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tv   Worldwide Exchange  CNBC  February 19, 2010 5:00am-6:00am EST

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rates from 50 to 75 basis points, the first increase in nearly four years. and this puts it a half a point above the fed funds rate. now, the fed says this will encourage banks to rely more on private markets for short-term borrowing. the move was expected widely. barack obama said last week that a hike was coming. but many economists thought the fed would at least wait until the policy meeting next month. in his statement, the fed says its economic outlook remains the same, reiterating that the benchmark rate will stay near zero for, quote, an extended period. that was echoed wednesday night by elizabeth duke, and james bull yard. but fed furchs are producing in a 25% rate hike by the end of this year. citigroup is lower by 1.5%. bank of america lower by a
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percentage point. let's take a look at how u.s. markets are likely to open, lower across the board, as well. dow is down about 50 below fair value, nasdaq down about 12 below fair value and the s&p 500 down about 8 below fair value, ross. so still digesting after that overreaction in futures. after, of course, it was after the bell that we heard about the fed news. >> yeah, absolutely, nicole. and although we have a fairly major stock reaction in asia, which chloe will get on to, here in europe, we're flat. only four days of gains. the smi benefiting from a really good earnings report from nestle. plus they've hiked their dividend and share buyback. but the stock reaction, they're taking it in stride, chloe, which is different than what happened in asia. >> interesting moves, really, given that we saw a pretty big sell-off in asia. just past 6:00 p.m. in case
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you're wondering what's happening in singapore. plenty of reaction especially after the fed move. take a look at dollar/yen, at 91.76, of course. through is very much in focus after those pmi numbers. but euro slshl dollar, back below the 1.35 handle. sterling at a nine-month low against the dollar on the back of weak retail sales data. euro/sterling at 0.8777. >> as far as the bond markets are concerned, the 10-year treasury, 3.8%. on the two-year note, we go to 0.95%. let's put all of this into perspective. joining us for the next hour, james bevan and chris rodrigua,
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gentlemen, thanks for joining us. in terms of the announcement, it's a pretty skinny rise in the cost of funding, but how immaterial is it in terms of sentiment and symbolism? >> yeah, that's exactly the point. economically, it does not make any difference. but symbolically, it could make a huge difference. irrespective of what any fed member may say and we had some fed members coming out after the decision last night playing down the implications of that move, the market thinks different, and for good reason. because data on the ground had been improving for a while and we're currently in a phase of praet much a textbook like cyclical upswing. we do think this upswing will find legs eventually, but during the curve, thus with valuations
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at the front end of the u.s. curve, especially in relative terms, look at the 2010 curve, which made a new all-time high just yesterday before the announcement. clearly, the curve is somewhat vulnerable with a bit more bear flattening now. >> i was going to say, after a big steepening trade, where might the spread between twos and tens go? >> maybe a bit flatter. it's still difficult to put this trade on because it incurs a bit of negative carry. and i think the overall bigger, broader max row picture is with steepeners. look at the u.s., how steep it is relative to, say, the euro zone curve and look what the fed is doing and look what the ecb will likely be forced to do,
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keep rates on hold for much longer, thus a flattener in the u.s., we think currently looks quite attractive. >> james, plenty b for the currency guys to get their teeth into. what is the symbolism, the stock investors? >> we're always going to get the that was at stake, especially on that particular rate. the interesting issue on timing, because it wasn't held over to the normal fed meeting, it requires a symbolism that it wouldn't have otherwise had. i think what we are seeing is a very clear signal from the feds this is ready to begin taking the ships off the table. the world has got to find its own way forward. now there's a real emphasis on stock collection for companies
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with decent balance sheets, with profoundly safe propositions and quality businesses. >> james, nicole lapin in the united states. how many chips are coming off the table right after the fed announcement, we heard bill gross come out and say that the fed doesn't dare touch fed funds rates in the wake of double digit unemployment. are you with them on that one? >> absolutely, i'm not. i mean, after all, it one goes back to what is happening with the u.s. unemployment numbers, while the social cost is very substantial from the corporate point of view, margins remained high. what we have seen is a substitution out of labor and in with capital. so u.s. companies are more efficient, u.s. companies are driving greater profit per unit of revenue than prior was the case. therefore, i do think the fed is going to be very minded to contemplate how quickly it can take away the life support engine and allow the corporate sector, allow the economy to get back on its own two feet and continue forward on its own basis.
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>> a lot more to discuss, james bevan, chief investment officer at ccla investment. do stay with us. chris stockriger, we appreciate you being with us. ross. >> and we'll have plenty more on what's happening with that. also, plenty of corporate news to dig into. food giant nestle reported better than expected earnings today. we'll have an update on those. the market is very much like what they've heard.
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on cnbc.com now, one strat gicht tells us investors can't be lazy this year. plus, david roche says the fed's discount sales price is a test of whether the wholesale money market is back to normal. and a series of online attacks have been traced to computers at stores in china, including one with close ties in the chinese military, according to people involved in that investigation. for more on that, read it at cnbc.com. >> hello. welcome back to "worldwide exchange." let's get a quick check on how prices of gold are faring at this moment. we saw resources selling off in asian b trade, especially on the
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back of that move to hike the discount rate. spot gold, slightly softer, down about $8 at $110 6. nymex light sweet crude down a buck at $78.10. a and a quick check on brent, there you go, off a little more than a done at $76.76. >> it will be a mixed session so far. here in the uk, becky is with me in the studio in london. what's going on? >> let's see where we stabbed right now. the markets are down by just about five points or so. so yeah, fairly flat, but still below the unchanged level at this stage. probably worth mentioning that we had retail sales data out and it was particularly bad. we expected a bit of a decline, but it was much steeper than we
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had been expecting. representing the sharpest decline in about 1 1/2 years, as well, for the month of january. now, we have had bad weather for january, of course. that kept people away from the shop. but i guess it remains to be seen whether that trend will continue. also, let me just tell you that the miners are under pressure today, taking a check on some of the big mining stocks. you'll notice anglo american is hitting a low for the day, rio tinto, bhp xstrata and the like falling quite hard, as well. etf down by 51% and saying that they aren't reinstating their dividends, either. sylvia, how is it going in germany? >> we took a dip lower at the start of trading and clawed our way back up again. as far as the macro scenario is concerned, the data we had out today, germany and the euro zone wasn't half bad. first of all, ppi, that came stronger than expected. we had expected it to flip back
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into the plus zone in terms of the price development, up to 0.3%. it was up 0.8% on the month. that was much stronger than expected, so an indication that they would get to normalization there. no sign of deflation any more. and then we had the pmi out, both for germany and the zone. in germany, we are zooming ahead above 57 now. we had expected a much lower reading, around 53 or so. that is not such a bad session, but really not much to help us above the zero line. stephane, plenty of news out of paris today. >> including plenty of information from tulles. they posted a loss of $158
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million for the last year. the contracts in the defense sector didn't upset the decline of io space. thales is referring to the crisis and the air transport and the delay of some airline projects. thales is now below expectations. and the margin will be between 3% and 4% which was below the average forecast. also in focus, carrefour, they warned that 2010 would remain challenging, but still, the retailer hopes to gain some market share, thanks to its turn around plan. carrefour will give a profitability guidance in may. but for the time being, this stock is down 1.4%. we had some disappointing numbers from lafarge. 54% decline in net profit for the last year.
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they believe that the demand will increase this year and that the growth will be driven by emerging markets. ross, back to you. >> okay. stephane, thanks for that. nestle, the world's biggest food group today surpassed forecasts of 1 pergs of growth targets for 2009. the stock is up. it's what's helping the smi up about a percent. carolin schober is in switzerland at the hx and joins us with more. give us some of the details that investors are particularly pleased about. >> let's talk about emerging market growth. that was very positive. sales in africa and in asia, organic growth there, that was better than expected at 6.7% in 2009. the company's sales and emerging markets make up ruffle 35% of total group sales. just now in the press conference, going on in the headquarters behind me, the ceo said he wants to increase that sales to emerging markets to 45% in the midterm and it looks like this strategy is going to work
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for nestle. now, in terms of the other highlights here, organic growth is higher than expected at 4.1% in 2009. also, net profits up 10.4 billion, better than expected. revenues, slight -- well, those were better than expected. we saw a slight drop there of 2% here. of course, we have increased pricing pressure, given the promotional activities that are going on. >> now, james is sitting next to me. he always comes on and tells me i have to go for companies generating cash that cover their dividends. what are their doing to cover their cash and dividends? >> well, they were sitting on a huge pile of cash. now they are returning that cash to shareholders, so those shareholders should be very happy today and they're proposing a dividend increase of 14.3% now up from 1.40 last year. they are proposing a share buyback of $101 billion swiss
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francs. and nestle traditionally returning a lot of money to shareholders and this year they are returning more than 15 billion francs in cash to their shareholders. >> carolin, thank you very much. briefly, james, do you like necessarily? >> i do. and baes today came to the table, decent results, good corporate traction, buyback, increased dividend. these are, i think, the ingredients that make shareholders very happy with necessa nestle today. >> james thank you for now. chloe, over to you. >> we've had a lot of red arrows that we have been highlighting for the show. >> heavy selling and resources and commodities sent the nikkei lower there, bowing to mounting pressure. toyota's president, akio toyoda
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said he had headed to the united states next week. >> i've received an official request and i believe this is an opportunity for me to go to a sincere explanation, which i have been doing in japan to send the message across the world. >> certainly, risk/appetite was off. take a look at the markets, weakness in banks and techs sent that market below the key 1600 level. the selling pressure even greater in the hong kong market because of worries as to how the shanghai composite will react when that market comes back on line next monday. remember, the shanghai market has yet to reaction to the rrr rate hike. that was done last friday and the market has been off for about a week now. and also, take a look at what happened down under, though. certainly one of the better performers today, down 0.4%. we had comments coming out from the rba saying that they are looking at a more normalized rate environment, as much as 100
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basis points. but certainly it was all about the fed rate discount hike that dominated sentiment. the market, losing steam by 0.4%. so not a pretty picture here in asia, and that was your global stock watch. >> thanks for that, chloe. we've got much coming up. hi, may i help you? yes, i hear progressive has lots of discounts on car insurance. can i get in on that? are you a safe driver? yes. discount! do you own a home? yes. discount! are you going to buy online? yes! discount! isn't getting discounts great? yes! there's no discount for agreeing with me. yeah, i got carried away. happens to me all the time. helping you save money -- now, that's progressive.
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call or click today.
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welcome back to "worldwide exchange." it is just after 5:20 in the morning on the east coast of the united states. you're looking at a live picture of times square. let's look at how markets are likely to open in the united states. lower across the board after being higher yesterday, of course, but the fed decision came out after the bell. the dow is down, 55 below fair value right now, nasdaq down about 11 below fair value. s&p futures are about 9 below fair value. ross, it looks like the fed is going to be the focus all day today. and after today, i think a lot of traders, a lot of investors are going to look ahead to some entertainment this weekend. >> yeah, they certainly will.
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you can rightly take a break from that story because this sunday, the british academy of television arts will hand out its awards. avatar is going to be featured as well as the hurt locker. they're both nominated in the best film category. this is normally a good preview of what might happen at the oscars. will artistic success translate into the commercial success? or does "avatar" not need it? >> it will be interesting to see what the oscars will reward. i think it's split this year between "hurt locker" which is a film about war and personality and character and danger and you've got a big kind of caper, a big animated spectacular. and i think we're going to see. i mean, if hurt locker comes in as the winner, i think bafta
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might be more minded than the oscars to reward "hurt locker." and it doesn't need to make the kind of money that avatar made. it needs to make a reasonable amount of money and nomination and rewards can really drive that. >> nicole lapin in the united states. you say it could be a precurso s to the os gars. british films have done quite well this year. >> yes. we're going to see carrie mulligan, nominated for best newcomer and best actress for her role in "an education." that is a very english sort of '70s period movie. we've seen a couple of filmmakers coming in, nominated in the best acts category for the tom ford film. and i think we've seen quite a lot of strong, publish new
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talent, which i think drives, that's what gets us into what is exciting. >> hi, mimi, this is chloe in asia. what do you think will happen to the red carpet as it rains? do they have any backup plans for that? >> well, i was there last year. last year, it actually really, really rained. i think we see all of the women who are beautifully attired are shunted through because if they're receiving an award, they can't afford to be absolutely soaked, whereas all the guys can spent lots of time doing red carpet and autographed. but there were a lot of umbrellas last year and there may be umbrellas this year, i thinkic say. >> mi mi turner thank you for that from "the hollywood reporter."
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>> coming up on "worldwide exchange," markets shocked by yesterday's surprise fed tightening. what does it mean for the u.s. recovery? stay with us.
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welcome back to "worldwide exchange." in the united states, the feds marked in a clear signal an exit strategy is under way. >> here in asia, in the united states, the nikkei and the hang seng both moving more than 2%. >> while here in europe, the stock market react is fairly muted, although the dollar index has hit an eight-month high. >> the fed discount rate is raised from 50 to 75 basis points. that's the big news today. the first increase in nearly four years. this puts it half a point above the fed funds rate. now, the fed says this will encourage banks to rely more on private markets for short-term
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borrowing. the move was widely expected. ben bernanke came out last week saying a hike was coming, but many economists thought that the fed would at least wait until the next policy meeting next month. and in its statement, the fed says that the economic outlook does remain the same, reiterating that the benchmark rate will sustain for a period and that was echoed by the atlanta fed president, st. louis fed president and fed funds futures are pricing in a 25% chance of a rate hike by the end of the year. checking shares of u.s. bank in frankfurt, down across the board with citi lower, 1.4%. morgan stanley down 2.7%. ross. >> yeah. meanwhile, nicole, european stock markets ahead of the u.s. open, they've short of taken it mostly in their stride. we've had a sunny bit of green on the board this morning. we've dipped down slightly, off about .25% for the ftse 100. a little more for the german and
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french markets. smi, as we heard earlier, really good numbers from nestle, talking about growth in asia, so doing all the sort of things that james bev aan next to me likes. and the dollar has come off the highs on the dollar index, but still, chloe, we're still living with it. >> the dollar rally is still holding pretty much steady, as you can see. dollar/yen, current lit at 91.82. take a look at euro/dollar, still below that 1.35 level, not really able to get any support from the pmi data that we got just a short time ago. currently, it's losing steam by 1%. sterling at a nine-month low i believe against the greenback. nicole. >> very good, chloe. joining us now is allen nukman. and still with us, thank you so much, james bevan, chief
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investment officer at ccla investment management. allan, i want to start with you. they're able to drain liquidity and hike rates, are we going to break new highs or do you feel like the market is kind of between a rock and a hard place? >> well, i think it's nice the way they've done this. they telegraphed the move and now they're executing the move after the markets closed. i'm encouraged to see the market does not overreact to this. but you've got to understand, stocks have climbed back and we were at the highest levels we've been since january 25th. so we've had a nice recovery. right now, we haven't seen any overreaction. it's early in the day and the dollar has bounced a little bit. gold is down 1%. so the markets look pretty solid, still. >> you know, i want to play some sounds for you, allan, that so-called overreaction that you were alluding to.an, that
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so-called overreaction that you were alluding to. take a listen and let's talk about it a bit. >> normalization is the word of the day. they were unusually accommodative to try to fix the banking system, to save the banking system. so these are very predictable and well announced steps in which they're going to essentially move away from that extreme easing. but i agree, it shouldn't have an effect on consumer markets, on the housing markets, these are fairly noncontroversial kind of moves. >> alan, what do you think the implication is on the housing market and is this the new normal inspect. >> yeah. i think we've come from being at def con one where it was an emergency situation, the patient is off life support, things are getting better. so we're not in an emergency, emergency situation any more and accommodating is the right word.
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being able to use that and get returns on it. that provides liquidity, obviously, but that's come to an end, as it had to. i don't think this is going to have any impact on raising rates any time soon. this is a bank situation to take a little bit of slack outf the system as they said they were going to do over the last couple of weeks. >> and you said earlier that timing was upsetting here. will we, though, next week be then taking further announcements and further normalization in our strife? >> well, i mean, the biggest focus is now going to move to the whole issue of debt and the levels of debt, how they are going to be remediated.
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>> and let's talk about the dollar impact here. certainly, it improves that the move, recent dollar index up to an eight-month high. nick, look, yes, we're worried about debt on the one hand. but i also wonder where currencies will be increasing by a yield story as we start the beginning of stabilization. >> absolutely. and this fed move has coincided, i think, in a week in which we've had basically confirmation that the ecb sale is not going to do so much in terms of its rates for some time to come. some people are sort of moving their expectations further back. also look at japan on the fact that if anything, people expect there there could be a further extension of quantitative
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easing. >> and it's questioning as to whether they're looking at the u.s. economy must be getting better and therefore we can back the dollar again. i do see the pound as friendless in this environment. the data we had yesterday clearly demonstrates the uk economy flat on its back. never mind the prospects tightening. >> absolutely. i mean, i think that's exactly the case here that we've seen and i think that's one of the reasons why the dollar will benefit. it's just because of the relative global picture, increasingly so is that we may not be happy about the pace of the u.s. coming out of this recession, but it is coming out first and that is the prime argument that will ensure that the dollar probably comes out on top. >> and if that happens, alan, does that have implications for you, the market strategist? >> well, i'm really focused on the dollar at these levels, as is everyone. this 1.35 level for the euro and the 82 number for the index are key points. the 82 is a 50% retracement from the highs of last march of '89
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to the lows back here in november at 74. so we're at a crucial change here. this could be a game changer if the dollar can get back above 82 and continue to rise. but again, here in the states, we've got a lot of negativity in the dollar, not necessarily because of dollar strength, but because of a weakness elsewhere. that, again, is the big wild card. but i'm very encouraged by by the way the gold market and the crude market has reacted. they've holding relatively strong and that's good sign that they're not as dollar dependent as some people had thought. >> you obviously talk about the dollar strength in context of the pound and the euro. i have to say that i see the dollar, however, going down against the emerging markets, particularly in asia. is that your take or do you have a contra view? >> well, yeah, that's very possible. i'm not -- i don't think the
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dollar has a whole lot more strength left in it. i think that this rally has been a bit overextended and, you know, this picture is radically different than the discussion that people were having just a month ago, talk about the dollar continuing to decline and pushing downward. so, you know, i think it's just a little bit of a knee jerk reaction. i think you saw some flight to quality with what we had with the greece and so forth. but i think this is a temporary phenomenon, albeit much, much more temporary than i thought. you know, i didn't think that we would have rallied this much over the past couple of months. but it's still holding strong. that's something to watch. but i don't think the correlation between the dollar and a lot of these resources is as high as it was just two months ago. i think they can stand on their own and not just benefit from the weak dollar. >> nick, if i can just bring you into the conversation, this is chloe in asia, i'm just wondering, the situation
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involving those p.i.g. nations, if you will, we've heard about currency swaps with greece and now derivative contracts involving italy, as well. could we be looking at a can of worms? and ultimately, how far do you think the euro could go in terms of do you think we could get back down to 190? >> certainly. i think one of the big problems here is that this is not overt, this is not sort of even the end of the beginning here. but this is going to away slow, slow deterioration. and yes, we have fought even begun to resolve the greek aspect of the whole euro/debt problem. and then remember you have all those other countries lined up, portugal, spain, and now people are starting to worry about italy. if you want, you could talk about the uk being under threat for a downgrade by the rating agencies. so you put that altogether, and certainly the future for the euro does not look very good. the aspect or any chance for the ecb in terms of them starting to
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tighten policy and there are some people suggesting that the ecb mi too perhaps stepped its quantitative easing further here, too, as a result of what's going on. so i think that this is -- as you're suggesting, it's going to be a slow erosion here of confidence and i think this is something that could actually really seriously undermine the euro in times to come. you know, over the last couple of weeks, we were hoping that there was going to be some quick political fix to greece's problem, which would then perhaps resolve the issues elsewhere. that is not what is happening. and at the moment, we're hanging in limbo, waiting to see what risk can actually do politically at home in terms of resolving this problem and in terms of cutting spending and more austerity measures. we have no confidence that that is going to happen. so i think as far as people's confidence in the euro, that is slowly going to ebb away. >> all right. we'll continue the conversation, vis-a-vis confidence and worldwide implications after the
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break. nick hastings, senior correspondent at dow jones news wires, we appreciate you being with us. alan knuckman, stay with us and james bevan, thanks for being with us for the hour. let's continue to push forward. still much more to come on "worldwide exchange." diamond impressive skulls, yes, they are selling out all around the world. but how long will the hype last? stay with us for more details after the break.
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welcome to "worldwide exchange." here are some of the top stories we're watching from around the world today. google may have a little bit more to worry about than hacker attacks in china. experts say the deal is not expected to impact microsoft's bottom line. it could, though, lay the foundation for a business in the area where microsoft has long struggled. schlumberge is reportedly in
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talk toes buy smaller rival, smith international. the deal could be announced in the upcoming days. schlumberger and smith are now trading -- let's see, schlumberge smith -- we soent have that right now. >> it is up to washington to repair tensions between the two nations. obama held a low key meeting in the white house. china stopped short of mentioning any direct retaliation. beijing accused the dalai lama
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of seeking unrest in tibet. recent cyber attacks aimed at google have been traced to two schools in china, one of which has ties to the military. the "new york times" is reporting that the was created with backing. google vowed last month to stand up to censorship in china and it continues to filter search for chinese law but it's trying to negotiate a comp miegz with officials. in the meantime, google says it has been working with u.s. intelligence agencies to investigate in those attacks. >> they warn that britain's fragile recovery could be seriously harmed by cuts to public spending. they supported the argument. that comes in response to a letter in the sunday times when 20 economists supported the conserve ifr parties arguing
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that the deficit must be tackled sooner rather than later. the former nbc member david staunchfield weighed in, as well. he agreed with the 60 economists. >> i think we need to see more stimulus coming on right now. it's much better than to keep it going for too long. >> they say they're keeping the mcqueen label following the death of alexander mcqueen last week. there are questions still remaining over the long-term success of the brand. it's smaller than ppr. since the death of mcqueen, the print dressed, they've been selling out in stores around the world. so if you need to get your hands on some, you have to act quickly. okay. we've got about 12 minutes to go until "squawk box." i've got a feeling i know what they're going to be talking about. carl is with us. morning, carl. >> i hope you can hear me. the debate this morning will be
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whether or not we were ready for this or whether the world was caught off guard. the fed is raising monetary numbers. those questions are put to our lineup of guests, including three former fed governors, one who even this week hinted that a move was coming in the very near future. mark sandy, bill gross of pimco and we even located steve liesman on vacation to cover this story and all this. we're going to get even more data on in this morning with inflation and consumer price index. now, the really big story of the day, tiger woods is about to make his first appearance since getting into that accident on thanksgiving night. we're going to have live reports from florida throughout the program. we'll take a look at the timing of this event and what it could mean for golf and his sponsors. squawk begins at the top of the hour, ross. we don't know everything until 11:00 a.m. this morning. but if you were mad at excensure
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for dropping you back in november or december, this might be a good week to do it. nobody is talking about match play, i'll tell you that. >> but how many times has the world accentu re been mentioned? this could be the story that proves the adage, there is no thing such as bad public bhisty. >> and you have to stand by your man. we'll find out months from now whether the companies that let him go will be seen as stupid or smart. >> that's for sure. carl, looking forward to the problem. >> okay. we'll be watching whether or not he wears nike shoes. u.s. markets will get their chance to react to the fed move. plus some key inflation due out before the market opens. stay with us on "worldwide exchange."
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welcome back to "worldwide exchange." a day after getting hotter than expected numbers on wholesale inflation, we get a temperature chem check on consumer prices
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today. the january ppi is out at 8:30 in the morning new york time for a temperature rise 0.3% to the core cpi rising 0.1%. new york fed president bill dudley is in san juan puerto rico to talk at a conference at 8:30 in the morning. on the retailers front, jcpenney is out today with power companies, pg&e, and trinity industries. let's bring back alan knuckman. you say the fed move isn't all that earth shattering. do you think the market will digest this today? could the markets close higher? >> well, that would be a very nice sign if that did happen. as a trader, you want to see how things react after the open. i think some markets are positive on the day and is if we look at the s&p, it's just kind of, you know, hovering around this 1100 level.
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and so i think that would be a healthy sign. i don't think anybody is panicked. and i really appreciate the way that the fed has planned this out thoroughly. they told us this was coming and it's coming. now people are going to start focusing on the future on the fact are they going to raise rates for the consumer? but i don't see that happening any time soon. we don't have inflation. we have cpi numbers coming out right now. but there's not inflationary pressures and the fed would rather deal with that than some other things at this time. >> some say they should be focusing on the housing markets. so very fragile in the united states. some say it's key to recovery. so what do you make of that? i mean, we're seeing -- >> well, yeah, but they can't raise rates. >> go ahead. >> i was just saying they can't raise rates for the consumer. with the unemployment situation here, you've got to -- all this comes back to the dollar,
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really. and the dollar has rallied 10% off the lows. so this may be the classic, you know, buy the rumor, sell the fact. this might be now that it's taken that anxiety out for people, obviously we have to raise rates. it's a matter of when, not if. but i don't see that happening any time soon. we have too many issues with the economy to crank on rates and squawk any recovery. >> good morning, alan. this is chloe in singapore. the fed may not be raising interest rates any time soon, but you have the mortgage backed buying program that is coming to an end at the end of march. we also have these discounts rates that are going up. even though the federal funds rate may not move, this could create a lot of problems for the u.s. consumer.
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>> they have turned off the spicket. they've been very, you know, consistent in their message that slowly, that these emergency measures were going to be put away, put back in the drawer and we were going to be done with them. you know, that's a healthy sign, they're following through with their plan. this has been very, very well telegraphed and, you know, i don't see anything happening as far as interest rates here in the states any time soon. but i think it's a relief they've started this process. >> we're out of time, alan, but thank you so much for being with us. i'm nicole lapin in the i'd. thanks for being with us. >> and i'm ross westgate in europe. >> i'm chloe cho in asia. have a great friday, everybody.
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good morning. the central bank on center stage. now the global markets are responding. mr. toyoda to testify, the grandson of the automaker's founding is on his way to washington, said to give what he's calling a sincere explanation to congress next week. dell's gross margins fall short of the forecast and the shares are being punished. we've got a busy friday morning ahead and we have it all covered for you as squawk begins right now. >> and good morning and welcome to "squawk box" right here on cnbc. i'm melissa lee along with carl quintanilla and joe and becky will be back on monday. our guest host this morning, richard bernstein and a cnbc contributor. it's great to have you with us this morning. >> thank you. thank you for having me.
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>> well, the fed is assuring the markets borrowing costs will not rise for consumers or for companies. fed officials echoing the same message in various speeches across the condition. our senior economics reporter steve liesman is covering it all from boston. steve, symbolism is everything to the markets. >> yeah. melissa, i'm sure this now focuses the attention of what's next. here we are, the fed wasting no time. muck them, the spooem speech last week by fed chairman ben bernanke and then the minutes that came out yesterday that said all members of the fed had basically agreed to hike discount rates. they raised anyone mum bid for the term auction facility, 250. the taf, just so people know, is

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