tv Worldwide Exchange CNBC November 24, 2009 4:00am-5:59am EST
the current conditions index, 89.1, better than the consensus of 88. through has been kicking up against the pound. this might be a slightly stronger than expected number and indeed it's rallying off its lows against the dollar. 1.4925. so the euro is rallying a little bit on that. let's get some snans instant reaction to that. christian is not with us -- is christian with us snch i'd like to get some reaction if christian was with us, but obviously he's not available particularly at the moment. anyway, so the business climate index rises from 87.4 from 87.3. as far as stocks are concerned at the moment, we are weaker today, as you heard christine say in asia. and that floats through to the european session. ftse 100 up .5%. so the stocks were up from yesterday. down today and some of the
cyclical elements, as well, within europe. the german market up .5%. cac 40 down .75%. the dollar has been stronger today, just saw the euro bounce off its lows against that data. we are just below 89 at the moment and sterling/dollar, you can see the figure on that board. christine, hello. >> hey, ross, as i mentioned, a lot of caution ahead of u.s. gdp data. investor res staying on the sidelines. of course, don't forget, we have a thanksgiving holiday. it's pretty thin ahead of that. the nikkei 225 is down from a public holiday. the stronger yen is hurting the exporter there. the financials getting hurt on more fears of raising capital by banks. the shanghai xotit, this is the big killer today, down more than
3% because of market boosting measures. ar fears that banks might have to raise more capital from the markets and take a look at the shanghai b-shares index. this market plunging 7.3%. the b-share index is the share index, the share segment, a lot of segments. let's take a look at the crude oil picture. adjusting to $77 a barrel. ahead of key u.s. data staying on the sidelines, of course, the thanksgiving holiday coming up, as well. trade is pretty thin ahead of that. nymex light swede crude is down 8 cents and brent, as well, trading flat $77.53 a barrel. matt, how are the futures looking today? >> it looks like we're going to be down four or five times christine. that sharp rebound that we saw, take a look at the futures here, down 21 with the fair value,
you're about .2% below fair value for the dow right now. fixed income markets will begin in germany, the 0-year bund. falling so some buying or chasing, that yield of the 10-year treasury, so they have pulled apart. you have shed almost $10 an ounce overnight basically since we last checked on it. hopefully you didn't top tick on gold since the short-term. ross, over to you. >> general motors is planning to cut as much as 9,500 jobs. the cut representatives over a fifth of the total workforce employed by gm europe. nick riley is presenting the plan to work apparently on wednesday. elsewhere, the m.a.n.ceo has been replaced there.
lloyd's has been -- is priced at 37 pence per share on the basis of 24.3 shares for every existing one. shareholders will on thursday get the chance to approve the multibillion dollar pound raising effort which will allow it to escape the government insured back schemes earlier this year that were too expensive. now we'll talk about the ceo. he has immediately stepped down and the reason for his resignation is unclear. samuelsson's departure could pave the way for a commercial merger. its swedish truck brand is scania and m.a.n. and the shopping season that has started for vivendi pipt has finally agreed to buy a stake
from the french private forecaster tf1. the price tag has been set at $1.1 billion. although vivendi has made a similar offer. they could have more cash to splash if it goes ahead and is sells it $6 billion nbcu stake. christine. >> japanese cabinet members upped the ante on the boj to respond to deflation. the banking member sister says the central bank has been asleep at the wheel. the government last week declared the country had ended its second bought of deflation in less than a decade. both sides say the other should play a greater role in battling inflag. raising fears of another recession. economists, however, say options are limited for both. china's banking regulator issued a stern warning to banks to
comply with capital requirements or risk being penalized. penalties include market access, overseas investments and banks have failed to comply with capital adequacy requirements or rules regarding the amount of capital they must hold against loans will be penalized. this is how the picture is looking for china bank shares. matt. >> all right, christine. thanks. hewlett packard's pravts were up 14%. that came in just ahead of forecasts despite a loss in revenues. services were a bright spot and division the company has beefed up with its acquisition of eds last year. the ceo mark herd says stronger market demand should continue into 2010. is shares are down about .5%.
extend extended hours. hp announced its preresults a couple weeks ago. experts were hoping for even more. well, the pay czar, ken feisty feinberg is easing restrictions next year. the government believes severe curbs could hurt aig and taxpayers who own 80% of the company. last month, feinberg slashed compensation for the top 13 earns by more than half for the rest of the year. freddie mac says it could be on the hook for at least $500 million from the bankruptcy of mortgage banks taker, bean and whitacre. the bank filed for chapter 11 in august after it was barred from making loans and issuing mortgage-backed securities. >> let's get to some market strategy.
we have peru sex sana. good to have you with us. you know, in asia, there are lots of worries about financials, fears by bank in china, hong kong and japan. >> christine, the second leg of the option arm resets and all-day loans has now commenced and that is likely to peak somewhere in 2011. we don't have any exposure to financials. i believe investors are going to take some risks by investing in the sector and investors can look at other areas where there's less risk and more of a chance of making good money over the next two to three years. >> speaking of money, a lot take a look at the shanghai composite today plunging more than 3%. we have the b shares plunging more than 8%. anything to worry about?
>> christine, we just have a normal one-day pullback in a norman ongoing market. a lot of people are saying that china is in a bubble. today, china is roughly 50% below its record high. this is not above her. over the next two to three years, a lot of capital is going to flow from the west into china and other emerging countries into asia. this part of the world is going to benefit immensely from capital flows. this is where the growth is. china is growing at 8% or 9%. india is growing. we believe china should be bought on every -- this is going to be at least a two or three year market. >> peru, what would happen if
you didn't have the stimulus? >> the policymakers all over the world thought that it would be best to postpone the stimulus by printing money and creating inflation. the government doesn't even have the money. they're borrowing money. they're printing money, at least the chinese to be fair have used up their savings to accumulate it for a rainey day and it has been raining in china for at least the last 12 months or so. we believe that consumption in china is going to increase over time. already today i read in the newspaper that the chinese market is bigger for autos. and i believe over the next five to ten years, the chinese economy is going to become a dominant force and the dependants on exports in america was going to decrease. >> you mentioned ex ports,
though. we had some data. just remember what we had out from the business ifo index. 93.9, versus consensus of 92.5. they're talking about ex ports feeling very strong. christian blaabjerg has joined us with this, as well. the ifo says companies are more upbeat on the ex ports. just talk about the china story there, christian. how much do you take from what the ifo is saying? >> well, basically, i pretty much great with the speaker that china is going to drive the demand for western goods. we believe that capital flows and export flows are going to reverse. that will be a major theme for the coming years simply on the back of that the chinese will import more from us and export less and capital flows that investments going from china is going towards the european and u.s. countries regions and on
the other hand, that is the main theme that we are playing at. >> christian, you know, every day, i read. yesterday was nab, citigroup talking up the economy here. and yet today, we're going to have four economic data points, all of which show weakness if they want it right. gdp will be lower down, confidence will be down month on month. case shiller will show home prices down and the fed office will show that body terrified to even think about raising rates. what the heck is the gap between reality and forecasting? >> well, obviously, there are models that explain the gap. economic models usually. but our main point is contrary to what we usually stand for, we are quite positive on u.s. data. we believe we are going to see an upside throughout the day, especially on gdp. market run 2.8%.
our models points to 3% is the more likely scenario. and we believe that based on our u.s. fundamental indices and indicators, we believe that the up swing is currently stronger than what is expected. that is most likely going to drive some risk appetite back into the market. >> let me ask you, you should say that investors should buy that in every depth. we had a big rally yesterday, snapping a three-day losing streak. and we're easing into a soft open here today. how would you position yourself? >> well, we have some positions for our clients, even in the united states. we own some world class businesses in the industrial machinery space and the resources space. we believe we have a huge wall of liquidity which is now climbing the wall of worry.
most people we talk to and most commentators say this is a rally, this is a bear market rally, that this is going to crash. we tend to disagree. we believe that the bear market ended in march in the west. it ended last october/november in asia and now we are a full months into a cyclical bull market which will probably carry on until such point that the central bank decides to raise rates. one of the officials in the fed commented that the fed would not raise rates until 2012. money is pouring into assets and people are getting very, very worried about the loss of inflation and central banks are destroying the value of money, they're debasing the currencies, that's why stocks, pressure metals, the value of everything is going up and the worth of paper money is going down.
>> thank you very much, puru saxena and christian blaabjerg. still coming on the program, third quarter u.s. gdp is lower. matt was talking about p that. plus, the prime minister of india is visiting president obama in washington. we'll discuss what to expect for the future of u.s./indian relations. we'll be joined by a special appearance by maria who is in singapore today. um bill-- 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 going to 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
the london market up nearly 2% right now. it is down right now. lloyd's banking group, stock is up 1.5%. treefd priced a record 1.5 billion pence issue. so the stock up 1.6%, as you can see on that. it follows a pretty good new form of bond issuance there now. which means the total capital raising is going to be the biggest on record, well over 20 billion pounds is the total cash call, but the stock looked like it's going to -- the rights
issue looks like it's going to get away fairly well. as far as the weaker sectors, well, some of those stocks were up yesterday. some of the mining stocks are weighing on the ftse 100. we just had a better than expected ifo sentiment. a brief rally from the lows of the xetra decks. patricia has more in frankfurt. >> this is what we expected. so the numbers are looking good. and it seems that even though we might grow at the slightest pace, the indices are doing fairly well. the dax at the moment is down 7%. the main loser is m.a.n. m.a.n. down about 3% after the ce owe said yesterday he's going to leave. plus, we just had the breaking news story coming through from general motors. tomorrow is the day they're going to present the detailed re structuring plan for gm. general motors, europe, especially opel. and it seems 19,000, 19,500 jobs
will go across europe and one very important plant out here may be saved. this is something that has been picked up from what was announced already by gm this morning. bmw, bayer and metro are trading in positive territory. we had a confirmation for the third quarter gdp in germany, looking fairly safe. private consumption fell by almost 1% wiping out the gains by the last two quarters, but the business cycle has changed. construction, all of these things plus business investments are getting quite a bit of stimulus for the third quarter the picture will not change. i.e., the unemployment data continuing to be solved, consumption will continue to be
soft wblg however, demand from outside will continue to fuel our economy if you can call it fueling our economy out here in germany. over to stephane. >> and in paris, patricia, we've got only a few gainers today related to consumer spending. we had a good surprise in october. consumer spending increased by 1.1%. much better than the average forecast. the carmakers, the other top gainers. there's trading lower, societe generale. there's a strike action at the bank. it's not so common in france. but it's very unusual in the banking sector against the working conditions and about the lack of negotiation from salaries. they claim that the recent debate on bonuses and stock options in the banking sector really increased the gap between
the managements. vivendi has decided to increase its control and it boasts a 10% and made an offer from 5% to 6% that vivendi wants to focus on its core businesses. the company has until the 10th of december to make a final decision on nbc universal and the possibility to sell its 20% stake. trading lower, also, outside the cac 40, nearly 7%. it's the maker of electrical switches and the main shareholders, kkr on the french company vavell lowered their stake in the company from 61% with very negative reaction from the markets. that's the story in paris this morning. let's have a look now at the
asian markets. >> good morning, stephane. it was a difficult day for the asian markets today. you know, the positive momentum on wall street weighs optimism into the asian trading session. some markets, though, did open up into the green such as the shanghai composite, and that turned out to be one of the biggest losers in today's trade led by declines in the b-share index which is the denominated d index. after the pboc made those comments just last week, the minister said they would keep the balance stable. that sends money out of the market today. the banking stocks also particularly week on concerns that we could see some of these adequacy ratios. while the banking regulator part
of me did deny that there is a concern that, of course, there is a bubble in the asset market, we saw that massive lending so far this year. bank of china did say they were looking at possibilities on how to raise more money, didn't confirm how to raise monies or when. it's a weak picture in greater china. similar picture in japan, as well. they are troubling this market of course with the volatility in the for ex markets as the u.s. dollar dropped sending the u.s. stocks higher. that's negative for all of the exporting companies in japan that even though they've adjusted the for ex in terms of the autos. it's certainly not helping matters with the yen trading at 88.65. so on that note, back to the u.s. with matt. good morning. >> hey, adam.
thanks so much. i appreciate it. we're going to have all kinds of data coming out. the revised third quarter gdp figure, that comes out at 8:30 a.m. time. reasons for the downgrade include, well, a bigger trade deficit, weaker commercial construction, a pullback in consumer spending, bad estimating. at 9:00, the case shiller price home index will be released. this is going to be the measure prices at 10:20. analysts there looking for a little bit of a giveback from 47.7 in october. then at 2:00, we get the fed minutes from this month's meeting. as for earnings, we'll get american eagle, barnes & noble,
borders, dollar tree and the retail space as well as hines and wore medical, j. crew, warner music and tivo. wow, that's all we can say. that is your global stock watch. >> and also coming up, if that were not enough estimates for the revised third quarter gdp have been just trickling lower and lower, almost a full percentage point now below that initial estimate. could a dismal reading kill the rally? >> plus, indian prime minister is visiting washington today. can obama convince him that china's growing importance won't overshadow relations between the u.s. and india?
i'm christine tan. india's prime minister, manmohan singh visits washington for talks critical to showing a commitment for strong u.s./india ties. and i'm ross westgate. germany's ifo has reached a 15-month high. >> and i'm matt nesto in the states. what a day for economic data we're going to have. that strong economic reading last quarter? twl, maybe not as robust as first thought.
>> hello. you're watching cnbc's "worldwide exchange." porsche says it's going to cancel the contract that it had settle up with magna to build the boxster model. we've been hearing from gm on the extent of the job cuts this morning. they're going to keep the opel plant in germany. they're going to come out and present the plan to unions on wednesday. but they're looking to cut 9,000 to 9,500 jobs on opel. global stocks are down in asia. the ftse cnbc 300 is off 23 points. we have just rallied for the session high, albeit still down
for the ftse 100 by .4%. lloyd's has been priced this morning, 13.5 billion pounds. 37 pence a share, about a 37% discount to where the stock was priced yesterday. it had a good bond issuance yesterday, as well. xetra dax down 0.5%. cac 40 down .6%, as well. euro/dollar, 1.4926. sterling against the dollar is weaker at 1765. christine. >> hey, ross. here in asia, most markets finished mostly lower. why? because we're waiting for u.s. gdp data, we're waiting for consumer confidence. this is how the picture is looking in the rest of asia. financials is a sector getting hit on more fears of capital raising plans. the nikkei 225 is down 1%. the kospi down 0.8 perls.
the hang seng is off 1.5%. the shanghai market is getting sold down badly, down 3.5%. a lot of people are saying this is a healthy correction in the face of what has been a huge runnup in the shanghai market. the b-share index is down 7.3%. a lot of people are waiting for key u.s. data, matt. >> oh, aren't we? and, you know, our markets are waiting, christine. we will be down for the fourth time in three days if we were to open right now. about 20, 30 points lower on the dow on a fair value basis. if you take a look at the treasury market here today, you're going to see a little bit of buying which is going to push the yield slightly lower on the 10-year treasury. at last check, it was at 3.37. ross. >> yeah. let's just -- thank you very much. i just want to recap the data we had out a short while ago from the ifo institute.
business sentiment in germany 1yu678ing more than expected, 93.9. current conditions stronger than expected. 89.1. the ifo says companies are more upbeat on ex ports, but the recovery isn't strong enough at the moment for any change in ecb policy. leena comaliver is the chief economist and is with us. leena, nice to see you. the ifo keeps bumping up a little bit. how much is this recovery underpinned by fundamentals? what's the reality like? >> this is very much the key question into the first half of next year. right now, risk sentiment shows that the economy continues to expand in the fourth quarter, probably at a faster pace. and the mrching sector, the export sector is defining the overall of the economy. now, as conditions normalize in markets and in the economy, this
will support the overall view that they're ready to implement an exit strategy. but i don't think strong growth figures alone are going to sway the core consensus view that they need to move in a gradual way in order to maintain confidence and, of course, provide a hedge against a relapse. i think right now, fiscal policy has -- and the global liquidity is used by the fed, the ecb and the bank of glnt have created that smooth vineer over growth figures. which happens to result in the underlying cracks from 2008. i think as we move into the first half of next year, we're going to see those cracks reappear again. >> leena, we have a lot of cracks in our economy, at least from my perspective. yet i keep cease outlooks that look rosie. the last of our data points here today will be the fed minutes which will underscore their
concern over doing anything to take the benchmark rate off of that emergency level. why such a gap between the fed and the pundits? >> well, you're absolutely right. the key speculation surrounding the fed's minutes is the chance that the fed might tell us more about their exit strategy. but of course, the last fomc meeting in november concluded that the rate has to remained at very low, depressed levels for an extended period as the economy is still healing as households have to deleverage and correct. last week's hearings were a chilling reminder of what's happening in the economy once the policy is extracted. on the one hand, you've got signs of civilization in the housing market. on the other, however, you've got high employment that is still driving up mortgage
defaults. and the fed will be weary here to signal that they are becoming optimistic and they're moving towards premature tightening which could destabilize the recovery. i think we will see a key tradition here between the funding rate and the unorthodox liquidity and asset purchases strategies pursued by the fed throughout this year. i think if there's any disagreement about the funding of the exit strategy, it's not going to be about the chances for fed rate hikes next year. it's going to be about how to leave the stimulus. >> and it's the fed policy, of course, that's one of the reasons we've got a weaker dollar, which is causing kick takts for emerging markets.
russia has come out and has cut its refi rate to 9% from 9.5%. they said we've done this specifically to contain ruble appreciation. how much of this -- if this is a problem for a lot of the emerging markets. >> you've got that right. we've got this ultra easy monetary policy throughout the industrialized world. and we've got recovery hopes that if you'll buy asset price gains which are classed around emerging markets in recent weeks. russia's announcement today, brazil's introduction of tax to gain keeping speculative flows away. chinese and asian officials warning us about an asset bubble in asia. all of this is about too much liquidity at the moment that is driving a sustainable asset price appreciation which could ultimately lead to a new boom cycle. >> leena, this is christine. i want to ask you as japan enters its second bought of deflation in a decade, we have
xlents saying that the boj was asleep at the wheel. what are you saying at how the government is slashing out at the central bank? >> japan has been leading, if you like, the major economies, the u.s., uk and the euro zone in the fight against global depression and deflation throughout the last few decades. i mean, many of the policies introduced by the major economies this year are very much tracking what japan did in the late '90s. at this point, i'm a bit concerned because we have a long period whereby the fiscal tools are being exploited. but this doesn't create the mechanics of a sustainable recovery. then you've got this political tensions emerging between governments and central banks which ultimately politic sooiz the risk premium to japanese assets. we have a very difficult situation in japan at the
moment. we have negative inflation, positive yields. that means the real yields for the corporate sector are higher than the state of the economy would justify. i think there is a very strong case at this point to look beyond the policy and to look at the content of policy, to look beyond scale and look at what actually the combined efforts of the prime minister and the bank of japan can do to make that liquidity work more effectively, to correct the kind of sentiment through accurate and well functioning credit channels that could ultimately make japan's recovery a bit more self-sustainable. >> hopefully that doesn't take another decade. leena, thank you very much for yao view. let's head over to japan and take a look at the japanese market, the trading day there. >> hello, christine.
conditioned fund-raising by japanese banks continued to keep stocks under pressure after a three-day weekend here. the nikkei index retreated for the fifth straight session down 1% to a four-month low, 9,401. with global banking regulators moving a step closer to implementing stricter capital adequacy roles, major banking groups are gearing up to conduct a second wave of capital increases. this prospect banked down banking issues across the board. japan airlines shared jump 8% on nuts that mizho and company sold its entire stake during the first half of 2009. hitachi will likely sign a deal
to build a high speed rail system in the usa. hitachi will supply ought 1,400 rail cars, provide maintenance and develop operational systems. that was the nikkei business report. back to you, christine. >> from prosecute japan, let's head over to india. we have india's premier in washington today and is scheduled to meet u.s. president barack obama. the summit gives obama a chance to reassure on u.s./india ties. for more on what to expect, piko basu is here with us. with china's growing clout, what does this mean for u.s. and india ties? >> well, of course, china is the guest that's not in the room. but the important point is that u.s. india relations have their own dynamic.
there is a cure basic for strategic partnership to make significant advances. it's quite important to recognize that india is not contributing to global imbalances. in fact, it has a small current account deficit. so it is, in fact, helping the global economy to recovery with the strength of its own domestic demand. that is something that i think the u.s. should welcome. what you have here, of course, is this visit is particularly important because he has staked a great deal of his career in significantly deepening ties between india and the u.s. of course, he managed to get a controversial nuclear deal passed through the parliament. now there is broad based support for that sort of program and for deepening ties with the u.s. the question is, is the obama
administration willing to recipro indicate the warmth that india is prefrg through prime minister singh. >> and do you think obama is going to recipro indicate? >> well, i think it's quite clear that at the current moment, the importance of u.s./china ties probably takes precedence. but it will be important for both sides to reaffirm the conservence of their views on various aspects of the global relgsz at this stage, including climate change and copenhagen. there is a question that ties into the dohar round of negotiations where in the past sometimes india has been seen as obstructionists somewhat. but, of course, both sides have
had issues that have stood in the way of completing that process. so i think there are a lot of issues on which we could see significant advances during the next few days. >> let me ask you, the chinese are the largest holders of our currency, our bonds. will india say anything scolding like the chinese did to say, look, you have the responsibility to manage things better, not only as investors, but as participants in the global economy? >> well, you can be sure that there will be no scolding from india on that point. india is a significant holder of oouts treasuries, much smaller than china. so it is a significant holder, but it doesn't take a moralistic position on this any longer.
i think india wants to keep its head down and focus on improving economic prospects for its people over time, rather than lecturing the world. i think india has done enough lecturing and the period of lectures is now clearly behind us. for the last ten years, india has focused on developing its economy and playing its part in a global peace keeping and helping it to be a solver of all problems. india is, of course, the world's largest democracy. there is a great deal in common between the u.s. and india in terms of values and ideals. so i think those are the things that will be emphasized by india in particular during this trip and it will be -- india will be looking to see what -- how much the obama administration reciprocates. >> maybe the next time obama visits asia, he will make india
his next stop. quite possibly. the point is that from singapore to the u.s., about a fifth of the way is india. so it's not completely trivial to add that to the journey. but i think there are separate issues and separate factors that deepen the relationship and this is a longer term thing that both sides will see a lot of benefit from. >> thank you so much. it's good talking to you. let's head over to india. ayesha faridi joins us live with the india business report. ayesha. >> thanks for that, christine. just picking up from your conversation. the market is eyeing out for what really happens on nfta if that happens between india and america or not. of course, we have been picking up news that there have been dozens of agreements to deepen economic ties between the --
between india and u.s. that have taken place. so while the economic developments over there when prime minister singh is there, it is affecting the markets today. the sensex, 17,000 plus and it is the auto sector that is holding up so well. there may be december discounts, that most automakers may be undertaking and that is why you see a good deal of action. with that, it's back to you. >> ayesha faridi, live from mumbai. ross. >> thanks, christine. the ailing general motors plant is planning to cut over 9,000 jobs in its opel plant in europe. nick riley, the interim chief
executive of opel is presenting the restructuring plan to workers tomorrow. last month, gm made that big u-turn when it decided to keep its opel operations rather than sell them to magna international. lloyd's banking group has priced its biggest cash call. is it going to be priced at 37 pence per share on the basis of 3.4 new shares for every existing stock and it's a 60% discount to where the price was yesterday at the close. shareholders will this thursday, then, vote on the approval of the multibillion pound capital raising effort which will allow it to escape the uk government backed insurance scheme set up this year widely seen as a bit too expensive, matt. brocade's profit was down 6%, but that came in better than expected. it offset a 31% jump in
revenues. brocade says it's benefitting from growth and data network traffic, which appeared to be recession is he cyst i can't answerant. shares were up more than 0.5% in after hours trade and have reversed and gone sharply south in light volume presumably in frankfurt. american res getting ready to shop till they drop this thanksgiving weekend. the official start of the holiday shopping season. the national retail federation says 57 million consumers plan to venture out on black friday. another 77 million say -- look at that poor guy -- that this will be staying out of the stores and looking for bargains before they open their wallets. discounters and department stores could see the most customer traffic with many retailers opening extra early friday. 10% of people say they would be willing to shop between midnight
and 3:00 a.m. where 90% of people say, what, are you crazy? >> playboy is handing over the keys, if you will, to the mansion. the wall street journal reports it will outsource most of its tabloids in an effort to curb losses. playboy's ceo tells the journal the five-year partnership will help return the magazine to profitability by the end of 2011. the stock was at just over $4 a share in regular trade. coming up on "worldwide exchange," economists have been busy trimming estimates for u.s. gdp figures. the initial estimate was 3.5% for the third quarter. but that number is expected to be headed south. how much lower? stay tuned for more on what the expectations are. >> and equities are just seeing
zone got a bit of a perkup after the ifo data. at the moment, i wonder is there anything actually that pushes the euro specifically or is it more sort of a victim of what happens elsewhere? exactly. i'm not surprised that the german ifo figure came out stoppinger than expected, especially considering the rehabilitate positive data that we had supergermany. but again, i think the markets shrugged off this and is recently focusing on the latest bouts of risk aversion that we've seen in the market overnight with the japanese equity markets down and also the story of the banking sector. i think what we are going to see is that december is a relatively quiet period for euro/dollar. and what we'll see is the trending pattern that we've seen the currency be at will continue stronger in january and that's what we're looking at. again, we're going to have periods of thin trading between now and then where we could see push above, but there isn't anything fundamental that's making it sustain above the 150 level and pushing higher.
>> zeb, since the dollar and the direction of the dollar seems to be the preeminent driver of the stock market these days, which of the economic data points in the u.s. will the currently strategist be looking at most closely? well we've got the revision of the gdp figure this afternoon. that is going to be supportive of the dollar. we're looking at the fomc minutes coming out later on. that is going to see where they're increasing the impact going forward. so it is in balance here. what we're seeing at the moment is anything that fuels equity market direction in either direction is going to positively or negatively affect the dollar. so with mixed messages going out, i think there will be periods of volatility in the longer term.
the dollar is going to be -- it remains to be seen whether it remains to be a funding currency of choice. >> zeb, this is christine. what's going to happen to the japanese yen? we have a japanese cabinet minister lashing out to the central bank for saying they were asleep at the wheel. we have the country in a second bought of deflation. looking at the strength of the win, can it continue at this rate? >> the deflation story is nothing new. that's been going on for decades. i think what is key is having -- i mean, there's some finance minister suggesting that we are seeing actually growth in the japanese economy. again, that's fairly muted. but because the japanese yen is still being seen as a safe haven currency of choice, it has appreciated aggressively on these equity market moves overnight in japan. banking stocks were the biggest hit and that seems to make investors nervous and that's, you know, fed into the
appreciation of the yen. we're at a very critical level here. look to see this appreciate further. >> all right. thank you very much for your thoughts, zeb bham is the currency strategist at corporate fx. stay tuned for a special appearance from our very own maria bartiromo who is in singapore for the asia business leaders award. >> plus ailing car giant general motors is planning to slash as many as 9.5,000 jobs in europe. we'll have more on the opel story right after this.
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i'm christine tan. in asia, the shanghai xot composite in focus, plunged.5% after a sell-off in b shares. >> and i'm ross westgate. in europe, business sentiment climbs more than expected. it is now at a 15-month high. >> and i'm matt nesto in the u.s. remember that big 3.5% pop we saw in third quarter gdp? well, today is reckoning day and it is going to get reckoned downward. all righty.
off we go. if you're just joining us in the u.s., it is "worldwide exchange." we broadcast live in the u.s., in asia via singapore and europe at our european headquarters in london. if you take a look at the futures right now in the u.s., they look to be headed south for the fourth time in five days, reversing some of the big gain that we started this shortened holiday off with yesterday. we look at the fixed income markets. we're going to give you the 10-year bund. 3726%, no change for german debt this morning. and the 10-year treasury, not surprisingly quiet ahead of a big day on the economic calendar. ross, how are we looking over there? i like that cnbc ftse global 300 index. >> let's show it because you love it so much. down 21 points, as you can see. but we have rallied off the lows. of course we had 2% gains and we're pulling back from that.
losses of .3% on the ftse 100. .6% for the xetra dax. lloyd's banking group up 1.5%. 37 pence a share, about a 6% discount from where the stock closed yesterday. when you add in the new bovend raising they're doing, it's a pretty successful capital raising. on the currency markets, the dollar is slightly weaker against the yen, getting up towards 88. euro/dollar, 1.4938 after stronger than expected business sentiment data out of europe. and sterling against the greenback is at its session low at .65, christine. >> hey, ross. here in asia, markets lower. we've got consumer confidence, gdp, so investors staying cautious on the sidelines. fears of more capital raising plans are hurting this particular sector. the nikkei 225 is down more than 1%.
slightly more than 1%. stronger yen is hurting the exporters. the hang seng up 1.5%. but the big sell-off coming from china today, down more than 3%, 3.5%. the financials getting hit there, as well. part of it was because of the sell-off. the profit taking we saw in the b-share index, that is filtering into the main index. in terms of oil, nymex light sweet crude drifting towards the $77 mark. trade is thin ahead of the thanksgiving holiday. down 34 cents, $77.22 a barrel. and brent is flat at the moment, $77.46 a barrel. ross. >> okay. let's get some investment strategy. joining us for the rest of the program, james bevan chief investment officer at ccla investment management. we've got a lot of u.s. data out today. we've got u.s. growth figures to be revised down. this septemberment in germany is firmer than we expected. what are you doing at the moment? how are you viewing the world? >> well, i rather suspect that
we are in for a roenltly long period of low economic growth and i have two concerns. the first is that the market has moved discounts in the pricing of cyclicals relative to defenses. i also think that the bond markets are taking the prospects for inflation way too optimistically and that actually we might see yields a long way next year. is it taking that they're taking inflation too lightly or are they listening to what the central banks keep telling them, which is that rates are going to stay low for an extended period? >> well, i think rates will stay low. in other words, investors need to be compensated for lending long in the bond markets. the bond markets are priced for low inflation and rates. we have what might be described as fair value today.
this is a story that can change quite quickly. if people wait until they see the numbers coming through, prices will have moved and it will be too late. >> james, this is christine. what aror thoughts about the financials? here in asia why and elsewhere in the world, worries about capital raising exercises are hurting the sector. how much do i know down side is there for financials? >> i look at the financials as a sector that is very diverse. so when i think about your region, i look at the giant hsbc as a company that has a relatively attractive loans deposit ratio, a decent balance sheet. and i think that they have significant further medium term upside potential and therefore i would absolutely not be selling. in contrast, i see bad news potentially in the peep line in terms of capital raising and in terms of stretched balance sheet with regard to loan deposits and therefore future earnings
growth. >> james, if you take a look at the financial sector here, yesterday, the bank industry, within it was the leader but more on the intermediate term, the reis, the real estate industry has been leading the back within financials at a time when that's commercial overhang doesn't want to go away. maybe you can explain why that is and whether or not you think it's correct. >> i think there are two drivers of rates. the first is being that they were very substantially left behind in the initial charge and there has been a fair amount of looking around to see what hasn't moved up substantially, to see if there is real value there. in terms of indicator vault, there's been a substantial focus on income flows. now, the cash rate and bond yields has been driven down to extraordinary low levels as a result of central banks and government action. the appetite yield is not going to be met from traditional sources and, therefore, real estate is coming into its own as
a sort of income and there are many rates that have high yields and decent discounts to current net asset value. people are saying, well, come on, guys, maybe because there is solid underpinning of value beginning to emerge, this is the rate place to be. that said, i think in the financials arena, people could do worse by having another look at goldman sachs. goldman sachs is a an investment bank that will benefit from the shakeout in the last couple of years and that is a company that on teb-year vote will do really, really well. >> james, what is the most missed price in your opinion? >> health care. i see substantial discounts foor what i would rather is a realistic discount cash appliace approximately in the states, i would be looking at bristol myers and eli lilly. in europe, i'd be looking at roche. and in asia, i would be looking at tekeda. which is way off the pace. it is a quality long-term
company. james bevan, chief investment officer at ccla investment management, stay put. we are going to take a little bit of a break. we have a big sdait date on the shopping calendar coming. it's black friday after the big feast we call thanksgiving here. and just how confident are consume urs feeling? tell us your thoughts. e-mail the show firstname.lastname@example.org.
welcome back to "worldwide exchange." hue let backyard were down, services were a bright spot, a division the company beefed up with the acquisition last year of eds. the ceo says stronger market demand should continue to fuel growth in 2010. the stock was down about .5% in regular u.s. trade has firmed up in german trade right now. they did pre announannounce tho results a few weeks ago and analysts had been hoping for more on the forecast front and didn't get it. pay czar ken feinberg is being pressed to ease restrictions on aig executives next year.
the wall street journal says the government believes severe curbs could hurt aig and u.s. taxpayers who own 80% of the company. last month, feinberg slashed compensation for the 13 top wage ea earners. freddie mac says it could be on the hook for more than $5 million losses from the bankruptcy of taylor lemam whitacre. >> matt, german business confidence tt today is at its highest lefls level since last year. it's based around 7,000 executives up more than expected to 93.9. the data suggests that the recovery is pretty much likely to gather pace next year. meanwhile, gdp data for the third quarter confirmed the initial estimate of 27% growth versus the previous one.
general motors is going to cut as many as 9,0500 jobs. nick riley is presenting the restructuring plan tomorrow. last month, gm made a pretty good u-turn when it decided to keep its european operations rather than sell them as originally discussed to magna international. >> ross, india's prime minister, m manmohan singh will be visiting with president obama to impact u.s.-indian ties. >> this is not underpinned by a strong economic relationship is unlikely to prosper. on the other hand, if that
economic relationship intins phis business to business and people to people contact, promoting a deeper and better understanding between countries. >> that was india's premier speaking at the came better of xherz in washington. officials from both sides will sign a memoranda of cooperation on clean energy and climate change. after the financial crisis, the two words safe and bank are rarely put together these days, but which banks are the safest
banks? check out our slideshow on cnbc.com to find out more. still to come on the show, lloyd's banking group has a cash call. 60% discount on yesterday's close. more on our global stock watch in just a bit. you all want to run your businesses more efficiently, so we've brought in a team of experts to help. one suggestion is to make your shipping more efficient with priority mail flat rate boxes from the postal service.
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let's bring you up to speed with where we are on the global equities. kicking off in london, the focus is very much on lloyd's tsb. they've come up with a pretty large capital raising, over $20 billion. the stock is up. the rights issue priced at 37 pence per share, about a 37% discount to where lloyd's appeared with its closing price yet. there you go. stock up 1.7%. james bevan is still with us. besides this cash call, the rights issue, they have -- when you add in the new bond plan they're working on, it keeps lloyd's out of the uk government's asset backed insurance plan. >> absolutely critical. >> and how impressive is it that lois has gone out and been able to raise this amount of money?
what does that show us about the atmosphere? >> that is more of a relief rally rather than a statement that lloyd's is now ready to go back to fast track growth. and i think when people look more broadly at the sector, and the global context, i have to say that lloyd's most definitely, in a great position at least for the foreseeable future. >> banks, what do you make of the banks as a whole? >> the banking sector is fully priced. there are a few relatively bright lights.
apart from that, i'd be very nervous of the sector. i think the banks are better valued and better positioned. >> stef stephane is bringing us up to speed for the market action. >> and we are not out of the red yet. carrefour, they're trading on the back oi of higher number peps carrefour has a positive impact like jpmorgan who increased its rating from neutral to buy. there is a strike action today at the bank. unions are protesting against the work conditions and the lack of negotiations on the salaries at societe generale.
vivendi is trading lower. it announced it's going to increase in france. it has agreed to pay the 10% -- to buy the 10% stake from kf-1. analysts believe that vivendi will go further and try to take control of the 20 remaining percent. let's have a look now at what happened in asia wa adam in singapore. >> thank you very much, stephane. it wasn't a pretty picture here in asia. despite the dow jones rising to yet another year high, all of the markets slipped into negative territory. in fact, the biggest loser coming out of the greater china region here today, the shanghai composite slipping down 3.5%, driven by the losses in the dollar denominated d-shares
index. that was down over 7% as hopes faded for the possibility of a yuan appreciation after the vice foreign minister said china is basically going to keep the yuan at a stable balance rate. we also saw some weakness across the banking stocks, not just in shanghai, but spilling across into the hong kong trading session, as well, on fears that banks may need to raise more capitals after the banking regularity said that potentially we could need to see capital adequacy ratios. while they did deny that report, the bank of china says they're looking at the possibility of raising more money and reuters did report they could raise up to $15 billion. meanwhile, in the north asian market, it was a weak day, as well. the nikkei 225 falling to four-month lows here. exporters came out in tremendous pressure as we continue to see an acceleration in the value of the japanese yen versus the u.s.
dollar pop that note, back to the u.s. with matt. >> adam, thanks very much. the revised third quarter gdp figure comes out at 8:30 washington time. it's expected to be lower by 2.7% down from that 3.5% print we had. all kinds of reasons of why it will go lower. trade deficit, weaker commercial construction, pullback in consumer spending, your call. at 9:00 a.m., the s& s&p/case-shiller home prices come out. let's look for it to slip from 47 to 47.7 in october. and then at 2:00 this afternoon, we get the fed minutes from their most recent meeting. separately, the fdic gives a quarterly update on u.s. bank
earnings and the overall health of the industry. on the earnings front, we get a lot of retailers out there today and a couple other big names, american eagle, barnes & noble, border, dollar tree, j. crew, hooins heinz and hormel, medtronic, warner music and tivo. a little something for everyone in your global stock watch. coming up, we're joined by cnbc's maria bartiromo who is in singapore for the asian business leader's award. >> plus, economists have been cutting their estimates in the third quarter. so how much lower in the original 3.5% was growth in the quarter? we'll look at the implications for investors right after this. for over 150 years, wells fargo has been putting our clients first. according to a leading independent research firm, in 2009 clients rated wells fargo advisors
as we get a revision come out latered the. and here in europe, general motors plans to cut 9,500 jobs at its opel plant. and here in asia, the shanghai plunged 3.5% after a big sell-off in b-shares. >> okay. we're galloping into the home stretch here. the futures have moved appreciably higher just within the last 30 minutes. we're down only 10 points on this big data packed tuesday. if you take a look at the treasury yield right now, the 10-year treasury has been quiet ahead of the data and remains such as 3.35%. ross. >> european stocks have been down, but we've bounced a long way off the lows, the ftse 100
almost getting off the flat line. so things are looking up from where we were an hour or so ago. on the currency market, the dollar had been stronger against the pound and the euro. but again, the pound is down 1.6510. euro slshl dollar has bounced up, as well. 1.4939 is where we stand. the dollar is down against the yen, christine. >> asian markets are mostly lower. investors staying at the sidelines ahead of those numbers. the nikkei 225 is down 1%. the kospi is lower 0.8%. the hang seng is off 1.5%. a big sell-off in shanghai due to the massive sell-off we saw on the shanghai b-shares, down 3.5%. in terms of oil, nymex light sweet crude drifting towards the $77 mark. down 9 cents. trade is a little thin ahead of the thanksgiving holiday.
brent right now trading up side, 19 cents higher, $77.65 a barrel. matt. >> joining us now for strategy is robert pavlik chief market strategist and still along for the chat, james bevan, chief investment officer at ccla investment management. robert, we'll begin with you. new face, new voice, new insight, do you believe in this rally? it looks like we're going to be down for the fourth time in five days, a busy day for economic data. >> it is going to be a bit of a busy day. some of the information is backward looking. but back to your point, is this a longer lasting rally? i believe it is. i believe that we are in early stages of an economic recovery. if you take a look at the economic data out there, it's pointing to just that. the economic recovery is in the early stages. so the news is going to be erratic. it's going to sort of be
contradictory at times. but if you look at things like the manufacturing data, the ism manufacturing report, factory orders, durable goods orders, you're looking at stabilization in the housing market. existing home sales jumped 10% month over month. you see inventory levels for new homes and existing homes down to some of the lowest levels in the past couple of years. you're looking at retail sales increases. you're looking at gdp increases. we've got a report that gdp increased here in the u.s. by 3.5%. you saw government spending just a small portion of that. you saw it increase in ex ports. you saw an increase in sales. you look at the service sector, that's improving. and you look at the inflationary environment, it's a low inflationary environment, low interest rates, and most of all, you take a look at inventory levels both at the business and wholesale level. and that's a very big positive going forward. so we're very positive on the market. we moved into the early cyclicals this year and it has
paid offhand solemnly for us. >> there is only one problem with that, robert, and that is that the fed refuses to move their emergency rate off of zero because they don't see any strength in this economy. >> well, that's not quite a problem, though. when you have a very low interest rate environment and if you could get the banks to go out and do some lending, businesses can borrow at very cheap rates and you're also seeing some m&a activity where the more powerful companies are taking over the weaker competitors and taking over market share. that's a very attractive environment for somebody that wants to own equities. >> james, what do you think? >> robert, i have two issues, i guess, to question. the first is that when i look at the u.s. earnings numbers, i see a appreciable support from cost cutting rather than underlying demand. and i have a sesser vacation that when the government and supports are removed, the
underliars in the economy are insufficient to maintain the momentum. if the u.s. bond market begins to require higher yields, and we were talking earlier on the show about this problem that the u.s. 10-year yield is absolutely fair, if we have the fed rate where it is, we have the inflation where it is and we have the inflation volatility numbers where they are, if we begin to see the markets try to anticipate higher inflation, then i would be nervous. what's your take on those issues? >> very good point. companies are lean and mean, you're right, they've been cost cutting, they've been making their profit numbers by the way of cost cutting. but that's just what you want to see from a very healthy company that has very strong management. when things start to sort of break down, you need management to be proactive and to take those types of tough measures where the company is going to be able to survive and be in a position to profit going forward. now, when demand picks up, even just a little bit, these companies are going to be having very low cost structures,
they're going to have very low inventory levels. again, that's a very big positive going forward. now, we're not going to stay in this sort of this down trend forever. as a matter of fact, like i said, we believe that we're in the early stages of a early cycle recovery and with regard to interest rates, yes, the fed has kept interest rates very low. it's actually a very good time for the treasury to go out and do some borrowing. so this is a very good environment for the government to be issuing those types of securities going forward. the biggest, i guess, issue that people have is the amount of stimulus and liquidity that's been pumped into this market. there is no reason not to give the fed or the treasury the benefit of the doubt here. they haven't made any kind of mistakes yet.
i believe that they will start scaling back some of this liquidity when we start to see a little bit of strength in this economy that is sustainable. but again, we're in the early stages and it's not the time to be raising or understand indicating that rates should be raising going forward. >> robert, you've also been a big fan of bannon partners, customers have been great beneficiaries of your early cyclical call. but at what stage are you going to move back into the defensive? i look at the health care sector as gloomy prospects for earnings numbers. >> it's an interesting question. you're seeing some of the health care in defensive areas that have held up recently and sort of outperformed the market recently. there's speculation that hedge fund managers have moved into this defensive names in order to protect their profits that they've gotten so far year-to-date. now, hedge funds are not going to be staying in these defensive
sectors and defensive names once the beginning of the new year turns the corner here. they need to see very strong gains in the portfolio in order to make their 2 and 20% in order for them to profit. so you're going to see a rotation back into these higher beta, higher risk names going forward. and again, we like the -- they're only cyclicals, financials, consumer discretionary, basic materials, technology, industrials, that's where we've made our money this year. we've been overweighted in those groups and we continue to overweight those groups until we see a sign that the economy has taken a turn for the worse, we're going to stay in those names and we're going to continue to profit from them. >> robert, this is christine. outside of the u.s., would you play emerging markets? >> by companies that have exposure to places like china.
for example, lass veg ya sands, i also like bali because it makes the slot machines that will be used in this operation. i would also play it by looking at companies like hewlett packard, 3m, ibm and ge that do a substantial amount of business in overseas markets. >> bo >> bob pavlik, we're going to put the brakes on here and james bevan, we'll get back to you, as well. coming up, is it all getting to be too much? stay tuned as we keep you abreast of the top stories.
welcome back to cnbc's "worldwide exchange." these are the top stories we're tracking from around the globe at this hour. americans getting ready to shop when they drop. thanksgiving weekend and the big holiday shopping season officially getting ready to roll. and the national retail federation says that 57 million
consumers plan to venture out on black friday and the weekend. another 77 million say that they're going to wait to make sure that stores are offering bargains before they actually open their wallets. discountsers and department stores could see the most consumer traffic. and with many retailers opening extra early on friday, 10% of the pooej people say, yeah, man, i go shopping at midnight or 3:00 a.m. where 0% of people say they wouldn't. playboy magazine is handing over the keys to the journal. the company will outsource most of the business operations of its namesake magazine to american media in an effort to curb losses. american media publishes the star, national inquirer as well as health magazines like "shape" and "men's fitness." playboy's ceo tells the journal that the partnership will help them return to profitability by the end of 2011.
stocks worth about 4 buckes and change right now. ross. lloyd's banking group has priced the world's biggest cash call. rights issues have been priced at 37 pence a share, about a 37% discount to where we closed yesterday. christine. >> well, ross, japanese cabinet ministers upped the ante on the bank of japan today to respond to deflation. the banking minister says the central bank has been asleep at the wheel. the government last week declared that the company had entered its second bought of deflation in less than a decade. both sides say the other should play a greater role in battling deflation which is forecast to dog the economy for seven years, raising fears of another recession. economists, however, say options are limited fovr for both. we've had some comments out from the bank of england governor mervyn king, capacity
will be pulled down on inflation in the medium term and forces continue to restrain spending. the growth is going to be splugish, that's your view, as well. >> absolutely correct. >> which has led you to believe that telecoms in europe are the place to be. why? >> if i were in urm, i would look at france telecom, swiss telecom, and -- but it really very much is. i look at singapore, australia, and they all have fabulous tel telecommunications companies. in a sense, the market is betting that there is going to be an absence of long-term growth relative to the rest of the world. if we have correct in saying nominal economic growth will remain single digit, then actually, i think telecommunications are entirely the right place to be for the next 12 months. >> james, always good to have you on. christine. >> and to show that this is a
truly global show, we've got someone really special joining us here on "worldwide exchange" today. maria bartiromo from "closing bell" in the u.s. is here with me. great to see you. you are here for a very good reason. tell us why. christine, thank you very much. i'm excited to be here in singapore, actually. we are here because we are hosting the asia business leadership awards dinner that is this thursday and it is a really interesting time to do it because we are looking at leadership throughout asia. we are hosting the awards and giving out six awards. one of the awards, actually, has come to be because of viewers actually chose the winner of that award. we've got for the first time a lifetime achievement award. we're looking at profitability. we're looking at things you can measure as well as philanthropy. so a lot of awards for the leadership of asia that we will be recognizing this week. one of the most exciting parts of it and the cohost of the awards show, jet li, the actor
and philanthropist, we will hear his secrets to executive and hear of some of the things that he's looking at in terms of philanthropy in his life right now. one of the more exciting things about the program is this is going away live program around the world. the asia business leadership program around the world will be broadcast throughout asia, europe and the united states live. so this is really an exciting program for us because we are going to be live as these awards happen on thursday. in addition, business, of course, after this tough year that we've had has been recovering throughout asia and europe. today, we sat down with the ceo of singapore airlines haas which has overperformed peers, and i asked the ceo about what's happening right now the terms of business. mr. chu told me that the business is coming from asia, but also we're seeing a pick up
in the united states and even in europe we're seeing signs of turn around in terms of travel. >> we are seeing a fairly balanced demand situation throughout the world. america continues to be a very important market, even though it is undergoing some correction at the moment. the same going goes for europe. toouk market has been rather weak in the last year or so. but it is still a significant market for us. likewise, australia, new zealand. but the places where we are seeing the strongest growth is undeniably in china and indiana ya. r. chu really was so confident that we are seeing business travelers get back into the skies in terms of asia. but he also said that we're seeing vibrancy throughout europe and the middle east. i thought that was interesting, christine, given that europe is debatable in terms of where it is in the recovery. but when you look at places like the midwest, africa and asia, that's where the business is coming from.
that's what mr. chu is capping on. and his airline has been able to outperform the rest in a tough industry. >> they're doing very well. also, this consolidation picture in the airline industry, did he say anything at all about that? >> he did. he had, is there capacity that needs to be coming out of the air? a lot of the problem is that there are too many planes. and he did believe that we would continue to see partnership. one issue, though, we need the regulatory environment to encourage further deal making and to encourage these firms to get together so that capacity comes out of the air. and he's expecting that actually to happen. in fact, we are probably going to see further deal making in u.s. "squawk box" follows "worldwide exchange," of course. and they're talking about deals this morning for viewers in europe, asia and the united states. joe kernen can tell us right now what to expect on "squawk box" after "worldwide exchange." hi, joe. >> maria, it has come to this,
for us to work together, you have to go half away around the woud world because this show is on so early, we had to send you to singapore where we can be side by side in a two box. but it was worth it. you look great. >> thank you, joe. what's happening? >> we're going to have a strategy session with thomas lee, chief u.s. equity strategist with jpmorgan and our guest host, david rosenberg of gleskin chef. david obviously toiled at merrill lynch for years and years and made his name by being very negative a couple of years ago and being right. defending the fed, former fed governor ric mishkin is here. he'll join us at 8:00 a.m. eastern to tell us why critic is of the central bank are all wrong and why the fed should keep its independence. warren buffett and bill gates, the lost tapes. conversations with the world's two richest men that you didn't see in becky's town hall meeting
nearly two weeks ago. the xwhent on everything from the dodd bill to the swine flu. and it's a big anniversary for caterpillar, the world's largestmaker of earth-moving equipment marking its 100th anniversary of its first export. jim owens will be our guest host on cnbc. "squawk box" will start right at the top of the hour. >> all right. you've got a lot coming up, joe. and even though we were talking about a holiday shortened week, that gdp report should be a big mover. we'll see you later and i'll see you back in the states soon, joe. thanks. >> safe travels, maria. >> thanks very much. now back to matt nesto at cnbc global headquarters. matt, over to you. >> all right, maria. thanks very much. up next, we'll be looking at the trading day ahead. all the things that joe talked about, get ready.
and we're going to find out what robert pavlik has to say in a few more different instances, as well as a preview of third quarter gdp revision. what is cloud computing? a cloud is a workload optimized, service management platform enabling... ...new consumption and delivery models. it's what? my cloud does email. lowers my energy bill. shares pictures. we collaborate on our cloud. i develop software in my cloud. i want a cloud that understands risk. ...compares patient histories... ...predicts traffic patterns. my cloud is... everywhere. my cloud is secure. simple. powerful. flexible. that's what we're working on. i'm an ibmer. let's build a smarter planet.
time to look ahead at the trading day that awaits us. robert pavlik, one of the things that we've seen so prevalent in the trade recently has been the weak dollar trade. now, at the same time, that's going to be fueling, some say, backend inflation because of the rise in the commodities, which could stoke rates, which could just ruin the whole weak dollar party. what are your thoughts about that? >> well, absolutely. the major focus of the market may be overly so, is the dollar trade. the dollar is always going to influence the equity markets to some degree. however, since really tend of october when hedge funds are supposed to be existing out, the
market needed something to focus in on and the dollar has taken that place. now, the dollar will eventually strengthen when the fed begins to raise interest rates. and you may see the dollar get some strength as we head into some of these fomc meetings. there is one in december. there's january and then there's march. there's going to be a little bit of fear that anybody that is dollar short might start to cover those positions. you might get a little bit of a rally in the dollar. but we don't believe that the fed is going to change their policy statement until march at the earliest. of course, that's going to depend on the strength and the speed of the recovery. but, again, we don't believe that you're going to see any kind of change in statement until then. but once we do start to see the fed understand indicating that higher rates are going to come and you'll see the dollar strengthen and maybe the market initially take a pullback. but when the fed starts raising interest rates, a low inflationary environment is a positive thing for the equity
markets at a positive time to be owning stocks. >> yeah. you know, i admire your economic optimist. citigroup was out with a note that said they predict a strong global recovery in 2010. but i can't get my head around this growth of government. we're debating a health care bill. we've got $12 trillion in debt. we're issuing treasury paper by the tens of billions of dollars a day, robert. how does it all end? how do we work our way through this? >> eventually, you're going to see the government begin to pullback some of this liquidity. the government increased its spending in the third quarter by just over 2%. now, that is not very much. but that is what you need in an economic downturn. you need the government to seniority of step in unless you're willing to pay the price and accept the ramifications. and i don't believe that many people in this country or really around this world were ready to pay that price. so now we're in the situation that we're in and eventually you're going to have to see
government sort of reign in their spending and let's hope that they do that and to spend wisely. again, you know, that's sort of, you know, hoping. but i think, again, eventually the government will be able to do that and i believe that you're going to see increase amounts of revenue for the government as the economy picks up. we're in a slow growth recovery phase. we're not going to see tremendous amounts of gdp growth in 2010. but if you take a look at where the mblth is right now, we're trait trading at around 15 1/2 times the consensus estimate of just over $70. now, many people believe that $70.34 number is too low. they could raise it up to about 75 or to about 80. and if you apply 15 1/2 times that 80 estimate, you're looking at around 12.40 on the s&p 500. so that's about another 12% increase from here. so i believe that 80% number is quite doable.
>> robert pavlik, thank you very much. we're going to give you the final work there, chief market strategist at banyan partners. on behalf of my capable colleagues in london and singapore, thank you for watching "worldwide exchange" and we hope to see you here tomorrow. but in business, only two matter: red and black. red, well, no one wants that. black on the other hand, has strength. black is always in style. it's what business looks best in. black is where growth and success happen, and it's easier to get there and stay there in ontario, canada, especially with our competitive tax rate. ♪ ontario, canada - the world works here.