit taking in some of the resource stocks. it is worth putting out, we have big quarterly options expire. we have got some caution. it's no surprise that people have maybe closed the books a little bit as we go through that this morning. in europe. it's happening in the states, as well, of course. the dollar is benefiting a bit, 91.20. euro/dollar has come back below 1.47 to 1.4668. >> hey, ross, the rallies that we've been seeing for this entire week fizzled out on the markets. we did see the banking sector recover after very sharp falls on thursday. the markets pulled back by more than 3%.
4:35 am
steel stocks got hit today on reports that china may impose more steel tariffs on china. overall, markets were pretty weak today. the kospi up by 0.25%. let me hand things over to julia for a look at how things are shaping up on this friday morning. >> thanks so much, maura. looks like we're pointing to a slightly lower open, dow, nasdaq and s&p futures all pointing slightly lower. this comes on the heels of the market making losses yesterday and breaking a three-day winning streak. so it looks like markets are taking a pause. we could see some profit taking. tags a look at the 10-year yield, it's now up to 3.39%.
4:36 am
maura, back over to you. >> michael, i want to get your thoughts on what's happening in japan right now with this new prime minister, new cabinet and new finance minister all making comments about what they want to do with economic policy. today, the finance minister, mr. fujii said they might cut back on jgb issuance fort entire fiscal year and that the the entire government is reviewing spending in that extra budget. does that or lung that effect stimulus spending in japan and perhaps even hurt japan's economic recovery? >> potentially, yes. japan's recovery is somewhat fragile to say the least. from the fiscal spending that the previous government launched in april. a review of that could mean an early withdraw of fiscal spending and that could help
4:37 am
drag the japanese economy back down intory session. having said that, i think it's important that japan does address its fiscal properties fairly quickly because its debt is huge. it clearly does have a problem in terms of potential future issuance of jgbs. so i think the policy is right, but it may be too soon given the fragile state of the japanese economy. >> michael, we're hearing more and more about the s.e.c. regulating the credit agencies and the payments of bankers on wall street. there are so many different issues up for regulation right now, how do you think government regulation of wall street is going to affect your perspective twar towards the u.s. equity market? >> clearly, i think in the medium term, it will have an effect to what is more likely now to become an overregulated
4:38 am
industry. i think perhaps the biggest dampener will become extremely onerous in some cases, especially for the larger firms. that will clearly impact their ability to earn profits, their return on equity, return on capital will fall. so i think the whole financial sector in the u.s. is in for a much tougher time over the foreseeable future, really. it does need to shrink. it did get too large. with government regulation, there are always unintended consequences and it tends to go too far. i think the risks are on the down side from the financial sector in the u.s. >> i think that's largely true, actually. i think that we've had regulations, it's just been the wrong source of regulation and the real risk is that we get s misregulation rather than better regulation. all the signs from politicians are that is exactly what they want. they want distractions and they don't want --
4:39 am
>> we've had plenty of misregulation already, haven't we? a good example is that the governments panicking about capital add quantitisy and what they've been trying to do is suggest to the banks they lend more money to keep the global economy going. at the same time, as they impose on the banks capital requirements which severely restricts them from lending money. >> that's what politicians do, isn't it? >> max, we'll get back to you in just a moment here. michael taylor, thank you very much for joining us today. >> thank you. trade tensions between the united states and china are on the rise ahead of the g-20 summit happening in pittsburgh next week. there are reports now that the u.s. may impose duties on chinese-made steel.
4:40 am
a chinese government worker is now accusing the u.s. of dumping soybeans on the chinese market. earlier, former u.s. secretary of xherz told cnbc that he is confident the world trade organization would be in favor of washington's move. >> on the tires, interestingly, it's not a dumping case. it's what they call a 421 where there are numbers produced to show that china has disrupted the market, that there's been a huge surge in imports from china and there is -- there's a strong likelihood that the wto would reaffirm that the u.s. made an appropriate decision. >> let's get some more analysis now for mark michael son, vice chairman in hong kong. mark, thanks for joining us today. what do you make of this trade
4:41 am
spat? how big a deal is this? well, i think we have a series of skirmishes now which we hope don't escalate up into a war. there will be some of this tit for tat for a while. it's hard to figure out who the players are. a couple of recent studies see a lot of protectionist measures, some not as object, some in terms of regulationes and barriers to trade that are not clearlily stated. >> mark, what do you make of china's vigorous response? just days after the u.s. is slapping tariffs on chinese products, you had china retaliating. it appears china is flexing its muscle much more aggressively and assertively in its trade sphere. >> well, part of it is a little bit of that in the sense that china is a powerful economic player, has apparently recovered more quickly than many other places from the financial downturn and it is flexing its
4:42 am
muscles a little bit. but a lot of this is playing to domestic audiences, as well, just like everything else. china has domestic interest, people that might lose their jobs that are concerned about these changes in trade flows and how they affect what they do on a day-to-day basis. so they have to react, as well, or at least be seen as reacting. >> mark, it's julia boorstin here in the united states. how do you think u.s. government is going to handle this moving forward? and if these disputes are indeed pushed towards the wto, how do you think they'll be resolved? >> well, it's not clear to me how it will be resolved. i don't think the tires issue was a great one to base that action on, in part because the industry in the u.s. wasn't really supporting it, rather, it is mainly the unions. but i think the concern resolves
4:43 am
around what the u.s. policy is going forward. it's a relatively new administration which hasn't made a clear policy on trade. i think that's part of the problem is that a lot of people are uncertain about which direction they're going to go. it doesn't mean others aren't taking similar actions, but of course, the u.s. is still the major player. >> i find it very hard to see how a country which hasn't got the xet hive advantage in the manufacturer of motor cars can possibly have the advantage in the manufacture of tires. it's bizarre to me. i suppose the best thing to do is to allow their currency to strengthen and i suspect the chinese are right and the u.s. is wrong. >> the u.s. industry didn't support it for that reason
4:44 am
because they've really moved out of that section of the low cost tires. it makes perfect economic sense. >> mark, thank you so much for joining us today. mark michaelson, vice chairman of afco asia hong kong. max is still with us for this hour. let me tell you about what is happening in india right now with the bombay sensex right there and the latest on the markets. wh hema is joining us for this support. >> hi. it's turn thing out to be a very quiet session, yesterday as well after the nifty hit 5,000. so another day, but we're seeing a lot of melt yumm in the broader universe. the midcap index is up about 0.2%. small cap index is up abo about 0.8%. and all of this while the nifty is down 0.2%. one thing that has picked up is the participation. so volumes since yesterday have been on the higher side. that is another positive sign. stocks which are on the move,
4:45 am
it's the entire banking space which is coming through a bit of profit taking. hdfc under pressure, down about 2% to 3%. all this is off setted by some of the gains we're seeing in the auto stocks. m&m, close on the heels, up about 3%. speaking of banking, which we were, one stock which is in focus is access bank. the stock is ul canning right now, down about 4%. it has raised about $720 million by a qip, come a gdr issue. so the stock is currently trading very close to that. size of about 906. currently it's at 908. but apart from that, a lot of the cement stocks have picked up. all the concerns we've had of weak monsoons have abated. and cement stocks are holding up very, very smartly. reliance, which had a very sharp
4:46 am
fall today is very quiet. let's see how the day pans out. markets are quiet ahead of that. back to you. >> reema, thank you for that. more help seems to be on the way for japan airlines. you've got american airlines, british airways and qantas airways teaming up to make a joint propose equal for the airlines. the offer will include an investment from american airlines. according to dow jones news wires, qantas has said it's not in m&a talks with anyone. the joint offer is a rebuff to an earlier bid coming from rival delta air lines which is hoping to lure jal to its sky team alliance. in china, the securities regulator has approved the first seven companies to list on the new nasdaq-style second run board. the seven firms come from the software, medical equipment and medicine sectors. they plan to raise a combined
4:47 am
$333 million from their initial public offerings on the growth enterprise board, based in shenzhen. so far, more than 150 companies have applied to list on this new exchange. here in the uk, lois lloyd's banking group has dismissed rumors that it will not be able to back out fully from the government protection scheme. it wants to scale back on its participation. lloyd's says that improving on economic conditions warrant a rethink about how they operate within the scheme. shares of lloyd's today, they opened lower, only down just about 1% at the moment. and credit suisse says it's now more positive on equities than credit. the defaults are below the peaks of the last few sessions. and a positive outlook on m&a means good news for equity markets compared to corporate bonds. also with, the russian president, dimitry medvedev has welcomed the decision to shell
4:48 am
the missiles in the help. he says there are now good continues to curb missile proliferation. u.s. president barack obama had earlier announced he was scrapping george w. bush's missile defense shield for europe after a review of the threat posed by iran. >> thanks so much, ross. well, the securities and exchange commission adopted new rules for credit agencies in an effort to provide transparency. the industry has come under tremendous criticism for its role in the financial crisis. this would apply, regardless of whether agencies are paid by issuers or by investors. creators of financial products must now share data with all credit ratings agencies. smart phonemaker palm has posted smaller sales in the
4:49 am
second quarter. its market grew from the previous quarter. palm has announced plans to sell 16 million shares of common stock elevation partners which owns a 33% stake in the country. palm shares lost 4.5% thursday closing at $14.44. year-to-date, the stock is up over 370%. mau maura, over to you. >> as always, you can get lots more news, videos and blogs on today's market-moving stories. head to our website, cnbc.com. and coming up, the eu and imf are promising more stimulus, but when will it end? we'll hear from the imf and discuss whether we're headed for trouble. >> and the dollar got a bit of rhett respite today. more on the currency markets after this.
4:50 am
4:51 am
4:52 am
sgha on the currency markets, today the dollar has gotten a bit of a respite. it was edging down towards the 90 level yesterday. euro/dollar is now back below .47. sterling/dollar, 1.6344. a short while ago, two bits of uk data, we saw the money supply
4:53 am
and bank lending rising for august. then we also saw public sector net hitting 60.1 billion pounds, as well. that's the biggest august on record. so basically, we've got uk public surging and bank lending stalling. and it makes me wonder, sam stanley, of halo financial is with us, whether this actually -- when you look at the pressures in the uk, whether that makes sterling trade more with the dollar than anything else. >> well, quite possible. this week, we've seen the dollar weak against everything except the pound. the pound and the dollar are seeming to fall against the dollar. i think the pound is under a lot of scrutiny at the moment. people are looking at everything that comes from the bank of england. the fiscal position is very, very important. and it built into a bigger sterling picture that we're starting to see emerge in light
4:54 am
of overall dollar weakness. >> max, what do you make of this uk fiscal position at the moment? >> well, i suspect that we need a greater sense of crisis before they take their sector deficit and barring seriously. a sense of crisis means a crunch in sterling and the crunch in government credits. i think until we see that, i can't see the politicians really getting to gribs with this. as bemused by brown's attitude to say he wants to cut unnecessary government spending, for example, which implies i've been wasting money for many years, or he's just saying what he thinks people want to hear. there's no sense of crisis in government. until there is, that may mean a crunch in government bonds. i don't really believe anything will happen. >> sam, it's mauer what here in asia. they have new covers for wanting to cut unnecessary spending. the finance minister today is
4:55 am
essentially saying they're going to review the budget. >> japan is a hard one here. they're trying to get liquidity out there in the market. they're trying to stimulate something at the moment. the domestic consumer is not spending. they haven't for quite some time. they are stuck in a sticky situation at the moment. so i would expect to see more issuance of bonds by the boj and certainly that will put pressure on the yen still. >> the government just said it's going to do options of 2, 5 and
4:56 am
7-year notes for next week. what happens when the government stops order of inserting all of this into the economy? what happens when the government stops these programs? >> the dollar will probably start strengthening, with i imagine. basically what we're seeing at the moment, we're starting to hear room irs of a couple of members talking about interest rate hikes early next week. obviously, that's not going to happen. but they're talking about withdrawing the liquidity out there and certainly there is going to be more and more talk about stopping this fiscal stimulus and the economy and basically that will be the turning point for the dollar, basically. bearing the short interest in the dollar, right, and this idea that we'll fund in the dollar as opposed to anything, if there was any sign of that, if there was a turn around, it would be a pretty big snap, wouldn't it? >> i think so. the fundamentals in the states are start to go improve. this week is case in point.
4:57 am
amazing figures, probably a dozen figures that came out above expectations. gdp growth could be as high at 5%. we're looking at a situation where they're starting to remove the liquidity in the economy or start tighten interest rates, it's going to strengthen very, very quickly, the dollar. >> max, what is your view on the u.s. stocks? we don't know what happens, we don't know how much of the current stock market rally is because of all the stimulus we've got in the system. >> i think our view in the medium term is u.s. stocks look fine, they're looking for pretty good value there. short-term, with you know, they may have run a bit fast for the time being and we're not inclined to power in. >> if you were, and i remember you were here a few months ago, you made a call that we're going aggressively into stocks. if you're sitting on profits right now, do you take some -- are you inclined to take some profit in mind? you're looking at your end of
4:58 am
year performance. >> not really but really for one reason. that is trying to finesse the market game. trying to sell at the right time and buy back at the right time, it's occupational therapy. there are two things i think you can look at. one is lightening up in the u.s. and europe is left behind. secondly, let's give you rebalancing. let's be overweight equities in your portfolios. you would be much more overweight than you were now. >> mark, sam, thank you both for joining us. good to see you both. >> coming up, our next guest says that the equity markets are about to get a boost from a surge in m&a. what do you think? e-mail your questions to worldwide@cnbc.com.
4:59 am
5:00 am
5:01 am
i'm julia boorstin. the wall street's federal reserve is proposing new rules to curb banker's compensation. >> and i'm ross westgate in europe. the uk government borrowed more than $26 billion in august, the third highest monthly figure on record. and i'm maura fogarty. here in asia, shanghai stocks
5:02 am
dropped 3% as steel shares got let by reports that u.s. may impose duties on chinese-made steel tubes. if you're just joining us in the u.s., welcome to your global day, broadcast to you live from the u.s., asia and europe. here in the u.s., looks like we're going to have an open to the lower side. let's take a quick look at the bond yield. the ten-year bund is down 0.016 at 3.33%. and the 10-year t-note is down 13001, 3.38%. we will be watching for market volatility. ross, over to you. >> meantime, global equities have been weaker, julia. the ftse cnbc global 300 is he moment is down 12 points, as you can see. we've done better in europe than
5:03 am
we have in asia. we've seen got green on the board, is smi is up into positive territory. health care and food and stokes have been in positive territory. only slim losses elsewhere. five session necessary a row for the ftse 100. dollar ysh yen, 91.10. sterling/dollar, under pressure. we've seen both public borrowing surge and continue to stall in the uk. i'm sure that will be a focus, as well, for the currency traders. let's get a wrap on that, how we've done in asia for the stock markets. maura. >> ross, the asian markets fell back today on this friday. in some cases by the weak sens session, you can say it ended lower on the week. shanghai level dropping 3% on worries that perhaps the trade war escalating into a full blown trade war.
5:04 am
steel stocks in particular were hit hard in shanghai today on reports, local media reports that the u.s. is going to impose some trade tariffs on chinese-made steel imports into the united states. the hang seng being pulled back by that weakness, down by 0.5%. tokyo falling by 0.7%. don't forget, though, next week we have a longer holiday happening in japan, so there's a bit of caution in trading today ahead of that long public holiday in japan next week. let's check on oil prices, the nymex sweet crude, $71.70. as for brent, october contract, $70.82. back to you, ross. >> okay. so joining us for the rest of the program, james bevan, chief investment officer at ccla investment management. james, we're up just off 2009 closing for the europe i can't thinkan stock markets. the u.s. has been up 8 out of
5:05 am
the last ten sessions. how much longer can this rally continue? how much of it is a liquidity driven event? >> well, i don't think the liquidity event has much impact asset. the liquidity levels in global market terms are much higher than normal. i think what's exciting in terms of this rally is that we are beginning to see real company upgrades, we're beginning to see companies coming candidate with much better news and economic numbers are stronger than some people had expected. now it's only right to say, however, that there are considerable risks out there and i guess that the overnight news, that there is a rumor of protectionism beginning to rear its head is a logical challenge if we're going to see an environment of relatively slow growth but doesn't fundamentally serve to curb unemployment. and i think that is something
5:06 am
the markets will have to look at. >> i think the important issue is that over the last year, companies have come to the table and cut their cost basis very considerably. there's been a huge amount of self-help and self-help has shown up in two ways. i think actually there is room for positive earnings pride. jeems, here in the united states, we're talking about limits on compensation. how do you think that's going to change the land zap? >> well, i think that the regulation primarily affect the
5:07 am
financial sector. i don't feel the financials confusing. i see a series of global winners. for the bulk of the remainder, i find it probable is to see the long-term growth and i suspect the prospects of regulation banking adequacy in capital terms, in terms of loan ratios and rates, it is going to make life difficult for projecting profits but stock selection. >> james, it's maura here in asia. in asia today, the dow is looking for american airlines, maybe qantas. what do you make of the m&a
5:08 am
activity? is that going to be a key driver of where we see share prices going? >> i think m&a activity is hugely important to the market in several ways. first of all, the m&a we're seeing at the moment is very much driven by industrial logic. we can see people saying this company has high free cash flow yields. this is a lot of industrial logic. that contrasts with the merger and acquisition and title flow that we saw in 2007 which is very much driven off off ample and low cost coverage. this is very much sustainable. i think both for acquirers and targets, there is plenty of opportunity to demonstrate value added and, therefore, plenty of puff, potentially, behind share prices. >> james, which sectors do you think provide opportunities in this market as we look forward to the earnings growth that you expect? >> i think that the reliable growth story particularly in the
5:09 am
big cap world looks too cheap. where one gets m&a potential on top, it's a sort of icing on the cake. therefore, i would be looking at the good quality, reliable earnings in food manufacturing and also in pharmaceuticals. i find that the market is nonperilous to have a sdeet price for glaxosmithkline baffling in the context of the very considerable macro uncertainties that exist. >> james, you're sticking around, so plenty more to come from james bevan. some of the other stories we're following today, of course, the problems over leveraged banks. have we solved that problem by overleveraging governments? is there any in sight? we'll hear from the imf after this break.
5:10 am
5:11 am
5:12 am
iu leaders met last night to lay out a coordinated plan for next week's g-20 summit. if estimated that overall support of the eu economy would be around 5% of gdp economy in 2009 and 2010. last night, cnbc spoke to john lip ski of the ifm. take a listen to what he said. >> for sure, one of the things we've learned in the past year
5:13 am
is that the slabbive coordinated stimulus applied by the g20s had an impact and its sigh mull takenty increased its effect. nonetheless, it's probably prudent to take a cautious approach toward growth and for sure, the stimulus already in the pipeline and is plan for 2010 we think still will be needed to produce the growth that we're looking for. >> okay. james bevan, what do you make of those comments? >>. >> i think the global economy continues to need a real helping hand. the lending numbers make it very difficult. >> yeah. so look, next year, how are we going to square that circle? because it's all about when can the economy -- particularly in the west countries, which can they stand on their own two feet without stimulus? >> it's a really delicate balance.
5:14 am
not only do we have the appetite to get growth self-sustaining, there's a real requirement that we have some constraint to pick up. now, i think in terms of the inflationary pressures, the exciting reality is that capacity remains ample and therefore, they are merging. so the expectations that we have have strong growth on the back of all this government spending is real. if protectionism comes to the table, in order to ensure that the job numbers begin to improve, then actually the global economy will say, whoa, boys, we're putting far too high a price on corporates growth. >> that is the biggest story to watch as far as you're concerned? >> absolutely. >> thanks, ross. the securities and exchange commission is adopting new rules for credit agents in an effort to end conflicts of interest and provide transparency.
5:15 am
the administration has come under financial scrutiny. they're looking at disclosing their ratings history. this will apply regardless of whether agencies are paid by issuers or by investors. creators of financial products must now share data with all credit rating agencies. mean wile, the u.s. federal reserve is proposing new rules to limit wall street banker's compensation. this is an effort to ensure banks are not creating harmful incentives to push employees to take on too much risk. a final proposal is still a few weeks away, but would only require a vote from the central bank and not from congress. ross. >> thanks, julia. mortgage lending in the uk took a hit, falling 37% from a year ago. those figures from the bank of
5:16 am
england showed that lending to businesses fell. >> in japan, the country's new finance minister said a review of the government's $154 billion budget could result in reduced government bond issuance for this fiscal year. he did stop short of saying by how much. fujii hopes to save several trillion yen after reviewing the budget and hopes to compile next year's budget by the end of december. he says the prime minister has ordered all members of his cabinet to get rid of all wasteful spending by the end of the year. american airlines, british airways and qantas airways are teaming up to make a joint proposal for jal. the offer will include an investment coming from american airlines. according to dow jones news wires, qantas has said it is not
5:17 am
in m&a talks with anyone. the joint offer is a rebuff coming from delta air lines which was hoping to lure jal to its sky team alliance. you can always go to our website for more news, videos and blogs on today's market moving stories. just type in cnbc.com. still to come on "worldwide exchange," more headaches for ubs as the swiss probes the banks on possible breaches of disclosure. has ubs's reputation been permanently shattered? you've worked all your life.
5:18 am
5:19 am
as the decades have past, the promise of medicare has always been there. and aarp has fought to guarantee none of the benefits you earned were ever taken away. today we're continuing that fight by protecting your freedom to choose the doctors and treatments you need. and to have your tax dollars go towards your care-- not insurance company subsidies. you've done your work. and we'll keep doing ours. learn more at aarp.org. even more freedom to the freest country on earth. so why should you be penalized for talking to someone, just because they're on another network. shouldn't you be able to call any mobile... on any network, at any time? it's a free country. knock yourself out. announcer: introducing the revolutionary any mobile, anytime. now on the sprint network you're free to call 250 million mobile phones nationwide without worrying about the meter running. only from sprint. the now network. deaf, hard of hearing and people
5:20 am
with speech disabilities access www.sprintrelay.com. we'll get to our team of reporters in a few moments, but first we'll have a gloo at our cnbc the 00. we closed last night at the highest level for 2009. maybe we'll get a little higher. glaxosmithkline a little better, autonomy, the best right now. and a bit more defensive, unileaver and hammerson a little more defensive.
5:21 am
kingfisher got numbers out yesterday. some of the down stocks, tullow oil, johnson matthey, balance four beatty and lonmin. how about elsewhere around the globe? patricia is in frankfurt. >> this turns out to be a lackluster day for markets. only about 28 million shares have traded so far to the downside, down about 0.2% for the german market. one outperformer for the market this morning is basf, up about 3.28% right now. they said and announced that they were able to raise some prices on their alcohol, some of their products, which really is something that shows you that the market, perhaps, is stabilizing. and if you look at the ppi index this morning, out from germany, above expectations even if you take it ex energy prices, up 0.3% on the month, much better than expected. all in all, it seems that perhaps the situations out here have at least stabilizized. people are finding a market, can
5:22 am
sell their products and find some pricing power in the market, even though only tentatively. pre-zenus met another day up in the positive. yesterday presenus benefiting from health care changes in the u.s. volkswagen under pressure, down about 2%. deutsche bank, siemens, classic examples of benefiting after the last two trading sessions. >> eads is trading lower after airbus warns that some clients could delay orders because of economic conditions examine that the company may have to cut down production because of lower demand. that being said, airbus still remains positive on the long-term. they believe they will reach 25,000 planes for the next ten years, but the stock is trading
5:23 am
lower. air france klm is up 3% on news that the travel reservation company is considering an ipo. air france has a significant stake in the company, 23%. it was delisted three years ago, but it is working on a possible ipo. air flans klm is the top gainer this morning on the cac. let's have a look at renault. the stock is lower despite word that the company could reorganize in order to trim costs. quoting the chief operating officer, renault is expecting demand to drop between 8% and 10% over the next year. the stock is down by 1%. that's the story in paris. now let's cross to zurich with carolin. >> thank you, stephane. actually, the smi is up by more than 0.25% and risk aversion is picking up a little. the defensive stocks are joe
5:24 am
outperforming the rest of the market. we have roche, nestle and novartis trading higher here. some positive news for novartis here, the fda approved their high pressure drug, expected to offset some of the revenue losses that we're going to see when blockbuster patrons run out. on the bottom of the index, we're seeing mostly financials, cyclicalities here. the swiss exchange has launched an investigation into ubs for possible breach of the disclosure rules here. we don't have many details on this story, but it probably relates to the late disclosure of some of the subprime losses back in october 2007. probably also about the compensation packages for the former chairman and ceo who left ubs in 2007 and 2008. well, in terms of the subsequents for ubs, this
5:25 am
investigation, analysts believe the consequences will probably be minor. well, maybe we will see a small fine for ubs. that's it from the zurich market. now over to adam in singapore. >> thank you very much, carolyn. the japan market was clearly in the red. having said that, coming off the worst levels of the day, we saw a fair amount of short covering ahead of a five-day weekend. particularly in the financial stocks, which had been particularly weak all week on concerns about political risk as we've seen the democratic party come into power. we could see regulation changes there. we had comments and the banking minister said he wanted a mo moratorium on some of the loans. the credit crisis seems to be spilling across to the consumer lenders today, as well. moving to south korea, it's a
5:26 am
completely different picture for that market. that market reaching 15-month highs as we saw a huge amount of foreign buying over the past 11 days. particularly today, in fact, $1.1 billion worth of transactions from foreign buyers as they're positioning themselves ahead of this market, switching to developed status from the advanced emerging market. moving on to the greater china region, a lot of weakness here. take a look at the shanghai composite. at one stage, it was down 3.9%. ongoing concerns, of course, is that we're going to see a flood of ipos coming to this market, including china metallurgical corp. hit 2 markets in terms of hong kong and shanghai market week, as well as we saw a lot of losers in the steel stocks. there was a local media report saying that the u.s. could slap duties on steel outside of china. also, some of the steel players in china are actually cutting back on production as prices continue to ease for the fifth
5:27 am
straight week. on that note, back to the u.s. with julia. >> thanks so much, adam. today here in the u.s., we are looking made to a quadruple witching day. this occurs when stock index options, individual futures and individual stock futures expire at the same time. it happens once a quarter and usually creates price swings in the broader market as well as in individual stocks. also today, we'll hear comments from key economic figures at the future of global finance conference being held at georgetown university. all eyes will be on the key note addresses from fdic chair slowly that bare, chair of the s.e.c., mary schapiro and director of the nec, larry summers. that's your global stock watch. coming up next, flirting with 0,000 again, the dow snapping a three-day winning streak last night sxa happy ending to the week now looks unlikely as futures trend downward. can we reach the ben mark level by the end of the month? stay tuned for a strategy discussion. these days every penny counts with everything you buy.
5:28 am
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 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.
5:29 am
5:30 am
welcome back to "worldwide exchange." the wall street journal reports that the u.s. federal reserve is proposing new rules to curb banker' compensation. and in europe, the uk government borrowed more than $26 billion in august, the third highest monthly figure on record. >> here in asia, shanghai stocks drop % today as steel shares get hit by reports the u.s. made impose duties on chinese-made she'll tubes. >> let's take a quick look at the u.s. futures. futures are pointing to a lore open, this on the heels of the market snapping a three-day winning streak. today is a quadruple witching day, so we'll be watching for volatility. quick look at the ten-year yield for t-bills. it's up 0.01 to 3.39%, slight
5:31 am
change since the last time we check. ross, over to you. >> yeah. and look, we've got some green here on the board. it's up five sessions in a row for the ftse 100. session high, 5,107. so that pause we had at the beginning of the day seems to be over. right now we have got again some options expiring, just going through the market this morning. so no surprise to see caution around that. but if we get through this afternoon, then the market will go higher. it has given the dollar selling a little bit of a pause, as well. dollar/yen, 91.44. it has extended its gains. euro/dollar, back below 1.47 after hitting a one-year high yesterday. and sterling is focusing on the deteriorating public finances of the uk and still weak bank lending, maura. >> yeah. in asia, markets here should have paired bay the gains we had
5:32 am
earlier in the week. we saw the shanghai market dropping by the most, by more than 3%, in fact. we could be seeing the u.s. imposing import duties on china-made steel tubes. that is contributing to a feeling that we could see this trade spat escalating a little bit. at the same time, a lot of pressure on shanghai stocks today. the nikkei fell back 1.7%. we saw the banking sector recovering from yesterday's sharp losses. korea's kospi managed to gain with a lot of foreign interest in korean stocks, the kospi up by 0.25%. oil prices slipping today, as well. nymex light sweet crude, $71.73. brent crude front month contract at $70.76. julia. >> thanks, maura. joining us for market strategy
5:33 am
is phillipe gito and still with us is our guest host, james bevan. phillipe, let's talk about your big picture perspective. i understand you said the worst is behind us, but that we're still in a bear market recovery. where are we in this recovery? are we going to see another leg down before we're truly in a bull market again? >> i think from an economic perspective, people have to be very optimistic. back in march, everybody talked about the world was going to end. we said, okay, government and central banks around the world will do whatever they can to prevent some sort of implosion. and they succeeded. they forget, of course, a lot of the improvement we see in these figures is driven by all kind of government programs, central banks putting quite a bit of liquidity into the system and eventually that will have to stop.
5:34 am
therefore, i'm worried that people get overexcited and i think we're in for a nasty patch over the next couple of months. >> phillipe, what do you expect to see once that government stimulus stops or slows down? >> well, i would say that the -- >> i'm sorry, i was going to butt in at that point and say from my perspective, the real challenge is from what point the central banks intend to tighten policy. until that point, i think equity valuations remain recently important on trend earnings and not expecting any growth premium. i still see equity risk premier for developed markets in excess of what's reasonable. if i worried about markets, i'm much more worried about credit markets than i am about equity prici pricing. >> why? >> because the spread is much deeper. investors who want to take betts off the table should look at
5:35 am
doing that before they remove -- >> do you go along with that, phillipe? >> i think this is a testing point. basically, if you compare it with other recessions, that's clear if you want to take money off the table, it's maybe also time to do it there. but what i do know about is they say, okay, it's becoming more or less attractive as compared to equities, so you should be more in equities and then use this credit thing even as the biggest capitalist to buy more equities. so it's possible that they vote that cash is the best option. >> phillipe, it's maura here in asia. you say the dollar is perhaps
5:36 am
set for some strength? >> yes, indeed. that is one of the big concerns in the market is the dollar because the government is planting so much dollar that it can only go down. if you look at purchasing power, the dollar is probably 20% undervalued. and the last couple of days, you've seen stories developing where they say europe will come out of the recession before the u.s., that even that the ecb is going to raise rates before the fed does and so on and so forth. i do not believe that. i clearly believe that you u.s. will come out of recession before europe and on top of that, the u.s. dollar is extremely cheap against the euro, also against the yen. so because everybody is thinking one way to go the other and that's the mirror image, of course, of gold, it's extremely bulis. in the meantime, the dollar
5:37 am
would go up. >> james, weigh in if you can. which side of the fend do you sit on with regards to the u.s. dollar? >> well, i think the u.s. dollar is set for weakness against the asian currencies, simply because the terms of trade are aggressively in favor of the cheaper economies of the emerging world. and i do feel, therefore, that we will see structural weakness of the u.s. dollar against its asian trading partners. i've challenged if a league on how low he thinks they'll go. on your prerchbls for cash short-term, you have a buying level where you say, equities are back where bad news is discounted. where do you think that is? therefore, i think there is
5:38 am
continued up side potential. >> first of all, i believe you should buy the best company so we have been highlighting the survivors where we tend to buy the strongest companies within the sector which we think will outperform the others. but on the other hand, i'm a little afraid to give the target because if this is, indeed, a bear market rally,lty least it's two 30s, but maybe even more and it's interesting in terms of sentiment, i've been drilled about this on division, also by clients and i think that there's a lot of resistance against this fuel because everybody wants to be bulis. what i also see in the best and then it's quite far away from everything that's fundamental, but just in terms of sentiment, people tend to get anxious at the moment when you say you can have some sort of reversal. and this enforces my point that maybe any shot term buying has
5:39 am
gotten too optimistic and this makes me extremely nervous. >> very interesting. can i take you through the bull armies as i see them and you tell me which parts you think are wrong? i look, for example, at least indicators and the lead indicators tell me that i should expect better economic progress and better economic earnings. do you think i will be disappointed in terms of the corporate new flow and the corporate earnings numbers? >> not necessarily yet in the fourth quarter, because i also think that we have an inventory construction coming up. inventories are very low and quite a bit of people start talking about 3.5% in the second half, which i think is maybe doable. the biggest problem i see is going into 2010 already.
5:40 am
we used to look at quite a bit of leading indicators, all kinds of figures and, okay, we tend to say, okay, if leading indicators go up, we're more bulis on stocks. we've learned quite a bit of things over the last 20 to 25 years. this is a strange as many cycle in the sense that the government has intervened so much to revert the implosion that we've seen back in march. and my big question is, how strong is this economy. then we will have to see because we are in unchartered territory economically. we do know exactly what is going to happen once the intervention wears off and that's anybody's guess. as you know, maybe now it's in fairly positive with equities sent to the beginning of the year and we are three months too early to go in the bear market rallies, but i think maybe it
5:41 am
can last a while. >> phillipe, thank you so much for joining us. james bevan will stay with us stay with us for a couple of final thoughts. meanwhile, let's check in on the nikkei. >> good to see you, maura. in tokyo, the financial and real estate sectors dragged the nikkei 225 down 0.7% ahead of a five-day holiday here. reports that consumer loan firm aiful scheduled to reschedule debt payments after stricter regulations the new government plans to introduce. investors dumped major real estate stocks on fears stricter restrictions may extend to property developers. meantime, airline shares rose
5:42 am
2.4% on a report that american airlines, quantitiat airways and british airways have made an attempt to help the japanese carrier. the offer is set to include extensive financial restrictions. in addition, american airlines is considering investing in jal. jal will decide which group to continue negotiations with by mid october. prime minister's yukio hatoyama kicked off the second week with the latest support for the new government, standing at 75%. the all-time high was an 80% rating ofco zummy's government. we'll see how long the honey
5:43 am
mood period lasts this time. back to you, maura. >> nozomu, thank you and enjoy your long weekend. >> thank you. still to come, the s.e.c. hopes to redeem itself for its role in the financial crisis. we'll have details on its role to tighten the credit agencies after criticism surrounding overgenerous ratings. before that, here is a quick look at the u.s. futures.
5:44 am
5:45 am
5:46 am
welcome to cnbc's "worldwide exchange." here are some of the top stories we're watching from around the world. securities and exchange commission has adopted new rules for credit agencies in an effort to end conflicts of interest and provide transparency. the industry has come under tremendous criticism for its role in the financial crisis. this will apply regardless of whether agencies are paid by issuers or by investors. creators of financial products must now share data with all credit ratings agencies. the wall street's federal reserve is proposing new rules to limit wall street bankers' compensation. this is an effort to assure banks aren't creating employees to take on too much risk.
5:47 am
it would only require a vote from the central bank and not from congress. maura, over to you. china's securities regulator has approved the first seven companies to list on the new nasdaq style board. according to shinwhau, they companies come from the software, medical equipment and medical sectors. they plan to raise a combine $333 million on the board which is based in shenzhen. so far, more than 150 companies have applied to lift on the new exchange. public finances continue to deteriorate in the uk. they have the third highest amount since records began in 1993 and far higher than the $20 billion equivalent expected by economists. mortgage lending took a hit. it was down 37% from a year ago and those figures from the bank of england shows lending to businesses fell, as well. so we've got higher public spending and weaker lending in the uk.
5:48 am
final thought mow from james bevan, ccla investment management. james, this discussion you were just having with phillipe, he in the short-term thinks we're due for a correction because we've had -- basically people had to get into this rally because they were missing out. we've had a sort of liquidity driven event and he thinks that we're still in sort of a bear market rally. you disagree? >> yes, i do. a bear market rally would require us to lose two-thirds of the gains since march. and i see that the fundamentals underpinning the market now as reasonably robust. we have better earnings numbers and growth numbers. we have a large number of companies that through self-help have much stronger balance sheets and have cut costs. to me, if there were to be a market downturn, we would need to have one of three principal triggers. we would need to see a tightening of money rates. it's abundantly clear whatever
5:49 am
the lead indicators say, markets are vulnerable. we need reputation of government debt and that is, i think, unlikely in the near term. we could have cops coming to the table and simply saying, we want more money and markets saying, hold on a minute, if you're going to flutter us with rights issues, we're going to take numbers down a peg. the bustle, i think, however, is very much in credit debt. i have been encouraging viewers to look at that as adequate in the risks that remain. >> james, thank you very much for joining us, james bevan from ccla investment management. carl is up with us to tell us what's coming up on "squawk box" today. >> also to cover today from equities to oil to gold. our lineup includes jim steel, xhod tirsen list at hsbc. and james gartman will jump on $1,000 gold, $70 oil and the dow making this run for 10,000.
5:50 am
on the economic side, dick burner is going to tell us if the markets might be getting ahead of themselves when it comes to economic recovery. and they say everything is bigger in texas, and the dallas cowboys now have this brand new stadium with the biggest television screen on planet earth. darren rovell is going to talk to cowboy's owner jerry jones about that big toy and the economics of pro football in this country which has gotten started in the past couple of weeks. also, the stock behind what could be another break through in diet drugs, ross, as we wrap up this 500-point week on the dow. >> if you put that in your living room, carl, how big would the couch have to be? >> you probably already have -- that's probably already in your living room, ross. we know what a technophile you are. >> how do you match the couch up?
5:51 am
>> the remote is the size of a small horse, you know? >> you have to sit a long way away, i know that. carl, look forward to the show. thanks. >> okay. see you later. >> up next, u.s. markets tap the three-day winning streak on thursday. can we finish the week on a positive note? uuuuuuuuuuuuuuuuuu
5:52 am
5:53 am
wroib to "worldwide exchange." for a preview, we're joined by david. david, we saw a bit of a breather in the market yesterday. today we have quadruple witching. what do you expect to see when the market opens? >> well, i think today, i would probably not want to talk about the u.s. market openings. we've got very little data to look at today, which i think is probably a good thing and very few companies making intrimt result statements today. we've had a cracking week with the dow up the best part of 2.5%. i think people are fairly confident with the fact that unless there is some economic
5:54 am
data out there to disturb things, heading up towards christmas, apart from the would probably, to use a horse racing expression, harm a horse. there is no asset class that excites the market. next week, we've got one or two companies reporting. we also hear from the super market wall clean and bed, bath & beyond will give us an idea on retail. as regards to the u.s. economy and the u.s. stock market, the one cumulonimbus cloud hanging over the market is retail. if people are unmroip employed,
5:55 am
that is going to restrict the spending that happens and it's going to make those who got jobs sir couple expect and you are very reliance on retail. it is something to keep a more on. >> david, are we going to see some profit taking? >> i think basically it was a pause for reflection and people just wanted to check out if there were any sellers there. from what i gather, talking to my colleagues, the sign of real out there is not there at the moment. the market seems on pretty good terms with itself. i think it would take very poor economic data, not even average data seems to move the market. next week, of course, we have michigan sentiment on friday. that will tell us a little.
5:56 am
>> david, it's maura here in asia. what do you make of these new regulations to ban flash trading in the united states? do you think that's going to affect nv any kind of market activity? >> i don't think. i think the one thing we would all like to see is for this rhetoric from the g-20 to stop talking about global regulation. it's never going to happen. what we would like to see is all the consonants in separate countries get on with their own agenda, get it fixed because it really needs fixing. if we carry on like this and trying to do things globally, nothing is ever going to happen. just courtesy of keeping your views in touch with your ideas and views and what you intend to do. i think that is the key to the kingdom. and great day, david buik, and that's it for today's show. i'm jewelace boorstin here in the u.s. >> and i'm ross westgate in europe. >> i'm maura fogarty in asia. thanks for watching "worldwide exchange." as washington continues the debate
5:57 am
5:58 am
over health care reform, aarp has chosen a side-- yours. we're fighting to guarantee that you'll never be denied coverage because of your health or age. to prevent anyone from coming between you and your doctor. and to make sure patients don't take a backseat to insurance companies. because at aarp, we believe your health is worth fighting for. learn more at aarp.org.
5:59 am

163 Views

info Stream Only

Uploaded by TV Archive on