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tv   Worldwide Exchange  CNBC  April 15, 2010 4:00am-6:00am EDT

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it is thursday, the 15th of april. here in asia, china's bolted to its fastest pace in almost three years, giving 11.9% for the first quarter 2010. >> in europe, stocks get a boost with strok results from roche helping to drive markets higher. >> welcome to "worldwide exchange." i'm christine tan here in asia together with steve sedgwick and nicole lapin. it's 4:00 p.m. in singapore. the thai markets are closed today and will resume trading tomorrow. we are continuing to watch the situation there very closely. we are getting a nice pop from gdp coming in later today giving asian markets a nice boost. nikkei 225 up 0.6%.
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the shanghai market, on the other hand, under pressure today because that growth strong growth in china seems to suggest monetary policy might be under way. that market is under pressure today. the hang seng is up 0.2%. china play is in focus. kospi is up 0.5%. but the strong one weighing on the exporters there, the bombay sensex pretty flat at the moment and the aussie market up 0.2%. as for the cnbc ftse global 300 index, this is how the picture is looking for the index, up slightly 1.6, 4,750. steve. hi, christine. it's really good to see the markets rallying, i suppose. the news on a corporate and economic basis yesterday was very strong. today, once again, good numbers this time from the pharmaceutical sector. not banks or technology, but roche this time beating numbers. as such, you can see the smi and
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switzerland up 1.4%, doubling the gains we've seen elsewhere. year-to-date now, the ftse is up 7%. the dax 5.4% and the cac, off around about 3%. nicole, very good to see you and good to hear you, as well. >> great to see you. thank you. it's 4:00 in the morning here in the united states. we're expecting markets to open lower across the board after a seller day yesterday. the dow was up 103 points, 11 11-1123, which is up five straight days, 21 in the last 26 sessions. dow futures lower about 18 below fair value. nasdaq futures slightly lower as are s&p 500 futures as we continue to get more earnings today, the likes of google and amd. joining us live to talk more about that for the next hour is our guest host, kirby daily, senior strategist at news edge group. kir kirby, we're talking a lot about
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this goaldy locks rally where we're seeing this strong growth. i had to look that up because i forget what happened in the end. do the bears eventually come out? >> it is going to end in tears relative to what we're seeing now. every economic statistic that we're seeing now in the world and what we're enjoying here in asia right now has been bought. the difference in the past is that when we buy the economic statistics this time we're buying them largely on credit. that credit has to be paid back. and it's not leading to a self-sustaining cycle of recovery which is key, which means right now we're enjoying the conflewence of monetary stimulus around the world and we're enjoying it right now.uen
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stimulus around the world and we're enjoying it right now. but when we have to pay the piper, starting next year in the united states, by the way, that will weigh on earnings and markets will adjust. to answer your question in a long way, yes, the bears will come out. >> kirby, this is christine in asia. take a look at china's economy growing 11.9% year on year in the fist quarter. this kind of fast growth and low inflation in china, is that sustainable? >> it's not sustainable. we have to take that into perspective, as well. we're looking at a base effect here, year on year. this 11.9% number, quarter on quarter it's a little more subdued. the inflation number is the could he key for what markets are looking at. markets in asia and then for the most part the rest of the world have been quite obsessed this year with the steps the chinese government will take to inflation, rightly or wrongly.
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this will give the markets some relief. there is a massive housing bubble that some would call it. and the argument that we should be strengthening the yuan or the rnb to arrest inflation isn't necessarily that clear cut. when you strengthen a currency, a lot of that may go into real estate. andy shay pointed out an article he did a couple months ago. the rising yuan, we need to look for more tightening in china in the way of interest rate hikes, reserve requirements and other policy tools besides the yuan. there's been far too much concentration on the issue of yuan strengthening and it's highly political. >> yeah. but kirby, you know, the longer the yen holds out, the more this money inflow is going to flow into china. why not get it out of the way,
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do it once and for all and move on? >> that's a great question. and i believe that the communist party government, the pboc, that everyone involved in policy implementation in china is worried about what is to come in the future as far as export demand. right now, again, we're in this sweet spot, inventory restocking coming on the back of stimulus that was implemented in the u.s. all these things make imports look very strong right now. coming back at this time, if they are coming off a one off evaluation or strengthening that come next year at this time with very, very slow export demand that i may see and many others, as well, they're going to have a hard time dealing with that. that is why china is very, very latent to go ahead and put in any type of evaluation. we have to look, again, it's sustainability of the export demand we're seeing. this is not only going to affect china, but japan and others around the country.
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we will not be there in 6 to 12 months from now. yes, steve? >> kirby, maybe these markets are being more pragmatic than you. you said everything has been bought, this rally so far is all being done on credit. well, i don't see that in the corporations i see. on the sovereign level, the companies are priced aggressively. it's only in this quarter, kirby, we're seeing top line revenue growth. it seems to me that a lot of corporations have given up on the credit story and put themselves on a much sounder footing. that is why i'm hoping that these companies won't go crashing back down again, that they'll be ready to sustain their business proposal, even if we see a downturn created by these sovereign debt issues. >> well, that would be fabulous, except for the fact that we've taken on this massive public sector debt when we have deleveraged slightly and private sector debt in the u.s. we have to work through the debt. so the debt we've taken on on
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the public side has to be paid back. that has to be paid back through higher taxes and cutting of services. these companies are enjoying the fruits of massive implementation of stimulus and yes, they've made tremendous cuts. productivity is very high. a lot of corporations are in great shape. the problem is, they're not going to have the energy to feed that in terms of consumption because we cannot afford to implement this type of stimulus again for 2011. that's one thing, the brakes are going to start to come on. again, markets are showing that they're not buying into this by not reacting to the upside. it remains to be seen what happens for the rest of earnings for this quarter, but i don't believe we have 30% upside from here. i certainly believe we are at risk of 30% to 40% downside from here, regardless of the shape of the corporations that you point out. this massive debt problem on the sovereign side has to be paid
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back. that comes through growth and private consumption. >> so we'll see if we're in store for a correction. kirby daily, our guest host for the hour stays with us. kirby, thank you very much. let's get some big stories we're following for you around the world in the meantime. ubs can't keep the good news under its brown hat. first quarter numbers were announced two weeks early. profits jumped a better than expected 33% and u.p.s. is boosting its growth outlook. growth was powered by the improving economy particularly in asia and latin america. ubs are considered indicators of the broader economy because they handle packages for nearly every industry. in frankfurt, u.p.s. is trading up higher, about 6%. almost, yumm brands topping forecasts there, helped by strong sales of its kfc restaurants, specifically in
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china. they have expanded from political delivery service in china and a new breakfast menu. the company faced a third of its profits from china. u.s. stores fell 1%, but that was smaller than expected. in frankfurt, yumm is trading higher about 3%. steve. >> robert zurlick has joined the debate over the world bank deal. he cautioned athens is likely to require ongoing attention from the national community and underlying issues are yet to be fixed. another volcanic eruption in iceland has sent into the atmosphere. all london airports are to close and there will be no services after 12:30 central european time, this after hundreds of flights coming in and out of the uk airport have been canceled. the uk air traffic control said the volcanic ash represents a significant safety threat to
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aircraft. meanwhile, flights across all of norway and northern sweden have been halted. christine. >> well, a barrage of key economic data coming out of china today. we're watching that very closely. the first quarter of 2010 economic growth rose 11.9%, fastest pace recorded in almost three years. it came in higher than a 1077% reported in the fourth quarter of 20309. china saw a tepid attempt in its cpi numbers. despite the red hot growth, the muted inflation numbers may give the chinese government reason to hesitate from making tightening decisions right now. elsewhere, peabody energy has raised the stakes in its bid to
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acquire mac arthur coal. the all cash offer is valued at $378 billion up from 3.3 billion previously. peabody said it is willing to allow the three main shareholders to retain their stakes. coming up on "worldwide exchange," swiss barber and oncology giant roche has beaten forecasts in the first quarter. let's find out how the shares are reacting after this break. >> we had a very good start in 2010. and again, we have outgrown our perspective markets in both diagnostics and pharmaceuticals.
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you're looking at a live shot of st. paul's cathedral. looks like a remarkably sunny day given the fact that i'm told we have a large cloud of ash descending on europe. let's take a quick look at the bund markets, the bunds are trading fast. 3.13% is where the yield is
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trading. the u.s. 10-year yield is trading at 3.84%. christine. >> we're watching the forex currencies closely. after that stellar performance growth trade coming out from china, the dollars remains on the defensive side right now. the euro weaker against the dollar, 1.3567. lots of concerns about greece, what's happening there. sterling, a little flat against the dollar. euro/sterling, 0.8778. earnings will continue to be the focus for many of the currencies today. >> christine, it's another busy day for economic data of all shapes and sizes. weekly jobless claims are out at 8:30 in the morning, forecast to drop by 15,000 to a total of 445,000. at 9:15 in the morning, we get march industrial production which is expected to rise 0.8%. 10:00 in the morning, the april philly fed survey of regional manufacturing conditions is out and at 1:00 p.m., the national association of home builders
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releases its monthly index. dallas fed president fisher is in dallas at 9:30 to talk about where we stand in the crisis. at 10:30 in the morning richmond fed president jeffrey lacker will be speaking and at noon, st. louis fed president james bullard speaks in new york. at 7:40 p.m., atlanta's fed president is talking about the and at 9:00 p.m., san francisco's janet yellen will be speaking. we will see results from amd sad google today, steve. >> the cac 40 is up 0.1%. the xetra dax barely in positive territory. but the smi is being boosted by roche today. let's get an update market by market. we're joined, first of all, by anna edwards.
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anna, you're looking at the pharmaceutical -- not the pharmaceuticals. you're looking at the miners this morning. >> absolutely. good to see you, steve. rio tinto is down by just over 1%. the company giving us an update on their production figures. they posted first quarter production below expectations for some of their key commodities. weather, lower grades and production issues at various production issues affecting things. they also say, though, they are running at capacity in a number of areas, and they've seen strong talk, rather, coming through or they gave us some strong talk, i should say, on the chinese market for the first quarter. iron ore guidance productionwise for the full year, they've increased but the market generally selling a few of these mining stocks in this morning's trade are going lower. bp, though, trading to the upside. partly to do with an upside they've received from credit suisse. probably not to do with the news flow. they at the company have said
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they're going to go ahead with canada oil sands projects. that's despite the fact that 140 investors, include calipers want them to review that decision. >> experion. it's one of the companies, i've wondered whether they do better in a recession or do better when people are coming out of recession. do you credit people more when things are bad or when things are going well? >> it's interesting where they're getting their strength from at the moment. we're talking about brics. so this bit is coming from the b of those and its regional partners, because latin america is a real growth engine for experion right now. the credit checking business telling us that they've had a good full year in quotes. revenue edged higher in the second half, held by strong sales in that latin america area where we saw sales up by some 17%. in the uk and ireland where they have another large part of their business, sales fell by 2%. so it really is a story of
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strength coming from emerging markets, but not the asian story that we hear so much about. >> anna edwards, update on the london market, let's go to frankfurt and speak to stephane arissa who is from cnbc markets. stephane, u.p.s. couldn't resist getting their numbers out. they preannounced and that's having a positive feedback on german peers. >> that's right. it looks like this economy recovers a little bit and could have a positive effect on do you have deutsche post. that's why this stock is riding today. lindah got an upgrade from three times b on a minus credit rating. that's good, so they can refinance a little cheaper than before. they had a very, very big success story in the past. but in general, if you look on
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the markets, for many days, the volatility, especially in the morning, it's very, very low. nothing happens, really. we have the election in front of us where angela merkel is looking on and before the election is not done, she tried to say not too much regarding help for greek because the german population is absolutely against this and after that, i think then everyone in europe, also germany, has to pay for it because that's a consequence of the european union. >> yeah, but is that the feeling across europe? i noticed george sore yoes said if germany doesn't play its traditional banking role, then
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the whole euro currency class risks breaking up. >> that's absolutely the case. so charles is right. but if you see that the germans in the beginning, they were always very anxious regarding the euro because we have two inflations in our pass of the world war i and world war ii and then the deutsch mark was a new experience, so very stable. and the bundes policy was always the most stable policy in europe. our stability will be attached by these other countries. now ten years after we founded the euro zone, we see the consequence and the german population is absolutely against this. but i think the people are not aware of that in the consequence it would mean that what george sorros is mentioning, the euro zone will grow. and in general, i think this can be happening, that greek or italian will go out of the euro because it's the bigger problem
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and the debt in my mind is the competition problem. so we have much more inflation in kins like spain, like italy, like greek in the last ten years, the credit boom, the real estate booms in spain especially and now they are not any more competitive. and what should be the consequence out of this? they can just do a deflation with unemployment. but it's impossible in a democracy. our germany would have higher inflation rates than they have. but the germans are absolutely anxious regarding that inflation. >> stephane, i've got a bone to pick with danone. i thought some of their products were slightly healthier. now they're having to take away some of these health
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advertisements, aren't they? >> yeah. they decided to drop the legal process. it was announced this morning along with a sales figure for the first quarter. 8.3% increase for the sales for the first quarter. 7% on a like for like basis. and the most important, it's from the core production of the dairy business. so, really, that demonstration that the strategy is working well. danone decided a couple of quarters ago to drop the prices in order to boost the product. it's still working. and compare its guidance for the full year, expecting sales growth at least of 5% on the like for like basis. that being said, the company is still very cautious about the global economic environment. it will remain challenging. plus, of course, there is the story we mentioned about the healthy products.
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that is why the stock is trading lower. danone is off 1.6% after the opening. >> of course. and both the next companies sell their products, i'm sure. casinos, they're okay. they look okay. and couples are waiting for, right? >> absolutely. the fifth largest gambling company in france, sales are slightly better than expected. the company confirmed its guidance for the full year. the margins will be stable, thanks to a better economic situation. that's the statement. karrfour is the largest retail group in france but also in europe. we'll have the numbers tonight and we'll comment tomorrow morning. >> excellent. thank you very much, indeed. in paris, let's move on and talk
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to carolin schober, taking a look at roche. carolin, those are great numbers, aren't they? >> yes, definitely. the stock outperforming 1.8%. the company beat expectations with the first quarter sales up 12.2 billion swiss francs. would have been higher if the strength of the swiss franc didn't weigh on these revenues here. we saw currency growth of 9%. now, the company told us both in its pharma and diagnostics division, they will see above market growth in 2010. by the way, its pharma unit, that is its strongest unit. we saw sales of its top selling cancer drug. pharma overall saw sales up by around 10%. also, the company confirmed its guidance for 2010. that's, of course, double digit growth in its core eps and single digit growth on the group
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level. >> just looking at some of the analyst comments, they have had a big run and they appear to be trading at a premium compared to the vast, as well. just wondered about what the trading community felt about this and the stocks broadly. have they had a good enough run for the stocks to come back to neutral stance or do you think there's futh to go? >> actually, roche is in shares of the overall health care index have been forming the general market in the last couple of months here. and that is why they think that this is definitely one good sign to buy back, to go long in the stock. overall, nobody knows why because roche has a very strong late stage pipeline. >> just looking at the roche trading at 12 times earnings apparently at a premium. thank you very much indeed for that. very good to speak to you, carolin schober in zurich. coming up on "worldwide exchange," 11.9% of china's
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first quarter gdp number. is it good news, bad news or bubble news for the chinese economy and the world? we'll discuss that later on in the show.
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welcome to the show. here in asia, beijing, china reporting red hot economic growth for the first quarter of 2010 while inflation appears muted. >> in europe, pharma stocks get a boost with strong results from the likes of roche, helping to drive markets higher. >> also in the united states, earnings season powers on led by results for shipping profits for u.p.s. >> welcome to "worldwide exchange." it is 4:31 here in singapore. it is overall a good session given the strong growth numbers we saw from china. the nikkei 225 up 0.6%. the shanghai market is under
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pressure because that strong growth means china could possibly embark more tightening measures. the hang seng is up marginally, 0.2%. china plays really in focus. banks, of course, getting a boost from stellar results coming up from jpmorgan overnight. elsewhere in south korea, this particular market trading higher thanks to the china effect. bombay sensex trading a bit to the downside. 0.2%. hovering in and out of negative territory, and the australian market up 0.2%. overall, it is all about china here today. nicole. >> absolutely, christine. it is 4:30 in the morning here in new york and we're expecting markets to open lower across the board with dow futures about 19 below fair value. s&p futures down about three. this is after a stellar day, as you're mentioning, for big
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bellwether companies. the s&p closing over the 1200 mark, steve, and the dow up 103 points. >> yeah. let's take a look, nicole, at the ftse cnbc global 300. it is trading flat. there is severe flight disruption across europe. the london airports in order with international regulations, basically, the ongoing activity in iceland they're anticipating that all flights in and out of heath row and dianzig will be suspended. bell fast international airport and dublin airport also seeing a lot of delays in and across scandinavia. basically, you get the tiny particles of glass, ash and rock getting into aircraft engines.
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that could be incredibly detrimental. they're playing it on the safe side. christine. >> hey, steve. a barrage of economic data coming out from china today. we had for the first quarter of 2010, economic growth rose 11.9%, the fastest pace recorded in almost three years. the data beat expectations and came in higher than the 10.7% reported in the fourth quarter of 2009. china saw a tepid rise in cpi numbers. lower market expectations. economists say despite the red hot growth and expectations to tighten monetary policy, the muted inflation numbers may give the chinese government reason to hesitate from making tightening decisions right now. let's talk about china and, of course, the rest of the global economy. joaning us right now is gabriel stein. still with us, our guest host, kirby daily, senior strategist at new edge group. gabriel, let me start with you
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first. china, inflation easing a little bit. but you know what? that is not stopping markets from speculating that this could possibly prompt beijing to loosen its grip on the chinese currency. do you think they're right to see that way? >> yes. first of all, i take issue with the idea that inflation is muted. you had minus 2% inflation in the year to year july last year. you had between 257% to 3% in the first three months of this year. and on our estimates, china has a positive outlook gap of 6% and the relationship between inflation and the output gap in china is almost one for one. the output gap is positive for one year. the rate is rising by 1%. you could well have 5% or 6%en flagz by the middle of summer. that should shift the debate in beijing towards greater influence for the peoples bank which is more concerns with inflation and that should lead
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sometime this year to a return to the managed appreciation of the yuan, possibly in combination with a once off re-evaluation. i think it's important to remember two things. first of all, from a u.s. point of view, the exchange rate with the yuan is not particularly important. but from a chinese point of view, it's very important, not so much for what it does, it is not due to exports, but for what it does to dampen inflationary pressures and to shift demands toward greater domestic demand. that's good for china. kirby, i want to bring you in on this. do you agree? >> no. inflation is a major problem in china. the numbers are showing that it looks benign so the markets will take a little relief in that, as i was pointing out earlier. the real problem is how does
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china most effectively deal with that? and all the recent talk and focus has been on the yuan. i think the term revaluation is far stronger than anything we're going to see in the end, but also, is that the best policy choice? if they start a gradual strengthening again, that will lead to more money inflows that would that will possibly go overheated in the market and other asset markets in china that will lead to further problems down the line. i think they'll probably look to other policy measures in conjunction with it and we'll see far more pressure on the yuan than some are seeing in the markets. inflation is very real in china. it's manufactured. they have to deal with it. now they want it. >> and i agree entirely with that. let me say, i think they will have to raise interest rates, as well. as for the reserve requirement ratio, given the huge deposits to loan ratio in chinese banks
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raising the reserve requirement ratio as they're doing in small steps is less than relevant. but there will certainly be interest rate rises, as well, and these are much more important, need to come in conjunction with any change to the currency. >> gabrielle, nicole lapin in the united states. are we underestimating inflation here coming out of more fed speak that we could extend this so-called extended period? >> no. on the contrary, the u.s. has said china on our estimates, a 6% positive output gap. in fact, i think you're likely to see by tend of the year core inflation at zero in the united states you could well see return to deflation not only on the headline rate, but on the core rate next year. in china, in the euro area, its downward pressures on prices that are by far the most important and dominant theme in 2010 and '11.
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>> the president of the world bank, gabriel, robert zurlich has been talking about the problems greece faces with higher debt and higher unemployment. not only greece, but other countries and staying with us for the a lock, long time. has the medicine been applied to us correctly or is the focus on the other side of the economy. >> it's difficult to say. you have a situation in europe where germany either has to buy the goods and services of its partners or bail them out. and at the moment, the germans are refusing to do either. instead what they're doing is exporting demand inflation to the rest of the euro area. i'm not sure. i think, of course, greece needs to bring down its budget deficit and its debts and action is needed. but i'm not sure if the medicine is sump as to not make things
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worse. ultimately, i cannot see greece and some other countries remaining part of the euro zone. the pain is simply excessive with the cost of remaining there. >> gabriel, leave it there. thank you very much. kirby daily, senior strategist at new age group is our guest host for this hour. coming up on "worldwide exchange," we will continue to talk about the economy. do we have tightening or maybe revaluation is on the way? here is a quick look at the chinese yuan right now. ddddd
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and welcome back to "worldwide exchange." you're supposed to be looking at a hong kong harbor shot. but you know what? i can't tell you, but it's very, very cloudy today. there's nothing wrong with our cameras. it's just one of those days. 14 degrees celsius, light rain. winds blowing north at 21 kilometers per hour. humidity at 94%. that's where our guest host,
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kirby daily is. ask him if he can see anything before he gets out of the studio. >> china letting out a raft of key economic data today. chief among them, inflation gdp nebs for the first quarter. china's economy grew at the fastest pace in three years. sequential growth was strong at 11.3%. that's thanks to the investment and industrial activity strength. investment put on 26.4% and industrial production rates up 18.1%, both above expectations for march. consumption played a part, too. retail sales gained 18% in march as expected. but consumer prices rose a moderate 2.4% in march below consensus and that is still within beijing's comfort zone. rate hikes will come later in the second quarter rather than this month as would a move on the currency. the ppi described the numbers as
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a good start to the year but warn the rest of the year could be challenging with uncertainties in the global economy and inflation pressures on the rise. meanwhile, the chinese cabinet has set key priorities for the economy after its first quarter meeting yesterday. agriculture production, liquidity management containing inflation, especially curbing property price rises after housing prices showed previous measures have had little effect in reigning property prices. back to you. >> and that was cheng lei. joining us now, we have jan frederick and, he, of course, our guest host, kirby daily is still with us. gentlemen, thank you very much for joining us on this cloudy day in hong kong. let me ask you, when you see growth numbers like that coming out from china, 11.9%, do you think to yourself, most of it was because of stimulus?
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>> absolutely. i think it's still very much a stimulus driven figure. the massive credit extension last year is still feeding into the real economy and it's now still very, very -- will he make an assessment of the real underlying strength from the private sector from a n nonstimulus in parts of the economy. i think the weaker part is coming from underlying sources. >> and from your view, when you take away the stimulus, what will be the actual growth you're looking at? >> well, that is tough to say. maybe something around 8% because the expansion in construction, in infrastructure projects was really very strong, is still very strong, and
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therefo therefore, it may be driven by the stim use husband. >> take away the stimulus and you have just about nothing. the problem i have with a lot of economists analysis of asia is they're trying to say that actually, that's china, but the rest of asia is recovering quite well. but i really don't see anything having changed from the export dependance of the rest of asia which has now turned into china stimulus dependance and the rest of the world stimulus. do you see the rest of asia falling back like china does when this stimulus play goes away? yeah, for a number of reasons. of course, china is very much currency dependent. a lot of asia is depending heavily on the united states. but asia, emerging at china,
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nondependant japan is emerging and stronger than in many countries, some even stronger than china and, of course, their stimulus, too, will have to be scaled back and that will have an impact. it's not something dramatic as i think in emerging asia, on china and emerging asia because i think that the underlying fundamentals in many of these countries are relatively okay. but they will have to prepare for some shifts, some changes in the growth rising sectors, in my opinion. >> nicole lapin in the united states. don't put too much weight on the data coming out of the united states. but we did get a bright spot yesterday on the economic calendar. retail sales rose 1.6% versus expectations of 1.2%. what do you make of that?
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>> it's really, what i'm telling outlines is it's very evading to look at current economic numbers now and take them at face value. because you might think, for example, retail sales of the private sector, so they won't show anything about the stimulus. that's not the case. retail sales are strongly influenced by stimulus driving wages, for example, by stimulus supporting consumer finances, for example, and therefore, there too, in retail sales, which are very much a private sector number, you do see the impact of the fiscal support and you really can see from that number that the problems in the household sector are false. >> and for a lot of those export
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dependent countries you mentioned that if indeed the united states does rachet up the fiscal pressure, if the chinese does move unilaterally on revaluing their currency, we could face some form of extreme protectionism as the next leg of this crisis. how prevalent a fear do you think that is? how do you think that will be more protectism and less exports coming out of asia? >> i don't really see that -- it could be a threat and we are thinking very, very carefully about it, but i don't see it as a very serious threat, a near threat, because i think china and the u.s. know that the trade will, for example, put its indications for both countries. and i think of the signs we've been hearing over the next few days, i think there will be a move relatively soon by the
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chinese that will change the exchange rate regime. i don't think it will be a big move. it will be something small, but it will be something that at least provides the obama administration some -- something to claim success. >> this is christine here. basically, we've seen how the financial credit crisis, in china, i know authorities are trying to clam back on credit growth. but are you concerned possibly there could be an underlying current of nonperforming loans that people are not aware of? >> there is absolutely no doubt that there will be a massive increase in nonperforming loans. i think a rise of something like 10% of total loans by something like 10% of total loans is very likely.
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i don't think that that is going to lead to major problems for the joefrt all chinese economy because the government will bail them out. it's not going to be the kind of bailout that we've seen in the u.s. where banks will have to pay back everything and will, therefore, have to consolidate their balance sheets for a long period of time. we'll have to scale back the lending. i think it will simply be that the government takes over the nonperforming loans and let's the banks, as the government has a big stake, anyway, go on afterwards. >> all right, jan, we'll have to leave it there. thank you so much, as always. >> thank you. >> of course, our guest host, kirby daily from new edge group will continue to stay with us. let's go over to saejal pa dell for a look at markets we're watching here in asia today. she's looking at one company specifically, macarthur.
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>> there isn't a dull moment when it comes to this company because they may have just gotten an offer that they can't refuse as they just rejected the $3.4 billion offer from local company new hope. peabody is raising the offer to $3.8 billion u.s. dollars. that's going to be 16 australian dollars. in the meantime, the nikkei up 0.6%. the kospi up above 0.5% to a new 22-month high and we saw gains in the shipping stocks as well as the steel stocks. christine, any of these sectors that are china related we saw a nice rally on. >> take a look at the shine high
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market. was there a lot of concerns about what's going to happen with the strong data, a lot of policy talk, maybe? >> yeah. and we've been talking about that. the question is what they are going to do, whether they hike interest rates. i think something that a lot of people agree on, though, and a lot of economists, they're going to have to do something about the property prices. because really, running away, we have the data yesterday showing property prices for march was up almost 12%. that's the fastest pace in five years. the council saying that they will curb private prices and the latest is that they might introduce a new property tax. not a price that we saw a sell-off in those developers, not just in china, but also in hong kong. >> thank you very much for that, sage. good talking to you, as always. ayesha faridi joins us live from mumbai. how is the market looking? >> it was holding up until now. we were holding and torturing under 53 odd levels.
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but suddenly, profit taking is what the market is witnessing. it is keybanking stocks that are actually thinking of beating right now, sitting at the bottom of the heap. hdfc and not just that, a couple of heavyweights selling off so reliance industries down about a percent and a half. so the entire heavyweight basket is the one which is putting some bit of pressure on the markets. in forces, that continues to be a winner in trade after the kind of stellar numbers that came out on tuesday. that continues to lift the entire i.t. basket with it, so most of those counters are holding up very well in trade. a couple of these capital good counters are -- tata motors continues to surprise trade. in fact, we have seen a whole host of upgrades. unitech puts an upgrade on unitech. that counter is also looking for
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a strong in trade. >> ayesha, thank you very much for that, good talking to you. right. let's get a final thought now from our guest host, kirby daily, senior strategist at new edge car group. kirby, we've been talking about china for the entire hour or so. do you think the rest of the world can count on china to pull its economies out to a recovery? >> no. this is the key, too. at the end of the day, i hear a lot of rhetoric, especially out of the u.s. that they're waiting for china to become this massive consumer and we can rebalance u.s. exports as china begin toes recover and consume. china is not setting itself up to become the world' consumer. they're investing into overcapacity. and they're going to be coming out of this the world's biggest and sleekest producer. the rest of the world is not going to be able to support that to the level of which they're going to be prepared for and they're not rebalancing their domestic economy to become a consumer. this is key.
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we can't depend on that and china is not continuing to do that. >> always a pleasure having you on the show, kirby. thank you very much for being with us, kirby daily. coming up on "worldwide exchange," earnings are strong. we will continue to focus on that. markets are rising but inflation remains low. it seems we have a goalie locks scenario with conditions snafrt, but is it all too good to be true? >> we'll be back after a short break.
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week to "worldwide exchange." out of the united states, earnings season powers on as its national growth by china fuels results for a shipping and fast food giant. >> in europe, pharma stocks get a boost with strong results from the likes of roche helping to drive markets higher. >> and here in asia, growth hit 11.9% for the fist quarter 2010. >> great to have you with us
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here on "worldwide exchange." it is 5:00 in the morning on wall street. welcome to the start of your global trading day. and we're feeling some pressure from asia right now as markets are likely to open lower across board with dow futures down about 30 below fair value at this hour. and they have been edging lower in the last half hour or so. this is after we had a stellar day in the markets and stellar numbers from big bellwethers, jpmorgan and today we're getting google and amd. >> hey, nicole. we're watching currencies closely. the china growth data is keeping the dollar a little on the defensive right now. take a look at euro dollar. stefrlg/dollar, 1.5462. euro/sterling, 0.8772. steve. >> here in europe, european
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markets have been trading for two hours. let's take a look at how they are currently trading. you have got a dip into negative territory on the xetra dax and the london markets. the smi is being boosted by the pharma sector, roche having some very good numbers for that oncology giant. another volcanic eruption in iceland has sent a cloud of ash headed towards europe. all flights from london's heathrow and danzig airports are to be suspended from 1300 cet. actually, let me get you the latest flash. no flights will be permitted in the uk air space apart from emergencies from 1100 gmc to 1700 gmt, that's according to the air traffic body. so no flights permitted in uk air space. except for emergencies from 1100. in oslow, the airport is closed
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due to icelandic volcanic activity. clearly, this cloud is incredibly extreme. just so you know, the credit, the sand, the glass gets shot up in these volcanos, drifts across and can seriously damage aircraft engines. that's why we're seeing these delays. joining us now as guest host is derek halpenny, european head of global xhe research at mitsubishi ufj. still with us. there was a bearish tone in the last hour of the show. our best host, kirby daily was saying equities could fall 30% to 40 bers. he believes all of the economic growth we're seeing is down from
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stimulus, pretty much saying all economic data. i thought that was incredibly bearish. i don't know if you want to address it or if you agree with the gentleman. >> i think it is more bearish than is justified. but on the other hand, i think markets have done surprisingly well and at least on the u.s. side, the whole question at this point hinges on earnings. if the earnings don't come through very, very well -- >> he said that the earnings will be hit by the fact that the government needs someone to pay its debt and that was going to debt the revenue outlook. >> given the way american policies work and so on, the taxation load may be coming, but we're talking about months or a year or two at the fastest. the u.s. congress this summer and in this fall is not going to raise taxes. >> derek, yes, enormous stimulus
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has been thrown at it. >> we are certainly in a sweet spot. the rhetoric from the feds and bernanke yesterday would suggest that they're not in a rush to change their monetary stance. i think that will be important to know over the next couple of months. over the short-term, i am getting concerned about that because i think asset prices are performing extremely strongly and if commodities and global equities are to continue on the current trajectory over the next couple of months, i think at some point, the markets could wonder about fed policy and start to increase their concerns in regard to the fed being potentially behind the curve. so that to me is the kind of risks that are on the horizon over the next month or so. maybe we're entering that phase now at the moment. if that's sustained over the next three to six months, then i think the story for 2011 could be quite volatile as the fed are forced wbl possibly, to become more aggressive than what the
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markets are currently expecting. >> david, nicole lapin in the united states. so stimulus isn't necessarily creating a ton of jobs. intel, jpmorgan, csx yesterday talking about job growth there, hiring, earnings reports, could this be an indication that we are moving away from a jobless recovery? >> we're probably moving away, but very, very slowly. the unemployment rate that we might remember is not something we can get to overnight. we are likely to stay above 9% through the end of this year and into next year. so it's going to be a frustrating recovery more than anything else. and slow, without a huge bounceback. there are large debts out there and as mentioned, there won't be a huge pick up in taxation in the next year or two. >> hey, derek, this is me, christine. and speaking of a pick up, take a look at china first quarter growth growing at a strong 11.9% year on year inflation.
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easing a little bit in march. you know what? the markets are speculating that beijing could be convinced to loosen its grip on its currency. do you think that's likely? >> yes, i do. i think it's becoming increasingly inevitable that the chinese authorities are going to make a step. it could come any day over the next week or month or two, i think. that kind of real gdp growth is clearly excessive and i think the authorities in china are going to become increasingly concerned about the medium to long-term risks. and, of course, the markets are now heavily speculating on a move and the fx reserve data shows in the first quarter that there was a notable pick up in hot flows into china in the month of march. so if they continue to drag their feet, it's likely they're going to see increasing money flows. so he think it's clearly in china's interest to be taking some form of action over the next couple of weeks or certainly over the next month or two. >> david, i know you have a view
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on the weak renminbi. you have an interesting take on this. you seem to think it's not a threat to the u.s., but more a threat to emerging markets. >> well, yes, i think that's true. the chinese are really competing with a number of other emerging markets, especially in the asian area, to export to the u.s. and to western europe. and i think that has a bigger impact as anything. the u.s. industry is not in a position to replace chinese exports anytime very soon. they're too huge. they're in a lot of areas that the u.s. doesn't produce or can't expand. chinese exports to the u.s. would be replaced by exports in japan from korea, from other parts of asia more than they would domestic u.s. activity in the near term. but on top of that, u.s. complaints about the rnb are many more politics than they are xhkts. anytime the unemployment rate goes up, the noise level about
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all those terrible foreigners ruining the u.s. with their managed currency goes up even more. and that's what we've had for the last couple of years. >> derek, you know, we've been getting a lot of visits from washington to china, as well. a lot of niceties being exchanged between both sides, both officials. do you think behind the scenes, a deal has been hammered when it comes to the yuan reevaluation story? >> well, yeah, first of all, i would agree that it's entirely a political scenario and it's steeped in politics. but you know, certainly, when you look at what's happening in recent weeks and in particular the postponement of the semi-annual report along with numerous bilateral meetings and some through to may, it's clear that there's been an improvement in the relations and, yeah, i think it's understandable that the markets are speculating that some kind of deal has been done
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and that we could get some things in regard to policy as we move forward. i think that's -- that seems quite likely. but, of course, we don't know for sure. >> david, what about the fundamentals? i want to get these back to the markets and look at the underlying economic data. it seems that the real important statistic going into the midterm is going to have to be the unemployment numbers, still incredibly large. given what we have in the housing market, a limit recovery in the employment market at the moment, when are these two parameters going to turn around enough for the policies and say yes, it's really working? >> possibly not by next fall. and for u.s. politics, the real key is the month of october more than anything else. it's the employment numbers that come out for september, the beginning of october, and what the thinking is about the october numbers is you go into the election more than anything else. you may almost be a bit
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optimistic about housing. some of the recent numbers are very encouraging. >> my concern on the labor market is the small to medium sized firms in the united states. we have small business confidence data this week which drops to an eight-month low. so there's a bank credit problem there that could curtail employment. >> derek, we've got to leave you there. we'll get more comment on that later on. you're with us for the rest of this hour. derek halpenny, global currency research. david blitzer, very nice to see you. >> and coming up on "worldwide exchange," ben bernanke isn't changing his mind. he's not ruling out the possibility of a double dip and continues to tell the markets to stop, watching the clock for a rates rise. ahead on the program, we'll check in with our strategist to find out what they think. before that, let us know what you think. if you have any questions or strategists, e-mail us.
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right now on cnbc many come, investors haven't heard the last about toxic assets. looks at whether the banks are purposely hiding these to happen toxic assets and what the ramifications are. plus, china's growth story keeps on going.
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will strong gdp data encourage tightening monetary policy? analysts say maybe not. and david roche from independent strategy has told cnbc that the american recovery is being, quote, engineered wrong. find out what he thinks may happen as a result. that and more on >> let's get to our roundup of equity markets now. we have anna edwards who has joined us back in the studio. a lot of corporate news to digest. no flights are permitted in uk air space now except in emergencies from mid day london time to 6:00 p.m. >> yes. when we've seen stoppages strikes, it costs about 3
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million pounds to these airports. >> how about the markets? >> down around 0.2%. rio tinto is very much in focus. that stock down, also, down 1.2%. the mining company telling us about their business. the iron ore production levels that they're seeing. they are talking about the chinese market and saying that's been quite strong in the first quarter. they're running at capacity. but the kwdz d 1 production number was down about 8%. that was below with people's expectations. despite that, they're managed to guide expectations for the full year bp is in focus, as well, pressing ahead with their canada oil sands project despite a contact from 140 investors, lodging objections to it on environmental or economic grounds. we are watching that and we're watching xstrata, the credit checking agency. their numbers out earlier today,
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that's former to the second half. the irish and uk market was certainly not the highlight. we saw a fall of 2% there. let's get to stephane in paris. >> in paris, danone posted an 8.3% increase in sales for the first quarter. the dey dairy product division was stronger than spengted with a 12.5% increase in volume in the first quarter. the company maintained its guidance for the full year but danone expressed concerns about the globe economic environment. the company decided to withdraw two applications for health claims for two of its best selling production. some on the list recently say that the application could be rejected by the european auto industry. that would be, of course, very negative news for the company so it has decided to drop the plan.
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that probably explains the reason why this stock is down 2.5%. casino, the fifth largest retailer in france posted a 5.6% rise in sales for the fifth quarter of this year. it's a bit better than expected. tonight after the market close, we had numbers from car four. over the saijal now to have a look at the asian market this thursday. >> stephane, it was mostly a positive picture here. we had a strong weekend from the shanghai composite. so it was basically flat with a downward bias. gains over japan, the nikkei 225 closing up 0.6% higher. china plays to the shippers and the auto stocks going on, as well.
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japan as well as china, it looks like this is because of an oil hose defect and it affects the acella. we had talked about toyota suspending worldwide sales of its lexus, gx 460. also saying it's starting safety tests for all the suvs. so that stock is down 8%, as well. the banking stocks doing well on the back of good numbers from jpmorgan and that helped south korea's kospi push higher. the banks in south korea also doing well because moody's yesterday updating -- or upping the sovereign ratings and it does show that the financial health seems to be a little better. so good gains for the financials in south korea, as well. and on that note, i'll send it back to nicole in the u.s. >> and saijal, for all of you procrastinators out there, there is less than 20 hours to file your federal income tax forms.
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up nextwell, we will talk to john hewitt, a pioneer in the tax industry, coming up.
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welcome back to "worldwide exchange." it is 5:22 on the east coast of the united states. we're expecting u.s. markets to open lower across the board.
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futures have been lower for the last hour and a half or so after a stellar day with the dow ending at 11,123. dow futures are down at this hour. 38 below fair value. nasdaq futures down about 7 and s&p 500 futures down about 5. all right. happy tax day to you. benjamin franklin said it best. in this world, there are only two things that are uncertain. the deadline, of course, is to settle their taxes. we're joined now by john visin. we appreciate you being with us. it's not a dark day for you, being a pioneer in this industry, but we're seeing unprecedented reform out of washington in terms of financial regulation. what of that concerns you most? >> nicole, my major concern is higher taxes. all these deficits, all these increased spending, we're going to have to raise taxes. we're going to raise taxes
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across the board. both the people and others will pay higher tax in the futures. >> he's saying president obama will use more spending and bigger deficits as justification for a value added tax. do you see that as a possibility? >> i do, unfortunately. the poor spend all of their money and the rich don't spend all their money, it hurts the poor worse than the rich. in this country, almost 50% of people don't pay any taxes. those people are going to have to pay v. archlt t. taxes. >> add insult to injuries there and we're seeing the state taxes are horrific. are we going to get to a point where we see an increase in
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state taxes? >> absolutely. i think there's huge deficits, huge financial problems in many states. as a result, they're going to have to raise taxes on the people that are working. >> let me bring derek in, actually, as well. we were talking off camera about these high tax lows that small to medium sized companies will have to bear, as well. you're saying despite the fact that we've seen these rallies in the blue chips, the confidence is incredibly low. >> yeah. there's a huge discrepancy between who said what's going on in the large multi national companies who may have greater exposure to international markets and have better access to funds in the financial markets. where the small to medium terms seem to be impacted by the lack of credit being extended by the u.s. commercial banks. going forward from here, certainly as you look at it here in terms of gdp and where we are, the projections look
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according to the fiscal elements going forward. but the question is whether or not sustainable growth is achievable without small to medium sized firms banking back. certainly at the moment, that's a key risk. >> sure. let me bring this back to you. are tax receipts from smaller and medium sized companies across the united states, are they looking incredibly laggardly in line with that lack of confidence compared to what we're seeing, of course, in areas such as wall street and indeed amongst the blue chip companies, as well? >> absolutely. and i think that is going to be an ongoing trend until employment picks up. >> so when employment picksup, then what are we seeing in terms of tax filing investmentwise? is there a potential that you bring liberty tax service
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public? >> there is. i've been involved with other tax companies that are public. i will work for h&r block, i work for jackson hewitt. it's likely that liberty will go public. we expect to go public in the next two or three years. >> likening the united states, we were obviously just bringing in our guest host from europe and steve and we brought him in from asia, as well. how do you see our taxes differing? >> we spend a lot less money collecting taxes than any other country in europe or asia. it's a very efficient system. the taxes we're talking about are v.a.t., health care, getting the irs involved in that is going to raise up the cost of collecting taxes. >> we appreciate your perspective. john hewitt, with us in the
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studio. thank you very much. happy new tax year. >> happy new year to you. coming up on "worldwide exchange," we have comments comparing the obama administration to rome and said it's made the u.s. a risky place to invest. is there truth to the statement? we'll ask a strategist after the break.
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in europe, pharma stocks get a boost with strong results from the likes of roche, helping drive markets higher. >> and here in asia, beijing reports a red hot economic growth at 11.9% for the first quarter of 2010 while inflation appears muted. >> great to have you with us
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here on "worldwide exchange." i'm nicole lapin in the united states with steve sedgwick and christine tan in asia. we're feeling some of that pressure from asia here with markets likely to open higher across the board. dow futures down about 41 below fair value at this hour. this is after the dow closed at 11,123 and the s&p broke the 1200 mark, as well. we get koogel reporting today. we also get amd and one of the many things we'll be looking at today, more fed speak, as well, in the united states. >> and we'll continue to watch those things. in terms of currencies, this is how the picture is looking. dollar/yen, around the 93 level. euro/dollar, 1.3544. lots of concerns there about greece, the debt situation with, that's not going away. sterling/dollar, 1.5436. simply because of concerns about elections coming right up and
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euro/sterling, 0.8775. steve, how are the european bourses looking today? they're a bit tired, christine. they're taking a look at this and they are in negative territory. they had been positive. they're just giving up the ghost a little bit. keeping it on those u.s. futures, down 0.3% is the mean at the moment. i'm afraid a lot of businessmen continue to do that, as well. a volcanic eruption from iceland has sent plumes of smoke into the atmosphere. the air space has been closed in sweden, europe and london. volcanic ash represents a significant safety threat to aircraft engines. nicole. >> all right. we'll keep an eye on that. let's get more market analysis now. dan greenhouse, one of the friends of the program, chief economic strategist at miller
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tavak and company. still with us, our guest host for the hour, derek halpenny. hey, i want to chat with you about goldy locks, if you don't mind. is it too hot, is it too cold? i don't really know what ended up happening with goaldy locks, but she goes off the with the bears. so are the bears coming is the question. at the same time, it's pretty clear and as a noted bear for some time, it's pretty clear that the economy has turned to a greater degree than a lot of people would have expected and i think that realize pretty much
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has to be acknowledged at this point. >> yeah, but what else? you were getting great nebs out of intel, great numbers out of jpmorgan, csx. you sent out a note doubting that and touting the idea that we could see early signs of hiring in these earnings reports. >> well, yeah. and companies are clearly the quote/unquote boots o ground. even though i'm a top down strategist, you want to take a look at what the company is saying. certainly this earnings season and company reports in general are suggesting that there is something going on here. now, to be clear from the sort of a bird's eye vantage point, this is not as powerful as might be suggested. but again, to be clear, the economy is definitely turning. we have definitely moving upwards. job growth is going to expand over the next couple of months and at least in the interim,
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that should provide some support for consumption levels that right now are curious at best to me. >> dan, i'm going to bring this back to europe if you don't mind and bring this back to some of the debt concerns on the pond, as well. flash concerns are saying greece has lowered its expectation easy for the u.s. dollar bond issue. greece may now cancel the road show if no interest in this. let's get back to derek halpe y halpenny. this is the worst possible news, isn't it, for everyone trying to draw a line under this whole affair. if greece is talking about canceling road shows to raise money, then it means that the europeans will have to cough up this money. >> it's inevitable. there's a lot of uncertainties in regard to working the plan that was announced. i think after the initial period of euphoria on monday, tuesday, say that the markets are now looking at those details and there's still an awful lot of uncertainties. greece had indicators that they
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still weren't happy about trying to draw on that. clearly, with the yields up like they are today, it's clearly investors are offloading greek debt and have lost complete confidence. and until we get the reality of this plan being put in place and how it works, the markets, i think, are going to remain very, very skeptical about how this works out in the long run. >> and daern, this is christine over here in asia. here, we're focusing on china growing double digits, 11.9% in the first quarter. to what extent do you think the u.s. economy can ride on this fast rail coming from china? >> well, chinese growth and the stimulus package in specific form was a major reason that a lot of investors in the united states got bullish and a lot of strategists and economists such as myself noted that the asia/japan region was an area you wanted to be supposed to, at least in the immediate term that
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is panning out. but at the same time, i think something that's going on in china that we're not talking about is worth paying attention to and i apologize, it's 5:30 here in the morning in the united states, so i don't remember all the examples. but china has taken a couple of steps to tighten policies. and the stock market has turned downward for the year. and i think you've seen this in a couple other markets throughout the globe where policy tightening has resulted in a more moderate pace of economic expansion and retracement of some of the equity gains. and i think that's something to pay attention to as you start to see this policy decoupling around the globe where countries that enter a period in which they are going to be draining liquidity have not performed as well as those remaining at zero. here in the united states, i think it's very important to pay attention to fed officials because we're entering a period of time where the economy is expanding and perhaps some steps will be taken to put the brakes on. and i think that's something to be aware of. >> dan, we're going to leave it
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there just for the moment. thank you very much, indeed. chief economist. i just want to correct what dow has corrected online. they're saying they're not going to cancel the road show. they're saying they're going to cancel the bond if there's no interest. i think that correction has even greater ramifications. that's a correction by dow, but it makes it stronger in the ramifications for this. not cancel the road show, but cancel the bond if there's no interest in the united states. nicole. >> okay. we'll continue that discussion, no doubt. still much more to come, as well, on cnbc's "worldwide exchange." the newest fortune 500 list has been released and there's a new leader. stay tuned to find out which company has the top ranking and how america's biggest corporations faired as a glup in 2009. ♪
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welcome back to "worldwide exchange." the chinese are very much in place. let's cross live to tokyo and check in on the trading day there with asuka kondo from the nikkei. kondo-san. >> thank you, christine. strong chinese data lifted
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support for export demand. mitsi osk added 5% and sow sacky kisen add 4%. exposure to chinese markets got benefits from china's data. according to a nikkei report, vietnam has approved plans to build a north-south railway using japanese bullet train technology. investors say this is likely to prove positive for kawasaki heavymaker of bullet train cars. meantime, toyota motor lost ground after it said it is suspending sales of its luxury gx 460. it will suspend production of the model for nine days from april 16th. toyota is now conductsing safety tests of all on its suvs. that was the nikkei business
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report. back to you, christine. >> kondo-san, thank you very much for that. christine, democratic senator blanch lincoln is sending shoulders through wall street this morning. the chair of the agricultural senate committee is proposing derivatives ban for banks. the senate financial reform bill, though, stops short of an outright derivatives trading plan. but if lincoln's plan does clear committee, it would be added to the full bill. and a record number of u.s. homes were lost to foreclosure in the first quarter, a sign that banks are starting to look at a backlog through a faster pace. home repos rose 45%. to. borrowers reduce monthly payments. nevada, arizona, florida and california are faced with the highest number of foreclosures.
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federal prosecutors are investigating whether goldman director gave information to gallon hedge fund founder raj ra area yumm. the government is looking into shares between october and june 2008. the journal says no challenges or allegations are being made against gupta. steve, what is going on with the volcano situation? >> we have had another eruption in iceland. air space in the uk, ireland, norway have all been closed to all but emergency traffic. sweden and other european countries have been affected by flight. cans layings and airport closures. volcanic ash, i'm sure you're aware, represents a significant
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threat to air krat engines. christine. >> hey, steve. we are focusing on gdp growth for the first quarter of 2010 economic growth rose 11.9%, fastest pace recorded in almost three years. the data beat expectations and came in much higher than the 10.7% reported in the fourth quarter of 2009. but china saw a tepid rise in its cpi numbers, up by 2.4%, lower than market expectations. economists say despite the red hot growth and expectations for chinese authorities to tighten monetary policy, the muted inflation numbers may give the chinese government reason to hesitate from making tightening decisions right now. >> okay. let's get a final thought now from derek halpenny. derek, we talked a bit about greece, as well, but the news today about canceling bond issues, it seemed quite extreme. i'm real concerned that the
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rescue package will have to be enacted, but can it be enacted? constitutional threats in germany, ireland and spain giving money to another country when they've got their own enormous problems? >> yeah. no, absolutely. i think that's part of the problem today. i think the markets are coming down to the relation that the actual workings of this in reality is still going to be quite complicated. and i recall from the original statements from the euro zone, the euro group is that basically we were talking about having a unanimous agreement. if ireland or spain, for example, failed to get a loan, then we fail on the nancy of the deal and, therefore, does that create uncertainty with regard to who is in, who is out? >> does it create something bigger? and this is where i'm concerned for the euro more generally not only going down, which i guess is a competitive boost for a lot of parts of the european union,
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but actually disintegrate? >> well, you know, the markets are talking more and more of that. certainly, that kind of scenario where some countries are willing to get a bilateral loan, others aren't, germany, therefore, has to give more then there's a constitutional challenge in germany. it just creates a picture of disharmony, and that obviously raises the prospects of the probability of the market starting to consider more seriously the idea of an actual country exiting the emu process. and i think importantly, one of the key elements to look at is the idea of greece money leaving the greek banking system. and there's been media reports .newspaper articles today in regard to wealthry greek people moving their money to the uk and investing in the uk property market. so, you know, if there's signs of capital slides from greece and a banking crisis suddenly becomes a realistic prospect for a country in the emu, that
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spells serious trouble. >> absolutely. we're going to leave it there. derek halpenny, as i mentioned, of bank of tokyo mitsubishi ufj. u.s. "squawk box" follows "worldwide exchange" for viewers in asia, europe and the united states. becky quick can tell us what to expect. we're looking at some big companies and where they stand in the rankings, are we not? >> we are. this is a very important day. that fortune 3500 list is out this morning. we're going to find out which companies jumped in the rankings, which missed their mark. it's a big, big list every year that corporate america watches very closely. so we'll have that coming up in just about 40 minutes' time. plus, you can call it the shipping indicator. the top executive of international giant dhl arrives with his take on the squawk set and this is particularly important today after what we heard from u.p.s. yesterday. we'll get a good look at that, too. also, president obama
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launching a major push to pass financial regulatory reform. bob corker fears that he is going too far. but we have democratic senator todd cav maun arguing more needs to be done. plus, it is tax day here in the united states, so we are making not this festive occasion, but we'll be talking about home buyer modifications, and much more. plus, our guest host today is ken aletta, a prolific writer for "the new yorker." it's all coming up at the top of the hour. steve, i'll send it back over to you. >> yeah. it was a horrific event for most of us. >> yeah. it's one wearing black today, right? >> yeah. as ever. cheers. >> see ya. >> yes, we are in mourning. i'm in black, as well.
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find out what our investors are keeping an eye out for in today's trading day. coming up on "worldwide exchange," we'll have a final thought with stan greenhouse and milla vatech.
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and at 1:00 p.m., the national association of home builders releases its monthly sentiment index. amd and google report after the close. still with us bright and early, dan, i talked to you about some
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of the comments that came out yesterday. of course, a big john mccain supporter, but billionaire real estate investors saying it's a political risk to invest in the united states. any truth to that? >> well, this is interesting, i have this conversation just about every day with people in my office. at the same time, and the argument i always use is, you know, if i had told you on election day that senator obama, then president obama, would become this socialist monster that everybody says he is, he would nationalize banks, he would nationalize the auto companies, he would do a $787 stimulus program, he would socialize health care and the stock market would be up 77% from the bottom and the economy would expand near 6% in the fourth quarter, everybody would have told me i was on crack, especially if i added that the yield on the 10-year would be at
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378%. but that's the reality in which we find ourselves. certainly, the pace of spending and government that we are witnessing is not sustainable for a free market society and a longer period of time. but at least in the immediate term, let's be crystal clear, spending was going up no matter who won the election and inevitably, taxes were going up no matter who won the election. >> dan, you are fifty. >> it's 5:30 in the morning. >> you are fifty at 5:30 in the morning. quickly before we let you go, i want to get your thoughts on these flashes coming out of greece. how is this expected to move markets if the bond altogether is canceled? >> well, at least with the client, there were sort of general acceptance from the beginning that greece is going to have to tap whatever bailout is provided to them. it didn't sound like investors in the united states were interested in participating in any debt auction. so this is a reality that pretty
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much everybody thought already. >> we appreciate for participating with us. markets are likely to open lower across the board. dow futures have been down for the last two hours and they are down still about 37 below fair value. that's going to do it for today's show. i'm nicole lapin in the united states. >> i'm steve sedgwick in europe. >> and here in asia, i'm christine tan. thank you very much for your company here on "worldwide exchange."
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good morning. shipping giant u.p.s. posting
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better than expected quarterly results and raising its outlook. the fortune 500, an annual favorite, a new ranking of the nation's biggest companies out today. and going for growth, china turning out its fastest rate of expansion since 2007 as "squawk box" begins right now. good morning, everybody. welcome to "squawk box" right here on cnbc. i'm becky quick along with joe kernen. carl is on assignment this week. yeah, it is tax day. here is something that may have you doing a double take this morning. americans, believe it or not, are paying lower taxes this year. congress cut individual federal taxes this year by about $173 billion. the states did raise taxes, but that was by a much smaller number. $29 billion. yeah, don't celebrate too
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quickly. this trend could change soon. there were future increases that were enacted as part of health care overhaul and some of president obama's expire in january. if you haven't done your taxes yet, wake up. time to get going. you have until midnight tonight. >> or get an expansion. >>


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