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tv   Worldwide Exchange  CNBC  April 28, 2010 4:00am-6:00am EDT

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it's wednesday, the 28th of april. welcome to "worldwide exchange." in the headlines today, here in asia, many market in japan and indonesia closing with a one-two punch downgrading greece and portugal. >> in europe, shares hit a five-week low. >> in the i'd, the flare-up of financial turmoil in greece and in portugal may reinforce the fed's reluctant to signal rate raises anytime soon.
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>> health low. a warm welcome to "worldwide exchange." i'm chloe cho here in asia w ang although with nicole lapin and ross westgate. a quick snap of the asian market action, a weak session today. as you can see, a lot of these markets losing their key support levels. the nikkei closing below the 11,000 handle, still in its final stretches of trade, falling below the 2,100 level, as well. the shanghai composite is relatively low today. it is standing at the lowest point for this year. the bombay sensex off 0.9 and the aussie market, this risk off trade taking a lot of money off the commodities markets, as well. the ftse cnbc global index down is 0.8%.
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the two-year jg yield is something we'll focus on, as well, ross. >> yeah. and really, it's about short-term risk being pulled back. that is why stocks here in europe are down once again, 0.5% lower for the ftse 100, xetra dax do you know 0.8% and cac 40 down 1%. markets are thinking there will have to be restructuring of greek debt. that i think is where investors are starting to think along these lines. greek bund yields is up 21%. frankly, whether it's 12 or 21 makes no difference because the greek government cannot borrow. we're now talking about whether we have to start thinking about lenders of last resort. all these issues we will get to. good morning to you, nicole. >> absolutely, ross.
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investors are flocking to the german bund and to u.s. treasuries as we're getting $42 billion more in treasury auctions today. we are going to be focused on the fed speak, the second day of a two-day policy harg. we're expecting markets to open lower across the board, pretty much with dow futures down about 10 below fair value at this hour and all major indexes, ross, ended about 2% lower yesterday with the dow snapping its six-day winning streak and ending down 213 points. >> okay. let's get more on the aftermath or the impact of greek debt. in a clear sign that the contagion is spreading, s&p downgraded portugal's debt rating to a minus. carolin schober is in athens and carolina climenti is in lisbon in portugal.
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sylvia, let's kick off with you. it seems there is no point in trying to buy time, but it seems that is still the german policy. >> well, they're still playing very much the political line. but i think it's moved to something else. the germans want a long-term solution, not a quick shot of the hip. that's not how we work. the german finance minister said quite clearly, we will help greece, we will stand by the euro, we will have to stabilize the euro, but we want this imf plan on the table and we want a three-year plan on the table and we want real numbers. we don't just want this number for the first year. we want to know what the whole package costs because we can't go back to the german parliament every three months and ask for aye another slice of the salami to bail out greece. so we need the whole story. that we might hopefully get by the end of the week or by tend of next week. then we could have a cabinet decision by monday or tuesday. then we could have a parliamentary debate maybe on
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wednesday and thursday. already we're talk about the approval of the upper house by friday. that means by tend of next week, germany could put the money on the table, at least as far as the formalities are concerned. let's wait and see whether it pans out like that. >> it's interesting, carolin, while we wait for the details to come out, we are seeing signs of contagions. >> absolutely. the portuguese debt has been downgraded two notches and the portuguese responds to the s&p rating was that this is a decisive moment. it's now or never that portugal can use all its tools to start cutting its deficit and then get the trust from the markets back. now, the mood among the analysts here in lisbon is that this is a lot of panic coming from the greek debt holders. it might be panic, but there is
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some reason if you look at the fundamentals. that level of debt of portugal reaches 80% of its gdp last year. it's about to grow this year, who knows, maybe 7%, 8% could be the budget deficit this year. so it's not only a panic, it's a little bit of reason. obviously, this euro zone decision or a lack of decision or difficulties to take the decision to help greece is not helping portugal, either. >> meanwhile, carolyn, what is happening in the markets is too expensive. and now we're getting 24-hour general strikes getting planned, as well. is the political side cranking up? >> oh, yes, definitely. the opposition here in greece is explaining that the government did everything wrong that they could have done wrong. meanwhile, we see tour i have thes flocking to athens.
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they're seemingly oblivious of all these debt problems here. they're looking at old monuments and buildings that the greek forefathers built a couple years ago. but a couple streets further away, we see more protesters, more procedure tests coming through. many of the public or the unions and opposition party tries to vent their anger in the streets here. meanwhile, it is a discrepancy between what the market thinks will happen and the imf and the eu president is telling us. that is a huge discrepancy. really, the market is pricing in that greece will default on this debt or at least restructure this debt with a substantial haircut up to 70%. on the other hand, while the greek officials are telling us, yes, we will get that aid in time and we will not have to restructure the debt, but the question, of course, is also will the $45 billion euro he, will that be enough?
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goldman sachs thinks greece will need $150 billion euros over the next three years. ross. >> thanks to all of you for now. let's bring in cathy reed. cathy, thanks very much indeed for joining us. have the global investors decided to take risk off the table as a result, is this going to be long lasting? what markets want is to exit fiscal stimulus rather than monetary stimulus. >> i think it's quite clear, ross, that the problems we have in greece are hitting different pockets of the world. for example, we had escape losses in asia. so i think as a result, what this is telling us is number one, not only with the european central banks have to be much more loose with monetary policy than they would otherwise if we were in a normal market environment without this type of problem. number two, unfortunately, is going to keep a lot of downside pressure on not only the
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euro/dollar, but a lot of the higher yielding currencies as well as some of the other asian currencies that still may have benefited from good economic data and an improving global economy. but because we've got this overhandle that is going to hit different pockets of the world and isn't going to go away anytime soon, even if germany comes up with the money at the end of next week, this will be a problem that remains in the market for some time. >> if you think this is going to away problem that remains for a long time, what is the impact on asia? a lot of analysts are telling us asia is relatively cushions from the blow, yet it seems to me like the equity markets seem to be relatively hoelg up well, but the bond markets, especially if you take a look at what's happening, it's about preservation of wealth, flight to quality, especially at the short end. >> right. >> what does that tell us? >> asia is relatively immune to a lot of these problems.
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china is still the engine of growth for the entire region. until china slows, we're not going to see any impact on the region. but it's really not about that, choey. it's the psychological impact of a country like greece defaulting and what a major region like the euro zone will have to do in order to save them. it's more the psychological impact that is driving risk aversion, even on a long-term basis. the impact on asia will be fairly small because the engine of growth is not necessarily coming from europe. now, in terms of the bond yield, we see japanese yield fall significantly. i think that's a measure of the overall risk aversion that we have in the markets. it's not necessarily that this is going to lead to the same sort of contagious effects in asia. asia is completely immune from that. but what it could do is a lot of countries could be less aggressive about normalizing
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monetary policy. in asia, we're thinking about raising interest rates. so it means that the central banks can be more lenient and keep monetary policy -- >> maybe it could ease the tightened cycle as we go. >> absolutely. and we're so delighted to have you as our guest host for this hour, cathy lien. good morning again, nicole. >> good morning, chloe. it was a long day for goldman sax execs who testified before the senate on tuesday. hearing lasted nearly 11 hours. lloyd blankfein was hit with a blistering attack about goldman's ethics and behavior towards its clients. afterwards, he spoke with cnbc's david faber disputing that goldman ran markets like a casino. >> when you are a marketmaker, you have a responsibility to make sure that your client is suitable, is knowledgeable, and
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that what you are providing serves the purpose and provides the risk that the client wants. >> and do you believe goldman sachs did that in the synthetic cdo market? >> i believe we did. >> blankif he in was more contrite when it came to the broader economy, saying goldman does bear some responsibility for the football crisis. >> the financial institutions, let the public down and we are a very important financial institution and so we bear our share. >> in regards to financial reform, blankfein says issues were raised in the hearing and regulation derivatives will be examined. cathy, i know you were listening in all of this. who comes out worse in all this, the government, rating agents or those who slapped that rating on them? >> i guess everyone is going to
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be embarrassed from the rating agents to goldman to the government itself. there's no winners right now in this scenario. it's just about finger pointing. i think goldman will be penalized. they'll probably have to pay some sort of a fine which will be significant, but a small portion of the money that they made from the trading activities. once this passes and we were able to penalize goldman and the american public feels satisfied, this is going to be one of the small hiccups along the way while they're riding the wave to greater profitability. >> small hiccups some may say are more like a belt, though. we will continue the conversation definitely throughout the rest of the hour and throughout "worldwide exchange." cathy leen, director of research
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stays with us as our guest host. meanwhile, let's get to some of the stories we're following from around the world. financial regulation. senate democrats failed to go and get enough votes to let financial reform move on debate in the floor of the senate. the majority leader, harry reid may find another vote today. senator chris dodd is working on a compromise deal with republican leaders. the big sticking point is how troubled financial firms would be shut down and, ross, consumer protections. we'll watch that, too. >> we will. we've got good numbers out here in the uk. giant shell beat all analyst forecasts. it says in the first quarter that supply/income rose to $5.4 billion, compared to $3.3 billion a year ago. rising costs in russia and brazil helped output by 6/%.
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>> ross, australia's inflation rate accelerated in the first quarter, up 0.9% from the first quarter last year. the specter of rising inflation is being upstaged of emanating from greece's debt woes. it may not be enough to encourage rba, the reserve bank of australia to raise rates when it meets next week. in the meantime, wayne swan saying that the outlook for inflation will remain moderate in the near term. >> we can't be complacent about that. the government remains very much focused on building the capacity of the economy so that we can have sustainable growth with low inflation. >> it was really risk all trade today. as you can see, the aussie dollar, currently a bit more traction, but certainly not being able to recoup that 93 handle that we've been sealing earlier in the week, the cause
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of what is happening in your part of the world, ross. >> absolutely, it's having an impact. we'll continue to talk about that. after the break, we'll visit the european stock markets, find out which stocks are on the move, as well, and we'll update you with the latest bond market action. we'll be back.
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okay. bunds are feeling the -- well, basically major government issues are feeling the benefit of flight to safety. 10-year bund yield, 2729%. worth pointing out the two-year german bund governments are down to record lows. as far as treasuries are concerned, the yield is still down, 3768%. again, it's an unwinding of risk appetite as supported. gilts, as well. treasuries, jjbs, and actually, the fact that the yield on treasuries are falling, it's giving away that auction a little bit harder. we've got a five-year note today scheduled to take place just over an hour before the federal meeting ends today and it did make the auction yesterday harder. current markets have been
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affected. chloe has the details on that. >> absolutely. it's no the dizzying action we're seeing in the bond markets. dollar/yen, 93.55. a balancing act going on between the dollar and the japanese yen, as well. sterling, of course, getting another punch lower as that may 6th general election day draws closer. euro/sterling, 0.8660. so a bit of action on the currency markets, as well, nicole. >> chloe, weekly u.s. inventory data is out at 10:30 in the morning new york time. a dow jones survey calls for a build of 800,000 barrels of oil, 600,000 barrelses of gas lease and distillates.
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we heard hear from nor tlom grum yam, sprint nextel, jetblew and others today. >> it hasn't been a stock market story today, nevertheless. but stocks are down. risk appetite is coming off the table. off about 1% is the ftse 100. the xetra dax and cac 40, down about 1.5% and the smi is down 1.25%. anna is here with me. we've got good numbers. >> big numbers from shell, better than expected. a 44% increase, in fact. an increase in the oil price and an unexpected increase in production levels. all of that coming together to generate this stronger than expected number. the turn around story that's been put in place by the ceo of this business since last year, this seems to be work according to some analysts. v.a.t. is reporting numbers, that's british american tobacco, underlying volumes around 4%.
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they say they're on track for the full year. pricing is helping them. but they do report some weakness in some of their key markets like russia, central and eastern europe, as well. >> yes. you say baton down. tobacco stocks this week, have they performed as a result? >> we've had imperial tobacco giving us their numbers. that's one sector we're very much focused on. i want to bring you up to date with what's happening in the banking sector. we are seeing reaction across europe. we see the biggest losses in the u.s. and rbs and lloyd, the two banks that are owned partially, at least, by the uk government. barclays is down by over 4% and hsbc faring down by over 1%. we are continuing to see banks coming under pressure as a result of concerns about where the exposure might lie to any default by greece on their debt. >> anna, thanks very much indeed for that.
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patricia, you're in frankfurt. are banks under water there? >> especially for commerzbank. it's now the biggest loser, losing about 6.2%. and a price target of 7 euros. as you can see, we are now well below that at 573. so as far as goldman is concerned, there is still a little bit of up side there. but banks and insurance companies have been under pressure because of the greece story and despite a fundamentally very sound picture, when you hear and listen to the first quarter results we've seen this morning from a lot of these companies, three companies, amongst which merck, infineon not only beat the expect actions, but they also raise the guidance for 2010. all in all, the fundamental picture seems to be that costs are more or less under control, demand is starting to pick up and people are so confident that they will seek continued demand in the future, that they're increasing their guidance.
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but it's not doing the trick at the moment. everything is being overshadowed by those credit risk in greece and on her european countries and this is putting a lot of pressure on the xetra dax. >> we've had numbers out from merck. how do they stand up? >> well, you know, the numbers are fabulous, well above expectations also in terms of the outlook, raising the outlook. so it seems that business is coming back with regard to merck. but the shares overall have been following more or less what the entire market mood is. down about 2%, as we speak. on the other hand, we had quite a bit of rally in that stock as of late. a few companies, brokers, have been downgrading that stock, as well. midcap, it's down 2.8%. and the dax a staggering 3.4%, ross. >> thanks for that, exposure. trying to figure out what the exposier is for french banks, i
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imagine credit ago recoal has the most exposure to greece, didn't it? >> yes. it was the same situation again in the markets this morning. we have credit agricole down 557% after a 6.5% decline yesterday. and bnp paribas, the largest french bank is the most riddled in. the stock was down yesterday. it's off 2.5% for bnp paribas right now. but, of course, all the banks and insurance are having a hard time at the french market, ross. >> okay. stephane, thanks very much indeed for that. that's the view in paris. as far as the other european stock markets are concerned, just recap what's going on in italy. the ftse down 1.9%. the ibex down 3%. portugal is currently down 6%. right.
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cathy, how long do you think our risk aversion will remain? what will it take to change it? >> unfortunately, ross, i think it's going to be some time before we have a full turn around in risk appetite. because even if germany comes through with this aid at the end of next week, there's still going to be a lot of these contagions here. so until people are no longer weary of further downgrades by the other two ratings agencies, they're going to be basically sitting at the edge of their seat. so see if the other two ratings stays downgraded with greece and how the ecb will respond. we all know that the collaterals allow them to give fund to go countries whose debt is rated above junk status, essentially. so if the other two rating agencies follow suit, then that will kind of realize the greatest fears in the market. but if they don't, everyone will still be wondering when they will.
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unfortunately, as a result, i think that we're going to see, you know, the euro/dollar may be coming down to 130 and possibly that the reflected in also risk aversion in the equity markets and also this continuation of sell-off in yields not only in the german bunds, for example, but also across the globe. >> yeah. well, the fear is undoubtedly if they get more ratings downgrades, because then you'll have to see indices for selling of greek debt into markets where no one wants to buy. that's, i guess, what the fear is that remains. still to come, the euro plummeting, markets downgrade as we talk about portugal and greece. we'll discuss if this is the start of an economic downturn or a blip in an otherwise stable recovery.
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welcome back to "worldwide exchange." in the headlines today, here in asia, japan's benchmark two-year jgb is sinking further down 20% for the year as fears over greece's debt problem figure a flight to quality demand for safe haven assets. >> shares in europe hit a five-week low on the greek downgrade. banks across the continent are under pressure. >> in the i'd, the flare-up of financial turm moim in greece
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and portugal may further the federal reserve's reluctant to raise interest rates any time soon. >> you're watching "worldwide exchange" with myself, ross westgate, chloe cho and nicole lapin. today the ftse cnbc global 300 is down 1%. >> right. and great to see you again, ross. here in asia, half past four. a lot of the markets are losing their key support levels. risk aversion is very much in play in both the equity markets, the bond markets and the currency markets, as well. the shanghai composite is outperforming for the day. it has lost about 757% since the start of light week on tightening concerns. the bombay sensex off 1.4%, the kospi off 0.9%. nicole. before we go to that, in this
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nicole, i would like to highlight all this action we're seeing is jgb markets today. it seems to be about preservation of capital as investors worry about what could happen in terms of inflation down the road. the yield percentage actually sinking as much as 22% in asian trade. you can see some of that activity reflected on the five-year note, as well. ten year just off slightly. of course, we have the japanese public taking off for the golden week holidays pretty much tomorrow. so it could be part of that activity, as well, nicole. >> very well, chloe. we are expecting here $42 billion actions today in treasuries world. still expecting to hear more fed speak today, the second day of a two-day policy hearing. dow futures are down about 6 below fair value after the dow
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ended down more than 200 points. the lowest close, actually, since april 8th. >> it's worth mentioning where we are with the bund markets, as well. the 10-year bund yield down to 2.9%. that's while greek two-year notes, actually, have -- well, that's the ten-year. the spread has widened again. but the two-year note on the bund yield is up 17% or some which means basic greece can't borrow. 20%. let's get more. joining us is ken watra, chief euro zone economists on bnp paribas. kim, when you look at the -- we're starting to see contagions here.
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are we -- if we don't get something, some action very soon here, pretty hard, stiff action, are authorities in danger of losing control? >> i think you're absolutely right. initial initially, it was a rise in sovereign debt. we saw markets turn their attention to portugal. now it's gone away beyond that. stock markets falling, financials in europe suffering as people start to digest which economies, which banks are most exposed to greece and other markets in difficulty. so absolutely right. unless something is done quickly, then the risk is that this situation spirals out of control. the financial markets keep diving, volatility rises, and then we see some adverse feedback between the financial sector and the real economy. >> it's a staged reaction, we see a nuclear action. the ecb effectively steps in to
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support. they can't buy directionally -- they can't fund the states directly. do they need to step into the secondary market? >> i understand why people are saying this nuclear option is on the table. we're running out of other options to do something quickly. my hope would be that within the euro area there's an increasing conversation that it's in their own interests to try and intervene quickly and substantially. as everyone has been talking about, exposure in german and french banks in other markets is pretty high. so i would hope that that will be something we can move on with heads of state. if. >> ken, if the imf brings their aid panel for greece and we see
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the germans come through by the end of the week, do you think we'll see any type of lasting improvement in risk appetite? do you think that's going to cause the euro/dollar to rise back above 134 or whafrdz 145 or do you think it's going to be a temporary boost? >> personally, we see an instant reaction, maybe see some impression of spreads. you certainly see short-term rates come down giving their extremely high levels. but beyond that, it will be there. how would the greek government management to keep on the troupe to stabilizing its debt ratio when the economy is collapsing. so we still have an ongoing debate about rescheduling, restructuring to other euro zone markets. so it would certainly help and the sooner the better, but it's not going to be a resolution to all the problems going on and the debates right now. >> ken, nicole lapin in the united states. we are looking ahead to more fed
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speed today. do you think that everything is going on in europe will be even more reason for the fed not to do anything anytime soon? >> on balance, yes, it probably is. it's probably not the most important factor. but at the margin, this risk of an adverse feedback loop has been one of the themes which has worried the fed most. i think really, if you go to the bottom line, it's to do with inflation. if you listen to what the fed speak is saying, bernanke, cohen and others, if you look at the fomc minutes and you look at the beige book, inflation is low and will stay low. our feeling is in a statement this evening, we'll have a reiteration of low levels for an extended period of time. >> ken, good morning. this is chloe in asia. i can't help but wonder how soon this come mow effect in europe is going to spread.
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what, 200 billion euros held by german and swiss banks. half of portuguese debt held by spanish banks and spanish bank debt held by german banks, etcetera. so the list goes on and on. a lot of people says greece and portugal alone only take a 5% of the euro zone gdp. but if you count the domino effect, the figure just keeps on getting bigger and bigger. >> it does. you're absolutely right. it's linked to what i said earlier. it's in the interest of euro zone's member states including the bigger one. the cost of an intervention which will have stabilized markets in greece and elsewhere some months ago was relatively small, given the share of greek gdp in the total fort european area back up they've taken too long and now the contagions are spreading and the size for confidence now would have to be much, much bigger. but i think the problems with spillovers are growing.
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what i would hope is that there's an toout attitude change in germany. that would be a positive change. but there's no sign as of yet that this is coming anytime soon. >> we pressure time and thoughts today. do have a good day, and, of course, cathy is sticking around a bit longer with us right here on "worldwide exchange" as our guest host. still to come here on the program on "worldwide exchange," japanese bonds gaining ground at greece's debt woes spook investors there. is this a smart place to be? we'll talking that issue next. in the meantime, take a look at the two-year yield. "worldwide exchange" will be right back.
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welcome back to "worldwide exchange". out of the i'd, boeing is delaying some fuselage parts for the 757 dream liner jet for more than a month. the dream liner is almost more
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than 2 1/2 years behind schedule. boeing says the new delay, though, won't affect production on the four planes on the final assembly line and it's on track to deliver the first jet to japan's ama by tend of the year. boeing is trading lower about 2%. from the dreamliner to dreamworks, animation studios first quarter profits beat forecasts from its latest release, how to train your dragon. it earneded 375 million worldwide. dreamworks is working on a sequel, which will hit theaters in 2013. may 21st is the next big hit, they hope. dreamworks is trading lower about 0.2%. >> i watched a great documentary about dreamworks a month or so
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ago. it's fascinating, the story of dreamworks. elsewhere, shell beat all analyst forecasts. the current cost of supply net income was up to $4.9 billion compared to 3.3 billion a year earlier. it's ramping up projects in russia and bra zim and that helped to drive output. they suggest that the turn around plan chartered by the shell is starting to work. >> and ross, japanese bonds have risen over the past two days. the fist consecutive gain in more than a week. japan's benchmark two-year jgb yield is plummeting more than 20% year-to-date as growing anxieties motivated a flight to equity demand for safe haven assets. stheer currently seeking nearly 20%, 22%. the benchmark yield, take a look, following the lowest level since december. the market will be focused on the boj's semi-annual report to
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be released friday when domestic players return to the market from a national holiday tomorrow. let's get out to the director of mizhuo international. seijiro, a lot is happening on the bond markets as investors react to the developments coming out of the euro zone. what is interesting is that the short end of the bonds getting so much traction, especially u.s. treasury and japanese two-year notes, as well. how do you interpret these moves? we've been talking about these bubbles. is this just another bubble that is waiting to happen? well, i think this is more of a momentary precaution or measure as you were commenting earlier. the reason for this is most of the japanese invefrts in japan believe that the interest rate will be nudging up, especially during this april to june period. you can affirm this by a lot of
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earnings seasons that we have just entered and you can see the earnings revival taking place quite acutely. and the economic activities are getting normalized. you can see a lot of sentiment reviving on the corporate side and, therefore, many people do believe that interest rates will rise during this quarter. for that reason, of course, this -- well, flight to quality or i should say flight away from euro, of course, may persist for a certain a time of time. but japan has their own problems. let's not forget about our debt to gdp levels. that's another factor. therefore, i don't think it will be seen in just a one-way street and, of course, the dmeomestic features, for example, we have another issue coming up today and that could be a bit of a hindrance particularly toward june when you have upper house elections. >> exactly. say engineer row, the hatoyama
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government, two out of three jam niece people, they're against this government. you have elections coming up, billions of dollars of debt to be issued and people are willing to put money for nothing. i mean, this is really -- i think this is a clear demonstration of the amount of fear out there in the markets. >> well, actually, our debt market, as you know, is quite secure and quite unique in the sense that it's consumed within 94% within japan. so we have quite a different supply/demand conditions. therefore, so much -- what you call the fierce scenario of deterioration in the short-term i don't think is going to happen. but as you just noted, we have the political agenda. that's a negative feature in coming months. but the good thing on the japanese front is, of course, the corporate earnings. we are right in the middle of that right now as we speak throughout the week and we can see that there are massive improvements. and this is basically because japan is geographical and also
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physically centered on the asian growth side. for example, automobile companies are coming up with massively improved results on the back of this. so, of course, it's not only calm. there are quite a lot of pros within this area and, therefore, we sustain our basically aim in saying that we will have this recovery coming through, particularly that will be ebbing towards the end of the year. >> say engineer row, this is kathy from singapore. on the one hand, we have strong earnings from japanese auto marriages and at the same time we have a lot of risk aversion flowing goes into the japanese yen. but on the other side, you have japanese officials talking about a much higher japanese yen. which of these factors do you have will have the impasse on dollar/yen over the next couple of months? >> the external environment, if it is so disruptive as what we've seen, there's not much the
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japanese officials or corporates can deal with. from that point of view, i think the exports comeback being hindered by the yen, the probability of that is, i think, fairly weak. the demand from the emerging nations, particularly in asia, shows significant signs of a very good plateau for the japanese corporate entities on their corporate cobback. any comeback in europe or particularly in the united states is on earnings today is welcomed. but i think we have a solid plateau of going along with the asian growth, being centered for the asia growth. for that reason, i think that would outweigh some of the short-term policies for the time being. >> you were you were sort of -- just lie light this, though. 4/they have absolutely seen some
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of that. >> supply/demand, 94% is concerned with the japanese. also at the same time, we have 1,500 trillion worth of individual assets. also, another buffer, which is argumentation which is more on theory side, but our consumption tax is only 5%. so you could argue that we could raise the consumgsz tax in order to levee off. so basically, japan has the buffer. in that sense, sample comparison between japan and that is wrong because not only do we have the debt, but it is quite wrong, also. i don't think that would be that risk that would emerge into japan, at least not in the near future. >> seijiro, who is going to buy this greek debt? is there is speculation that china could be a buyer. could japan sdmrp >> i don't think the japanese
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investors' eyes are looking towards, for example, the euro zone at this moment. if anything, i think ter moment they're trying to be risk averse as much as possible. i think one of the characteristics is that their diversification is always rather on the second or third hand. they will probably take a wait and see attitude of foreign investors and then make a move. so i think they will be the secondary players. we so appreciate your time, as always. say engineer row capital and cathy sticks around longer with us as our guest least on "worldwide exchange." moving on, los angeles sand, the world's most valuable casino saying that it will consider building a las vegas style ka casino strip in europe if the opportunity arises. the model, which carries casino
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gaming and venture could be open to others around the world. my good colleague, christine tan, sat down with the kre o of sands and asked him if singapore was going to be his most lucrative casino. >> in my opinion, it will be the most lucrative casino, not because of the taxes because the taxes in las vegas are much less. it's only a duopoly, and at least there's several hundred million ath nick groups that are part of the asian culture and the asian culture has a high pro pencety to play. >> that was christine tan speaking with the vegas stands ceo, sheldon adleson. s&p downgrades for greece and portugal has spiked the
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xwletation. take a look, dropping below 11,000, the biggest one-day decline in three months. risk aversion is playing identity more prominently in the markets. sinking as much as 22%. that accord toing to my memory is about a 4 1/2 year low. higher than expected cpi numbers down under, doing little to lift market sentiment there. risk off trade meant more money coming out of commodities. the s&p/asx 200 were off. this market is sinking to its lows for this year, sitting up a key 4.79 points last year. dmrakt, we're just getting sments out from the central bank of china saying that they want
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to boost more yuan settlements, and based on global uncertainties, the chinese bank make needs to re-benish the anterior, because a lot of people have been coming up with chinese options last year. that's been a key overhang for the mainland, as well, down 1.5%. let's get some final thoughts with kathy lien. china one never know what they're alluding to until you get the big bombshell announcement maine maybe a day or so later or maybe sometimes never. so these flashes that we were getting, the chinese banking skter needs to replenish their bays, expand u.n. trade settlement in 2010.
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do you think this is in relation, in response to what is happening elsewhere around the world? >> well, i do think that china tries to take active measures to basically reduce any sort of volatility in their own markets. that's why they're expressing to everyone that they have not to have consistency. i think at the same time, there's some protectionism. and so i think that their desire to decrease their exposure to u.s. dollars, the u.s. is probably expected in terms of this. >> what does this mean now that there are concerns everywhere. maybe that could erode and be evaporated. maybe china would say -- yeah, i think that's the argument that coy by will use.
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and these uncertainties that we have in other pockets of the world will cause them to slow down any type ofmakers that they worked take and that think that to slow getting. we've seen berdz in the past where chinese stock markets have been a precursors to how u.s. equity markets are doing. in fast, it could be a seeper market in mind. and causing to putback any plans to revam ewe the yuan. >> right. and also this bit about how the chinese banking sector needs to replenish capital bids, all along we have been hearing from the chinese leadership. their ratios are much -- the rules are much more stricter than the western standard. a lot of the big banks have those ratios running anywhere from 11% and higher. maybe the stocks that we've been
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hearing about property speculation, maybe it's more rampant, maybe. >> not to the levels -- >> but to the i'd, it's more serious examine a lot of the citi financials could be in trouble? >> i don't necessarily think that we have an immediate prifk of the same type of subprime defaults in china as we do in other parts of the world. but i think china is trying to take active measure toes prevent the same sort of embarrassment that is occurring in the u.s. and as well as the euro zone particularly. at this points, china knows the engine for growth for a lot of asia. there's a lot of blonde band xleks, if the banks have issues, it would not only hurt their economy, but nip them in the bed bd before it's a daefrt later on. >> very shine he's style, i would say. cathy lien from gst.
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>> just to remind you where we are in terms of peripheral stock markets around europe, the portugal market and psi 20 down nearly 5.6%. portugal's debt got downgraded yesterday. the spain xbx is off. the ftse 100 at the moment, just down about 1%. and the xetra dax, german banks are down and inest vrs are just now looking at their exposure to greek bonds, down 1.9% and the cac 40 is down 179%. we'll take a short break. still to come on "worldwide exchange," it is the beginning of something new. germany's s&p downgrades threaten the stability of the euro zone. should the ebc looking at buying debt sflp we'll find out.
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welcome to "worldwide exchange." out of the united states, the flare-up of the financial turmoil in greece and portugal may reinforce the fed's reluctant to signal rates anytime soon.
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>> and shares in europe are at a five-week low on that downgrade. banks across the continent under pressure. >> many markets in asia are closing below key support levels after s&p's one-two punch downgrading greece and portugal. >> great to have you with us here on "worldwide exchange." welcome to the start of your global trading day. u.s. markets are likely to open lower this morning. dow futures are down about 10 below fair value. the dow dropped 213 points yesterday after debt downgrades, sovereign debt concerned as investors were unloading more commodities. we are going to, of course, look ahead to more earnings out of the united states and more fed speak, ross, as we're getting a slew of treasuries, as well, out of the united states. and you guys are looking lower, as well. >> yes, we are, losses around 1%
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for the ftse 100, slightly better for the xetra dak and the cac 40, down 1.8%. but it is the bank sector that is weakest right now. i think investors are thinking about there might well be a restructuring of greek debt. plus, a general risk aversion being overlaid on what has been quite a long bull run if you go back to march last year and we're getting close to may, chloe, and in may, people thinking about taking time off. >> it's election time where you are and that's going to meek a weaker currently especially for the british pound as we get closer to that may 9th election day. we've got a bit of a balancing going on between the dollar and the yen. the dollar seems to be gaining a bit of traction as you can see there on the board. sterling, under a bit more pressure. it could be a rough ride until we get closer to that date.
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of course, a quick update on what is happening in this part of the world. thailand appears to be more signs of violence at this moment. witnesses say between 8 and 10 people were sdwruinjured after s fired. witnesses claiming that a thai soldier has been shot in the head during the clashes and we will be updating the situation with you throughout the day. ross. >> we are seeing this risk aversion piling into the bund market. the 10-year yield is down on the bund market. there we go. up the top, down to 2.93%. the greek yields don't actually matter. greece can no longer fund itself. as far as the two-year chat is, we're now at a record low. so we're yielding 0.74%. there we go, 20.75% because no one is going to borrow at that
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level. now, at the same time, jean-claude trichet and the imf president are meeting to discuss the details of the greek rescue package today. ville vooe ya, can mr. trichet suppress a problem with the german government? their own interests in trying to come up with a package sooner rather than later? what market makers are doing right now is wondering whether the ecb will have to have a nuclear option and buy debt if they can in the secondary market and what german bank exposure might be if they have to take a haircut in greek debt. >> frankly speaking at the moment, it's not so much about the german government, but it's about the german parliament. so what jean-claude trichet and dominick are here for is to field possible questions from german parliamentarians. because the government might be on the imf/eu line, but they have to get this through the german parliament. and while most opposition members or while most mps agree
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that a package has to be hammered out, they're opposed to the idea of whipping through at double speeds. they want to have a real solution and not get back to parliament every three months for more money. so that is probably what trichet and dominick straus have to talk about today mosh. we want to talk further about where the solutions for this lie and whether the germans might be to blame for part of the problem. i want to bring in our guests, professor charles blankhart from the university. professor, thanks for joining us. the germans are being accused for pretty much anyone around at the moment for having become part of the problem. they might want have caused it, but having exacerbated it. do you agree with that? >> i do not agree with that. there are two parties, the greek government and on the other hand, the private banks who bought all these government bonds at high yields and they expect high yields and profits
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and now get somehow disgruntled as they lose their money. >> well, the whole story, we've seen that pretty much throughout the subprime crisis. but let's get to the possible solutions. i think at this stage, it's not so much about who owns the problem, but who owns the solutions. the german government clearly wants a three-year plan to be on the table. we're talking about nebs anywhere from 45 billion to 150 billion. we're talking about debt rescheduling. where do you think the solution should be for solving this greek problem? >> i don't think that these are good plans. basically, they are institutions where the countries, if they are in deficits, go to pose their problems. there, the banks and the governments come together and look at the plan. they make a haircut for the government and find solutions.
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they will help the greek government to fulfill these restrictions which are now imposed by the european union because when when the greek government has got the air cut, it will be difficult for the geek government to get initial money on the capital market. it's always these restrictions imposed for the greek government. >> what does this mean to the euro project? basically, what part of the problem has always been the greeks arguably lied themselves into the euro and then they cheated themselves through it and then they didn't get their house in order. but they are part of the euro club. can they stay in there? >> this is not a problem.
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greek is not such a large country. if the greek enterprise breaks down, nobody would think about that the euro is in danger. this is just part of the economy and also greece's part of the economy and in a market economy, obviously, those that get in debt have to pay back the debt. >> well, the question is whether the market believes because they're shooting at portugal, they're shooting at spain. but thanks for stopping by, professor. >> yes. >> that's it for now. back over to you. >> let's get back over to greece. carolin schober is over there. there we go. the question is whether the can you know country is going to take the austerity measures. >> yes, ross.
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they're here in had i him home country. there is a lot of public anger about the proposed austeritymakers. many think that will be roughly 50%, plus a cut in the pension payments. that has caughted or stoked a lot of discussion criticism from the and from the public here. the greece prime minister is doing his best to focus on the aid side here. of course, we're seeing protest here on the street against the fact that the greek minister has turned to the imf. he's under a lot of criticism because he turned to the imf and the eu for help. we're seeing more strikes being called, for instance, yesterday the private sector has called for a general 24-hour strike on may the 5th.
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meanwhile, the problem is the fact that private consumption is vital to this economy. private consumption will take another hit. this year, we have a forecast of 40%. ross. >> thanks very much indeed for that. joaning us now is neal michaels. neal, what seems to be happening here? fundamentally, the markets are sending a powerful message to governments of the developed world. fix your finances without waiting. and on the day that the fed is concluded its meeting, it's not monetary stimulus they want fixed, it's the fiscal side that they want. that is what they want sorted out. >> i think ultimately you're right. the bond vigilantes are one by one picking off the countries starting with greece and probability some of the other
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peripheral countries. ultimately, yes, that's sending a strong message. if you don't, then we're going to dump your government bonds. ultimately, politicians are going to come under increasing pressure to tighten fiscal policy. however, there is a silver lining. if you tighten fiscal policy, then monetary policy is going to have to stay looser for longer and that will help to ultimately sustain the recovery. and help risk markets. >> yes been so how long is this derisking going to hang over us? it's been petering out, anyway.
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>> those risks have always been there. the markets have had a significant rally over the last few weeks and honestly, they've been getting complacent. the markets have been looking toppy for a while. they are overdue a short-term correction. they've been getting macroeconomic support from improving financial macroeconomic conditions. they've been getting support from good corporate earnings numbers that are coming from companies. but in the short-term, though, we're looking choppy. the big volatility index was trading close to the bottom of its range. and the markets, investors were getting complacent. and given that, they're waiting to jump out and scare us. >> does this give us an excuse for selling? >> absolutely. they realize there is a degree of complacency embedded in the
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markets and they were due a correction. it went from a technical point of view, the markets were looking overbought, but also from a valuation point of view. if you look at the cyclely adjusted price earnings ratio, it's looking significantly above its long run average, so the markets were due a correction. >> good morning, neal. i watched the goldman sachs testimony for hours. as a strategist, what do you think the impact will be, given that for instance trading could be heavily impacted given the level of financial reforms in the united states but in terms of m&a and investment banking, certainly the ipo market, where is the biggest ipo market in the world? it's china. and a lot of companies in china could be watching these developments and saying maybe we won't work with goldman sachs on our next big project or on our
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next ipo move. we've got billions of dollars coming in on the markets this year. >> it's a major problem. there is a significant political backlash about what's going on in the banking sector and specifically with regard to goldman sachs. but i think politicians need to be very careful. they're skating on very thin economic ice. if they impose regulations that are too draconian, that could choke off banking profitability. and it's very important that we have a healthy, functioning banking system at the heart of our economy pumping credit around the rest of the economy. if that part gets damaged in any way, it could damage other parts of the economy and the global economy generally. >> all right. very good, neal michael, executive director of investment strategies stays with us for the rest of the hour. investment strategies at london and capital.
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there you go. hey, ross, what do we have coming up. >> german software company s.a.t. has posted double digit profit and sales growth in the first quarter. we'll hear from the co-eo after the break.
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on cnbc.com today, contagion fears in bond markets and volatile stocks, that is what is
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likely to happen to bond markets following the downgrade to greece to junk. that is what traders have been telling cnbc. if you're wondering what banks are most exposed to greek debt, takes a look at the figures. they suggest french banks are topping the list with $75 billion worth of exposure. that accounts for around 25% of total foreign claims. and if you want to recap tuesday's goldman sachs hearings in the u.s. senate, take a look at our slideshow, highlighting the most dramatic moments. >> let's bring you up to date with some of the other big stories from around the world been s.a.p. prorted a 97% rise in profit. total sales are up 3%. it showed large jump in its
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operating margin. the co-o told us the good performance are seen across all parts of the business. >> we have the top line growth. this is very important. but it's important to say that that growth comes from solid performances. it's all regions, all product lines and it's all segments. >> jim hagemann speaking in a first on cnbc interview. he expects sales to rise between 4% and 8% this year. s.a.p. stock is trading in line with the border germ unanimous market, currently up 1.4%, nicole. and ross, it was a long day for goldman execs. the hearing lasted 11 hours. lloyd blankfein, the final witness, was questioned by lawmakers for about three years. he was hit with a wlifterring attack about goldman's treatment of its clients.
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afterwards, they disputed claims that goldman ran with the open with its customers. >> when you are a marketmaker, off responsibility to make sure that your client is suitable, is knowledgeable and that what you are providing serves the purpose and provides the risks that the client wants. and do you believe goldman sachs did that in the synthetic cdo market? >> i believe we did. >> blankfein says goldman's clients are supportive and he personally has the support of the board. he was more contrite when the came to the financial issues saying goldman bears some of the responsibility for the crisis. >> we are a very important financial institution and so we bear our share. >> also in regard to financial reform, blankfein says that the issues raised during the hearing and the regulation of derivatives markets will certainly be examined. chloe. >> here in asia, australia's
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inflation rate accelerating in the first quarter of 0.9% from the fourth quarter last year beating estimates. cpi numbers showing an uptick from a year ago period, but it's being upstaged by renewed anxiety. economists say australia's increase in price pressures may not be enough to encourage the rba to raise rates when it meets next week. nicole. >> and so much more to come on "worldwide exchange." the s&p has downgraded portuguese debt by two notches. so is the debt crisis spreading? we're live in portugal after the break.
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welcome back to "worldwide exchange." it is 5:25 on the east coast of the united states. you're looking at a live, pretty picture of times square right now. let's take a quick look at how u.s. markets are likely to open. lower across the board right now. we were micked in the last hour. now we are all the way down with dow futures down about 20 below fair value at this hour. after the dow tumbled 213 points yesterday over greece at portugal concerns. we're also getting more fed speak. we are getting more u.s. data, as well.
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inventory data out at 10:30 in the morning new york time. dow jones survey calls for a build of 800,000 barrels of oil. 600,000 barrels of gasoline and 1.2 million barrels of distillates. we also have a slew of earnings, as well. comcast reports before the bell as do barrett gold, corning, dow chemical, general dynamics, northrop gumman, sprint nextel and after the close, we get visa and allstate. >> that's whag coming up there. as we know and nicole mentioned it, greece's credit status job rating sess now junk according to standard & poors. we're waiting to see what the other ratings agents do over the next coming days and weeks. portugal was downgraded to a minus. let's get out to lisbon. carolina is there with the details. carolina, how much more expensive is it now getting the portugal government to borrow? >> reporter: it's getting more and more expensive. even today, the portuguese bonds
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are widening against the german bund. but some of the analysts here have been talking to lisbon, ross, are saying that the timing for this downgrading is very strange because they say that they were expecting -- if you look at the fundamentals, there is some reason for this downgrading of two notches to a minus by the s&p to portugal. but they also say why didn't they wait inspect a week more to hear what the euro zone is going to do with greece to understand. because this is going to be the precedent for all the euro zone countries, including portugal. obviously, portugal has a much lower debt level than greece. it's not as dramatic a situation as you see in greece. for example, last year, portugal had a national debt of around 78, 79% of its gdp. it's possibly going to achieve
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85%, 86% of gdp this year. but the government has already presented some austerity measures. today, the government has called the position in at 1113 and now we're trying to discuss more austerity measures. they didn't do any weight curbs so far, but they might go that way now since they are feeling the pressure from the credit rating agencies, from the market, they are seeing what's happening in greece and obviously, the euro zone has a whole. and i've been reading that all these leaders have been in contact on the phone day .night to try to find a solution as quick as possible. they are trying to get this contagion to stop in portugal, not to get this to move to spain and that could be a really, really big problem, ross. >> do i? coming up on "worldwide exchange," an untable euro zone and goldman sachs under fire. are we looking toward a
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downturn? stay with us on "worldwide exchange" to see what our strategists think right after the break.
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>> and in europe, shares hit a five-week low as banks coming come under pressure on that greek downgrade. >> and here in asia, the jgb shrinking further down 0% of the year in fears over greece's debt problems figure a flight to quality demand for safe haven assets. great to have you with us here on "worldwide exchange." it's 5:30 on the east coast of the united states. welcome to the start of your global trading day. we are likely to see markets open lower about 20 below with fair value now. they have been going lower .lower in the last hour and a half or so. nasdaq futures and s&p 500
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futures lower. this is after the dow, ross, dropped 213 points yesterday. we saw a sell-off in commodities. we also saw a flight to safety in treasuries with another big treasury action coming up later today as we get the second day of a two-day fed policy hearing on the hill. >> yeah. and nicole, we're 2 1/2 hours into the european session and down near the session lows. the german and french markets off over 2%. it is bank stocks that are the weakest. we have a general unwinding of risk appetite with banks being hit. there are concerns, of course, particularly in germany and france about their exposure to greek debt and concerns whether there have to be some tremendous structuring or taking a haircut. energy's best performing sector today after shell numbers came out and stanley beat all analyst forecasts, chloe. >> and, of course, whether the markets get that german parliamently approval for the greek debt issue is something that has to be quite key opinion t
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there is no real joy for sterling, as well, off 0.6% as we head towards that may 6th election date. thanks for the correction. and dollar/yen, 93.68 at this moment. let's move on and toss things over to nicole. >> yes, chloe. and we are joined by bill strozillo, chief market strategist. still with us, neal michael, our guest host, executive director of investment strategies at london & capital. bill, you are saying we are due for a correction. when is this correction coming and by how much? >> yeah, nicole. the last time i was on this show with you at the end of march, i talked about the short-term momentum taking the s&p to 1200 or 1250. we topped out that on april 26th at 12:20. we've had a nice sized sell-off. i think the next couple of days will be critical to see if we can hold that shorter term
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momentum together. i think you need to hold around 11730 in the s&p. otherwise, you get another good sized sell-off to 11.25. our bigger picture, we've never been a buyer of this whole march rally and that's off the march '09 lows is going to be like the rally coming out of the dotcom bust. we think the march rally, although impressive, is probably in its later stages and once it winds down, you're going to be much more in a two-way range mode. so we'll have to watch whether this sell-off is going to be kind of the first sign that this march rally is running out of gas. >> well, you know, we were just talking to neal in the last half hour and he was saying that this is also just an excuse to sell some of these concerns out of europe, greece and portugal yesterday. we had a major sell-off on the dow. do you think people are just looking town load? >> nicole, look, you have to put this in the context of a market that in the s&p, at least, march
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'09 lows top is up over 80%. you've got to ask yourself, does the risk reward make sense at these levels? last summer, we were very bullish. we felt like the market had nowhere to go but up. the economic news and the earn eggs data were on its back. we had every central bank in the world printing money and, you know, you had some negative sentiment that, you know, that ended up being a good contrary indicator. now things have kind of turned around. you've got central banks around the world begin to go raise rates. a lot of the good earnings news and economic data is priced into the market. our view is that these levels, if you're a longer term investor, you have probably as much downside as upside, so i think people are beginning to make that assessment. >> neal, let's bring you in on this. nicole mentioned, the overall market to risk reward ratio has changed. we're getting cracking numbers
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out in the oil sector this week, shell and bp. >> absolute lit. that's why i think in the medium to long-term, i think that the markets will continue to nudge upward. the financial environment, the general macroeconomic environment in terms of an improving economic recovery, which ultimately will spread to other parts of the economy, as well, such as the consumer sector. i think that's very supportive for risk assets in the medium to long-term. >> what do you call the medium term? >> i believe that we're going to have a post positive return for equity these year. >> do you go along with that, bill? >> well, look, i think if you're looking out a year or so, i probably want to be a little bit more cautious. rally off the march '0the lows has been impressive and i'm not going to say i can call the top on it, but you know, we do think
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that it's probably in its later stages. and, again, we don't see this as similar to the period where we came out of the dotcom bust and the market traded up for four or five years. we think that it's darchbt set of circumstances and, you know, the march rally more than likely the probably in its later stages. so if you're somebody with a longer time rising, i think you take advantage of this move up and take some of your profits and begin to take a step back. >> good morning, bill. this is chloe in singapore. i wanted to know whether we could have a poch picture just as neal had mentioned given the potential blows from this goldman sachs drama unfolding with eyes on the hill. i mean, the center of this trial resolves around cdos and goldman was number 11. so if the paddle starts moving up the chain and going after the other big players, certainly goldman was a market mover, but
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there were others who were much bigger market movers as far as cdos are concerned. >> yeah. well, i think it's a good question tb especially in terms of the whole financial sector. if you look at this rally that was had over the last year, the rally has been at its best when the financials outperformed the broader market. so if we go back into a situation where the financials start to underperform, i think that's obviously not a good sign for the sector, but it's not a good sign for the market overall. so i think this story has legs to it. i don't think we know the full extent of the damage here. and again, i think the financials have been critical in terms of leading the market higher. if we have a situation where the financials start to lag, i think as i said, it's not only bad for the sector, but bad for the market as a whole. >> we have been seeing some of the financials lagging, bill, the likes of morgan stanley falling 3.3%, jpmorgan also around that area yesterday. so let's dig into that in a little bit. stay with us, stay put in
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boston. it's bright and early in boston, bill extra zill low, strategist and editor at bell curve trading. neal michaels stays with us, as well. and you may have notice today food menu at your local starbucks has grown considerably. one of the most recent additions is an all-natural stack that is good for your body and mind. we speak to the ceo of kind snacks after the break.
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the nutritional food market has grown significantly in the past decade. u.s. organic food sales jumped from 23 billion in 2002 to 53 billion in 2008. one of the fastest growing companies behind this trend is kind snacks. joining us now is daniel fraveski, founder and ceo of kind snacks. you've been doing business during the time of loose monetary policy. we're so focused on the fed today, small businesses and big businesses alike to see if easy credit is going to continue. do you think you could have done it in times of tighter monetary policy? >> i think we're very lucky to work on creating a delicious product and thanks to consumers who learn the hard way when we
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were not properly financed when we had to do everything ourselves with very, very tight credit limits when i started the company. the present predecessor to this 15 years ago with $10,000, so yes, i think we could have done it because we groou organically. but i did notice 2008, b in the early 2008 difficult period for a lot of our pliers were having difficulty getting credit and that was impacting us because they were not able to source the products quickly enough and that has changed. right now, i think things are flowing rather smoothly. so i don't know if further tightening is going to hurt them down the line. >> because you started in 2003. so right after another recession, 2002, and you thought, oh, gate win weathered that economic storm. and then 2008, 2009 happened. were you worried or did you feel like you had already gone through that so you were better equipped to go through it again?
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>> first of all, we've been very fortunate. sales have more than doubled every year. and i think based on the strength of the product, the solution of being kind to your body, to your taste buds and to the world. >> it's a simple idea. fwuft likes that idea. keep it simple, right? you have nuts and fruit and honey and you put it together and it's a simple food product. is that what has also helped you, the -- >> i think that the -- >> you can read all of the ingredients on the back. >> you seem like you under our products. it's ingredients you can see and pronounce, and that's what we stand for. not a salt trader or processed foods, but things where you know what you're eating and we enjoy it. we believe simplifying food is what consumers want to be looking for. >> it wasn't a simple process to get into starbucks. this is huge for your company. what was that process like? >> a lot of persistence and patience and just trying to listen to your potential
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partners and what their needs are and we tried two or three years ago and it hadn't worked out and we just maintain the relationship at a certain point. starbucks decided that they wanted to focus their tag line as real food is simply delicious and they thought kind was an iconic potential partner and they like the values of us trying to do something through the world through the kind movement and the stuff that we've done. and it was at the right once it fit with the strategic priorities. it just worked well. >> and good morning. certainly kind and healthy, those are probably two favorite words that many people like in this part of the world, considering that the growth waistlines are something that a lot of people are trying to tablg. talk us through if the credit conditions become tighter in the united states, maybe you can seek serious organic growth levels outside of the united states, especially in asia. >> we're actually very excited that we already are start to go
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sell in japan and sing prosecute and hopefully in other parts of asia. but since you're talking about tightening waistlines and not just economic but real life, the yale school of medications prevention center came out with a study that if you take kind bars, you don't gain weight and the reason is you eat the good types of fat and the good types of calories that are few trishally rich rather than calories rich in carbohydrates. so it was a good weight management technique. so i was surprised when they did that study. so it really fills you up and you end up eating the good types of stuff than the bad. >> all investors are focused on the state of the u.s. economy and the state of the u.s. consumer specifically. on your level, the u.s. consumer is purchasing, eating those things and bouncing back to some extent. daniel, ceo and founder of kind
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snacks, we appreciate your time this morning. >> thank you so much. >> neal does stay with us for the rest of the hour or did he have just one more thought? >> no. we're getting the final thought from him now before we go. neal, i was just wondering what food prices, talk to me about your view at the moment on the commodities sector. do you have a position there or not? >> it's an area that is not correlated so much. i mean, it's not core late really with what is going on with the bond markets, although it's affected by risk appetite. >> we don't really have a strong exposure to soft commodities. we quite like commodities generally, but they can very very volatile, so we don't tend to expose our clients too much to that particular asset class. but in terms of commodities generally, i think, of course, they're going to continue to get support from continued rapid growth in emerging markets and particularly demand from china
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and india. however, my concern is there may be a lid to the extent to which commodities can rise because of slowly tightening in monetary policy in china, which could put a break on the demand for commodities. and additionally, if we see a rise in the dollar, which we quite -- we could quite easily see, that could put a damp ner on the demand for commodities, as well, because that means nondollar investors can get commodities for their money. >> good to have you on, neal. okay. "squawk box" is under way in just over 11 minutes. carl is with us to tell us what's coming up today. hey, carl. >> hey, ross. as you probably can guess, we're going to talk a lot about goldman and the grilling they took yesterday on the hill, that marathon hearing is taking shots at the wall street giant. goldman's armor did hold up, although it did take a few dents. we even had a few profanities
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flying around the hearing room. we'll have david faber's interview with lloyd blankfein. the fed on the clock, chairman bernanke and company not expected to change rates. but what about the language? we have former fed insiders, including ric mishkin who will join us at 8:00 eastern time, our guest host today. the road to financial reform, negotiations in full swing to get that deal to the senate floor. senator bob corker will tell us about some of the key points that could bring both sides closer together. and cable giant comcast is getting ready to check into earnings central. we'll talk to the chairman and ceo brian roberts about the quarter and beyond. ross, we're paying a lot more attention to comcast nebs as that merge gets regulatory approval here until the states. a lot going on. we'll see you in about ten minutes' time. >> how many times did he use that profanity? at least seven times. >> i've seen two counts. our own certainly count here was
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11 by senator levin. but politico says this morning it was 12. so maybe we'll just check the tape. >> at least we know what to called the hearing from the goldman perspective. >> we're not the ukraine. we don't have each other in headlocks quite yesterday yet. >> carl, thanks for that. looking forward to it. >> okay. >> right there, that's a nice headlock right on the front page of the journal. good times, i tell you. coming up on "worldwide exchange," the earnings season rumbles on today. dow chemical nor tlum grumman among some of the folks reporting today. we'll tell you more on what you need to know for a successful trading day, we hope. stay with us.
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welcome back to "worldwide exchange." we get some data out of the united states. specifically, inventory data is coming out this morning. a dow jones survey calls for a build of 800,000 barrels of oil, 600,000 barrels of gasoline and 1.2 million barrels of
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distillates. comcast reports results before the bell as do dow chemical, general dynamics, northrop grumman, visa and allstate after the close, as well. joining us now, bill strazullo. became, all eyes are going to be focused on the fed. with everything coming out of the european market,s, is it mosh likely that that will be a reason for the fed to do nothing any times soon? >> yeah, i think so, nicole. i think they're going to keep the extend period language in there. i don't expect any major changes in the statement. i think, you know, the exit strategy, a lot of that is going to be determined on how the unemployment situation shakes out. as long as we've got a weak labor market, you know, still weak housing, both commercial and residential real estate markets, i think they're going to keep rates low.
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i mean, you have to look at it from the standpoint of what are their polgz policy openings if they get it wrong? if they tighten too soon and they snuff out what is still a fairly fragile recovery, they don't have many policy options opinion they can't rate raise taxes. so for a risk/reward standpoint, i think it makes sense to keep rates low until the economy is really on firm footing. >> well, the dirty word in all of this, bill, is inflation. >> yep. >> i mean, is that the main concern and message here? >> yeah, yeah. well, i think, look, there's two evils here. you know, one is inflation and one is deflation. and i think the evil that the fed would much rather deal with is the evil of inflation because that's something they certainly have experience with. they don't want to be in a situation where we have some sort of turndown in the economy
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and you have a potential deflationary forces come to the forefront. so yeah, inflation is a concern, but i think that is a concern that the fed is willing to deal with. if i had to count on one factor to dictate when that exit strategy is going to occur, i would look at the unemployment situation. >> a couple evil hes we're balancing here, bill strazullo helping us do it. that's going to do it for this program. i'm nicole lapin in the united states. >> i'm ross westgate here in europe. >> and i'm chloe cho in asia. have a great day. thanks for watching "worldwide exchange."
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hi, ellen! hi, ellen! hi, ellen! hi, ellen! we're going on a field trip to china! wow. [ chuckles ] when i was a kid, we -- we would just go to the -- the farm. [ cow moos ] [ laughter ] no, seriously, where are you guys going? ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! [ female announcer ] the new classroom. see it. live it. share it. on the human network. cisco.
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